Nrg Energy, Inc. · NYSE:NRG
Nrg Energy — Lehman Energy/Power Conference 2005
32 slides from Nrg Energy's conference presentation, Sep 7, 2005
Slide 1: Poised to Meet the Country's Energy Infrastructure Requirements
NRG Energy, Inc.: Poised to Meet the Country's Energy Infrastructure Requirements Lehman Energy/Power Conference September 7-9, 2005 New York City
Slide 2: Safe Harbor Statement
Safe Harbor Statement This Investor Presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are subject to certain risks, uncertainties and assumptions and typi
Slide 3: Agenda
Agenda General Overview Our First 18 Months: A Scorecard Recent Events Our Focus Going Forward
Slide 4: New NRG - Two Drivers since Emergence
New NRG - Two Drivers since Emergence Ch. 11 E m e r g e n c e 2004 2005 YTD Future Future Unrelenting focus on execution Prudent Balance Sheet Management Growth Value Enhancing Growth 2003 Adding a third driver - growth - while continuing our focus on operations and balance sheet management Complet
Slide 5: NRG Strategy - Building Competitively Advantaged Businesses in our Core Regions
NRG Strategy - Building Competitively Advantaged Businesses in our Core Regions Creating maximum value from existing fleet Reinvestment in repowering of key assets Acquisitions to enhance regional portfolios Our Objective: To be a multi-regional, multi-fuel, scale generator with assets across the me
Slide 6: Domestic Core Businesses - Fuel and Dispatch Diversity
Domestic Core Businesses - Fuel and Dispatch Diversity Note: Other North America includes 1,579 MW outside of core regions South Central West Northeast Gas 980 MW 40% Coal 1,489 MW 60% Gas 842 MW 11% Coal 2,407 MW 30% Dual Fuel 2,284 MW 29% Oil 2,350 MW 30% Oil 628 MW 59% Gas 427 MW 41% Intermediate
Slide 7: International Core Businesses - Australia & Germany
International Core Businesses - - Australia & Germany Flinders 40% market share Locationally advantaged Multiyear load following contract of up to 72% of on- peak capacity Gladstone Predominately contracted Output fully contracted Minimal seasonality to earnings Australia Coal 1,390 MW 100% Germany
Slide 8: Our First 18 Months: A Scorecard
Our First 18 Months: A Scorecard
Slide 9: Focus on Execution
Focus on Execution Year Eastern (mm tons) % Hedged Western (mm tons) % Hedged Total (mm of tons) % hedged 2005 1.8 100% 11.5 100% 13.3 100% 2006 0.8 60% 12.5 92% 13.4 90% 2007 0.8 20% 12.4 64% 13.1 61% 2008 0.8 0% 12.4 52% 13.1 49% Locking in coal supply NRG Safety Record NRG Safety Record NRG Safet
Slide 10: Prudent Balance Sheet Management
Prudent Balance Sheet Management Prudent Balance Sheet Management Lowered interest expense by 35% Net debt at low end of targeted range Cash on hand and total liquidity remain strong Bonds outperform peer group Bonds outperform peer group Bonds outperform peer group Bonds outperform peer group
Slide 11: Recent Events
NRG ) Recent Events
Slide 12: South Central and Hurricane Katrina
South Central and Hurricane Katrina
Slide 13: NRG and Hurricane Katrina
NRG and Hurricane Katrina Provide for our own staff and families Protect the physical integrity of our facilities Help our rural cooperative customers in every way we can Initial Response Stand ready to generate once grid is stabilized Resume coal delivery Assist in restoration of Washington St. Tam
Slide 14: Operational Performance
Operational Performance During peak summer demand, coal units performed in line or better than expected July August Note: Total MWh for July and August 2005 were 5.9 million MWh versus 4.9 million MWh in 2004
Slide 15: Operational Activities - F.O.R.NRG EBITDA Impact
Operational Activities - F.O.R.NRG EBITDA Impact EBITDA Impact EBITDA Impact EBITDA Impact EBITDA Impact ($ in millions) 2005 2006 2007 2008 Run Rate Operations Initiatives $ 5 $21 $ 37 $62 Corporate Initiatives 25 33 38 38 Total $30 $54 $75 $100 Driving Return on Invested Capital at NRG A Key Opera
Slide 16: Regulatory Development: Delay of LICAP
Regulatory Development: Delay of LICAP Cos Cob Devon Montville Middletown Branford Torrington Terminal Franklin Drive Norwalk Harbor NRG Energy All Transmission Lines 345 KV Below 230 KV Immediate consequences: NRG's current RMR settlement expires December 31, 2005 Will seek to extend RMR until loca
Slide 17: Forward Focus
NRG ) Forward Focus
Slide 18: Energy Infrastructure: Conditions in our Core Domestic Regions
Energy Infrastructure: Conditions in our Core Domestic Regions The United States has looming energy infrastructure issues which need to be addressed immediately New record demand Insufficient supply currently Gas dependent Significant internal transmission constraints Aging power generation fleet CA
Slide 19: Energy Infrastructure: NRG's Advantages
Energy Infrastructure NRG's Advantages Substantial cash resources available for reinvestment Ownership of industrial sites with existing fuel delivery and transmission interconnects near load centers Considerable expertise on purchasing, transporting and consuming Powder River Basin coal, the countr
Slide 20: Energy Infrastructure: Big Cajun II-Unit 4
Energy Infrastructure: Big Cajun II-Unit 4 675MW net capacity Supercritical boiler (higher efficiency, lower fuel consumption and therefore lower emissions) Best Available Control Technology Potential partners are regional cooperatives and local utilities Potential power off-takers are local utiliti
Slide 21: NRG Intrinsic Growth Initiatives: 2006 - 2010
NRG Intrinsic Growth Initiatives: 2006 - 2010 Power Marketing and Market Development Current Asset "Steady State" EBITDA Brownfield and Asset Growth Multi-faceted approach to realization of the Company's earnings potential $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 EBITDA F.O.R.NRG Capital Rede
Slide 22: Appendix
NRG ) Appendix
Slide 23: June YTD 2005 Financial Summary
June YTD 2005 Financial Summary 2004 Actuals $490 Portfolio Changes: Kendall Sale (23) WCP CDWR contract (82) Enfield 4 Portfolio Changes: (101) Mark-to-Market (33) Regional margins1 (37) Operating Exp1 (28) G&A Exp1 (24) Equity Earnings2 5 Other, net 5 2005 Actuals $277 1 Net of Kendall 2 Net of WC
Slide 24: Q2 2005 Cash Flow
Q2 2005 Cash Flow $ in millions Q1 Q2 YTD Adjusted EBITDA $154 $123 $277 Interest Payments - Cash (56) (74) (130) Income Tax - Cash (2) (3) (5) Other Cash and Non-Cash Items 66 29 95 Working Capital Changes - Excludes Accrued interest (107) (41) (148) Other Assets & Liabilities 10 (7) 3 CFO $64 $28
Slide 25: Debt Schedule - 6/30/2005
Debt Schedule (US $mm) - 6/30/2005 S Xcel Note 9.5 S Senior Credit Facility 797.8 S 8% Notes 1,320.6 S Camas 8.7 S Conemaugh 0.2 NEO Northbrook 25.6 NEO NY 16.4 Peakers 240.1 S Thermal San Francisco 0.1 S Thermal 120.4 Audrain-Capital Lease 239.9 S Schkopau-Capital Lease 239.5 Itiquira 50.7 S Flinde
Slide 26: Value Enhancing Growth - Hedging Coal Generation
Value Enhancing Growth - Hedging Coal Generation1,2 Energy position as of August 30, 2005; excludes capacity revenues and ancillary services Includes Northeast and South Central portfolios 77% of our fleet maintains flexible sourcing through multiple modes of transportation 100% of transportation un
Slide 27: Operational Statistics by Primary Fuel
Operational Statistics by Primary Fuel Coal Net Capacity EAF EFOR Net MWh Full year 2004 64.9% 84.8% 7.4% 21,132,616 YTD June 04 64.9% 83.6% 8.0% 10,562,929 YTD June 05 57.6% 78.3% 10.1% 9,353,938 Gas Net Capacity EAF EFOR Net MWh Full year 2004 7.7% 88.0% 17.5% 3,456,671 YTD June 04 6.8% 85.5% 23.4
Slide 28: Regulatory Activities: RMR Filing Process
Regulatory Activities: RMR Filing Process NRG files RMR under Section 205 of the Federal Power Act FERC rejects RMR FERC accepts RMR as of 1/1/2006, subject to hearing and refund, payments flow 1/1/2006 FERC defers decision until after final hearing (5 month delay), delayed payments By statute, FERC
Slide 29: Regulation G Reconciliation: Six Month EBITDA Reconciliation
Regulation G Reconciliation Appendix Table A - - 1 : Six Month EBITDA Reconciliation The following table summarizes the calculation of EBITDA and provides a reconciliation to net income/(loss): Six Months Ended Six Months Ended 06 /3 0 /200 5 06 /3 0 /2004 Net Income: $ 46,484 $ 113,259 Plus: Income
Slide 30: Regulation G Reconciliation: Net Debt to Capital
Regulation G Reconciliation Appendix Table A - - 2 : Net Debt to Capital Reconciliation The following table summarizes the calculation of Net Debt to Capital: Numerator Gross Debt 3,210,951 Total Cash 910,409 Net Debt 2,300,542 Denominator Book Value of Equity 2,600,651 Net Debt 2,300,542 Capital 4,
Slide 31: Regulation G Reconciliation: Second Quarter 2005 Regional EBITDA
Regulation G Reconciliation Appendix Table A - - 3 : Second Quarter 2005 Regional EBITDA Reconciliation The following table summarizes the calculation of EBITDA and provi des a reconciliation to net income/(loss): Three months ending June 30 , 200 5 Northeast South Central West ern Other NA Australi
Slide 32: Regulation G Reconciliation
Regulation G Reconciliation EBITDA, Adjusted EBITDA and adjusted net income are nonGAAP financial measures. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. The presentation of Adjusted EBITDA and adjusted net i