HOUSTON, Feb. 27 /PRNewswire-FirstCall/ -- Reliant Energy, Inc.
reported a loss from continuing operations before income taxes of $153
million for the fourth quarter of 2006, compared to a loss from continuing
operations before income taxes of $281 million for the same period of 2005.
The fourth quarter 2006 reported numbers include net gains from unrealized
energy derivatives of $49 million and $101 million of net losses from
unrealized energy derivatives for the same period of 2005. Fourth quarter
2006 results also include a $37 million debt conversion expense resulting
from a December 2006 exchange offer. Fourth quarter 2005 results include an
$8 million charge for the Cornerstone settlement.
Open EBITDA was $74 million for the fourth quarter of 2006, compared to
$215 million for the fourth quarter of 2005. Improved retail adjusted gross
margin was offset by lower wholesale open gross margin and increased
expenses. Adjusted EBITDA, which includes the effect of historical
wholesale hedges and gains on sales of emission allowances, was $33 million
for the fourth quarter of 2006, compared to $36 million for the fourth
quarter of 2005.
"Our businesses continue to perform well, despite the mild weather we
encountered during the quarter," said Joel Staff, chairman and chief
executive officer. "We successfully executed against our priorities for
2006 and have substantially completed the repositioning which began in
2003," Staff added. "Looking forward to 2007, we plan to continue improving
operations, grow our retail business in Texas through product and service
innovation and expansion to other markets, and eliminate current
restrictive debt covenants to enhance financial flexibility."
Reliant Energy, Inc. reported a loss from continuing operations before
income taxes of $449 million for the year ended December 31, 2006, compared
to $694 million for the same period of 2005. The reported numbers include
net losses from unrealized energy derivatives of $231 million and $192
million, and a $35 million and $359 million charge for Western states and
Cornerstone settlements for 2006 and 2005, respectively.
Open EBITDA was $838 million for 2006, compared to $1,002 million for
2005. The decline in open EBITDA was due to higher expenses in 2006.
Adjusted EBITDA was $621 million for 2006 compared to $686 million for
2005. The decline in adjusted EBITDA was primarily due to higher expenses,
partially offset by reduced losses related to historical wholesale hedges.
During 2006, the company reported cash provided by continuing
operations from operating activities of $1,330 million, compared to a
$1,110 million use of cash in continuing operations from operating
activities for 2005. Free cash flow provided by continuing operations was
$311 million for 2006, compared to $110 million for 2005. The increase in
free cash flow provided by continuing operations was primarily due to
changes in working capital and lower purchases of emission allowances.
OUTLOOK
Reliant Energy's outlook for open EBITDA is $974 million, $1,219
million and $1,160 million for the years ending December 31, 2007, 2008 and
2009, respectively. Adjusted EBITDA, which includes the impact of
historical wholesale hedging activity and gains on the sales of emission
allowances, is $823 million, $1,148 million and $1,062 million for the same
periods. The outlook for free cash flow provided by continuing operations
is $228 million, $420 million and $503 million for the years ending
December 31, 2007, 2008 and 2009, respectively.
This outlook is based on forward commodity prices as of December 22,
2006, and assumptions and estimates by Reliant Energy.
Open EBITDA
Outlook Reconciliation
($ millions) 2007E 2008E 2009E
Income from continuing
operations before
income taxes (a) $681 $547 $397
Unrealized gains on energy
derivatives (542) (88) (4)
Depreciation and amortization 383 439 443
Interest expense, net 301 250 226
Adjusted EBITDA (a) $823 $1,148 $1,062
Historical wholesale hedges (b) 151 71 98
Open EBITDA (a) $974 $1,219 $1,160
(a) Certain factors that could affect GAAP financial measures are not
accessible on a forward-looking basis, but could be material to future
reported earnings.
(b) Historical wholesale hedges were entered into to primarily hedge the
economics of our wholesale operations. These amounts primarily relate
to settlements of forward power and fuel hedges, long-term tolling
purchases, long-term natural gas transportation contracts, storage
contracts and our legacy energy trading. These amounts are derived
based on methodology consistent with the calculation of open EBITDA
and forward commodity prices as of December 22, 2006.
Free Cash Flow from Continuing Operations
Outlook Reconciliation
($ millions) 2007E 2008E 2009E
Operating cash flow from
continuing operations (a) $788 $956 $830
Change in margin deposits (b) (288) (100) (14)
Western states settlement payment 35(c) --- ---
Adjusted cash flow provided by
continuing operations $535 $856 $816
Capital expenditures (238) (308) (183)
Purchases of emission
allowances(d) (69) (128) (130)
Free cash flow provided by
continuing operations(d) $228 $420 $503
(a) Outlook assumes no changes in working capital.
(b) Certain factors that could affect GAAP financial measures are not
accessible on a forward-looking basis, but could be material to future
reported earnings or cash flows.
(c) In December 2006, we reached a settlement of 12 class action natural
gas cases pending in state court in California. We expect to pay this
amount in the first or second quarter of 2007.
(d) Consistent with SEC guidance to the industry, purchases and sales of
emission allowances are classified as cash flows from investing
activities for GAAP purposes.
NON-GAAP FINANCIAL MEASURES
This press release and the attached financial tables include the
following non-GAAP financial measures:
Adjusted gross margin
Open energy gross margin
Open wholesale gross margin
Open gross margin
Adjusted contribution margin
Open contribution margin
Adjusted other general and administrative expenses
EBITDA
Adjusted EBITDA
Open EBITDA
Adjusted cash flow provided by continuing operations
Free cash flow provided by continuing operations
Adjusted net debt
A reconciliation of these financial measures and the most directly
comparable GAAP measures is included above or in the attached financial
tables. Additional information regarding these measures, including a
discussion of their usefulness and purpose, is included in the Form 8-K
furnished along with this press release.
WEBCAST OF EARNINGS CONFERENCE CALL
Reliant Energy has scheduled its fourth-quarter 2006 earnings
conference call for Tuesday February 27, 2007, at 9 a.m. CT. Interested
parties may listen to a live audio broadcast of the conference call at
http://www.reliant.com in the investors section. A replay of the call can be
accessed approximately two hours after the completion of the call. A copy
of the presentation accompanying the call is also available at this Website
address.
Reliant Energy, Inc. (NYSE: RRI) based in Houston, Texas, provides
electricity and energy services to retail and wholesale customers in the
United States. In Texas, the company provides service to approximately 1.9
million retail electricity customers, including residential and small
business customers and commercial, industrial, governmental and
institutional customers. Reliant also serves commercial, industrial,
governmental and institutional customers in the PJM (Pennsylvania, New
Jersey and Maryland) market.
The company is one of the largest independent power producers in the
nation with approximately 16,000 megawatts of power generation capacity in
operation across the United States. These strategically located generating
assets utilize natural gas, fuel oil and coal. For more information, visit
http://www.reliant.com.
This news release contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements are statements that contain projections,
estimates or assumptions about our revenues, income and other financial
items, and our plans and objectives for future operations or about our
future economic performance, transactions and dispositions and financings
related thereto. In many cases you can identify forward-looking statements
by terminology such as "anticipate," "estimate," "believe," "continue,"
"could," "intend," "may," "plan," "potential," "predict," "should," "will,"
"expect," "objective," "projection," "forecast," "goal," "guidance,"
"outlook," "effort," "target" and other similar words. However, the absence
of these words does not mean that the statements are not forward-looking.
Actual results may differ materially from those expressed or implied by
forward-looking statements as a result of many factors or events,
including, but not limited to, legislative and regulatory developments, the
outcome of pending lawsuits, governmental proceedings and investigations,
the effects of competition, financial market conditions, access to capital,
the timing and extent of changes in commodity prices and interest rates,
weather conditions, changes in our business plan and other factors we
discuss or reference to in the "Risk Factors" section of our most recent
Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
Each forward-looking statement speaks only as of the date of the
particular statement and we undertake no obligation to update or revise any
forward-looking statement, whether as a result of new information, future
events or otherwise.
Reliant Energy, Inc. and Subsidiaries
Consolidated Statements of Operations
(Thousands of Dollars, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 2006 2005
Revenues:
Revenues (including
$4,085, $108,768,
$191,405 and $(218,081)
unrealized gains
(losses)
on energy derivatives) $2,344,229 $2,600,265 $10,877,385 $9,711,995
Expenses:
Purchased power, fuel and
cost of gas sold
(including $44,963,
$(209,637), $(422,325)
and $25,846 unrealized gains
(losses) on energy
derivatives) 1,961,979 2,488,475 9,435,892 8,365,921
Operation and maintenance 197,104 180,849 833,094 736,954
Selling and marketing 32,747 28,930 124,485 95,256
Bad debt expense 19,024 14,181 86,933 58,008
Total 2,210,854 2,712,435 10,480,404 9,256,139
Contribution Margin 133,375 (112,170) 396,981 455,856
Other general and
administrative 53,311 7,393 172,559 139,222
Western states and
Cornerstone settlements - 8,631 35,000 359,436
(Gains) losses on sales
of assets and emission
allowances, net 401 (52,322) (159,386) (168,114)
Depreciation and
amortization 92,763 109,341 372,616 445,871
Total 146,475 73,043 420,789 776,415
Operating Loss (13,100) (185,213) (23,808) (320,559)
Other Income (Expense):
Income of equity
investments, net 2,136 2,273 5,791 25,458
Debt conversion expense (37,257) - (37,257) -
Other, net (463) 146 203 (22,672)
Loss Before Interest and
Taxes (48,684) (182,794) (55,071) (317,773)
Interest expense (115,421) (105,601) (427,867) (399,281)
Interest income 11,533 7,947 34,317 23,227
Loss from Continuing
Operations Before Income
Taxes (152,572) (280,448) (448,621) (693,827)
Income tax benefit (96,043) (97,851) (121,929) (253,080)
Loss from Continuing
Operations (56,529) (182,597) (326,692) (440,747)
Income (loss) from
discontinued operations 2,823 49,145 (2,088) 110,799
Loss Before Cumulative
Effect of Accounting
Change (53,706) (133,452) (328,780) (329,948)
Cumulative effect of
accounting changes, net
of tax - (608) 968 (608)
Net Loss $(53,706) $(134,060) $(327,812) $(330,556)
Basic Earnings (Loss) Per
Share:
Loss from continuing
operations $(0.18) $(0.60) $(1.06) $(1.46)
Income (loss) from
discontinued operations 0.01 0.16 (0.01) 0.37
Cumulative effect of
accounting changes, net
of tax - - - -
Net loss $(0.17) $(0.44) $(1.07) $(1.09)
Diluted Earnings (Loss)
Per Share:
Loss from continuing
operations $(0.18) $(0.60) $(1.06) $(1.46)
Income (loss) from
discontinued operations 0.01 0.16 (0.01) 0.37
Cumulative effect of
accounting changes, net
of tax - - - -
Net loss $(0.17) $(0.44) $(1.07) $(1.09)
Weighted Average Common
Shares Outstanding (in
thousands):
- Basic 310,381 304,849 307,705 302,409
- Diluted 310,381 304,849 307,705 302,409
Reference is made to Reliant Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2005.
Reliant Energy, Inc. and Subsidiaries
Results of Operations by Segment - As Reported
(Millions of Dollars)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 Change 2006 2005 Change
Retail Energy:
Revenues $1,722 $1,736 $(14) $8,197 $7,045 $1,152
Purchased power 1,497 1,792 (295) 7,500 6,362 1,138
Gross margin (1) 225 (56) 281 697 683 14
Operation and maintenance 57 48 9 234 190 44
Selling and marketing 32 29 3 124 95 29
Bad debt expense 19 14 5 89 56 33
Contribution margin -
Retail Energy 117 (147) 264 250 342 (92)
Wholesale Energy:
Revenues 745 1,044 (299) 3,250 3,286 (36)
Purchased power, fuel and
cost of gas sold 588 878 (290) 2,507 2,630 (123)
Gross margin (1) 157 166 (9) 743 656 87
Operation and maintenance 141 132 9 599 544 55
Bad debt expense - - - (2) 2 (4)
Contribution margin -
Wholesale Energy 16 34 (18) 146 110 36
Other Operations:
Revenues 1 2 (1) 2 6 (4)
Purchased power, fuel and
cost of gas sold - - - - (1) 1
Gross margin (1) 1 2 (1) 2 7 (5)
Operation and maintenance 1 1 - 1 3 (2)
Contribution margin - Other
Operations - 1 (1) 1 4 (3)
Eliminations:
Revenues (124) (182) 58 (572) (625) 53
Purchased power, fuel and
cost of gas sold (123) (182) 59 (571) (625) 54
Gross margin (1) (1) - (1) (1) - (1)
Operation and maintenance (1) - (1) (1) - (1)
Contribution margin - - - - - -
Consolidated:
Revenues 2,344 2,600 (256) 10,877 9,712 1,165
Purchased power, fuel and
cost of gas sold 1,962 2,488 (526) 9,436 8,366 1,070
Gross margin (1) 382 112 270 1,441 1,346 95
Operation and maintenance 198 181 17 833 737 96
Selling and marketing 32 29 3 124 95 29
Bad debt expense 19 14 5 87 58 29
Contribution margin -
Consolidated 133 (112) 245 397 456 (59)
Other general and
administrative 53 8 45 172 140 32
Western states and
Cornerstone settlements - 8 (8) 35 359 (324)
Gains on sales of assets and
emission allowances, net - (52) 52 (159) (168) 9
Depreciation and
amortization 93 110 (17) 373 446 (73)
Total 146 74 72 421 777 (356)
Operating loss (13) (186) 173 (24) (321) 297
Income of equity
investments, net 2 3 (1) 6 26 (20)
Debt conversion expense (37) - (37) (37) - (37)
Other, net - - - - (23) 23
Loss before interest and
income taxes (48) (183) 135 (55) (318) 263
Interest expense (116) (106) (10) (428) (399) (29)
Interest income 11 8 3 34 23 11
Loss from continuing
operations before income
taxes (153) (281) 128 (449) (694) 245
Income tax benefit (96) (98) 2 (122) (253) 131
Loss from continuing
operations (57) (183) 126 (327) (441) 114
Income (loss) from
discontinued operations 3 49 (46) (2) 111 (113)
Cumulative effect of
accounting change, net of
tax - (1) 1 1 (1) 2
Net loss $(54) $(135) $81 $(328) $(331) $3
(1) Gross margin (revenues less purchased power, fuel and cost of gas
sold) excludes depreciation, amortization, labor and other product
costs.
Reference is made to Reliant Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2005.
Reliant Energy, Inc. and Subsidiaries
Results of Operations by Segment - Adjusted and Open
(Millions of Dollars)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 Change 2006 2005 Change
Retail Energy:
Gross margin (1) $225 $(56) $281 $697 $683 $14
Unrealized (gains)
losses on energy
derivatives (81) 150 (231) 287 69 218
Adjusted gross margin
- Retail Energy 144 94 50 984 752 232
Operation and
maintenance 57 48 9 234 190 44
Selling and marketing 32 29 3 124 95 29
Bad debt expense 19 14 5 89 56 33
Adjusted contribution
margin - Retail
Energy 36 3 33 537 411 126
Wholesale Energy:
Gross margin (1) 157 166 (9) 743 656 87
Unrealized (gains)
losses on energy
derivatives 32 (49) 81 (56) 123 (179)
Changes in California-
related receivables
and reserves - - - - (1) 1
Historical wholesale
hedges 41 231 (190) 376 484 (108)
Open gross margin -
Wholesale Energy 230 348 (118) 1,063 1,262 (199)
Operation and
maintenance 141 132 9 599 544 55
Bad debt expense - - - (2) 2 (4)
Open contribution
margin - Wholesale
Energy 89 216 (127) 466 716 (250)
Other Operations:
Gross margin (1) 1 2 (1) 2 7 (5)
Operation and
maintenance 1 1 - 1 3 (2)
Contribution margin -
Other Operations - 1 (1) 1 4 (3)
Eliminations:
Gross margin (1) (1) - (1) (1) - (1)
Operation and
maintenance (1) - (1) (1) - (1)
Contribution margin - - - - - -
Consolidated:
Adjusted gross margin
- Retail Energy 144 94 50 984 752 232
Open gross margin -
Wholesale Energy 230 348 (118) 1,063 1,262 (199)
Gross margin - Other
Operations 1 2 (1) 2 7 (5)
Gross margin -
Eliminations (1) - (1) (1) - (1)
Open gross margin -
Consolidated 374 444 (70) 2,048 2,021 27
Operation and
maintenance 198 181 17 833 737 96
Selling and marketing 32 29 3 124 95 29
Bad debt expense 19 14 5 87 58 29
Open contribution
margin -
Consolidated 125 220 (95) 1,004 1,131 (127)
Adjusted other general
and administrative (53) (8) (45) (172) (132)(2) (40)
Income of equity
investments, net 2 3 (1) 6 26 (20)
Other, net - - - - (23) 23
Open EBITDA 74(3) 215(4) (141) 838(3)(5) 1,002(5) (164)
Historical wholesale
hedges:
Power (42) (204) 162 (326) (525) 199
Fuel 6 18 (12) 25 123 (98)
Tolling/other (5) (45) 40 (75) (82) 7
(41) (231) 190 (376) (484) 108
Gains on sales of
assets and emission
allowances, net - 52 (52) 159 168 (9)
Adjusted EBITDA $33 $36 $(3) $621 $686 $(65)
Unrealized gains
(losses) on energy
derivatives 49 (101) 150 (231) (192) (39)
Western states and
Cornerstone
settlements - (8) 8 (35) (359) 324
Changes in California-
related receivables
and reserves - - - - 1 (1)
Settlement of
shareholder class
action lawsuits - - - - (8) 8
Debt conversion
expense (37) - (37) (37) - (37)
EBITDA $45 $(73) $118 $318 $128 $190
Depreciation and
amortization (93) (110) 17 (373) (446) 73
Interest expense (116) (106) (10) (428) (399) (29)
Interest income 11 8 3 34 23 11
Loss from continuing
operations before
income taxes $(153) $(281) $128 $(449) $(694) $245
(1) Gross margin (revenues less purchased power, fuel and cost of gas
sold) excludes depreciation, amortization, labor and other product
costs.
(2) Adjusted other general and administrative excludes $8 million for
settlement of shareholder class action lawsuits for the twelve months
ended December 31, 2005.
(3) Open EBITDA excludes $37 million for debt conversion expense for the
three and twelve months ended December 31, 2006.
(4) Open EBITDA excludes $8 million for the Cornerstone settlement for
the three months ended December 31, 2005.
(5) Open EBITDA excludes $35 million and $359 million for the Western
states and Cornerstone settlements for the twelve months ended
December 31, 2006 and 2005, respectively.
Reference is made to Reliant Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2005.
Reliant Energy, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Thousands of Dollars)
December 31, December 31,
2006 2005
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $463,909 $88,397
Restricted cash 24,980 26,906
Accounts and notes receivable,
principally customer, net of
allowance of $33,332 and
$34,054 1,043,637 1,171,673
Inventory 275,437 299,099
Derivative assets 489,726 725,964
Margin deposits 452,605 1,716,035
Accumulated deferred income taxes 279,479 361,547
Prepayments and other current
assets 141,016 137,498
Current assets of discontinued
operations 2,460 203,332
Total current assets 3,173,249 4,730,451
Property, Plant and Equipment, net 5,741,995 5,934,060
Other Assets:
Goodwill 381,594 386,594
Other intangibles, net 423,745 510,582
Derivative assets 203,857 527,799
Accumulated deferred income taxes 87,858 32,527
Prepaid lease 264,328 259,412
Other 290,507 306,585
Long-term assets of discontinued
operations - 880,796
Total other assets 1,651,889 2,904,295
Total Assets $10,567,133 $13,568,806
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt
and short-term borrowings $355,264 $789,325
Accounts payable, principally
trade 664,630 886,965
Derivative liabilities 1,164,809 1,219,954
Margin deposits 16,490 15,588
Other 488,764 397,942
Current liabilities of
discontinued operations 3,286 96,456
Total current liabilities 2,693,243 3,406,230
Other Liabilities:
Derivative liabilities 420,534 812,695
Other 324,145 389,083
Long-term liabilities of
discontinued operations - 779,678
Total other liabilities 744,679 1,981,456
Long-term Debt 3,177,691 4,317,427
Commitments and Contingencies
Temporary Equity Stock-based
Compensation 1,647 -
Stockholders' Equity:
Preferred stock; par value $0.001
per share (125,000,000 shares
authorized; none
outstanding) - -
Common stock; par value $0.001 per
share (2,000,000,000 shares
authorized; 337,623,392
and 304,900,193 issued) 99 66
Additional paid-in capital 6,174,665 5,846,747
Retained deficit (2,026,316) (1,698,504)
Accumulated other comprehensive
loss (198,575) (284,281)
Accumulated other comprehensive
loss of discontinued operations - (335)
Total stockholders' equity 3,949,873 3,863,693
Total Liabilities and Equity $10,567,133 $13,568,806
Reference is made to Reliant Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2005.
Reliant Energy, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Twelve Months Ended
December 31,
2006 2005
(in thousands)
Cash Flows from Operating Activities:
Net loss $(327,812) $(330,556)
(Income) loss from discontinued
operations 2,088 (110,799)
Net loss from continuing operations
and cumulative effect of accounting
change (325,724) (441,355)
Adjustments to Reconcile Net Loss to
Net Cash Provided by (Used in)
Operating Activities:
Cumulative effect of accounting
change (968) 608
Depreciation and amortization 372,616 445,871
Deferred income taxes (152,431) (278,992)
Net changes in energy derivatives 316,742 192,235
Amortization of deferred financing
costs 31,508 15,110
Debt conversion expense 37,257 -
Gains on sales of assets and
emission allowances, net (159,386) (168,114)
Western states and Cornerstone
settlements 35,000 359,436
Income of equity investments, net (5,791) (25,458)
Other, net 12,590 27,498
Changes in other assets and
liabilities:
Accounts and notes receivable and
unbilled revenue, net 129,161 (109,736)
Inventory 18,157 (42,253)
Margin deposits, net 1,264,332 (1,213,940)
Net derivative assets and liabilities (30,313) 10,978
Western states and Cornerstone
settlement payments (159,885) -
Accounts payable (97,117) 144,466
Other current assets 17,284 33,071
Other assets (35,373) (32,605)
Taxes payable/receivable 1,302 3,053
Other current liabilities 64,046 (34,479)
Other liabilities (2,963) 4,495
Net cash provided by (used in)
continuing operations from operating
activities 1,330,044 (1,110,111)
Net cash provided by (used in)
discontinued operations from
operating activities (54,171) 192,948
Net cash provided by (used in)
operating activities 1,275,873 (917,163)
Cash Flows from Investing Activities:
Capital expenditures (96,793) (82,296)
Proceeds from sales of assets, net 1,417 149,345
Proceeds from sales of emission
allowances 205,510 234,421
Purchases of emission allowances (22,575) (145,769)
Restricted cash 1,926 14,251
Other, net - 5,500
Net cash provided by continuing
operations from investing activities 89,485 175,452
Net cash provided by discontinued
operations from investing activities 967,566 130,700
Net cash provided by investing
activities 1,057,051 306,152
Cash Flows from Financing Activities:
Proceeds from long-term debt 400,000 299,000
Payments of long-term debt (865,870) (148,333)
Increase (decrease) in short-term
borrowings and revolving credit
facilities, net (825,554) 407,000
Premium paid for conversion of
senior subordinated notes (36,157) -
Payments of financing costs (16,673) (1,198)
Proceeds from issuances of stock 24,842 37,885
Net cash provided by (used in)
continuing operations from financing
activities (1,319,412) 594,354
Net cash used in discontinued
operations from financing activities (638,000) -
Net cash provided by (used in)
financing activities (1,957,412) 594,354
Net Change in Cash and Cash
Equivalents 375,512 (16,657)
Cash and Cash Equivalents at
Beginning of Period 88,397 105,054
Cash and Cash Equivalents at End of
Period $463,909 $88,397
Free Cash Flow Reconciliation
(Unaudited)
Twelve Months Ended
December 31,
2006 2005
(in millions)
Operating cash flow from continuing
operations $1,330 $(1,110)
Western states and Cornerstone
settlement payments 160 -
Change in margin deposits, net (1,264) 1,214
Adjusted cash flow provided by
continuing operations 226 104
Capital expenditures (97) (82)
Proceeds from sales of emission
allowances 205 234
Purchases of emission allowances (23) (146)
Free cash flow provided by
continuing operations $311 $110
Reference is made to Reliant Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2005.
Reliant Energy, Inc. and Subsidiaries
Retail Energy Data
(Unaudited)
Three Months Ended Twelve Months
December 31, Ended December 31,
2006 2005 Change 2006 2005 Change
(in millions) (in millions)
Mass gross margin (1) $166 $117 $49 $776 $689 $87
Commercial and Industrial gross
margin (10) (11) 1 208 78 130
Market usage adjustments (12) (12) - - (15) 15
Total retail energy gross margin(1),
excluding unrealized gains
(losses) on energy derivatives 144 94 50 984 752 232
Unrealized gains (losses) on
energy derivatives 81 (150) 231 (287) (69) (218)
Total retail energy
gross margin (1) 225 (56) 281 697 683 14
Operation and maintenance 57 48 9 234 190 44
Selling and marketing 32 29 3 124 95 29
Bad debt expense 19 14 5 89 56 33
Total retail energy
contribution margin $117 $(147) $264 $250 $342 $(92)
Three Months Ended Twelve Months
December 31, Ended December 31,
2006 2005 2006 2005
(gigawatt hours) (gigawatt hours)
Electricity Sales to
End-Use Retail
Customers:
Mass:
Residential:
Houston 2,949 3,587 15,447 18,029
Non-Houston 1,709 1,556 7,955 6,504
Small Business:
Houston 723 763 3,587 3,640
Non-Houston 315 294 1,375 891
Total Mass 5,696 6,200 28,364 29,064
Commercial and Industrial:
ERCOT (2) 8,013 7,290 33,393 32,309
Non-ERCOT 1,076 1,613 5,572 6,152
Total Commercial and Industrial 9,089 8,903 38,965 38,461
Market usage adjustments (185) 79 8 (250)
Total 14,600 15,182 67,337 67,275
Three Months Ended Twelve Months
December 31, Ended December 31,
2006 2005 2006 2005
(in thousands, (in thousands,
metered locations) metered locations)
Weighted Average Retail
Customer Count:
Mass:
Residential:
Houston 1,107 1,213 1,164 1,256
Non-Houston 539 442 504 390
Small Business:
Houston 126 137 132 139
Non-Houston 31 23 29 17
Total Mass 1,803 1,815 1,829 1,802
Commercial and Industrial:
ERCOT (2) 75 67 74 70
Non-ERCOT 1 2 1 2
Total Commercial and Industrial 76 69 75 72
Total 1,879 1,884 1,904 1,874
December 31, December 31,
2006 2005
(in thousands, metered locations)
Retail Customers:
Mass:
Residential:
Houston 1,095 1,213
Non-Houston 547 462
Small Business:
Houston 124 137
Non-Houston 33 29
Total Mass 1,799 1,841
Commercial and Industrial:
ERCOT (2) 75 70
Non-ERCOT 1 2
Total Commercial and Industrial 76 72
Total 1,875 1,913
(1) Gross margin (revenues less purchased power) excludes depreciation,
amortization, labor and other product costs.
(2) Includes customers of the Texas General Land Office for whom we
provide services.
Reference is made to Reliant Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2005.
Reliant Energy, Inc. and Subsidiaries
Wholesale Energy Data
(Unaudited)
Three Months Ended December 31,
2006 2005
GWh %Economic(1) GWh %Economic(1)
Economic Generation
Volume (2):
PJM Coal 5,919.1 80% 5,955.0 81%
MISO Coal 1,807.1 65% 1,823.7 65%
PJM/MISO Gas 60.8 1% 174.9 3%
West 221.5 3% 917.8 13%
Other 1,375.1 79% 1,695.1 51%
Total 9,383.6 38% 10,566.5 40%
Commercial Capacity
Factor (3):
PJM Coal 87.7% 79.2%
MISO Coal 87.0% 76.3%
PJM/MISO Gas 85.5% 75.9%
West 99.7% 98.7%
Other 90.3% 84.4%
Total 88.2% 81.2%
Generation Volume (4): GWh GWh
PJM Coal 5,192.2 4,716.2
MISO Coal 1,572.6 1,391.0
PJM/MISO Gas 52.0 132.7
West 220.9 905.8
Other 1,241.2 1,429.9
Total 8,278.9 8,575.6
Unit Margin ($/MWh) (5):
PJM Coal $21.96 $43.68
MISO Coal 16.53 34.51
PJM/MISO Gas - 7.54
West NM(6) 1.10
Other - 5.59
Weighted Average Total $16.55 $30.79
Twelve Months Ended December 31,
2006 2005
GWh %Economic(1) GWh %Economic(1)
Economic Generation
Volume (2):
PJM Coal 23,541.9 81% 23,152.2 81%
MISO Coal 6,525.1 59% 7,047.2 63%
PJM/MISO Gas 998.0 3% 1,562.9 6%
West 2,830.0 11% 2,032.0 9%
Other 5,731.1 86% 6,005.9 56%
Total 39,626.1 39% 39,800.2 39%
Commercial Capacity
Factor (3):
PJM Coal 82.9% 78.9%
MISO Coal 85.5% 83.3%
PJM/MISO Gas 91.8% 77.1%
West 86.1% 95.9%
Other 91.9% 91.1%
Total 85.1% 82.3%
Generation Volume (4): GWh GWh
PJM Coal 19,522.3 18,259.3
MISO Coal 5,577.7 5,871.4
PJM/MISO Gas 916.4 1,205.5
West 2,435.8 1,948.5
Other 5,268.8 5,474.3
Total 33,721.0 32,759.0
Unit Margin ($/MWh) (5):
PJM Coal $27.05 $35.05
MISO Coal 21.33 33.38
PJM/MISO Gas 40.38 31.52
West 4.93 NM(6)
Other 0.76 4.93
Weighted Average Total $20.76 $27.20
Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 Change 2006 2005 Change
Open Energy Gross Margin (7): (in millions) (in millions)
PJM Coal $114 $206 $(92) $528 $640 $(112)
MISO Coal 26 48 (22) 119 196 (77)
PJM/MISO Gas - 1 (1) 37 38 (1)
West (3) 1 (4) 12 (10) 22
Other - 8 (8) 4 27 (23)
Total Open Energy
Gross Margin 137 264 (127) 700 891 (191)
Other Margin (8):
PJM Coal 9 14 (5) 37 41 (4)
MISO Coal 1 1 - 10 10 -
PJM/MISO Gas 19 11 8 50 42 8
West 33 39 (6) 155 187 (32)
Other 31 19 12 111 91 20
Total Other Margin 93 84 9 363 371 (8)
Total Open Wholesale
Gross Margin 230 348 (118) 1,063 1,262 (199)
Historical Wholesale
Hedges (9):
Power (42) (204) 162 (326) (525) 199
Fuel 6 18 (12) 25 123 (98)
Tolling/other (5) (45) 40 (75) (82) 7
Total Historical Wholesale
Hedges (41) (231) 190 (376) (484) 108
Unrealized gains (losses)
on energy derivatives (32) 49 (81) 56 (123) 179
Changes in California-related
receivables and reserves - - - - 1 (1)
Total Wholesale Energy
Gross Margin 157 166 (9) 743 656 87
Operation and maintenance 141 132 9 599 544 55
Bad debt expense - - - (2) 2 (4)
Total Wholesale Energy
Contribution Margin $16 $34 $(18) $146 $110 $36
(1) Represents economic generation volume (hours) divided by maximum
generation hours (maximum plant capacity X 8,760 hours).
(2) Economic generation volume is estimated generation at 100% plant
availability based on an hourly analysis of when it is economical to
generate based on the price of power, fuel, emission allowances and
variable operating costs.
(3) Commercial capacity factor is the generation volume divided by
economic generation.
(4) Excludes generation volume related to power purchase agreements,
including tolling agreements.
(5) Represents open energy gross margin divided by generation volume.
(6) NM is not meaningful.
(7) Open energy gross margin is calculated using the power sales
prices received by the plants less delivered spot fuel prices.
(8) Other margin represents power purchase agreements, capacity
payments and ancillary revenues. In addition, other margin includes
settlement of forward power and fuel sales and purchases for
the West region.
(9) Historical wholesale hedges were entered into to primarily hedge
the economics of our wholesale operations. These amounts primarily
relate to settlements of forward power and fuel hedges, long-term
tolling purchases, long-term natural gas transportation contracts,
storage contracts and our legacy energy trading. These amounts are
derived based on methodology consistent with the calculation of open
energy gross margin.
Reference is made to Reliant Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2005.
Reliant Energy, Inc. and Subsidiaries
PJM Coal and MISO Coal (1)
(Unaudited)
Summer/Winter
Average Heat Q4 economic
Capacity Rate generation volume(GWh)
Unit Name (MW) (MMBtu/MWh) 2006 2005
Cheswick 580 10.0 940.4 860.2
Conemaugh (2) 280 9.4 606.2 613.5
Elrama 465 11.3 771.5 790.0
Keystone (2) 282 9.5 592.1 600.1
Portland 400 10.1 600.9 662.9
Seward 521 9.7 1,077.3 1,119.5
Shawville (2) 566 10.3 1,027.6 947.6
Titus 246 10.8 303.1 361.2
PJM Coal Total 3,340 5,919.1 5,955.0
Q4 commercial capacity factor Q4 generation volume (GWh)
Unit Name 2006 2005 2006 2005
Cheswick 82.3% 92.5% 774.1 796.1
Conemaugh (2) 96.4% 76.5% 584.2 469.1
Elrama 79.3% 72.4% 611.6 571.9
Keystone (2) 99.9% 99.7% 591.4 598.4
Portland 93.4% 85.6% 561.0 567.2
Seward 88.1% 46.9% 949.0 525.5
Shawville (2) 84.2% 89.4% 865.3 846.9
Titus 84.3% 94.4% 255.6 341.1
PJM Coal Total 87.7% 79.2% 5,192.2 4,716.2
Summer/Winter
Average Heat Q4 economic
Capacity Rate generation volume(GWh)
Unit Name (MW) (MMBtu/MWh) 2006 2005
Avon Lake 721 9.8 1,069.1 1,165.4
New Castle 328 10.7 407.0 357.0
Niles 208 10.5 331.0 301.3
MISO Coal Total 1,257 1,807.1 1,823.7
Q4 commercial capacity factor Q4 generation volume (GWh)
Unit Name 2006 2005 2006 2005
Avon Lake 92.8% 70.6% 992.4 822.8
New Castle 94.9% 82.5% 386.1 294.5
Niles 58.6% 90.8% 194.1 273.7
MISO Coal Total 87.0% 76.3% 1,572.6 1,391.0
Summer/Winter
Average Heat Q4 YTD economic
Capacity Rate generation volume(GWh)
Unit Name (MW) (MMBtu/MWh) 2006 2005
Cheswick 580 10.0 3,716.4 3,313.7
Conemaugh (2) 280 9.4 2,417.9 2,414.0
Elrama 465 11.3 2,975.9 2,805.7
Keystone (2) 282 9.5 2,351.1 2,374.9
Portland 400 10.1 2,472.6 2,600.3
Seward 521 9.7 4,351.0 4,178.9
Shawville (2) 566 10.3 3,986.1 4,047.6
Titus 246 10.8 1,270.9 1,417.1
PJM Coal Total 3,340 23,541.9 23,152.2
Q4 YTD commercial Q4 YTD generation
capacity factor volume (GWh)
Unit Name 2006 2005 2006 2005
Cheswick 75.8% 87.2% 2,815.4 2,889.7
Conemaugh (2) 97.2% 88.2% 2,350.6 2,128.9
Elrama 72.3% 56.8% 2,151.9 1,592.3
Keystone (2) 90.2% 94.6% 2,121.4 2,245.9
Portland 87.4% 83.4% 2,161.5 2,169.1
Seward 74.7% 66.1% 3,251.2 2,761.3
Shawville (2) 88.0% 79.0% 3,508.5 3,198.9
Titus 91.4% 89.8% 1,161.8 1,273.2
PJM Coal Total 82.9% 78.9% 19,522.3 18,259.3
Summer/Winter
Average Heat Q4 YTD economic
Capacity Rate generation volume(GWh)
Unit Name (MW) (MMBtu/MWh) 2006 2005
Avon Lake 721 9.8 4,000.5 4,340.9
New Castle 328 10.7 1,374.0 1,520.4
Niles 208 10.5 1,150.6 1,185.9
MISO Coal Total 1,257 6,525.1 7,047.2
Q4 YTD commercial Q4 YTD generation
capacity factor volume (GWh)
Unit Name 2006 2005 2006 2005
Avon Lake 88.7% 81.6% 3,548.2 3,541.5
New Castle 82.9% 86.5% 1,138.6 1,314.9
Niles 77.4% 85.6% 890.9 1,015.0
MISO Coal Total 85.5% 83.3% 5,577.7 5,871.4
(1) Unless otherwise indicated, the Company owns a 100% interest in each
facility listed.
(2) The Company leases a 100% interest in the Shawville facility, a
16.67% interest in the Keystone facility and a 16.45% interest in the
Conemaugh facility under facility interest lease agreements, which
expire in 2026, 2034 and 2034, respectively.
Reference is made to Reliant Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2005.
Reliant Energy, Inc. and Subsidiaries
PJM/MISO Gas (1)
(Unaudited)
Summer/Winter
Average Heat Q4 economic
Capacity Rate generation volume(GWh)
Unit Name (MW) (MMBtu/MWh) 2006 2005
Aurora 942 10.5 3.6 17.2
Blossburg 23 14.6 0.1 1.4
Brunot Island 315 10.4 - 2.8
Gilbert 614 11.0 4.8 15.3
Glen Gardner 184 14.6 - 1.4
Hamilton 23 14.8 - 0.2
Hunterstown 70 14.8 0.2 1.6
Hunterstown CCGT 833 7.0 47.5 108.3
Mountain 47 14.3 1.7 2.5
Orrtanna 23 14.4 - 0.8
Portland 185 11.2 - 16.9
Sayreville 264 13.8 - 3.0
Shawnee 23 14.0 - -
Shawville 5-7 (2) 6 10.2 - -
Titus 35 17.4 - 0.2
Tolna 47 14.2 - 0.3
Werner 252 13.8 - 3.0
Shelby 356 9.8 2.9 -
PJM/MISO Gas Total 4,242 60.8 174.9
Q4 commercial capacity factor Q4 generation volume (GWh)
Unit Name 2006 2005 2006 2005
Aurora 11.1% 20.3% 0.4 3.5
Blossburg 100.0% 100.0% 0.1 1.4
Brunot Island 0.0% 100.0% - 2.8
Gilbert 75.0% 32.0% 3.6 4.9
Glen Gardner 0.0% 100.0% - 1.4
Hamilton 0.0% 100.0% - 0.2
Hunterstown 100.0% 100.0% 0.2 1.6
Hunterstown CCGT 96.8% 86.6% 46.0 93.8
Mountain 100.0% 96.0% 1.7 2.4
Orrtanna 0.0% 100.0% - 0.8
Portland 0.0% 100.0% - 16.9
Sayreville 0.0% 26.7% - 0.8
Shawnee 0.0% 0.0% - -
Shawville 5-7 (2) 0.0% 0.0% - -
Titus 0.0% 100.0% - 0.2
Tolna 0.0% 66.7% - 0.2
Werner 0.0% 60.0% - 1.8
Shelby 0.0% 0.0% - -
PJM/MISO Gas Total 85.5% 75.9% 52.0 132.7
Summer/Winter
Average Heat Q4 YTD economic
Capacity Rate generation volume(GWh)
Unit Name (MW) (MMBtu/MWh) 2006 2005
Aurora 942 10.5 48.7 120.5
Blossburg 23 14.6 1.9 4.3
Brunot Island 315 10.4 6.4 7.8
Gilbert 614 11.0 99.6 220.2
Glen Gardner 184 14.6 8.1 9.0
Hamilton 23 14.8 1.4 1.4
Hunterstown 70 14.8 4.3 8.0
Hunterstown CCGT 833 7.0 746.3 1,006.6
Mountain 47 14.3 11.0 8.3
Orrtanna 23 14.4 1.8 2.4
Portland 185 11.2 8.0 58.3
Sayreville 264 13.8 21.9 12.7
Shawnee 23 14.0 0.2 0.3
Shawville 5-7 (2) 6 10.2 - -
Titus 35 17.4 - 0.8
Tolna 47 14.2 3.1 11.0
Werner 252 13.8 5.4 10.3
Shelby 356 9.8 29.9 81.0
PJM/MISO Gas Total 4,242 998.0 1,562.9
Q4 YTD commercial Q4 YTD generation
capacity factor volume (GWh)
Unit Name 2006 2005 2006 2005
Aurora 81.3% 84.2% 39.6 101.5
Blossburg 100.0% 100.0% 1.9 4.3
Brunot Island 98.4% 100.0% 6.3 7.8
Gilbert 61.0% 78.2% 60.8 172.1
Glen Gardner 97.5% 94.4% 7.9 8.5
Hamilton 100.0% 100.0% 1.4 1.4
Hunterstown 100.0% 100.0% 4.3 8.0
Hunterstown CCGT 97.0% 71.7% 723.9 721.8
Mountain 100.0% 98.8% 11.0 8.2
Orrtanna 94.4% 100.0% 1.7 2.4
Portland 85.0% 99.1% 6.8 57.8
Sayreville 90.0% 78.7% 19.7 10.0
Shawnee 100.0% 100.0% 0.2 0.3
Shawville 5-7 (2) 0.0% 0.0% - -
Titus 0.0% 100.0% - 0.8
Tolna 100.0% 96.4% 3.1 10.6
Werner 98.1% 87.4% 5.3 9.0
Shelby 75.3% 100.0% 22.5 81.0
PJM/MISO Gas Total 91.8% 77.1% 916.4 1,205.5
(1) Unless otherwise indicated, the Company owns a 100% interest in each
facility listed.
(2) The Company leases a 100% interest in the Shawville facility under
facility interest lease agreement, which expires in 2026.
Reference is made to Reliant Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2005.
Reliant Energy, Inc. and Subsidiaries
West and Other (1)
(Unaudited)
Summer/Winter
Average Heat Q4 economic
Capacity Rate generation volume(GWh)
Unit Name (MW) (MMBtu/MWh) 2006 2005
Bighorn (2) 598 7.2 - 692.9
Coolwater 622 10.1 187.5 89.3
Ellwood (2) 54 13.3 - -
Etiwanda (2) 640 10.0 - -
Mandalay (2) 560 10.9 34.0 108.5
Ormond Beach 1,516 9.6 - 27.1
West Total 3,990 221.5 917.8
Q4 commercial capacity factor Q4 generation volume (GWh)
Unit Name 2006 2005 2006 2005
Bighorn (2) 0.0% 98.3% - 680.9
Coolwater 99.7% 100.0% 186.9 89.3
Ellwood (2) 0.0% 0.0% - -
Etiwanda (2) 0.0% 0.0% - -
Mandalay (2) 100.0% 100.0% 34.0 108.5
Ormond Beach 0.0% 100.0% - 27.1
West Total 99.7% 98.7% 220.9 905.8
Summer/Winter
Average Heat Q4 economic
Capacity Rate generation volume(GWh)
Unit Name (MW) (MMBtu/MWh) 2006 2005
Channelview 830 6.1 1,375.1 1,310.3
Indian River (2) 587 10.5 - 353.5
Osceola (2) 470 11.0 - 31.3
Other Total 1,887 1,375.1 1,695.1
Q4 commercial capacity factor Q4 generation volume (GWh)
Unit Name 2006 2005 2006 2005
Channelview 90.3% 100.0% 1,241.2 1,310.3
Indian River (2) 0.0% 30.2% - 106.8
Osceola (2) 0.0% 40.9% - 12.8
Other Total 90.3% 84.4% 1,241.2 1,429.9
Summer/Winter
Average Heat Q4 YTD economic
Capacity Rate generation volume(GWh)
Unit Name (MW) (MMBtu/MWh) 2006 2005
Bighorn (2) 598 7.2 933.9 692.9
Coolwater 622 10.1 715.0 393.6
Ellwood (2) 54 13.3 0.1 0.1
Etiwanda (2) 640 10.0 - -
Mandalay (2) 560 10.9 356.2 351.0
Ormond Beach 1,516 9.6 824.8 594.4
West Total 3,990 2,830.0 2,032.0
Q4 YTD commercial Q4 YTD generation
capacity factor volume (GWh)
Unit Name 2006 2005 2006 2005
Bighorn (2) 99.5% 98.3% 929.4 680.9
Coolwater 96.1% 100.0% 687.0 393.6
Ellwood (2) 100.0% 100.0% 0.1 0.1
Etiwanda (2) 0.0% 0.0% - -
Mandalay (2) 97.2% 99.5% 346.4 349.2
Ormond Beach 57.3% 88.3% 472.9 524.7
West Total 86.1% 95.9% 2,435.8 1,948.5
Summer/Winter
Average Heat Q4 YTD economic
Capacity Rate generation volume(GWh)
Unit Name (MW) (MMBtu/MWh) 2006 2005
Channelview 830 6.1 5,721.3 5,159.9
Indian River (2) 587 10.5 - 683.2
Osceola (2) 470 11.0 9.8 162.8
Other Total 1,887 5,731.1 6,005.9
Q4 YTD commercial Q4 YTD generation
capacity factor volume (GWh)
Unit Name 2006 2005 2006 2005
Channelview 91.9% 100.0% 5,259.0 5,159.9
Indian River (2) 0.0% 33.0% - 225.4
Osceola (2) 100.0% 54.7% 9.8 89.0
Other Total 91.9% 91.1% 5,268.8 5,474.3
(1) Unless otherwise indicated, the Company owns a 100% interest in each
facility listed.
(2) Excludes generation volume during periods the unit operated under
power purchase agreements.
Reference is made to Reliant Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2005.
Reliant Energy, Inc. and Subsidiaries
Adjusted Net Debt
(Unaudited)
(in millions)
December 31, 2006
Debt:
Senior secured revolver $-
Senior secured term loans 400
Senior secured notes 1,850
Convertible senior subordinated notes 2
Orion Power 12% notes (1) 439
PEDFA fixed-rate bonds for Seward
plant due 2036 500
Channelview 342
Retail working capital facility -
Warrants (1)
Other (2) 1
Total debt 3,533
REMA operating leases (off-balance sheet) 480
Total debt and debt equivalents (3) 4,013
Less:
Cash and cash equivalents (464)
Restricted cash (25)
Net margin deposits (436)
Adjusted Net Debt $3,088
(1) Orion 12% notes include purchase accounting adjustments of $39
million.
(2) Other subsidiary debt.
(3) Debt equivalents include off-balance sheet REMA leases of $480
million.
Reference is made to Reliant Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2005.
SOURCE Reliant Energy, Inc.
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Related links:
http://www.reliant.com/corporate
CONTACT:
Dennis Barber, investors, +1-713-497-3042, or
Pat Hammond, media, +1-713-497-7723, both of Reliant Energy, Inc.
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