HOUSTON, May 10 /PRNewswire-FirstCall/ -- Reliant Energy, Inc. reported
a loss from continuing operations before income taxes of $81 million for
the first quarter of 2006, compared to $54 million for the same period of
2005. The reported numbers include net gains from unrealized energy
derivatives of $23 million and $124 million, respectively, for 2006 and
2005.
"We are making good progress toward our priorities for 2006, which
include completing the transition to a fully competitive retail market in
Texas, converting to an open model in our wholesale business, improving the
commercial capacity factor of our generating plants and managing our
collateral exposure to reduce postings by $1 billion by year end," said
Joel Staff, chairman and chief executive officer. "Our commercial capacity
factor improved to 89 percent from 81 percent in the first quarter of 2005,
collateral postings have declined by nearly $400 million since the
beginning of the year, and we had better than expected performance in our
retail business. Additionally, in the first quarter, we completed the sale
of our New York City assets and repaid $952 million of debt," Staff added.
Open EBITDA (earnings before interest, income taxes, depreciation and
amortization) was $45 million for the first quarter of 2006, compared to
$52 million for the first quarter of 2005. Improvements in wholesale unit
margins and commercial capacity factors of the power plants were more than
offset by lower retail gross margin and higher expenses. Retail gross
margin was lower due to higher supply costs that were not recovered through
the price-to-beat revenue rate.
Adjusted EBITDA was $76 million for the first quarter of 2006, compared
to $21 million for the first quarter of 2005. The improvement to adjusted
EBITDA was primarily related to net gains from the sales of emission
allowances, partially offset by higher losses related to historical
wholesale hedges.
During the first quarter of 2006, the company reported a $228 million
use of cash in continuing operations from operating activities, compared to
$59 million for the same period of 2005. Free cash flow from continuing
operations after emission allowances activity was ($27) million for the
first quarter of 2006, compared to $141 million for the first quarter of
2005. The decline in free cash flow from continuing operations after
emission allowances activity was due to lower earnings, partially offset by
proceeds from the sale of emission allowances, and positive changes in
working capital, which were included in the 2005 period.
Reliant Energy recorded a $70 million valuation allowance against
deferred tax assets during the first quarter of 2006. While the company's
net operating loss carryforwards will not expire for twenty years, GAAP
prescribes specific procedures in valuing deferred tax assets and, as a
result of applying those procedures, a valuation allowance was required.
Reliant Energy's forward projections contemplate utilizing the net
operating loss carryforwards within the expiration period.
Reliant Energy's loss from continuing operations for the first quarter
of 2006 was $139 million compared to $41 million for the first quarter of
2005.
OUTLOOK
Reliant Energy's outlook for open EBITDA is $805 million, $1,137
million and $1,236 million for the years ending December 31, 2006, 2007 and
2008, respectively. Adjusted EBITDA, which includes the impact of
historical wholesale hedging activity and gains on the sales of emission
allowances is $467 million, $878 million and $1,117 million for the same
periods. Free cash flow from continuing operations after emission
allowances activity is ($85) million, $205 million and $380 million for the
years ending December 31, 2006, 2007 and 2008, respectively.
This outlook is based on forward commodity prices on March 24, 2006 and
assumptions and estimates by Reliant Energy.
Open EBITDA
Outlook Reconciliation
($ millions) 2006 2007 2008
Income from continuing operations
before income taxes (a) $38 $214 $348
Delivery of product underlying
the unrealized (gains) losses
on energy derivatives (352) (94) (8)
Depreciation and amortization 388 435 489
Interest expense, net 393 323 288
Adjusted EBITDA (a) $467 $878 $1,117
Historical wholesale hedges (b) 489 259 119
Gains on sales of emission
allowances (a),(c) (151) -- --
Open EBITDA (a) $805 $1,137 $1,236
(a) Certain factors that could affect GAAP financial measures are not
accessible on a forward-looking basis, but could be material to future
reported earnings.
(b) Historical wholesale hedges were entered into to primarily hedge the
economics of our wholesale operations. This amount primarily relates
to settlements of forward power and fuel hedges, long-term tolling
purchases, long-term natural gas transportation contracts, storage
contracts and our legacy energy trading. These amounts are derived
based on methodology consistent with the calculation of open EBITDA
through March 31, 2006 and forward commodity prices as of March 24,
2006.
(c) Sales through March 31, 2006.
Free Cash Flow from Continuing Operations Before and After
Emission Allowances Activity Outlook Reconciliation
($ millions) 2006 2007 2008
Operating cash flow from
continuing operations (a) $405 $541 $813
Change in margin deposits (b) (646) --- ---
Western states and Cornerstone
settlements 155 --- ---
Capital expenditures (c) (150) (224) (258)
Free cash flow from continuing
operations before emission
allowances activity ($236) $317 $555
Proceeds from sales of emission
allowances (b),(d) 188 --- ---
Purchases of emission allowances (37) (112) (175)
Free cash flow from continuing
operations after emission
allowances activity(e) ($85) $205 $380
(a) Outlook assumes no changes in working capital.
(b) Certain factors that could affect GAAP financial measures are not
accessible on a forward-looking basis, but could be material to future
reported earnings.
(c) Midpoint of outlook provided on February 8, 2006.
(d) Sales through March 31, 2006.
(e) Consistent with SEC guidance to the industry, purchases and sales of
emission allowances are classified as cash flows from investing
activities for GAAP purposes.
Adjusted and Open EBITDA Reconciliations
Three Months Ended March 31,
($ millions) 2006 2005
Loss from continuing operations before
income taxes ($81) ($54)
Depreciation and amortization 81 108
Interest expense, net 99 90
EBITDA 99 144
Changes in California-related receivables and
reserves --- 1
Unrealized gains on energy derivatives (a) (23) (124)
Adjusted EBITDA $76 $21
Historical wholesale hedges (b) 120 30
(Gains) losses on sales of assets and emission
allowances, net (151) 1
Open EBITDA $45 $52
(a) Reliant Energy uses derivative instruments to manage operational or
market constraints, to increase the return on its generation assets
and to execute its retail energy segment's supply procurement
strategy. Some derivative instruments receive mark-to-market
accounting treatment, which requires the company to record
gains/losses related to future periods based on current changes in
forward commodity prices. The company refers to these gains and
losses prior to settlement, as well as ineffectiveness on cash flow
hedges, as "unrealized gains/losses on energy derivatives." In some
cases, the related underlying transactions being hedged receive
accrual accounting treatment, resulting in a mismatch of accounting
treatments.
(b) Historical wholesale hedges were entered into to primarily hedge the
economics of our wholesale operations. This amount primarily relates
to settlements of forward power and fuel hedges, long-term tolling
purchases, long-term natural gas transportation contracts, storage
contracts and our legacy energy trading. These amounts are derived
based on methodology consistent with the calculation of open EBITDA
through March 31, 2006.
Free Cash Flow from Continuing Operations Before and After
Emission Allowances Activity Reconciliation
Three Months Ended March 31,
($ millions) 2006 2005
Operating cash flow from continuing operations ($228) ($59)
Change in margin deposits (a) (120) 226
Western states and Cornerstone settlement payments 155 ---
Capital expenditures (22) (10)
Free cash flow from continuing operations before
emission allowances activity ($215) $157
Proceeds from sales of emission allowances 188 23
Purchases of emission allowances --- (39)
Free cash flow from continuing operations after
emission allowances activity(b) ($27) $141
(a) Reliant Energy posts collateral to support most commodity sales and
purchase transactions. The collateral provides assurance to
counterparties that contractual obligations will be fulfilled. As the
obligations are fulfilled, the collateral is returned. Reliant Energy
commonly uses both cash and letters of credit as collateral. The use
of cash as collateral appears as an asset on the balance sheet and as
a use of cash in operating cash flow. When cash collateral is
returned, the asset is eliminated from the balance sheet and it
appears as a source of cash in operating cash flow. Changes in margin
deposits reflect the net inflows and outflows of cash collateral and
are driven by hedging levels and changes in commodity prices, not by
the cash flow generated by the business related to sales and purchases
in the reporting period.
(b) 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
Adjusted contribution margin
Open contribution margin
EBITDA
Adjusted EBITDA
Open EBITDA
Free cash flow from continuing operations before emission allowances
activity
Free cash flow from continuing operations after emission allowances
activity
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
filed along with this press release.
WEBCAST OF EARNINGS CONFERENCE CALL
Reliant Energy has scheduled its first-quarter 2006 earnings conference
call for Wednesday, May 10, 2006, at 10:00 a.m. CT. Interested parties may
listen to a live audio broadcast of the conference call at
http://www.reliant.com/corporate. 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/corporate.
This news release contains "forward-looking statements."
Forward-looking statements are statements that contain projections,
estimates or assumptions about our revenues, income and other financial
items, our plans for the future, future economic performance, transactions
and dispositions and financings related thereto. Forward-looking statements
relate to future events and anticipated revenues, earnings, business
strategies, competitive position or other aspects of our operations or
operating results. 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.
We have based our forward-looking statements on management's beliefs
and assumptions based on information available to management at the time
the statements are made. Actual results may differ materially from those
expressed or implied by forward-looking statements as a result of many
factors or events, including 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 in our filings 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.
Information in this release is subject to adjustment resulting from
further review and the obtaining of additional information that impacts the
consolidated financial statements.
Reliant Energy, Inc. and Subsidiaries
Consolidated Statements of Operations
(Thousands of Dollars, except per share amounts)
(Unaudited)
Three Months Ended March 31,
2006 2005
Revenues:
Revenues (including $149,506 and
$(145,412) unrealized gains
(losses)) $2,452,685 $1,717,317
Expenses:
Purchased power, fuel and cost of gas
sold (including $(126,038) and
$269,566 unrealized gains (losses)) 2,250,049 1,342,084
Operation and maintenance 185,555 170,548
Selling and marketing 23,997 18,985
Bad debt expense 10,804 8,610
Total 2,470,405 1,540,227
Contribution Margin (17,720) 177,090
Other general and administrative 35,939 31,664
(Gains) losses on sales of assets and
emission allowances, net (151,476) 754
Depreciation and amortization 80,505 108,451
Total (35,032) 140,869
Operating Income 17,312 36,221
Other Income (Expense):
Income (loss) of equity investments,
net 326 (168)
Other, net 85 (58)
Income Before Interest and Taxes 17,723 35,995
Interest expense (108,162) (95,345)
Interest income 9,018 5,211
Loss from Continuing Operations
Before Income Taxes (81,421) (54,139)
Income tax expense (benefit) 57,646 (12,683)
Loss from Continuing Operations (139,067) (41,456)
Income from discontinued operations 4,980 16,534
Loss Before Cumulative Effect of
Accounting Change (134,087) (24,922)
Cumulative effect of accounting
change, net of tax 968 -
Net Loss $(133,119) $(24,922)
Basic and Diluted Earnings (Loss) Per Share:
Loss from continuing operations $(0.46) $(0.14)
Income from discontinued operations 0.02 0.06
Cumulative effect of accounting
change, net of tax - -
Net loss $(0.44) $(0.08)
Weighted Average Common Shares
Outstanding (in thousands):
- Basic 305,631 300,441
- Diluted 305,631 300,441
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
March 31, March 31,
2006 2005 Change
Retail Energy:
Revenues $1,687 $1,304 $383
Purchased power, fuel and cost of gas
sold 1,694 1,081 613
Gross margin (7) 223 (230)
Operation and maintenance 51 38 13
Selling and marketing 24 19 5
Bad debt expense 14 9 5
Contribution margin - Retail Energy (96) 157 (253)
Wholesale Energy:
Revenues 911 519 392
Purchased power, fuel and cost of gas
sold 702 368 334
Gross margin 209 151 58
Operation and maintenance 134 132 2
Bad debt expense (3) - (3)
Contribution margin - Wholesale
Energy 78 19 59
Other Operations:
Revenues 1 1 -
Purchased power, fuel and cost of gas
sold - - -
Gross margin 1 1 -
Operation and maintenance - - -
Contribution margin - Other
Operations 1 1 -
Eliminations:
Revenues (146) (107) (39)
Purchased power, fuel and cost of gas
sold (146) (107) (39)
Gross margin - - -
Consolidated:
Revenues 2,453 1,717 736
Purchased power, fuel and cost of gas
sold 2,250 1,342 908
Gross margin 203 375 (172)
Operation and maintenance 185 170 15
Selling and marketing 24 19 5
Bad debt expense 11 9 2
Contribution margin - Consolidated (17) 177 (194)
Other general and administrative 35 32 3
(Gains) losses on sales of assets and
emission allowances, net (151) 1 (152)
Depreciation and amortization 81 108 (27)
Total (35) 141 (176)
Operating income 18 36 (18)
Income (loss) of equity investments,
net - - -
Other, net - - -
Income before interest and income
taxes 18 36 (18)
Interest expense (108) (95) (13)
Interest income 9 5 4
Loss from continuing operations
before income taxes (81) (54) (27)
Income tax expense (benefit) 58 (13) 71
Loss from continuing operations (139) (41) (98)
Income from discontinued operations 5 16 (11)
Cumulative effect of accounting
change, net of tax 1 - 1
Net Loss $(133) $(25) $(108)
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
(Millions of Dollars)
(Unaudited)
Three Months Ended
March 31, March 31,
2006 2005 Change
Retail Energy:
Gross margin $57 $70 $(13)
Operation and maintenance 51 38 13
Selling and marketing 24 19 5
Bad debt expense 14 9 5
Contribution margin - Retail Energy (32) 4 (36)
Wholesale Energy:
Open gross margin 242 211 31
Operation and maintenance 134 132 2
Bad debt expense (3) - (3)
Open contribution margin - Wholesale
Energy 111 79 32
Other Operations:
Gross margin 1 1 -
Operation and maintenance - - -
Contribution margin - Other
Operations 1 1 -
Consolidated:
Open gross margin 300 282 18
Operation and maintenance 185 170 15
Selling and marketing 24 19 5
Bad debt expense 11 9 2
Open contribution margin -
Consolidated 80 84 (4)
Other general and administrative 35 32 3
Income (loss) of equity investments,
net - - -
Other, net - - -
Open EBITDA $45 $52 $(7)
Historical wholesale hedges:
Power (115) (44) (71)
Fuel 7 47 (40)
Tolling/other (12) (33) 21
Gains (losses) on sales of assets
and emission allowances, net 151 (1) 152
Adjusted EBITDA $76 $21 $55
Unrealized gains on energy
derivatives 23 124 (101)
Changes in California-related
receivables and reserves - (1) 1
Depreciation and amortization (81) (108) 27
Interest expense (108) (95) (13)
Interest income 9 5 4
GAAP Loss from continuing operations
before income taxes $(81) $(54) $(27)
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 - Adjustments
(Millions of Dollars)
(Unaudited)
Three Months Ended
March 31, March 31,
2006 2005 Change
Retail Energy:
Gross Margin (1) Adjustments:
Unrealized (gains) losses on energy
derivatives $64 $(153) $217
Total gross margin adjustments 64 (153) 217
Wholesale Energy:
Gross Margin (1) Adjustments:
Changes in California-related
receivables and reserves - 1 (1)
Unrealized (gains) losses on energy
derivatives (87) 29 (116)
Total gross margin adjustments (87) 30 (117)
(1) Revenues less purchased power, fuel and cost of gas sold.
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)
(Unaudited)
March 31, 2006 December 31, 2005
ASSETS
Current Assets:
Cash and cash equivalents $43,927 $88,397
Restricted cash 60,645 26,906
Accounts and notes receivable,
principally customer, net 1,115,558 1,171,673
Inventory 270,988 299,099
Derivative assets 138,855 725,964
Margin deposits on energy trading
and hedging activities 1,595,055 1,716,035
Other current assets 403,380 499,045
Current assets of discontinued
operations 18,303 203,332
Total current assets 3,646,711 4,730,451
Property, Plant and Equipment, net 5,883,248 5,934,060
Other Assets:
Goodwill 386,594 386,594
Other intangibles, net 470,341 510,582
Derivative assets 406,849 527,799
Other long-term assets 633,668 598,524
Long-term assets of discontinued
operations - 880,796
Total other assets 1,897,452 2,904,295
Total Assets $11,427,411 $13,568,806
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt
and short-term borrowings $490,761 $789,325
Accounts payable, principally
trade 658,411 886,965
Derivative liabilities 727,319 1,219,954
Margin deposits on energy trading
and hedging activities 15,000 15,588
Other current liabilities 435,144 397,942
Current liabilities of
discontinued operations 71,296 96,456
Total current liabilities 2,397,931 3,406,230
Other Liabilities:
Derivative liabilities 618,155 812,695
Other long-term liabilities 379,038 389,083
Long-term liabilities of
discontinued operations - 779,678
Total other liabilities 997,193 1,981,456
Long-term Debt 4,319,508 4,317,427
Commitments and Contingencies
Temporary Equity Stock-based
Compensation 2,151 -
Total Stockholders' Equity 3,710,628 3,863,693
Total Liabilities and Equity $11,427,411 $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
(Thousands of Dollars)
(Unaudited)
Three Months Ended March 31,
2006 2005
Cash Flows from Operating Activities:
Net loss $(133,119) $(24,922)
Income from discontinued operations (4,980) (16,534)
Net loss from continuing operations
and cumulative effect of accounting
change (138,099) (41,456)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Cumulative effect of accounting
change (968) -
Depreciation and amortization 80,505 108,451
Deferred income taxes 55,238 (10,354)
Net unrealized gains on energy
derivatives (23,468) (124,154)
Amortization of deferred financing
costs 3,931 3,672
(Gains) losses on sales of assets
and emission allowances, net (151,476) 754
Other, net 10,927 33,404
Changes in other assets and
liabilities:
Accounts and notes receivable and
unbilled revenue, net 88,805 171,560
Inventory 26,291 (2,158)
Margin deposits on energy trading and
hedging activities, net 120,392 (226,406)
Net derivative assets and liabilities (50,002) 82,034
Western states and Cornerstone
settlement payments (155,102) -
Accounts payable (75,817) (28,706)
Other current assets (3,120) 28,878
Other assets (20,653) (29,533)
Taxes payable/receivable 134 889
Other current liabilities (6,543) (25,913)
Other liabilities 10,636 198
Net cash used in continuing
operations from operating activities (228,389) (58,840)
Net cash provided by discontinued
operations from operating activities 7,279 35,726
Net cash used in operating activities (221,110) (23,114)
Cash Flows from Investing Activities:
Capital expenditures (21,897) (10,131)
Proceeds from sales of assets, net 1,238 560
Proceeds from sales of emission
allowances 187,910 23,284
Purchases of emission allowances - (39,512)
Restricted cash (33,739) 29,548
Other, net 2,500 20
Net cash provided by continuing
operations from investing activities 136,012 3,769
Net cash provided by (used in)
discontinued operations from
investing activities 967,743 (4,341)
Net cash provided by (used in)
investing activities 1,103,755 (572)
Cash Flows from Financing Activities:
Payments of long-term debt (321,372) (30,643)
Increase in short-term borrowings
and revolving credit facilities,
net 27,241 58,152
Proceeds from issuances of stock 5,016 6,382
Net cash provided by (used in)
continuing operations from financing
activities (289,115) 33,891
Net cash used in discontinued
operations from financing activities (638,000) -
Net cash provided by (used in)
financing activities (927,115) 33,891
Net Change in Cash and Cash
Equivalents (44,470) 10,205
Cash and Cash Equivalents at
Beginning of Period 88,397 105,054
Cash and Cash Equivalents at End of
Period $43,927 $115,259
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 March 31,
2006 2005 Change
(in millions)
Mass gross margin $30 $85 (1) $(55)
Commercial and Industrial
gross margin 20 - (1) 20
Market usage adjustments 7 (15) 22
Total retail energy gross
margin, excluding unrealized
gains (losses) 57 70 (13)
Unrealized gains (losses) (64) 153 (217)
Total retail energy gross
margin (7) 223 (230)
Operation and maintenance 51 38 13
Selling and marketing 24 19 5
Bad debt expense 14 9 5
Total retail energy
contribution margin $(96) $157 $(253)
Three Months Ended March 31,
2006 2005
(gigawatt hours)
Electricity Sales to End-Use
Retail Customers:
Mass:
Residential:
Houston 2,913 3,312
Non-Houston 1,547 1,166
Small Business:
Houston 697 847 (1)
Non-Houston 296 135 (1)
Total Mass 5,453 5,460
Commercial and Industrial:
ERCOT (2) 7,496 8,192 (1)
Non-ERCOT 1,588 1,208
Total Commercial and Industrial 9,084 9,400
Market usage adjustments 7 (221)
Total 14,544 14,639
Three Months Ended March 31,
2006 2005
(in thousands, metered locations)
Weighted Average Retail
Customer Count:
Mass:
Residential:
Houston 1,212 1,302
Non-Houston 472 344
Small Business:
Houston 136 142 (1)
Non-Houston 28 14 (1)
Total Mass 1,848 1,802
Commercial and Industrial:
ERCOT (2) 72 73 (1)
Non-ERCOT 2 1
Total Commercial and Industrial 74 74
Total 1,922 1,876
March 31, December 31,
2006 2005
(in thousands, metered locations)
Retail Customers:
Mass:
Residential:
Houston 1,211 1,213
Non-Houston 483 462
Small Business:
Houston 136 137 (1)
Non-Houston 27 29 (1)
Total Mass 1,857 1,841
Commercial and Industrial:
ERCOT (2) 75 70 (1)
Non-ERCOT 2 2
Total Commercial and Industrial 77 72
Total 1,934 1,913
(1) Beginning in the first quarter of 2006, we recategorized financial and
operational data for customers with a peak demand between 250
kilowatts and one MW from small business within mass to commercial and
industrial. The 2005 data is presented on a comparable basis.
(2) Includes customers of the 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 March 31,
2006 2005
GWh % Economic (1) GWh % Economic (1)
Economic Generation (2):
PJM Coal 5,807.3 70% 5,435.6 60%
MISO Coal 1,292.7 45% 1,795.8 58%
PJM/MISO Gas 86.6 0% 156.1 1%
West 939.0 13% 145.1 3%
Other 1,304.3 74% 1,337.0 54%
Total 9,429.9 32% 8,869.6 28%
Commercial Capacity Factor (3):
PJM Coal 87% 76%
MISO Coal 95% 90%
PJM/MISO Gas 1% 56%
West 98% 100%
Other 94% 94%
Total 89% 81%
Generation Volume (4): GWh GWh
PJM Coal 5,030.6 4,123.0
MISO Coal 1,225.9 1,620.5
PJM/MISO Gas 0.7 86.7
West 924.1 145.1
Other 1,220.0 1,251.1
Total 8,401.3 7,226.4
Unit Margin ($/MWh) (5):
PJM Coal $27.48 $20.36
MISO Coal 23.24 21.52
PJM/MISO Gas - 98.50
West 0.78 (4.56)
Other (0.74) 4.29
Weighted Average Total $19.80 $18.27
Three Months Ended March 31,
2006 2005 Change
Open Energy Gross Margin (6): (in millions)
PJM Coal $138 $84 $54
MISO Coal 28 35 (7)
PJM/MISO Gas (0) 9 (9)
West 1 (1) 2
Other (1) 5 (6)
Total Open Energy Gross Margin 166 132 34
Other Margin (7):
PJM Coal 10 11 (1)
MISO Coal 2 1 1
PJM/MISO Gas 3 3 -
West 37 39 (2)
Other 24 25 (1)
Total Other Margin 76 79 (3)
Total Open Wholesale Gross Margin 242 211 31
Historical Wholesale Hedges (8):
Power (115) (44) (71)
Fuel 7 47 (40)
Tolling/other (12) (33) 21
Total Historical Wholesale Hedges (120) (30) (90)
Unrealized gains/losses on
energy derivatives 87 (29) 116
Changes in California-related
receivables and reserves - (1) 1
Total Wholesale Energy Gross Margin 209 151 58
Operation and maintenance 134 132 2
Bad debt expense (3) - (3)
Total Wholesale Energy Contribution
Margin $78 $19 $59
(1) Percent economic is generation volume divided by maximum generation
at 100% plant availability.
(2) Economic generation 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 the
economic generation.
(4) Excludes generation volume related to power purchase agreements, which
includes tolling agreements.
(5) Represents open energy gross margin divided by generation volume.
(6) Open energy gross margin is a model-derived number based on generation
volume assuming (a) it had been sold at day-ahead power prices in the
case of coal-fired generation and real-time power prices in the case
of natural gas-fired generation and (b) it had been purchased at
delivered spot fuel prices, each without regard to the effect of our
historical wholesale hedges or prices actually paid or received.
(7) Other margin represents power purchase agreements, capacity payments,
ancillary revenues and West region hedges.
(8) 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 above.
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
(Unaudited)
Q1 economic
Summer/Winter generation volume
Average Heat Rate (GWh)
Unit Name Capacity(MW) (MMBtu/MWh) 2006 2005
Cheswick 580 10.0 831.6 723.6
Conemaugh 280 9.4 602.8 599.2
Elrama 466 11.3 856.4 595.9
Keystone 282 9.5 570.1 585.6
Portland 400 10.1 614.1 647.6
Seward 521 9.7 1,109.2 926.4
Shawville 566 10.3 909.7 997.5
Titus 246 10.8 313.4 359.8
PJM Coal Total 3,341 5,807.3 5,435.6
Q1 commercial Q1 generation
capacity factor volume (GWh)
Unit Name 2006 2005 2006 2005
Cheswick 99% 97% 826.6 701.2
Conemaugh 96% 96% 576.2 577.7
Elrama 78% 25% 664.0 147.5
Keystone 79% 97% 449.5 570.4
Portland 95% 75% 580.8 484.2
Seward 71% 55% 790.7 511.5
Shawville 94% 81% 856.2 803.4
Titus 91% 91% 286.6 327.1
PJM Coal Total 87% 76% 5,030.6 4,123.0
Q1 economic
Summer/Winter generation volume
Average Heat Rate (GWh)
Unit Name Capacity(MW) (MMBtu/MWh) 2006 2005
Avon Lake 721 9.8 803.6 1,097.3
New Castle 328 10.7 237.6 387.3
Niles 208 10.5 251.5 311.2
MISO Coal Total 1,257 1,292.7 1,795.8
Q1 commercial Q1 generation
capacity factor volume (GWh)
Unit Name 2006 2005 2006 2005
Avon Lake 95% 91% 764.1 999.4
New Castle 93% 86% 221.3 333.3
Niles 96% 92% 240.5 287.8
MISO Coal Total 95% 90% 1,225.9 1,620.5
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
(Unaudited)
Q1 economic
Summer/Winter generation volume
Average Heat Rate (GWh)
Unit Name Capacity(MW) (MMBtu/MWh) 2006 2005
Aurora 942 10.5 4.3 8.0
Blossburg 23 14.6 1.0 0.4
Brunot Island 315 10.4 - -
Gilbert 614 11.0 28.9 32.1
Glen Gardner 184 14.6 0.2 0.1
Hamilton 23 14.8 - -
Hunterstown 71 14.8 0.1 58.9
Hunterstown CCGT 833 7.0 47.2 41.5
Mountain 47 14.3 0.6 0.2
Orrtanna 23 14.4 - 0.2
Portland 185 11.2 0.3 13.4
Sayreville 264 13.8 0.4 1.1
Shawnee 23 14.0 - -
Shawville 5-7 6 10.2 - -
Titus 35 17.4 - 0.1
Tolna 47 14.2 0.1 0.1
Werner 252 13.8 - -
Shelby 356 9.8 3.5 -
PJM/MISO Gas Total 4,243 86.6 156.1
Q1 commercial Q1 generation
capacity factor volume (GWh)
Unit Name 2006 2005 2006 2005
Aurora 26% 34% 1.1 2.7
Blossburg 100% 100% 1.0 0.4
Brunot Island 0% 0% - -
Gilbert 14% 83% 4.0 26.7
Glen Gardner 100% 100% 0.2 0.1
Hamilton 0% 0% - -
Hunterstown 100% 0% 0.1 0.2
Hunterstown CCGT -11% 100% (5.4) 41.5
Mountain 100% 100% 0.6 0.2
Orrtanna 0% 100% - 0.2
Portland 0% 100% - 13.4
Sayreville -125% 100% (0.5) 1.1
Shawnee 0% 0% - -
Shawville 5-7 0% 0% - -
Titus 0% 100% - 0.1
Tolna 100% 100% 0.1 0.1
Werner 0% 0% - -
Shelby -14% 0% (0.5) -
PJM/MISO Gas Total 1% 56% 0.7 86.7
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
(Unaudited)
Q1 economic
Summer/Winter generation volume
Average Heat Rate (GWh)
Unit Name Capacity(MW) (MMBtu/MWh) 2006 2005
Bighorn (1) 598 7.2 932.7 -
Coolwater 622 10.1 - 48.3
Ellwood (1) 54 13.3 - -
Etiwanda (1) 640 10.0 - -
Mandalay (1) 560 10.9 6.3 44.7
Ormond Beach 1,516 9.6 - 52.1
West Total 3,990 939.0 145.1
Q1 commercial Q1 generation
capacity factor volume (GWh)
Unit Name 2006 2005 2006 2005
Bighorn (1) 98% 0% 917.8 -
Coolwater 0% 100% - 48.3
Ellwood (1) 0% 0% - -
Etiwanda (1) 0% 0% - -
Mandalay (1) 100% 100% 6.3 44.7
Ormond Beach 0% 100% - 52.1
West Total 98% 100% 924.1 145.1
Q1 economic
Summer/Winter generation volume
Average Heat Rate (GWh)
Unit Name Capacity(MW) (MMBtu/MWh) 2006 2005
Indian River (1) 587 10.5 6.1 76.7
Osceola (1) 470 11.0 47.6 57.2
Channelview 830 6.1 1,250.6 1,203.1
Other Total 1,887 1,304.3 1,337.0
Q1 commercial Q1 generation
capacity factor volume (GWh)
Unit Name 2006 2005 2006 2005
Indian River (1) 100% 30% 6.1 22.8
Osceola (1) 100% 44% 47.6 25.2
Channelview 93% 100% 1,166.3 1,203.1
Other Total 94% 94% 1,220.0 1,251.1
(1) 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
(in millions)
(Unaudited)
March 31, 2006
Debt:
Senior secured revolver $409
Senior secured term loans 534
Senior secured notes 1,850
Convertible senior subordinated notes 275
Orion Power 12% notes (1) 446
PEDFA fixed-rate bonds for Seward
plant due 2036 500
Channelview 346
Receivables facility 450
Warrants (1)
Other (2) 1
REMA operating leases (off-balance
sheet) 497
Total debt and debt equivalents (3) 5,307
Less:
Cash and cash equivalents (44)
Restricted cash (61)
Net margin deposits (1,580)
Adjusted Net Debt $3,622
(1) Orion 12% notes include purchase accounting adjustments of $46
million.
(2) Other subsidiary debt.
(3) Debt equivalents include off-balance sheet REMA lease of $497 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:
Kevin Kremke, +1-713-497-5468, Pat Hammond,
+1-713-497-7723, or Dennis Barber, +1-713-497-3042, all of
Reliant Energy, Inc.
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