HOUSTON, Aug. 8 /PRNewswire-FirstCall/ -- Reliant Energy, Inc. reported
income from continuing operations before income taxes of $39 million for
the second quarter of 2006, compared to $105 million for the same period of
2005. The reported numbers include net gains from unrealized energy
derivatives of $52 million and $138 million, respectively, for 2006 and
2005.
Open EBITDA (earnings before interest, income taxes, depreciation and
amortization) was $258 million for the second quarter of 2006, compared to
$185 million for the second quarter of 2005. Improved retail adjusted gross
margin, driven by higher unit margins in all customer classes, was
partially offset by higher expenses. Adjusted EBITDA, which includes the
effect of historical wholesale hedges and gains on sales of emission
allowances, was $174 million for the second quarter of 2006, compared to
$168 million for the second quarter of 2005. The improvement to adjusted
EBITDA was primarily related to the same factors described above for open
EBITDA, partially offset by lower net gains on sales of emission allowances
and higher losses related to historical wholesale hedges.
"Our businesses, particularly the retail energy segment, delivered
strong second quarter results," said Joel Staff, chairman and chief
executive officer. "In addition, we have made excellent progress on the
priorities outlined in February, including our collateral reduction target.
The completion of our retail credit-enhanced structure, combined with our
year-to- date results, should produce a $1.6 billion reduction in
collateral, significantly exceeding our $1 billion target for 2006," Staff
added.
Reliant Energy, Inc. reported a loss from continuing operations before
income taxes of $42 million for the first six months of 2006, compared to
income from continuing operations before income taxes of $51 million for
the same period of 2005. The reported numbers include net gains from
unrealized energy derivatives of $75 million and $262 million,
respectively, for 2006 and 2005.
Open EBITDA was $303 million for the first six months of 2006 compared
to $237 million for the same period of 2005. The improvement was due to
improved retail adjusted and wholesale open gross margin, partially offset
by higher expenses. Adjusted EBITDA was $250 million for the first six
months of 2006 compared to $189 million for the same period of 2005. The
improvement was primarily due to improved retail adjusted gross margin
partially offset by higher losses related to historical wholesale hedges
and higher expenses.
During the first half of 2006, the company reported a $115 million use
of cash in continuing operations from operating activities, compared to $56
million for the same period of 2005. Free cash flow used in continuing
operations after emission allowances activity was ($116) million for the
first half of 2006, compared to $98 million of free cash flow provided by
continuing operations after emission allowances activity for the same
period of 2005. The decline in free cash flow from continuing operations
after emission allowances activity was due to changes in working capital
requirements partially offset by increased proceeds from emission
allowances sales.
OUTLOOK
Reliant Energy's outlook for open EBITDA is $871 million, $1,038
million and $1,154 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 $607 million, $810 million and $1,043 million for the same
periods. The outlook for free cash flow from continuing operations after
emission allowances activity is $103 million, $147 million and $363 million
for the years ending December 31, 2006, 2007 and 2008, respectively.
This outlook is based on forward commodity prices on June 23, 2006 and
assumptions and estimates by Reliant Energy.
Open EBITDA
Outlook Reconciliation
($ millions) 2006 2007 2008
Income from continuing operations
before income taxes (a) $217 $164 $357
Delivery of product underlying the
unrealized (gains) losses on energy
derivatives (368) (45) (19)
Depreciation and amortization 378 387 428
Interest expense, net 380 304 277
Adjusted EBITDA (a) $607 $810 $1,043
Historical wholesale hedges (b) 420 228 111
Gains on sales of emission
allowances (a),(c) (156) -- --
Open EBITDA (a) $871 $1,038 $1,154
(a) Certain factors that could affect GAAP financial measures are not
accessible on a forward-looking basis, but could be material to future
reported earnings.
(b) Historical wholesale hedges were entered into to primarily hedge the
economics of our wholesale operations. These amounts primarily relate
to settlements of forward power and fuel hedges, long-term tolling
purchases, long-term natural gas transportation contracts, storage
contracts and our legacy energy trading. These amounts are derived
based on methodology consistent with the calculation of open EBITDA
through June 30, 2006 and forward commodity prices as of June 23,
2006.
(c) Sales through June 30, 2006.
Free Cash Flow from Continuing Operations Before and After
Emission Allowances Activity Outlook Reconciliation
($ millions) 2006 2007 2008
Operating cash flow from
continuing operations (a) $651 $479 $750
Change in margin deposits (b) (749) --- ---
Western states and Cornerstone
settlement payments 159 --- ---
Capital expenditures (129) (251) (251)
Free cash flow from continuing
operations before emission
allowances activity ($68) $228 $499
Proceeds from sales of assets
and emission allowances (b),(c) 197 --- ---
Purchases of emission allowances (26) (81) (136)
Free cash flow from continuing
operations after emission
allowances activity (d) $103 $147 $363
(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) Sales through June 30, 2006.
(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
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
furnished along with this press release.
WEBCAST OF EARNINGS CONFERENCE CALL
Reliant Energy has scheduled its second-quarter 2006 earnings
conference call for Tuesday, August 8, 2006, at 9:00 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" 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, 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 the "Risk Factors" section of our 2005 Form 10-K and the
"Management Discussion and Analysis of Financial Condition and Results of
Operations - Recent Events" section of our second quarter 2006 Form 10-Q
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 Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Revenues:
Revenues (including
$52,393, $45,072,
$201,899 and $(100,341)
unrealized gains
(losses)) $2,774,903 $2,431,392 $5,227,588 $4,148,709
Expenses:
Purchased power, fuel and
cost of gas sold
(including $(364),
$93,100, $(126,402) and
$362,667 unrealized
gains (losses)) 2,233,908 1,838,353 4,483,957 3,180,438
Operation and maintenance 229,975 207,165 415,530 377,713
Selling and marketing 30,326 21,925 54,323 40,910
Bad debt expense 22,056 12,529 32,861 21,139
Total 2,516,265 2,079,972 4,986,671 3,620,200
Contribution Margin 258,638 351,420 240,917 528,509
Other general and
administrative 39,308 49,183 75,246 80,847
Gains on sales of assets
and emission allowances,
net (4,854) (24,672) (156,330) (23,919)
Depreciation and
amortization 91,092 103,920 171,597 212,372
Total 125,546 128,431 90,513 269,300
Operating Income 133,092 222,989 150,404 259,209
Other Income (Expense):
Income (loss) of equity
investments, net 2,061 (3,676) 2,387 (3,844)
Other, net 744 (22,821) 829 (22,879)
Income Before Interest
and Taxes 135,897 196,492 153,620 232,486
Interest expense (103,444) (98,560) (211,606) (193,906)
Interest income 6,877 6,841 15,895 12,053
Income (Loss) from
Continuing Operations
Before Income Taxes 39,330 104,773 (42,091) 50,633
Income tax expense 16,603 54,681 74,249 41,998
Income (Loss) from
Continuing Operations 22,727 50,092 (116,340) 8,635
Income (loss) from
discontinued operations (8,551) 48,632 (3,571) 65,167
Income (Loss) Before
Cumulative Effect of
Accounting Change 14,176 98,724 (119,911) 73,802
Cumulative effect of
accounting change, net
of tax - - 968 -
Net Income (Loss) $14,176 $98,724 $(118,943) $73,802
Basic Earnings (Loss) Per Share:
Income (loss) from
continuing operations $0.07 $0.17 $(0.38) $0.03
Income (loss) from
discontinued operations (0.02) 0.16 (0.01) 0.22
Cumulative effect of
accounting change, net
of tax - - - -
Net income (loss) $0.05 $0.33 $(0.39) $0.25
Diluted Earnings (Loss) Per Share:
Income (loss) from
continuing operations $0.07 $0.16 $(0.38) $0.03
Income (loss) from
discontinued operations (0.02) 0.14 (0.01) 0.21
Cumulative effect of
accounting change, net
of tax - - - -
Net income (loss) $0.05 $0.30 $(0.39) $0.24
Weighted Average Common
Shares Outstanding (in
thousands):
- Basic 306,780 301,250 306,208 300,848
- Diluted 342,592 337,679 306,208 308,907
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 Six Months Ended
June 30, June 30,
2006 2005 Change 2006 2005 Change
Retail Energy:
Revenues $2,217 $1,717 $500 $3,904 $3,021 $883
Purchased power, fuel and
cost of gas sold 1,836 1,364 472 3,530 2,445 1,085
Gross margin 381 353 28 374 576 (202)
Operation and maintenance 58 49 9 109 87 22
Selling and marketing 30 22 8 54 41 13
Bad debt expense 22 12 10 36 21 15
Contribution margin - Retail
Energy 271 270 1 175 427 (252)
Wholesale Energy:
Revenues 698 837 (139) 1,609 1,356 253
Purchased power, fuel and
cost of gas sold 538 600 (62) 1,240 968 272
Gross margin 160 237 (77) 369 388 (19)
Operation and maintenance 173 156 17 307 288 19
Bad debt expense - - - (3) - (3)
Contribution margin -
Wholesale Energy (13) 81 (94) 65 100 (35)
Other Operations:
Revenues - 2 (2) 1 3 (2)
Purchased power, fuel and
cost of gas sold - (1) 1 - (1) 1
Gross margin - 3 (3) 1 4 (3)
Operation and maintenance - 2 (2) - 2 (2)
Contribution margin - Other
Operations - 1 (1) 1 2 (1)
Eliminations:
Revenues (140) (124) (16) (286) (231) (55)
Purchased power, fuel and
cost of gas sold (140) (124) (16) (286) (231) (55)
Gross margin - - - - - -
Consolidated:
Revenues 2,775 2,432 343 5,228 4,149 1,079
Purchased power, fuel and
cost of gas sold 2,234 1,839 395 4,484 3,181 1,303
Gross margin 541 593 (52) 744 968 (224)
Operation and maintenance 231 207 24 416 377 39
Selling and marketing 30 22 8 54 41 13
Bad debt expense 22 12 10 33 21 12
Contribution margin -
Consolidated 258 352 (94) 241 529 (288)
Other general and
administrative 40 49 (9) 75 81 (6)
Gains on sales of assets and
emission allowances, net (5) (25) 20 (156) (24) (132)
Depreciation and amortization 91 105 (14) 172 213 (41)
Total 126 129 (3) 91 270 (179)
Operating income 132 223 (91) 150 259 (109)
Income (loss) of equity
investments, net 2 (4) 6 2 (4) 6
Other, net 1 (23) 24 1 (23) 24
Income before interest and
income taxes 135 196 (61) 153 232 (79)
Interest expense (103) (98) (5) (211) (193) (18)
Interest income 7 7 - 16 12 4
Income (loss) from continuing
operations before income
taxes 39 105 (66) (42) 51 (93)
Income tax expense 16 55 (39) 74 42 32
Income (loss) from continuing
operations 23 50 (27) (116) 9 (125)
Income (loss) from
discontinued operations (9) 49 (58) (4) 65 (69)
Cumulative effect of
accounting change, net of
tax - - - 1 - 1
Net income (loss) $14 $99 $(85) $(119) $74 $(193)
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 Six Months Ended
June 30, June 30,
2006 2005 Change 2006 2005 Change
Retail Energy:
Adjusted gross margin $347 $244 $103 $404 $314 $90
Operation and maintenance 58 49 9 109 87 22
Selling and marketing 30 22 8 54 41 13
Bad debt expense 22 12 10 36 21 15
Adjusted contribution
margin - Retail Energy 237 161 76 205 165 40
Wholesale Energy:
Open gross margin (1) 231 247 (16) 473 458 15
Operation and maintenance 173 156 17 307 288 19
Bad debt expense - - - (3) - (3)
Open contribution margin
- Wholesale Energy (2) 58 91 (33) 169 170 (1)
Other Operations:
Gross margin - 3 (3) 1 4 (3)
Operation and maintenance - 2 (2) - 2 (2)
Contribution margin - Other
Operations - 1 (1) 1 2 (1)
Consolidated:
Open gross margin 578 494 84 878 776 102
Operation and maintenance 231 207 24 416 377 39
Selling and marketing 30 22 8 54 41 13
Bad debt expense 22 12 10 33 21 12
Open contribution margin -
Consolidated 295 253 42 375 337 38
Adjusted other general and
administrative (40) (41) 1 (75) (73) (2)
Income (loss) of equity
investments, net 2 (4) 6 2 (4) 6
Other, net 1 (23) 24 1 (23) 24
Open EBITDA $258 $185 $73 $303 $237 $66
Historical wholesale hedges:
Power (65) (53) (12) (180) (97) (83)
Fuel 5 32 (27) 12 79 (67)
Tolling/other (29) (21) (8) (41) (54) 13
(89) (42) (47) (209) (72) (137)
Gains on sales of assets and
emission allowances, net 5 25 (20) 156 24 132
Adjusted EBITDA $174 $168 $6 $250 $189 $61
Unrealized gains on energy
derivatives 52 138 (86) 75 262 (187)
Changes in California-related
receivables and reserves - 3 (3) - 2 (2)
Settlement of shareholder
class action lawsuits - (8) 8 - (8) 8
EBITDA $226 $301 $(75) $325 $445 $(120)
Depreciation and
amortization (91) (105) 14 (172) (213) 41
Interest expense (103) (98) (5) (211) (193) (18)
Interest income 7 7 - 16 12 4
Income (loss) from continuing
operations before income
taxes $39 $105 $(66) $(42) $51 $(93)
(1) Wholesale adjusted gross margin was $142 million and $205 million
during the three months ended June 30, 2006 and 2005, respectively,
and $264 million and $386 million during the six months ended June 30,
2006 and 2005, respectively.
(2) Wholesale adjusted contribution margin was $(31) million and $49
million during the three months ended June 30, 2006 and 2005,
respectively, and $(40) million and $98 million during the six months
ended June 30, 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
Results of Operations by Segment - Adjustments
(Millions of Dollars)
(Unaudited)
Three Months Ended
June 30, 2006 June 30, 2005 Change
Retail Energy:
Gross Margin (1) Adjustments:
Unrealized gains on energy
derivatives $(34) $(109) $75
Total gross margin adjustments (34) (109) 75
Wholesale Energy:
Gross Margin (1) Adjustments:
Changes in California-related
receivables and reserves - (3) 3
Unrealized gains on energy
derivatives (18) (29) 11
Total gross margin adjustments (18) (32) 14
Consolidated:
General and Administrative adjustment
- settlement of shareholder class
action lawsuits - (8) 8
Six Months Ended
June 30, 2006 June 30, 2005 Change
Retail Energy:
Gross Margin (1) Adjustments:
Unrealized (gains) losses on energy
derivatives $30 $(262) $292
Total gross margin adjustments 30 (262) 292
Wholesale Energy:
Gross Margin (1) Adjustments:
Changes in California-related
receivables and reserves - (2) 2
Unrealized gains on energy
derivatives (105) - (105)
Total gross margin adjustments (105) (2) (103)
Consolidated:
General and Administrative adjustment
- settlement of shareholder class
action lawsuits - (8) 8
(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)
June 30, 2006 December 31, 2005
ASSETS
Current Assets:
Cash and cash equivalents $69,819 $88,397
Restricted cash 9,873 26,906
Accounts and notes receivable,
principally customer, net 1,328,865 1,171,673
Inventory 290,760 299,099
Derivative assets 322,077 725,964
Margin deposits 1,403,865 1,716,035
Other current assets 390,715 499,045
Current assets of discontinued
operations 10,804 203,332
Total current assets 3,826,778 4,730,451
Property, Plant and Equipment, net 5,830,813 5,934,060
Other Assets:
Goodwill 386,594 386,594
Other intangibles, net 460,770 510,582
Derivative assets 447,868 527,799
Other long-term assets 581,728 598,524
Long-term assets of discontinued
operations - 880,796
Total other assets 1,876,960 2,904,295
Total Assets $11,534,551 $13,568,806
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt
and short-term borrowings $494,390 $789,325
Accounts payable, principally
trade 769,078 886,965
Derivative liabilities 819,086 1,219,954
Margin deposits 15,000 15,588
Other current liabilities 446,038 397,942
Current liabilities of
discontinued operations 35,270 96,456
Total current liabilities 2,578,862 3,406,230
Other Liabilities:
Derivative liabilities 613,022 812,695
Other long-term liabilities 366,430 389,083
Long-term liabilities of
discontinued operations - 779,678
Total other liabilities 979,452 1,981,456
Long-term Debt 4,226,437 4,317,427
Commitments and Contingencies
Temporary Equity Stock-based
Compensation 2,211 -
Total Stockholders' Equity 3,747,589 3,863,693
Total Liabilities and Equity $11,534,551 $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)
Six Months Ended June 30,
2006 2005
(in thousands)
Cash Flows from Operating Activities:
Net income (loss) $(118,943) $73,802
(Income) loss from discontinued
operations 3,571 (65,167)
Net income (loss) from continuing
operations and cumulative effect of
accounting change (115,372) 8,635
Adjustments to reconcile net income
(loss) to net cash used in operating
activities:
Cumulative effect of accounting
change (968) -
Depreciation and amortization 171,597 212,372
Deferred income taxes 68,644 37,329
Net unrealized gains on energy
derivatives (75,497) (262,326)
Amortization of deferred financing
costs 7,982 7,406
Gains on sales of assets and
emission allowances, net (156,330) (23,919)
Other, net 36,766 46,752
Changes in other assets and
liabilities:
Accounts and notes receivable and
unbilled revenue, net (135,413) (90,381)
Inventory 6,269 (21,121)
Margin deposits, net 311,582 (205,676)
Net derivative assets and liabilities (137,484) 61,536
Western states and Cornerstone
settlement payments (159,319) -
Accounts payable 35,514 186,080
Other current assets 8,304 26,311
Other assets 14,663 (21,706)
Taxes payable/ receivable (29,884) (14,045)
Other current liabilities 31,285 (14,936)
Other liabilities 2,845 11,766
Net cash used in continuing
operations from operating activities (114,816) (55,923)
Net cash provided by (used in)
discontinued operations from
operating activities (36,997) 27,995
Net cash used in operating activities (151,813) (27,928)
Cash Flows from Investing Activities:
Capital expenditures (41,919) (33,065)
Proceeds from sales of assets, net 1,382 44,932
Proceeds from sales of emission
allowances 197,201 70,447
Purchases of emission allowances (3,273) (89,147)
Restricted cash 17,033 29,974
Other, net 4,750 2,500
Net cash provided by continuing
operations from investing activities 175,174 25,641
Net cash provided by discontinued
operations from investing activities 967,568 20,541
Net cash provided by investing
activities 1,142,742 46,182
Cash Flows from Financing Activities:
Payments of long-term debt (326,201) (36,396)
Increase (decrease) in short-term
borrowings and revolving credit
facilities, net (55,337) 24,019
Proceeds from issuances of stock 10,031 14,441
Net cash provided by (used in)
continuing operations from financing
activities (371,507) 2,064
Net cash used in discontinued
operations from financing activities (638,000) -
Net cash provided by (used in)
financing activities (1,009,507) 2,064
Net Change in Cash and Cash
Equivalents (18,578) 20,318
Cash and Cash Equivalents at
Beginning of Period 88,397 105,054
Cash and Cash Equivalents at End of
Period $69,819 $125,372
Free Cash Flow Reconciliation
(Unaudited)
Six Months Ended June 30,
2006 2005
(in millions)
Operating cash flow from continuing
operations $(115) $(56)
Western states and Cornerstone
settlement payments 159 -
Change in margin deposits, net (312) 206
Capital expenditures (42) (33)
Free cash flow before emission
allowances activity (310) 117
Sales of emission allowances 197 70
Purchases of emission allowances (3) (89)
Free cash flow after emission
allowances activity $(116) $98
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 Six Months Ended
June 30, June 30,
2006 2005 Change 2006 2005 Change
(in millions) (in millions)
Mass gross margin $272 $203 (1) $69 $297 $284 (1) $13
Commercial and
Industrial gross
margin 88 41 (1) 47 108 42 (1) 66
Market usage
adjustments (13) - (13) (1) (12) 11
Total retail energy
gross margin,
excluding
unrealized
gains (losses) 347 244 103 404 314 90
Unrealized gains
(losses) on energy
derivatives 34 109 (75) (30) 262 (292)
Total retail energy
gross margin 381 353 28 374 576 (202)
Operation and
maintenance 58 49 9 109 87 22
Selling and
marketing 30 22 8 54 41 13
Bad debt expense 22 12 10 36 21 15
Total retail
energy contribution
margin $271 $270 $1 $175 $427 $(252)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
(gigawatt hours) (gigawatt hours)
Electricity Sales to End-
Use Retail Customers:
Mass:
Residential:
Houston 4,572 4,812 7,399 8,042
Non-Houston 2,013 1,458 3,502 2,626
Small Business:
Houston 954 879 (1) 1,719 1,689 (1)
Non-Houston 382 193 (1) 652 331 (1)
Total Mass 7,921 7,342 13,272 12,688
Commercial and
Industrial:
ERCOT (2) 8,631 8,735 (1) 16,147 16,923 (1)
Non-ERCOT 1,539 1,384 3,143 2,580
Total Commercial
and Industrial 10,170 10,119 19,290 19,503
Market usage
adjustments (62) (147) 11 (238)
Total 18,029 17,314 32,573 31,953
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
(in thousands, metered (in thousands, metered
locations) locations)
Weighted Average Retail
Customer Count:
Mass:
Residential:
Houston 1,189 1,276 1,201 1,289
Non-Houston 490 371 480 358
Small Business:
Houston 134 140 (1) 135 141 (1)
Non-Houston 27 15 (1) 28 14 (1)
Total Mass 1,840 1,802 1,844 1,802
Commercial and
Industrial:
ERCOT (2) 75 72 (1) 74 73 (1)
Non-ERCOT 2 1 2 1
Total Commercial and
Industrial 77 73 76 74
Total 1,917 1,875 1,920 1,876
June 30, December 31,
2006 2005
(in thousands, metered locations)
Retail Customers:
Mass:
Residential:
Houston 1,169 1,213
Non-Houston 502 462
Small Business:
Houston 133 137 (1)
Non-Houston 29 29 (1)
Total Mass 1,833 1,841
Commercial and
Industrial:
ERCOT (2) 76 70 (1)
Non-ERCOT 2 2
Total Commercial and
Industrial 78 72
Total 1,911 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 June 30, Six Months Ended June 30,
2006 2005 2006 2005
% % % %
Economic Economic Economic Economic
GWh (1) GWh (1) GWh (1) GWh (1)
Economic Generation
Volume (2):
PJM Coal 5,869.0 81% 5,602.8 78% 11,676.4 81% 11,038.5 79%
MISO Coal 1,758.9 64% 1,406.8 50% 3,051.7 56% 3,203.3 57%
PJM/MISO Gas 249.8 3% 454.9 6% 283.9 2% 610.2 4%
West 349.5 5% 47.3 1% 1,273.0 9% 192.3 2%
Other 1,462.1 92% 1,570.7 61% 2,865.4 88% 2,907.8 59%
Total 9,689.3 37% 9,082.5 36% 19,150.4 37% 17,952.1 35%
Commercial
Capacity Factor
(3):
PJM Coal 70.3% 74.9% 78.4% 75.4%
MISO Coal 76.6% 84.7% 84.3% 87.8%
PJM/MISO Gas 91.6% 75.9% 80.8% 70.7%
West 87.6% 100.0% 96.5% 100.0%
Other 94.2% 82.7% 88.8% 87.7%
Total 76.3% 77.9% 82.2% 79.7%
Generation
Volume (4): GWh GWh GWh GWh
PJM Coal 4,128.1 4,194.8 9,158.4 8,317.8
MISO Coal 1,347.6 1,191.3 2,573.7 2,811.8
PJM/MISO Gas 228.9 345.2 229.5 431.2
West 306.2 47.3 1,228.5 192.3
Other 1,377.4 1,299.7 2,543.7 2,550.7
Total 7,388.2 7,078.3 15,733.8 14,303.8
Unit Margin
($/MWh) (5):
PJM Coal $26.16 $25.51 $26.86 $22.96
MISO Coal 19.29 28.54 20.98 24.54
PJM/MISO Gas 30.58 26.07 30.50 41.74
West NM (6) NM NM NM
Other - 0.77 NM 2.35
Weighted
Average
Total $18.68 $20.63 $19.32 $19.44
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 Change 2006 2005 Change
Open Energy Gross (in millions) (in millions)
Margin (7):
PJM Coal $108 $107 $1 $246 $191 $55
MISO Coal 26 34 (8) 54 69 (15)
PJM/MISO Gas 7 9 (2) 7 18 (11)
West (3) (5) 2 (2) (6) 4
Other - 1 (1) (1) 6 (7)
Total Open Energy
Gross Margin 138 146 (8) 304 278 26
Other Margin (8):
PJM Coal 7 10 (3) 17 21 (4)
MISO Coal 2 4 (2) 4 5 (1)
PJM/MISO Gas 10 12 (2) 13 15 (2)
West 46 51 (5) 83 90 (7)
Other 28 24 4 52 49 3
Total Other Margin 93 101 (8) 169 180 (11)
Total Open Wholesale
Gross Margin 231 247 (16) 473 458 15
Historical Wholesale
Hedges (9):
Power (65) (53) (12) (180) (97) (83)
Fuel 5 32 (27) 12 79 (67)
Tolling/other (29) (21) (8) (41) (54) 13
Total Historical
Wholesale Hedges (89) (42) (47) (209) (72) (137)
Unrealized gains on
energy derivatives 18 29 (11) 105 - 105
Changes in California
-related receivables
and reserves - 3 (3) - 2 (2)
Total Wholesale Energy
Gross Margin 160 237 (77) 369 388 (19)
Operation and maintenance 173 156 17 307 288 19
Bad debt expense - - - (3) - (3)
Total Wholesale Energy
Contribution Margin $(13) $81 $(94) $65 $100 $(35)
(1) Percent economic is economic generation volume divided by maximum
generation at 100% plant availability.
(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 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) NM is not meaningful.
(7) 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.
(8) Other margin represents power purchase agreements, capacity payments,
ancillary revenues and West region hedges.
(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
(Unaudited)
Summer/Winter Q2 economic generation
Average Heat Rate volume (GWh)
Unit Name Capacity (MW) (MMBtu/MWh) 2006 2005
Cheswick 580 10.0 935.6 763.1
Conemaugh 280 9.4 603.8 595.5
Elrama 466 11.3 722.6 718.0
Keystone 282 9.5 586.5 581.8
Portland 400 10.1 611.7 569.4
Seward 521 9.7 1,084.3 1,033.7
Shawville 566 10.3 1,010.5 1,036.7
Titus 246 10.8 314.0 304.6
PJM Coal Total 3,341 5,869.0 5,602.8
Q2 commercial
capacity factor Q2 generation volume (GWh)
Unit Name 2006 2005 2006 2005
Cheswick 31.0% 74.8% 290.0 570.7
Conemaugh 99.9% 97.9% 603.1 582.8
Elrama 48.5% 39.7% 350.1 284.7
Keystone 83.7% 85.7% 490.7 498.4
Portland 86.7% 81.3% 530.2 462.8
Seward 59.3% 77.8% 643.5 804.4
Shawville 90.5% 73.8% 914.6 765.1
Titus 97.4% 74.2% 305.9 225.9
PJM Coal Total 70.3% 74.9% 4,128.1 4,194.8
Summer/Winter Q2 economic generation
Average Heat Rate volume (GWh)
Unit Name Capacity (MW) (MMBtu/MWh) 2006 2005
Avon Lake 721 9.8 1,067.5 869.4
New Castle 328 10.7 418.5 314.7
Niles 208 10.5 272.9 222.7
MISO Coal Total 1,257 1,758.9 1,406.8
Q2 commercial
capacity factor Q2 generation volume (GWh)
Unit Name 2006 2005 2006 2005
Avon Lake 82.7% 86.9% 882.5 755.5
New Castle 66.6% 89.0% 278.8 280.1
Niles 68.3% 69.9% 186.3 155.7
MISO Coal Total 76.6% 84.7% 1,347.6 1,191.3
Summer/Winter Q2 YTD economic
Average Heat Rate generation volume (GWh)
Unit Name Capacity (MW) (MMBtu/MWh) 2006 2005
Cheswick 580 10.0 1,767.3 1,486.8
Conemaugh 280 9.4 1,206.6 1,194.7
Elrama 466 11.3 1,579.0 1,313.9
Keystone 282 9.5 1,156.6 1,167.4
Portland 400 10.1 1,225.8 1,216.9
Seward 521 9.7 2,193.5 1,960.1
Shawville 566 10.3 1,920.2 2,034.3
Titus 246 10.8 627.4 664.4
PJM Coal Total 3,341 11,676.4 11,038.5
Q2 YTD commercial
capacity factor Q2 YTD generation volume (GWh)
Unit Name 2006 2005 2006 2005
Cheswick 63.2% 85.5% 1,116.5 1,271.9
Conemaugh 97.7% 97.1% 1,179.2 1,160.5
Elrama 64.2% 32.9% 1,014.1 432.2
Keystone 81.3% 91.6% 940.2 1,068.8
Portland 90.6% 77.8% 1,110.9 947.0
Seward 65.4% 67.1% 1,434.2 1,315.9
Shawville 92.2% 77.1% 1,770.8 1,568.5
Titus 94.4% 83.2% 592.5 553.0
PJM Coal Total 78.4% 75.4% 9,158.4 8,317.8
Summer/Winter Q2 YTD economic
Average Heat Rate generation volume (GWh)
Unit Name Capacity (MW) (MMBtu/MWh) 2006 2005
Avon Lake 721 9.8 1,871.2 1,967.5
New Castle 328 10.7 656.1 702.0
Niles 208 10.5 524.4 533.8
MISO Coal Total 1,257 3,051.7 3,203.3
Q2 YTD commercial
capacity factor Q2 YTD generation volume (GWh)
Unit Name 2006 2005 2006 2005
Avon Lake 88.0% 89.2% 1,646.6 1,754.9
New Castle 76.2% 87.4% 500.2 613.4
Niles 81.4% 83.1% 426.9 443.5
MISO Coal Total 84.3% 87.8% 2,573.7 2,811.8
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)
Summer/Winter Q2 economic generation
Average Heat Rate volume (GWh)
Unit Name Capacity (MW) (MMBtu/MWh) 2006 2005
Aurora 942 10.5 5.4 89.1
Blossburg 23 14.6 0.3 0.9
Brunot Island 315 10.4 - -
Gilbert 614 11.0 14.7 54.8
Glen Gardner 184 14.6 1.8 0.6
Hamilton 23 14.8 0.1 0.2
Hunterstown 71 14.8 0.6 1.0
Hunterstown CCGT 833 7.0 214.4 275.7
Mountain 47 14.3 0.8 1.0
Orrtanna 23 14.4 0.3 0.2
Portland 185 11.2 1.6 5.8
Sayreville 264 13.8 4.4 3.1
Shawnee 23 14.0 - 0.1
Shawville 5-7 6 10.2 - -
Titus 35 17.4 - 0.1
Tolna 47 14.2 0.7 2.3
Werner 252 13.8 0.1 1.0
Shelby 356 9.8 4.6 19.0
PJM/MISO Gas Total 4,243 249.8 454.9
Q2 commercial
capacity factor Q2 generation volume (GWh)
Unit Name 2006 2005 2006 2005
Aurora 51.9% 100.0% 2.8 89.1
Blossburg 100.0% 100.0% 0.3 0.9
Brunot Island 0.0% 0.0% - -
Gilbert 30.6% 70.1% 4.5 38.4
Glen Gardner 88.9% 50.0% 1.6 0.3
Hamilton 100.0% 100.0% 0.1 0.2
Hunterstown 83.3% 100.0% 0.5 1.0
Hunterstown CCGT 97.0% 66.3% 207.9 182.7
Mountain 100.0% 100.0% 0.8 1.0
Orrtanna 100.0% 100.0% 0.3 0.2
Portland 87.5% 100.0% 1.4 5.8
Sayreville 75.0% 100.0% 3.3 3.1
Shawnee 0.0% 100.0% - 0.1
Shawville 5-7 0.0% 0.0% - -
Titus 0.0% 100.0% - 0.1
Tolna 100.0% 100.0% 0.7 2.3
Werner 100.0% 100.0% 0.1 1.0
Shelby 100.0% 100.0% 4.6 19.0
PJM/MISO Gas Total 91.6% 75.9% 228.9 345.2
Summer/Winter Q2 YTD economic
Average Heat Rate generation volume (GWh)
Unit Name Capacity (MW) (MMBtu/MWh) 2006 2005
Aurora 942 10.5 9.7 97.0
Blossburg 23 14.6 1.2 1.3
Brunot Island 315 10.4 - -
Gilbert 614 11.0 43.6 86.9
Glen Gardner 184 14.6 2.0 0.7
Hamilton 23 14.8 0.2 0.2
Hunterstown 71 14.8 0.7 21.8
Hunterstown CCGT 833 7.0 209.0 355.3
Mountain 47 14.3 1.4 1.1
Orrtanna 23 14.4 0.3 0.4
Portland 185 11.2 1.9 19.2
Sayreville 264 13.8 4.8 4.2
Shawnee 23 14.0 - 0.2
Shawville 5-7 6 10.2 - -
Titus 35 17.4 - 0.2
Tolna 47 14.2 0.9 2.3
Werner 252 13.8 - 0.4
Shelby 356 9.8 8.2 19.0
PJM/MISO Gas Total 4,243 283.9 610.2
Q2 YTD commercial
capacity factor Q2 YTD generation volume (GWh)
Unit Name 2006 2005 2006 2005
Aurora 39.2% 94.6% 3.8 91.8
Blossburg 100.0% 100.0% 1.2 1.3
Brunot Island 0.0% 0.0% - -
Gilbert 19.7% 74.9% 8.6 65.1
Glen Gardner 90.0% 71.4% 1.8 0.5
Hamilton 100.0% 100.0% 0.2 0.2
Hunterstown 85.7% 5.5% 0.6 1.2
Hunterstown CCGT 96.8% 63.1% 202.4 224.2
Mountain 100.0% 100.0% 1.4 1.1
Orrtanna 100.0% 100.0% 0.3 0.4
Portland 73.7% 99.5% 1.4 19.1
Sayreville 58.3% 100.0% 2.8 4.2
Shawnee 0.0% 100.0% - 0.2
Shawville 5-7 0.0% 0.0% - -
Titus 0.0% 100.0% - 0.2
Tolna 100.0% 100.0% 0.9 2.3
Werner 0.0% 100.0% - 0.4
Shelby 50.0% 100.0% 4.1 19.0
PJM/MISO Gas Total 80.8% 70.7% 229.5 431.2
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)
Summer/Winter Q2 economic generation
Average Heat Rate volume (GWh)
Unit Name Capacity (MW) (MMBtu/MWh) 2006 2005
Bighorn (1) 598 7.2 19.6 -
Coolwater 622 10.1 111.3 3.0
Ellwood (1) 54 13.3 0.1 -
Etiwanda (1) 640 10.0 - -
Mandalay (1) 560 10.9 80.0 18.3
Ormond Beach 1,516 9.6 138.5 26.0
West Total 3,990 349.5 47.3
Q2 commercial
capacity factor Q2 generation volume (GWh)
Unit Name 2006 2005 2006 2005
Bighorn (1) 78.1% 0.0% 15.3 -
Coolwater 98.8% 100.0% 110.0 3.0
Ellwood (1) 100.0% 0.0% 0.1 -
Etiwanda (1) 0.0% 0.0% - -
Mandalay (1) 95.9% 100.0% 76.7 18.3
Ormond Beach 75.2% 100.0% 104.1 26.0
West Total 87.6% 100.0% 306.2 47.3
Summer/Winter Q2 economic generation
Average Heat Rate volume (GWh)
Unit Name Capacity (MW) (MMBtu/MWh) 2006 2005
Channelview 830 6.1 1,462.1 1,404.4
Indian River (1) 587 10.5 - 151.3
Osceola (1) 470 11.0 - 15.0
Other Total 1,887 1,462.1 1,570.7
Q2 commercial
capacity factor Q2 generation volume (GWh)
Unit Name 2006 2005 2006 2005
Channelview 94.2% 84.1% 1,377.4 1,180.5
Indian River (1) 0.0% 74.0% - 111.9
Osceola (1) 0.0% 48.7% - 7.3
Other Total 94.2% 82.7% 1,377.4 1,299.7
Summer/Winter Q2 YTD economic
Average Heat Rate generation volume (GWh)
Unit Name Capacity (MW) (MMBtu/MWh) 2006 2005
Bighorn (1) 598 7.2 938.4 -
Coolwater 622 10.1 109.7 51.2
Ellwood (1) 54 13.3 0.1 -
Etiwanda (1) 640 10.0 - -
Mandalay (1) 560 10.9 86.3 63.0
Ormond Beach 1,516 9.6 138.5 78.1
West Total 3,990 1,273.0 192.3
Q2 YTD commercial
capacity factor Q2 YTD generation volume (GWh)
Unit Name 2006 2005 2006 2005
Bighorn (1) 99.4% 0.0% 933.0 -
Coolwater 98.8% 100.0% 108.4 51.2
Ellwood (1) 100.0% 0.0% 0.1 -
Etiwanda (1) 0.0% 0.0% - -
Mandalay (1) 96.1% 100.0% 82.9 63.0
Ormond Beach 75.2% 100.0% 104.1 78.1
West Total 96.5% 100.0% 1,228.5 192.3
Summer/Winter Q2 YTD economic
Average Heat Rate generation volume (GWh)
Unit Name Capacity (MW) (MMBtu/MWh) 2006 2005
Channelview 830 6.1 2,865.4 2,607.5
Indian River (1) 587 10.5 - 228.1
Osceola (1) 470 11.0 - 72.2
Other Total 1,887 2,865.4 2,907.8
Q2 YTD commercial
capacity factor Q2 YTD generation volume (GWh)
Unit Name 2006 2005 2006 2005
Channelview 88.8% 91.4% 2,543.7 2,383.5
Indian River (1) 0.0% 59.0% - 134.6
Osceola (1) 0.0% 45.2% - 32.6
Other Total 88.8% 87.7% 2,543.7 2,550.7
(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
(Unaudited)
(in millions)
June 30, 2006
Debt:
Senior secured revolver $323
Senior secured term loans 532
Senior secured notes 1,850
Convertible senior subordinated notes 275
Orion Power 12% notes (1) 444
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) 5,217
Less:
Cash and cash equivalents (70)
Restricted cash (10)
Net margin deposits (1,389)
Adjusted Net Debt $3,748
(1) Orion 12% notes include purchase accounting adjustments of $44
million.
(2) Other subsidiary debt.
(3) Debt equivalents include off-balance sheet REMA leases 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:
Dennis Barber, +1-713-497-3042, or Pat
Hammond, +1-713-497-7723, both of Reliant Energy, Inc.
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