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Executives

Steve Himes – Director, IR

Ed Muller – Chairman and CEO

Bill Holden – SVP and CFO

John O’Neal – SVP and Chief Commercial Officer

Gary Garcia – VP and Treasurer

Analysts

Angie Storozynski – Macquarie

Terran Miller – Knight Libertas

Neel Mitra – Simmons & Company International

Lasan Johong – RBC Capital Markets

Jeffrey Coviello – Duquesne Capital

Ali Agha – SunTrust Robinson Humphrey

Brandon Blossman – Tudor Pickering

Robert Howard – Prospector Partners

Brian Chin – Citigroup

Nitin Dahiya – Nomura Securities

Raymond Leung – Goldman Sachs

Julien Dumoulin-Smith – UBS

Carlos Rodriguez – Hartford Investment Management

Mirant Corporation (MIR) Q4 2009 Earnings Call Transcript February 26, 2010 9:00 AM ET

Operator

Good day, everyone, and welcome to the Mirant Corporation’s fourth quarter and year-end 2009 earnings call. Today’s call is being recorded.

For opening remarks and introductions, I would like to turn the call over to Mr. Steve Himes, Director of Investor Relations at Mirant. Please go ahead.

Steve Himes

Thank you, Barbara, and good morning, everyone. Thank you for joining us today for Mirant’s fourth quarter and year-end 2009 earnings call. If you don’t already have a copy, the press release, financial statements, and year-end filing with the SEC are available on our Web site at www.mirant.com. The slide presentation is also available on our Web site and a replay of our call will be available approximately two hours after we finish.

Speaking today will be Ed Muller, Mirant’s Chairman and Chief Executive Officer and Bill Holden, Mirant’s Chief Financial Officer. Also in the room and available to answer questions are John O’Neal, Mirant’s Chief Commercial Officer; Paul Gillespie, our Senior Vice President of Tax; and Gary Garcia, our Treasurer.

Moving to Slide #1, the Safe Harbor, during the call we will make forward-looking statements which are subject to risks and uncertainties. Factors that could cause actual results to differ materially from management’s projections, forecasts, estimates and expectations are discussed in the Company’s SEC filings. We encourage you to read them.

Our slide presentation and discussion on this call may include certain non-GAAP financial measures. For such measures, reconciliation to the most directly comparable GAAP measure is available on our Web site or at the end of our slide presentation.

And with that, I’d like to turn it over to Mr. Muller.

Ed Muller

Thank you, Steve, and good morning, everyone. I’ll start on Page #3 of the presentation with our highlights for 2009. As you can see in our press announcement this morning of earnings, 2009 was a very good year in terms of the performance of Mirant, and we’re extremely pleased with how things went and how we did.

And I want to speak first on the subjects that are enumerated on Slide #3 for things that are in our control. First, notwithstanding a decline in the price of commodities that affect our industry, our hedging strategy, which has consistently been in place for a number of years, substantially mitigated the effects of those low commodity prices. That is though, prices were low we had a good year financially.

Second, our generating facilities achieved an 89% commercial availability factor, which is excellent performance for us and as we will go through a little more later in this presentation, show significant improvement over prior years.

Third, we had zero lost time accidents in our facilities.

Safety, I think, is important in a number of ways. First, we are and I am responsible for the people of Mirant. And that in itself is enough. But second, safety is a strong indicator and is strongly correlated with how our operations function, how well we do.

And I think that there is no doubt, based on my experience that achieving that 89% commercial availability is linked to our excellent safety performance. Having zero lost time accidents in our kind of industry is fabulous performance.

Fourth, we’ve had underway a very large program, we believe the largest underway in the United States at this time to install four scrubbers at our coal stations in Maryland to control emissions of sulfur dioxide. We were doing so pursuant to the Maryland Healthy Air Act. We were doing so under a quite an accelerated schedule as required by the Act, and I am very pleased to say that all four of those scrubbers came into operation in December of 2009 and all of them are operating and operating well.

And finally, still on Slide #3, we have said for several years now, that there is value in our existing sites, which are in load centers and have room for expansion, and that overtime when marketplace justifies that these sites will be redeveloped, and we are very pleased that in 2009, we signed a Power Purchase Agreement with Pacific Gas & Electric to build 760 megawatts of new natural gas-fired peaking capacity at our Contra Costa site in Northern California.

Turning now to Page #4, our results, financially for 2009, fourth quarter and the year. As you can see for the quarter, in terms of adjusted EBITDA, we are up compared to the same quarter in 2008, 23%. We are up for the year, 14%.

For the year, the change, the increase, principally is attributable to the factors shown here. That is, we have higher realized value of hedges, which makes sense in a declining commodity environment. We had particularly good performance from our proprietary trading and fuel oil management activities. And I would note we had this particularly good performance without changing any of our risk controls or limits. And finally, we had lower energy gross margins from generation, again as you would expect in a lower commodity environment.

Turning to Page #5, I spoke earlier about operations, safety and commercial availability. Here is some more detail on this. If you look at the upper left chart or graph, you can see some triangles; those reflect top quartile performance as determined by the Edison Electric Institute and its members.

You can see that we not only achieved performance that has puts us in the top quartile, both on our incident rate and our lost time incident rate as the first is the recordable incident rate, but we have been improving significantly over the years . These graphs are going in the right direction. And again, I just can’t resist. If you look at the dark blue line for 2009, again, zero lost time, which is just terrific.

And then on the right, you can see how our commercial availability has been improving over the last several years and we’re extremely pleased with our performance for 2009, which exceeded by 1 percentage point, our own internal goals.

Turning to Page #6 and now moving looking forward from 2009. We have spoken about where we have been now. Where are we going? Adjusted EBITDA guidance for 2010 and for 2011, we are adjusting our guidance for '10 slightly down by $4 million and we are initiating, as we do each year at this time, our guidance for 2011 at $387 million.

Compared to our prior guidance for '10, we have the changes indicated there on Page #6. Again, in this commodity environment, lower realized energy gross margins, higher realized value from our hedges and lower operating expenses, which I will speak in a moment.

And then for 2011 compared to 2010, again, given the environment and our hedge profile, we have lower realized value of hedges, lower capacity revenues and again improved, operating expenses.

Let’s talk about these operating expenses on Slide #7. We have, as we always do, look at our operating expenses and maintenance CapEx and taken into account the current operating environment. We’ve taken into account how much we expect our plants to actually operate, which plants we expect to operate and so we have from a bottom-up gone through all of these expenses and we have reduced them significantly from our prior guidance for 2010 as you can see.

This leads to the obvious question. Are we going to affect commercial availability? We do not think we will. We have focused this carefully. The primary savings are in facilities that we don’t expect to operate much. So while we take some, but very small, risk by cutting back on some of these expenditures, we don’t think it’s meaningful and we are doing nothing we think would affect the commercial availability of our coal stations

Turning to Page #8, as we do each quarter, an update on market prices here. I think in an overall sense it is important to remember we are in a commodity business. We are in a business that is affected by commodities. That is the price of fuel, the price of electricity, heat rates, and all commodities. We are at a point in the cycle that is down from where it has been significantly.

In all of my years in this business, the sector, the one thing I have always known is that I could never predict which way the commodities were going to move and I could never predict when they were going to move. I can’t today either. That’s why we hedge, so that we can manage through these various cycles. We are in a period of dark spreads compressing, both in the near-term and the long-term.

Will that be the case for the long-term? I don’t know. What will the economy do in the long-term? I don’t know. Are we well situated to manage through this and variations in the commodity cycle? Absolutely.

Turning to Page #9, the same graph we provide. I will focus you on something that has not changed in terms of its slope, and that is PJM East. This is where our coal stations that are located and the reserve margin, targeted reserve margin is this gray thatched area. And you can see that starting sometime in the latter part of 2012 that PJM East is projected to take all of the available data, to get significantly below what is an acceptable reserve margin.

I have said for many years and I continue to say this is our concern. This is the kind of circumstance that can lead to brownouts and blackouts. It may seem strange to talk about it in this economic environment, where other than storm-related outages, no one is particularly worried about demand exceeding supply, but the economy will recover. It is showing signs of recovery.

And in our industry where we have to deploy large amounts of capital and we have to plan many years in advance. This remains worrisome for the sector. It remains ultimately attractive for an incumbent like us.

Turning then to Page #10, showing you our hedge levels both for output and for fuel. The profile pretty much as you have seen it. I remind you that the thatched portion at the top of the boxes reflects additions since we last showed this to you and the open white areas show reductions, you will see a slight reduction in coal for 2010.

And this reflects that we had higher burns of coal in the beginning of 2010 than we had previously anticipated. And it also reflects that we have decided to increase some the number of days of coal that we seek to have by the end of the year on our piles.

Page #11, I mentioned earlier that we are extremely pleased to have gotten our four scrubbers in place by December. The Maryland Healthy Air Act also had us do put in place various controls for nitrogen oxides, which went into service quite some time ago. All of this equipment is functioning.

All of this equipment has placed us in a position, where we are in compliance with the requirements of the Maryland Healthy Air Act. We have paid out $1.42 billion of the $1.674 billion that we continue to estimate will be the capital cost of this program. There is still finishing work to be done in the usual course with such large programs.

Page #12, some more detail at the Marsh Landing Generating Station, of what we have to get done this year. And that is, we expect by the third quarter to have the various permits we need from the California Energy Commission, the Bay Area Air Quality Management District. We expect the California Public Utilities Commission will have approved the PPA and we would expect that we will have closed project financing for this project. And then we will start construction by the end of this year so that we can meet our schedule of being in operation in May 2013.

Common question. What do we expect the all-in cost of this project to be? We are for the first time able to tell you that and we expect it to be slightly over $700 million for all of the costs that are listed there on the bottom of Page #12.

And with that, I will turn it over to Bill Holden, who will walk you through the numbers.

Bill Holden

Thank you, Ed, and good morning. As shown on Slide #13, income from continuing operations was $494 million for the full year 2009 compared to $1.215 billion for the full year 2008. The decrease of $721 million primarily results from the decrease of $739 million in unrealized gross margin and an increase of $170 million in operating expenses, which included impairment losses of $221 million in 2009. These items were partially offset by an increase of $209 million in realized gross margin.

Loss from continuing operations was $104 million for the fourth quarter 2009 compared to income from continuing operations of $594 million for Q4 2008. The decrease of $698 million primarily results from the decrease of $587 million in unrealized gross margin and a $236 million increase in operating expenses, which included an impairment loss of $207 million in Q4 2009. These items were partially offset by an increase of $127 million in realized gross margin.

Adjusted income from continuing operations was $594 million for the full year 2009 and $110 million for the fourth quarter as compared to $517 million for the full year 2008 and $77 million for the fourth quarter of 2008.

The most notable items that bridge adjusted income from continuing operations to income from continuing operations, a GAAP measure or unrealized gains or losses on derivatives; bankruptcy charges and legal contingencies; impairment losses; and the net effect of lower costs or market inventory adjustments.

Unrealized gains were $47 million for 2009 as compared to net unrealized gains of $786 million for 2008. The net unrealized gains of $47 million resulted from decreases in forward power and fuel prices, which resulted in unrealized gains on our hedging activities that were partially offset by unrealized losses on our proprietary trading and fuel oil management activities.

For the fourth quarter, we had unrealized losses on derivatives of $19 million as compared to net unrealized gains of $568 million for the same period last year. The net unrealized losses of $19 million primarily resulted from power and fuel contracts that settled during the current period for which net unrealized gains had been recorded in prior periods, including unrealized losses on our proprietary trading and fuel oil management activities.

Impairment losses for the full year 2009 and the fourth quarter 2009 were $221 million and $207 million respectively. The $207 million impairment loss in the quarter relates to an impairment of our Potomac River facility.

Net effect of lower costs or market inventory adjustments on adjusted income was a decrease of $31 million for the full year 2009 compared to $54 million for 2008. For the fourth quarter, the net effect of lower costs or market inventory adjustments on adjusted income was a decrease of $14 million compared to $54 million for the same period last year.

Bankruptcy charges and legal contingencies for the year-to-date include the $62 million related to the MC Asset Recovery settlement with Southern Company. This amount includes $52 million as reimbursement for funds previously provided to MC Asset Recovery and the reverse of a $10 million accrual for future funding to MC Asset Recovery.

Adjusted EBITDA, which is adjusted income from continuing operations, less interest, taxes, depreciation and amortization was $890 million for the full year 2009 as compared to $782 million for 2008 and $184 million for the fourth quarter of 2009 as compared to $150 million for the same period in 2008.

The increase in adjusted EBITDA for both the year and fourth quarter were principally the result of higher realized gross margins. I’ll cover realized gross margin in more detail on the next slide.

And finally, our earnings per share based on adjusted income from continuing operations increased to $4.10 per share for the full year 2009 from $2.60 per share for 2008 and increased to $0.75 per share for the fourth quarter 2009 and $0.51 per share for the fourth quarter of 2008.

Turning to Slide #14, this slide presents the components of the Company’s realized gross margin for the full year 2009 and the fourth quarter of 2009 as well as the comparable periods for 2008.

Energy, shown as the light blue bar, represents gross margin from the generation of electricity at market prices, fuel sales and purchases at market prices, fuel handling, and steam sales and our proprietary trading and fuel oil management activity.

The decrease of $226 million for the year was the result of lower energy gross margins from our generating facilities, reflecting a decrease in power prices, and increase in the costs of emissions allowances because of the Regional Greenhouse Gas Initiative and lower generation volumes, partially offset by a decrease in the price of fuel.

The lower energy gross margins from our generating facilities were partially offset by an increase in the realized gross margins from proprietary trading and fuel oil management activity. The increase of $116 million for the quarter resulted from an increase in the realized gross margins from proprietary trading and fuel oil management activity.

Contracted and capacity, dark blue bar, represents gross margin received from capacity sold in ISO and RTO administered capacity markets through RMR contracts through tolling agreements and from ancillary service. The $13 million increase for the year and $7 million increase for the quarter primarily resulted from higher capacity prices in the Mid-Atlantic.

And finally, realized value of hedges, the yellow bar, was up by $422 million for the year and $4 million for the quarter. These amounts reflect the actual margin and settlement of our power and fuel hedging contracts and the difference between market prices and contract costs for coal that we’ve purchased under long-term agreements.

Power and hedging contracts include sales of both power and natural gas used to hedge power prices, as well as hedges to capture the incremental value related to the geographic location of our physical assets.

Turning to Slide #15, this slide presents cash flow information for the fourth quarter of 2009 and the full year 2009 and for the same period last year. The increase of $131 million in cash provided by operating activities for the full year 2009 is principally related to a number of items.

First, higher realized gross margin of $176 million, excluding the effect of non-cash lower of cost or market adjustments on fuel inventory.

Second, lower O&M expense of $85 million, which included $52 million in cash received from the MC Asset Recovery settlement and lower operating costs resulting from the shutdown of Lovett.

Third, lower working capital of $78 million primarily is a result of lower power prices and implementation of weekly settlements with PJM. These amounts were partially offset by a decrease of $122 million, because of changes in funds on deposit and a decrease of $82 million as a result of higher fuel inventory levels in 2009 as compared to 2008.

The decrease of $3 million in cash provided by operating activities for the fourth quarter is principally related to a decrease of $62 million related to changes in net accounts receivable and payable and a decrease of $67 million related to changes in collateral, primarily as a result of changes in forward energy prices.

These amounts were offset by higher realized gross margin of $76 million excluding the effects of non-cash lower of cost or market adjustments on fuel inventory and an increase of $60 million related to payments in the pension plan that were made in 2008.

Adjusting for the cash received from the MC Asset Recovery settlement, proceeds from the sales of emissions allowances and capitalized interest arrives at adjusted net cash provided by operating activities of $712 million for the full year 2009 and $75 million for the fourth quarter. Reducing these amounts for total capital expenditures, results in adjusted free cash flow of $104 million for the year and a deficit of $60 million for the quarter.

Our Maryland Healthy Air Act capital expenditures and our Marsh Landing capital expenditures and working capital requirements are nonrecurring in nature. Therefore, a more meaningful presentation of free cash flow is to use free cash flow adjusted for these amounts.

Accordingly, adding back actual expenditures for both programs results in adjusted free cash flow of $529 million or $3.65 per share for the year 2009 and $13 million or $0.09 per share for the fourth quarter of 2009.

Turning to Page #16, this slide presents our debt and liquidity as of December 31, 2009. Consolidated debt was $2.631 billion at year-end.

As of year-end, Mirant had total cash and cash equivalents of $1.953 billion. Of which, $403 million was restricted at Mirant North America and its subsidiaries and not available for distribution to Mirant.

Although the Company expects Mirant North America to remain in compliance with its financial covenants, it is restricted from making distributions beyond amounts permitted for interest payable by Mirant Americas Generation, because of the effect of the capital expenditures for Maryland Healthy Air Act compliance on the free cash flow calculation and the restricted payment test of a senior credit facility.

When the capital expenditures no longer affect the free cash flow calculation, Mirant North America is expected to be able again to make distributions. We do not expect the restriction on distributions to have any effect on operations.

And finally, our total available liquidity, including amounts available under the Mirant North America revolver and the synthetic LC facility, was $2.622 billion.

Turning to Slide #17, as Ed mentioned previously, we are revising our adjusted EBITDA guidance for 2010 from $617 million to $613 million and introducing adjusted EBITDA guidance for 2011 of $387 million, all based on forward market prices as of February 9, 2010.

Deducting projected net interest expenditures and income taxes paid or refunded, and factoring in projected changes in working capital, adjusted net cash provided by operating activities is projected to be $291 million for 2010 and $190 million for 2011.

Interest net is projected to be lower in 2011 than 2010 by $42 million because of repayment of the MAG notes due in 2011 and higher projected interest rates on cash balance.

Income tax is projected for 2010 and 2011 are primarily related to Alternative Minimum Tax, while we expect an income tax refund in 2011 related to overpayment of taxes in a prior period in California. The largest single item affecting working capital and other changes for 2010 and 2011 is expected collateral requirements related to Marsh Landing.

Reducing adjusted net cash provided by operating activities by projected capital expenditures of $488 million and $372 million for 2010 and 2011 respectively, derives an adjusted free cash flow deficit of $197 million for 2010 and an adjusted free cash flow deficit of $182 million for 2011.

Adding back the Maryland Healthy Air Act and Marsh Landing expenditures and working capital requirements for 2010 and 2011, which as I stated, earlier are nonrecurring in nature, results in adjusted free cash flow without the Maryland Healthy Air Act and Marsh Landing of $229 million for 2010 and $102 million for 2011.

Based on our closing stock price and diluted share count as of February 23, 2010, the adjusted free cash flow yield without the Maryland Healthy Air Act and Marsh Landing is 12% for 2010 and 5.4% for 2011.

Our hedged adjusted gross margin for 2010 is $1.117 billion or 86% of our projected realized gross margin. For 2011, our hedged adjusted gross margin is $713 million or 69% of our projected realized gross margin. Hedged adjusted gross margin is defined as hedged merchant generation and contracted and capacity gross margin, which would include Reliability Must-Run agreements and capacity sold in ISO and RTO-administered capacity markets.

And finally, hedged adjusted EBITDA, which is defined as hedged adjusted gross margin less projected operating and other expenses for a full calendar year is $433 million for 2010 and $73 million for 2011.

Turning to Slide #18, this slide presents the components of the adjusted gross margin included in our guidance for 2010 and 2011. Adjusted gross margin is projected to decrease from $1.297 billion in 2010 to $1.027 billion in 2011.

The $270 million decrease is principally the result of a $165 million decrease in realized value of hedges and a $127 million decrease in contracted and capacity, partially offset by a $22 million increase in energy realized gross margins. I’ll discuss this in more detail on Slide #20.

Turning to Slide #19, this slide presents a comparison of our guidance for 2010 given on November to the updated guidance for 2010 being provided today. Our 2010 guidance is $4 million lower than our previous 2010 guidance. The decrease is comprised of the following:

First, $109 million decrease in energy gross margin, principally related to a $95 million decrease for market price and generation changes, a $12 million decrease in expected results from fuel oil management and a $2 million decrease in projected results from proprietary trading.

Next, an $87 million increase in realized value of hedges as a result of lower power prices. And finally, an $18 million increase related to lower operating and other expenses, primarily as a result of lower plant O&M.

Turning to Slide #20, this slide presents a bridge of our adjusted EBITDA for 2009 to our guidance for 2010 and a bridge of our 2010 guidance to our 2011 guidance.

Our 2010 guidance is $277 million lower than our adjusted EBITDA for 2009. This decrease is comprised of the following.

First, a $158 million increase in energy gross margin, principally related to a $240 million increase resulting from market price and generation changes, primarily related to higher power prices, lower emissions prices, and higher fuel costs, partially offset by $34 million decrease related to expected results from fuel oil management and a $48 million decrease in projected results from proprietary trading.

Second, a $360 million decrease in the realized value of hedges, principally due to a lower hedged percentage of our expected generation in 2010, as compared to 2009 and to higher market prices for power in 2010. Our hedges were also executed at higher prices for 2009 as compared to 2010.

Third, a $22 million decrease in contracted and capacity gross margin, principally as a result of a decrease in capacity revenues in the Mid-Atlantic.

And finally, a $53 million decrease related to higher operating and other expenses as a result of an increase in plant operating costs, principally related to operating the scrubbers on our Maryland plant and lower emissions credit sale.

Turning to the bridge from 2010 guidance to 2011 guidance, our 2011 guidance is $226 million lower than our 2010 guidance. The decrease is comprised of the following:

First, a $22 million increase in energy gross margin, principally related to an $18 million increase resulting from market price and generation changes, primarily related to higher power prices partially offset by higher fuel prices. A $13 million increase related to expected results from fuel oil management, partially offset by a $9 million decrease in projected results from proprietary trading, also contributed to the change in energy gross margin.

Second, a $165 million decrease in realized value of hedges, principally due to a lower hedged percentage of our expected generation in 2011 as compared to 2010 and to higher market prices for power in 2011.

Third, a $127 million decrease in contracted and capacity gross margin, principally as a result of a decrease in capacity revenue in the Mid-Atlantic.

Contracted and capacity gross margin for 2011 also reflects the expected shut down of Potrero but this amount is partially offset by lower operating costs resulting from the shut down of the plant.

The balance of the $44 million increase related to lower operating and other expenses principally results from expected reductions in plant operating costs to reflect the current outlook for commodity prices.

Slide #21 addresses some of the key sensitivities regarding the guidance for 2010 and 2011 that we are providing today. NYMEX gas prices used in our guidance are as of February 9th and are $5.59 per million BTU for the balance of 2010 and $6.20 per million BTU for 2011.

Based on our hedge position for 2010, $1 per million BTU change in natural gas prices will result in a change in adjusted EBITDA of approximately $9 million for the balance of 2010.

For 2011, $1 price move in natural gas is expected to result in a change in adjusted EBITDA of approximately $32 million. Energy price changes due to heat rate movements of 500 BTU/kWh are expected to result in a change in adjusted EBITDA of approximately $10 million for the balance of 2010 and $47 million for 2011. The heat rates shown are 7x24 Pepco forward implied market heat rates as of February 9th.

And finally, a $1 move in the price of carbon credits to comply with RGGI is expected to result in a change in adjusted EBITDA of $6 million for the balance of 2010 and $7 million for 2011. This sensitivity is based on our hedge position and our view that power prices will increase as the cost of complying with RGGI increases.

Turning to Slide #22, this slide presents a break down of our projected capital expenditures for 2010 and 2011. The total estimated cost for compliance with the Maryland Healthy Air Act remains at $1.674 billion, with $269 million expected to be paid this year.

Other environmental expenditures include the remaining $33 million deposited into escrow in the third quarter of 2008 and expected to be spent between 2010 and 2011 for the control of small dust particles pursuant to the Potomac River Agreement.

Our normalized maintenance CapEx is approximately $50 million to $60 million per year, down from approximately $70 million to $80 million per year previously. The reductions reflect the current outlook for commodity prices.

Construction expenditures include the estimated amounts for the construction of our Marsh Landing generating facility, which will commence operations in May 2013.

And with that, I will turn it back to Ed, who will wrap up and open the call for your questions. Ed?

Ed Muller

Thanks, Bill. On Slide #23, the takeaways are how we sum up what we have just presented. Our program of hedging has cushioned us in this time of declining commodity prices, substantially in 2009 and somewhat in 2010; we will continue this hedging program.

We have been investing in and focusing on our generating facility and we’re pleased with how they have performed in terms of commercial availability, in terms of safety. We’ve had this massive program underway to comply with the Maryland Healthy Air Act, $1.674 billion program and all of the controls are in place and operating.

Looking forward, notwithstanding economic conditions, the supply and demand balance in our most important market is forecasted to tighten, although certainly at a slower pace than we had previously projected.

And finally, we’re moving forward with Marsh Landing. We expect to have the permits in place and the approvals in place by the third quarter and to commence construction this year to have it in commercial operation by May 2013.

And with that, Steve, I’ll turn it back to you.

Steve Himes

Barbara, we will take any questions now.

Question-and-Answer Session

Operator

Thank you. (Operator instructions). Our first question is from Angie Storozynski of Macquarie.

Angie Storozynski – Macquarie

I have a question about the O&M cuts. They seem to be pretty substantial, especially when you look at '09 numbers. You mentioned that that’s the adjustment of your O&M levels to the current commodity price environment. Did I understand it right? Is that linked to the run time of your plants or is it just a temporary cost management to help earnings simply?

Ed Muller

Hi, Angie, it’s Ed. It is linked to our expected operations of the plant and what we think makes sense, given the environment, in terms of how much we’re going to run. If we thought we’re going to be running full out to make sure that we could meet our obligations and run, we would spend more money on O&M. When we don’t think we’re going to run much, we will spend less. And that’s the decisions we’ve made by looking at it. The numbers are significant.

If the commodity environment were to change markedly and we expected to run more, these would change as well. But for the environment that we’re in, we think these are appropriate. We think they’re prudent. And are quite confident that they will not affect our commercial availability.

Angie Storozynski – Macquarie

So there is no fixed level of costs, for instance, that you think can be cut and it’s a sustainable reduction?

Ed Muller

It varies based on how we’re going to operate the fleet.

Angie Storozynski – Macquarie

Okay. Now just looking at your hedge disclosure, doesn’t seem like you guys added too many hedges. As you rightly spotted it, we’re in an environment where gas is weakening and coal prices are rising and so your implied dark spread is weakening. Do you have a fundamental difference in your views and simply you think it’s a temporary phenomenon, and that’s why you are not trying to hedge coal more or sell power forwards?

Ed Muller

If you look at the slope of our hedge profile, both for power and fuel, you’ll see that it’s consistent with where we’ve been. On the fuel side, particularly, on the coal side, we tend to buy in significant chunks rather than small pieces. We, of course, are always adding in the market. So it shouldn’t be surprising that it would not necessarily show significant change say, quarter-to-quarter, but our approach remains the same.

And our approach remains the same on power. It isn’t that we think we are a lot smarter than the whole marketplace. We have a view as to what we would expect to get and we will transact when we think we can get what is appropriate in the market, based on our assessment of the market. But you should expect our hedge profile to continue to have the same slope.

Angie Storozynski – Macquarie

And lastly, any comments regarding your transportation contract for coal? I guess the prices that you are disclosing in your presentation do not include transportation charges. Is that correct?

Ed Muller

John, do you want to that?

John O’Neal

Yes, our coal contracts for our Maryland plants are primarily all the coal is delivered on CSX. For Potomac River, the coal is delivered on the NS. All those coals are relatively new contract. They all extend through 2012. They are in the range of the $20 per ton to $23 per ton delivered.

Angie Storozynski – Macquarie

Okay. Thank you so much.

Ed Muller

Welcome.

Operator

And we will take our next question from Terran Miller of Knight Libertas.

Terran Miller – Knight Libertas

Good morning. Bill, I just wanted to make sure I understood some of your earlier comments. Based on the 2011 EBITDA projections or estimates that you’ve given, do you anticipate that there will be any issues with the distribution tests between the subsidiaries or do you think you have more than enough cash flow and earnings?

Bill Holden

I think we expect that once the capital expenditures for Maryland have cleared through, we should be able to resume distributions from the subsidiaries. Now, certainly that will be reflective of the gross margins. The level of cash available for distribution will be reflective of the gross margins that you will see in the guidance for 2011.

Terran Miller – Knight Libertas

Okay. And alternatively, you do have the cash at the Holdco, to infuse back down, if there is any issues?

Bill Holden

Yes, I mean, certainly we do. You can see the cash balances at Mirant Corp. as well.

Terran Miller – Knight Libertas

Okay. Thank you.

Operator

And we will take our next question from Neel Mitra of Simmons & Company International.

Neel Mitra – Simmons & Company International

Hi, good morning.

Ed Muller

Good morning, Neel.

Neel Mitra – Simmons & Company International

Can you talk a little bit about how you are looking at coal procurement differently? Now that the scrubber installations are near complete and maybe the possible impact it could have in reducing your costs with some more options.

Ed Muller

Sure. John, why don’t you take that?

John O’Neal

Sure. Neel, as you know, we primarily have been a burner of Northern App coal at our Maryland stations, primarily, a three pound sulfur spec. Our actions over the last several years have all been designed to give us more flexibility as we go forward. As Ed mentioned, we have completed the installations of scrubbers at all of our stations in Maryland, which allows us to take a wider variety of coals, including higher sulfur coals that we previously could not take.

In addition to that, we’ve made some pretty major changes down at Morgantown, our largest station. We have installed a barge unloader, which allows us to take both barge domestic and international coal. We’ve put on new pulverizers, which opens up the spec a little bit. And we’re currently installing a state-of-the-art blending system, which will allow us to take, again, a wider range of coals and blend to the specifications of the boilers down at Morgantown.

So with all that done, we think that’s going to give us a wider fuel slate going forward than what we’ve had in the past. We are currently taking some coal this year that we were not able to take previously. As you look at our hedge positions this year you can see that we’re not 100% hedged. That’s by design, because we wanted to be able to be in the market this year, making some purchases, so that we could test some fuels that we previously have not been able to test.

So we think the combination of the blending equipment, the unloader and the scrubbers is going to allow us to take a wider slate of fuels than we have previously been able to take, including perhaps we will be looking at small blends of potentially PRB and maybe Illinois Basin. We’re not sure that those will work in our boilers; but again we now have the flexibility to take those where we previously did not. So we’re very mindful of what we see going on in the Northern App with respect to the pricing of that basin and we’re planning to be able to take other alternatives to that.

Neel Mitra – Simmons & Company International

Okay, great. And then just following up on the operating expenses, I’m focusing on the $44 million decrease between 2010 and 2011. Do you expect generation volumes to decrease between '10 and '11 or what kind of driving the decrease between those two years?

Ed Muller

Go ahead, Bill.

Bill Holden

Yes, I will start and if John wants to amplify he can. I think what we’re seeing based on the current outlook for commodity prices is, particularly, for a lot of the oil units and the mid Mirant units, we’re just expecting a lot lower run times. So, yes, the generation would be less as well.

Neel Mitra – Simmons & Company International

Okay. Thank you.

Operator

And we will next hear from Lasan Johong of RBC Capital Markets.

Lasan Johong – RBC Capital Markets

Good morning. Can you quantify how much brownfield opportunities you have? And also, how much more potential megawatts you have left to scrub?

Ed Muller

Let me deal with them first. Somebody will help me. We have a Page #34 in the appendix of the presentation today; will show you our estimate of the capacity that could be added at our existing sites. And as to what we have in addition to scrub, the answer is nothing. We’ve scrubbed all of our coal units in Maryland. Our other coal station is Potomac River in Alexandria, Virginia, and there simply is not room to scrub that. And so we control emissions of sulfur dioxide in other ways, principally by using the trona, which is chemically very similar to sodium bicarbonate.

Lasan Johong – RBC Capital Markets

Okay. And then, Ed, you’ve been talking about profits and losses, mostly profits I guess, from prop trading. And just curious, how big do you intend to make prop trading? And is one of the reasons why you are not using your cash for anything else, in particular, is to try and grow this business?

Ed Muller

No. First, we have not changed our outlook for what we want to be doing in this business. We’ve had a particularly good year in 2009, which is a tribute to the people, who do the work. But, we have an expected run rate, which I will let Bill address in a moment, we don’t look to grow the business nor are we holding cash or capital to do that. We think it’s the appropriate size for the Company. And as I said at the beginning, we have not changed the risk limits and so on that we have in place for that activity nor do we intend to. Bill, why don’t you remind me?

Bill Holden

Yes, we’re still in the same place we would have been last quarter, where our expected contribution over time from proprietary trading would be about $50 million a year and about $5 million from fuel oil management.

Lasan Johong – RBC Capital Markets

What’s holding you back? Why would you not grow that business?

Ed Muller

Well, we think what we do, we do well. We think we have it in hand. We think we manage it well. But we think that in the markets in which we operate and the business we’re in it’s the appropriate size for the business.

Lasan Johong – RBC Capital Markets

Okay, thank you.

Operator

And next is Jeffrey Coviello of Duquesne Capital.

Jeffrey Coviello – Duquesne Capital

Good morning, guys.

Ed Muller

Good morning.

Jeffrey Coviello – Duquesne Capital

I had a question. There was I guess some disclosure in the K about fly ash issues at the Brandywine landfill. I guess I was wondering on that and also on the EPA regs that are going to be coming out on fly ash. How do you think about your exposure? And I guess what are the kind of key events we should be looking for and when will we get resolution on the whole fly ash issue?

Ed Muller

I think this. Particularly, after the bad incident that TVA had, there has been heightened scrutiny, understandably on ash. We manage and have managed our ash carefully and prudently and we think safely and continue to, but there is a lot of focus on it. Understandably again. And there are claims and some litigation but in a profound sense, nothing that we see of great consequence for the Company. So, I think, frankly, we and everybody in our sector and our business across the nation is having to deal with the fact that TVA had a horrific spill and that TVA manages its ash in a way that we do not. We do not have wet holding pots.

Jeffrey Coviello – Duquesne Capital

Got it. Okay, thank you very much.

Operator

And next is Ali Agha of SunTrust Robinson Humphrey.

Ali Agha – SunTrust Robinson Humphrey

Thank you, good morning.

Ed Muller

Good morning

Ali Agha – SunTrust Robinson Humphrey

Ed, when you look at the total cash on the balance sheet in the system, the $1.95 billion, some of it is restricted, but, as you say, will become unrestricted. At this point, what is your comfort level on the amount of cash you think is appropriate? And related to that what are the incremental return opportunities? Obviously, share buyback is one obvious one. But are there acquisitions; are there other things you could do rather than earning almost a 0% return in the bank for that large amount of cash?

Ed Muller

Well, first, we size how much cash we have using the same factors that we have, which is to maintain our credit profile. Bill will find me the factors so that we repeat them the same way.

Bill Holden

Yes, I will jump in maybe on sort of how we think about cash requirements and then Ed can come back maybe to some of your broader questions. We haven’t changed the way we view that. We look at the outlook for the business and we size our cash requirements based on that outlook and also looking at the potential for a downside case.

And then we look at the expected performance of the business in the downside case and all of the obligations that we have coming due over the planning horizon, which would include capital expenditures, which now includes Marsh Landing and debt maturities within the planning horizon. Based on that evaluation, we have concluded that we don’t have excess cash. So we’re comfortable with our cash balances now, but we don’t see a lot of excess cash.

Ali Agha – SunTrust Robinson Humphrey

Okay. But you know you have given us your CapEx programs. You’ve also told us you’re going to be project financing Marsh Landing later this year. Presumably, all of that should reduce the amount of cash needed on the balance sheet. Am I wrong in that assumption?

Bill Holden

I think all of those factors as we move through the CapEx programs and we have more certainty about what the financing with Marsh Landing will look like, directionally all that should reduce the amount of cash that we have on the balance sheet. But keep in mind that we do size our cash level based on a downside case. And so, we continue to look at that. And I think it’s the prudent way to look at it.

Ali Agha – SunTrust Robinson Humphrey

Yes. And then, separately, as you pointed out, we are in the midst of a trough cycle, have not seen the turn yet. But given that, are you looking opportunistically at other assets that today maybe priced more attractively to you? Is acquisition something on your radar screen?

Ed Muller

It’s always on our radar screen. But at the same time, whether we have excess cash or not we never approach it by thinking that the cash is burning a hole in our pocket. So, we are happy to move forward and we look at whatever is out there and consider it. But we’re only interested in moving forward on something if we think it is going to in ways that we’re quite comfortable, deliver value. And not just do it again, because we have the money to do it.

Ali Agha – SunTrust Robinson Humphrey

And last question, when you look at the forward curves and the picture they are painting, does that basically follow the same as regards to your fundamental view of the market? Or do you think there is some mismatch in pricing that the forward curves may not be capturing?

Ed Muller

Well, there are things that we look at and do have fundamental views on. But by and large, particularly in the deep and liquid markets, take natural gas, I think it is imprudent for us to think that we are smarter than those markets. And frankly, if we thought we were smarter than those markets we ought to get out of the power business and just go trade in them. That is not what we do.

Ali Agha – SunTrust Robinson Humphrey

Fair enough. Thanks.

Operator

Next is Brandon Blossman of Tudor Pickering.

Brandon Blossman – Tudor Pickering

Good morning, guys.

Ed Muller

Good morning

Brandon Blossman – Tudor Pickering

Actually just following up on that last set of questions. Marsh Landing, you have $700 million as an estimate. Is that all in? That doesn’t include project financing? That’s the total cash cost?

Ed Muller

That is we expect, the total all-in capital cost, just over $700 million.

Brandon Blossman – Tudor Pickering

Okay. That looks like a nice price, although about $1,000 a kW.

Ed Muller

Well, as we’ve said, there is advantage to having the sites. And I think we are pleased with the price we were able to offer to PG&E.

Brandon Blossman – Tudor Pickering

Good. So the '10 and '11 CapEx for Marsh Landing, your guidance does not reflect any kind of project financing at this point?

Ed Muller

Bill?

Bill Holden

That’s correct. We’ve just gotten the capital expenditures in there.

Brandon Blossman – Tudor Pickering

So any financing would be a reduction to that CapEx number?

Bill Holden

Yes, it would depend on the terms of the financing. In the overall amount, yes, any financing we arrange would be reduction to the funding requirement for the $700 million.

Brandon Blossman – Tudor Pickering

Okay, great. That’s helpful. Thanks. Potomac River impairment, can you tell me what triggered that that test?

Ed Muller

Bill, why don’t you walk through –?

Bill Holden

Yes, you will see a lot of this in the 10-K but we have on our Mirant Mid-Atlantic standalone balance sheet, we have goodwill. We’re required to test that goodwill annually. And when we did that we had an indication of impairment. That required us then to test the long-lived assets. So that was the triggering event for Potomac River and that’s what ultimately resulted in the impairment we took.

Brandon Blossman – Tudor Pickering

And the difference year-over-year, just forward curves?

Bill Holden

The biggest difference, yes, was changes in commodity prices. There’s a lot of other assumptions that go into the fair value analysis; but obviously the forward prices are lower.

Brandon Blossman – Tudor Pickering

Okay. And no kind of big change year-over-year on environmental expectations?

Ed Muller

That’s correct.

Brandon Blossman – Tudor Pickering

Okay. I guess if we have time, last question. It seems like there is quite a bit of opportunity from burning lower spec coal. So can you give me just a sense of timing around those test burn programs and when we might see some results from that?

Ed Muller

John?

John O’Neal

I think it will be over the course of this year. I can’t put a lot more precision on it than that. Currently, the scrubbers came on line at the end of the last year. We’ve been going through performance testing over first part of the year and run them through their paces. So, I would say that heading into the spring and in the summer we will have some opportunities to get some different blend coals in there and try some different things out. The blending facility that we are building at Morgantown is under construction and that will be completed the end of the year. So, once we conclude that, that will give us more opportunities heading into 20 2011 to do some different things. I would say it’s an initiative that kicks off now but will continue over the next year or so.

Brandon Blossman – Tudor Pickering

Great. Helpful, thanks, guys.

Operator

And next is Robert Howard of Prospector Partners.

Robert Howard – Prospector Partners

Good morning.

Ed Muller

Good morning. How are you, Rob?

Robert Howard – Prospector Partners

I’m pretty good. I wanted to ask a little bit more about the cash and I guess the detailed guidance from Slide #17 and the assumptions on the interest line. Are you basically, like for 2010, you have $191 million interest expense. Is that basically saying that your cash balances are earning zero? Would that be fair? How much is the cash earning there to offset your expenses?

Bill Holden

It is a very low amount. The cash is invested in AAA-rated U.S. Treasury fund and so the earnings it’s not zero, but it is low. Less than 1%

Robert Howard – Prospector Partners

Okay. And what type of rate were you getting on that, say, before rate crash, like early ‘08 or something? Would you be getting 2%, 3% or how much?

Bill Holden

My recollection is it would have been in the twos, sort of money market rates, in the range of 2%.

Robert Howard – Prospector Partners

Okay. So if we were to have historical levels your free cash flow estimate here would be up another 20%, I guess if $2 billion on 2% would be a significant bump up in your free cash flow.

Bill Holden

The guidance reflects how we expect the cash will be invested over the period though. I don’t really think we ought to get into hypothetical statements about it if we did something different.

Robert Howard – Prospector Partners

Yes, okay. So you are just basically using that cash, the current return forward for 2010 and for 2011, is that –?

Bill Holden

Yes, I will look at Gary, but I think it is. It is based on forward rates.

Gary Garcia

It is; which 2011 is a little bit higher than 2010, which is why you see the interest in that decreasing, part of the reason.

Robert Howard – Prospector Partners

Yes. I assume the big reason on 2011 is just the debt pay down?

Bill Holden

That is the largest.

Gary Garcia

Yes.

Robert Howard – Prospector Partners

Okay. For your cost estimate for Marsh Landing, at least a portion of it maybe that you can say that the fact that it was on a brownfield site, how much that reduced, how it would compare to a greenfield site? Were you saving $100 a kW 200, thing you could kind of say?

Ed Muller

I’m not prepared to say at this time, Rob. But it is a measurable number.

Robert Howard – Prospector Partners

Okay. Then lastly I guess with the piles and piles of snow that you guys have been getting there in the Mid-Atlantic area. I assume the operations have been fine. The coal piles haven’t gotten snowed in or anything like that? Everything is kind of clicking away the way that was supposed to?

Ed Muller

John, do you want to take that?

John O’Neal

Yes, Rob, the storms created some significant challenges for the entire infrastructure, primarily on the rail side. As you can imagine with the amount of snow they had, they were treated down across the tracks, and snow on the track. That took quite a while to unwind and it created some challenges for us. We went into the year with very high inventories at all of our stations and so, we’re prepared for this. There is no question it challenged the system and it’s in some cases drawn our inventories down to the single digits. But we have managed through it. The system has relieved itself, we’re building inventory back at all of our stations as we speak.

Robert Howard – Prospector Partners

Okay. Sounds good, thanks a lot.

Operator

Next is Brian Chin of Citigroup.

Brian Chin – Citigroup

Hi, just a quick one. Do you guys have any visibility into how much demand-response growth has continued to occur over the last year in your PJM East territory?

Ed Muller

John, do we?

John O’Neal

Brian, no. The only thing I would point to what you saw clear in the last RPM auction. Obviously, with the demand we’ve seen in the energy markets, there is no real way to see what demand-response is out there. So all I can point to is what we saw clear in RPM last May. So I don’t have any additional information beyond that.

Brian Chin – Citigroup

All right, thanks a lot.

Operator

And next is Nitin Dahiya of Nomura Securities.

Nitin Dahiya – Nomura Securities

Good morning.

Ed Muller

Good morning.

Nitin Dahiya – Nomura Securities

Given the number of questions we’ve had today in terms of use of cash, I might just add one more to it. Obviously, the '11 maturity is not callable. But the trading around, what, 102, 103; and then you also have the 13s which are callable. And I would assume that to the extent you are looking at potential cash requirements over the planning horizon. You’re looking at those maturities. Have you looked at actually taking them out early either a tender or a call for the 13s, just because the negative carry you’re paying on your cash right now, it could actually be worthwhile?

Bill Holden

We’re looking at financing alternatives generally. As you may recall, we have in the past repurchased some of the MAG notes that are due in '11. And I think it’s fair to say we’re looking at corporate finance alternatives, including refinancing the upcoming maturities at Mirant North America. We’re looking at that actively. We haven’t made any decisions yet.

Nitin Dahiya – Nomura Securities

And then follow-up to that in terms of refinancing and because of all the cash traps and everything else. Is simplifying the cost structure just the number of boxes in there, is that also a part of the evaluation, if you like?

Bill Holden

I think we’ll have to continue to evaluate what the alternatives are. But we haven’t in the past seen a benefit to simplifying collapsing the capital structure.

Nitin Dahiya – Nomura Securities

Okay. Because now with the environmental CapEx done, do you think the cash trap would actually reduce? So to that extent the need would be reduced as well.

Bill Holden

And if we refinance at Mirant North America, what would govern then would be the covenants in the new financing documents and we will have to see what the current market would allow.

Nitin Dahiya – Nomura Securities

Okay, great, thank you.

Operator

And next is Raymond Leung of Goldman Sachs.

Raymond Leung – Goldman Sachs

Hey, guys. Sorry, we’re probably going to beat this a little bit more here. If we look at the '11 maturity that you just mentioned, you sort of intimated that you would refinance at North America. Is that how we should think about it? Or would you make a decision on how to use the cash as you go forward? That’s the first question.

Bill Holden

Yes, we haven’t made decisions there. I think what I said is we haven’t as we’ve looked at this in the past, seen a benefit to collapsing the capital structure. We continue to look at what’s the best way to address the upcoming maturities. And as I said, we haven’t made any decisions on that.

Raymond Leung – Goldman Sachs

Okay. And secondly, you talked about Marsh project financing later this year possibly. How should we think of potential size or magnitude there? Would it be something where you do all of the cost and some sort of construction revolver, draw down revolver or would it be just for a portion of the overall construction cost?

Bill Holden

Yes, I think it’s going to be a portion of the overall costs. How we finance it and in which market we finance, I think it’s a bit premature. I think we’re starting to work on that, but it’s a bit premature to give too many details.

Raymond Leung – Goldman Sachs

Okay, great, thanks, guys.

Operator

And next is Julien Dumoulin-Smith of UBS.

Julien Dumoulin-Smith – UBS

Hi, good morning. Hey, so, just a couple quick questions. Sorry to come back to this point further, but following up on Angie’s question earlier today, I just wanted to see if there was potential to accelerate those O&M benefits? You put it out there in 2011; but if I look at your disclosures correctly, it seems that generation again on the base load, it seems like it’s going up. Again, is there anyway to provide a little bit more granularity about how to think about those O&M? Is that a sort of an upside benefit on '10? I don’t know. I let you guys respond there.

Ed Muller

If you look at Slide #7 of the presentation, you will see that we’ve provided numbers for what we think the improvements we expect to have in '10. And when we give guidance, our approach here is not to hold back or be aggressive, but to give you our very best judgment. So you can take that as being our very best judgment at this time.

Julien Dumoulin-Smith – UBS

All right, excellent. When I look at the capital expenditures, there are a couple different other lines there within your sort of break out, if you will. Do you mind speak to a little bit of what those various expenditures are?

Bill Holden

The other environmental CapEx?

Julien Dumoulin-Smith – UBS

Yes.

Bill Holden

The 27 to 28, it’s principally some capital expenditures for ash treatment at the Maryland facilities and then the $33 million that I mentioned that we’re anticipating to spend in 2010 and 2011 at Potomac River is included in those numbers as well. And there’s a couple of other small miscellaneous items.

Julien Dumoulin-Smith – UBS

All right, I’m just trying to figure out, again, not to rehash here, but just with regard to the Brandywine fly ash issue, I’m just thinking if that one of these other items here sort of coming up, if you will.

Bill Holden

Any expenditures for ash that we anticipate in the guidance period would show up in the other environment.

Julien Dumoulin-Smith – UBS

All right, excellent. And then finally, a third question, if you will. You successfully got this Marsh Landing project underway. Any opportunity at Pittsburg? Is that something you guys are still considering or was that sort of Marsh Landing, Pittsburg, you were both looking at recontracting it; you got one, now the other is sort of shelved, if you will?

Ed Muller

We are always looking and in the longer-term see opportunities. We are not prepared to say anything beyond that at this time.

Julien Dumoulin-Smith – UBS

All right, great, well, thanks for the time.

Operator

And next we have Carlos Rodriguez of Hartford Investment Management

Carlos Rodriguez – Hartford Investment Management

Yes, thanks. Can you give a little bit more color on the operating expense and other expense increase from 2009 to 2010 the $53 million? How much of that is increased expenses to run the scrub plants?

Bill Holden

Yes, about $30 million of it is associated with increased operating expenses on the scrubbers.

Carlos Rodriguez – Hartford Investment Management

And the balance would be related to higher RGGI emissions credit?

Bill Holden

Most of the balance will be lower emissions credit sales.

Carlos Rodriguez – Hartford Investment Management

Okay, got it. Any sense that you can give us for what an equity component might be on that $700 million if you were to finance that in the project debt market?

Bill Holden

I think it’s a bit premature. We’re sort of the beginning of that process, so, I am reluctant to speculate on where we’ll end up in the capitalization.

Carlos Rodriguez – Hartford Investment Management

Okay, that’s all I had, thanks very much.

Operator

That does conclude the question and answer portion. I would like to turn the call back over to Steve Himes for closing remarks.

Steve Himes

We want to thank everyone for joining us today and thank you for your interest in Mirant. Look forward to talking to you next time. Thanks.

Operator

That does conclude today’s conference call. Thank you for your participation.

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