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Executives

Chad Plotkin – Investor Relations, NRG Energy, Inc.

David Crane – President and Chief Executive Officer, NRG Energy, Inc.

Edward R. Muller – Chairman and Chief Executive Officer, GenOn Energy, Inc.

Anne M. Cleary – Senior Vice President, Asset Management, GenOn Energy, Inc.

Kirkland Andrews – Executive Vice President and Chief Financial Officer, NRG Energy, Inc.

Analysts

Greg Gordon – ISI Group

Neil Mehta – Goldman Sachs Group Inc.

Angie Storozynski – Macquarie Research

Steve Fleishman – Bank of America/Merrill Lynch

Julien Dumoulin-Smith – UBS

Paul Patterson – Glenrock Associates LLC

Michael J. Lapides – Goldman Sachs & Co.

Keith T. Stanley – Deutsche Bank Securities, Inc.

Ali Agha – Suntrust Robinson Humphrey

James L. Dobson – Wunderlich Securities, Inc.

Brian Russo – Ladenburg Thalmann & Company

GenOn Energy, Inc. (GEN) NRG and GenOn to Merge Conference Call July 23, 2012 9:00 AM ET

David Crane

I’m sorry that there are not enough chairs, it’s hard to know how (inaudible) to show up on, morning on short notice in the middle of summer. But we appreciate everyone taking the time to join us today, because we’re very excited about today. We really think this is – we’re here today to talk about the transaction that we announced yesterday, which we really think is a seminal transaction in the history of our industry, a very significant milestone in that. We think between GenOn and NRG, we’ve created the leading competitive energy provider in the industry with the largest and best portfolio multi-fuel across the merit order, exceptionally strong asset portfolios in the three premier regional competitive markets in the United States and for us, it creates a foundation of conventional generation, which is going to allow us to grow the business in a way that is without equal in the industry.

So, we're very excited about this and I hope that – we've got a presentation for you – for the people listening via phone, I assume that this is available online as well. We are going to go through it fairly quickly because we want to be able to answer everyone’s questions. And certainly if there are any concerns or comments you want to make, we will look forward to hearing that. So (inaudible) if you want to – we have a Safe Harbor statement here or an (inaudible) either way, I'm not going to read it, but I may assume that everyone is familiar with the contents of it.

Let's go to the – so it's time for me to introduce my current colleagues and our future colleagues first to all. Obviously the man that needs no introduction, he is my partner in this transaction, Ed Muller, the chairmen and CEO of GenOn. Next to Ed, Anne Cleary – if and I'm sorry if I get people [tails wrong] National Asset Manager for GenOn who will be joining the combined company in a newly created role and very important role of the Chief Integration Officer, where she will be singularly responsible for achieving the synergies which are such a valuable driver at this transaction for both companies sets of shareholders.

Kirk Andrews, Chief Financial Officer of NRG will also be presenting today about the transaction. Bill Holden, next to him, the Chief Financial Officer of GenOn, who is available to answer any questions that you have; likewise next to him Mauricio Gutierrez, the Chief Operating Officer of NRG.

There are other Senior Executives from GenOn and from NRG in the audience and I’d like to just – both acknowledge them for the work they’ve done, but also to point them out to you in case you have any questions for them. First of all, Lee Davis, who will run the East region, we claim that Lee Davis is actually an NRG Executive because he (inaudible) former Mirant Executive, so he comes to this transaction from both sides of the party.

Next to him is Patti Helfer who would be the Chief Administrative Officer of the company. I’m going to skip over to Murphy, because he performs the secretive role of the M&A person for NRG and we never acknowledge for his presence and he – Gary Garcia is the Treasurer of GenOn; and whereas Dennis and Chad, Investor Relations for GenOn and NRG respectively.

So with that, moving on to the next page, just the highlights and I think everyone is familiar with these highlights. As I mentioned, if you put these two companies together and we believe that there is $300 million in total of free cash flow benefits that we can achieve and we feel we can achieve them with 2013. So setting up with the timing of this transaction, it makes 2014 the first full-year of this transaction and certainly the goal of us in this transition under Anne’s leadership is, we want to get all the cost out of the system in the course of 2013. So on January 1, 2014, we can realize the full amount of this $300 million of benefits. I think everyone recognize that that size of synergy benefits for two companies of this size is truly extraordinary and has a great value driver for both sets of shareholders.

The transaction not surprisingly in light of those comments is significantly accretive in the first full year of operations and you put the projected earnings power of GenOn with the projected earning power of NRG and then you add this on top and you see where we expect 2013 and 2014 to be from a point of view of adjusted EBITDA and free cash flow, and they’re very powerful numbers. And this is even in the low gas price environment that we find ourselves in today.

So moving to the next slide, these are the terms of the transaction. The transaction is actually a very straightforward transaction, it’s very simple to understand, stock for stock, fixed exchange ratio 0.1216 NRG shares per GenOn shares, which represents a 20.6% premium to the close of GenOn at the close of business on Friday. the combined company will be 71% owned by NRG shareholders and 29% by GenOn Board and Management responsibles will be shared as listed there sort of in percentages they are roughly commensurate with the ownership.

and in terms of the bottom of the page, timing and approvals, obviously there are approvals to be gained, but having had the best legal and regulatory minds in the business look at the transaction, we don’t actually anticipate any particular difficulty in the timely receipt of all necessary approvals at the state and federal level.

Now, for the most part, the strategic rationale of this transaction, Ed is going to talk about, but there is one aspect I want to talk about because they’re obviously parts of the NRG business that GenOn is not involved in, since GenOn is very focused on the power generation part. But I just want to make it clear particularly for our shareholders that because we really see this combination with GenOn is actually reinforcing the strategic path that we were already on, and the basic philosophy very simple which we’ve tried to depict on this slide number 6, (inaudible) expand and strengthen the base, it allows you to build a stronger and bigger growth [emphasis] on top of it.

So we’re committed to the wholesale, retail model. We think it’s done well for us in Texas. We like to duplicate it in the Northeast, and we think – and ultimately depending on the rules out at West, we like to duplicate west as well. But we think that by combining with GenOn with the strength that they bring to the asset portfolio both in the east and in the west, that this enables us to grow retail in a better and safer way than we could have without this transaction. And on top of that a variety of the clean energy initiatives that we have done.

So moving on to the next slide, specifically what we’re trying to show on this slide with the premier sort of deregulated markets are the markets were NRG serves retail load both down in the Gulf Coast and the East. You see that now that the generation portfolio that we have to support that. What we’re trying to show on the lower left is, this is sort of the way we look at the business right now, in Texas which is that sort of – we feel that the natural position that we want to be in, in our markets is roughly to be about 20% long generation to retail and that’s essentially what we have at this point in Texas, which is not surprising since we have at this point under NRG, the two former parts of Houston line power and the Texas Genco part and the Reliant retail part. So we got an almost perfect match down there in Texas. It’s not possible to create as perfect a match in the Northeast, but if you look on the lower right, with the sort of enormous resources that GenOn brings to the combined company on the generation side, it gives us a very long runway in terms of the potential for retail expansion in the Northeast and we see retail that in this low gas price environment, retail is an area where we feel that we can expand profitably.

Moving on in terms of the environmental story of this company, NRG for several years has been pursuing sort of a two-track path with respect to environmental. We want to be a leader in clean energy and renewables, but we’ve also been very involved in terms of greening our conventional portfolio. As we’ve been doing that over the past several years, GenOn has been doing that on a similar path. And you see on the left hand side of the page between carbon emissions and SOx and NOx, I think the extraordinary gains that the two companies together have made in terms of reducing the air emissions from our conventional fleet. And so we are very pleased with that.

And it goes back to the contention that I’ve had an – maybe I’ve been fairly lonely voice in this so far, I’ve always believed that the companies are in the best position to lead in the clean energy space once we are also involved in conventional generation and that’s because for all of us who’ve been in the power industry for a long time, we know that the historic mission of the electric industry is to provide safe, affordable and reliable power and there is nothing about the 21 century that is going to change is that being the basic mission of the electric industry.

What we are saying is that, on top of that, there is an increasing demand for sustainable power. So sustainability is safe, affordable and reliable to provide all those for an optimal way. In our point of view because of the basic (inaudible) of most clean energy sources, you have to be both in clean energy and in conventional. And so I think that this company has very much strengthened itself in terms of what we can deliver environmentally.

So my final slide because of the timing of this announcement of this transaction, three weeks after the end of the second quarter, we thought it was important for us to effectively pre-announce our second quarter results. So you see them here on the slide and Kirk will I think talk a little bit more about this.

Speaking on behalf of NRG in terms of our own update, $530 million of adjusted EBITDA in the second quarter, we are pleased with that result and I think importantly for people who maybe more focused on the full year as opposed to the half year. I think there were some questions after the first quarter whether we would able to stay on track to meet our full year guidance. And I would expect that most people would say that with the big third quarter – third quarter always the biggest quarter for companies in our industry, that we are re-affirming our 2012 full year guidance today, adjusted EBITDA range of $1.825 billion to $2 billion.

The final thing I would mention is that, as we I think first announced in the February call, we are actually announce – our intention to announce the dividend during the course of 2013. I think as I recall, yesterday, we actually did announce the dividends. So we’re also announcing the first ever quarterly dividend in the history of NRG. So, all in all, a very auspicious day on all account. So with that, I’ll turn over the floor to Ed Muller.

Edward R. Muller

(Inaudible), thanks. We want to go to the next slide. Just to put a little more detail on what David has said, when we created GenOn, two years ago, the driving force was the efficiency that we could create by combining particularly the two overheads and taking out the duplication. And we’re doing it again and we’re doing it with – like higher number of savings. So to – the numbers to keep in mind here, to reiterate, we expect and are confident we will achieve a $175 million a year in G&A savings, and that’s permanent. So that’s forever and we’ll come to more detail on that in a moment.

Second, with the larger fleet and the approach that NRG has had in optimizing the fleet, purchasing is taking advantage of scale and so on, we see another $25 million a year that will be achieved forever. And third, as we worked on this and it’s one of the nice additional benefits of this, is we realized that the combined company needs less liquidity than each company together needs, which means we’ll have some balance sheet efficiencies, Kirk will talk about that more. And we see there, $100 million a year of cash savings forever.

So $300 million a year, which is stupendous, it’s terrific to try and create that kind of value in this sector. It is hard and to achieve it by simply doing the right thing for our owners we think is a great day.

Chad, thank you. David talked about the size. The combined company will by far be the largest competitive generator in terms of capacity in the United States with 47,000 megawatts. the size has a variety of advantages, the optimization of the assets, the great personnel. The big thing is the efficiency of it. The overheads to run these businesses are substantial and but they are also very scalable. So we can add more megawatts. And that's what we did when we created GenOn and that is what we’re doing here. And so by getting that scale up, it makes us ever more efficient. And it means as David has said and absolutely right, this sets the bar, and it sets the bar, because of what we bring, we’ll be bringing in terms of efficiency in how we operate this and taking this large overhead and spreading it over a lot of megawatts.

(Inaudible) David showed you what I think is tremendous value proposition coming down the road of taking the NRG wholesale, retail model in Texas and bringing it into the east. But that we also have the, what I think is a big plus for us in this company, which is we diversify. NRG is very heavily centered in Texas. we, GenOn, are very heavily centered in PJM and together we get a broad set of diversification and you can see us spread across the country, the East, the Gulf Coast, particularly Texas and then the West, really we can think about it a terrific match up. GenOn is – have some significant positions in Northern California, NRG in Southern California, this is just a tremendous complementary marriage.

I talked about those numbers. I want to focus for a moment on the $175 million a year. Kirk will address the $100 million and the $25 million, I think for anyone who follows the industry are to be pretty obvious.

On the $175 million, we are particularly fortunate that we have the very recent experience of having done something very comparable in the creation of GenOn, and we’re very fortunate in that and [clearly] to my right was at the table in the beginning and at the table in the end. We had a very carefully put together process of integration, none of it is rocket science, but it is hard work, it requires a well organized decision making process, it requires a lot of discipline because if you slip up, you don’t achieve it. It will be achieved and we’ll make sure we achieve it.

And I’ll take Chad, the next one. In connection with the numbers that NRG was able to show you, we’re providing more guidance in advance of when we normally do. For 2012, the year we were in, we are updating our guidance from that which we gave in May, and these are numbers based on the curves on July 9, and we’re increasing the guidance from $446 million for the year to $467 million for the year.

We’re also updating our guidance for 2013 for next year, and we are likewise increasing it from $669 million to $687 million. And we’re providing guidance for 2014, which we have not done before at $730 million for the year.

So in short, 2012 is on track and ahead, 2013 currently is on track and ahead, and 2014 you can see is a step up from where we have been. And with that, Chad, I think it’s time to turn it over to Anne.

Anne M. Cleary

Thank you. Integration planning has begun in earnest and thanks to – for the opportunity from Dave and having had done this very recently with Ed and the rest of my GenOn colleagues, let me tell you it will be a team effort. And from top to bottom all the way through our rank and file, we are prepared to get it done.

The synergies you will see have been developed by a ground-up build department upon department. So when you look at those, there has been a lot of thought and planning, but everything will be in the execution. As we build upon what we learned at GenOn, let me tell you that really the integration process falls to three areas; staffing, systems, and day-one readiness and that’s what we will be focused on. And finally, before we get to the details of the numbers, we do expect and will be providing quarterly updates to our investors after closing of the transaction so that you can track our progress.

So let’s turn to the numbers. On slide 17 in the upper left hand corner you see a graph, above the x-axis in red, this is our projection quarter-on-quarter on how we will be achieving the synergies. What you see assumes a January 1, 2013 [close]. Below the x-axis is the corresponding quarterly build up of the cost it will take to achieve the synergies. So above is the synergy achievement and below is the one-time cost to achieve.

On the right hand side, we have some details on the make-up of the synergies. In blue, the G&A overlap is the largest component at $116 million, redundant fees and services include a variety of duplicative fees and services you would expect to see outside of IT audit fees, Board of Director fees, subscription for obvious in the like. The reduction in IT and facilities of $18 million represents the cost reductions that you would expect due to the duplication in IT and facility locations.

And finally, the reduction of $14 million in miscellaneous costs or things like travel and entertainment, training in the like, the results from a lower headcount. The $175 million represents the annual full cost synergies to be realized in the first full year of operations and we have our processes in place to get going and ensuring that we can deliver these synergies.

Turning to slide 18. The next area of synergies that Ed and David have briefly touched on is operational efficiency synergies. and this is where we planned to leverage the FORNRG program that was previously announced earlier this year. The green bars standing from 2012 to 2014 represents what NRG has already announced of course, with its FORNRG program. and the blue bars on top represent what we believe as the result of having a larger combined fleet or the incremental operational synergies that we can achieve. By 2014, this is a $25 million per year permanent pickup, a 25% improvement over NRG’s existing FORNRG program.

On the right hand side, you could see the types of areas we do expect to gain this from, reliability capacity and efficiency improvement, procurement savings and asset optimization. So in total, on slide 18, the three categories, the $175 million well on our way, a lot of hard work to be done, but we’re prepared to build upon what we’ve done most recently and have in our institutional memory. Operational energy efficiencies building on program is already in place and the balance sheet efficiencies of a $100 million, totalling to the $300 million of transaction benefits, that the merger will create, so with that Kirk.

Kirkland Andrews

Thanks, Anne. Turning to the first to transaction structure overview on page 21. We’ve selected a structure for this transaction, which will permit us to close the transaction without requiring the consents of any vendors that obviously expedites our ability to close, move forward, logistically and certainly focused on delivering those significant cost savings and all the savings that Anne had reviewed with you. This also allows us to do so while realizing the full benefits of those synergies that afforded us as a result of the transaction.

NRG will be providing services to GenOn as a subsidiary of NRG and there will be a shared services agreement between NRG and GenOn, which will reflect that particular arrangement. Importantly GenOn will be merged with and into and survive as an excluded project subsidiary of NRG Energy. Importantly that means that NRG or the GenOn rather will be a non-guarantor of NRG Energy Inc. And importantly this structure is permitted under the indentures and as I said does not require any approvals for the existing vendors of either NRG or GenOn.

But important distinction, the overall transaction it self, that inside this structure, does trigger the change of control put rights on GenOn's existing HoldCo debt, which when combined with the existing Term Loan B GenOn amounts to about $3.2 billion in total debt, that debt, that debt being potentially repayable, on a change of control exercise for the bonds and it is mandatorily pre-payable in the case of the Term Loan B.

We have secured, although we do not expect giving where it is likely that the GenOn bonds may trade, we do not expect a significant amount of those bonds to be put. But in the event that they do combined with the obligation to take out the Term Loan B. We have secured a $1.6 billion bridge loan facility. It is a secured bridge, that bridge along with the surplus cash on hand, which I’ll speak to in a few moments, is ample and sufficient to address any eventuality that might take place with respect to those puts and the mandatory prepayment that takes place with respect to the Term Loan B.

Turning to page 22, as David had indicated previously the transaction is significantly accretive immediately on an EBITDA basis in 2013, which given the fact that we would expect the transaction to close in the 2013, is for us a transition year given both that timing as well as the cost to achieve all of which will be incurred during 2013, but turning to 2014 the first full year of operations of the combined company and importantly where the full blend of our Tier 1 Solar portfolio and our respective important re-powering projects on the West Coast are all included in the numbers. It is significantly accretive on both an EBITDA and free cash flow basis.

In order to highlight the accretion benefits for NRG, in addition to reconfirming our guidance for 2012 on both EBITDA and free cash flow, we are providing standalone guidance for NRG on 2013 and 2014 for both EBITDA and free cash flow. As you can see, our guidance for 2013 and 2014 is in the same range of $1.7 billion to $1.9 billion in the aggregate, and that translates on a free cash flow basis. Again on a standalone basis for NRG, our $650 million to $850 million in 2013 and $500 million to $700 million in 2014; this is our free cash flow before growth investment.

Coupling that with the guidance that GenOn had previously updated with Ed’s remarks were $687 million in 2013 on EBITDA on a standalone basis and $730 million in 2014. That combined with the synergy benefits, which we expect about three quarters of which to be realized under the assumption in pro forma that the transaction will close on January 2. So, a full-year pro forma combination about three quarters of the synergy in 2013 in that transition year.

On a full run rate basis, the combination of the operating cost synergies affords us an additional $200 million, which when combined, although it’s difficult that to see I think perhaps on the slide here; results in the combined company in 2014 having $2.6 billion to just over $2.8 billion in combined EBITDA.

Turning to free cash flow, combining the GenOn’s standalone free cash flow, which is slightly negative in 2013 turning positive in 2014. With those same synergy numbers on EBITDA basis and importantly having $100 million of additional benefits from balance sheet efficiencies, the details of which I’ll cover in a few moment, allows us to realize on a combined basis, $825 million to $1.025 billion of free cash flow on a pro forma basis in 2013 and $845 million to $1.45 billion in 2014. Importantly, this is before in the case of 2013, the one-time costs to achieve, if you recall on those pages, prior Anne had walked through one-time costs in aroma of $155 million, that number includes $14 million of non-cash costs. So the number depicted on this slide of $141 million excludes those non-cash costs.

Translating those numbers on a per-share basis leads us to the accretion numbers that David spoke to before and underscores the benefits of the transaction or the share on a per share basis.

Turning to page 23, the combination of our two platforms permits us a more efficient use of the combined cash balances of the two entities, which you can see on this page, it’s just – is around $2.7 billion. Importantly, we are confident that that $2.7 billion represents a significant surplus over the cash necessary for the ongoing needs – liquidity needs of the business going forward and as a result, affords us the ability to free up at least $1 billion of that combined cash balance to de-lever the combined company, which would occur in two ways.

First, in all cases, you could assume that $690 million of that $1 billion in de-levering would take place by virtue of paying off the Term Loan B at GenOn. The remaining $310 million is a, to be determined number, which will be applied to tranches of debt either at GenOn or potentially at NRG, the parent company on a go-forward basis and we will make that determination based upon market conditions and what the opportunities present themselves to be from a cost and returning standpoint.

The interest savings that has afforded the combined company as a result of that $1 billion of de-levering, combined with the elimination of GenOn’s $788 million revolving credit facility, as well as lower costs for LC posting under our facilities and that which GenOn has enjoyed on its own. And finally combining those savings with what we expect to be given the growth we see in the retail business, specifically in the PJM market, which on a standalone basis would require us given our asset position there, to have greater collateral posting requirements than we’ll expect on a standalone basis.

And then we will expect our combined basis, I should say the combination of the physical generation from the GenOn platform in PJM in the north east combined with our retail growth will afford us to more efficiently realize those aspirations in the north east with lower collateral postings as a result. And the cost and cash flow freedom that are afforded as a result were also reflected in that $100 million of balance sheet efficiency benefit.

Turning to page 24, the transaction on a combined basis is also immediately accretive to NRG’s target credit metrics, which we define as the credit metrics we target on a long-term basis to focus on our prudent balance sheet management objective.

As a reminder, our long-term target ratios are in three areas; first, net debt to total capital in the 45% to 60% range; second, corporate debt to corporate EBITDA, less than or equal to 4.25 times; and finally, corporate FFOs to corporate debt greater than 18%. And as you can see as a result of the transaction we are with or slightly ahead of those target levels and increasingly so as we move forward in the combination and realize the first full year of benefits in 2014.

Finally, turning to page 25, as I alluded to, the benefits of the combination afford a more efficient use of the combined company surplus cash. Having analyzed the collateral and capital needs importantly from a liquidity standpoint of the combined company, we’re confident that the $2.8 billion in pro forma liquidity taking into account the elimination of the GenOn credit facility, as well as the $1 billion of debt pay down is more than sufficient to support the combined business and in fact itself still has some remaining surplus capital.

Importantly, those of you who recall NRG on a standalone basis at the starting point to calculate our capital available for allocation. The minimum cash balance we used to do so on a standalone basis historically at 700, as a result of analysis the combined cash needs of the company, we have increased that minimum cash balance to 900 which will inform our decision process and quantification of our capital available for allocation going forward.

With that, I’ll turn it back over to David and Ed.

David Crane

Well, thank you Kirk. Well, I’d end by saying, on my own behalf is that, there has been a lot of focus today on the synergies that we’re going to achieved from this transaction. And I would tell you that on behalf of the management of the company that, I mean, we’re going to be laser focused on achieving those cost synergies. And maybe Ed as the perspective Vice Chairman of our Board will talk about the – will reaffirm the combined company’s Board’s focus on the same thing. But I also want – I don’t want to [lucid] the fact that, what also is very exciting about this transaction from my perspective is that, it’s going to create this amazingly effective growth platform for the company as well. So I think this is about both achieving the cost synergies and achieving a platform for further growth. So we are going to be achieving more at a lower cost and that’s what all this is about.

Ed, do you have a final comment?

Edward R. Muller

Yeah, I do. I agree with everything David said. The numbers are compelling, the future in terms of the company, its assets and so on is compelling. It’s also compelling to see the people working together, we went through a delicate process, we are planning the integration process, having seen such things and been involved in such things many times over the years, this one feels exactly where you’d hope it would be. This is going to be a fabulous organization, just fantabulous organization.

David Crane

So with that, I think we’d be happy to answer your questions. Chad is there any protocol, I mean the people who have mikes, the people want to identify themselves, how you want them to, how are dealing with?

Question-and-Answer Session

Chad Plotkin

(Inaudible)

David Crane

Well, I mean, just I want everyone to know, there are people listening on the webcast so if you could…

Greg Gordon – ISI Group

I will start with a basic question, Greg Gordon from ISI, submitting in for Jon Cohen, he is on vacation. There is always someone on vacation, when a deal happens, all right. So I have just a basic question, Ed, you are very clear on the footnotes here, that your guidance is based on the forward curve. I know that NRG has given a range and not a single point estimate for the two years, but relative to sort of your basic wholesale portfolio, are you also using the forward curve, or to put it in another way what drives the delta, what drives the range? And can we be confident that you are not using some sort of aggressive point of view on the forward curve?

Edward R. Muller

Yeah, understood. First of all on the wholesale part of our forecast, we have based that portion of our forward EBITDA guidance on a standalone basis for ’13 and ’14 on the same market curves and timing as GenOn’s standalone point estimates. Obviously, given the wider and the more disparate nature of our business, as is our practice from the retail standpoint, as well as potential additional expansion in spark spreads in ERCOT, we provided that range consistently we are on the same bandwidth from a magnitude standpoint, but what underpins it is the same assumption inspiring the wholesale portfolio.

Neil Mehta – Goldman Sachs Group Inc.

Neil Mehta here from Goldman Sachs. So with the incremental free cash flow, how should we be thinking about the way, David, you’re thinking about dividend growth and share buybacks?

David Crane

Well, what I would say, first of all, the dividend growth, I mean we’re just starting the dividend and we would like to grow it over time. we haven't started specifically about payout ratios or how much we want to grow to fit. Definitely, our goal would be to grow the dividend over time.

On share buybacks, our perspective there is that that it’s going to be the free cash flow generating machine. and obviously, I think sort of implied in your question is the thing that NRG has struggled with for the past eight years, I’ve been here, the RP basket is effectively put to rest by this transaction. So we have the potential to allocate capital to share buyback. I think it’s pre-mature to talk too much about that now. Because obviously, there is some reordering of the balance sheet that needs to be done over the next several months.

and I would say that – well, what I would say about share buybacks is that our company on our side and I’m sure GenOn, I don’t know if they use the same expressions, but we’ve always been focused on a prudent balance sheet management. and typically in the past, we’ve paid down debt as sort of an equal pace to doing share buybacks. And I think as we look at the balance sheet, we are going to be very focused on doing both of those things. If we have excess cash, we’ll be paying down debt and looking to do share buybacks when we can.

Angie Storozynski – Macquarie Research

Angie Storozynski, Macquarie. I have one question for you. So far you have quantified cost synergies, could you help us with revenue synergies so far the retail and the asset optimization is concerned?

David Crane

Well, I think the revenue synergies out there we’ve sort of focused on the cost side for now, I’d say that we think sort of revenue synergies aren’t upside; in the future, I think we’ve been fairly conservative on the asset synergies that we talk about. So we think there is more upside there. But I think at this point, we’re still getting to know each other, and it’s always under promise and over deliver. And so I don’t know that we’re prepared to talk further in the sort of quantitative detail Angie that you always demand of us. But I think it’s fair to say that there is more room to – there’s more benefits to come from this transaction over time. But let’s us get to know each other and get focused on the immediate task at hand first, I think what we’ve announced today is a pretty good start. So…

Steve Fleishman – Bank of America/Merrill Lynch

Steve Fleishman at Bank of America/Merrill Lynch. Couple of questions, just tying maybe to that one that you probably can’t answer as well. But in terms of thinking about the PGM fleet, and not just in terms of going retail, but just the way that fleet is hedged in the future, all those things that you can do differently on a bigger platform to maybe sell more the power forward in terms of like of full requirements there as opposed to a wholesale sale, ways to get better margins that way?

David Crane

I see you glancing furtively over Mauricio, because you know I’m going to kick this question. And you know Mauricio is a master at not answering any question, as to do with forward hedging strategy, but Mauricio let’s see how you answer Steve’s question there?

Mauricio Gutierrez

I mean, when we look at the portfolio and the composition of the gross margin, I mean, keep in mind that, I am going to say close to 60% already is capacity revenue or contract revenues. So that leaves you with 40% really on an open energy basis. And as we look at the hedge profile of GenOn today, it’s close to 50% for the next three years. So how do we think about optimizing that, whether we hedge more or not, I think we’ve been very clear that for the next two to three years, we’re pretty well hedged on both sides, and then we have a call option really on energy and driven by potentially higher natural gas prices. But are we going to change the way we’re optimizing and hedging the portfolio, I think that’s one of the things that we will evaluate in the coming month.

Steve Fleishman – Bank of America/Merrill Lynch

Just one other question…

Kirkland Andrews

We’ll give you a second. Let Steve receive the answer to that question.

Steve Fleishman – Bank of America/Merrill Lynch

The other I guess announcement today that both companies gave in someway 2014 guidance, I think, in both cases were above consensus forecasts that are out there. I don’t know if there is a way to give a sense of, is there certain things that are driving numbers to be higher than consensus for each company to kind of sell out the picture of today’s announcement?

Kirkland Andrews

Steve, as I recall you were skeptical on our last call, weren’t you that we could try and do 1,800, which we have a range here, but obviously you can figure out what the midpoint of that range is. So your question about whether or not we could give more detail on what drives that number for ’13, ’14, from my end I’ll speak only on behalf of NRG, I would say, we are going to have our quarterly call in two weeks time or something, maybe what we should do is try and provide more better build up there if you’re still skeptical of how we get to the numbers for 2013 and 2014. Or do you, Kirk, you get with that?

Kirkland Andrews

Yeah, I mean I think just – right in terms of (inaudible). Just to follow-up on my response to Greg’s question, the underpinning on the wholesale side is a consistent market view, that’s consistent with the numbers that added late on his revised guidance. The only other thing I’d say is that the retail component of that is consistent with the range of expectations that we’ve given to the street before. In an addition, in 2014 as I had reviewed in the first quarter, that takes into account the full compliment of the tier 1 (inaudible) portfolio, as well as the EBITDA contribution for us from our El Segundo project, and I think for Ed and Bill, their number is for the Marsh Landing project as well. So, there is some new sources of EBITDA as you’re going forward towards that as well. Bill, do you want to speak to [2014]?

J. William Holden III

Yeah, and Steve I think it’s harder for me to explain why our guidance would be different than the consensus, because I don’t know what people may have been assuming in their 2014 estimates. I can tell you what’s driving the year-on-year change that the principal factor is energy prices were higher relative to 2013. So, we have more energy revenue that’s partially offset by the realized value of hedges being lower in 2014. The other year-on-year driver is we get a full-year of operations in Marsh Landing instead of six months, which is what we have in 2013.

Julien Dumoulin-Smith – UBS

Great. Julien Dumoulin-Smith, UBS. Just a follow-up on what you guys discussed on the retail strategy. Just kind of following up on that more near-term if you will with regards to 2012 targets and 2013 to 2014, what kind of load growth are you anticipating to build out in the Mid-Atlantic, and how is that building into that EBITDA guidance that you guys discussed there?

Kirkland Andrews

Well, I think the – well, we haven’t given any specifics in terms of the retail component of our forward guidance. I think the load growth that we are assuming in PJM, which we can consider giving you some additional details of bandwidth on, is reasonable. And I would say relatively conservative given the combination of this platform, we’ve not taken into account any load growth in PJM that would come about by virtue of the uplift or the benefits we gain from this transaction. Said differently, our standalone EBITDA guidance is on the basis of what we expect to achieve with our retail business on our existing platform.

Unidentified Company Representative

Yeah, I can’t emphasize enough what Kirk is saying there. This is not underpinned by heroic assumptions of fantastic triple-digit growth in Northeast retail for us, far from it, it’s a conservative part of the overall contribution.

Julien Dumoulin-Smith – UBS

Great. Maybe just a quick clarification on the last question of ’13 to ’14 Jan EBITDA, the drive year-on-year, how much is coming from Marsh Landing perhaps can you be that exclusive perhaps?

Unidentified Company Representative

I don’t have it for Marsh Landing with in California, but the change in California is about $25 million.

Julien Dumoulin-Smith – UBS

Great. Thank you.

Unidentified Company Representative

(Inaudible)

Paul Patterson – Glenrock Associates LLC

Paul Patterson, Glenrock Associates. Just one quick sort of item, the working capital, sorry I missed this, working capital versus the interest savings for the free cash flow synergies, could you break that out a little bit more? I wasn't clear exactly which – how much working capital was contributing to it?

Edward R. Muller

Sure, if you walk through the numbers as I delineate them from top to bottom, and if you start with $1 billion of first numbers to $690 million Term Loan B, I think that is an L plus or 25 of the 2%, 4%, so and so around 6%, if you combine that with the remaining de-levering and again there is some fungibility around that $310 million of what our interest cost you assume in a price that is brought about by virtue of that de-levering, I think if you run through that and you combine with some of the incremental savings that you derive by eliminating the GenOn credit facility, by affording in some of the benefits we get from lower costs on LC because there is some LCs currently closing that will roll over into our facility.

Once you get all the way down to that, you're probably somewhere in the $80 million, $85 million range all in, you may take into account additionally in 2014 as I think in the GenOn, standalone projections, there is a re-financing assumption that I would suggest that the combined company probably has a lower cost opportunity to do so. We have not factored that in, which means within that $50 million, that re-financing, that lower capital cost is there, and that the bulk of that is what we expect to be the case with respect to lower collateral requirements, when I say working capital, I mean collateral posting for hedging the retail portfolio with respect to the fact that we don't have the same complement of physical generation in the Northeast, currently that we will on a pro forma basis, so we don't expect as much cash posting for collateral and retail as a result of that.

Paul Patterson – Glenrock Associates LLC

Okay. I mean just finally on the dividend, I know you sort of answered this, but it's just little bit unclear to me, you mentioned 2% indicating the Friday and that's of course gone down a little bit now and you also mentioned that…

David Crane

(Inaudible) may continue to go down. Sorry, sorry, Paul.

Paul Patterson – Glenrock Associates LLC

Well, the question is simply I mean I guess really sort of any outlook in terms of how should we think of this dividend and its potential growth, I mean I know you don’t want to comment too much on it, but basically though I mean how should we think about this, is this just hey, we’re not a dividend payer or is this something, should we expect to see potential growth as – you guys are not giving EBITDA guidance for 2014 stuff? So…

David Crane

Well, yeah, well, let me just say, let me just make an ad hoc comment about the last thing. I’m not sure we’re going to be getting in the practice Paul giving two year forward guidance going forward, but extraordinary deals require extraordinary measures and we figure that our shareholder base deserve to see what this – why we’re doing this transaction in the first full year. So that’s my polite way of saying. Don’t get used to the two year forward guidance.

But on the dividend, Paul, I’d have to tell you, there has been actually very little discussion either at the management level or at the Board of Directors level about how we’re going to take the dividend forward. We know we want to grow it, but at the same time, if some one is looking to invest in this combined company strictly as a yield play, there are always going to be utilities in our space, much lower beta companies that have a much higher dividend.

So it’s not the – basically, but the only thing I could add to what I’ve already said is that it’s not the aspiration of the Board of Directors of NRG or the management to try and compete with the Southern Company or something as a straight yield investment. So we want to grow the dividend because this is a business that we expect to grow over time and to throw off free cash flow, but we’re not trying to turn into a 5% or 6% yield company. I think actually – we probably should get up to this, we have some long suffering people on the front row over here, so why don’t – next why don’t we go to front row on the right next.

Michael J. Lapides – Goldman Sachs & Co.

Okay, David, Ed, Michael Lapides of Goldman Sachs. Congratulations. Two questions, one when you look at the portfolio of assets, is there anything that you deem – either assets or regions that you deem as non-core? And then the second question is, we’re combining one or two companies who have very diverse portfolios, but one of the things you both are or some of the nations bar just coal generators. How do you think about the bio power or leverage this gives in negotiating both with the coal suppliers and the rail companies, and how do you quantify that?

David Crane

Well, so on the first question, I think both companies in terms of geographic footprint have done a good job over the last few years of getting their portfolios down to sort of being where they want to be. I know in the eight years I’ve been in NRG, I think there has been a lot of focus and I think the three or four acquisitions we’ve done, but we’ve sold 26 assets, I think since I have been herein. And people would have noticed last week that, we sold one of our two remaining international assets when we finally got Schkopau sold in Germany.

So I think Michael, in terms of geographic footprint there maybe a couple outliers, but for the most part, the two companies come together with the assets in the markets they want to be in. I think the bigger question is that, now it’s time to optimize within those regions because if you just – it’s just axiomatic that if you have a larger portfolio in a particular region, then you figure out the best way to make money with the portfolio. So I think we have a lot of opportunity there and that sort of ties into the coal side is that, coal procurement whether it’s with the railroads. The railroads have pretty strong market power themselves. So just because we combine this company, I’m not sure that’s something we’d sort of go to the Burlington Northern and say there is a new share up intact. So, but I mean let’s face it, this scale helps on the procurement side and certainly we will look particularly with the coal, with the commodity itself and with the transportation service, we will look to take advantage of that to the fullest extent we can. And I don’t know, if you’ve anything to add to that, Mauricio?

Mauricio Gutierrez

I would agree with that. I mean it’s nothing as if we suddenly are such a dominant player that we can call the shots, but in just being a very large customer doesn’t give us the ability to certainly be heard.

Unidentified Company Representative

Well, let me just add, because – since I made sort of a flipping comment about Burlington Northern, I don’t want to get, a recall from Matt Rose. But, yeah, with – one of the thing that has been a positive response in the last several months as coal plants have come under pressure, is that the railroads have taken a very constructive attitude towards working with us that those of us who use coal in our plants. And so Matt, if you are listening, we’re looking forward to the continuation of that and start the relationship. Mauricio, do you have anything to add?

Mauricio Gutierrez

No, thank you for that.

Keith T. Stanley – Deutsche Bank Securities, Inc.

Hi, Keith Stanley from Deutsche Bank. So just looking at some of the accretion and coming back to the financial projection, you guys have shown some pretty compelling numbers on 2014. And I guess just looking long-term and thinking about sort of the financial outlook over sort of a recurring ongoing basis. Do you see 2014 as really kind of a cleanlier from both companies perspective, it seems like GenOn probably has a more significant in the money hedge value, little bit of a higher sort of RPM capacity revenue stream in 2014. So just to clarify, are there any indication of do you think the deal on core EBITDA and free cash metrics is still accretive in 2015 for example or over the long run?

Unidentified Company Representative

The answer to that question is yes. Certainly a transaction that is accretive on a single year, it does not necessarily be the same compelling transaction that you make. I mean certainly we focused on the financial merits of this transaction over the long-haul and well we were only providing the guidance around 2014. I think the combination of what we see on a run rate basis especially taken into effect what this means for us from a platform or combined platform standpoint and realizing potentially greater results, there are standalone aspiration on a retail basis, then that adds to our confidence and comfort in the ongoing accretive benefits of the transaction.

Ali Agha – Suntrust Robinson Humphrey

Ali Agha, Suntrust. Two quick questions. One is, I know the GenOn standalone, you talked a lot about the sensitivities to gas price moves every dollar change, just wondering for the combined company, could you give us some rough sensitivity, a dollar change in gas price what that would do to EBITDA, some rule of thumb for us?

Unidentified Company Representative

I don’t have a – I mean, it’s a good question, you are talking about an open EBITDA perspective, you put the two together and what does it look like. I mean that sensitivity is the number that we give in our – but as I think is looking down that – I don’t think we’ve don’t that yet for us, but we will get that number to you soon.

Ali Agha – Suntrust Robinson Humphrey

Okay. And my second question if I could, Ed, you said, you bid GenOn with Mirant and RRI, and that worked, the same kind of logic applied here in this combination and I know the focus is obviously to execute here. But is this model replicable going forward, I mean there is merchant IPP with a similar profile to you guys out there?

Edward R. Muller

What company is that?

Ali Agha – Suntrust Robinson Humphrey

Texas based. So should we think that the focus next year or so is just to complete this or could we see another one, I mean the logic still applies or does it not going forward?

Edward R. Muller

I don’t think the regulators would allow John Young and Energy Plus to get together. Is that what you’re talking about?

Ali Agha – Suntrust Robinson Humphrey

Somebody who was in bankruptcy right now.

Edward R. Muller

I think we’re very focused on this transaction right now. I mean whether it’s replicable, again down the road or something, we’ll cross that bridge when we come to. We’ve got our work cut out for ourselves for the next several months. And we really like the fit of the people and the assets and so to us, we’re not looking past, maybe it’s like the standards [forward] cliché, we’re not looking past this next game, this next game is everything to us. And this is it for us right now as we get this done successfully as you said in your preamble that the focus for us is on execution right now.

James L. Dobson – Wunderlich Securities, Inc.

Jay Dobson with Wunderlich Securities. Two questions, first, maybe we can start with David and Ed. Maybe you could tell us exactly what the responsibilities of a Vice Chairman of the Board will be? And then second, I noticed in the merger agreement, Kirk that it’s a reorganization for U.S. tax purposes and how that impacts the NOL on GenOn side?

David Crane

Well, I mean, I think, the way our Board works, I would just say that – the two main roles of the Vice Chairman like a Vice anything is like if the Chairman is not present, the Vice Chairman runs the Board, runs the executive sessions of the Board, which our Board has plenty of executive sessions, I know because I’m excluded all the time. So that would be one role. the second thing is, NRG is a very busy company, it’s a very busy Board, we have a few more Board committees than the average, kind of we have six committees of which two of the committees are – there is the normal committees and then we have a finance committee that sort of takes a detail dive in any potential capital investment. And then we have a – what we call a COAC committee where it stands for commercial operations, which is essentially a risk oversight committee.

GenOn actually has the same committee, but they actually combine those two into one. The way that our Board works is that when you have six committees even if you have a big Board, you have some people who are on more than one committee, and of course, now Board members are busy. So the Chairman of our Board is an exo-physio member of every committee. So if a particular committee is lacking requirement, the Chairman sits in. Ed is Vice Chairman, will be an exo-physio member of all six committees of the Board as well. And so I think it strengthens the Board’s ability to provide proper supervision to the company. I don’t know Ed if that…

Edward R. Muller

Yeah. That’s exactly – the one thing I would add is that my intention and plan is subject to scheduling is to attend as many of the committee meetings as possible to continue at a full breadth, a view over the full breadth of the business and the issues.

J. William Holden III

And at GenOn tax point, well, correct, the transaction is structured as a tax free reorganization, so that it doesn’t result in the shares to be received by the GenOn shareholder has been taxable in that sense. But nonetheless, we do anticipate this transaction resulting, and I believe in that part of the appendix of the materials that we circulated at today meeting there is some high level summary of this, but nonetheless, we anticipate this to trigger an ownership change under Section 382, which would result in an annual limitation. We’ve certainly taken that into account, NRG have taken that into account and considering the road of value implications of the transaction. And – but we do not anticipate that this will have a material impact on our combined tax appetite positively or negatively.

Although, I would say in fact the totality of the tax impacts had to be taken into account, first of all, the first order income, you got a 382 limitation, obviously that reduces your ability at least on the GenOn side of the equation to utilize those tax benefits, but we also had an increase in taxable income that takes place by virtue of the synergies for example, which given our tax position accelerate to our appetite forward.

So there were some pushes and pulls around all of this. But the high-level headline answer is, yes, we have taken into consideration that this does trigger a 382 limitation on this thing, GenOn NOL.

James L. Dobson – Wunderlich Securities, Inc.

No, no. Thank you.

Brian Russo – Ladenburg Thalmann & Company

Hi, Brian Russo, Ladenburg Thalmann. Could you just elaborate on the impact that the transaction has on the restricted covenants at the Energy’s senior debt?

Edward R. Muller

Are you referring to the RP basket?

Brian Russo – Ladenburg Thalmann & Company

Yes.

Edward R. Muller

Yeah, okay. As you all recall in the first quarter, given our previously announced intention to initiate the dividend, obviously it’s more important that we would actually announce the dividend. We had brought the market current in terms of the governing aspect of our 2017 indenture, that being the RP basket, the amount of capital that could be returned to shareholders actually buybacks or dividends that number was $135 million, I believe it was the number we disclosed in the first quarter.

The sale of the Schkopau plant adds to that basket plus or minus on a dollar-for-dollar basis, but that is completely eclipsed by the fact that 100% of the shares and value associated with those issue in that transaction adds to that RP basket also on a dollars-for-dollar basis. And so, well, I’m not providing a specific update, it is safe to say that our current RP basket, which governs our ability to engage in repurchases as importantly giving our announcement of yesterday the dividend is measured in the billion.

Steve Fleishman – Bank of America/Merrill Lynch

Yeah. Steve Fleishman, again, a question for Ed. You’re stock have been very vital this year. And obviously this is a huge premium to where it was a month ago, but it’s probably about the same in terms of exchange right now as the stock price was a couple months ago, clearly, a lot of strategic and value benefits from this transaction. But just how did you kind of get comfortable with the – knowing what the exchange ratio should be here in your board, just given the volatility of where you’re stock has been?

Edward R. Muller

It’s a very good question. And we spent a lot of time on it, it’s probably the subject that was required the most negotiating, which is why it’s a four-digit exchange ratio. But I propose (inaudible) – but I also think about this in classic Graham and Dodd analysis. It’s always interesting to say what it was yesterday, and what I think it's going to be tomorrow, but it is today what it is. And I can be unhappy with it and frequently I'm in a – virtually every CEO where his or her soul should always be unhappy with their stock price. And I've consistently been unhappy, but looking at this and looking at a variety of factors and then looking at the value being created here, which is just – just to be clear, this is a boatload of value and it is a boatload of value for both sets of shareholders and that to me overwhelmed any considerations of where we are in the various volatility cycles and issues floating around. It’s just – you're going to come to a lot of meetings during you careers before you find a deal that creates this kind of value.

David Crane

Well, that’s great. Can we – just one, I don’t know if we can actually top that last one. I’d like to conclude now, but since are you about to give the mike. So one last questions if – what?

Steve Fleishman – Bank of America/Merrill Lynch

It was a better answer for my question.

David Crane

Okay. Well, we appreciate again you all taking the time and I look forward to reporting on this as we go forward. So, thank you very much.

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