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Power from the North

Restructuring Roundtable Peter D. Fuller February 29, 2008. Power from the North. NRG Company Overview. 3 rd Fastest Growing Co. in Fortune 500 Listed: NYSE (NRG) Market Cap.: ~$9 billion Employees: 3,640 Generating Assets: 23,000 MW, primarily in four domestic regions. Northeast.

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Power from the North

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  1. Restructuring Roundtable Peter D. Fuller February 29, 2008 Power from the North

  2. NRG Company Overview 3rd Fastest Growing Co. in Fortune 500 Listed: NYSE (NRG) Market Cap.: ~$9 billion Employees: 3,640 Generating Assets: 23,000 MW, primarily in four domestic regions Northeast Western Gas 1,555 MW Gas 21% 1,965 MW Oil 3,555 MW Coal 100% 2,130 MW 50% 29% Texas South Central 1 Combined Scale Nuclear 1,100 MW 10% Gas 1,360 MW Oil Coal 48% 1,490 Nuclear 3,555 MW Gas Coal 52% 1,100 MW 15% 5,480 MW 4,180 MW 5% 51% 39% Gas 10,470 MW 46% Coal 7,815 MW 34% Includes 125 MW as part of NRG ’ s Thermal assets. For combined scale, approximately 3,430 MW is dual - 1 fueled capable. Reflects only domestic generation capacity as of December 31, 2006 MW data as of December 31, 2006 NRG: The center of the power industry value chain.

  3. NRG Capabilities & Strategies Capabilities Strategies • NRG Energy • Develop and finance a large range of power projects • Padoma Wind Power • NRG wind team –– focused on developing projects across the nation • NRG Thermal • CHP and district heating installations across the country • Repowering NRG • Nuclear • Advanced Coal • Carbon Capture and • Sequestration • Wind • Natural Gas • US Climate Action Partnership • advocating federal legislation • to reduce greenhouse gas • emissions • Combating Climate Change (“3C”) • advocating for the global • business community to lead on • creating a low-carbon society NRG is committed to leadership in addressing carbon emissions

  4. A Comprehensive Development Program that Meets the Growing Energy Needs of our Domestic Markets

  5. NRG’s Low/No Carbon Lineup PADOMA WIND POWER • NRG wind team – Padoma Wind Power – focused on projects across the nation. • Plan to develop over 500MW by the beginning of the next decade. IGCC (Gasified Coal) • Convert coal to synthesis gas via partial oxidation; Removes pollutants from gas prior to combustion • Removes 95% of SO2, NOx and 65% of CO2 with carbon capture and sequestration. ECO2 POWERSPAN • Partnership with Powerspan to implement pre-combustion carbon capture large-scale test at WA Parish coal plant in Texas. PLASMA • Plasma torches break coal down into its molecular structure to become synthetic gas; similar emissions profile to IGCC. • Can be used on smaller plants that might not otherwise be retrofitted

  6. Power System Economics • Power system managers historically have found the least-cost way to satisfy the service, reliability and environmental needs of their customers • Scenario Analysis (2007) found that gas-fired generation is among the only economically-viable options • RPS, RGGI, and other cap-and-trade programs are efforts to internalize in power system economics the societal externalities related to fuel sources, climate change, etc.

  7. RPS Requirements are Increasing • Approximately 10.8% of regional load in 2012, rising to approximately 15.8% by 2020 Source: Compiled from Union of Concerned Scientists data, www.ucsusa.org/clean_energy (2007); NH HB 873-FN-LOCAL

  8. Market Response • RGGI and RPS alter the economics in favor of low/zero emission sources, but how much? • RGGI • auction rules yet to be finalized; price estimates vary widely • RPS • According to ISO’s RSP07, the projects currently in the queue could satisfy 81% of new RPS requirements • CT Clean Energy Fund has testified that the current project pipeline can meet the region’s RPS in 2012, and is robust into the future • State and regional siting policies will be critical in meeting the requirements

  9. Tie Benefits • ‘Leaning’ on neighbors may no longer be the right model • Placing a market value on capacity benefits from neighboring regions will ensure efficient decisions Source: New England Power Generators Association

  10. Expanded Imports vs. Internal Development • Economics of new transmission and generation development in Canada • All-in costs not yet considered • Any new resources should be tested against the market • Any new resources should be contractual, not tie benefits • Economic Development impacts • Imports create operational challenges, contingency considerations

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