Powering Connecticut

Transcription

1 Powering Connecticut What s the Deal 2010 October 4, 2010 Raymond G. Long Vice President, Government Affairs NRG Energy, Inc.

2 Safe Harbor Statement This Presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of Forward-looking statements are subject to certain risks, uncertainties and assumptions and typically can be identified by the use of words such as expect, estimate, should, anticipate, forecast, plan, guidance, believe, will and similar terms. Although NRG believes that these expectations are reasonable, it can give no assurance that these expectations will prove to have been correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated above include, among others, general economic conditions, hazards customary in the power industry, weather conditions, competition in wholesale power markets, the volatility of energy and fuel prices, failure of customers to perform under contracts, changes in the wholesale power markets, changes in government regulation of markets and of environmental emissions, the condition of capital markets generally, adverse results in current and future litigation, failure to identify or successfully implement acquisitions and repowerings, and the inability to implement value enhancing improvements to plant operations and companywide processes. NRG undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors that could cause actual results to differ materially from those contemplated in the forward-looking statements included in this Presentation should be considered in connection with information regarding risks and uncertainties that may affect NRG's future results included in NRG's filings with the Securities and Exchange Commission at 2

3 Company Overview Added to the S&P 500 Index (2010) Fortune 500 Ranked 12 th Fastest Growing Company (2009) Fortune 500 Ranked in top 10% for Best Investment (2008) Platt s 2007 Recipient of Energy Company and Industry Leader of the Year Listed: NYSE (NRG); Market Cap.: ~$6 billion; Employees: ~4,300 Generating Assets: ~23,500 MW, primarily in four domestic regions NRG: The center of the power industry value chain NRG Reliant Energy Fuel Supply Fuel Transportation Power Generation Transmission Distribution Retail (Customer) Oil, gas, coal companies Common carriers: Pipelines, Trains, Ships Investor and Government Owned Utilities Merchant Generator (NRG, etc.) From Generator to Distribution substation From Distribution substation to home or business Residential, commercial, and industrial (1) MW data as of December 31, 2009 NRG US Wholesale generation totaling 23,475 MW (1) 10,660 MW gas 7,560 MW coal 3,715 MW oil 1,175 MW nuclear 470 MW wind & solar Reliant Energy retail: Serves nearly 1.6 mm customers Mass: 2nd largest in Texas with ~28% market share C&I: largest in Texas over 35 TWh annual sales 3

4 NRG: Portfolio Western Gas 2,130MW 99% Northeast Oil 3,715 MW 53% Gas 1,430 MW 20% Coal 1,870 MW 27% Solar PV 21 MW <1% Nuclear 1,175 MW 10% Gas Gas 5,475 MW 5,480 MW 50% 49% Texas Coal 4,165 MW 36% Wind 450 MW 4% 1 Includes 115 MW as part of NRG s Thermal assets. For combined scale, approximately 2,095 MW is dual-fuel capable. Reflects only domestic generation capacity as of December 31, 2009 South Central Coal 1,495 52% Gas 1,355 MW 48% Wind 450 MW 2% Nuclear 1,175 MW 5% Asset scale & diversity of fuel and location provide value creation opportunities Combined Scale Coal 7,560 MW 32% Oil 3,715 MW 16% Gas 10,660 MW 45% 4

5 Northeast Region Overview Largest geographic region comprised of three ISO/RTOs Oswego Middletown Montville Huntley Meriden Dunkirk Keystone Conemaugh Vienna Astoria Arthur Kill Dover Cos Cob Indian River Asbury Park Somerset Devon - (ISO-NE, NYISO & PJM) Princeton, New Jersey Site of corporate office Asbury Park Press, Freehold NJ 2 MW behind the fence Norwalk Harbor Oil 3.7 GW 53% Gas 1.4 GW 20% Coal 1.9 GW 27% 7,020 MW located in Connecticut, Massachusetts, New York, Delaware, Maryland, and Pennsylvania 5

6 NRG in Connecticut Existing NRG Connecticut Generating Stations: Montville Oil/Gas - Steam 497 MW Middletown Oil/Gas - Steam 770 MW Devon ULSD/Gas - Fast Start Turbines 160 MW Norwalk Harbor Oil - Steam 378MW Cos Cob ULSD - Fast Start Turbines 100 MW Remote Jets Oil - Fast Start Turbines 60MW NRG - Generation in Connecticut for over 10 years 6

7 NRG Connecticut Energy Projects Cos Cob 40 MW Summer 2008 GenConn Devon 200 MW Summer 2010 GenConn Middletown 200 MW Under Construction Montville Biomass 40 MW Permitted Meriden 540 MW Permitted Long-term off-take contracts are necessary to finance energy projects. 7

8 CT Development Pipeline New units awarded contracts pursuant to DPUC RFP processes Source: ESAI Power analysis 8

9 How are these Projects Getting Done 2005 Energy Independence Act 2007 Energy Act Next Wave of Projects CT Integrated Resource Plan (IRP) Process Long term contracts for needed generation infrastructure within CT. 9

10 CT Needs to Replace Aging Infrastructure Connecticut s fossil steam units more than 30 years old 2,551 MW Middletown (NRG) 770MW Montville (NRG) 490 MW Norwalk Harbor (NRG) 330MW New Haven Harbor (PSEG) 448MW Bridgeport Harbor (PSEG) 513MW Current IRP process is evaluating phase out of older generation with development of new, efficient and cost effective technologies. 10

11 What CT Consumers Get Everyone wants reliable power Issue: Aging Infrastructure Solution: Appropriately sited new generation along with transmission and distribution improvements to match local load requirements. Consumers want stable, low-cost power Issue: High electric prices Solution: Capacity market reforms, new generation, Marcellus Shale gas opportunities Everyone wants a cleaner environment Issue: Older generation continues to operate; concerns over emissions and environment Solution: Long-term contracts and capacity markets to support repowering and new generation, acceptance of current technologies readily available and abundant fuel sources 11

12 Infrastructure = Generation and Transmission Transmission Generation 1,100MW transfer capability $2 billion installed Annual cost ~$400 million 1,100MW combined cycle $1,700/kW installed Annual fixed cost ~$374 million Annual fixed cost $340/kW-year Minus energy and capacity net revenues of $173/kW-year (ISO estimate, 2008) Net annual cost $364/kW-year Net annual cost $167/kW-year Must be a balance not an either-or decision 12

13 Facts about your Electric Bill Generation costs have remained fairly constant over the past 10 years. Fuel costs and regulated charges like transmission and distribution have driven increases in electricity costs. Transmission and distribution charges vary the most from state to state. Connecticut M assachusetts Rhode Island G 12.1 T 1.5 D 5.0 G 12.1 T 1.1 D 3.8 G 10.8 T 1.2 D 3.2 Other 1.2 Other 1.2 Other 0.3 Source: EEI Typical Bills and Average Rates Report; Summer

14 So CT has led the region in developing energy infrastructure. The legislature has set up a process to continue evaluating infrastructure needs going forward. Current IRP process is evaluating the aging infrastructure and phased in replacement of older generation. The cost of electricity is impacted most significantly by the price of fuel, primarily natural gas, and by regulated T/D costs. Generation and Transmission investment must be evaluated in tandem to provide the most costeffective solution for CT consumers. 14

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