Filed by Mirant Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934, as amended
Subject Company: Mirant Corporation
(Commission File No. 001-16107)
Below is a copy of the presentation that was given by Mirant on its Second Quarter 2010 Earnings Results on August 6, 2010
 Dickerson Generating Station Mirant Corporation Second Quarter 2010 Earnings Results August 6, 2010 |
 2 Safe Harbor Statement Forward-Looking Statements This presentation may contain statements, estimates or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. In some cases, one can identify forward-looking statements by terminology such as “will,” “expect,” “plan,” “lead,” “project” or the negative of these terms or other comparable terminology. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from Mirant’s historical experience and our present expectations or projections. These risks include, but are not limited to: (i) legislative and regulatory initiatives relating to the electric utility industry; (ii) changes in, or changes in the application of, environmental or other laws; (iii) failure of our assets to perform as expected, including due to outages for unscheduled maintenance or repair; (iv) changes in market conditions or the entry of additional competition in our markets; (v) the expected timing and likelihood of completion of the proposed merger with RRI Energy, including the timing, receipt and terms and conditions of required stockholder, governmental and regulatory approvals that may reduce anticipated benefits or cause the parties to abandon the merger; the ability of the parties to arrange debt financing in an amount sufficient to fund the refinancing contemplated in, and on terms consistent with, the Merger Agreement; the diversion of management’s time and attention from our ongoing business during the time we are seeking to complete the merger; the ability to maintain relationships with employees, customers and suppliers; the ability to integrate successfully the businesses and realize cost savings and any other synergies; and the risk that credit ratings of the combined company or its subsidiaries may be different from what the companies expect; and (vi) those factors contained in our periodic reports filed with the SEC, including in our Quarterly Report on Form 10-Q for the period ended June 30, 2010. The forward-looking information in this document is given as of this date only, and Mirant assumes no duty to update this information. Non-GAAP Financial Information The following presentation includes certain “non-GAAP financial measures” as defined in Regulation G under the Securities Exchange Act of 1934. A schedule is attached hereto and is posted on the Company’s website at mirant.com (in the Investor Relations - Presentations section) that reconciles the non-GAAP financial measures included in the following presentation to the most directly comparable financial measures calculated and presented in accordance with Generally Accepted Accounting Principles. In addition, the Company has included a more detailed description of each of the non-GAAP financial measures used in this presentation, together with a discussion of the usefulness and purpose of these measures as Exhibit 99.2 to the Company’s Current Report on Form 8-K furnished to the SEC with its earnings press release. |
 3 Safe Harbor Statement Additional Information and Where To Find It This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with the proposed merger between RRI Energy and Mirant, on May 28, 2010, RRI Energy filed with the SEC a Registration Statement on Form S-4 that includes a preliminary joint proxy statement of RRI Energy and Mirant and that also constitutes a preliminary prospectus of RRI Energy. On July 6, 2010, RRI Energy amended these materials. These materials are not yet final and will be further amended. RRI Energy and Mirant will distribute the final joint proxy statement/prospectus to their respective shareholders. RRI Energy and Mirant urge investors and shareholders to read the registration statement, and any other relevant documents filed with the SEC, including the preliminary joint proxy statement/prospectus that is a part of the registration statement, and the definitive joint proxy statement/prospectus, when available, because they contain or will contain important information. You may obtain copies of all documents filed with the SEC Participants in The Merger Solicitation RRI Energy, Mirant, and their respective directors, executive officers and certain other members of management and employees may be soliciting proxies from RRI Energy and Mirant shareholders in favor of the merger and related matters. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of RRI Energy and Mirant shareholders in connection with the proposed merger is contained in the preliminary joint proxy statement/prospectus and will be contained in the definitive joint proxy statement/prospectus when it becomes available. You can find information about RRI Energy’s executive officers and directors in its definitive proxy statement filed with the SEC on April 1, 2010. You can find information about Mirant’s executive officers and directors in its definitive proxy statement filed with the SEC on March 26, 2010 and supplemented on April 28, 2010. Additional information about RRI Energy’s executive officers and directors and Mirant’s executive officers and directors can be found in the above-referenced Registration Statement on Form S-4. You can obtain free copies of these documents from RRI Energy and Mirant as described above. regarding this transaction, free of charge, at the SEC’s website (www.sec.gov). You may also obtain these documents, free of charge, from RRI Energy’s website (www.rrienergy.com) under the tab “Investor Relations” and then under the heading “Company Filings.” You may also obtain these documents, free of charge, from Mirant’s website (www.mirant.com) under the tab “Investor Relations” and then under the heading “SEC Filings.” |
 4 GenOn Energy – Merger Update Filed Amended S-4 in response to SEC comment letter on July 6, 2010 Entered into agreements with financial institutions Commitment for $750 million to $1.0 billion five-year revolving credit facility Commercially reasonable efforts to syndicate a $500 million term loan Underwrite up to $1.9 billion of senior unsecured notes Regulatory approvals Received New York State Public Service Commission clearance on July 20, 2010 Received Federal Energy Regulatory Commission (FERC) approval on August 2, 2010 Received Hart-Scott-Rodino second request from the Department of Justice on July 15, 2010 Merger expected to close by the end of 2010 Operational Performance - Cash Generation - Prudent Growth |
 5 Financial Highlights ($millions) In Q2, change in Adjusted EBITDA principally attributable to - Lower realized value of hedges - Lower energy gross margins from fuel oil management activities Higher energy gross margins from Mid-Atlantic generation For 6 Months, change in Adjusted EBITDA also attributable to - Lower energy gross margins from Northeast generation - Lower net gains from sales of emissions allowances Adjusted EBITDA 149 200 311 395 Q2 6 Months 2010 2009 2010 2009 Operational Performance - Cash Generation - Prudent Growth |
 6 Operations Highlights Mirant’s safety incident rates remain at low levels Commercial Availability, the percent of maximum achievable energy gross margin that was realized in the period, remains at a high level Commercial Availability Safety Incident Rates Lost Time Incident Rate Lost Time EEI Top Quartile Benchmark Recordable Incident Rate Recordable EEI Top Quartile Benchmark Operational Performance - Cash Generation - Prudent Growth |
 7 Market Update Since May Near term (2010) Natural gas prices increased and currently trade around $4.85/mmBtu for the balance of the year Power prices in PJM increased and heat rates expanded as power rose more than natural gas Northern Appalachian coal prices increased and trade around $62/ton On-peak dark spreads increased while off-peak dark spreads decreased Longer term (2011 – 2014) Natural gas prices decreased and currently trade in a range of $5.20 to $5.80/mmBtu Power prices in PJM decreased but heat rates expanded as power declined less than natural gas Northern Appalachian coal prices were relatively unchanged and are quoted in a range of $63– $75/ton Dark spreads generally declined Operational Performance - Cash Generation - Prudent Growth |
 8 Electricity Markets Reserve Margins Forecasted reserve margins incorporate the latest information from each ISO Eastern markets are forecasted to tighten because little generation is being built Source: Mirant forecasts Operational Performance - Cash Generation - Prudent Growth 8% 12% 16% 20% 24% 28% 32% 36% 40% 2010 2011 2012 2013 2014 New York East N.California PJM East New England PJM RTO (ex. COMED) Target Reserve range |
 9 Hedge Levels Based on Expected Total Generation Aggregate Baseload Coal 1. Positions as of July 13, 2010 Shaded boxes represent net additions to prior guidance; empty boxes represent net decreases since prior guidance 2. 2010 represents period between August and December 3. Power hedges include hedges with both power and natural gas Operational Performance - Cash Generation - Prudent Growth 0% 20% 40% 60% 80% 100% Power Fuel 2010 2011 2012 2013 2014 0% 20% 40% 60% 80% 100% Power Fuel 2010 2011 2012 2013 2014 3 3 2 2 |
 10 Marsh Landing Generating Station • California Energy Commission preliminary approval of environmental permits issued on July 26, 2010 Final decision expected on August 25, 2010 • CPUC approval of PPA with PG&E issued on July 29, 2010 • Project financing to close in Q3 • Construction expected to begin in late 2010 and to be completed by mid-2013 Operational Performance - Cash Generation - Prudent Growth |
 11 Financial Results (millions, except per share amounts) 1 Per share amount for Q2 2010 net loss is based on basic weighted average shares outstanding of 145 million Operational Performance - Cash Generation - Prudent Growth 6 Months 2010 2009 2010 2009 Net income (loss) (263) $ 163 $ 144 $ 543 $ Unrealized (gains) losses on derivatives 340 14 (12) (240) Bankruptcy charges and legal contingencies - (62) 1 (62) Postretirement benefit curtailment gain (37) - (37) - Other 6 16 11 5 Adjusted net income 46 131 107 246 Interest, taxes, depreciation & amortization 103 69 204 149 Adjusted EBITDA 149 $ 200 $ 311 $ 395 $ Diluted weighted average shares outstanding 146 145 146 145 Earnings per share: Net income (loss) (1.81) $ 1 1.12 $ 0.99 $ 3.74 $ Adjusted net income 0.32 $ 0.90 $ 0.73 $ 1.70 $ Q2 |
 12 Realized Gross Margin (millions) Operational Performance - Cash Generation - Prudent Growth Q2 2010 Q2 2009 YTD 2010 YTD 2009 Energy 96 71 206 182 Contracted & Capacity 138 137 280 271 Realized Value of Hedges 78 152 147 260 Total Realized Gross Margin 312 360 633 713 $312 $360 $633 $713 $0 $100 $200 $300 $400 $500 $600 $700 $800 |
 13 Adjusted Free Cash Flow (millions, except per share amounts) 2010 2009 2010 2009 Net cash provided by (used in) operating activities (152) $ 113 $ 150 $ 384 $ Bankruptcy claim payments - - - 1 Emission allowance sales proceeds 1 2 3 17 Capitalized interest (3) (31) (3) (33) Adjusted net cash provided by (used in) operating activities (154) 84 150 369 Capital expenditures, excluding capitalized interest (72) (176) (157) (345) Adjusted free cash flow (226) (92) (7) 24 MD Healthy Air Act capital expenditures 29 126 77 248 Marsh Landing capital expenditures and working capital 2 - 2 - Adjusted free cash flow (w/o MD HAA & Marsh Landing) (195) $ 34 $ 72 $ 272 $ Diluted weighted average shares outstanding 146 145 146 145 Adjusted free cash flow per share (w/o MD HAA & Marsh Landing) (1.34) $ 0.23 $ 0.49 $ 1.88 $ 6 Months Q2 Operational Performance - Cash Generation - Prudent Growth |
 14 Consolidated Debt and Liquidity (millions) Debt $ 2,562 Cash and cash equivalents Mirant Corporation 1,388 $ Mirant Americas Generation - Mirant North America 272 Mirant Mid-Atlantic 159 Other 30 Total cash and cash equivalents 1,849 Less restricted and reserved (11) Available cash & cash equivalents 1,838 Revolver & LC availability 662 Total available liquidity 2,500 $ June 30, 2010 Operational Performance - Cash Generation - Prudent Growth |
 15 Capital Expenditures (millions) Maryland Healthy Air Act spending prior to 2010 totaled approximately $1.405 billion Normalized maintenance CapEx of $50 million to $60 million per year Other environmental expenditures include the remaining $33 million deposited in escrow for control of small dust particles as part of the Potomac River agreement Operational Performance - Cash Generation - Prudent Growth 2010 ¹ 2011 Environmental Maryland Healthy Air Act 269 $ - $ Other 10 33 Maintenance 103 45 Construction Marsh Landing Generating Station 47 185 Other 30 42 Other 18 11 Total Capital Expenditures² 477 $ 316 $ 1 Includes actuals for January through June 2 Excludes capitalized interest unrelated to the Marsh Landing project financing Forecast |
 16 Takeaways Creation of GenOn Energy will deliver significant value to stockholders Hedging cushioned Mirant in Q2 2010 from the effects of relatively low commodity prices Eastern markets are forecasted to tighten because little generation is being built Mirant continues to make progress to permit, finance and commence construction of its Marsh Landing generating facility later in 2010 Operational Performance - Cash Generation - Prudent Growth |
 Appendix |
 18 Federal NOL Status Mirant’s estimated Federal NOL balance at December 31, 2009 was $2.7 billion An “ownership change” requires Mirant to reset the limitation that determines how much annual taxable income may be offset by its NOLs in future years An ownership change occurs if there is an increase of more than 50 percentage points in the ownership of Mirant stock held by large Mirant shareholders from the date of a previous ownership change New limitation depends on Mirant stock value on the ownership change date and an interest rate determined by the IRS We expect that Mirant will experience an “ownership change” for federal income tax purposes on the closing date of the proposed merger with RRI Energy RRI Energy has advised us that they expect RRI Energy to experience an ownership change on the closing date of the merger as well Operational Performance - Cash Generation - Prudent Growth |
 19 Federal NOL Status (Cont.) Assuming the shares of Mirant and RRI Energy are at or near current prices on the closing date of the proposed merger, Mirant expects that The combined company, GenOn Energy, will be unable to use any pre merger NOLs for the first 5 years following the merger Thereafter, assuming sufficient taxable income, GenOn will be able to use approximately $100MM – $125MM per year of pre merger NOLs until such NOLs expire Based on current commodity price forecasts, Mirant expects that GenOn Energy will pay only federal Alternative Minimum Tax and certain state income taxes during the 5 years immediately following the merger Mirant‘s Board of Directors has extended its stockholder rights plan and the plan was approved at its 2010 Annual Meeting of Stockholders held on May 6, 2010 There is no assurance that the stockholder rights plan will prevent an ownership change prior to the closing date of the proposed merger Operational Performance - Cash Generation - Prudent Growth |
 20 Additional Hedge Information 1 Projected as of July 13, 2010 2 Power hedges include hedges with both power and natural gas 3 Realized Value of Hedges are nominal values and do not include certain adjustments required under fair value accounting ($millions) Q2 2010 Q2 2009 YTD 2010 YTD 2009 2010 2011 2012 2013 2014 Power 2 91 $ 194 $ 175 $ 323 $ 333 $ 221 $ 172 $ 176 $ 169 $ Fuel (13) (42) (28) (63) (51) (33) (35) (10) (1) Realized Value of Hedges 78 $ 152 $ 147 $ 260 $ 282 $ 188 $ 137 $ 166 $ 168 $ Projected 1,3 Actual Operational Performance - Cash Generation - Prudent Growth Aug-Dec 2010 2011 2012 2013 2.41 $ 2.79 $ 3.32 $ 3.28 $ Average contract price of hedged coal before delivery ($/mmBtu) |
 21 Quarterly Generation by Dispatch Type Operational Performance - Cash Generation - Prudent Growth Net MW Net MWh Generated EAF (%) (1) Net Capacity Factor (%) Net MW Net MWh Generated EAF (%) (1) Net Capacity Factor (%) Baseload MidAtlantic 2,729 3,061,916 70.9 51.3 2,765 3,441,013 84.3 57.0 Northeast 238 355,283 88.8 70.2 238 333,034 84.7 65.8 California 0 0 0 0 Total Baseload 2,967 3,417,199 72.3 52.7 3,003 3,774,047 84.3 57.7 Intermediate MidAtlantic 1,400 277,198 51.7 9.3 1,400 34,807 37.5 1.2 Northeast 2,265 49,278 80.6 1.0 2,265 37,562 70.1 0.8 California 2,191 88,587 94.1 1.9 2,191 213,600 78.4 4.5 Total Intermediate 5,856 415,063 79.0 3.3 5,856 285,969 65.6 2.3 Peaking MidAtlantic 1,065 63,694 88.9 2.6 1,065 4,505 93.7 0.2 Northeast 32 941 85.4 1.4 32 63 98.3 0.1 California 156 (433) 98.3 0.0 156 271 75.3 0.1 Total Peaking 1,253 64,202 89.9 2.3 1,253 4,839 91.6 0.2 Total Mirant 10,076 3,896,464 78.4 17.7 10,112 4,064,855 74.5 18.4 (1) Equivalent Availability Factor - the total hours a unit is available in a period minus the sum of all full and partial outage equivalent hours, expressed as a percent of all hours in a period. Generation by Dispatch Type Second Quarter 2010 Second Quarter 2009 |
 22 Year to Date Generation by Dispatch Type Operational Performance - Cash Generation - Prudent Growth Net MW Net MWh Generated EAF (%) (1) Net Capacity Factor (%) Net MW Net MWh Generated EAF (%) (1) Net Capacity Factor (%) Baseload MidAtlantic 2,729 7,034,084 77.4 59.3 2,765 7,167,376 83.6 59.7 Northeast 238 719,693 92.6 70.6 238 698,244 89.6 68.5 California 0 0 0 0 Total Baseload 2,967 7,753,777 78.6 60.2 3,003 7,865,620 84.0 60.4 Intermediate MidAtlantic 1,400 331,890 44.6 5.5 1,400 139,181 36.0 2.3 Northeast 2,265 58,154 86.7 0.6 2,265 571,590 83.0 5.8 California 2,191 211,853 88.6 2.2 2,191 389,246 80.0 4.1 Total Intermediate 5,856 601,897 77.5 2.4 5,856 1,100,017 70.8 4.3 Peaking MidAtlantic 1,065 70,054 90.7 1.4 1,065 35,512 92.6 0.7 Northeast 32 1,327 89.0 1.0 32 369 98.1 0.3 California 156 (588) 97.2 0.0 156 502 83.9 0.1 Total Peaking 1,253 70,793 91.4 1.2 1,253 36,383 91.7 0.6 Total Mirant 10,076 8,426,467 79.7 19.1 10,112 9,002,020 77.5 20.4 (1) Equivalent Availability Factor - the total hours a unit is available in a period minus the sum of all full and partial outage equivalent hours, expressed as a percent of all hours in a period. Generation by Dispatch Type YTD 2010 YTD 2009 |
 23 Equivalent Forced Outage Rate (EFOR) EFOR = Forced Outage Hours Forced Outage Hours + Service Hours 2010 2009 2010 2009 Mid-Atlantic Baseload Coal 7% 10% 6% 10% Q2 YTD Operational Performance - Cash Generation - Prudent Growth |
 24 Mirant Operations 10,076 MW Power plants sized by capacity Canal Pittsburgh Contra Costa Chalk Point Morgantown Dickerson Potomac River Dickerson Potomac River Northeast 3,054 MW Mid Atlantic 5,256 MW Contra Costa Dickerson Potomac River Dickerson Potomac River Northeast 3,054 MW Contra Costa Dickerson Potomac River Dickerson Potomac River Northeast 3,054 MW Kendall California 2,347 MW Bowline Martha’s Vineyard Potrero Capacity by Fuel Type Operational Performance - Cash Generation - Prudent Growth Coal 29% Gas 24% Oil 10% Dual 37% |
 25 Development Opportunities • Potential to add 2,500 – 3,500 MWs of capacity Entered into ten-year Power Purchase Agreement with PG&E for new 760 MW Marsh Landing Generating Station California Northeast Mid Atlantic Boston N.Y.C. Washington, DC • Potential to add 1,000 – 1,500 MWs of capacity • Potential to add 4,000 – 5,000 MWs of capacity Pittsburgh Dickerson Bowline Chalk Point Morgantown Canal San Francisco Contra Costa Operational Performance - Cash Generation - Prudent Growth Lovett |
 26 Share Count (millions) Operational Performance - Cash Generation - Prudent Growth Weighted average shares outstanding - basic 145 145 145 145 Effect of dilutive securities 1 0 1 0 Weighted average shares outstanding - diluted 146 145 146 145 Shares outstanding at quarter end - basic 145 145 145 145 Effect of dilutive securities 1 0 1 0 Shares outstanding at end of quarter - diluted 146 145 146 145 Three Three Six Six Months Ending June 30, 2009 Months Ending Months Ending Months Ending June 30, 2010 June 30, 2009 June 30, 2010 |
 27 Regulation G Reconciliation Operational Performance - Cash Generation - Prudent Growth (in millions except per share) Net Income (Loss) (263) $ (1.81) $ 163 $ 1.12 $ Unrealized losses 340 2.34 14 0.10 Bankruptcy charges and legal contingencies - - (62) (0.43) Severance and bonus plan for dispositions - - 13 0.09 Postretirement benefit curtailment gain (37) (0.25) - - Other 6 0.04 3 0.02 Adjusted Net Income 46 $ 0.32 $ 131 $ 0.90 $ Provision for income taxes 1 - Interest expense, net 49 33 Depreciation and amortization 53 36 Adjusted EBITDA 149 $ 200 $ June 30, 2010 June 30, 2009 1 Per share amounts for 2010 are based on basic weighted average shares outstanding of 145 million, for all amounts except adjusted net income which is based on diluted weighted average shares outstanding of 146 million. Per share amounts for 2009 are based on diluted weighted average shares outstanding of 145 million. Table 1 Net Income (Loss) to Adjusted Net Income and Adjusted EBITDA Quarter Ending Quarter Ending Per Share ¹ Per Share ¹ |
 28 Regulation G Reconciliation Operational Performance - Cash Generation - Prudent Growth (in millions except per share) Per Share ¹ Per Share ¹ Net Income 144 $ 0.99 $ 543 $ 3.74 $ Unrealized gains (12) (0.08) (240) (1.65) Bankruptcy charges and legal contingencies 1 - (62) (0.43) Severance and bonus plan for dispositions - - 13 0.09 Lower of cost or market inventory adjustments, net 6 0.04 (11) (0.07) Postretirement benefit curtailment gain (37) (0.25) - - Other 5 0.03 3 0.02 Adjusted Net Income 107 $ 0.73 $ 246 $ 1.70 $ Provision for income taxes 1 8 Interest expense, net 99 69 Depreciation and amortization 104 72 Adjusted EBITDA 311 $ 395 $ 1 Per share amounts for 2010 are based on diluted weighted average shares outstanding of 146 million. Per share amounts for 2009 are based on diluted weighted average shares outstanding of 145 million. Table 2 Net Income to Adjusted Net Income and Adjusted EBITDA Year to Date Year to Date June 30, 2010 June 30, 2009 |
 29 Regulation G Reconciliation (in millions ) Mid- Atlantic Northeast California Other Operations Eliminations Total Net Income (Loss) (233) $ (12) $ 4 $ (22) $ - $ (263) $ Unrealized losses 317 10 - 13 - 340 Lower of cost or market inventory adjustments, net (4) - - 7 - 3 Postretirement benefit curtailment gain - - - (37) - (37) Merger-related costs - - - 3 - 3 Adjusted Net Income (Loss) 80 $ (2) $ 4 $ (36) $ - $ 46 $ Provision for income taxes - - - 1 - 1 Interest expense, net - 1 - 48 - 49 Depreciation and amortization 36 6 7 4 - 53 Adjusted EBITDA 116 $ 5 $ 11 $ 17 $ - $ 149 $ Table 3 Adjusted Net Income (Loss) and Adjusted EBITDA Quarter Ending June 30, 2010 Operational Performance - Cash Generation - Prudent Growth |
 30 Regulation G Reconciliation (in millions ) Mid- Atlantic Northeast California Other Operations Eliminations Total Net Income (Loss) 206 $ (14) $ 6 $ (54) $ - $ 144 $ Unrealized losses (gains) (29) 14 - 3 - (12) Bankruptcy charges and legal contingencies - - - 1 - 1 Lower of cost or market inventory adjustments, net 1 - - 5 - 6 Postretirement benefit curtailment gain - - - (37) - (37) Merger-related costs - - - 5 - 5 Adjusted Net Income (Loss) 178 $ - $ 6 $ (77) $ - $ 107 $ Provision for income taxes - - - 1 - 1 Interest expense, net 1 1 - 97 - 99 Depreciation and amortization 69 12 15 8 - 104 Adjusted EBITDA 248 $ 13 $ 21 $ 29 $ - $ 311 $ Table 4 Adjusted Net Income (Loss) and Adjusted EBITDA Year to Date June 30, 2010 Operational Performance - Cash Generation - Prudent Growth |
 31 Regulation G Reconciliation (in millions ) Mid- Atlantic Northeast California Other Operations Eliminations Total Net Income 133 $ 5 $ - $ 25 $ - $ 163 $ Unrealized losses (gains) - (20) - 34 - 14 Bankruptcy charges and legal contingencies - - - (62) - (62) Severance and bonus plan for dispositions - - - 13 - 13 Lovett shut down costs - 2 - - - 2 Lower of cost or market inventory adjustments, net 3 - - (2) - 1 Adjusted Net Income (Loss) 136 $ (13) $ - $ 8 $ - $ 131 $ Interest expense, net 1 - - 32 - 33 Depreciation and amortization 24 5 5 2 - 36 Adjusted EBITDA 161 $ (8) $ 5 $ 42 $ - $ 200 $ Table 5 Adjusted Net Income (Loss) and Adjusted EBITDA Quarter Ending June 30, 2009 Operational Performance - Cash Generation - Prudent Growth |
 32 Regulation G Reconciliation (in millions ) Mid- Atlantic Northeast California Other Operations Eliminations Total Net Income (Loss) 518 $ 35 $ 3 $ (14) $ 1 $ 543 $ Unrealized losses (gains) (243) (46) - 49 - (240) Bankruptcy charges and legal contingencies - - - (62) - (62) Severance and bonus plan for dispositions - - - 13 - 13 Lovett shut down costs - 3 - - - 3 Lower of cost or market inventory adjustments, net 7 (1) 1 (18) - (11) Adjusted Net Income (Loss) 282 $ (9) $ 4 $ (32) $ 1 $ 246 $ Provision for income taxes - - - 8 - 8 Interest expense, net 2 - 1 66 - 69 Depreciation and amortization 48 9 10 5 - 72 Adjusted EBITDA 332 $ - $ 15 $ 47 $ 1 $ 395 $ Table 6 Adjusted Net Income (Loss) and Adjusted EBITDA Year to Date June 30, 2009 Operational Performance - Cash Generation - Prudent Growth |
 33 Regulation G Reconciliation (in millions) Mid-Atlantic Northeast California Other Operations Eliminations Total Energy 78 $ 4 $ - $ 14 $ - $ 96 $ Contracted & capacity 85 24 29 - - 138 Incremental realized value of hedges 74 4 - - - 78 Realized gross margin 237 32 29 14 - 312 Unrealized gross margin (317) (10) - (13) - (340) Gross margin (80) $ 22 $ 29 $ 1 $ - $ (28) $ (in millions) Mid-Atlantic Northeast California Other Operations Eliminations Total Energy 19 $ 3 $ - $ 49 $ - $ 71 $ Contracted & capacity 86 22 29 - - 137 Incremental realized value of hedges 152 - - - - 152 Realized gross margin 257 25 29 49 - 360 Unrealized gross margin - 20 - (34) - (14) Gross margin 257 $ 45 $ 29 $ 15 $ - $ 346 $ Gross Margin Quarter Ending June 30, 2010 Table 7 Quarter Ending June 30, 2009 Operational Performance - Cash Generation - Prudent Growth |
 34 Regulation G Reconciliation (in millions) Mid-Atlantic Northeast California Other Operations Eliminations Total Energy 170 $ 1 $ - $ 35 $ - $ 206 $ Contracted & capacity 174 47 59 - - 280 Incremental realized value of hedges 131 16 - - - 147 Realized gross margin 475 64 59 35 - 633 Unrealized gross margin 29 (14) - (3) - 12 Gross margin 504 $ 50 $ 59 $ 32 $ - $ 645 $ (in millions) Mid-Atlantic Northeast California Other Operations Eliminations Total Energy 91 $ 18 $ - $ 76 $ (3) $ 182 $ Contracted & capacity 171 44 56 - - 271 Incremental realized value of hedges 259 1 - - - 260 Realized gross margin 521 63 56 76 (3) 713 Unrealized gross margin 243 46 - (49) - 240 Gross margin 764 $ 109 $ 56 $ 27 $ (3) $ 953 $ Table 8 Gross Margin Year to Date June 30, 2010 Year to Date June 30, 2009 Operational Performance - Cash Generation - Prudent Growth |
 35 Regulation G Reconciliation (in millions) Gross margin (28) $ 346 $ Unrealized gross margin 340 14 Lower of cost or market inventory adjustments, net 3 1 Adjusted gross margin 315 361 Operations and maintenance expenses (132) (114) Bankruptcy charges and legal contingencies - (62) Severance and bonus plan for dispositions - 13 Merger-related costs 3 - Postretirement benefit curtailment gain (37) - Lovett shutdown costs - 2 Adjusted operations and maintenance expenses (166) (161) Gain on sales of emissions allowances, net 1 2 Other income (expense), net (1) (2) Adjusted EBITDA 149 $ 200 $ Table 9 Gross Margin to Adjusted EBITDA Quarter Ending Quarter Ending June 30, 2010 June 30, 2009 Operational Performance - Cash Generation - Prudent Growth |
 36 Regulation G Reconciliation (in millions) Gross margin 645 $ 953 $ Unrealized gross margin (12) (240) Lower of cost or market inventory adjustments, net 6 (11) Adjusted gross margin 639 702 Operations and maintenance expenses (298) (276) Bankruptcy charges and legal contingencies - (62) Severance and bonus plan for dispositions - 13 Merger-related costs 5 - Postretirement benefit curtailment gain (37) - Lovett shutdown costs - 3 Adjusted operations and maintenance expenses (330) (322) Gain on sales of emissions allowances, net 3 17 Other expense, net (1) (2) Adjusted EBITDA 311 $ 395 $ Table 10 Gross Margin to Adjusted EBITDA Year to Date Year to Date June 30, 2010 June 30, 2009 Operational Performance - Cash Generation - Prudent Growth |