NRG Energy 8K/A Other Events | NRG 15 Jun 05

EXHIBIT 99.5

INDIAN RIVER POWER LLC

Unaudited Financial Statements
At March 31, 2005 and December 31, 2004
and for the Three Months Ended March 31, 2005
and for the Three Months Ended March 31, 2004

INDIAN RIVER POWER LLC

INDEX


	Page
Balance Sheets at March 31, 2005 and December 31, 2004		3
Statements of Operations for the three months ended March 31, 2005, and March 31, 2004		4
Statements of Member’s Equity for the three months ended March 31, 2005, and March 31, 2004		5
Statements of Cash Flows for the three months ended March 31, 2005, and March 31, 2004		6
Notes to the Unaudited Financial Statements		7

INDIAN RIVER POWER LLC

BALANCE SHEETS


	March 31,			December 31,
	2005			2004
	(Unaudited)			(Audited)
	(In thousands)
ASSETS
Current assets
Accounts receivable	$	—		$	1,160
Accounts receivable — affiliates		14,908			6,330
Inventory		18,595			16,320
Prepayments and other current assets		1,046			1,510

Total current assets		34,549			25,320
Property, Plant and Equipment
In service		403,101			398,356
Under construction		1,263			5,279

Total property, plant and equipment		404,364			403,635
Less accumulated depreciation		(23,188	)		(18,538	)

Net property, plant and equipment		381,176			385,097

Other Assets
Intangible assets, net of accumulated amortization of $3,586 and $2,913, respectively		50,653			51,325
Other assets		6,772			6,738

Total other assets		57,425			58,063
Total Assets	$	473,150		$	468,480

LIABILITIES AND MEMBER’S EQUITY
Current Liabilities
Accounts payable — trade	$	17		$	4
Accrued expenses		177			125

Total current liabilities		194			129

Other Liabilities
Deferred income tax		24,014			22,160
Other long-term obligations		4,600			4,531

Total non-current liabilities		28,614			26,691
Total Liabilities		28,808			26,820


Member’s equity		444,342			441,660

Total liabilities and Member’s Equity	$	473,150		$	468,480

The accompanying notes are an integral part of these financial statements.

INDIAN RIVER POWER LLC

STATEMENTS OF OPERATIONS
(Unaudited)


	Three months		Three months
	Ended		Ended
	March 31,		March 31,
	2005		2004
	(In thousands)
Operating Revenues
Revenues	$	52,312	$	41,557
Operating Costs and Expenses
Operating costs		42,409		28,366
Depreciation		4,651		4,401
General and administrative expenses		765		1,618

Income from operations		4,487		7,172
Other income, net		49		40

Income before income taxes		4,536		7,212
Income tax expense		1,854		2,947

Net income	$	2,682	$	4,265

The accompanying notes are an integral part of these financial statements.

INDIAN RIVER POWER LLC

STATEMENTS OF MEMBER’S EQUITY
Three Months Ended March 31, 2005 and March 31, 2004


					Member		Accumulated			Total
	Member				Contributions/		Net Income			Member’s
	Units		Amount		Distributions		(Loss)			Equity
	(In thousands except units)
Balances at December 31, 2003 (audited)		1,000	$	1	$	396,291	$	(1,562	)	$	394,730
Net income		—		—		—		4,265			4,265

Balances at March 31, 2004 (unaudited)		1,000	$	1	$	396,291	$	2,703		$	398,995


Balances at December 31, 2004 (audited)		1,000	$	1	$	433,134	$	8,525		$	441,660
Net income		—		—		—		2,682			2,682

Balances at March 31, 2005 (unaudited)		1,000	$	1	$	433,134	$	11,207		$	444,342

The accompanying notes are an integral part of these financial statements.

INDIAN RIVER POWER LLC

STATEMENTS OF CASH FLOWS
(Unaudited)


	Three Months Ended
	March 31,			March 31,
	2005			2004
	(In thousands)
Cash flows from operating activities
Net income	$	2,682		$	4,265
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		4,651			4,401
Amortization of intangibles		672			1,112
Loss on disposal of assets		14			—
Deferred income taxes		1,854			2,947
Changes in assets and liabilities
Accounts receivable		1,160			—
Accounts receivable — affiliates		(8,578	)		—
Inventory		(2,275	)		1,186
Prepayments and other current assets		464			265
Other assets		(34	)		(14	)
Accounts payable — trade		13			8
Accounts payable — affiliates		—			(14,095	)
Accrued liabilities		52			—
Other non current liabilities		69			68
Changes in other assets and liabilities		—			5

Net cash provided by operating activities		744			148

Cash flows from investing activities
Capital expenditures		(744	)		(148	)

Net cash used in investing activities		(744	)		(148	)

Cash flows from financing activities
Net cash provided by (used in) financing activities		—			—

Net change in cash and cash equivalents		—			—
Cash and cash equivalents
Beginning of period		—			—

End of period	$	—		$	—

The accompanying notes are an integral part of these financial statements.

INDIAN RIVER POWER LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

Note 1—General

Indian River Power LLC, or the Company, is an indirect wholly owned subsidiary of NRG Energy, Inc., or NRG Energy. NRG Mid Atlantic Generating LLC, or Mid Atlantic Gen, owns 100% of the Company. Mid Atlantic Gen is a wholly owned subsidiary of NRG Energy.

Note 2—Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim financial statements have been prepared in accordance with the Securities and Exchange Commission’s regulations for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. The accounting policies we follow are set forth in Note 2 of the company’s annual financial statements for the year ended December 31, 2004, as filed by NRG Energy, Inc. on Form 8-K on June 15, 2005. The following notes should be read in conjunction with such policies and other disclosures in those financial statements. Interim results are not necessarily indicative of results for a full year.

In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all material adjustments (consisting of normal, recurring accruals) necessary to present fairly our consolidated financial position as of March 31, 2005, the results of our operations, cash flows and member’s equity for the three months ended March 31, 2005 and March 31, 2004. Certain prior-year amounts have been reclassified for comparative purposes.

Accounting Estimates

Management of the Company is required to make certain estimates and assumptions during the preparation of the financial statements in accordance with generally accepted accounting principles. These estimates and assumptions impact the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements. They also impact the reported amount of net earnings during any period. Actual results could differ from those estimates.

Note 3—Commitments and Contingencies

Environmental Matters

Indian River Power LLC is responsible for the costs associated with closure, post-closure care and monitoring of the ash landfill owned and operated by the Company on the site of the Indian River Generating Station. No material liabilities outside such costs are expected. In accordance with certain regulations established by the Delaware Department of Natural Resources and Environmental Control, the Company has established a fully funded trust fund to provide for financial assurance for the closure and post-closure related costs in the amount of $6.8 million. The amounts contained in this fund will be dispersed as authorized by the Delaware Department of Natural Resources and Environmental Control. This amount is recorded in other noncurrent assets on the balance sheets.

The Company estimates that it will incur capital expenditures of approximately $25 million during the years 2005 through 2010 related to addressing certain environmental matters at the Indian River Generating Station. These matters include the expected closure of the existing ash landfill, the construction of a new ash landfill nearby, the addition of controls to reduce NOx emissions, fuel yard modifications and electrostatic precipitator refurbishments to reduce opacity.

Note 4—Guarantees

INDIAN RIVER POWER LLC

In November 2002, the FASB issued FASB Interpretation No. 45, or FIN 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others”. In connection with push down accounting, all outstanding guarantees were considered new; accordingly, the Company applied the provisions of FIN 45 to all of the guarantees.

On February 4, 2005, NRG Energy redeemed and retired $375.0 million of Second Priority Notes. As a result of the retirement, the joint and several payment and performance guarantee obligations of the Company was reduced from $1,725.0 million to $1,350.0 million.

Note 5—Regulatory Issues

On January 25, 2005, FERC issued an order approving the Pennsylvania, Jersey, Maryland Interconnection, or PJM, proposal to increase the compensation for generators which are located in load pockets and are mitigated at least 80% of their running time. Specifically, when the generators would be subject to mitigation, the generator would have the option of recovering their variable costs plus $40 or a negotiated rate with PJM, based on the facility’s going forward costs. If the generator declines both options, it could file for an alternative rate with FERC. The revisions to the cost capping rule could impact the revenues earned by several of the Company’s facilities. In the order, FERC also substantially revised the exemption facilities built after 1996 had from the capping mitigation rule. Under the order the exemption for facilities located in original PJM territory now applies only if the facility was constructed after April 1, 1999. If construction of the facility began after September 30 2003, the exemption would not apply.

Note 6—Income Taxes

The Company is included in the consolidated tax return filings as a wholly owned indirect subsidiary of NRG Energy. Reflected in the financial statements and notes below are separate company federal and state tax provisions, as of the earliest period presented, as if the Company had prepared separate filings. The Company’s ultimate parent, NRG Energy, does not have a tax allocation agreement with its subsidiaries nor has it historically pushed down or allocated income taxes to non tax paying entities or entities such as the Company which are treated as disregarded entities for tax purposes. Because the Company is not a party to a tax sharing agreement, current tax expense (benefit) is recorded as a capital contribution from (distribution to) the Company’s parent.

In assessing the realizeability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of taxable income in future periods. Management considers both positive and negative evidence, projected operating income and capital gains, and available tax planning strategies in making this assessment. Based upon projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences.

For the period ended March 31, 2005, the company utilized $7.6 million of US net operating loss carryforwards of $49.6 million. There is a net operating loss carryforward of $42.0 million available at March 31, 2005 which will expire by 2023 if unutilized.

The effective income tax rates of continuing operations differ from the statutory federal income tax rate of 35% as follows:


	Three Months					Three Months
	Ended March 31,					Ended March 31,
	2005					2004
	Amount		Rate			Amount		Rate
			(In thousands)
Income before taxes	$	4,536				$	7,212

Tax at 35%		1,588		35.0	%		2,524		35.0	%
State taxes (net of federal benefit)		266		5.9	%		423		5.8	%

Income tax expense	$	1,854		40.9	%	$	2,947		40.8	%

INDIAN RIVER POWER LLC

Note 7 — Related Party Transactions

Effective January 1, 2005, Corporate charges for allocated overhead was discontinued. For fiscal year 2005 and future years, General and administrative expenses will consist of the Company’s expenses only. For the three months ended March 31, 2004, Corporate overhead charges included in General and administrative expenses totaled $0.8 million. The amounts paid during the three months ended March 31, 2004 reflect an overall increase in corporate level general and administrative expenses. Corporate general, administrative and development expense increased during the three months ended March 31, 2004 due to higher legal fees and increased consulting costs due to NRG Energy’s Sarbanes-Oxley implementation. The method of allocating these costs remained the same from the prior years.

For the three months ended March 31, 2005 and 2004, the Company recorded operating and maintenance costs billed from NRG Operating Services of $9.5 million and $7.9 million, respectively.

At March 31, 2005 and December 31, 2004, the Company had an accounts receivable affiliate balance of $14.9 and $6.3 million, respectively. These balances are settled on a periodic basis and are due to or from multiple entities which are wholly owned subsidiaries of NRG Energy Inc., the parent company of NRG Mid Atlantic Generating LLC. NRG Mid Atlantic Generating LLC is the parent company of Indian River Power LLC.

NRG Energy (NRG) 8-K/AOther Events