================================================================================

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

--------------------
FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM __________ TO ___________

COMMISSION FILE NUMBER: 1-16077

----------------------
ORION POWER HOLDINGS, INC.
(EXACT NAME OF THE REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 52-2087649
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

C/O RELIANT RESOURCES, INC.
1111 LOUISIANA STREET
HOUSTON, TEXAS 77002
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (410) 230-3500

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
--- ---

AS OF MAY 15, 2002, ORION POWER HOLDINGS, INC. HAD 1,000 SHARES OF
COMMON STOCK OUTSTANDING, ALL OF WHICH WERE HELD BY RELIANT RESOURCES, INC.

ORION POWER HOLDINGS, INC. MEETS THE CONDITIONS SET FORTH IN GENERAL
INSTRUCTIONS H(1)(a) and (b) OF FORM 10-Q AND IS THEREFORE FILING THIS 10-Q
WITH THE REDUCED DISCLOSURE FORMAT.

================================================================================

ORION POWER HOLDINGS, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2002

INDEX

<Table>
<Caption>
Page
----

PART I. FINANCIAL INFORMATION...............................................................................3

Item 1. Financial Statements................................................................................3

Consolidated Balance Sheets as of December 31, 2001 and March 31, 2002 (unaudited)..................3

Consolidated Statements of Operations for the Three Months ended March 31, 2001, for the
period January 1, 2002 through February 19, 2002, and for the period February 20, 2002
through March 31, 2002 (unaudited)..................................................................5

Consolidated Statements of Cash Flows for the Three Months ended
March 31, 2001, for the period January 1, 2002 through February
19, 2002, and for the period February 20, 2002 through March 31,
2002(unaudited).....................................................................................6

Notes to Unaudited Consolidated Financial Statements................................................7

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...............15

Item 3. Quantitative and Qualitative Disclosures About Market Risk.........................................20

PART II. OTHER INFORMATION..................................................................................21

Item 1. Legal Proceeding...................................................................................21

Item 4. Submission of Matters to a Vote of Security Holders................................................21

Item 5. Other Information..................................................................................21

Item 6. Exhibits and Reports on Form 8-K...................................................................21
</Table>

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ORION POWER HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)

<Table>
<Caption>
FORMER ORION CURRENT ORION
------------------ --------------
DECEMBER 31, 2001 MARCH 31, 2002
------------------ --------------

ASSETS

CURRENT ASSETS:
Cash and cash equivalents ................................................... $ 183,719 $ 6,609
Restricted cash ............................................................. 336,714 294,083
Accounts receivable, net of allowances for bad debts of $1,631 and
$1,006 at December 31, 2001 and March 31, 2002, respectively ............. 134,113 155,634
Inventories and supplies .................................................... 58,969 59,639
Deferred income tax asset ................................................... 3,754 4,189
Derivative assets ........................................................... 13,472 57,241
Prepaid expenses and other current assets ................................... 22,544 61,066
------------------ --------------
Total current assets ........................................................... 753,285 638,461
------------------ --------------
PROPERTY AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION OF $247,543 AND
$19,391 AT DECEMBER 31, 2001 AND MARCH 31, 2002, RESPECTIVELY ............... 3,350,893 3,987,323
OTHER NONCURRENT ASSETS:
Prepaid expenses and other noncurrent assets ................................ 7,089 58,202
Derivative assets ........................................................... 11,563 74,432
Identifiable purchased intangibles, net of accumulated amortization
of $10,203 at December 31, 2001 .......................................... 65,734 --
Goodwill, net of accumulated amortization of $857 at December 31, 2001 ...... 101,972 1,320,841
Deferred financing costs, net of accumulated amortization of $30,084 at
December 31, 2001 ........................................................ 37,762 --
------------------ --------------
Total other noncurrent assets ............................................... 224,120 1,453,475
------------------ --------------
Total assets ................................................................ $ 4,328,298 $ 6,079,259
================== ==============
</Table>

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

ORION POWER HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED)
(IN THOUSANDS)
(UNAUDITED)

<Table>
<Caption>
FORMER ORION CURRENT ORION
----------- -----------
DECEMBER 31, MARCH 31,
2001 2002
----------- -----------

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings and current portion of long-term debt ................ $ 1,614,334 $ 1,829,194
Accounts payable ........................................................... 76,336 50,748
Accounts payable, affiliated companies ..................................... -- 2,950
Accrued interest ........................................................... 17,276 30,767
Deferred revenue ........................................................... 1,875 --
Deferred income tax liabilities ............................................ -- 816
Derivative liabilities ..................................................... 3,090 60,639
Other ...................................................................... 26,432 34,843
----------- -----------
Total current liabilities ..................................................... 1,739,343 2,009,957
Long-term debt ................................................................ 870,000 754,988
Deferred income tax liabilities ............................................... 1,204 180,329
Derivative liabilities ........................................................ 88,634 53,877
Other long-term liabilities ................................................... 47,487 103,341
----------- -----------
Total liabilities ............................................................. 2,746,668 3,102,492
----------- -----------

COMMITMENTS AND CONTINGENCIES (NOTE 9)

STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 200 million shares authorized; 103,648,909
shares issued and outstanding at December 31, 2001 and
1,000 shares issued and outstanding at March 31, 2002, respectively ..... 1,037 --
Additional paid-in capital ................................................. 1,503,891 2,955,148
Deferred compensation ...................................................... (1,763) --
Notes receivable from officers ............................................. (3,736) --
Accumulated other comprehensive (loss) income .............................. (51,061) 8,529
Retained earnings .......................................................... 133,262 13,090
----------- -----------
Total stockholders' equity ................................................. 1,581,630 2,976,767
----------- -----------
Total liabilities and stockholders' equity ................................. $ 4,328,298 $ 6,079,259
=========== ===========
</Table>

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

ORION POWER HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)

<Table>
<Caption>
FORMER ORION CURRENT ORION
-------------------------------------- --------------
FOR THE PERIOD FOR THE PERIOD
FOR THE THREE JANUARY 1, 2002 FEBRUARY 20, 2002
MONTHS ENDED THROUGH THROUGH
MARCH 31, 2001 FEBRUARY 19, 2002 MARCH 31, 2002
-------------- -------------------- -----------------

OPERATING REVENUES ......................................... $ 274,251 $ 134,473 $ 112,332
-------------- -------------------- ---------------

OPERATING EXPENSES:

Fuel .................................................... 111,728 46,514 35,753
(Gain) Loss on derivative instruments ................... (1,521) 12,065 (677)
Operations & maintenance ................................ 27,906 22,419 11,566
General & administrative ................................ 12,778 86,188 5,943
Taxes other than income taxes ........................... 17,786 8,576 8,149
Depreciation and amortization ........................... 32,195 25,530 19,391
-------------- -------------------- --------------
Total operating expenses ................................... 200,872 201,292 80,125
-------------- -------------------- --------------
OPERATING INCOME (LOSS) .................................... 73,379 (66,819) 32,207
Interest income ............................................ 5,791 1,101 607
Interest expense ........................................... (52,891) (25,067) (12,311)
-------------- -------------------- --------------
Income (Loss) before provision/benefit for income tax ...... 26,279 (90,785) 20,503
Income tax (provision) benefit ............................. (11,162) 38,611 (7,413)
-------------- -------------------- --------------
NET INCOME (LOSS) ....................................... $ 15,117 $ (52,174) $ 13,090
============== ==================== ==============
</Table>

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

ORION POWER HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

<Table>
<Caption>
FORMER ORION CURRENT ORION
------------------------------------ --------------
FOR THE THREE FOR THE PERIOD FOR THE PERIOD
MONTHS ENDED JANUARY 1, 2002 FEBRUARY 20, 2002
MARCH 31, THROUGH THROUGH
2001 FEBRUARY 19, 2002 MARCH 31, 2002
-------------- ------------------ --------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ............................................ $ 15,117 $ (52,174) $ 13,090
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Deferred income taxes ..................................... 4,203 (4,787) 1,132
Deferred compensation ..................................... 399 1,763 --
(Gain) Loss on derivative instruments ..................... (1,521) 12,065 (677)
Interest income on officers note receivable ............... (91) -- --
Depreciation and amortization ............................. 35,941 25,530 19,391
Change in assets and liabilities:
Restricted cash ........................................ 93,985 86,339 (43,708)
Accounts receivable .................................... 8,239 (50,375) 12,029
Inventories and supplies ............................... 328 (539) (3,716)
Prepaid expenses and other current assets .............. 3,084 (44,279) 5,758
Prepaid expenses and other noncurrent assets ........... (13,843) (37,798) 5,348
Accounts payable ....................................... (51,622) 26,041 (31,160)
Accrued interest ....................................... 12,589 16,738 (3,233)
Deferred revenue ....................................... (919) (517) --
Other current liabilities .............................. (9,646) (10,958) (31,514)
Other long-term liabilities ............................ 782 45,802 (5,967)
-------------- ------------------ --------------
Net cash provided by (used in) operating activities ............. 97,025 12,851 (63,227)
-------------- ------------------ --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment ........................ (116,807) (49,642) (17,586)
-------------- ------------------ --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock, net ............................. -- 491 --
Payments on debt .......................................... (3,443) (78,758) (25,026)
Borrowings on debt ........................................ 66,900 21,000 16,200
Net change in payables to affiliates ...................... -- -- 2,951
Payments on deferred financing fees ....................... (250) (100) --
Proceeds from note receivable from officers ............... -- 3,736 --
-------------- ------------------ --------------
Net cash provided by (used in) financing activities ............. 63,207 (53,631) (5,875)
-------------- ------------------ --------------
NET CHANGE IN CASH AND CASH EQUIVALENTS ......................... 43,425 (90,422) (86,688)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .................. 135,834 183,719 93,297
-------------- ------------------ --------------
CASH AND CASH EQUIVALENTS, ENDING OF PERIOD ..................... $ 179,259 $ 93,297 $ 6,609
============== ================== ==============

Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest .................................................. $ 38,806 $ 7,342 $ 19,750
============== ================== ==============
Income taxes .............................................. $ 7,522 $ 65 $ 6
============== ================== ==============
</Table>

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

ORION POWER HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF INTERIM PRESENTATION

Included in this Quarterly Report on Form 10-Q (Form 10-Q) for Orion Power
Holdings, Inc. together with its subsidiaries (Orion Power or the Company) are
the Company's consolidated interim financial statements and notes (Interim
Financial Statements). The Interim Financial Statements are unaudited, omit
certain financial statement disclosures and should be read with the annual
report on Form 10-K of Orion Power (Orion Power Form 10-K) for the year ended
December 31, 2001.

On February 19, 2002, Orion Power was acquired in a merger by a wholly
owned subsidiary of Reliant Resources, Inc. (Reliant Resources) (the Merger). As
a result, Orion Power became a wholly owned subsidiary of Reliant Resources,
which is in turn a majority-owned subsidiary of Reliant Energy, Inc. (Reliant
Energy) (see Note 5).

As of March 31, 2002, Orion Power owned 81 power plants with a total net
generating capacity of approximately 5,644 megawatts (MW) and two development
projects with an additional 804 MW of capacity under construction.

Within these financial statements, "Current Orion" and "Former Orion" refer
to Orion Power, after and before, respectively, the February 2002 acquisition by
Reliant Resources (see Note 5).

As a result of the Merger, Orion Power is no longer required to present
earnings per share (EPS) data as its common shares (all of which are owned by
Reliant Resources) are not publicly held. EPS data for Former Orion has not been
included because the Company believes it is no longer meaningful.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

The gains and losses related to financial instruments and contractual
commitments qualifying and designated as hedges related to the sale of electric
power and purchase of fuel are deferred in other comprehensive income to the
extent the contracts are effective, and then are recognized in the same period
as the settlement of the underlying physical transaction. These realized gains
and losses are included in operating revenues and operating expenses in the
Consolidated Statements of Operations. For additional discussion, see Note 2 to
the consolidated financial statements included in the Orion Power Form 10-K
(Orion Power 10-K Notes).

The Interim Financial Statements reflect all normal recurring adjustments
that are, in the opinion of management, necessary to present fairly the
financial position and results of operations of the Company for the respective
periods. Amounts reported in the Consolidated Statements of Operations are not
necessarily indicative of amounts expected for a full year period due to the
effects of, among other things, (a) seasonal fluctuation in demand for energy
and energy services, (b) changes in energy commodity prices, (c) timing of
maintenance and other expenditures, and (d) acquisitions and dispositions of
assets and other interests. In addition, certain amounts from the prior period
have been reclassified to conform to the Company's presentation of financial
statements in the current period. These reclassifications do not affect the
earnings of the Company.

2. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 141 "Business Combinations" (SFAS No. 141). SFAS No. 141 requires business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting and broadens the criteria for recording intangible
assets separate from goodwill. Recorded goodwill and intangibles will be
evaluated against these new criteria and may result in certain intangibles being
transferred to goodwill, or alternatively, amounts initially recorded as
goodwill may be separately identified and recognized apart from goodwill. The
Company adopted the provisions of the statement which apply to goodwill and
intangible assets acquired prior to June 30, 2001 on January 1, 2002. The
adoption of SFAS No. 141 did not have a material impact on the Company's
historical results of operations or financial position.

In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations" (SFAS No. 143). SFAS No. 143 requires the fair value of
a liability for an asset retirement legal obligation to be recognized in the
period in which it is incurred. When the liability is initially recorded,
associated costs are capitalized by increasing the carrying amount of the
related long-lived asset. Over time, the liability is accreted to its present
value each period, and the capitalized cost is depreciated over the useful life
of the related asset. SFAS No. 143 is effective for fiscal years beginning after
June 15, 2002, with earlier application encouraged. SFAS No. 143 requires
entities to record a cumulative effect of change in accounting principle in the
income statement in the period of adoption. The Company plans to adopt SFAS No.
143 on January 1, 2003, and is in the process of determining the effect of
adoption on its consolidated financial statements.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" (SFAS No. 144). SFAS No. 144
provides new guidance on the recognition of impairment losses on long-lived
assets to be held and used or to be disposed of and also broadens the definition
of what constitutes a discontinued operation and how the results of a
discontinued operation are to be measured and presented. SFAS No. 144 supersedes
SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" and Accounting Principles Board Opinion No.
30, "Reporting the Results of Operations - Reporting the Effects of Disposal of
a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions," while retaining many of the requirements of these two
statements. Under SFAS No. 144, assets held for sale that are a component of an
entity will be included in discontinued operations if the operations and cash
flows will be or have been eliminated from the ongoing operations of the entity
and the entity will not have any significant continuing involvement in the
operations prospectively. SFAS No. 144 did not materially change the methods
used by the Company to measure impairment losses on long-lived assets.

See Note 3 for a discussion regarding the Company's adoption of SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities," as
amended (SFAS No. 133) on January 1, 2001 and adoption of subsequent cleared
guidance. See Note 6 for a discussion regarding the Company's adoption of SFAS
No. 142 "Goodwill and Other Intangible Assets" (SFAS No. 142) on January 1,
2002.

3. DERIVATIVE FINANCIAL INSTRUMENTS

Derivative instruments (Derivatives) are contracts which typically derive
value from changes in interest rates, foreign exchange rates, credit spreads,
prices of securities or financial or commodity price indices. The timing of cash
receipts and payments for derivatives is generally determined by contractual
agreement. Derivatives can be either standardized contracts that are traded on
an organized exchange or privately negotiated contracts. Futures contracts are
examples of standard exchange-traded derivatives. Privately negotiated
derivative contracts include forwards, interest rate swaps and certain option
contracts. The Company enters into interest rate swap agreements and commodity
forward contracts as an end user for purposes other than trading. Derivatives
used for purposes other than trading serve to economically hedge variable cash
flows on floating rate debt and hedging the purchase and sale price of various
commodities.

The Company accounts for its derivative instruments at fair value as assets
or liabilities. All derivatives held by the Company either qualify as cash flow
hedges or are accounted for with no hedging designation. To qualify for cash
flow hedge accounting, the hedge relationship must be formally designated and
documented at inception and be anticipated to be highly effective. If the
requirements for hedge accounting are not met, the Company classifies the

derivative as no hedging designation, accounting for derivative fair value
changes currently through the Consolidated Statements of Operations.

The Company reports interest rate swaps at fair value with changes in the
swap fair value reported in either other comprehensive income (OCI) or earnings
as determined by whether the contract is designated in a qualifying hedge
relationship. For interest rate swaps qualifying for hedge accounting, the
effective portion of the gains/losses on the interest rate swaps are reported as
a component of OCI. Deferred gains and losses from effective hedge relationships
will be reclassified into earnings as adjustments to interest expense over the
life of the forecasted variable interest payments being hedged. If the swap does
not qualify for hedge accounting, any change in fair value is reported currently
in earnings.

The Company accounts for financial contracts for the forward purchase and
sale of various commodities as derivatives at fair value. The classification for
reporting the change in fair values depends on whether the contract qualifies
for hedge accounting. For those contracts that qualify for hedge accounting, the
effective portion of the derivative fair value change for those contracts are
reported as a component of OCI. Gains/losses on the commodity forward contracts
are reclassified from OCI to earnings in the same period(s) that the hedged
forecasted transactions involving the commodity impacts earnings. For those
commodity contracts to which hedge accounting is not applied, the Company
reports any change in fair value currently in earnings.

The Company also has certain commodity purchase contracts for the physical
delivery of goods in quantities expected to be used in the normal course of
business. These contracts meet the definition of a derivative, however, they are
considered to be exempt from the requirement to record the contract in the
financial statements under the normal purchases and sales exception, and thus
are not reflected in the balance sheet at fair value.

The adoption of SFAS No. 133 resulted in a one-time pre-tax reduction of
approximately $57 million ($33 million after taxes) to OCI, a component of
Stockholders' Equity. The reduction to OCI resulted from the recognition of the
Company's contracts meeting the definition of a derivative at fair value. At
March 31, 2002, the Company had net derivative assets of approximately $17
million and OCI of approximately $9 million respectively, after tax, related to
fair values of the Company's derivatives. As of March 31, 2002, the Company
expects $2 million in accumulated other comprehensive income to be reclassified
into net income during the next twelve months.

The application of SFAS No. 133 is still evolving as the FASB clears issues
submitted to the Derivatives Implementation Group for consideration. During the
second quarter of 2001, an issue that applies exclusively to the electric
industry and allows the normal purchases and normal sales exception for
option-type contracts if certain criteria are met was approved by the FASB with
an effective date of July 1, 2001. The adoption of this cleared guidance had no
impact on the Company's results of operations. Certain criteria of this
previously approved guidance were revised in October and December 2001 and
became effective on April 1, 2002. The effect of adoption of the revised
guidance did not have a material impact on the Company's consolidated financial
statements.

During the third quarter of 2001, the FASB cleared an issue related to
application of the normal purchases and normal sales exception to contracts that
combine forward and purchased option contracts. The effective date of this
guidance was April 1, 2002 and the effect of adoption of this guidance did not
have a material impact on the Company's consolidated financial statements.

4. RELATED PARTY TRANSACTIONS

Orion Power does not rely on significant related party transactions in its
operations. During 2001, Orion Power was involved in several contracts with
current or former owners related to the operations of certain of its facilities.
Additionally, Orion Power had several notes receivable, with an aggregate amount
of $3.7 million, from officers outstanding at December 31, 2001, which were paid
off at the completion of the Merger on February 19, 2002.

The Interim Financial Statements include transactions between the Company
and Reliant Resources and its subsidiaries other than the Company. The majority
of these transactions involve the purchase or sale of capacity, energy,
ancillary services, fuel, emissions allowances or related derivatives or
services (including transportation, transmission and storage services) by
Reliant Energy Services, Inc. (RES), a wholly owned subsidiary of and the
primary trading entity for Reliant Resources, from or to the Company. These
transactions have been entered into on

an arm's-length basis with pricing derived from market indices, the actual price
paid by RES to the upstream third party for the relevant product or another
price reflecting market conditions at the time the transaction is entered into.

5. ACQUISITION BY RELIANT RESOURCES, INC.

On February 19, 2002, the Company was acquired by merger by a wholly owned
subsidiary of Reliant Resources, which in turn, is a majority-owned subsidiary
of Reliant Energy. The transaction resulted in the purchase by Reliant Resources
of the outstanding shares of common stock of the Company for $26.80 per share in
cash for an aggregate purchase price of approximately $2.9 billion. Reliant
Resources funded the Orion Power acquisition with a $2.9 billion credit facility
and $41 million of cash on hand.

Reliant Resources accounted for the acquisition as a purchase with assets
and liabilities of Orion Power reflected at their estimated fair values. The
Company's fair value adjustments included adjustments in property, plant and
equipment, debt, unrecognized pension and postretirement benefits liabilities
and related deferred taxes. The fair value adjustments related to the
acquisition have been pushed down to Orion Power. The Company expects to
finalize these fair value adjustments no later than February 2003, based on
valuations of property, plant and equipment, intangible assets and other assets
and obligations.

The following table presents selected financial information and unaudited
pro forma information for the three months ended March 31, 2001 and the period
from January 1, 2002 through February 19, 2002, as if the acquisition had
occurred on January 1, 2001 and 2002, as applicable.

<Table>
<Caption>
THREE MONTHS ENDED JANUARY 1 THROUGH
MARCH 31, 2001 FEBRUARY 19, 2002
------------------------- --------------------------
ACTUAL PRO FORMA ACTUAL PRO FORMA
----------- --------- ------------ ----------
(IN MILLIONS)

Revenues............................................ $ 274 $ 274 $ 134 $ 134
Net income (loss)................................... 15 17 (52) (51)
</Table>

These unaudited pro forma results, based on assumptions deemed appropriate
by the Company's management, have been prepared for informational purposes only
and are not necessarily indicative of the amounts that would have resulted if
Orion Power had been acquired by Reliant Resources on January 1, 2001 and 2002,
as applicable. Purchase-related adjustments to the results of operations include
the effects on depreciation and amortization, interest expense and income taxes.
The unaudited pro forma condensed consolidated financial statements reflect the
acquisition of Orion Power in accordance with SFAS No. 141 and SFAS No. 142. For
additional information regarding the Company's adoption of SFAS No. 141 and SFAS
No. 142, please read Notes 2 and 6.

6. GOODWILL AND INTANGIBLES

In July 2001, the FASB issued SFAS No. 142, which provides for a
non-amortization approach, whereby goodwill and certain intangibles with
indefinite lives will not be amortized into results of operations, but instead
will be reviewed periodically for impairment and written down and charged to
results of operations only in the periods in which the recorded value of
goodwill and certain intangibles with indefinite lives is more than its fair
value. The Company adopted the provisions of the statement, which apply to
goodwill and intangible assets acquired prior to June 30, 2001 on January 1,
2002.

On January 1, 2002, the Company discontinued amortizing goodwill into its
results of operations pursuant to SFAS No. 142. The Company had no goodwill
amortization for the three months ended March 31, 2001.

As of March 31, 2002, Reliant Resources had assigned no fair value to
specific intangibles. The Company expects to finalize the fair value adjustments
to any intangible assets no later than February 2003 based on valuations of
specific intangibles. The components of the Company's other intangible assets as
of December 31, 2001, consist of the following (in thousands):

<Table>
<Caption>
DECEMBER 31, 2001
-----------------

Federal Energy Regulatory Commission Licenses.................................................. $ 60,348
Provider Of Last Resort Contract............................................................... 14,288
Other.......................................................................................... 1,301
-----------------
Total.......................................................................................... 75,937
Less: accumulated amortization................................................................. (10,203)
-----------------
Total.......................................................................................... $ 65,734
=================
</Table>

Amortization expense for other intangibles for the three months ended March
31, 2001, the periods from January 1, 2002 through February 19, 2002 and
February 20, 2002 through March 31, 2002 was $5.0 million, $3.3 million, and $0,
respectively.

7. BORROWINGS FROM THIRD PARTIES

New York Credit Agreement. As of March 31, 2002, Orion Power New York
(Orion NY), a wholly-owned subsidiary of Orion Power Holdings, Inc., had a
secured credit agreement (New York Credit Agreement), which includes a $502
million acquisition facility and a $30 million revolving working capital
facility. As of March 31, 2002, Orion NY had $502 million of acquisition loans
outstanding. As of March 31, 2002, there were no revolving loans outstanding. A
total of $10 million in letters of credit were outstanding under the New York
Credit Agreement. The loans bear interest at the borrower's option at (a) a base
rate or (b) LIBOR plus a margin. The rate as of March 31, 2002, was 3.75%. The
credit agreement is secured by substantially all of the assets of Orion NY. The
credit agreement expires in December 2002.

MidWest Credit Agreement. As of March 31, 2002, Orion Power MidWest LP
(Orion Power MidWest), a wholly-owned subsidiary of Orion Power Holdings, Inc.,
had a secured credit agreement (Midwest Credit Agreement), which includes a $988
million acquisition facility and a $75 million revolving working capital
facility. As of March 31, 2002, Orion Power MidWest had $988 million and $28
million of acquisition loans and revolving loans outstanding, respectively. A
total of $15 million in letters of credit were outstanding under the MidWest
Credit Agreement. The loans bear interest at the borrower's option at (a) a base
rate or (b) LIBOR plus a margin. The rate as of March 31, 2002, was 3.34%.
Borrowings under the MidWest Credit Agreement are secured by substantially all
the assets of Orion Power MidWest. The credit agreement expires in October 2002.

The New York Credit Agreement and the Midwest Credit Agreement
(collectively the Orion Credit Agreements) contain restrictive covenants that
restrict the ability to, among other things, make dividend distributions unless
Orion NY or Orion MidWest satisfy various conditions. As of March 31, 2002
restricted cash under the Orion Credit Agreements totaled $267 million.

In connection with the Orion Power acquisition, the existing interest rate
swaps related to the New York Credit Agreement and MidWest Credit Agreement were
bifurcated into a debt component and a derivative component. The fair value of
the debt component, approximately $31 million for the New York Credit Agreement
and $59 million for the MidWest Credit Agreement, was based on the Company's
incremental borrowing rates at the acquisition date for similar types of
borrowing arrangements. The value of the debt component will be amortized to
interest expense over the life of the interest rate swaps. For the period from
February 20, 2002 through March 31, 2002, $1 million and $2 million was
amortized to interest expense for the New York Credit Agreement and MidWest
Credit Agreement, respectively. See Note 3 for information regarding the
Company's derivative financial instruments.

The Orion Credit Agreements contain various business and financial
covenants requiring Orion NY or Orion MidWest to, among other things, maintain a
debt service coverage ratio of at least 1.5 to 1.0. For the three months ended
March 31, 2002, Orion Power MidWest did not meet its debt service coverage
ratio, and alternatively made a $25 million prepayment on March 22, 2002, as
permitted by the MidWest Credit Agreement in order to maintain compliance. Orion
Power MidWest may not be able to meet this debt service coverage ratio for the
quarter ending June 30, 2002. It is the Company's current intention to arrange
for the repayment, refinancing or amendment of these facilities prior to June
30, 2002. If the MidWest Credit Agreement facility is not repaid, refinanced or
amended prior to that date, and if a waiver is required under this credit
facility, the Company believes that it will be able to obtain such a waiver.
However, the Company currently has no assurance that it will be able to obtain
such a waiver or amendment from the lender group if required under the MidWest
Credit Agreement.

Liberty Credit Agreement. Liberty Electric Power, LLC (Liberty), a
wholly-owned subsidiary of Orion Power Holdings, Inc., entered into a facility
that provides for (a) a construction/term loan in an amount of up to $105
million; (b) an institutional term loan in an amount of up to $165 million; (c)
an equity bridge loan in an amount of up to $41 million; (d) a revolving working
capital facility for an amount of up to $5 million; and (e) a debt service
reserve letter of credit facility of $17.5 million (Liberty Credit Agreements).

Amounts outstanding under this facility bear interest at a floating rate
for a portion of the facility, which may be either (a) a base rate or (b) LIBOR
plus a margin, except for the institutional term loan which bears interest at a
fixed rate. At March 31, 2002, the interest rate was 3.04% on the floating rate
component and 9.02% on the fixed rate portion. As of March 31, 2002, Liberty had
$135 million and $165 million of the floating rate and fixed rate portions of
the facility outstanding, respectively.

The lenders under the Liberty Credit Agreement have a security interest in
substantially all of the assets of Liberty and have negative pledges on other
fixed assets of Liberty. The Liberty Credit Agreement contains restrictive
covenants that restrict Liberty's ability to, among other things, make dividend
distributions unless Liberty satisfies various conditions. As of March 31, 2002,
restricted cash under the Liberty Credit Agreement totaled $25 million.

The equity bridge loan matures on the earlier of October 1, 2002, or a date
on which the conditions precedent to conversion to a term loan are met. The debt
service reserve letter of credit facility becomes available for use when the
conditions precedent to conversion to a term loan are met and matures five years
thereafter. The working capital facility becomes available for use six months
prior to the scheduled conversion date and matures five years thereafter. The
construction/term loan matures on the earlier of October 1, 2002, or a date on
which the conditions precedent to conversion to a term loan are met and matures
10 years thereafter. The institutional term loan has a final maturity date of
April 15, 2026.

Senior Notes. Orion Power has outstanding $400 million of 12% senior notes,
due 2010 (Senior Notes). The Senior Notes are senior unsecured obligations of
Orion Power. Orion Power is not required to make any mandatory redemption or
sinking fund payments with respect to the Senior Notes. The Senior Notes are not
guaranteed by any of Orion Power's subsidiaries. In connection with the Orion
Power acquisition, the Company recorded the Senior Notes at estimated fair
value, $479 million. The $79 million premium will be amortized against interest
expense over the life of the Senior Notes. The fair value of the Senior Notes is
based on the Company's current incremental borrowing rates for similar types of
borrowing arrangements. The Senior Notes indenture contains covenants that
include among others, restrictions on the payment of dividends.

Pursuant to certain change of control provisions, Orion Power commenced an
offer to repurchase the Senior Notes on March 21, 2002. The offer to repurchase
expired on April 18, 2002. There were no acceptances of the offer to repurchase
and the entire $400 million remains outstanding.

Before May 1, 2003, Orion Power may redeem up to 35 percent of the Senior
Notes issued under the indenture at a redemption price of 112% of the principal
amount of the notes redeemed, plus accrued and unpaid interest and special
interest, with the net cash proceeds of an equity offering provided that certain
provisions under the indenture are met.

Revolving Senior Credit Facility. Orion Power has an unsecured $75 million
revolving senior credit facility that matures in December 2002. Amounts
outstanding under the facility bear interest at a floating rate. As of March 31,
2002, there were no outstanding borrowings under this facility, but a total of
$70 million in letters of credit were outstanding.

The senior credit facility of Orion Power contains various business and
financial covenants that require Orion Power to, among other things, maintain a
debt service coverage ratio of at least 1.4 to 1.0. Orion Power did not meet the
debt service coverage ratio for the quarter ended March 31, 2002. In the event
that Orion Power is unable to meet this financial covenant for a second
consecutive fiscal quarter it would constitute a default under its credit
facility. It is the Company's current intention to arrange for the
repayment, refinancing or amendment of this facility prior to June 30, 2002. If
this facility is not repaid, refinanced or amended prior to that date, and if a
waiver is required under this credit facility, the Company believes that
it will be able to obtain such a waiver. However, the

Company currently has no assurance that it will be able to obtain such a waiver
or amendment from the lender groups if required under this credit facility.

Convertible Senior Notes. Orion Power had outstanding an aggregate
principal amount of $200 million of 4.5% convertible senior notes, due on June
1, 2008. Pursuant to certain change of control provisions, Orion Power commenced
an offer to repurchase the $200 million 4.5% convertible senior notes on March
1, 2002, which expired on April 10, 2002. The Company repurchased $189 million
in principal amount under the offer to repurchase and $11 million remains
outstanding. The repurchase was funded with cash provided by Reliant Resources.

8. COMPREHENSIVE INCOME AND STOCKHOLDERS' EQUITY

The following table summarizes the components of total comprehensive (loss)
income (in thousands):

<Table>
<Caption>
FORMER ORION CURRENT ORION
---------------------------------------- ------------------
THREE MONTHS JANUARY 1 THROUGH FEBRUARY 20
ENDED MARCH 31, FEBRUARY 19, THROUGH MARCH 31,
2001 2002 2002
------------------ ------------------ ------------------

Net income ............................................ $ 15,117 $ (52,174) $ 13,090
Other comprehensive income (loss):
Cumulative effect of adoption of SFAS No. 133 ....... (33,330) -- --
Change in valuation of cash flow hedges ............. (14,289) (2,344) 8,529
------------------ ------------------ ------------------
Comprehensive (loss) income ........................... $ (32,502) $ (54,518) $ 21,619
================== ================== ==================
</Table>

In conjunction with the acquisition on February 19, 2002, all outstanding
stock options and warrants of the Company were vested and exercised and
immediately purchased by Reliant Resources in cash. All outstanding common stock
of the Company was purchased by Reliant Resources and retired. The 1,000 shares
($1.00 par value), authorized and outstanding, of the merger subsidiary were
immediately converted into 1,000 shares of the surviving corporation, Orion
Power Holdings, Inc.

9. COMMITMENTS AND CONTINGENCIES

Generating Projects. As of March 31, 2002, the Company had two generating
facilities under construction. Total estimated costs of constructing these
facilities are $340 million. As of March 31, 2002, the Company had incurred $320
million of the total projected costs of these projects, which were funded
primarily from debt facilities.

In addition, the Company has commitments to purchase additional power
generation equipment, consisting of steam and combustion turbines and heat
recovery steam generators, for a total estimated cost of $697 million, with a
remaining commitment of $533 million. The Company is actively attempting to
market this equipment, having determined that it is in excess of its current
needs.

Tolling Agreement for Liberty Electric Generating Station. The output of
Liberty Electric Generating Station is contracted under a tolling agreement for
a term of approximately 14 years. Under this agreement, the counterparty will
have the exclusive right to receive all energy, capacity and ancillary services
produced by the plant. The counterparty will pay for, and be responsible for,
all fuel used by the plant under the tolling agreement. The facility achieved
commercial operation on April 15, 2002 and the commencement of the tolling
agreement is expected to occur in the second quarter of 2002.

Agreements and Amendments to Agreements with Duquesne Light Company. On
February 15, 2002, the Company executed with Duquesne Light Company a capacity
agreement, amendments to the Provider of Last Resort (POLR) Contract I and II
Agreements, and an amended and restated ancillary services agreement, as well as
amendments to certain related agreements as necessary to allow such agreements
to function mechanically within the Pennsylvania, New Jersey and Maryland (PJM
West) structure. Effectiveness of all of the foregoing is conditioned upon
receipt of the consent of the Company's lenders as well as the satisfaction of
multiple other conditions precedent, including without limitation Federal Energy
Regulatory Commission (FERC) approval of certain changes to Duquesne Light
Company's retail and supplier tariffs to allow Duquesne Light Company to pass on
to the applicable customers amounts payable by Duquesne Light Company under the
capacity agreement and additional amounts under the amended and restated
ancillary services agreement. If such conditions are not satisfied within 180
days of the execution date, the new agreements and amendments do not become
effective and will terminate automatically.

Orion Power Environmental Contingencies. In connection with the acquisition
of 70 hydro plants in northern and central New York and four gas- or oil- fired
plants in New York City, Orion Power recorded a liability for the estimated cost
of environmental remediation. The liability was based on valuation reports
provided by independent environmental liability assessment experts. In
conjunction with these valuations, Orion Power has developed remediation plans
for each item specifically identified. For environmental items at the New York
City sites, the New York State Department of Environmental Conservation has
issued consent orders requiring active investigation and remediation of past
releases of petroleum and other substances by the prior owners. The consent
order also contains obligations related to continuing compliance with
environmental regulations. At March 31, 2002, the liability totaled
approximately $7 million which is expected to be paid out through 2009.

In connection with the acquisition of Midwest assets by Orion Power, Orion
Power recorded a liability for the estimated cost of environmental remediation.
The liability was based on valuations performed by independent environmental
liability assessment experts. In conjunction with these valuations, Orion Power
has developed remediation plans for the known liabilities. At March 31, 2002,
the liability totaled approximately $5 million which is expected to be paid out
through 2009.

10. INCOME TAXES

The Company is included in the consolidated income tax returns of Reliant
Energy. The Company calculates its income tax provision on a separate return
basis under a tax sharing agreement with Reliant Energy. The Company uses the
liability method of accounting for deferred income taxes and measures deferred
income taxes for all significant income tax temporary differences. Prior to the
acquisition date, the Company filed a consolidated federal income tax return.
The Company's pre-acquisition consolidated federal income tax returns have been
audited and settled through the year 2000.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion and analysis should be read in combination with
our Interim Financial Statements contained in this Form 10-Q.

Orion Power meets the conditions specified in General Instruction H(1)(a)
and (b) to Form 10-Q and is therefore permitted to use the reduced disclosure
format for wholly owned subsidiaries of reporting companies. Accordingly, Orion
Power has omitted from this report the information called for by the following
Part II items of Form 10-Q: Item 2 (Changes in Securities and Use of Proceeds)
and, Item 3 (Defaults Upon Senior Securities). The following discussion explains
material changes in the amount of revenue and expense items of Orion Power
between the three months ended March 31, 2001 and the periods from January 1,
2002 through February 19, 2002 and February 20, 2002 through March 31, 2002.

This report contains "forward-looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements include, among others, statements concerning the
Company's outlook for 2002 and beyond, the Company's expectations, beliefs,
future plans and strategies, anticipated events or trends, and similar
expressions concerning matters that are not historical facts. The
forward-looking statements in this report are subject to risks and uncertainties
that could cause actual results to differ materially from those expressed in or
implied by the statements.

OVERVIEW

We are an electric power generating company formed in March 1998 to
acquire, develop own and operate power-generating facilities in certain
deregulated wholesale markets throughout North America. As of March 31, 2002, we
had 81 power plants with a total generating capacity of 5,644 MW and two
development projects with an additional 804 MW of capacity under construction.

On February 19, 2002, we were acquired by merger by a wholly owned
subsidiary of Reliant Resources, Inc. (Reliant Resources), which in turn, is a
majority-owned subsidiary of Reliant Energy, Inc. (Reliant Energy) for
approximately $2.9 billion. As a result, we became a wholly owned subsidiary of
Reliant Resources, which files reports with the Securities and Exchange
Commission.

Reliant Resources accounted for the acquisition as a purchase with assets
and liabilities of Orion Power reflected at their estimated fair values. The
fair value adjustments related to the acquisition, which have been pushed down
to Orion Power, primarily included adjustments in property, plant and equipment,
debt, unrecognized pension and postretirement benefits liabilities and related
deferred taxes. For additional information regarding the acquisition, see Note 5
to the Interim Financial Statements.

Similar to other wholesale power generators, we typically sell three types
of products: energy, capacity, and ancillary services. Energy refers to the
actual electricity generated by our facilities and sold to intermediaries for
ultimate transmission and distribution to consumers of electricity. Capacity
refers to the physical capability of a facility to produce energy. Ancillary
services generally are support products used to ensure the safe and reliable
operation of the electric power supply system.

We typically sell our wholesale products to electric power retailers, which
are the entities that supply power to consumers. Power retailers include
independent service operators, regulated utilities, municipalities, energy
supply companies, cooperatives, and retail "load" or customer aggregators.

OUTLOOK

Reliant Resources will fully integrate our assets into the existing Reliant
Resources business, fully utilizing Reliant Resources' extensive trading,
marketing and operational experience. Reliant Resources expects to improve our
assets through reduced operating and maintenance costs as well as improved
availability and reliability. This integration will be rolled out during the
third quarter of 2002. All modernization, environmental, and development
strategies will be integrated into Reliant Resources' regional operational
strategy.

RESULTS OF OPERATIONS

The period January 1, 2002 through February 19, 2002 and February 20, 2002
through March 31, 2002, as compared to the three months ended March 31, 2001.

Revenue. Our revenues were $134.5 million and $112.3 million for the
periods from January 1, 2002 through February 19, 2002 and February 20, 2002
through March 31, 2002, respectively, as compared to $274.3 million for the
three months ended March 31, 2001. The decrease was due to extremely mild
temperatures during the first three months of 2002 along with very low rainfall
for the same period. The megawatts generated were down 13% as well as market
prices being depressed for the three months ended March 31, 2002, compared to
the three months ended March 31, 2001.

Operating Expenses. Our operating expenses consisted of fuel expense, gain
(loss) on derivative instruments, operations and maintenance expenses, general
and administrative expenses, taxes other than income taxes (principally property
taxes), and depreciation and amortization expense.

Fuel expenses were $46.5 million and $35.8 million for the periods from
January 1, 2002 through February 19, 2002 and February 20, 2002 through March
31, 2002, respectively, as compared with $111.7 million for the three months
ended March 31, 2001. The decrease was due to reduced fuel prices, especially
coal prices, as well as reduced generation for the comparable periods.

The gain (loss) on derivative instruments was ($12.1) million and $0.7
million for the periods from January 1, 2002 through February 19, 2002 and
February 20, 2002 through March 31, 2002, respectively, as compared with a $1.5
million gain for the three months ended March 31, 2001. This change reflects the
changes in market values recognized during the three months ended March 31,
2002, for the derivative financial instruments (natural gas, oil, and financial
tolling agreements) that do not qualify as cash flow hedges under generally
accepted accounting principles as compared to the market price fluctuations for
the three months ended March 31, 2001. See Note 3 to our Interim Financial
Statements for further discussions on derivative instruments.

Operations and maintenance expenses were $22.4 million and $11.6 million
for the periods from January 1, 2002 through February 19, 2002 and February 20,
2002 through March 31, 2002, respectively, as compared to $27.9 million for the
three months ended March 31, 2001. The increase was due to repairs made to our
Midwest facilities throughout the three months ended March 31, 2002 as compared
to the three months ended March 31, 2001. The work performed and equivalent
costs incurred were planned and part of the operating budget.

General and administrative expenses were $86.2 million and $5.9 million for
the periods from January 1, 2002 through February 19, 2002 and February 20, 2002
through March 31, 2002, respectively, as compared to $12.8 million for the three
months ended March 31, 2001. For the period January 1, 2002 through February 19,
2002, we recognized $46.0 million in severance and buyout packages paid to
former executives of Orion Power, $29.0 million in legal and consulting fees
related to the acquisition by Reliant Resources, and $1.4 million in deferred
compensation expense relating to full vesting and payout of Orion Power stock
options. There were no such costs for the period from February 20, 2002 through
March 31, 2002 or during the three months ended March 31, 2001.

Taxes other than income taxes amounted to $8.6 million and $8.1 million for
the periods from January 1, 2002 through February 19, 2002 and February 20, 2002
through March 31, 2002, respectively, as compared to $17.8 million for the three
months ended March 31, 2001. The decrease was directly related to a concentrated
effort to reduce these costs through appeals and reassessments.

Depreciation and amortization expense was $25.5 million and $19.4 million
for the periods from January 1, 2002 through February 19, 2002 and February 20,
2002 through March 31, 2002, respectively, as compared to $32.2 million for the
three months ended March 31, 2001. This increase is due to increased capital
costs being depreciated coupled with the increase in the fair value of the
assets resulting from the application of purchase accounting (see Note 5 to our
Interim Financial Statements).

Operating Income (Loss). As a result of the above factors, our operating
loss was $66.8 million for the period from January 1, 2002 through February 19,
2002 and operating income of $32.2 million for the period from

February 20, 2002 through March 31, 2002, as compared to operating income of
$73.4 million for the three months ended March 31, 2001.

Interest Expense. Our interest expense was $25.1 million and $12.3 million
for the periods from January 1, 2002 through February 19, 2002 and February 20,
2002 through March 31, 2002, respectively, as compared to $52.9 million for the
three months ended March 31, 2001. This decrease is attributable to the
reduction in interest rates and a reduction in our effective interest rate due
to adjustments in fair value of debt in connection with our acquisition for the
periods presented (see Notes 5 and 7 to our Interim Financial Statements). Our
average interest rate for the three months ended March 31, 2002 was 6.3%
compared to 6.6% for the three months ended March 31, 2001.

Interest Income. Our interest income was $1.1 million and $0.6 million for
the periods from January 1, 2002 through February 19, 2002 and February 20, 2002
through March 31, 2002, respectively, as compared to $5.8 million for the three
months ended March 31, 2001. The decrease is due to substantially lower total
cash on hand to earn interest as well as lower interest rates for the comparable
periods.

Income Tax (Benefit)Provision. Our income tax benefit was $38.6 million for
the period from January 1, 2002 through February 19, 2002 and a provision of
$7.4 million for the period from February 20, 2002 through March 31, 2002, as
compared to a provision of $11.2 million for the three months ended March 31,
2001. The effective income tax rates, excluding certain state tax credits in
effect for the three months ended March 31, 2002, for the periods were
comparable.

Net Income(Loss). As a result of the above factors, our net loss was $52.2
million for the period from January 1, 2002 through February 19, 2002 and net
income of $13.1 million for the period from February 20, 2002 through March 31,
2002, as compared to net income of $15.1 million for the three months ended
March 31, 2001.

SEASONALITY

Our operations vary depending upon the season and regional weather
conditions, although the impact of seasonality can vary depending upon the
geographic location of our facilities. In many areas, the demand for electric
power peaks during the hot summer months, with energy and capacity prices
correspondingly being the highest at that time. We can earn a substantial amount
of our net income from a few days during the peak demand for electric power on
the hottest days of summer. In some areas, demand also increases during the
coldest winter months. Additionally, hydroelectric plants show seasonality
depending upon the availability of water flows, which generally will be high
during rainy months or as a result of snowmelt in the late winter and spring.
Prices will generally fluctuate with demand, being highest at times of greatest
demand. This fluctuation is currently somewhat mitigated by the existence of the
hydro-transition power sales agreement and the provider of last resort contract,
both of which have constant prices for the entire year. Our overall future
operating results may reflect different seasonal aspects, depending upon the
location and characteristics of any additional facilities we acquire.

FINANCIAL CONDITION

The following table summarizes the net cash provided by (used in)
operating, investing and financing activities for the three months ended March
31, 2001 and the periods from January 1, 2002 through February 19, 2002 and
February 20, 2002 through March 31, 2002.

<Table>
<Caption>
FORMER ORION CURRENT ORION
------------------------------------- --------------
JANUARY 1, 2002 FEBRUARY 20,
THREE MONTHS ENDED THROUGH 2002 THROUGH
MARCH 31, 2001 FEBRUARY 19 2002 MARCH 31, 2002
------------------ ---------------- --------------
(IN MILLIONS)

Cash provided by (used in):
Operating activities.................................. $ 97 $ 13 $ (63)
Investing activities.................................. (117) (50) (18)
Financing activities.................................. 63 (54) (6)
</Table>

Net cash provided by (used in) operating activities for the periods from
January 1, 2002 through February 19, 2002 and February 20, 2002 through March
31, 2002, provided $13 million and used $63 million of cash, respectively,
compared to $97 million in cash provided during the three months ended March 31,
2001. For the period January 1, 2002 through February 19, 2002, cash provided
resulted from a decrease in

restricted cash and increases in other noncurrent liabilities offset by
increases in other current and noncurrent assets. In the period February 20,
2002 through March 31, 2002 cash used was primarily due to an increase in
restricted cash for Orion NY for the period, a decrease in liabilities related
to the purchase of services and materials, taxes withheld for employees and
costs related to the acquisition by Reliant Resources.

Investing activities for the periods from January 1, 2002 through February
19, 2002 and February 20, 2002 through March 31, 2002, used $50 million and $18
million of cash, respectively, compared to $117 million for the three months
ended March 31, 2001. The increase was primarily for facility improvements and
capital expenditures.

Financing activities for the periods from January 1, 2002 through February
19, 2002 and February 20, 2002 through March 31, 2002, used $54 million and $6
million of cash, respectively, as compared to providing $63 million for the
three months ended March 31, 2001. During the periods from January 1, 2002
through February 19, 2002 and February 19, 2002 to March 31, 2002, payments on
debt increased by $100 million compared to the three months ended March 31, 2001
primarily due to payments on our MidWest Credit Agreement. Proceeds from
borrowings decreased by $30 million in the periods from January 1, 2002 through
February 19, 2002 and February 19, 2002 to March 31, 2002, compared to the three
months ended March 31, 2001. Additionally, we paid $0.1 million for various
financing costs and had proceeds of $4 million from officers' notes receivable.

As of March 31, 2002, we had restricted cash of $292 million that can only
be used pursuant to our credit facilities in certain circumstances to fund the
business activities of the subsidiaries that hold our hydroelectric assets, our
assets located in New York City, our assets located in Cleveland, Pittsburgh,
West Pittsburg and Youngstown and the assets in development that we acquired.
For additional discussion, see Note 7 to our Interim Financial Statements.

FUTURE SOURCES AND USES OF CASH FLOWS

For 2002, our principal sources of liquidity will be cash from operations
as well as fundings from our existing credit facilities including any
refinancing of our Orion Power revolving credit facility and of our New York and
MidWest credit facilities. Such refinancing may be provided by external sources
or via intercompany loans or equity injections provided by Reliant Resources.
The major risk to our liquidity sources for 2002 are significant increases in
interest rates as we refinance our existing facilities, or the inability to
refinance such facilities.

Depending on our performance and market conditions prevailing at the time
of the expiration of these credit facilities, Reliant Resources may not be able
to arrange for the necessary replacement of these facilities on terms that are
acceptable to us. If we are unable to obtain financing to replace these
facilities on terms that are acceptable to us, our financial condition and
future results of operations would be materially adversely affected.

The Orion Credit Agreements contain various business and financial
covenants requiring Orion NY or Orion MidWest to, among other things, maintain
a debt service coverage ratio of at least 1.5 to 1.0. For the three months
ended March 31, 2002, Orion Power MidWest did not meet its debt service
coverage ratio, and alternatively made a $25 million prepayment on March 22,
2002, as permitted by the MidWest Credit Agreement in order to maintain
compliance. Orion Power MidWest may not be able to meet this debt service
coverage ratio for the quarter ended June 30, 2002. It is the Company's
current intention to arrange for the repayment, refinancing or amendment of
these facilities prior to June 30, 2002. If the MidWest Credit Agreement
facility is not repaid, refinanced or amended prior to that date, and if a
waiver is required under this credit facility, the Company believes that
it will be able to obtain such a waiver. However, we currently have no
assurance that we will be able to obtain such a waiver or amendment from the
lender group if required under the MidWest Credit Agreement.

The senior credit facility of Orion Power contains various business and
financial covenants that require Orion Power to, among other things, maintain a
debt service coverage ratio of at least 1.4 to 1.0. Orion Power did not meet
the debt service coverage ratio for the quarter ended March 31, 2002. In the
event that Orion Power is unable to meet this financial covenant for a second
consecutive fiscal quarter it would constitute a default under its credit
facility. It is the Company's current intention to arrange for the
repayment, refinancing or amendment of this facility prior to June 30, 2002. If
this facility is not repaid, refinanced or amended prior to that date, and if a
waiver is required under this credit facility, the Company believes that
it will be able to obtain such a waiver. However, we currently have no
assurance that we will be able to obtain such a waiver or amendment from the
lender groups if required under this credit facility.

For additional information regarding our debt obligations, please read
Note 7 to our Interim Financial Statements.

NEW ACCOUNTING PRONOUNCEMENTS AND CRITICAL ACCOUNTING POLICIES

NEW ACCOUNTING PRONOUNCEMENTS

record a cumulative effect of change in accounting principle in the income
statement in the period of adoption. The Company plans to adopt SFAS No. 143 on
January 1, 2003, and is in the process of determining the effect of adoption on
its consolidated financial statements.

See discussions in Note 2 to our Interim Financial Statements regarding
our adoption of SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended (SFAS No. 133) on January 1, 2001 and adoption of
subsequent cleared guidance and SFAS No. 142 "Goodwill and Other Intangible
Assets" (SFAS No. 142) on January 1, 2002 as well as SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets" which was adopted on
January 1, 2002.

CRITICAL ACCOUNTING POLICIES

A critical accounting policy is one that is both important to the portrayal
of our financial condition and results of operations and requires management to
make difficult, subjective or complex judgments. The circumstances that make
these judgments difficult, subjective and/or complex have to do with the need to
make estimates about the effect of matters that are inherently uncertain.
Estimates and assumptions about future events and their effects cannot be
perceived with certainty. We base our estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments. These
estimates may change as new events occur, as more experience is acquired, as
additional information is obtained and as our operating environment changes.

We believe the following are the most significant estimates used in the
preparation of our consolidated financial statements.

The Company records gross revenue for energy sales and services related to
its electric power generation facilities under the accrual method and these
revenues generally are recognized upon delivery. Energy sales and services
related to its electric power generation facilities not billed by month-end are
accrued based upon estimated energy and services delivered. Electric power and
other energy services are sold at market-based prices through existing power
exchanges or through third-party contracts. The only portion of our revenue that
contains certain assumptions in its determination and measurement is the revenue
recognized from the Provider of Last Resort contract with Duquesne Light
Company. The revenue, per the contract, is based on the amount of charges billed
to Duquesne Light Company's customer base for the services provided. Since the
amount of the actual revenue is not known until it is remitted by Duquesne Light
Company subsequent to when they have read a customer's meter, we have
established a reasonable number of assumptions regarding multiple factors to
match the megawatts we produce to the revenue we record. These assumptions are
continuously reviewed and revised, as necessary. We have been and continue to
work with Duquesne Light Company to obtain the most accurate and timely data
available to minimize any volatility within our assumptions. Through March 31,
2002, there have been no significant revisions or changes to our revenue
recognition assumptions related to this contract.

The determination of fair value of non-trading derivative assets and
liabilities require significant estimates (see Note 3 to our Interim Financial
Statements).

The analysis of impairment of long-lived assets and intangibles requires
significant estimates (see Note 6 to our Interim Financial Statements and Note 2
to the Orion Power 10-K Notes).

For a description of all of the Company's significant accounting policies,
please read Note 2 to the Orion Power 10-K Notes.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company has financial instruments that involve various market risks and
uncertainties. For information regarding the Company's exposure to risks
associated with interest rates, equity market prices, and energy commodity
prices, see Item 7A of the Orion Power Form 10-K, which is incorporated herein
by reference. These risks have not materially changed from the market risks
disclosed in the Orion Power Form 10-K.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDING

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On February 19, 2002, an unanimous written consent of the sole
stockholder in lieu of a special meeting approved the amendment of the
Company's Certificate of Incorporation to change the name of the
Company from Reliant Energy Power Generation Merger Sub, Inc. back to
Orion Power Holdings, Inc. All 1,000 shares of outstanding common stock
of the Company voted for the amendment.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

4.1 Supplemented Indenture dated as of February 19, 2002 between the
Company and Wilmington Trust Company, as trustee (Trustee),
supplementing the Indenture dated as of June 6, 2001 between the
Company and the Trustee relating to the Company's 4.50% Convertible
Senior Notes due 2008.

(b) Reports on Form 8-K

None.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.

ORION POWER HOLDINGS, INC.

By: /s/ Curtis A. Morgan
----------------------------------
Curtis A. Morgan
President

Dated: May 20, 2002

EXHIBIT INDEX

EXHIBIT
NO. DESCRIPTION
- ------- -----------