Craig Mataczynski

Worldwide, NRG has experienced dramatic growth over the past four years resulting in a diverse portfolio of approximately 30,000 MW of projects in operation, in construction or with signed agreements. NRG's goal is to own at least 50,000 MW of plants by 2005. Today, the North American asset base makes up about 70 percent of NRG's total worldwide portfolio. The balance of assets is located in Australia, Europe, and Latin America.

Craig Mataczynski, president and CEO of NRG Energy Inc.'s North American region, has led the region created in 1998 through its enormous growth period from approximately 1000 megawatts (MW) to over 20,000 MW today.

NRG has expanded its core North American markets from three to five. They are in northeast, mid-Atlantic, south central, central and western portions of the United States. The majority of projects are located where electricity supply is constrained, transmission is accessible and where NRG can take advantage of a diverse mix of peaking, intermediate and baseload units.

Historically, most of NRG's growth has occurred by acquisition. Going forward over the next four years, growth through acquisition will still be about half of the total, while the remaining 50 percent will come from a combination of building on new sites and repowering existing sites.

Twelve years after its founding in 1989, NRG finds itself once again back to its roots with an increasing focus on greenfield development. The company's original emphasis was to market and build power plants using a standardized reference plant design for 400-megawatt coal-fired facilities for the IPP market. The innovations and construction efficiencies that were designed into those plants are the same principles being applied to NRG's current greenfield construction program.

NRG's insistence on diversity adds stability to the bottom line.

Central to NRG's market strategy is a portfolio of generation that is diverse in dispatch level, geography and fuel.

Peaking, intermediate and baseload facilities all play important roles in NRG's diverse strategy. Peaking and intermediate units provide needed flexibility and value in keeping the lights from going out and enhancing the return on the overall portfolio, while baseload plants provide a stable return. Geographical project diversity limits risk related to weather, economic, political or other market issues. NRG North America's diverse fuel portfolio includes natural gas, oil and coal. NRG has, and intends to always have, a coal component.

"Coal provides additional margin-especially when gas prices are high-and provides a benefit to the end user," commented Mataczynski. "We are committed to being environmentally responsible and can generate using coal and oil in an environmentally-sensitive manner while assuring an adequate supply at all times. This makes energy much more affordable for the consumer. "

Mataczynski added, "We also have plants that can switch between oil and gas. The ability to arbitrage the oil and gas position is a value enhancement that other companies who are solely reliant on a single fuel simply don't have. California shows what can happen when you don't have that fuel diversity."

NRG's investment in power marketing capabilities creates shareholder value.

NRG is building a track record of performance, not only from the standpoint of operating facilities, but also the ability to convert those operations into net income and earnings.

"We have built a first-class North American power marketing group consisting of more than 60 people with the proven ability to boost the overall return on the portfolio through the use of our expanded trading expertise," said Mataczynski. "This capability has been critical to our ability to raise capital to fuel further growth."

Another key element in adding the value that converts rapid top-line growth to increased earnings is the ability for NRG to quickly and easily integrate new acquisitions into the overall power marketing and risk management aspects of the business.

Mataczynski commented, "By the time we close on a new acquisition, we are prepared to trade around the asset and have already increased its value. One of the keys is to get the people on the ground to become more entrepreneurial and look at the operation from the perspective of an owner. That's the NRG culture."