Operator: Good day, ladies and gentlemen and welcome to the Quarter Four 2012 NRG Energy Incorporated Earnings Conference Call. My name is Patrick, and I will be your coordinator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference is being recorded for replay purposes.
I would now like to turn the conference over to your host for today Mr. Chad Plotkin, Vice President of Investor Relations. Please proceed.
Chad Plotkin - VP, IR: Thank you, Patrick, and good morning, everyone. I'd like to welcome you to NRG's year end fourth quarter 2012 earnings call. This morning's call is being broadcast live over the phone and via webcast, which can be located on our website at www.nrgenergy.com. You can access the call, associated presentation material, as well as the replay of the call in the Investor Relations section of our website. Because this call, including the presentation and Q&A session will be limited to one hour, we ask that you limit yourself to only one question with just one follow-up.
Before, we begin, I urge everyone to review the Safe Harbor statement provided in today's presentation which explains the risks and uncertainties associated with future events and the forward-looking statements made in today's press release and presentation material. We caution you to consider the important risk factors contained in our press release and other filings with the SEC that could cause actual results to differ materially from those in the forward-looking statements in the press release and this conference call.
In addition, please note that the date of this conference call is Wednesday, February 27, 2013, and any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of future events, except as required by law.
During this morning's call, we will refer to both GAAP and non-GAAP financial measures of the Company's operating and financial results. For complete information regarding our non-GAAP financial information, the most directly comparable GAAP measures and a quantitative reconciliation of those figures, please refer to today's press release in this presentation.
With that, I'll turn the call over to David Crane, NRG's President and Chief Executive Officer.
David Crane - President and CEO: Thank you, Chad and good morning to everyone. I am joined here today by Mauricio Gutierrez, the Company's Chief Operating Officer; and Kirk Andrews, the Company's Chief Financial Officer. They will both be giving part of this presentation and be available for questions thereafter.
Also joining us some other NRG executives, who will be available to answer your questions; Anne Cleary, the Company's Chief Integration Officer; Chris Moser, who runs the Company's Commercial Operations including our Trading; and Elizabeth Killinger, who runs Retail for us in Texas; and Jim Steffes, who runs Retail for us in the Northeast United States.
So, let me begin by recognizing that certain dichotomies exist between what we typically focus on during these earnings calls and what we – NRG management concentrate on while conducting the Company's day-to-day business. Chief to these dichotomies is the one that exists around personal safety. While our safety is not the focus of the financial community, it's very much our focus. Indeed for NRG management it is our primary focus.
As such, I am pleased to report today that in 2012, NRG achieved the best safety performance record in its history, a 0.52 OSHA recordable rate with not a single life altering injury. This performance places us well within the top decile of our industry and is a testament to the hard work and professionalism of NRG's now 8,000 employees.
To put this achievement into a historical context, in 2004 my first full year here at NRG, our OSHA recordable rate was 4.48, which was itself significantly down from a rate of 6.05 which was what the Company achieved in 2003, the year before I came here. So, having brought the rate down over 90% from 2003 to 0.52 in 2012 is extremely noteworthy. So, I want to start by using this public forum to congratulate the men and women of NRG on an absolutely stellar safety performance in 2012.
Now, as we turn to 2012 financial performance, I am very pleased with our overall performance in the year when our fundamental commodities were under nearly constant bearish pressure, nor did the weather give us much upside, even in terms of the Northeast winter or the Texas summer. Notwithstanding the moderate weather that we experienced in 2012, for NRG financially the formula remained the same in 2012. Solid EBITDA was a healthy contribution from retail and a growing contribution from solar, plus robust free cash flow for forward growth.
We also made significant strides in 2012 across our three part strategic platform of enhance generation, expand retail and go green. Here's the highlights in each of these three areas on subsequent slides, but first, I want to focus for a moment on an achievement which has received relatively little public comment to-date and that is the actions taken around our Louisiana portfolio in 2012. A decade long extension to a couple of critical co-op contracts, a constructive settlement with the EPA of longstanding NSR litigation relating to Big Cajun II, and a reassessment of the Company's overall environmental spend in light of currently applicable environmental and economic factors which has enabled us to reduce our public estimate of our future overall spend as a Company on environmental CapEx by over $100 million. This favorable outcome was a result of the core negated efforts spearheaded by our Louisiana management team under the leadership of our Gulf regional organization.
Now, turning to Slide 4 there are two points there. The first point is that we and NRG management have long objected to the view that our stock is just the proxy for long-term natural gas prices. Clearly in the past now and into the foreseeable future, NRG will do better in a high natural gas price environment than in the low natural gas price environment. But our goal as a management team has been to create a business model that allows NRG not only to survive but also to flourish no matter what the price of natural gas might be from time to time. We have made significant strides in that regard and it seems that the separation of our stock price performance from natural gas prices in the second half of 2012 might suggest that the market is coming to (believe it) as well.
My second point on this slide which is obvious from the chart on Slide 4 is that 2012 was not an evenly paced year for the Company. We clearly gained momentum during the second half of the year and we are focused right now hard on maintaining and accelerating that momentum in 2013 as we springboard off the forceful and expedited implementation of the GenOn integration.
In that regard turning to Slide 5 under Anne Cleary's leadership our integration effort has jumped off to a great start. Just eight weeks into the integration our confidence level on what we can achieve could not be higher and as a result we are pleased to announce an increase in our overall cost synergy target arising out of this combination from $175 million to $185 million. 52% of our new revised target run rate for total cost synergies already has been captured and that's $97 million a year plus over 90% of our balance sheet synergies representing an additional $93 million a year already has been put in place. So, we are well on our way to delivering what we promised. As to what we have not yet promised, we have not yet revised our estimate of the operational synergies that we expect to be able to achieve as a result of operating the generating assets of classic NRG and the former GenOn plans as one combined fleet.
I want to assure you that such work is ongoing at a very granular level across all the plans now in our system. As soon as we affirmed up the commercial and technological viability of our asset management plan around the entire set of generation assets, we will inform you of what we think we can achieve in regard to increased operational synergies, the cost to achieve these synergies and how long it will take us to achieve them. At this point it is still too early for me to be specific, but I continue to believe that the $25 million a year estimate is quite conservative.
Now turning to Slide 6, while we obviously are focused as a Company on the GenOn integration at the corporate level and on the wholesale side of the business, there is significant movement underway within NRG's retail companies, to make sure we continue to grow our retail businesses in a way that enhances shareholder value, which means to us profitable and intelligent growth with key wholesale supply risk inherent in the retail business covered or partially covered by our own wholesale supply.
To do this we have reorganized our multi-brand strategy principally on geographic lines with Elizabeth Killinger of Reliant assuming all responsibility for NRG Retail in Texas and Jim Steffes of Green Mountain assuming responsibility for all NRG Retail in the Northeast, United States. For each of our retail leaders, one of their many key objectives for 2013 will be to more closely integrate new clean energy products and services of the type briefly described in the bottom of Slide 6, and to their conventional grid based retail business. We already have a head start in this regard with what Reliant already has accomplished with smart energy products and services for the home and we believe in assertive expansion of these clean energy products and services and at the end use energy consumer, and the seamless integration of them into a conventional retail offering of system power will have multiple benefits.
It will differentiate our retail value proposition from both customer retention, and act as its own distinct and attractive sale channel. I think we'll be able to report on very positive developments in the retail space by the end of 2013.
Now turning to Slide 7, the other major area of management focus which you should be tracking is our Company's very substantial construction program. For the last couple of years, we have carried forward a multibillion dollar construction program. From your perspective, to-date, there has been little to show for in terms of current EBITDA contribution. In 2013 and 2014, our construction program bears fruit in a significant way.
In 2013, we expect over 2,000 megawatts of utility scale conventional and solar generation to come online. These projects should generate over $500 million in incremental EBITDA, almost all of which is fully contracted. So far, all of these projects are performing fully or close to fully in line with our expectations with respect to both time and schedule. You will be hearing more from us as meaningful milestones are achieved in our construction program in the months to come.
Beyond these projects, we continue to make substantial investment in a robust development program aimed at both revitalizing our conventional fleet in key locations and continuing the attractive growth of our industry leading solar portfolio. With respect to the latter, we have over 900 megawatts of mid to late stage Tier 2 utility scale solar projects in development in key markets across United States, 72 megawatts of which are already under contract. We also see in our pursuing significantly sized solar development programs at the sub-utility scale level in industry, commercial and arising out of government procurement.
Now, turning to Slide 8 and to capital allocation, which is the fourth part of NRG's strategy for value enhancing growth. As mentioned previously, the Company stands to be substantially free cash flow positive both in 2013 and 2014. Notwithstanding the continued weakness of the underlying gas price fundamentals and that free cash flow generation will add to the cash already on NRG's balance sheet which we already have acknowledge as liquidity in excess of current needs. Without undermining our eternal and unyielding commitment to prudent balance sheet management or PBSM as is referred to in the upper part of this slide, we are now in a position to consider our options with respect to the optimization of your capital without the artificial constraints imposed in previous years upon us by various restricted payment baskets. You will note and Kirk will elaborate further that as a first salvo in this regard we have chosen to do two things; increasing our annual dividend on common stock back to a level which approximates 2% per year of the average dividend yield of the S&P 500, plus a buyback of $200 million worth of common stock. Together these two actions represent a return to shareholders of close to 5% of our market capitalization.
What we hope we have accomplished with these two actions is; first, having initiated a common dividend just last year. This year we are acknowledging the principal that the dividend should grow over time; and second, with the share buyback that we will not sit indefinitely on all of our excess capital. We see a lot of opportunities across our wholesale to retail business footprint within our industry and with our industry in a considerable state of flux with our own internal development opportunities and with the clean energy industry still struggling to figure out where it fits with the conventional business.
We are highly confident that we can deploy the Company's capital in a way that generates cash outruns our own cost of capital and enhances the strength of our overall asset portfolio and business model going forth.
With that, I'll turn it over to Mauricio.
Mauricio Gutierrez - EVP and COO: Thank you, David, and good morning everyone. NRG closed 2012 on a high note and delivered another year of strong performance across the board. I want to take this opportunity to join David and recognize every one of our colleagues at NRG for making this year the safest in our nine-year history. It was also our best year from an environmental standpoint. These are outstanding accomplishments that make us all proud and the foundation for our best-in-class operations.
Now back to the results for the quarter on Slide 10. Our integrated platform delivered on our goals despite the low commodity price environment. Retail grew customer count and margins and our commercial group was very successful in managing the retail lows and maximizing the value of our generation portfolio in a year where many of our markets saw the lowest electricity prices in a decade.
As we work through the integration process, it is important to start by providing you with a full transaction view in key areas of operations hedging disclosers and environmental spend. To that effect, the environmental capital plan of the combined company will be $630 million through 2017. This includes $100 million reduction primarily related to MATS compliance at our of Big Cajun II facility that we announced during our third quarter call. The entire operations group is very focused on further optimizing our combined spend through our successful FORNRG program and executing on operational synergies. As you know, the program has delivered significant improvement in the past and this year was no exception. You can expect to hear from us in this area, and the weeks and months to come.
Finally, on the construction front, we commissioned 280 megawatts of utility scale solar generation in 2012, with Borrego and Alpine coming online at the beginning of this year.
El Segundo and Marsh Landing made significant progress in 2012 and remain on track for commercial operations in 2013. During the year, we also kicked off the construction of our Parish Peaker project for operational leader in the year.
Turning to our operational metrics on Slide 11, and starting with safety, we achieved the lowest recordable injury rate in NRG's history and for the fourth year out of the last five, achieved top decile performance in our industry.
During the fourth quarter 97 our 104 locations were without a single reportable injury. I mention this post-merger count to highlight that we have combined two strong safety cultures and we expect a continuation of great results going forward.
The continuous improvement culture that drives our safety performance, translates to results in the large organization. For the fourth quarter, our generation was up 8% compared to last year, driven primarily by the west region which tripled the amount of generation in the Northeast assets.
For the year, generation was down 10% compared to 2011, driven almost entirely by Texas due to coal to gas switching in the early part of the year, based on availability and milder weather. Our coal availability was 85% for the year.
As I mentioned in the past, in this commodity price environment, we need to balance operating performance and margin up risk by proactively taking outages during on economic periods with legal opportunity costs.
Our gas portfolio performed well with almost 8,000 stocks and 98% of starting reliability. From January 8th, we have failure on one of our two main trust formats at SPP Unit 2 causing correctly a unit trip, but impacting one of the Lube Oil pumps. We experienced (indiscernible) damage due to the turbine costing down without lubrication. Repair work is in progress and we expect to have the unit back online by early May. The problem was isolated to the power side of the plant and there was never a nuclear safety issue nor was anyone hurt during the incident.
Our 4 NRG program have very successful start with $36 million above our target for the year. Combination of recurring and non-recurring items on asset optimization, property tax relief, retail synergies and outage optimization work helped us achieve these results. These programs creates the right frame work to achieve our operational synergies and one that will leverage best practices across our portfolio of now 100 plants and 330 fossil units.
Moving on to Slide 12 our retail business has finished the year strong delivering $656 million of EBITDA, slightly ahead of expectations driven primarily by an increasing customer count, higher volumes and sustainable retail margins.
In 2012 NRG through customer count organically by 142,000 customers with two thirds of them coming outside of Texas, a compelling 7% growth rate overall. These results were driven by our effective sales and service execution as well as introduction of additional innovative promotions, products, channels and partnerships. Our investment in geographic growth to enter and further penetrate the northeast markets was also effective where we grew customer count by 43% year-over-year.
2012 was another year with intense competition in the C&I markets and we remain committed to diligently manage the business, making trade-off to ensure profitable growth. Recognizing the Texas and Northeast markets are unique and consumers have distinct preferences for brand, channel and product combination, we refocused our business regionally in the fourth quarter. It will enable our multi-brand business to launch relevant promotions, sales and products for each market while leveraging our customer operation scale efficiencies and bad debt effectiveness across all our bends and markets.
Finally, the result for quarter and the year is that, we once again balance customer count and margin consistent with our long-term strategy, and this strong performance has enabled NRG to remain the largest retail business in Texas with a healthy growing presence in the Northeast.
Moving on to Slide 13; I'd like to share a few comments in two of our core markets. Starting with ERCOT as a multimedia opportunity, we continued to see reserve margins below the target level, despite downward revisions in local estimates by ERCOT in the latest report. Spark spreads have improved recently and are now indicated at top end of the six-month trading rates but remain below newbuild economics by $4 to $5 per megawatt hour, as you can see on the upper left chart.
The ongoing debate of our resource adequacy solutions and the recently announced changes of the commission will likely push any long-term decision probably summer. In the meantime, we continue to work closely with ERCOT and other stakeholders to improve the real-time price formation prior to the summer. Specifically, we're addressing real-time price mitigation and expansion of operating results, which if properly addressed should help to provide the appropriate economic signals to the market.
In PJM, we see potential recovery in the medium-term with tightening coming from supply side in the form of announceable retirements (indiscernible) megawatts as shown in the upper right hand chart. With the potential to lose another 2 to 4 gigawatts of (indiscernible) New Jersey head units. You can see on the chart, the combination of significant retirements was a heavy reliance on demand response to meet the reserve margin target, will indicate to us the need for some premium in the market, which is noticeably absent as we look at the spark spreads on the chart below. Based on new world economics, the potential offset could be close to $6 per megawatt hour, which our fleet will be well positioned to benefit from.
Turning to our hedging disclosure on Slide 14, we have fully hedged our 2013 expected coal and nuclear generation. In the medium to long-term, we retain significant exposure. So, as markets improve, we stand to benefit from heat rate expansion and gas recovery. On the coal supply, we remain opportunistic to hedge the remaining open exposure in 2013 and since our last call, we executed a coal transportation agreement for our Maryland units.
I'm also pleased to report that the commercial integration so far has been relatively small, and we expect to finalize all changes to systems and personnel prior to the summer.
Finally, Slide 15 summarizes the goals and priorities for the operations group. We're focused first on completing the integration of the GenOn portfolio and executing on operations, commercial and construction objectives. Second, on delivering the operational synergies that we committed across the fleet, both of which laid the foundation of our success in 2013 and beyond.
With that, I will turn things over to Kirk for the financial review.
Kirkland Andrews - EVP and CFO: Thank you, Mauricio. Beginning with the financial summary on Slide 17, NRG is reporting fourth quarter 2012 adjusted EBITDA of $420 million. For the full 12 months of 2012, the adjusted EBITDA totaled over $1.9 billion with nearly $1.2 billion from wholesale, $656 million from retail and $86 million from our solar projects.
Our fourth quarter and full year 2012 results include the impact of the GenOn transaction which contributed approximately 10 million in adjusted EBITDA following the closing of the merger on December 15. Meanwhile, 2012 adjusted cash flow from operations was a robust 1.1 billion driving free cash flow before growth of approximately 900 million for the year and leading to a $1.3 billion improvement in liquidity since year end 2011.
Turning to capital allocation, I am pleased to announce that we have now completed over 98% of the $1 billion debt reduction target announced in mid-2012 in connection with the GenOn transaction, significantly strengthening NRG's consolidated balance sheet. We achieved nearly 800 million in debt reduction by year end 2012 through the combination of the 2017 refinancing and the repayment of the GenOn term loan. In 2013, NRG lost a debt open-market repurchase program which is now been completed resulting in the repurchase of 200 million in NRG unsecured notes of various maturities and representing the balance of our $1 billion deleveraging target.
In addition, having achieved our minimum delivering objective, we have now captured 93 million of the 100 million in annual free cash flow for balance sheet efficiencies announced in connection with the merger. Importantly, we now expect the $10 million increase in cost synergies which will lead to at least 310 million in free cash flow benefits resulting from the GenOn transaction.
The reduction in total debt, when combined with substantially increased adjusted EBITDA and free cash flow for 2013 and beyond, now places is in line with target prudent balance sheet management metrics providing NRG the flexibility to allocate a substantially excess capital towards both enhanced return to shareholders and the continued investment in NRG's future growth.
In the third quarter of 2012, NRG initiated its first-ever dividend as our committed vehicles for annual return of capital to shareholders at a rate of $0.36 per share. This initial dividend was based primarily on the growing contracted cash flows from our successful renewable investment efforts.
With the completion of our equity investments in our Tier 1 solar projects by the end of 2012, we see all of these projects reach COD by 2014 and deliver over $300 million in adjusted EBITDA.
Finally, in the third quarter of 2012, NRG announced the 20% reduction in expected environmental CapEx further enhancing free cash flow and capital for allocation by total of $100 million through 2017.
In 2013, with our balance sheet now significantly strengthen, our credit metrics in line previous RT constraints now lifted and a significant portion of our cash flow synergies captured, we are now pleased to announced the $200 million share buyback program which when combined with an intended 33% increase in our annual dividend of $0.48 per share represents a substantial increase in total capital we return to shareholders in 2013 versus 2012.
Turning briefly to the guidance overview on Slide 18; we are reaffirming the recently announced increased guidance ranges for adjusted EBITDA and free cash flow before growth for 2013 and 2014.
Turning to Slide 19; beginning in 2013, NRG is changing the methodology used to calculate adjusted EBITDA and free cash flow before growth. We believe this new methodology when combined with enhanced quarterly disclosure regarding NRG's proportionate share of debt in partially owned investments will provide investors clarity to assist in evaluating NRG's enterprise value and leverage.
The changes to adjusted EBITDA include the following. First, we will now include our pro rata portion of the EBITDA of our equity investments and unconsolidated affiliates, instead of using a pro rata portion of net income.
Second, we will discontinue the deduction of non-controlling interest and will provide separately the proportionate amount of adjusted EBITDA and debt attributable to our partners in consolidated investments.
Third, given the significant increase in planned retirements resulting from the GenOn transaction, we will now exclude non-recurring plant deactivation cost from the calculation of adjusted EBITDA.
Finally, we will now exclude interest income from adjusted EBITDA and instead report it as a reduction of interest expense in the buildup of adjusted EBITDA in our Reg G disclosures.
In addition, we will begin adjusting free cash flow before growth investments for distributions in non-controlling interest. This was previously deducted below this line to arrive at a change in cash or capital for allocation.
However, as we do not currently anticipate making distributions to non-controlling investors until 2015, our revised methodology does not affect our free cash flow before growth investments guidance under the new methodology.
With a number of our projects partially owned, we believe this new EBITDA methodology and enhanced disclosure will permit us to provide our investors with a clearer picture of NRGs adjusted EBITDA.
Slide 20, provides you a breakdown of the impact of these changes in methodology on our 2013 and 2014 adjusted EBITDA guidance ranges. The total impact of these changes is approximately $80 million in 2013, and $60 million in 2014, resulting in revised adjusted EBITDA ranges of $2.615 billion to $2.815 billion in 2013 and $2.760 billion to $2.960 billion in 2014. These changes impact the wholesale and solar guidance ranges only with no impact in retail adjusted EBITDA guidance under the revised method. These revised adjusted EBITDA ranges are now more closely aligned with NRG's consolidated debt balances and will also provide investors the bases for understanding NRG's proportionate share of adjusted EBITDA and debt, which I will cover on Slide 21.
Turning to Slide 21 and focusing on 2014 the year in which our Tier 1 solar projects have all reached COD. At the top of the slide and starting with our adjusted EBITDA guidance under revised methodology, we have deducted our partner share of EBITDA to arrive at NRG's proportionate share of adjusted EBITDA guidance.
In the blue section of the slide, we have also provided adjustments to our projected consolidated debt balance for 2014, deducting our partner share of debt and adding NRG's share of debt associated with investments in unconsolidated affiliates to arrive at NRG's projected proportionate share of 2014 debt of $15 billion. This compares apples to apples to NRG's proportionate share of EBITDA of 2.65 billion to 2.85 billion for 2014.
Finally, in the yellow section of the slide, we have also provided separately NRG's proportionate share of both adjusted EBITDA and projected 2014 non-recourse debt associated with our solar projects. Going forward, we will be providing our partner share of adjusted EBITDA and debt as a part of the appendix to our quarterly presentations as we believe this additional information will (indiscernible) investors a clearer understanding of NRG's leverage, the leverage levels of our solar projects in particular and provide the bases for EBITDA multiple base (indiscernible) of NRG.
Turning to corporate liquidity on Slide 22; NRG's current liquidity increased by $1.3 billion in 2012 to approximately $3.4 billion. This increase is primarily due to an increase in cash and cash equivalents of $983 million due to the cash acquired in the GenOn transaction, which is net of cash used to retire the GenOn term loan, and the increase in revolver availability of $385 million primarily due to the reduction in letters of credit resulting from the selldown of Agua Caliente.
Our 2012 year-end cash which significantly exceeds our targeted minimum balance of $900 million when combined with our substantial free cash flow generation forms the basis for capital available for allocation which I will review in further detail shortly.
Turning to Slide 23; as a part of our 2013 capital allocation program, we intend to increase our annual dividend by 33% from $0.36 to $0.46 per common share beginning in the second quarter of 2013. The El Segundo project, when combined with the Marsh Landing project acquired in connection with the GenOn transaction will both be online in 2013 and will begin contributing substantial cash distribution.
These significant distributions when combined with the cash flows from renewable assets which formed the basis for establishing our initial dividends provide an expanded base of contracted cash flows to support NRG's increased dividend rate.
By 2014, we expect total distributions from these long-term contracted projects to exceed the 2013 dividend rate by approximately $25 million and expect this excess to grow to nearly $75 million by 2015 providing the basis for potential continued dividend growth. In a market environment with the reliable yield hard to come by and many utility dividend payout rates now under pressure, we are pleased to now be in a position to provide an enhanced current return to our investors based on successful prior allocation of capital to these contracted investments.
Moreover, NRG's increased dividend rate also represents only around 15% of our free cash flow before growth providing a broader base of certainty support and potential growth for this important vehicle for return on shareholder capital.
Finally, turning to capital allocation in Slide 24, NRG ended 2012 with an excess cash balance of $1.062 billion, which consists of cash and cash equivalents less our targeted cash balance of $900 million and $125 million of cash at certain excluded project subsidiaries which is not currently distributable to NRG. This excess cash balance, when combined with NRG's 2013 free cash flow before growth investments leads to $1.962 billion to $2.162 billion in cash available for allocation in 2013, representing more than a 60% increase over 2012.
Approximately $900 million of 2013 cash available for allocation has already been allocated through a combination of previously committed growth investments, scheduled debt amortization in 2013, the capital deployed since year-end to complete the open market purchase of NRG unsecured notes, integration costs associated with the GenOn transaction and finally a reserve for NRG's intended increased dividend.
We have now, also allocated $200 million toward an authorized share repurchase program to be deployed during 2013, which when combined with the dividend increase represents a significant increase in return of shareholder capital.
As the capital allocation measures announced today are implemented, NRG's ongoing cash flow generation through 2013 will still provide nearly 1 billion in cash liquidity in excess of current commitment. We believe that type of financial flexibility as the year unfolds is a huge advantage in the dynamic marketplace and fluid capital markets in which we currently operate. However, consistent with our commitment to enhancing cash flow, exceeding our cost of capital and providing clear shareholder communication we will continue to adhere to these disciplines in evaluating and executing any investment decisions.
With that, I'll turn it back to David for his closing remarks.
David Crane - President and CEO: Thank, Kirk. As has been my tradition during my 9 years at NRG on Slide 26, which is the last slide, we are ending our first earnings deck of the year with the checklist of key objectives for the year ahead. My goal on doing this is obviously so you can follow along and hold us accountable as we succeed or fail in our effort to lead the company (indiscernible). Most of these specific goals were touched upon by Mauricio, Kirk or myself previously in this presentation, so I am not going to elaborate further on any of these individual goals unless you want me to. So, I'll end by making only one point I think the fundamental strength of NRG is that we are not vetted to generation alone or to retail alone or to any other single link in the energy value chain. We are not vetted to one technology to one source of fuel or to one geographic location. We can go wherever in the industry we see the potential for possible growth and shareholder value creation and we have built the company now that has the ability to do just that. We look forward to 2013 to building on the momentum generated by a very successful 2012 for the benefit of all of you, the owners of NRG.
And with that, Patrick, we are happy to take a few questions.
Operator: Brandon Blossman, Tudor, Pickering, Holt & Co.
Brandon Blossman - Tudor, Pickering, Holt & Co.: I guess, first off, David, CO2 legislation/EPA regulation, just your general thoughts about where we are, say, versus four years ago and where we are today versus pre-election?
David Crane - President and CEO: Well, Brandon, how much time do you have? I mean from my perspective, a considerable amount of work has been done particularly, I mean, actually on the GenOn side of the equation, in terms of backend controls. I mean it seems to me that where we are at quite frankly on the coal side of the conventional power industry is. The plants I have put on in the backend controls, I think, have medium to long-term future. The ones that don't at this point, it doesn't make a huge amount of economic sense to put more backend controls on. With the idea of the EPA regulating carbon by regulation; I mean, I assume that's a path where we're on now. I mean I don't see, I mean, there's obviously been more talk about climate change and the like with the reelection of President Obama, but I don't see any sort of legislation passing through Congress. So, it's up to the EPA and I think they will take action, but the nature of EPA action will be so slow moving, once it works its way through the whole process, but it's almost not really even in our short to medium-term planning horizon. It's something really virtually for the next decade. So, in that sense, I don't think there's been a fundamental change as opposed to the last results of the election cycle, I don't think there's any sort of talk in any circles about a rebirth of the Waxman-Markey style legislation. So, I think we're in a pretty good place. The amount of money that we're talking about spending to finish out the backend controls, I think that's really it and we're going to be pretty well set. Did that answer your question at all? I mean, because I could go on, but I should stop there and let you ask, you're allowed one back up question or a second follow-up question right?
Brandon Blossman - Tudor, Pickering, Holt & Co.: No, that's helpful and it may lead into the follow-up question, which is about growth. You guys have proven to be head and shoulders of both the peers as far as being opportunistic around looking for newer or perhaps (of consensus) places for growth. Say, over the next three years, balance between returning cash to shareholders and new growth opportunities, where do you see that waiting biased towards one direction or another over the next three years?
David Crane - President and CEO: The first way I'd answer that question is to punt and basically say, it's the last five years that I've been in this industry, which is really actually like the five years before that, has proven one thing, it's that, none of us have any idea what the next five years are going to be about, and I think what we've really done is built a Company now with the financial resources that can go in either direction. I mean, we actually do, I think maybe, unlike some of the other companies in our sector see a lot of opportunities across the space, and I would say right now, in terms of reinvesting in the business, I would say, we've got a lot going on, on the generation side, but I guess, what really animates me, when I get up in the morning is what we can do on the retail space and around the customer in bringing together conventional retail and new clean energy and products which will be appealing to the consumer. The thing though about those types of investment spending is they tend not to be as capital intensive. The bets are smaller, hopefully the payback is quicker, or as they say if you are going to fail, something fail quickly and cheaply. And so as we move and try new things in that area, I think, it will still leave a lot of capital for the return of capital to shareholders. I mean, obviously, we are excited about what we did today in terms of the increase of the dividend, in particular, we would like to do more of that in the future, but obviously we are not committing ourselves to a particular rate of increase. And as Kirk talked about, it is going to be sort of tide to how much we get accomplished in terms of contracted investments. I think that we will see more in this natural gas price environment if there is going to be more built in United States on the generation side, it is all going to be based on bilateral contract. We've got great sites. We got the people. We got the ability to repower, conventional and renewable and so hopefully we can grow the dividend of the back of an every-increasing amount of contracted revenue streams. So, that's my long-winded answer. My short-winded answer is I think we can do both. We can continue to return capital to shareholders and really stakeholders in terms of debt pay down and reinvest across our portfolio of businesses.
Operator: Jon Cohen, ISI Group.
Jon Cohen - ISI Group: I had two questions; one for David and one for Kirk. David, do you have any sense of when we're going to get an update on the O&M synergies in 2013? How long it will take you to do your review and what that would amount to?
David Crane - President and CEO: Well, what I would tell you is, we would probably tell you more than I should. We would like to disclose the greater synergies about the time on the next earnings call. But I can't commit to that 100% because we have a clear idea commercially of what we would like to do, but I mean we need to do a sort of technical review of some of our plants as to make sure the plants can back up what we want to do on the commercial end and that involves things like boiler inspections and analysis which are far beyond my intellectual capacity to understand. And if those take longer than the next earning cycle, then we're going to take a little bit longer, because when we do come out, we want to be 100% certain that we can accomplish what we tell you we're going to accomplish. But certainly our goal is the next earnings call.
Jon Cohen - ISI Group: Kirk, what are the opportunities for the further delevering aside from just open-market repurchases? So, I know a lot of the debt, and especially the GenOn debt is trading at pretty high levels here. But what's the timeline on when various pieces of that become callable? I guess, the second question is are you happy to hang on to some of that excess deployable cash until the call dates or is that kind of too far out?
Kirkland Andrews - EVP and CFO: Well, I'll take components of your questions in reverse order. No, I'm not happy to hang on to excess deployable cash for an undefined period of time for any purpose, but I feel comfortable that we've got sufficient cash flow generation in liquidity to be able to address the opportunities that may arise on the debt side of the equation, but in terms of the opportunities that I see currently, what hamstrings us, at least opportunistically, clearly we were focused on and are pleased to have achieve the billion dollar delevering objective, which is what the last component at of that open market purchase program was all about, taking care of that last few hundred. Looking forward, given the fact that our balance sheet is in line with our targets and returning to strength. My view is further delevering constitutes opportunistic delevering and given the trading levels of our bonds as you acknowledge the fact that, to answer your question, they aren't currently callable. Our 2014 maturity at the GenOn level obviously comes due in relatively short order, but our remaining maturities are not callable until 2014. I think we've got a couple or 2019, two tranches for 2019 bonds that are callable in '14, but until that time, those call premiums are significantly lower than the current trading levels of our bonds, which in my view, don't represent a compelling level, both from a yield and total – or both from a current return and total return perspective to warrant allocation of capital opportunistically, but we'll continue to look at alternatives around that, but for right now, I think we're satisfied with where we are.
Jon Cohen - ISI Group: Then just one little mitt on Slide 24, you have the green chunk in the pie charts as growth investments of $226 million, should that not be net of project financing? So, in one of your later slides I think you had $163 million of project financing. Should that be in addition to what's shown here?
Kirkland Andrews - EVP and CFO: The growth investments of $226 million which is in the green section that is equity and that is net of project financing.
Operator: Neil Mehta, Goldman Sachs.
Neil Mehta - Goldman Sachs: At a high level what are all the options we have in terms of monetizing your solar assets. And how are you thinking about the timing there?
David Crane - President and CEO: I'll answer the easier second part of the question and drop it to Kirk to say what he wants to say about the first half of the question. Our timing is that since really we sold down part of Agua Caliente to Mid-American, which is now over a year ago, we've been communicating with the investment community that we feel that the best time having demonstrate that we could sell down the solar assets add value that's the best time to actually do that to optimize that is allowing the time of commercial operation of the assets. And the bigger assets, in particular, are all achieving or coming very close to achieving commercial operation during 2013. So, answer to the timing portion of your question is our timetable is this year as to what our options are, Kirk, how much do you want to say or not say in that direction.
Kirkland Andrews - EVP and CFO: The only thing I'd add is clearly, as David said, we are focused on 2013 impart because these are best when these assets come online. And with all of them now at COD, we see the realm or universe of potential partners or investors are sell down candidates as expanding and the return expectations given the fact that the perceived risk at least having achieved COD as it is now lower. As far as alternatives, I think, I'd only say, certainly, transactions are not unlike what you saw with Agua Caliente. I certainly continue to see as being a possibility both at the individual asset level and though less likely that it's still possible at the sub-portfolio level. But beyond that I wouldn't elaborate. I think those are probably the two most likely categories. But we're continuing to evaluate those, and like I say, I think, as we get closer to COD, a lot of press (indiscernible) right now. Those opportunities will present themselves more ratable.
Neil Mehta - Goldman Sachs: Second question is around STP Unit 2. What's left to do on that project in order for it to come back in the early May?
David Crane - President and CEO: Mauricio?
Mauricio Gutierrez - EVP and COO: So, I mean, right now we're working on re-bleeding the turbine, the ones that were damaged. We remained on track to be operational and available prior to the summer. So, right now, our estimate is the beginning of May.
David Crane - President and CEO: Neil, I mean, Mauricio makes an important point there and it's one of the points that sort of showed up in like our availability figures for 2012 as well. There is not much money to be made to be frank in the generation business during the shoulder seasons, but we are obviously focused like a laser beam on the conditions in Texas this summer. So, the instructions we've given to the plant management at STP is obviously, we want you to make these repairs as quickly as you can, but the most important thing is that you need to be there for the Texas summer reliably operating. So, if it takes an extra few days, take those extra days. So, that's very much the sort of marching orders there.
Operator: Julien Dumoulin-Smith, UBS.
Julien Dumoulin-Smith - UBS: So first, just following up on the GenOn subsidiary, talking about distributions and what expectations are, I know you commented already a little bit about debt paydown, but broadly speaking, what kind of distributions should we be looking for over this year and the coming – what's your stated policy if you will?
David Crane - President and CEO: Julien, just to make sure – the question has to do with distributions from the GenOn subsidiary, up to parent NRG and what you should expect in that front, is that what you're saying?
Julien Dumoulin-Smith - UBS: Absolutely.
David Crane - President and CEO: Okay, Kirk?
Kirkland Andrews - EVP and CFO: Well first of all Julien, as I think you're probably aware there are RP between – restricted payments calculations largely similar to those in our NRG indentures on the GenOn unsecured notes, and the impact of that is the – I think we made this clear in our annual disclosure this year. We talked about this before. There's about $250 million basket that currently exists for distributions to energy. Clearly, we're now of course the only sole shareholder at this point. Beyond that, there is an intercompany agreement for shared services between GenOn and NRG where the way to think about it is the past and responsibilities that were formerly performed and represented by GenOn standalone G&A are now being performed by NRG, and there is an intercompany payment for those services provided by NRG to GenOn. Beyond that, there is an intercompany revolving credit facility relationship between the two and there are certain elements of the GenOn operations which are currently – which are not related to the specific physical assets which are now being performed at the NRG level. So, it is a combination of there are changes in the operations in terms of the flows, but in terms of degrees of freedom with that $250 million basket combined with the significant payment annually that is basically a G&A compensation payment that is the way to think about the flows between the two from a distribution standpoint. Hopefully that addresses you question.
Julien Dumoulin-Smith - UBS: And then just following up on capital allocation broadly speaking. Seems like you have number of organic investment opportunities this year, I am thinking specifically Astoria and (indiscernible) contract still outstanding. How do you think potentially pursuing those opportunities exposed this year?
David Crane - President and CEO: The sort of development in the conventional space is the province of our regional presidents. We think we have a competitive advantage in terms of repowering at our existing sites with the cost savings and the locational advantages on the grid. Projects like Astoria, which I think is still the only fully permitted new project in the New York City zone, certainly give us a creditworthy PPA and we are off to the races. The one thing that I would say of course is that, this goes back to question of capital available for allocation. I mean, on the conventional side, obviously, building a new power plant is an expensive proposition, but with long term PPAs and project finance debt in all and the equity sort of going in over the two to three-year construction period. It's not likely actually to consume an enormous amount of our capital in 2013. So, we would like to do as much as we can in terms of repowering, revitalizing at our existing sites, and certainly the story is one of our top priorities for 2013.
Operator: Keith Stanley, Deutsche Bank.
Keith Stanley - Deutsche Bank: In New York, can you talk about your expectations for capacity pricing as it looks like they're raising the reserve margin and also the local capacity requirement in New York City. So, any sort of directional expectation on prices there, and then also just, could you remind me do you generally hedge New York capacity prices much in advance or should we assume you received close to the auction prices going forward?
David Crane - President and CEO: Okay, Mauricio?
Mauricio Gutierrez - EVP and COO: I mean we managed our capacity in assuming our way as we do our energy opportunistically and exerting some sort of market view. So, I think you already pointed out that in rest of state reserve margin requirement increased from 16% to 17%, in New York City, the locational capacity requirement actually moved up much higher than that 83% to 86%. So, the combination of that and then some retirements that we have seen, particularly around (indiscernible) have really pushed up New York, both New York City and rest of State prices significantly in 2013. We said in couple of calls ago, that we remain bullish on New York that we feel that the supply demand balance could have shifted fairly quickly by changes in the supply stack, we certainly did that. So, I think it's fair to assume that we will benefit from it, but having said that, I just want to, we do hedge our capacity portfolio and you shouldn't account for one to one benefit on our portfolio.
Keith Stanley - Deutsche Bank: Then in Texas, you've talked in the past about the year around spark spread needed for a new CCGT to be economic, and there's been some news, I think about a week ago that you were looking to potentially build some peaking capacity at the Robinson plant. How can we think about what's needed in Texas for you to move forward with the construction on peakers, since that's more, seems like a trickier calculation based upon scarcity pricing and summer spark spreads?
Mauricio Gutierrez - EVP and COO: Yeah, in the past we have given, what I refer to as the new entry spark spread around $30 per megawatt hour. The composition of that spark spread is heavily biased towards the summer months and if I have to point out, it's basically heavily biased towards a few hours of scarcity pricing. So clearly, the marketing that we have right now, if any generation will be built is more peaking capacity rather than combined cycle base load capacity. Having said that, I think some of the construction that we're seeing, not just from us, but other developers is price is specific, you have an advantage on specific projects, whether you're sharing common facilities or you have access to favorable debt, I think those are the projects that are going to move forward now. I think there is a finite amount of those projects and when you look at the amount of the reserved capacity that is required to meet the reserved margin that Texas is targeting, it's the whole lot more than what are being announced today.
David Crane - President and CEO: Keith, let me just add a little bit on that too, because you have to recognize sort of the relatively unique situation we are doing when it comes to those scarcity pricing moments in Texas. It's an opportunity on the generation side, but it's a time to play defense on the retail side. We have a lot of peaking generation in Texas, because the legacy of where those plants came from, we don't have a lot of really fast start peaking in, and sometimes you need to be able to move very quickly to capture those one or two-hour time periods. So, I think there is a whole bunch of reasons why the initiative you are talking about is not really – it's a very specific niche need and opportunity for us that I think it's hard to draw sort of systemic wide conclusions from that one instance.
Mauricio Gutierrez - EVP and COO: If I can just add one more thing, when we look at bringing some of these capacities really around rejuvenating some of our older slow start capacities, so as we're bringing these new fast start capacities, we're going to evaluate these old fleets and see if we need to require that or put in (indiscernible).
David Crane - President and CEO: Patrick, I mean, we've have gone a little bit over the hour which is entirely our own fault because of our long-winded answers. I am mindful of everyone's time, we'd like to accommodate two more callers, if we could, and then for the other callers in the queue, we'll get their names and Chad will follow-up with myself and Mauricio and Kirk, if necessary, to make sure we get their questions answered. So, let's take two more callers and then I call it a day if we could.
Operator: Stephen Byrd, Morgan Stanley.
Stephen Byrd - Morgan Stanley: I wanted to go back, Mauricio, to what you had mentioned about the sort of disconnect in PJM in 2015 and the sense that a large number of retirements in the forward curves don't appear to be indicative of where things would need to be? Can you speak a little bit to what catalyst might be needed to cause a correction in that regard or how you sort of see that disconnect playing out?
Mauricio Gutierrez - EVP and COO: Well, from my perspective, it's twofold. One is – and I think on the chart, we breakout announced retirements versus projected retirements and when I think about projected retirements, our new generation that hasn't cleared, but not necessarily has been determining whether they are going to exit the market or not. So, I think there is a lot of asset optimization and evaluations going on right now in the market. So, that's one potential check in the supply demand balance. The second one is demand response and whether or not we have hit saturation point. So, when you have half of your reserve margin made up by demand response and this is probably more a regulatory rather than a market question, how sweetly we're going to level the playing field between demand response and generation. So, if I have to point to two, those would be the two big catalysts that will spark, I guess, a recovery on spark spreads.
Stephen Byrd - Morgan Stanley: Then just as a follow-up on retail. I wondered if you all could talk a bit about your experiences in expansion in the Northeast? What kind of competitive dynamics you're seeing? I know you have a number of clean energy initiatives there, but just more broadly as you expand there what kind of competition are you seeing? Are margins in line with expectations or how is that going?
David Crane - President and CEO: Great question Steven, Jim Steffes is going to answer that question.
James Steffes - President, Green Mountain Energy Company: I think in general these markets, specifically the C&I side, they are competitive and highly competitive, as we expand, the markets give us different opportunities to each state, each market will be different and we do see some pockets of opportunity on the mass market side, margins are online with what we're expecting and we see continued growth in those markets.
Operator: Angie Storozynski, Macquarie.
Angie Storozynski - Macquarie: Nobody asked the question about the upcoming PJM capacity auction. You are entering the auction with a very large portfolio. The market is highly consolidated at this point. You talked about the additional coal plant retirements. Could you tell us if some of those plants would be yours and what are your expectations for the auction?
David Crane - President and CEO: Look, I'll leave it to Mauricio to probably not – first of all Angie, it makes my day to end this call by listening to your question, and it'll equally make my day by basically not answering the questions. I'll leave that to Mauricio to talk to you about his expectations for the 2016, 2017, but let me start by not answering the first part of your question, which is, in terms of future plant retirements, our position going into this call is the same as before. The announcements that were previously made, which were made on the GenOn side. We have no reason at this point to sort of change the outcomes or add to that. Having said that, that's all part of the sort of asset review that we have underway, which is across the entire portfolio, but certainly it's focused in the east and specifically in the east more in the PJM footprint than anywhere else. And so that's the sort of thing that you will hear more from us about hopefully on the next quarterly earnings call. So the 2016, 2017 auction, Mauricio.
Mauricio Gutierrez - EVP and COO: You know we haven't disclosed this. All I can tell you is when we look at the parameters that were published earlier there is couple of plus and minuses. We actually think that the auction results maybe is sideways to slightly lower than the 15, 16 auction. So, I will leave it at that. In terms of asset optimization retirements we are, as David already alluded, completely focus on doing a plant by plant evaluation on which units are going to continue operation and which unit is not economical to put the backend control. So, that's going to be an ongoing conversation. I will tell you that earlier we announced that Gilbert and Werner which were two plants that in the past GenOn had continuing operations. Beyond 2015, we actually have filed for deactivation of (mothball). But there is a lot of, I guess, of evaluation going on right now. That's the only two that have been publicly announced and I will just leave it at that.
David Crane - President and CEO: Thank you, all for participating in the call. We apologize for going 8 minutes over and we look forward to talking to you on the next quarter. Thank you, Patrick.
Operator: Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.