Retail financial results impacted by extraordinary weather and market

conditions in ERCOT

Strong power plant operating performance

Value proposition and free cash flow outlook remain robust

HOUSTON–(EMWNews)–Reliant Energy, Inc. reported open EBITDA of $62 million for the second

quarter of 2008, compared to $193 million for the second quarter of

2007. Lower retail contribution margin driven primarily by extraordinary

market conditions in ERCOT significantly offset improvements in open

wholesale contribution margin.

Adjusted EBITDA, which includes the effect of historical and operational

wholesale hedges and gains on sales of assets and emission and exchange

allowances, was $153 million for the second quarter of 2008, compared to

$165 million for the second quarter of 2007. While the company saw an

improvement in historical and operational hedges and open wholesale

contribution margin, the decline in retail contribution margin resulted

in a decrease in adjusted EBITDA compared to the prior year.

“We have made very good progress implementing

our strategic priorities and are well-positioned in light of current

market conditions,” said Mark Jacobs,

president and chief executive officer. “During

the quarter, the retail business delivered disappointing financial

results driven by extreme weather and transmission constraints in the

Texas electricity market. While these factors impact our 2008 results,

we believe we have taken the necessary steps to reduce their potential

magnitude going forward. Reliant Energy continues to offer a robust

value proposition and expects to generate significant free cash flow.”

Free cash flow provided by continuing operations was $130 million for

the first half of 2008, compared to a free cash flow used in continuing

operations of $142 million for the same period in 2007. The improvement

was primarily due to higher adjusted EBITDA and lower interest payments

from reduced debt levels.

Income from continuing operations before income taxes for the second

quarter of 2008 was $582 million, compared to a loss of $456 million for

the second quarter of 2007. These 2008 GAAP results include net

unrealized gains from energy derivatives of $570 million. The reported

numbers for 2007 include net unrealized losses from energy derivatives

of $326 million and a $71 million charge for debt extinguishments.

Interest expense, net declined to $53 million for the second quarter of

2008, compared to $114 million for the second quarter of 2007. The

decline was primarily related to the write off of deferred financing

costs in 2007 which was not repeated in 2008 as well as lower debt

levels in 2008. Operating cash flow from continuing operations was $182

million for the first six months of 2008, compared to $24 million for

the same period of 2007.

Open EBITDA was $234 million for the first six months of 2008, compared

to $307 million for the same period of 2007. The decline was due to the

same factors as described above for the second quarter. Adjusted EBITDA

was $371 million for the first six months of 2008, compared to $246

million for the second quarter of 2007. Improvement in historical and

operational hedges and improvements in open wholesale contribution

margin more than offset the decline in retail contribution margin.

Income from continuing operations before income taxes for the first six

months of 2008 was $1,182 million, compared to a loss of $44 million for

the first six months of 2007. These 2008 GAAP results include net

unrealized gains from energy derivatives of $1,128 million and a $34

million charge for western states litigation and similar settlements.

The reported numbers for 2007 include net unrealized gains from energy

derivatives of $196 million, a $22 million charge for western states

litigation and similar settlements and a $71 million charge for debt

extinguishments.

OUTLOOK

Reliant Energy’s outlook for open EBITDA is

$1,056 million, $1,581 million and $1,478 million for the years ending

December 31, 2008, 2009 and 2010, respectively. Adjusted EBITDA, which

includes the impact of historical and operational wholesale hedges and

gains on the sales of assets and emission and exchange allowances, net

is $1,535 million, $1,756 million and $1,535 million for the same

periods. The outlook for free cash flow provided by continuing

operations is $834 million, $983 million and $831 million for the years

ending December 31, 2008, 2009 and 2010, respectively.

This outlook is based on forward commodity prices as of June 20, 2008,

assumptions and estimates by Reliant Energy, and excludes Bighorn

financial results beginning in the fourth quarter of 2008.

Open EBITDA
Outlook Reconciliation
($ millions)		2007A			2008E			2009E			2010E
Income from continuing operations before income taxes		$493			$1,374			$831			$961
Unrealized (gains) losses on energy derivatives		(445	)		(446	)		298			(12	)
Western states litigation and similar settlements		22			34			—			—
Debt extinguishments		73			1			—			—
Depreciation and amortization1		424			362			475			452
Interest expense, net		315			210			152			134
Adjusted EBITDA		$882			$1,535			$1,756			$1,535
Historical and operational wholesale hedges		92			(411	)		(175	)		(57	)
Gains on sales of assets and emission and exchange allowances, net		(26	)		(68	)		—			—
Open EBITDA		$948			$1,056			$1,581			$1,478
1. Includes CAIR’s annual NOx for 2009 and 2010 and SO2 2-for-1 step down in 2010, which were vacated in July 2008 by the D.C. Circuit Court of Appeals.

Free Cash Flow from Continuing Operations
Outlook Reconciliation
($ millions)		2007A			2008E			2009E			2010E
Operating cash flow from continuing operations 1		$755			$1,180			$1,431			$1,104
Western states litigation and similar settlements payments		57			34			—			—
Change in margin deposits, net		(297	)		17			(41	)		(25	)
Adjusted cash flow provided by continuing operations		$515			$1,231			$1,390			$1,079
Maintenance capital expenditures		(85	)		(87	)		(83	)		(74	)
Environmental capital expenditures and capitalized interest 2		(104	)		(251	)		(139	)		(23	)
Emission and exchange allowances activity, net3		(85	)		(59	)		(185	)		(151	)
Free cash flow provided by continuing operations		$241			$834			$983			$831
1. Outlook assumes no changes in working capital and net operating loss is fully utilized during 2009.
2. Estimate represents the low end of the range.
3. Includes CAIR’s annual NOx for 2009 and 2010 and SO2 2-for-1 step down in 2010, which were vacated in July 2008 by the D.C. Circuit Court of Appeals.

NON-GAAP FINANCIAL MEASURES

This press release and the attached financial tables include the

following non-GAAP financial measures:

Retail gross margin

Retail contribution margin

Open energy gross margin

Open wholesale gross margin

Open wholesale contribution margin

EBITDA

Adjusted EBITDA

Open EBITDA

Adjusted cash flow provided by continuing operations

Free cash flow provided by continuing operations

Gross debt

A reconciliation of these financial measures and the most directly

comparable GAAP measures is included above or in the attached financial

tables. Additional information regarding these measures, including a

discussion of their usefulness and purpose, is included in the Form 8-K

furnished along with this press release. Certain factors that could

affect GAAP financial measures are not accessible on a forward-looking

basis, but could be material to future reported earnings and cash flows.

WEBCAST OF EARNINGS CONFERENCE CALL

Reliant Energy has scheduled its second quarter 2008 earnings conference

call for Tuesday, August 5, 2008, at 7 a.m. CT. Interested parties may

listen to a live audio broadcast of the conference call at www.reliant.com

in the investors section. A replay of the call can be accessed

approximately two hours after the completion of the call. A copy of the

presentation accompanying the call is also available at this Website

address.

Reliant Energy, Inc. (NYSE:RRI) based in Houston, provides electricity

and energy services to retail and wholesale customers in the United

States. The company provides service to approximately 1.8 million retail

electricity customers primarily in Texas, including residential and

small business customers. Reliant also serves commercial, industrial,

governmental and institutional customers in Delaware, Illinois,

Maryland, New Jersey, New York, Pennsylvania, and Washington, D.C.

The company is one of the largest independent power producers in the

nation with more than 15,000 megawatts of power generation capacity

across the United States. These strategically located generating assets

use natural gas, fuel oil and coal. For more information, visit http://www.reliant.com.

This news release contains “forward-looking statements”

within the meaning of Section 27A of the Securities Act of 1933, as

amended, and Section 21E of the Securities Exchange Act of 1934, as

amended. Forward-looking statements are statements that contain

projections, estimates or assumptions about our revenues, income,

capital structure and other financial items, and our plans and

objectives for future operations or about our future economic

performance, transactions and dispositions and financings and approvals

related thereto. In many cases you can identify forward-looking

statements by terminology such as “anticipate,” “estimate,” “believe,”

“continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,”

“should,” “will,” “expect,” “objective,” “projection,” “forecast,”

“goal,” “guidance,” “outlook,” “effort,” “target” and other similar

words. However, the absence of these words does not mean that the

statements are not forward-looking.

Actual results may differ materially from those expressed or implied

by forward-looking statements as a result of many factors or events,

including, but not limited to, legislative, regulatory and/or market

developments, the outcome of pending lawsuits, governmental proceedings

and investigations, the effects of competition, financial market

conditions, access to capital, the timing and extent of changes in

commodity prices and interest rates, weather conditions and other

factors we discuss or refer to in the “Risk

Factors” section of our most recent Annual

Report on Form 10-K filed with the Securities and Exchange Commission.

Each forward-looking statement speaks only as of the date of the

particular statement and we undertake no obligation to update or revise

any forward-looking statement, whether as a result of new information,

future events or otherwise.

Reliant Energy, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
			2008				2007				2008				2007
		(thousands of dollars, except per share amounts)
Revenues:
Revenues (including $5,627, $(10,848), $(6,957) and $3,722 unrealized gains (losses)) (including $145,592, $0, $253,001 and $0 from affiliates)		$	3,423,535			$	2,649,915			$	6,238,959			$	5,012,516
Expenses:
Cost of sales (including $564,562, $(315,497), $1,135,445 and $192,162 unrealized gains (losses)) (including $121,134, $0, $200,130 and $0 from affiliates)			2,408,849				2,475,716				4,160,521				3,919,207
Operation and maintenance			229,423				233,966				441,901				464,707
Selling, general and administrative			85,414				103,084				161,064				190,681
Western states litigation and similar settlements			–				–				34,000				22,000
Gains on sales of assets and emission and exchange allowances, net			(22,312	)			(1,727	)			(22,923	)			(1,727	)
Depreciation and amortization			88,775				110,603				177,369				202,572
Total operating expense			2,790,149				2,921,642				4,951,932				4,797,440
Operating Income (Loss)			633,386				(271,727	)			1,287,027				215,076
Other Income (Expense):
Income of equity investment, net			988				1,366				1,195				2,526
Debt extinguishments			–				(71,269	)			(423	)			(71,269	)
Other, net			Reliant Energy, Inc. Dennis Barber, 713-497-3042 (investors) Pat Hammond, 713-497-7723 (media) Major Newsire & Press Release Distribution with Basic Starting at only $19 and Complete OTCBB / Financial Distribution only $89 Get Unlimited Organic Website Traffic to your Website  TheNFG.com now offers Organic Lead Generation & Traffic Solutions