Filed by Exelon Corporation
Reg. No. 333-155278
Pursuant to Rule 425 under the
Securities Act of 1933, as amended
Subject Company: NRG Energy, Inc.
On December 2, 2008, Exelon began using the following presentation in discussions with investors:
 Exelon + NRG: A Compelling Opportunity for Value Creation Investor Meetings December 2008 |
 Forward-Looking Statements This presentation includes forward-looking statements. These forward-looking statements
include, for example, statements regarding benefits of the proposed merger,
integration plans and expected synergies. There are a number of risks and
uncertainties that could cause actual results to differ materially from the
forward-looking statements made herein. The factors that could cause
actual results to differ materially from these forward-looking statements include Exelon’s ability to achieve the synergies contemplated by the proposed transaction, Exelon’s ability
to promptly and effectively integrate the businesses of NRG and Exelon, and the timing
to consummate the proposed transaction and obtain required regulatory approvals as
well as those discussed in (1) Exelon’s 2007 Annual Report on Form 10-K in
(a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and
Supplementary Data: Note 19; (2) Exelon’s Third Quarter 2008 Quarterly Report on
Form 10-Q in (a) Part II, Other Information, ITEM 1A. Risk Factors and (b) Part I, Financial Information, ITEM 1. Financial Statements: Note 12; (3) Exelon’s preliminary prospectus/offer to exchange that is contained in the Registration Statement on Form S-4 (Reg.
No. 333-155278) that Exelon has filed with the SEC in connection with the offer;
and (4) other factors discussed in Exelon’s filings with the SEC. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which apply only as of the date of this filing. Exelon does not undertake any
obligation to publicly release any revision to its forward-looking statements to
reflect events or circumstances after the date of this filing, except as required by law. Statements made in connection with the exchange offer are not subject to the safe harbor
protections provided to forward-looking statements under the Private Securities
Litigation Reform Act of 1995. All information in this presentation concerning NRG, including its business, operations, and
financial results, was obtained from public sources. While Exelon has no
knowledge that any such information is inaccurate or incomplete, Exelon has not had
the opportunity to verify any of that information. 2 |
 Important
Additional Information 3 This communication relates, in part, to the offer (the “Offer”) by Exelon Corporation
(“Exelon”) through its direct wholly-owned subsidiary, Exelon Xchange
Corporation (“Xchange”), to exchange each issued and outstanding share of common stock (the “NRG shares”) of NRG Energy, Inc. (“NRG”) for 0.485 of a share of Exelon common stock.
This communication is for informational purposes only and does not constitute an
offer to exchange, or a solicitation of an offer to exchange, NRG shares, nor is it a substitute for the Exchange Offer Statement on Schedule TO or the Prospectus/Offer to Exchange included in the
Registration Statement on Form S-4 (Reg. No. 333-155278) (including the Letter
of Transmittal and related documents and as amended from time to time, the “Exchange Offer Documents”) filed by Exelon and Xchange with the Securities and Exchange Commission
(the “SEC”). The Offer is made only through the Exchange Offer Documents.
Investors and security holders are urged to read these documents and other relevant materials as they become available, because they will contain important information.
Exelon and Xchange expect to file a proxy statement on Schedule 14A and other relevant
documents with the SEC in connection with the solicitation of proxies for the
2009 annual meeting of NRG stockholders (the “NRG Meeting Proxy Statement”). Exelon will also file a proxy statement on Schedule 14A and other relevant documents with the SEC in
connection with its solicitation of proxies for a meeting of Exelon shareholders (the
“Exelon Meeting”) to be called in order to approve the issuance of shares of Exelon common stock pursuant to the Offer (the “Exelon Meeting Proxy Statement”). Investors
and security holders are urged to read the NRG Meeting Proxy Statement and Exelon
Meeting Proxy Statement and other relevant materials as they become available, because
they will contain important information. Investors and security holders can obtain copies of the materials described above (and all other
related documents filed with the SEC) at no charge on the SEC’s website:
www.sec.gov. Copies can also be obtained at no charge by directing a request for such materials to Innisfree M&A Incorporated, 501 Madison Avenue, 20th Floor, New York, New York
10022, toll free at 1-877-750-9501. Investors and security holders may
also read and copy any reports, statements and other information filed by Exelon, Xchange or NRG with the SEC, at the SEC public reference room at 100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC- 0330 or visit the SEC’s website for
further information on its public reference room. Exelon, Xchange and the individuals nominated by Exelon for election to NRG’s Board of
Directors will be participants in the solicitation of proxies from NRG stockholders
for the 2009 annual meeting of NRG stockholders or any adjournment or postponement
thereof. Exelon and Xchange will be participants in the solicitation of proxies from Exelon shareholders for the Exelon Meeting or any adjournment or postponement thereof. In addition, certain directors and executive
officers of Exelon may solicit proxies for the Exelon Meeting and the NRG
meeting. Information about Exelon and Exelon’s directors and executive officers is available in Exelon’s proxy statement, dated March 20, 2008, filed in connection with its
2008 annual meeting of shareholders. Information about Xchange and Xchange’s
directors and executive officers is available in Schedule II to the Prospectus/Offer to Exchange. Information about the interests of any other participants will be included in the
NRG Meeting Proxy Statement or the Exelon Meeting Proxy Statement, as applicable.
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 4 Agenda for Today’s Discussion 4 • Our Exchange Offer • Compelling Value for NRG Shareholders • Timeline • Why Tender Your Shares Appendix • Overview of Exelon Corporation |
 The Exchange
Offer • On November 12 , Exelon launched an exchange offer for all of the outstanding shares of NRG • Filed Form S-4 with the SEC • Fixed exchange ratio of 0.485 Exelon share for each NRG common share • Represents a 37% premium to the October 17 NRG closing price • Initial exchange offer period expires January 6, 2009 5 th th |
 Financing Is Not
an Obstacle • Exelon believes it can secure committed financing for the transaction at the appropriate time • We believe a negotiated combination can be structured in a way to reduce refinancing requirements to $4B or less • We believe that the contemplated structure would not trigger the change of control provision for NRG’s $4.7B of Senior Notes, and would substantially improve credit metrics for those bondholders • Exelon’s relationships with many of NRG’s banks should facilitate arrangements for new credit facilities once current conflicts are eliminated • We believe that the NRG direct lien program for power marketing could be left in place 6 Reflecting our confidence that we can obtain secure committed financing at the appropriate time, the transaction will not be subject to a financing condition |
 •
Full and generous price – upfront premium of 37% • Opportunity to participate in the future growth of the largest and most diversified US power company, with a substantially improved credit profile • Requisite scope, scale and financial strength • Stronger credit metrics and investment grade balance sheet • Best-in-class nuclear and fossil operations • Low-cost generator, operating in the most attractive markets • Exelon 2020 principles will be adapted to the combined fleet • Potential for substantial synergies • Manageable regulatory hurdles to close Compelling Value for NRG Shareholders 7 |
 Pro Forma
Exelon 8 Combined company expected to have requisite scope, scale and financial strength to succeed in an increasingly volatile energy market Pro Forma Quick Stats ($s in millions) Combined assets 1 $68,900 LTM EBITDA 2 $9,400 Market cap (as of 11/24/2008) $39,800 Enterprise value 3 $60,500 Generating capacity 4 ~51,000 MWs Combination Will Result in Scope, Scale and Financial Strength Enterprise Value Market Cap $0 $30 $50 $60 $40 $20 $70 $10 Southern Dominion Duke FPL First Energy Entergy 1. Reflects total assets (under GAAP) with no adjustments. Based upon 9/30/08 Form 10-Q.
2. Reflects Last Twelve Months EBITDA (Earnings before Income Taxes, Depreciation and
Amortization) as of 9/30/08 with no adjustments. 3. Calculation of Enterprise Value =
Market Capitalization (as of 11/24/08) + Total Debt (as of 9/30/08) + Preferred Securities (as of 9/30/08) + Minority Interest (as of 9/30/08) – Cash & Cash Equivalents (as of
9/30/08). Debt, Preferred Securities, Minority Interest and Cash & Cash
Equivalents based upon 9/30/08 Form 10-Q. 4. Includes owned and contracted
capacity after giving effect to planned divestitures after regulatory approvals. |
 Strong Balance
Sheet and Credit Metrics • NRG shareholders and bondholders expected to benefit from an investment grade balance sheet • Targeting strong credit metrics for the combined entity— 25 - 30% FFO/debt • Pay down debt plan expected to include: NRG balance sheet cash, asset sale proceeds, free cash flow 1. Ratios exclude securitized debt. 2. Senior unsecured credit rating and FFO/Debt as of 10/31/08. Reflects S&P updated guidelines,
which include imputed debt and interest related to purchase power agreements, unfunded
pension and other postretirement benefits obligations, capital adequacy for energy
trading, operating lease obligations and other off-balance sheet data. 3.
From Standard & Poor’s 8/28/08 CreditStats: Independent Power Producers & Energy Traders – U.S. 9 Exelon NRG Today 2011 Credit Rating: BBB FFO / Debt: 25-30% Combined Entity Targets Credit Rating: BBB- FFO / Debt: 26% Credit Rating: B+ FFO / Debt: 18% 3 1 2 |
 World Class
Nuclear & Fossil Operations 10 NRG: High performing nuclear plant • Top quartile capacity factor: 94.9% • Large, well-maintained, relatively young units Fossil fleet • Half of >500 MW coal units are top quartile capacity factor • 90% of coal fleet lower-cost PRB and lignite Combined Company: • Largest U.S. power company in terms of generating capacity: ~51,000 MW fleet (18,000 MW nuclear) • Best-in-class nuclear and fossil operations • Second lowest carbon emitting intensity in the industry • Geographic and fuel diversification with an improved dispatch profile Exelon: Premier U.S. nuclear fleet • Best fleet capacity factor: ~ 94% • Lowest fleet production costs: ~ $15 / MWh • Shortest fleet average refueling outage duration: 24 days • Strong reputation for performance and safety |
 11 Operating in Most Attractive Markets • Geographically complementary asset base • Predominantly located in competitive markets • Strong presence in PJM (Mid-Atlantic and Midwest) and ERCOT 6,280 Contracted* 51,403 2,085 CAL ISO 13,027 ERCOT By RTO Combined PJM 22,812 MISO 1,065 ISO NE 2,174 NYISO 3,960 SERC 2,405 WECC 45 Total 53,853 By Fuel Type Combined Nuclear 18,144 Coal 8,986 Gas/Oil 18,801 Other 1,642 Contracted 6,280 *Contracted in various RTOs, mainly in PJM and ERCOT 1. Excludes international assets. Before any divestitures. Exelon NRG 1 1 |
 <1% <1% Exelon ~150,000 GWh 2009 Historical Forward Coal Prices Combined Entity Will Continue to Benefit from Low Cost, Low Volatility Fuel Sources Powder River Basin and lignite coal supply (90% of NRG’s coal) provides low-sulfur at a relatively stable price as compared to northern and central Appalachian coal mines. 0.00 1.00 2.00 3.00 4.00 5.00 6.00 Powder River Basin Northern Appalachian Central Appalachian Production Costs 0 2 4 6 8 10 12 2000 2001 2002 2003 2004 2005 2006 2007 Nuclear Gas Coal Petroleum Combined fleet will continue to be predominantly low-cost fuel. 1. Based on 2007 data, does not include ~38,000 GWh of Exelon Purchased Power. Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 cents/Kwh $/mmbtu 12 Nuclear PRB & Lignite Coal Other Coal Gas/Oil Hydro/Other 1% 3% 6% Other Coal Pro Forma Exelon ~198,000 GWh 1 1 |
 •
Texas offers nuclear growth platform • Potential for stretch power uprate (5-7%) on South Texas Project units 1 and 2 • Construction & Operating License and Loan Guarantee applications filed for both STP 3 and 4 and Victoria County • Exelon has the financial strength and discipline to investigate these opportunities • Strong balance sheet and credit metrics • Demonstrated track record of financial rigor • Nuclear depth and expertise • Options to build remain under evaluation; no commitment has yet been made 13 Nuclear Growth Opportunities |
 0 50 100 150 50 100 150 200 250 2006 Electricity Generated (GWh, in thousands) NRG TVA AEP Duke FPL Southern Exelon + NRG Entergy Exelon Dominion Progress FirstEnergy Bubble size represents carbon intensity, expressed in terms of metric tons of CO2 per MWh generated SOURCE: EIA and EPA data as compiled by NRDC Exelon 2020 principles will be adapted to the combined fleet CO2 Emissions of Largest US Electricity Generators 2006 CO2 Emissions from Electricity Generation (in million metric tons) Largest Fleet, 2 nd Lowest Carbon Intensity Top Generators by CO2 Intensity 10 9 8 7 6 5 4 3 2 1 AEP NRG Southern Duke FirstEnergy TVA Progress Dominion FPL Exelon + NRG Entergy Exelon 0.83 0.80 0.74 0.66 0.64 0.64 0.57 0.50 0.35 0.31 0.26 0.07 14 |
 Exelon 2020 and
NRG Offer more low carbon electricity in the marketplace Reduce emissions from coal/oil fired generation Help our customers and the communities we serve reduce their GHG emissions Reduce or offset our footprint by greening our operations Adapt Elements of Exelon 2020 to NRG Expand the 2020 Plan • Expand internal energy efficiency, SF6, vehicle, and supply chain initiatives to NRG portfolio • Offset a portion of NRG’s GHG emissions • Expand energy efficiency program offerings • Add capacity to existing nuclear units through uprates • Add new renewable generation • Add new gas-fired capacity • Continue to explore new nuclear • Address older/higher emitting coal and oil units • Invest in clean coal technology R&D 15 Taking the next step in Exelon’s commitment to address climate change Options to Evaluate: |
 Combination
Expected to Create Substantial Synergies Exelon Operations & Maintenance: $4,289 1 NRG Maintenance & Other Opex: $950 General & Admin Expenses: $309 Other COGS: $454 Pro Forma Combined Non-fuel Expenses: $6,002 Estimated Annual Cost Savings: $180 - $300 2 % of Combined Expenses: 3%-5% Costs to Achieve $100 NPV of Synergies: $1,500-$3,000 16 ($ in Millions) Transaction expected to create $1.5 – $3 billion of value through synergies – with opportunity for more Reflects no revenue or fuel cost synergies. Excludes transaction and other costs of $654
million and excludes increased interest expense related to refinancing of NRG
debt. 1. Company 10-K for 2007 and investor presentations. 2. Based on a preliminary analysis of publicly available information. Subject to due
diligence investigation. 1 |
 Clear Value
under Multiple Scenarios Value Gas Prices New Build Costs Carbon Year/Price Recession $0 $6.50 $1,300 Moderate 2014/$22 $7.30 $1,100 Moderate 2020/$22 $7.10 $1,100 Severe 2014/$22 $7.30 $1,500 Moderate 2012/$12 $8.60 $1,500 Moderate 17 We look at fundamental value creation under a wide range of future commodity price scenarios and our analysis suggests $1-3 billion, possibly more. Coal Prices $11.00 $20.00 $20.00 $20.00 $11.00 Gas price is long-term price in 2008 $/MMBtu; coal price is long-term price in 2008 $/ton
for PRB8800 excluding transportation; new build cost is long-term combined cycle
cost in PJM in 2008 overnight $/kW; carbon year is year in which national cap and trade starts; carbon price is in 2012 $/tonne assuming 7% escalation; moderate recession assumes
conditions consistent with current forward prices; and severe recession assumes five
years of no load growth. |
 Principal
Regulatory Approvals and Expected Divestitures • Principal regulatory approvals: • Texas, New York, Pennsylvania, California state regulatory commissions and various state siting commissions • Hart-Scott-Rodino (DOJ/FTC) • FERC • NRC • Notice filing in Illinois • Limited market power issues – not expected to challenge transaction closing • Divestitures anticipated only in PJM and ERCOT • ~3,200 MWs of high heat rate gas and baseload coal plants and ~1,200 MWs under contract • Model assumes $1 billion of proceeds from divestitures (after-tax) 1. Plants subject to divestiture are de minimus contributors to revenue and earnings. Regulatory hurdles are manageable 18 1 |
      19 Transaction Timeline * Notice filing only 10/19: Announce Offer 11/12: Exchange Offer Filed 1/6: Initial Exchange Offer Expires Proxy Solicitation NRG and Exelon Shareholder Meetings Make Filings and Work to Secure Regulatory Approvals (FERC, NRC, DOJ/FTC, PUCT, NYPSC, PAPUC, CPUC, ICC*) Receive Regulatory Approvals Expected Transaction Close Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 |
 20 Exelon More Than Meets the “Five Imperatives” Outlined by NRG on May 28, 2008 1. 2. 3. 4. 5. NRG’s Stated Imperatives MUST accumulate generation at competitive cost This transaction accomplishes in one step what several transactions might have accomplished for NRG in these regards. Given the current difficulty in accessing capital markets, it is unclear whether NRG would have the ability to meet this objective without Exelon. Exelon provides NRG stakeholders with broad trading expertise and sound power marketing and risk management practices. Exelon’s significant experience in markets with locational prices is particularly relevant since ERCOT is moving to a PJM-type structure. Exelon’s breadth of operations and depth of service allows significant access to customers, retail providers, and other sales channels. NRG stakeholders become part of the most diversified and competitive generation portfolio operating in 12 different states and 6 different regional transmission organizations. Deal expected to provide NRG stakeholders with significant value and upside and a share of the largest unregulated generation fleet in the United States. MUST be geographically diversified in multiple markets MUST develop and expand our route to market through contracting with retail load providers, trading, direct sales, etc MUST have sophisticated ability to trade, procure, hedge, and originate for electricity and input fuels MUST develop depth and breadth in key markets, particularly across fuel types, transmission constraints and merit order Exelon Combination More than Meets These Imperatives |
 Why Tender Your
NRG Shares? 21 • Tendering your NRG shares prior to the January 6 th expiration will provide a strong signal of your support for a negotiated deal • Exelon believes its proposal represents the best immediate and long-term value for your investment, providing: • Increased scale and generation efficiency • Enhanced ability to pursue capital-intensive projects • Stronger credit metrics and an investment grade balance sheet • Greater liquidity and stock appreciation potential • Ability and intention to pay quarterly dividends on common stock |
 Appendix
22 |
 ’07
Earnings: $2,331M ’07 EPS: $3.45 Total Debt (1) : $2.5B Credit Rating (2) : BBB Nuclear, Fossil, Hydro & Renewable Generation Power Marketing ‘07 Operating Earnings: $2.9B ‘07 EPS: $4.32 Assets (1) :
$45.2B Total Debt (1) : $13.0B Credit Rating (2) :
BBB- Note: All ’07 income numbers represent adjusted (Non-GAAP) Operating Earnings and EPS.
Refer to attached slides for reconciliation of adjusted (non-GAAP) operating EPS
to GAAP EPS. 1. As of 9/30/08. 2. Standard & Poor’s senior unsecured debt ratings for Exelon and Generation and senior
secured debt ratings for ComEd and PECO as of 11/24/08. Pennsylvania Utility Illinois Utility ’07 Earnings: $200M $507M ’07 EPS: $0.30 $0.75 Total Debt (1) : $5.1B $3.5B Credit Ratings (2) : BBB+ A- The Exelon Companies 23 Exelon Corporation Exelon Generation ComEd PECO |
 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 2001 2002 2003 2004 2005 2006 2007 2008E 2009E $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 Cash flow from operations Annual cash dividend / share Stable Cash Flows and Commitment to Value Return Exelon produces strong and consistent cash flows and continues to honor its commitment to return value to shareholders • Strong and consistent cash flows from operations (1) • Over 12% compound annual dividend growth rate since 2001 Sustainable Value 24 1. Cash Flows from Operations primarily include net cash flows provided by operating activities,
excluding counterparty collateral activity, and including net cash flows used in
investing activities other than capital expenditures. Cash Flows from Operations in 2005 reflect discretionary aggregate pension contributions of $2 billion.
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 •
Large, low-cost, low-emissions, exceptionally well-run nuclear fleet • Complementary and flexible fossil and hydro fleet • Improving power market fundamentals (commodity prices, heat rates, and capacity values) • End of below-market contract in Pennsylvania beginning 2011 • Potential carbon restrictions Value Proposition • Continue to focus on operating excellence, cost management, and market discipline • Execute on power and fuel hedging programs • Support competitive markets • Pursue nuclear & hydro plant relicensing and strategic investment in material condition • Maintain industry-leading talent Protect Value • Pursue potential for nuclear plant uprates and investigate potential for more • Rigorously evaluate generation development opportunities, including new nuclear and combined cycle gas turbine • Capture increased value of low-carbon generation portfolio Grow Value 25 Exelon Generation Exelon Generation is the premier unregulated generation company – positioned to capture market opportunities and manage risk |
 1 Quartile 2 Quartile 3 Quartile 4 Quartile 2006-2007 Average Production Cost for Major Nuclear Operators (1) Average Among major nuclear plant fleet operators, Exelon is consistently the lowest-cost producer of electricity in the nation Lowest Cost Nuclear Fleet Operator 1. Source: 2007 Electric Utility Cost Group (EUCG) survey. Includes Fuel Cost plus Direct O&M divided by net generation. 26 st nd rd th |
 65 70 75 80 85 90 95 100 Operator (# of Reactors) Range 5-Year Average Note: Exelon data prior to 2000 represent ComEd-only nuclear fleet. Sources: Platt’s, Nuclear News, Nuclear Energy Institute and Energy Information Administration (Department of Energy). Sustained production excellence World-Class Nuclear Operator Average Capacity Factor Range of Fleet 2-Yr Avg Capacity Factor (2003-2007) EXC 93.5% 27 40% 50% 60% 70% 80% 90% 100% Exelon Industry |
 (18) - - - (18) Nuclear decommissioning obligation reduction (11) - - - (11) Sale of ExGen’s investments in TEG and TEP 72 - - - 72 Georgia Power tolling agreement (130) - - - (130) Termination of Stateline PPA (5) - - - (5) Settlement of a tax matter at Generation related to Sithe $(115) (63) - - (87) - $35 Other $2,923 (29) 14 280 (87) 101 $2,736 Exelon $507 - - - - - $507 PECO $200 - 14 24 - (3) $165 ComEd ExGen (in millions) - City of Chicago settlement 256 2007 Illinois electric rate settlement $2,331 2007 Adjusted (non-GAAP) Operating Earnings / (Loss) 34 Non-cash deferred tax items - Investments in synthetic fuel-producing facilities 104 Mark-to-market adjustments from economic hedging activities $2,029 2007 GAAP Reported Earnings Note: Amounts may not add due to rounding. GAAP Earnings Reconciliation Year Ended December 31, 2007 28 |
 1. Amounts shown per Exelon share and represent contributions to Exelon's EPS. (0.01) - - - (0.01) Settlement of a tax matter at Generation related to Sithe (0.04) (0.08) - - 0.04 Non-cash deferred tax items (0.14) (0.14) - - - Investments in synthetic fuel-producing facilities 0.41 - - 0.03 0.38 2007 Illinois electric rate settlement (0.19) - - - (0.19) Termination of State Line PPA 0.11 - - - 0.11 Georgia Power tolling agreement Exelon Other (1) PECO (1) ComEd (1) ExGen (1) $4.32 $(0.18) $0.75 $0.30 $3.45 2007 Adjusted (non-GAAP) Operating Earnings (Loss) Per Share (0.01) - - - (0.01) Sale of Generation's investments in TEG and TEP 0.02 - - 0.02 - City of Chicago settlement (0.03) - - - (0.03) Nuclear decommissioning obligation reduction 0.15 - - - 0.15 Mark-to-market adjustments from economic hedging activities $4.05 $0.04 $0.75 $0.25 $3.01 2007 GAAP Earnings Per Share GAAP EPS Reconciliation Year Ended December 31, 2007 29 |