Edgar Filing: GenOn Energy, Inc.

GEN-2013.03.31-10Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

		For the Quarterly Period Ended: March 31, 2013

o		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

GenOn Energy, Inc.

(Exact name of registrant as specified in its charter)

75-0655566 (I.R.S. Employer Identification No.)

Commission File Number: 001-16455

GenOn Americas Generation, LLC

(Exact name of registrant as specified in its charter)

51-0390520 (I.R.S. Employer Identification No.)

Commission File Number: 333-63240

GenOn Mid-Atlantic, LLC

(Exact name of registrant as specified in its charter)

58-2574140 (I.R.S. Employer Identification No.)

Commission File Number: 333-61668



Delaware (State or other jurisdiction of incorporation or organization)		(609) 524-4500 (Registrants' telephone number, including area code)

211 Carnegie Center, Princeton, New Jersey (Address of principal executive offices)		08540 (Zip Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (As a voluntary filer not subject to filing requirements, the registrant nevertheless filed all reports which would have been required to be filed by Section 15(d) of the Exchange Act during the preceding 12 months had the registrant been required to file reports pursuant to Section 15(d) of the Exchange Act solely as a result of having registered debt securities under the Securities Act of 1933.)



GenOn Energy, Inc.	o	Yes	o	No
GenOn Americas Generation, LLC	o	Yes	o	No
GenOn Mid-Atlantic, LLC	o	Yes	o	No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).



GenOn Energy, Inc.	x	Yes	o	No
GenOn Americas Generation, LLC	x	Yes	o	No
GenOn Mid-Atlantic, LLC	x	Yes	o	No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



	Large accelerated filer	Accelerated filer	Non-accelerated filer	Smaller reporting company
GenOn Energy, Inc.	o	o	x	o
GenOn Americas Generation, LLC	o	o	x	o
GenOn Mid-Atlantic, LLC	o	o	x	o
			(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



GenOn Energy, Inc.	o	Yes	x	No
GenOn Americas Generation, LLC	o	Yes	x	No
GenOn Mid-Atlantic, LLC	o	Yes	x	No

Each Registrant’s outstanding equity interests are held by its respective parent and there are no equity interests held by nonaffiliates.



Registrant		Parent
GenOn Energy, Inc.		NRG Energy, Inc.
GenOn Americas Generation, LLC		GenOn Americas, Inc.
GenOn Mid-Atlantic, LLC		GenOn North America, LLC

This combined Form 10-Q is separately filed by GenOn Energy, Inc., GenOn Americas Generation, LLC and GenOn Mid-Atlantic, LLC. Information contained in this combined Form 10-Q relating to GenOn Energy, Inc., GenOn Americas Generation, LLC and GenOn Mid-Atlantic, LLC is filed by such registrant on its own behalf and each registrant makes no representation as to information relating to registrants other than itself.

NOTE: WHEREAS GENON ENERGY, INC., GENON AMERICAS GENERATION, LLC AND GENON MID-ATLANTIC, LLC MEET THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q, THIS COMBINED FORM 10-Q IS BEING FILED WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION H(2).

TABLE OF CONTENTS



CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATON		2
GLOSSARY OF TERMS		3
PART I — FINANCIAL INFORMATION		5
	Item 1 — CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES	5
	Item 2 — MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION	38
	Item 3 —QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	46
	Item 4 — CONTROLS AND PROCEDURES	47
PART II — OTHER INFORMATION		48
	ITEM 1 — LEGAL PROCEEDINGS	48
	ITEM 1A — RISK FACTORS	48
	ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	48
	ITEM 3 — DEFAULTS UPON SENIOR SECURITIES	48
	ITEM 4 — MINE SAFETY DISCLOSURES	48
	ITEM 5 — OTHER INFORMATION	48
	ITEM 6 — EXHIBITS	49
	SIGNATURES	50

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

(GenOn, GenOn Americas Generation and GenOn Mid-Atlantic)

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. The words "believes," "projects," "anticipates," "plans," "expects," "intends," "estimates" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Registrants’ actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors, risks and uncertainties include the factors described under Item 1A - Risk Factors, in Part I, Item 1A of the Registrants' Annual Report on Form 10-K for the year ended December 31, 2012, including, but not limited to, the following:


•	General economic conditions, changes in the wholesale power markets and fluctuations in the cost of fuel;


•	Volatile power supply costs and demand for power;

•

Hazards customary to the power production industry and power generation operations such as fuel and electricity price volatility, unusual weather conditions, catastrophic weather-related or other damage to facilities, unscheduled generation outages, maintenance or repairs, unanticipated changes to fuel supply costs or availability due to higher demand, shortages, transportation problems or other developments, environmental incidents, or electric transmission or gas pipeline system constraints and the possibility that the Registrants may not have adequate insurance to cover losses as a result of such hazards;


•	The effectiveness of the Registrants’ risk management policies and procedures, and the ability of the Registrants’ counterparties to satisfy their financial commitments;


•	Counterparties' collateral demands and other factors affecting the Registrants' liquidity position and financial condition;


•	The Registrants’ ability to operate their businesses efficiently, manage capital expenditures and costs tightly, and generate earnings and cash flows from their asset-based businesses in relation to their debt and other obligations;


•	The Registrants’ ability to enter into contracts to sell power and procure fuel on acceptable terms and prices;


•	The liquidity and competitiveness of wholesale markets for energy commodities;


•	Government regulation, including compliance with regulatory requirements and changes in market rules, rates, tariffs and environmental laws and increased regulation of carbon dioxide and other greenhouse gas emissions;


•	Price mitigation strategies and other market structures employed by ISOs or RTOs that result in a failure to adequately compensate the Registrants’ generation units for all of their costs;


•	The Registrants’ ability to borrow additional funds and access capital markets, as well as GenOn’s substantial indebtedness and the possibility that the Registrants may incur additional indebtedness going forward;


•	Operating and financial restrictions placed on the Registrants and their subsidiaries that are contained in the indentures governing GenOn’s outstanding notes, and in debt and other agreements of certain of the Registrants’ subsidiaries and project affiliates generally;


•	The Registrants’ ability to implement their strategy of developing and building new power generation facilities;


•	The Registrants’ ability to implement their strategy of finding ways to meet the challenges of climate change, clean air and protecting natural resources while taking advantage of business opportunities;


•	The Registrants’ ability to implement their strategy of increasing the return on invested capital through operational performance improvements and a range of initiatives at plants and corporate offices to reduce costs or generate revenues;


•	The Registrants’ ability to successfully evaluate investments in new business and growth initiatives;


•	The Registrants’ ability to successfully integrate and manage any acquired businesses;


•	The Registrants' ability to integrate the businesses and realize cost savings related to the NRG Merger; and


•	The Registrants’ ability to develop and maintain successful partnering relationships.

Forward-looking statements speak only as of the date they were made, and the Registrants undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors that could cause the Registrants’ actual results to differ materially from those contemplated in any forward-looking statements included in this Quarterly Report on Form 10-Q should not be construed as exhaustive.

GLOSSARY OF TERMS

When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below:



2012 Form 10-K		The Registrants' Annual Report on Form 10-K for the year ended December 31, 2012
Ancillary Services		Services that ensure reliability and support the transmission of electricity from generation sites to customer loads. Such services include regulation service, reserves and voltage support
ASC		The FASB Accounting Standards Codification, which the FASB established as the source of authoritative U.S. GAAP
ASU		Accounting Standards Updates – updates to the ASC
Bankruptcy Court		United States, Bankruptcy Court for the Northern District of Texas, Fort Worth Division
CAA		Clean Air Act
CenterPoint		CenterPoint Energy, Inc. and its subsidiaries, on and after August 31, 2002, and Reliant Energy, Incorporated and its subsidiaries prior to August 31, 2002
Clean Water Act		Federal Water Pollution Control Act
Deactivation		Includes retirement, mothballing and long-term protective layup. In each instance, the deactivated unit cannot be currently called upon to generate electricity.
EPA		United States Environmental Protection Agency
Exchange Act		The Securities Exchange Act of 1934, as amended
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
GenOn		GenOn Energy, Inc. and, except where the context indicates otherwise, its subsidiaries
GenOn Americas		GenOn Americas, Inc.
GenOn Americas Generation		GenOn Americas Generation, LLC and, except where the context indicates otherwise, its subsidiaries
GenOn Energy Holdings		GenOn Energy Holdings, Inc. and, except where the context indicates otherwise, its subsidiaries
GenOn Marsh Landing		GenOn Marsh Landing, LLC
GenOn Mid-Atlantic		GenOn Mid-Atlantic, LLC and, except where the context indicates otherwise, its subsidiaries, which include the coal generation units at two generating facilities under operating leases
GenOn North America		GenOn North America, LLC
ISO		Independent System Operator, also referred to as Regional Transmission Organization, or RTO
LIBOR		London Inter-Bank Offered Rate
Long-term protective layup		A descriptive term for GenOn's plans with respect to the Shawville coal-fired units, including retiring the units from service in accordance with the PJM tariff, maintenance of the units in accordance with the lease requirements and continued payment of the lease rent. Although the units are not decommissioned and reactivation remains a technical possibility, GenOn does not expect to make any further investment in environmental controls for the units. Further, reactivation after the long-term protective layup would likely involve numerous new permits and substantial additional investment.
MATS		Mercurty and Air Toxics Standards promulgated by the EPA
MC Asset Recovery		MC Asset Recovery, LLC
MDE		Maryland Department of the Environment
Mirant		GenOn Energy Holdings, Inc. (formerly known as Mirant Corporation) and, except where the context indicates otherwise, its subsidiaries
Mirant/RRI Merger		The merger completed on December 3, 2010 pursuant to the Mirant/RRI Merger Agreement
Mirant/RRI Merger Agreement		The agreements by and among Mirant Corporation, RRI Energy, Inc. and RRI Energy Holdings, Inc. dated as of April 11, 2010
Mirant Debtors		GenOn Energy Holdings, Inc. (formerly known as Mirant Corporation) and certain of its subsidiaries
MISO		Midwest Independent Transmission System Operator, Inc.
MMBtu		Million British Thermal Units



MW		Megawatt
MWh		Saleable megawatt hours net of internal/parasitic load megawatt-hours
NAAQS		National Ambient Air Quality Standards
Net Exposure		Counterparty credit exposure to GenOn, GenOn Americas Generation or GenOn Mid-Atlantic, as applicable, net of collateral
NJDEP		New Jersey Department of Environmental Protection
NOL		Net Operating Loss
NOV		Notice of violation
NO_x		Nitrogen oxide
NPDES		National pollutant discharge elimination system
NPNS		Normal Purchase Normal Sale
NRG		NRG Energy, Inc. and, except where the context indicates otherwise, its subsidiaries
NRG Merger		The merger completed on December 14, 2012 pursuant to the NRG Merger Agreement
NRG Merger Agreement		Agreement and Plan of Merger by and among NRG Energy, Inc., Plus Merger Corporation and GenOn Energy, Inc. dated as of July 20, 2012
NSR		New Source Review
OCI		Other comprehensive income
PADEP		Pennsylvania Department of Environmental Protection
PJM		PJM Interconnection, LLC
PJM market		The wholesale and retail electric market operated by PJM primarily in all or parts of Delaware, the District of Columbia, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia
Plan		The plan of reorganization that was approved in conjunction with Mirant Corporation's emergence from bankruptcy protection on January 3, 2006
Registrants		GenOn, GenOn Americas Generation and GenOn Mid-Atlantic, collectively
Repowering		Technologies utilized to replace, rebuild or redevelop major portions of an existing electrical generating facility, not only to achieve a substantial emission reduction, but also to increase facility capacity, and improve system efficiency
Retirement		The unit has been removed from service and is unavailable for service and not expected to return to service in the future.
RGGI		Regional Greenhouse Gas Initiative
RMR		Reliability Must-Run
RRI Energy		RRI Energy, Inc.
RTO		Regional Transmission Organization
Securities Act		The Securities Act of 1933, as amended
SO₂		Sulfur dioxide
Southern Company		The Southern Company
U.S.		United States of America
U.S. GAAP		Accounting principles generally accepted in the United States

PART I - FINANCIAL INFORMATION

ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

GENON ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	Successor			Predecessor
	Three months ended			Three months ended
	March 31, 2013			March 31, 2012
	(In millions)			(In millions)
Operating Revenues
Operating revenues	$	424		$	721
Operating revenues — affiliate	6			—
Total operating revenues	430			721
Operating Costs and Expenses
Cost of operations	350			528
Cost of operations — affiliate	140			—
Depreciation and amortization	59			88
Selling, general and administrative	33			50
Selling, general and administrative — affiliate	17			—
Acquisition-related transaction and integration costs	19			—
Total operating costs and expenses	618			666
Operating (Loss)/Income	(188		)	55
Other Income/(Expense)
Other income, net	2			2
Interest expense	(44		)	(89		)
Interest expense — affiliate	(3		)	—
Total other expense	(45		)	(87		)
Loss Before Income Taxes	(233		)	(32		)
Income tax	—			—
Net Loss	$	(233	)	$	(32	)

See accompanying notes to condensed consolidated financial statements.

GENON ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)



	Successor			Predecessor
	Three months ended			Three months ended
	March 31, 2013			March 31, 2012
	(In millions)			(In millions)
Net Loss	$	(233	)	$	(32	)
Other comprehensive income net of reclassifications, net of tax of $0:
Unrealized gain on derivatives	2			4
Defined benefit plans	—			1
Other comprehensive income	2			5
Comprehensive loss	$	(231	)	$	(27	)

See accompanying notes to condensed consolidated financial statements.

GENON ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS



	March 31, 2013			December 31, 2012
	(unaudited)
	(In millions)
ASSETS
Current Assets
Cash and cash equivalents	$	873		$	825
Funds deposited by counterparties	105			140
Restricted cash	21			18
Accounts receivable — trade	124			138
Inventory	451			450
Derivative instruments	489			596
Derivative instruments — affiliate	25			8
Cash collateral paid in support of energy risk management activities	154			148
Prepayments and other current assets	243			216
Total current assets	2,485			2,539
Property, plant and equipment, net of accumulated depreciation of $67 and $9	3,967			3,946
Other Assets
Intangible assets, net	74			68
Derivative instruments	395			511
Derivative instruments — affiliate	1			1
Deferred income taxes	198			209
Other non-current assets	162			232
Total other assets	830			1,021
Total Assets	$	7,282		$	7,506
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Current portion of long-term debt and capital leases	$	40		$	32
Accounts payable	183			188
Accounts payable — affiliate	32			6
Derivative instruments	235			237
Derivative instruments — affiliate	27			8
Deferred income taxes	198			209
Cash collateral received in support of energy risk management activities	105			140
Accrued expenses and other current liabilities	358			346
Total current liabilities	1,178			1,166
Other Liabilities
Long-term debt and capital leases	4,182			4,167
Derivative instruments	118			123
Derivative instruments — affiliate	2			1
Out-of-market contracts	1,046			1,062
Other non-current liabilities	590			591
Total non-current liabilities	5,938			5,944
Total Liabilities	7,116			7,110
Commitments and Contingencies
Stockholder's Equity
Common stock: $0.001 par value, 1 share authorized and issued at March 31, 2013 and December 31, 2012	—			—
Additional paid-in capital	467			466
Accumulated deficit	(305		)	(72		)
Accumulated other comprehensive income	4			2
Total Stockholder's Equity	166			396
Total Liabilities and Stockholder's Equity	$	7,282		$	7,506

See accompanying notes to condensed consolidated financial statements.

GENON ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



	Successor			Predecessor
	Three months ended			Three months ended
	March 31, 2013			March 31, 2012
	(In millions)			(In millions)
Cash Flows from Operating Activities
Net loss	$	(233	)	$	(32	)
Adjustments to reconcile net loss to net cash provided/(used) by operating activities:
Depreciation and amortization	59			88
Amortization of financing costs and debt discount/premiums	(21		)	4
Amortization of acquired and out-of-market contracts	(16		)	(8		)
Amortization of unearned equity compensation	5			3
Gain on disposals and sales of assets	—			(8		)
Changes in derivative instruments	221			(100		)
Excess materials and supplies inventory reserve	—			35
Lower of cost or market inventory adjustments	—			46
Advance settlement of out-of-market contract obligation	—			(20		)
Other, net	—			2
Changes in collateral deposits supporting energy risk management activities	(6		)	(6		)
Cash provided/(used) by changes in other working capital	121			(26		)
Net Cash Provided/(Used) by Operating Activities	130			(22		)
Cash Flows from Investing Activities
Capital expenditures	(107		)	(87		)
Proceeds from sale of assets, net	—			12
(Increase)/decrease in restricted cash, net	(5		)	2
Purchase of emission allowances, net of proceeds	(14		)	—
Net Cash Used by Investing Activities	(126		)	(73		)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt	45			45
Payments for short and long-term debt	(1		)	(2		)
Net Cash Provided by Financing Activities	44			43
Net Increase/(Decrease) in Cash and Cash Equivalents	48			(52		)
Cash and Cash Equivalents at Beginning of Period	825			1,539
Cash and Cash Equivalents at End of Period	$	873		$	1,487
Supplemental Disclosures
Interest paid, net of amounts capitalized	$	—		$	11
Income taxes paid, net of refunds received	$	—		$	2

See accompanying notes to condensed consolidated financial statements.

GENON AMERICAS GENERATION, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	Successor			Predecessor
	Three months ended			Three months ended
	March 31, 2013			March 31, 2012
	(In millions)			(In millions)
Operating Revenues
Operating revenues	$	399		$	682
Operating revenues — affiliate	133			(30		)
Total operating revenues	532			652
Operating Costs and Expenses
Cost of operations	219			260
Cost of operations — affiliate	328			266
Depreciation and amortization	21			40
Selling, general and administrative	1			5
Selling, general and administrative — affiliate	20			16
Total operating costs and expenses	589			587
Operating (Loss)/Income	(57		)	65
Other Expense
Interest expense	(16		)	(18		)
Interest expense — affiliate	(2		)	(1		)
Total other expense	(18		)	(19		)
(Loss)/Income Before Income Taxes	(75		)	46
Income tax	—			—
Net (Loss)/Income	$	(75	)	$	46

See accompanying notes to condensed consolidated financial statements.

GENON AMERICAS GENERATION, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS



	March 31, 2013		December 31, 2012
	(unaudited)
	(In millions)
ASSETS
Current Assets
Cash and cash equivalents	$	283	$	148
Accounts receivable — trade	111		125
Note receivable — affiliate	167		198
Inventory	244		239
Derivative instruments	489		596
Derivative instruments — affiliate	86		60
Cash collateral paid in support of energy risk management activities	99		91
Prepayments and other current assets	37		62
Total current assets	1,516		1,519
Property, plant and equipment, net of accumulated depreciation of $24 and $4	1,320		1,327
Other Assets
Intangible assets, net	73		66
Derivative instruments	394		511
Derivative instruments — affiliate	34		25
Other non-current assets	13		13
Total other assets	514		615
Total Assets	$	3,350	$	3,461
LIABILITIES AND MEMBER'S EQUITY
Current Liabilities
Current portion of long-term debt and capital leases	$	5	$	5
Accounts payable	66		69
Accounts payable — affiliate	110		71
Derivative instruments	220		228
Derivative instruments — affiliate	101		134
Cash collateral received in support of energy risk management activities	105		140
Accrued expenses and other current liabilities	95		72
Total current liabilities	702		719
Other Liabilities
Long-term debt and capital leases	952		955
Derivative instruments	82		82
Derivative instruments — affiliate	39		51
Out-of-market contracts	533		539
Other non-current liabilities	103		103
Total non-current liabilities	1,709		1,730
Total Liabilities	2,411		2,449
Commitments and Contingencies
Member’s Equity
Member’s interest	939		1,012
Total Member’s Equity	939		1,012
Total Liabilities and Member’s Equity	$	3,350	$	3,461

See accompanying notes to condensed consolidated financial statements.

GENON AMERICAS GENERATION, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



	Successor			Predecessor
	Three months ended			Three months ended
	March 31, 2013			March 31, 2012
	(In millions)			(In millions)
Cash Flows from Operating Activities
Net (loss)/income	$	(75	)	$	46
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Depreciation and amortization	21			40
Amortization of debt premiums	(2		)	—
Amortization of out-of-market contracts	(6		)	—
Loss on disposals and sales of assets	3			—
Changes in derivative instruments	135			(49		)
Excess materials and supplies inventory reserve	—			6
Lower of cost or market inventory adjustments	—			25
Changes in collateral deposits supporting energy risk management activities	(43		)	81
Cash provided by changes in other working capital	102			(31		)
Net Cash Provided by Operating Activities	135			118
Cash Flows from Investing Activities
Capital expenditures	(16		)	(22		)
Decrease in notes receivable - affiliate	31			18
Purchase of emission allowances, net of proceeds	(14		)	—
Net Cash Provided/(Used) by Investing Activities	1			(4		)
Cash Flows from Financing Activities
Payments for short and long-term debt	(1		)	(1		)
Increase of notes payable-affiliate	—			15
Net Cash (Used)/Provided by Financing Activities	(1		)	14
Net Increase in Cash and Cash Equivalents	135			128
Cash and Cash Equivalents at Beginning of Period	148			267
Cash and Cash Equivalents at End of Period	$	283		$	395

See accompanying notes to condensed consolidated financial statements.

GENON MID-ATLANTIC, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	Successor			Predecessor
	Three months ended			Three months ended
	March 31, 2013			March 31, 2012
	(In millions)			(In millions)
Operating Revenues
Operating revenues	$	(40	)	$	127
Operating revenues — affiliate	138			193
Total operating revenues	98			320
Operating Costs and Expenses
Cost of operations	51			64
Cost of operations — affiliate	87			142
Depreciation and amortization	16			29
Selling, general and administrative — affiliate	16			12
Total operating costs and expenses	170			247
Operating (Loss)/Income	(72		)	73
Other Expense
Interest expense — affiliate	(1		)	(1		)
Total other expense	(1		)	(1		)
(Loss)/Income Before Income Taxes	(73		)	72
Income tax	—			—
Net (Loss)/Income	$	(73	)	$	72

See accompanying notes to condensed consolidated financial statements.

GENON MID-ATLANTIC, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS



	March 31, 2013		December 31, 2012
	(unaudited)
	(In millions)
ASSETS
Current Assets
Cash and cash equivalents	$	283	$	135
Accounts receivable — trade	2		4
Inventory	176		150
Derivative instruments	277		285
Derivative instruments — affiliate	62		109
Prepayments and other current assets	20		44
Total current assets	820		727
Property, plant and equipment, net of accumulated depreciation of $19 and $4	1,218		1,220
Other Assets
Intangible assets, net	1		1
Derivative instruments	268		351
Derivative instruments — affiliate	87		104
Total other assets	356		456
Total Assets	$	2,394	$	2,403
LIABILITIES AND MEMBER'S EQUITY
Current Liabilities
Current portion of long-term debt and capital leases	$	5	$	5
Accounts payable	24		16
Accounts payable — affiliate	35		2
Derivative instruments	15		3
Derivative instruments — affiliate	70		97
Cash collateral received in support of energy risk management activities	105		57
Accrued taxes and other current liabilities	41		38
Total current liabilities	295		218
Other Liabilities
Long-term debt and capital leases	8		9
Derivative instruments	6		—
Derivative instruments — affiliate	42		55
Out-of-market contracts	533		539
Other non-current liabilities	57		56
Total non-current liabilities	646		659
Total Liabilities	941		877
Commitments and Contingencies
Member’s Equity
Member’s interest	1,453		1,526
Total Member’s Equity	1,453		1,526
Total Liabilities and Member’s Equity	$	2,394	$	2,403

See accompanying notes to condensed consolidated financial statements.

GENON MID-ATLANTIC, LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



	Successor			Predecessor
	Three months ended			Three months ended
	March 31, 2013			March 31, 2012
	(In millions)			(In millions)
Cash Flows from Operating Activities
Net (loss)/income	$	(73	)	$	72
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Depreciation and amortization	16			29
Amortization of out-of-market contracts	(6		)	—
Loss on disposals and sales of assets	3			—
Changes in derivative instruments	133			(42		)
Excess materials and supplies inventory reserve	—			4
Lower of cost or market inventory adjustments	—			25
Changes in collateral deposits supporting energy risk management activities	48			—
Cash provided/(used) by changes in other working capital	41			(19		)
Net Cash Provided by Operating Activities	162			69
Cash Flows from Investing Activities
Capital expenditures	(13		)	(17		)
Net Cash Used by Investing Activities	(13		)	(17		)
Cash Flows from Financing Activities
Payments for short and long-term debt	(1		)	(1		)
Net Cash Used by Financing Activities	(1		)	(1		)
Net Increase in Cash and Cash Equivalents	148			51
Cash and Cash Equivalents at Beginning of Period	135			68
Cash and Cash Equivalents at End of Period	$	283		$	119

See accompanying notes to condensed consolidated financial statements.

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Basis of Presentation (GenOn, GenOn Americas Generation and GenOn Mid-Atlantic)

GenOn Energy, Inc., a wholly-owned subsidiary of NRG, is a wholesale power generator engaged in the ownership and operation of power generation facilities, with approximately 20,485 MW of net electric generating capacity located in the U.S.

GenOn Americas Generation is a wholesale power generator with approximately 7,850 MW of net electric generating capacity located, in many cases, near major metropolitan areas. GenOn Americas Generation's electric generating capacity is part of the 20,485 MW of net electric generating capacity of GenOn.

GenOn Mid-Atlantic operates and owns or leases 4,680 MW of net electric generating capacity in the Washington, D.C. and Baltimore areas. GenOn Mid-Atlantic’s electric generating capacity is part of the 7,850 MW of net electric generating capacity of GenOn Americas Generation. GenOn Mid-Atlantic’s generating facilities serve the Eastern PJM markets.

GenOn Americas Generation and GenOn Mid-Atlantic are Delaware limited liability companies and indirect wholly-owned subsidiaries of GenOn. GenOn Mid-Atlantic is a wholly-owned subsidiary of GenOn North America and an indirect wholly-owned subsidiary of GenOn Americas Generation.

The Registrants sell power from their generation portfolio and offer capacity or similar products to retail electric providers and others, and provide ancillary services to support system reliability.

This is a combined quarterly report of the Registrants for the quarter ended March 31, 2013. The notes to the condensed consolidated financial statements apply to the Registrants as indicated parenthetically next to each corresponding disclosure. The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the SEC's regulations for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. The following notes should be read in conjunction with the accounting policies and other disclosures as set forth in the notes to the Registrants' financial statements in their 2012 Form 10-K. Interim results are not necessarily indicative of results for a full year.

In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all material adjustments consisting of normal and recurring accruals necessary to present fairly the Registrants' consolidated financial positions as of March 31, 2013, and the results of operations, comprehensive loss and cash flows for the three months ended March 31, 2013 and 2012.

NRG Merger, Predecessor and Successor Reporting

On December 14, 2012, NRG completed the acquisition of GenOn with GenOn continuing as the surviving corporation and a wholly-owned subsidiary of NRG. The NRG Merger is accounted for under the acquisition method of accounting. Fair value adjustments related to the NRG Merger have been pushed down to GenOn, GenOn Americas Generation and GenOn Mid-Atlantic, resulting in certain assets and liabilities of the Registrants being recorded at fair value at December 15, 2012. See Note 3, NRG Merger, for further discussion.

The Registrants’ consolidated statements of operations subsequent to the NRG Merger include amortization expense relating to fair value adjustments and depreciation expense based on the fair value of the Registrants’ property, plant and equipment. In addition, effective with the NRG Merger, the Registrants adopted accounting policies of NRG. Therefore, the Registrants' financial information prior to the NRG Merger is not comparable to its financial information subsequent to the NRG Merger.

As a result of the impact of pushdown accounting, the financial statements and certain note presentations separate the Registrants' presentations into two distinct periods, the period before the consummation of the NRG Merger (labeled predecessor) and the period after that date (labeled successor), to indicate the application of different basis of accounting between the periods presented.

Use of Estimates

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

Reclassifications

Certain prior-year amounts have been reclassified for comparative purposes. The reclassifications did not affect results from operations or cash flows.

Note 2 — Summary of Significant Accounting Policies (GenOn, GenOn Americas Generation and GenOn Mid-Atlantic)

Recent Accounting Developments

ASU 2011-11 — Effective January 1, 2013, the Registrants adopted the provisions of ASU No. 2011-11, Balance Sheet (Topic 210) Disclosures about Offsetting Assets and Liabilities, or ASU No. 2011-11, and began providing enhanced disclosures regarding the effect or potential effect of netting arrangements on an entity's financial position by improving information about financial instruments and derivative instruments that either (1) offset in accordance with either ASC 210-20-45 or ASC 810-20-45 or (2) are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset. Reporting entities are required to disclose both gross and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The disclosures required by ASU No. 2011-11 are required to be adopted retroactively. As this guidance provides only disclosure requirements, the adoption of this standard will not impact the Registrants' results of operations, cash flows or financial position.

ASU 2013-02 (GenOn) - Effective January 1, 2013, GenOn adopted the provisions of ASU No. 2013-02, Other Comprehensive Income (Topic 220) Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, or ASU No. 2013-02, and began reporting the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income within the notes to the financial statements if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income in the same reporting period. For other amounts not required by U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures which provide additional information about the amounts. The provisions of ASU No. 2013-02 are required to be adopted prospectively. As this guidance provides only presentation requirements, the adoption of this standard did not impact GenOn's results of operations, cash flows or financial position.

Note 3 — NRG Merger (GenOn, GenOn Americas Generation and GenOn Mid-Atlantic)

On December 14, 2012, NRG completed the acquisition of GenOn. Consideration for the acquisition was valued at $2.2 billion and was comprised of 0.1216 shares of NRG common stock for each outstanding share of GenOn, including restricted stock units outstanding, on the acquisition date, except for fractional shares which were paid in cash.

The acquisition was recorded as a business combination, with identifiable assets acquired and liabilities assumed provisionally recorded at their estimated fair values on the acquisition date. The initial accounting for the business combination is not complete because the evaluations necessary to assess the fair value of certain net assets acquired is still in process. See Note 3, NRG Merger, in the Registrants' 2012 Form 10-K for additional information related to the NRG Merger.

The following table summarizes the adjustments during the first quarter of 2013 to the provisional allocation for assets acquired and liabilities assumed initially recorded in 2012. The allocation of the purchase price may be modified up to one year from the date of acquisition as more information is obtained about the fair value of assets acquired and liabilities assumed.



	GenOn
	(In millions)
Liabilities
Other current and non-current liabilities	$	17
Total liabilities	$	17

Note 4 — Fair Value of Financial Instruments (GenOn, GenOn Americas Generation and GenOn Mid-Atlantic)

This footnote should be read in conjunction with the complete description under Note 5, Fair Value of Financial Instruments, to the Registrants' 2012 Form 10-K.

For cash and cash equivalents, funds deposited by counterparties (GenOn), accounts receivable, note receivable — affiliate (GenOn Americas Generation), accounts payable, accrued expenses and other current liabilities, restricted cash, and cash collateral paid and received in support of energy risk management activities, the carrying amount approximates fair value because of the short-term maturity of those instruments and are classified as Level 1 within the fair value hierarchy.

The estimated carrying amounts and fair values of GenOn and GenOn Americas Generation’s long-term debt, including current portion, are as follows:

GenOn



	As of March 31, 2013				As of December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In millions)
Long-term debt, including current portion	$	4,209	$	4,237	$	4,185	$	4,195

GenOn Americas Generation



	As of March 31, 2013				As of December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In millions)
Long-term debt, including current portion	$	944	$	970	$	946	$	953

The fair value of GenOn and GenOn Americas Generation's publicly-traded long-term debt is based on quoted market prices and is classified as Level 1 within the fair value hierarchy. The fair value of GenOn's nonpublicly-traded long-term debt is estimated using current interest rates for similar instruments with equivalent credit quality and is classified as Level 3 within the fair value hierarchy.

Recurring Fair Value Measurements

Derivative assets and liabilities and trust fund investments are carried at fair market value. Realized and unrealized gains and losses included in earnings that are related to energy derivatives are recorded in operating revenues and cost of operations.

GenOn

The following tables present assets and liabilities (including affiliate amounts) measured and recorded at fair value on GenOn’s consolidated balance sheet on a recurring basis and their level within the fair value hierarchy:



	As of March 31, 2013
	Fair Value
	Level 1		Level 2		Level 3		Total
	(In millions)
Derivative assets:
Commodity contracts	$	122	$	753	$	35	$	910
Derivative liabilities:
Commodity contracts	$	36	$	258	$	41	$	335
Interest rate contracts	—		47		—		47
Total liabilities	$	36	$	305	$	41	$	382
Other assets ^(a)	$	44	$	—	$	—	$	44


(a)	Primarily consists of mutual funds held in a rabbi trusts for non-qualified deferred compensation plans for certain former employees.



	As of December 31, 2012
	Fair Value
	Level 1		Level 2		Level 3		Total
	(In millions)
Derivative assets:
Commodity contracts	$	139	$	946	$	31	$	1,116
Derivative liabilities:
Commodity contracts	$	52	$	253	$	14	$	319
Interest rate contracts	—		50		—		50
Total liabilities	$	52	$	303	$	14	$	369
Other assets ^(a)	$	43	$	—	$	—	$	43


(a)	Primarily consists of mutual funds held in a rabbi trusts for non-qualified deferred compensation plans for certain former employees.

There were no transfers during the three months ended March 31, 2013 and 2012 between Levels 1 and 2. Transfers in/out of Level 3 are related to the availability of external broker quotes and are valued as of the end of the reporting period. There were no transfers in/out of Level 3 for the three months ended March 31, 2013 and 2012. The following tables reconcile, for the three months ended March 31, 2013 and 2012, the beginning and ending balances for derivatives that are recognized at fair value in GenOn’s consolidated financial statements at least annually using significant unobservable inputs:



	Successor			Predecessor
	Three months ended March 31, 2013			Three months ended March 31, 2012
	Fair Value Measurement Using Significant Unobservable Inputs (Level 3)			Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
	Derivatives ^(a)			Derivatives ^(a)
	(In millions)			(In millions)
Balance as of beginning of period	$	17		$	(31	)
Total gains and losses (realized/unrealized) included in earnings ^(b)	(3		)	(11		)
Purchases	(4		)	—
Settlements	(16		)	6
Balance as of end of period	$	(6	)	$	(36	)
The amount of the total losses for the period included in earnings attributable to the change in unrealized derivatives relating to assets still held at March 31	$	(13	)	$	(5	)


(a)	Consists of derivatives assets and liabilities, net.

(b) Contracts entered into are reported with total gains and losses included in earnings in the predecessor periods.

GenOn Americas Generation

The following tables present assets and liabilities (including affiliate amounts) measured and recorded at fair value on GenOn Americas Generation's consolidated balance sheet on a recurring basis and their level within the fair value hierarchy:



	As of March 31, 2013
	Fair Value
	Level 1		Level 2		Level 3		Total
	(In millions)
Derivative assets:
Commodity contracts	$	144	$	824	$	35	$	1,003
Derivative liabilities:
Commodity contracts	$	87	$	314	$	41	$	442



	As of December 31, 2012
	Fair Value
	Level 1		Level 2		Level 3		Total
	(In millions)
Derivative assets:
Commodity contracts	$	170	$	991	$	31	$	1,192
Derivative liabilities:
Commodity contracts	$	123	$	358	$	14	$	495

There were no transfers during the three months ended March 31, 2013 and 2012 between Levels 1 and 2. Transfers in/out of Level 3 are related to the availability of external broker quotes and are valued as of the end of the reporting period. There were no transfers in/out of Level 3 for the three months ended March 31, 2013 and 2012. The following tables reconcile, for the three months ended March 31, 2013 and 2012, the beginning and ending balances for GenOn Americas Generation's derivatives that are recognized at fair value in the consolidated financial statements at least annually using significant unobservable inputs:



	Successor			Predecessor
	Three months ended March 31, 2013			Three months ended March 31, 2012
	Fair Value Measurement Using Significant Unobservable Inputs (Level 3)			Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
	Derivatives ^(a)			Derivatives ^(a)
	(In millions)			(In millions)
Balance as of beginning of period	$	17		$	(32	)
Total gains and losses (realized/unrealized) included in earnings ^(b)	(3		)	(6		)
Purchases	(4		)	—
Settlements	(16		)	8
Balance as of end of period	$	(6	)	$	(30	)
The amount of the total gains/(losses) for the period included in earnings attributable to the change in unrealized derivatives relating to assets still held at March 31	$	(13	)	$	1

(a) Consists of derivatives assets and liabilities, net.

(b) Contracts entered into are reported with total gains and losses included in earnings in the predecessor periods.

GenOn Mid-Atlantic

The following tables present assets and liabilities (including affiliate amounts) measured and recorded at fair value on GenOn Mid-Atlantic's consolidated balance sheet on a recurring basis and their level within the fair value hierarchy:



	As of March 31, 2013
	Fair Value
	Level 1		Level 2		Level 3		Total
	(In millions)
Derivative assets:
Commodity contracts	$	69	$	624	$	1	$	694
Derivative liabilities:
Commodity contracts	$	11	$	115	$	7	$	133



	As of December 31, 2012
	Fair Value
	Level 1		Level 2		Level 3		Total
	(In millions)
Derivative assets:
Commodity contracts	$	63	$	778	$	8	$	849
Derivative liabilities:
Commodity contracts	$	16	$	138	$	1	$	155

There were no transfers during the three months ended March 31, 2013 and 2012 between Levels 1 and 2. Transfers in/out of Level 3 are related to the availability of external broker quotes and are valued as of the end of the reporting period. There were no transfers in/out of Level 3 for the three months ended March 31, 2013 and 2012. The following tables reconcile, for the three months ended March 31, 2013 and 2012, the beginning and ending balances for GenOn Mid-Atlantic's derivatives that are recognized at fair value in the consolidated financial statements at least annually using significant unobservable inputs:



	Successor			Predecessor
	Three months ended March 31, 2013			Three months ended March 31, 2012
	Fair Value Measurement Using Significant Unobservable Inputs (Level 3)			Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
	Derivatives ^(a)			Derivatives ^(a)
	(In millions)			(In millions)
Balance as of beginning of period	$	7		$	(64	)
Total gains and losses (realized/unrealized) included in earnings ^(b)	(2		)	(43		)
Purchases	(4		)	—
Settlements	(7		)	19
Balance as of end of period	$	(6	)	$	(88	)
The amount of the total losses for the period included in earnings attributable to the change in unrealized derivatives relating to assets still held at March 31	$	(7	)	$	(25	)


(a)	Consists of derivatives assets and liabilities, net.


(b)	Contracts entered into are reported with total gains and losses included in earnings in the predecessor periods.

Derivative Fair Value Measurements

A portion of the Registrants' contracts are exchange-traded contracts with readily available quoted market prices. A majority of the Registrants' contracts are non-exchange-traded contracts valued using prices provided by external sources, primarily price quotations available through brokers or over-the-counter and on-line exchanges. For the majority of the Registrants' markets, the Registrants receive quotes from multiple sources. To the extent that the Registrants receive multiple quotes, the Registrants' prices reflect the average of the bid-ask mid-point prices obtained from all sources that the Registrants believe provide the most liquid market for the commodity. If the Registrants receive one quote, then the mid-point of the bid-ask spread for that quote is used. The terms for which such price information is available vary by commodity, region and product. A significant portion of the fair value of the Registrants' derivative portfolio is based on price quotes from brokers in active markets who regularly facilitate those transactions and the Registrants believe such price quotes are executable. The Registrants do not use third party sources that derive price based on proprietary models or market surveys. The remainder of the assets and liabilities represents contracts for which external sources or observable market quotes are not available for the whole term or for certain delivery months. These contracts are valued using various valuation techniques including but not limited to internal models that apply fundamental analysis of the market and corroboration with similar markets. Contracts valued with prices provided by models and other valuation techniques make up 4% of GenOn's derivative assets and 11% of GenOn's derivative liabilities, 3% of GenOn Americas Generation’s derivative assets and 9% of GenOn Americas Generation's derivative liabilities and 0% of GenOn Mid-Atlantic’s derivative assets and 5% of GenOn Mid-Atlantic's derivative liabilities.

The fair value of each contract is discounted using a risk free interest rate. In addition, the Registrants apply a credit reserve to reflect credit risk which is calculated based on published default probabilities. To the extent that the Registrants’ net exposure under a specific master agreement is an asset, the Registrants use the counterparty's default swap rate. If the net exposure under a specific master agreement is a liability, the Registrants use their default swap rate. The credit reserve is added to the discounted fair value to reflect the exit price that a market participant would be willing to receive to assume the Registrants’ liabilities or that a market participant would be willing to pay for the Registrants’ assets. The Registrants' credit reserves were as follows:



	As of March 31, 2013		As of December 31, 2012
	(In millions)
GenOn	$	1	$	4
GenOn Americas Generation	2		4
GenOn Mid-Atlantic	4		4

Concentration of Credit Risk

In addition to the credit risk discussion as disclosed in Note 2, Summary of Significant Accounting Policies, to the Registrants' 2012 Form 10-K, the following is a discussion of the concentration of credit risk for the Registrants’ financial instruments. Credit risk relates to the risk of loss resulting from non-performance or non-payment by counterparties pursuant to the terms of their contractual obligations. The Registrants are exposed to counterparty credit risk through various activities including wholesale sales and fuel purchases.

Counterparty Credit Risk

The Registrants monitor and manage counterparty credit risk through credit policies that include: (i) an established credit approval process; (ii) daily monitoring of counterparties' credit limits; (iii) the use of credit mitigation measures such as margin, collateral, prepayment arrangements, or volumetric limits; (iv) the use of payment netting arrangements; and (v) the use of master netting agreements that allow for the netting of positive and negative exposures of various contracts associated with a single counterparty. Risk surrounding counterparty performance and credit could ultimately impact the amount and timing of expected cash flows. The Registrants seek to mitigate counterparty credit risk with a diversified portfolio of counterparties. The Registrants also have credit protection within various agreements to call on additional collateral support if and when necessary. Cash margin is collected and held to cover the credit risk of the counterparty until positions settle.

As of March 31, 2013, counterparty credit exposure to a portion of GenOn’s counterparties was $801 million and GenOn held collateral (cash and letters of credit) against those positions of $105 million, resulting in a net exposure of $696 million. Approximately 89% of GenOn's exposure before collateral is expected to roll off by the end of 2014. As of March 31, 2013, GenOn Americas Generation’s counterparty credit exposure to a portion of counterparties was $799 million and GenOn Americas Generation held collateral (cash and letters of credit) against those positions of $105 million, resulting in a net exposure of $694 million. Approximately 89% of GenOn Americas Generation’s exposure before collateral is expected to roll off by the end of 2014. As of March 31, 2013, GenOn Mid-Atlantic’s counterparty credit exposure to a portion of counterparties was $527 million and GenOn Mid-Atlantic held collateral (cash and letters of credit) against those positions of $105 million, resulting in a net exposure of $422 million. Approximately 90% of GenOn Mid-Atlantic’s exposure before collateral is expected to roll off by the end of 2014. Counterparty credit exposure is valued through observable market quotes and discounted at a risk free interest rate. The following tables highlight net counterparty credit exposure by industry sector and by counterparty credit quality. Net counterparty credit exposure is defined as the aggregate net asset position for the Registrants with counterparties where netting is permitted under the enabling agreement and includes all cash flow, mark-to-market, NPNS and non-derivative transactions. The exposure is shown net of collateral held and includes amounts net of receivables or payables.

GenOn



Category	Net Exposure ^(a) (% of Total)
Financial institutions	61	%
Utilities, energy merchants, marketers and other	25	%
ISOs	13	%
Coal	1	%
Total as of March 31, 2013	100	%



Category	Net Exposure ^(a) (% of Total)
Investment grade	99	%
Non-investment grade	1	%
Total as of March 31, 2013	100	%


(a)	Counterparty credit exposure excludes transportation contracts because of the unavailability of market prices.

GenOn has counterparty credit risk exposure to certain counterparties representing more than 10% of total net exposure discussed above and the aggregate of such counterparties was $545 million. Changes in hedge positions and market prices will affect credit exposure and counterparty concentration. Given the credit quality, diversification and term of the exposure in the portfolio, GenOn does not anticipate a material impact on its financial position or results of operations from nonperformance by any of its counterparties.

GenOn Americas Generation



Category	Net Exposure ^(a) (% of Total)
Financial institutions	61	%
Utilities, energy merchants, marketers and other	24	%
ISOs	14	%
Coal	1	%
Total as of March 31, 2013	100	%



Category	Net Exposure ^(a) (% of Total)
Investment grade	99	%
Non-investment grade	1	%
Total as of March 31, 2013	100	%

(a) Counterparty credit exposure excludes transportation contracts because of the unavailability of market prices.

GenOn Americas Generation has counterparty credit risk exposure to certain counterparties representing more than 10% of total net exposure discussed above and the aggregate of such counterparties was $544 million. Changes in hedge positions and market prices will affect credit exposure and counterparty concentration. Given the credit quality, diversification and term of the exposure in the portfolio, GenOn Americas Generation does not anticipate a material impact on its financial position or results of operations from nonperformance by any of its counterparties.

GenOn Mid-Atlantic



Category	Net Exposure ^(a) (% of Total)
Financial institutions	100	%



Category	Net Exposure ^(a) (% of Total)
Investment grade	100	%

(a)Counterparty credit exposure excludes transportation contracts because of the unavailability of market prices.

GenOn Mid-Atlantic has counterparty credit risk exposure to certain counterparties representing more than 10% of total net exposure discussed above and the aggregate of such counterparties was $355 million. Changes in hedge positions and market prices will affect credit exposure and counterparty concentration. Given the credit quality, diversification and term of the exposure in the portfolio, GenOn Mid-Atlantic does not anticipate a material impact on its financial position or results of operations from nonperformance by any of its counterparties.

Note 5 — Accounting for Derivative Instruments and Hedging Activities (GenOn, GenOn Americas Generation and GenOn Mid-Atlantic)

This footnote should be read in conjunction with the complete description under Note 6, Accounting for Derivative Instruments and Hedging Activities, to the Registrants' 2012 Form 10-K.

Energy-Related Commodities (GenOn)

As of March 31, 2013, GenOn had energy-related derivative financial instruments extending through 2017.

Interest Rate Swaps (GenOn)

In 2010, GenOn Marsh Landing entered into interest rate protection agreements (interest rate swaps) in connection with its project financing, which have been designated as cash flow hedges. GenOn Marsh Landing entered into the interest rate swaps to reduce the risks with respect to the variability of the interest rates for the term loans. As of March 31, 2013, the maximum length of time GenOn is hedging its exposure to the variability in future cash flows that may result from changes in interest rates is 10 years.

Volumetric Underlying Derivative Transactions (GenOn, GenOn Americas Generation and GenOn Mid-Atlantic)

The following table summarizes the net notional volume buy/(sell) of the Registrants’ open derivative transactions broken out by commodity, excluding those derivatives that qualified for the NPNS exception as of March 31, 2013 and December 31, 2012. Option contracts are reflected using delta volume. Delta volume equals the notional volume of an option adjusted for the probability that the option will be in-the-money at its expiration date.



		GenOn				GenOn Americas Generation				GenOn Mid-Atlantic
		Total Volume				Total Volume				Total Volume
		As of March 31, 2013		As of December 31, 2012		As of March 31, 2013		As of December 31, 2012		As of March 31, 2013		As of December 31, 2012
Commodity	Units	(In millions)
Coal	Short Ton	5		5		4		4		4		4
Natural Gas	MMBtu	(187)		(194)		(145)		(150)		(137)		(150)
Power	MWh	(37)		(43)		(19)		(22)		(19)		(22)
Interest	Dollars	$	475	$	475	$	—	$	—	$	—	$	—

Fair Value of Derivative Instruments (GenOn, GenOn Americas Generation and GenOn Mid-Atlantic)

The following tables summarize the fair value within the derivative instrument valuation on the balance sheet:

GenOn



	Fair Value
	Derivative Assets				Derivative Liabilities
	March 31, 2013		December 31, 2012		March 31, 2013			December 31, 2012
	(In millions)
Derivatives Designated as Cash Flow Hedges:
Interest rate contracts current	$	—	$	—	$	(11	)	$	(9	)
Interest rate contracts long-term	—		—		(36		)	(41		)
Total Derivatives Designated as Cash Flow Hedges	—		—		(47		)	(50		)
Derivatives Not Designated as Cash Flow Hedges:
Commodity contracts current	514		604		(251		)	(236		)
Commodity contracts long-term	396		512		(84		)	(83		)
Total Derivatives Not Designated as Cash Flow Hedges	910		1,116		(335		)	(319		)
Total Derivatives	$	910	$	1,116	$	(382	)	$	(369	)

GenOn Americas Generation



	Fair Value
	Derivative Assets				Derivative Liabilities
	March 31, 2013		December 31, 2012		March 31, 2013			December 31, 2012
	(In millions)
Derivatives Not Designated as Cash Flow Hedges:
Commodity contracts current	$	576	$	656	$	(321	)	$	(362	)
Commodity contracts long-term	428		536		(121		)	(133		)
Total Derivatives Not Designated as Cash Flow Hedges	$	1,004	$	1,192	$	(442	)	$	(495	)

GenOn Mid-Atlantic



	Fair Value
	Derivative Assets				Derivative Liabilities
	March 31, 2013		December 31, 2012		March 31, 2013			December 31, 2012
	(In millions)
Derivatives Not Designated as Cash Flow Hedges:
Commodity contracts current	$	339	$	394	$	(85	)	$	(100	)
Commodity contracts long-term	355		455		(48		)	(55		)
Total Derivatives Not Designated as Cash Flow Hedges	$	694	$	849	$	(133	)	$	(155	)

The Registrants have elected to present derivative assets and liabilities on the balance sheet on a trade-by-trade basis and does not offset amounts at the counterparty master agreement level. In addition, collateral received or paid on the Registrants' derivative assets or liabilities are recorded on a separate line item on the balance sheet. The following tables summarize the offsetting of derivatives by counterparty master agreement level and collateral received or paid:

GenOn



	Gross Amounts Not Offset in the Statement of Financial Position
Description	Gross Amounts of Recognized Assets / Liabilities			Derivative Instruments			Cash Collateral (Held) / Posted			Net Amount
	(In millions)
March 31, 2013
Commodity contracts:
Derivative assets	$	884		$	(264	)	$	(184	)	$	436
Derivative assets - affiliate	26			(26		)	—			—
Derivative liabilities	(306		)	264			—			(42		)
Derivative liabilities - affiliate	(29		)	26			—			(3		)
Total commodity contracts	575			—			(184		)	391
Interest rate contracts:
Derivative liabilities	(47		)	—			—			(47		)
Total derivative instruments	$	528		$	—		$	(184	)	$	344

GenOn Americas Generation



	Gross Amounts Not Offset in the Statement of Financial Position
Description	Gross Amounts of Recognized Assets / Liabilities			Derivative Instruments			Cash Collateral (Held) / Posted			Net Amount
March 31, 2013	(In millions)
Commodity contracts:
Derivative assets	$	883		$	(263	)	$	(184	)	$	436
Derivative assets - affiliate	121			(121		)	—			—
Derivative liabilities	(302		)	263			—			(39		)
Derivative liabilities - affiliate	(140		)	121			—			(19		)
Total derivative instruments	$	562		$	—		$	(184	)	$	378

GenOn Mid-Atlantic

Gross Amounts Not Offset in the Statement of Financial Position

Description