Report
of Independent Accountants To
the Management of
NRG South Central Generating LLC: In
our opinion, the accompanying carve-out statement of net assets and the related
carve-out statement of certain revenue and expenses present fairly, in all
material respects, the net assets of the Cajun Electric (Cajun Facilities)
business to be acquired by Louisiana Generating LLC at December 31, 1999 and
1998, and certain revenue and expenses of its operations for each of the three
years in the period ended December 31, 1999 in conformity with accounting
principles generally accepted in the United States. These financial statements
are the responsibility of NRG South Central Generating LLC's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. Our audit included
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above. As
described in Note 3, the accompanying carve-out financial statements were
prepared to present the net assets of the Cajun Electric (Cajun Facilities)
business to be acquired by Louisiana Generating LLC and the certain revenue and
expenses related to such business and are not intended to be a complete
presentation of the assets, liabilities, revenue, expenses and cash flows of
Cajun Electric Power Cooperative, Inc. PricewaterhouseCoopers
LLP
Minneapolis, Minnesota
March 7, 2000 CAJUN
ELECTRIC (CAJUN FACILITIES)

CARVE-OUT
STATEMENT OF NET ASSETS



December 31,1999
  1998(in thousands)AssetsUtility plantElectric plant in service
  $1,198,928
  $1,191,375Less: Accumulated depreciation and
  amortization
  632,899
  594,539566,029
  596,836Construction work in progress
  3,996
  1,455Electric plant held for future use
  9,904
  9,904579,929
  608,195Other property and investmentsNon-utility property
  670
  670Decommissioning reserve fund
  3,518
  3,2254,188
  3,895Current assetsAccounts receivable  electric
  customersMembers
  25,944
  23,504Nonmembers
  6,220
  4,725Accounts receivable  other
  1,678
  2,043Fuel and supplies inventories
  34,234
  40,578Prepaids
  1,600
  1,31669,676
  72,166Total assets
  $653,793
  $684,256LiabilitiesCurrent liabilitiesAccounts payable
  $     4,806
  $     2,114Taxes other than income tax
  150
  215Other accrued expenses
  8,966
  13,90413,922
  16,233Decommissioning
  3,518
  3,225Total liabilities
  17,440
  19,458Net assets
  $636,353
  $664,798

See
accompanying notes to financial statements.

CAJUN
ELECTRIC (CAJUN FACILITIES)

CARVE-OUT
STATEMENT OF CERTAIN REVENUE AND EXPENSES



Year Ended December 31,1999
  1998
  1997(in thousands)Operating revenueSales of electric energyMembers
  $292,090
  $289,856
  $280,109Nonmembers
  75,258
  66,341
  65,715Other
  1,214
  1,379
  958368,562
  357,576
  346,782Operating expensesPower productionFuel
  165,597
  154,964
  154,257Operations and maintenance
  36,673
  37,405
  37,236Purchased power
  10,951
  11,645
  12,681Other power supply expenses
  577
  592
  578Transmission
  30,246
  29,882
  41,687Administrative and general
  9,711
  9,122
  9,437Depreciation and amortization
  37,930
  38,117
  39,537Taxes, other than income
  7,093
  7,629
  8,575298,778
  289,356
  303,988Operating income
  69,784
  68,220
  42,794Other income and expensesInterest, rents and leases
  463
  456
  695Other income
  545
  787
  730Loss on asset dispositions
  (2,878)
  (5,900)
  (481)(1,870)
  (4,657)
  944Revenues in excess of expenses
  $67,914
  $63,563
  $43,738

See
accompanying notes to financial statements.

CAJUN
ELECTRIC (CAJUN FACILITIES)

NOTES
TO CARVE-OUT FINANCIAL STATEMENTS

1. Business Description

The accompanying "carve-out"
financial statements present the net assets and certain revenue and expenses of
the non-nuclear electric power generating business (herein named "Cajun
Electric (Cajun Facilities)") of Cajun Electric Power Cooperative, Inc.
(the "Cooperative"). The Cooperative is a rural electric generation
and transmission cooperative wholly owned by 11 distribution cooperatives (the
"Members"). Pursuant to a competitive bidding process following the
Cooperative's Chapter 11 bankruptcy proceeding, Louisiana Generating LLC has
agreed to acquire the Cooperative's non-nuclear electric power generating
facilities (see Notes 2 and 3). Louisiana Generating LLC is a wholly owned
subsidiary of NRG South Central Generating LLC, which in turn is an indirect
wholly owned subsidiary of NRG Energy, Inc. NRG Energy, Inc. is a wholly owned
subsidiary of Northern States Power Company.

2. Bankruptcy Proceeding

Bankruptcy Filing

On December 21, 1994 (the
"Petition Date"), the Cooperative filed a Petition for Reorganization
under Chapter 11 of the United States Bankruptcy Code and began operating as
debtor-in-possession under the supervision of the United States Bankruptcy
Court for the Middle District of Louisiana (the "Bankruptcy Court").
In August 1995, the United States District Court for the Middle District of
Louisiana (the "Court") ordered the appointment of a trustee (the
"Trustee") to oversee the Cooperative's operations for the benefit of
claim holders and interest holders. All debts of the Cooperative as of the
Petition Date were stayed by the bankruptcy petition and subject to compromise
pursuant to such proceedings. The Cooperative operated its business and managed
its assets in the ordinary course as debtor-in-possession, and was required to
obtain Trustee approval for transactions outside the ordinary course of
business.

Plan of Reorganization and
Acquisition

On January 22, 1996, the Court
approved the Trustee's motion to establish procedures for submission of
proposals to purchase the Cooperative's assets. The Trustee ultimately selected
a bid by NRG Energy, Inc. to create a new limited liability company (Louisiana
Generating LLC) to purchase certain non-nuclear assets of the Cooperative. In
September 1999, the Bankruptcy Court approved the Plan of Reorganization (the
"Plan"), which incorporates the Acquisition Agreement (see Note 3).
The purchase price of the assets to be acquired by Louisiana Generating LLC is
$1,026 million, subject to adjustment for interest rate fluctuations beyond
specific levels. In addition, Louisiana Generating LLC has agreed to reimburse
the Members for up $14 million of the expenses that the Members incurred in
connection with the bankruptcy of the Cooperative. The transaction is scheduled
to close on March 31, 2000, subject to various conditions.

The
assets to be acquired by Louisiana Generating LLC include all non-nuclear
assets owned by the Cooperative, other than enumerated excluded assets defined
in the Acquisition Agreement. Generally, the assets to be acquired consist of:


Big Cajun I and Big Cajun II, Units 1 and 2;


the Cooperative's 58% interest in Big Cajun II, Unit 3;


an energy control center and headquarters building;


approximately 4,200 acres of agricultural land near Coushatta, Louisiana;


a 540 MW General Electric steam turbine generator;


a 17.5 mile gas pipeline system;


848 steel rotary dump railcars;


approximately 38,000 annual sulfur dioxide allowances;


all coal inventory, oil in storage, materials and supplies;


the Big Cajun II solid waste closure investment fund; and


certain transmission assets and all other substations.

Louisiana Generating LLC will not
assume any liabilities of the Cooperative, other than (i) obligations under any
of the contracts that Louisiana Generating LLC assumes in connection with the
acquisition and which arise on or after the closing date of the acquisition,
(ii) contingent liabilities related to certain tax benefit transfer agreements
to which the Cooperative was a party and (iii) environmental liabilities that
may exist related to the transferred property, including the obligation to
rehabilitate the Big Cajun II ash and wastewater impoundment areas (see Note
8).

3. Basis of Presentation

The accompanying carve-out financial
statements have been presented in accordance with generally accepted accounting
principles and were derived from the historical accounting records of the
Cooperative. The statements are intended to present the net assets and certain
revenue and expenses of the Cajun Electric (Cajun Facilities) business to be
acquired by Louisiana Generating LLC pursuant to the Fifth Amended and Restated
Asset Purchase and Reorganization Agreement among Louisiana Generating LLC,
Ralph R. Mabey, as Chapter 11 Trustee of Cajun Electric Power Cooperative,
Inc., and NRG Energy, Inc. (as to Sections 7.4, 9.13 and 9.14 of the agreement
only) (the "Acquisition Agreement") and the Cooperative's bankruptcy
proceedings (see Note 2). Louisiana Generating LLC has agreed to purchase
substantially all of the Cooperative's non-nuclear electric power generating
facilities and related transmission assets, inventory and other real and
personal property. Louisiana Generating LLC will not acquire the "Excluded
Assets", as defined in the Acquisition Agreement, which generally consist
of the Cooperative's cash, receivables and investments, nor will it assume any
liabilities of the Cooperative, except as described in Note 2. Accordingly, the
carve-out financial statements do not include all assets, liabilities, revenue
and costs and expenses of the Cooperative as of and for the periods presented.

Generally,
the statements of net assets exclude the Cooperative's cash, investments
(except decommissioning trust fund investments), employee post-retirement
benefit obligation, liabilities subject to compromise in the bankruptcy
proceeding, income taxes and equity and margin accounts. The statements of
certain revenue and expenses exclude the Cooperative's investment earnings
(except earnings from the decommissioning trust fund investments), bankruptcy
reorganization costs, income taxes, and revenue, expenses and losses related to
the ownership, operation and disposal of its 30% interest in the River Bend
Nuclear Station in 1997. All long-term debt of the Cooperative is subject to
compromise in the bankruptcy proceeding and during the three years ended December
31, 1999 the Cooperative did not record any interest expense thereon in
accordance with American Institute of Certified Public Accountants Statement of
Position No. 90-7, "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code." Therefore, the
carve-out financial statements do not include any long-term debt of the
Cooperative or interest expense thereon.

Although Louisiana Generating LLC will
not purchase any receivables or assume any liabilities of the Cooperative,
except as described in Note 2, the statements of net assets include
receivables, accounts payable and accrued expenses in order to present the
historical net assets of the business operation that will be acquired.

The carve-out financial statements do
not include a statement of cash flows due to exclusion of cash from the
statements of net assets. However, see Note 4 for a summary of cash provided by
and used in Cajun Electric's (Cajun Facilities) operating and investing
activities.

4. Summary of Significant
Accounting Policies

Use of Estimates

The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported
in the financial statements and accompanying notes. Actual results could differ
from those estimates.

Significant Customers and
Concentrations of Credit Risk

During 1999 sales to two customers
totaled 16.7% and 18.9%, respectively, of total operating revenue (1998: 16.7%
and 19.2%, respectively; 1997: 16.2% and 19.0%, respectively). No other
customer accounted for more than 10% of total operating revenue during the
years ended December 31, 1999, 1998 and 1997.

Electric Plant in Service and
Construction Work in Progress

Electric plant in service and
construction work in progress are stated on the basis of cost. Depreciation is
computed using the straight-line method over the expected useful lives of the
related component assets. The net book value of units of property replaced or
retired, including costs of removal net of any salvage value, is charged to
operations.

Fuel and Supplies Inventories

Fuel and supplies inventories are
stated on the basis of cost utilizing the weighted-average cost method of
inventory valuation.

Fair Values of Financial Instruments

Investments held in the
decommissioning reserve fund are comprised of U.S. government debt securities
carried at amortized cost, which approximates fair value.

Summary of Cash Flows

Summarized cash flows from operating
and investing activities were as follows (in thousands):



1999
  1998
  1997Cash flows from operating activities:Revenues in excess of expenses
  $67,914
  $63,563
  $43,738Adjustments to reconcile net margins to
  net cash:Depreciation and amortization
  37,930
  38,117
  39,537Asset dispositions
  2,878
  5,900
  481Changes in accounts receivable
  (4,939)
  5,988
  (2,838)Changes in fuel and prepayments
  6,060
  (8,184)
  5,315Changes in accounts payable and accrued expenses
  (2,313)
  (4,333)
  (254)Net cash provided by operating activities
  107,530
  101,051
  85,979Cash flows from (for) investing activities:Capital expenditures
  (11,631)
  (9,999)
  (7,074)$95,899
  $91,052
  $78,905

5. Utility Plant

Electric plant in service is comprised
of the following generating facilities:



Capable
  Louisiana GeneratingGeneratingGenerating Unit
  Capacity
  Percentage
  Megawatts(Unaudited)
  
  (Unaudited)Big Cajun II, Unit 1
  575
  100%
  575Big Cajun II, Unit 2
  575
  100%
  575Big Cajun II, Unit 3
  575
  58%
  334Big Cajun I, Unit 1
  110
  100%
  110Big Cajun I, Unit 2
  110
  100%
  1101,945
  
  1,704

Big Cajun II, Unit 3 is jointly owned
by the Cooperative (58%) and Gulf States Utilities (42%). The unit is operated
by the Cooperative pursuant to a Joint Ownership Participation and Operating
Agreement, which governs the rights and obligations to the ownership of the
facility. Each owner is entitled to their ownership percentage of the hourly
net electrical output of the unit. All fixed costs of operating the unit are
shared in proportion to the respective ownership interests and all variable
costs are borne in proportion to the energy delivered to either co-owner. The
statements of certain revenue and expenses include the Cooperative's share of
all fixed and variable costs of operating the unit. The Cooperative's 58% share
of the original cost included in electric plant in service at December 31, 1999
was $291.1 million ($290.9 million at December 31, 1998). The corresponding
accumulated depreciation and amortization was $151.1 million ($141.9 million at
December 31, 1998).

The Cooperative will assign the Joint
Ownership Participation and Operating Agreement to Louisiana Generating LLC
upon closing of the acquisition.

Electric plant in service balances at
December 31 consisted of the following (in thousands):

1999
  1998Production:Coal
  $1,048,012
  $1,041,741Gas
  35,368
  34,749Transmission
  94,393
  94,320General
  21,155
  20,565$1,198,928
  $1,191,375

Construction work in progress consists
of improvements and additions to existing plants. The estimated cost to
complete these projects at December 31, 1999 was approximately $10.8 million.

Electric plant held for future use of
approximately $9.9 million at December 31, 1999 and 1998 consists primarily of
land, carried at its original cost of $9.5 million, related to an abandoned
lignite project that has been retained as a possible site for a future
generating facility.

The net change in accumulated
depreciation and amortization for the years ended December 31 was (in
thousands):



1999
  1998Charged to operating expenses
  $37,930
  $38,117Charged to fuel inventories and other assets
  1,192
  1,197$39,122
  $39,314Less: Disposals and other adjustments
  762
  1,435$38,360
  $37,879

Substantially all of the assets
included in the carve-out statements of net assets are pledged as collateral to
the Cooperative's long-term debt payable to the Rural Utilities Service. In
addition, certain office facilities have been separately pledged as collateral
to the Cooperative's industrial revenue bonds. These obligations are included
in the Cooperative's pre-petition liabilities subject to compromise, which have
been excluded from the carve-out statement of net assets. Upon execution of the
Plan and closing of the acquisition, Louisiana Generating LLC will acquire the
assets free of such encumbrances.

6. Employee Benefit Plans

All of the Cooperative's employees
participate in the National Rural Electric Cooperatives Association (NRECA)
Retirement and Security Program once they have met minimum service
requirements. The Cooperative makes annual contributions to the plan equal to
the amounts accrued for pension expense. In this master multiple-employer
defined benefit plan, which is available to all member cooperatives of the
NRECA, the accumulated benefits and plan assets are not determined or allocated
separately by individual employer. The Cooperative's contributions to the plan
and amounts included in the accompanying statements of certain revenue and
expenses of Cajun Electric (Cajun Facilities) totaled approximately $1.7
million, $1.7 million and $1.3 million in 1999, 1998 and 1997, respectively.

The Cooperative also maintains a
defined contribution pension plan, which constitutes a cash or deferred
arrangement under section 401(k) of the Internal Revenue Code of 1986 (as
amended). Once minimum service requirements are met, all of the employees of
the Cooperative are eligible to participate in the plan. Under the terms of the
plan, which is administered by the NRECA, the Cooperative matches 50% of
employee contributions up to a maximum of 4% of each participating employee's
base compensation. The Cooperative's contributions to the plan and amounts
included in the accompanying statement of certain revenue and expenses of Cajun
Electric (Cajun Facilities) totaled approximately $0.4 million, $0.3 million
and $0.4 million in 1999, 1998 and 1997, respectively.

The
Cooperative also makes medical benefits available to all retirees. For those
nonbargaining employees who retire at age 62 or thereafter and who have at
least 10 years of service, the Cooperative will pay a portion of the cost. All
other retirees are required to pay the full cost of benefits. Net periodic
postretirement benefit expense of approximately $0.8 million, $0.8 million and
$0.8 million in 1999, 1998 and 1997, respectively, is included in the
accompanying statement of certain revenue and expenses.

Upon the closing of the acquisition,
all of the Cooperative's employee benefit plans will be terminated, including
the defined benefit pension plan, the defined contribution (401(k)) pension
plan and the post-retirement healthcare plan and no liabilities related thereto
will be assumed by Louisiana Generating LLC.

7. Rates and Regulation

The electric rates charged by the
Cooperative to its Members have been subject to the jurisdiction of the
Louisiana Public Service Commission ("LPSC"). For the three years
ended December 31, 1999, the Cooperative provided capacity and energy to its 11
Members pursuant to "all requirements" power supply agreements.
Generally, the all requirements power supply agreements obligated the
Cooperative to supply and required the Members to purchase all of the energy
and capacity required by the Members for service to its retail customers, with
limited exceptions. The Cooperative also provided capacity and energy to three
other customers under long-term power agreements and sold excess capacity and
energy on a merchant basis to other power suppliers and marketers.

Pursuant to the Acquisition Agreement
and the Plan, all 11 Members have elected to terminate, effective on the
closing date, their existing all requirements supply agreements with the
Cooperative. Each of the 11 Members has selected one of three alternative
supply options offered by Louisiana Generating LLC, to be effective immediately
after the acquisition closes. Seven of the Members have agreed to purchase
power from Louisiana Generating LLC under long-term "all
requirements" power supply agreements with terms of 25 years commencing on
the acquisition closing. After the initial term, each agreement will continue
on a year to year basis unless either party gives the other five years' notice
of its intent to terminate the agreement. The remaining four Members have
agreed to purchase power from Louisiana Generating LLC under short-term
four-year transition power supply agreements. A Member may terminate a
short-term agreement upon two years advance notice.

The underlying terms and provisions of
the long- and short-term power supply agreements offered by Louisiana
Generating LLC and selected by the Members have been approved by the LPSC,
which has regulatory authority over the Members. Although the form of the
agreements have been approved by the LPSC, each Member must obtain approval from
the LPSC of the supply alternative selected. Such approval has been obtained by
three of the Members that have elected the long-term agreement. The remaining
eight Members are expected to request and receive LPSC approval of their
decisions prior to the closing of the acquisition.

Electric Utility Deregulation

On December 17, 1997, the LPSC
accepted a staff report finding that deregulation, or retail wheeling, may be
in the public interest contingent upon numerous issues being individually and
adequately researched. During January 1998, the LPSC investigated the issues of
tax implications; unbundling; market structure; market power, reliability,
Independent System Operators; stranded costs and benefits; consumer protection,
public policy programs and environmental issues; and future regulatory
structure and affiliate relationships. In February of 1999, LPSC staff issued a
report finding that restructuring is not in the public interest and
recommending that the LPSC defer making a final determination. At its March
1999 Open Session, the LPSC adopted a new procedural schedule to continue its
investigation of competitive implications through August of 2000. The effect of
deregulation upon Cajun Electric (Cajun Facilities) cannot be determined at
this time.

8. Other Commitments and
Contingencies

Coal Supply and Transportation
Agreements

Purchases under the terms of contracts
for the acquisition and related transportation of coal during 1999, 1998 and
1997 were approximately $129 million, $136 million and $127 million,
respectively. Louisiana Generating LLC will not assume any liabilities incurred
by the Cooperative prior to the closing of the acquisition related to the
existing coal supply and transportation agreements.

Louisiana Generating LLC has entered into
a five-year coal supply agreement under which Triton Coal Company will sell to
Louisiana Generating LLC sufficient quantities of coal to satisfy the full coal
requirements of the Cajun facilities.

Louisiana Generating LLC has entered
into a five-year coal transportation agreement with Burlington Northern and
Santa Fe Railway Company and American Commercial Terminal LLC which agreement
will be effective on the closing date of the acquisition. Pursuant to the
agreement, the railroad will transport the coal from the Triton mines in
Wyoming to St. Louis, Missouri, and American Commercial Terminal will transport
the coal down the Mississippi River from St. Louis to the Cajun facilities.

Decommissioning

The Cooperative is required by the
State of Louisiana Department of Environmental Quality ("DEQ") to
rehabilitate its Big Cajun II ash and wastewater impoundment areas upon removal
from service of the Big Cajun II facilities. On July 1, 1989, the Cooperative
established a guarantor trust (the "Solid Waste Disposal Trust Fund")
to accumulate the estimated funds necessary for such purpose. The Cooperative
deposited $1.06 million in the Solid Waste Disposal Trust Fund in 1989, and has
funded $116,000 annually thereafter, based upon the Cooperative's estimated future
rehabilitation cost (in 1989 dollars) of approximately $3.5 million and the
remaining estimated useful life of the Big Cajun II facilities. Cumulative
contributions to the Solid Waste Disposal Trust Fund and earnings on the
investments therein are accrued as a decommissioning liability. At December 31,
1999 the carrying value of the trust fund investments and the related accrued
decommissioning liability was approximately $3.5 million. The trust fund
investments are comprised of various debt securities of the United States and
are carried at amortized cost, which approximates their fair value.

The
Solid Waste Trust Fund is included in assets to be acquired by Louisiana
Generating LLC, which will also assume the obligation to rehabilitate the Big
Cajun II ash and wastewater impoundment areas.

Letters of Credit

The Cooperative has outstanding two
letters of credit in the aggregate amount of approximately $15 million as of
December 31, 1999 supporting potential indemnity payments related to certain
tax benefit transfer agreements to which the Cooperative was a party. The
letters of credit will be terminated upon the closing of the acquisition.
However, as of the closing date, Louisiana Generating LLC will assume the
contingent liability related to the potential indemnity payments.

Member Class Action Rate
Litigation

On September 20, 1989, a class action
petition was filed in the Tenth Judicial District State Court in Natchitoches
Parish, Louisiana, naming the Cooperative's Members as defendants. The plaintiffs
in this action seek a refund of all rate increases enacted by the Cooperative's
Members from 1978 until the respective Member voted to be subject to the
jurisdiction of the LPSC or was placed under the jurisdiction of the LPSC by
action of the State Supreme Court. On October 17, 1989, the case was moved to
the federal courts. On August 28, 1992, the District Court abstained from this
matter in favor of proceedings at the LPSC.

THE LPSC currently has an open docket
associated with this matter. On August 19, 1994, the LPSC adopted the standards
recommended by its Special Counsel. Based on those standards, Special Counsel
issued a report in August 1996 recommending that 23 of the 29 rate increases
implemented during the period of nonregulation be found presumptively not
unreasonable and be eliminated from further review. Special Counsel recommended
that the remaining six rate increases be further reviewed for reasonableness.
On November 18, 1997, the LPSC issued Order U-19943-B dismissing two more rate
increases, finding all but the four remaining increases presumptively not
unreasonable. On August 19, 1998, the LPSC dismissed two rate increases for
Southwest Louisiana Electric Membership Corporation leaving the final two rate
increases to be reviewed for reasonableness. A hearing was held on October 12,
1999, on the last two rate increases. The LPSC staff is expected to issue a
final report in time for the LPSC to vote on the matter at its March 2000 Open
Session. The timing or outcome of this matter is uncertain and no provision for
any liability that may result has been made in the financial statements.
However, each Member has entered into a stipulation with the Trustee which
releases the Bankruptcy Estate from claims by the Members that might arise as a
result of any refunds which the LPSC may order. Further, Louisiana Generating
LLC will not assume any liability that may result from the outcome of this
matter.