exv10w68






Exhibit
10.68B








	

RRI Long-Term Incentive Plan

2004 - 2006 Cycle

Supplement to Define RRI Long-Term
Performance Metrics

21145
©2004 Reliant Resources Proprietary and Confidential Information








 








	

RRI Long-Term Incentive Plan (2004-2006)

Deliver Superior Customer Value

Defend Houston mass market customer base

Residential market share (customers)

Number of ESIID's flowing power as a % of the total market ESIID's available.

Small C&I market share (volume)

Annualized volume as a % of the total market volume available.

Retain/grow rest of ERCOT customer base

Residential # of customers

Total number of new customer enrollments during each quarter excludes TX Star.

Residential cost to acquire ($/customer)

Total acquisition marketing dollars (including sign up incentives) divided by total # of

customers acquired.

Residential monthly attrition

The % of flowing ESIID's lost on a monthly basis.

Total ERCOT market share

Number of ESIID's flowing power as a % of the total market ESIID's available.

Small C&I total signed annualized volume (mWh)

Total amount of new load enrollments during each quarter.

Large C&I market share (volume) - ERCOT only

Annualized volume as a % of the total market volume available.

Large C&I gross margin ($/mWh) - ERCOT

Weighted average # of deals signed during the quarter.

Large C&I gross margin ($/mWh) - PJM

Weighted average # of deals signed during the quarter.

Build brand value and customer reputation

Customer satisfaction (Houston)

A high level satisfaction metric.  Respondents indicating that they are very satisfied or

somewhat satisfied with Reliant Energy as their provider.

Customer satisfaction (non Houston)

Customer service satisfaction

Brand awareness - TXU

Respondents indicating some degree of familiarity with Reliant Energy to aided and

unaided survey questions.

Brand awareness - CPL

Respondents indicating some degree of familiarity with Reliant Energy to aided and

unaided survey questions.

Brand consideration - TXU

Respondents indicating they would consider Reliant over other major competitors.

Brand consideration - CPL

Respondents indicating they would consider Reliant over other major competitors.

Align generation assets to direct customers

Total mWh hedged through non-OTC transactions %

Originated transaction mWh sold over total portfolio mWhs generated.

Gross margin ($/mWh)

Weighted average # of deals signed during the quarter.  Metric was not maintained in 2003.

Operate assets effectively

Plant availability %

One less (planned and unplanned outage hours over 8,760 hours).

Equivalent forced outage rate % (EFOR %)

Unplanned outage hours over (service hours plus unplanned outage hours).

Plant O&M plus maintenance and environmental CAPEX

Average hedge duration

Total mWh hedged over average monthly portfolio production.

©2004 Reliant Resources Proprietary and Confidential Information








 








	




RRI Long-Term Incentive Plan (2004-2006)

Achieve Financial Flexibility

Strong balance sheet

Adjusted net debt / EBITDA

Adjusted net debt is debt less cash and cash

equivalent, plus off balance sheet debt.

Implied corporate rating

(Moodys/S&P/Fitch)

Strong operating profile

EPS - adjusted ($/diluted share)

Adjusted for special items as defined for SEC

reporting purposes.

Total operating costs ($MM)

O&M, bad debt, selling & marketing, G&A, taxes

other than income.

Operating cash flows, net of

     capital expenditures ($MM)

Outstanding reputation

P/E and EV/Adjusted EBITDA

Bond spread

Analyst coverage and rating

Rating scale: 1 = strong; 3 = hold; 5 = strong sell

# of top 50 institutions holding RRI stock

©2004 Reliant Resources Proprietary and Confidential Information








 








	

RRI Long-Term Incentive Plan (2004-2006)

Build a Great Company to Work For



Living the Reliant values

How we act

How we work

How we create value



Outstanding organizational
performance

Organizational alignment with
vision and strategic goals

Employee motivation



High company pride

Individual pride

Institutional pride

Online annual employee survey with results
and analysis performed by outside vendor.

Select vendor by end of Q2 2004, initiate
survey by end of Q3 2004.

Survey designed to measure:

Living the Reliant values

Achievement of outstanding organization
performance

Employee pride

Employee view of company reputation

Metrics needed for compliance with
annual survey required by the Office of
Ethics and Compliance charter
(separately reported results)

Establish baseline metrics based on survey
responses from 2004.  Metrics include internal
benchmark, and comparison to representative
normative external data from vendor database.

©2004 Reliant Resources Proprietary and Confidential Information








 








	

RRI Long-Term Incentive Plan (2004-2006)

Build a Great Company to Work For (Continue)



Providing Safe Work Place

Safety performance index







Total case incident rate (TCIR)





Environmental performance index










weighting of various safety goals set individually by the
East and West regions. Scoring is based on a "threshold"
(50 points), "goal" (100 points) and "maximum" (150
points), with a proration between the "threshold" and
"maximum" points based on actual performance



rate reflecting total number of recordable non-fatal
injuries and illnesses per 100 full-time workers that a site
has experienced in a given time frame



measure of environmental compliance with scoring
based on a "threshold" (50 points), "goal" (100 points)
and "maximum" (150 points). Points are deducted from
the "maximum" score for items such as wastewater
permit violations, air permit violations, uncollected
environmental data, oil or chemical spills, poor
housekeeping or agency enforcement activity

©2004 Reliant Resources Proprietary and Confidential Information








 








	

RRI Long-Term Incentive Plan (2004-2006)

Build a Great Company to Work For (Continue)



Company reputation

Community

Investors:

GMI (Governance Metrics
International)

ISS (Industrial Shareholder
Services)





Regulators/Legislators



Compliance

Legal



Regulatory

Considering incorporation into ongoing marketing survey.





GMI scale: 1.0 = lowest; 10 = highest





Index ranking represents the % of companies in the Russell 3,000
Index that RRI outperformed, updated annually.

Industry ranking represents the % of the companies in the utilities
group that RRI outperformed, updated annually.



Number of formal formal complaints filed; stated goals for
regulatory milestones (I.e. claw back; refund cases, etc.; success
in intervening in legislative efforts.



Based on complaints filed by or other actions taken by regulators,
permit violations and agency findings of noncompliance.



Statistical data on the number of requests, timelines on meeting
such requests and the number of documents provided.

©2004 Reliant Resources Proprietary and Confidential Information