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                                                                    EXHIBIT 99.1

                        DESCRIPTION OF RELIANT RESOURCES
                           RISK MANAGEMENT STRUCTURE

RISK MANAGEMENT STRUCTURE

      Reliant Resources, Inc. (we) has a risk control framework to limit,
monitor, measure and manage the risk in our existing portfolio of assets and
contracts and to risk-measure and authorize new transactions. These risks
include market, credit, liquidity and operational exposures. We believe that we
have effective procedures for evaluating and managing these risks to which we
are exposed. Key risk control activities include limits on trading and marketing
exposures and products, credit review and approval, credit and performance risk
measurement and monitoring, validation of transactions, portfolio valuation and
daily portfolio reporting including mark-to-market valuation, VAR and other risk
measurement metrics.

      We seek to monitor and control our risk exposures through a variety of
separate but complementary processes and committees which involve business unit
management, senior management and our Board of Directors, as detailed below.

      Board of Directors. Our Board of Directors affirms the overall strategy
and approves overall risk limits for commodity trading and marketing.

      Audit Committee. The Audit Committee of our Board of Directors assesses
the adequacy of the risk control organization and policies. The Audit Committee
of our Board of Directors meets at least three times a year to:

      -     approve the risk control organization structure,

      -     approve the corporate-wide risk control policy,

      -     monitor compliance with trading limits,

      -     review significant risk control issues, and

      -     recommend to our Board of Directors corporate-wide commodity risk
            limit parameters for trading and marketing activities.

      Executive Management. Our executive management appoints the Risk Oversight
Committee members, reviews and approves recommendations of the Risk Oversight
Committee prior to presentations to the Audit Committee of our Board of
Directors, and approves and monitors broad risk limit allocations to the
business segments and product types. Our executive management receives daily
position reports of our trading and marketing activities.

      Risk Oversight Committee. The Risk Oversight Committee, which is comprised
of corporate and business segment officers, oversees all of our trading,
marketing and hedging activities and other activities involving market risks.
These activities expose us to commodity price, credit, foreign currency and
interest rate risks. The Risk Oversight Committee meets at least monthly. For
trading, marketing and hedging activities, the Risk Oversight Committee:

      -     monitors compliance of our trading units,

      -     reviews daily position reports for trading and marketing activities,

      -     recommends adjustments to trading limits, products and policies to
            the Audit Committee of our Board of Directors,

      -     approves business segment's detailed policies and procedures,

      -     allocates Board of Director-approved trading and marketing risk
            capital limits, including VAR limits,

      -     approves new trading, marketing and hedging products and
            commodities,


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      -     approves entrance into new trading markets,

      -     monitors processes and information systems related to the management
            of our risk to market exposures, and

      -     places guidelines and limits around hedging activities.

      Commitment Review Committee. The Commitment Review Committee, which is
comprised of corporate officers, establishes corporate-wide standards for the
evaluation of capital projects and other significant commitments, evaluates
proposed capital projects and other significant commitments, and makes
recommendations to the chief executive officer. The Commitment Review Committee
is scheduled to meet on an as needed basis.

      Corporate Risk Control Organization. Our Corporate Risk Control
Organization is headed by a chief risk control officer who has corporate-wide
oversight for maintaining consistent application of corporate risk policies
within individual business segments. The Corporate Risk Control Organization:

      -     recommends the corporate-wide risk management policies and
            procedures which are approved by the Audit Committee of our Board of
            Directors;

      -     provides updates of trading and marketing activities to the Audit
            Committee of our Board of Directors on a regular basis;

      -     provides oversight of our ongoing development and implementation of
            operational risk policies, framework and methodologies;

      -     monitors effectiveness of the corporate-wide risk management
            policies, procedures and risk limits;

      -     evaluates the business segment risk control organizations, including
            information systems and reporting;

      -     evaluates all significant valuation methodologies, assumptions and
            models;

      -     evaluates allocation of risk limits within our business segments;

      -     reviews daily position reports of trading and marketing activities;
            and

      -     reviews inherent risks in proposed transactions.

      Business Segment Risk Control Organizations. Each of our business segments
has a Business Segment Risk Control Organization, which is headed by a risk
control officer who reports to the Corporate Risk Control Organization and the
business segment's executive management outside of the commercial trading
organization. The Business Segment Risk Control Organization:

      -     develops and maintains the risk control infrastructure, including
            policies, processes, personnel and information and valuation
            systems, to analyze and report the daily risk positions to Executive
            Management, the Risk Oversight Committee, the Corporate Risk Control
            Organization, the Internal Audit Department and the Controllers
            Organization;

      -     reviews credit exposures for customers and counterparties;

      -     reviews all significant valuation methodologies, assumptions and
            models used for risk measurement, mark-to-market valuations and
            structured transaction evaluations;

      -     ensures risk systems can adequately measure positions and related
            risk exposures for new products and transactions;


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      -     evaluates new transactions for compliance with risk policies and
            limits; and

      -     evaluates effectiveness of hedges.

      The management of each of the business segments is responsible for the
management of its risks and for maintaining a conducive environment for
effective risk control activities as part of its overall responsibility for the
proper management of the business unit. Commercial management has in-depth
knowledge of the primary sources of risk in their individual markets and the
instruments available to hedge our exposures. Commercial management allocates
risk limits that have been allocated to specific markets and to individual
traders, within the limits imposed by the Risk Oversight Committee. Risk limits
are monitored on a daily basis. Risk limit violations, including VAR, are
reported to the appropriate level of management in the business segment and
corporate organizations, depending on the type and severity of the violations.

      Segregation of duties and management oversight are fundamental elements of
our risk management process. There are segregation of duties among the trading
and marketing functions; transaction validation and documentation; risk
measurement and reporting; settlements function; accounting and financial
reporting functions; and treasury function. These risk management processes and
related controls are reviewed by our corporate Internal Audit Department on a
regular basis. When appropriate, external advisors or consultants with relevant
experience will assist the Internal Audit Department with their reviews.

      The effectiveness of our policies and procedures for managing risk
exposure can never be completely estimated or fully assured. For example, we
could experience losses, which could have a material adverse effect on our
financial condition, results of operations or cash flows, from unexpectedly
large or rapid movements or disruptions in the energy markets, from
regulatory-driven market rules changes and bankruptcy of customers or
counterparties.



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