<PAGE>   1

                                                                    EXHIBIT 99.1

                               DUNKIRK POWER LLC

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                              PAGE(S)
                                                              -------
<S>                                                           <C>
Report of Independent Accountants...........................     2
Financial Statements:
  Balance Sheet at December 31, 2000 and 1999...............     3
  Statement of Operations for the year ended December 31,
     2000 and the period from
     June 11, 1999 (inception) to December 31, 1999.........     4
  Statement of Cash Flows for the year ended December 31,
     2000 and the period from
     June 11, 1999 (inception) to December 31, 1999.........     5
  Statement of Member's Equity for the year ended December
     31, 2000 and the period from June 11, 1999 (inception)
     to December 31, 1999...................................     6
Notes to Financial Statements...............................     7
</TABLE>

                                        1
<PAGE>   2

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Management Committee of
Dunkirk Power LLC:

     In our opinion, the accompanying balance sheet and the related statement of
operations, of member's equity and of cash flows present fairly, in all material
respects, the financial position of Dunkirk Power LLC at December 31, 2000 and
1999, and the results of its operations and its cash flows for the year ended
December 31, 2000 and the period from June 11, 1999 (inception) through December
31, 1999 in conformity with accounting principles generally accepted in the
United States of America. These financial statements are the responsibility of
the Company'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 of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes 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 our opinion.

/S/ PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP
Minneapolis, MN
March 2, 2001

                                        2
<PAGE>   3

                               DUNKIRK POWER LLC

                                 BALANCE SHEET
                         AT DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                  2000           1999
                                                                  ----           ----
                                                                (THOUSANDS OF DOLLARS)
<S>                                                             <C>            <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................    $      2       $      2
  Accounts receivable, net of allowance for doubtful
     accounts of $940 and $0................................      13,892         13,804
  Accounts receivable, affiliates...........................      23,428             --
  Inventory.................................................       9,685          8,643
  Prepaid expenses..........................................       2,187          2,016
                                                                --------       --------
       Total current assets.................................      49,194         24,465
Property, plant and equipment, net..........................     184,515        183,365
Deferred financing costs, net of accumulated amortization of
  $51 and $698..............................................       1,447            557
                                                                --------       --------
       Total assets.........................................    $235,156       $208,387
                                                                ========       ========
LIABILITIES AND MEMBER'S EQUITY
Liabilities:
  Current liabilities:
     Accounts payable.......................................    $    795       $    946
     Current portion of long-term debt (intercompany note
      payable)..............................................      13,574             --
     Checks in excess of cash...............................         204            515
     Accounts payable-affiliates............................          --          6,370
     Accrued interest.......................................         380             --
     Accrued fuel and purchased power expense...............       3,723          2,394
     Accrued taxes..........................................          --            409
     Other current liabilities..............................       4,385          1,030
                                                                --------       --------
       Total current liabilities............................      23,061         11,664
     Long-term debt (intercompany note payable).............      91,806        124,118
                                                                --------       --------
       Total liabilities....................................     114,867        135,782
Member's equity.............................................     120,289         72,605
                                                                --------       --------
       Total liabilities and member's equity................    $235,156       $208,387
                                                                ========       ========
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                        3
<PAGE>   4

                               DUNKIRK POWER LLC

                            STATEMENT OF OPERATIONS
     FOR THE YEAR ENDED DECEMBER 31, 2000 AND THE PERIOD FROM JUNE 11, 1999
                        (INCEPTION) TO DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                                  2000          1999
                                                                  ----          ----
                                                                (THOUSANDS OF DOLLARS)
<S>                                                             <C>            <C>
Revenues....................................................    $135,370       $57,764
Operating costs.............................................      78,823        43,021
                                                                --------       -------
       Operating margin.....................................      56,547        14,743
Depreciation................................................       6,470         3,628
General and administrative expenses.........................       3,239         2,073
                                                                --------       -------
       Income from operations...............................      46,838         9,042
Other income, net...........................................        (592)           --
Interest expense............................................       9,779         5,604
                                                                --------       -------
Net income..................................................    $ 36,467       $ 3,438
                                                                ========       =======
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                        4
<PAGE>   5

                               DUNKIRK POWER LLC

                            STATEMENT OF CASH FLOWS
     FOR THE YEAR ENDED DECEMBER 31, 2000 AND THE PERIOD FROM JUNE 11, 1999
                        (INCEPTION) TO DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                                  2000            1999
                                                                  ----            ----
                                                                 (THOUSANDS OF DOLLARS)
<S>                                                             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income................................................    $  36,467       $   3,438
  Adjustments to reconcile net income to net cash provided
     from operating activities:
     Depreciation...........................................        6,470           3,628
     Amortization of deferred financing costs...............          655             698
     Changes in assets and liabilities:
       Accounts receivable..................................          (88)        (12,240)
       Accounts receivable, affiliates......................      (23,428)             --
       Inventories..........................................       (1,042)          2,086
       Prepaid expenses.....................................         (171)         (2,017)
       Accounts payable.....................................         (151)            946
       Accounts payable-affiliates..........................       (9,826)          6,345
       Accrued fuel and purchased power expense.............        1,329           2,394
       Accrued taxes........................................           --             409
       Accrued interest.....................................          380              --
       Other current liabilities............................        2,946           1,030
       Other assets and liabilities.........................          (47)             --
                                                                ---------       ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES...................       13,494           6,717
                                                                ---------       ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Business acquisition, net of liabilities assumed..........           --        (193,285)
  Capital expenditures......................................       (4,164)         (5,976)
                                                                ---------       ---------
NET CASH USED IN INVESTING ACTIVITIES.......................       (4,164)       (199,261)
                                                                ---------       ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on long term debt......................     (131,642)             --
  Proceeds from borrowings..................................      112,904         124,118
  Deferred financing costs..................................       (1,498)         (1,254)
  Contributions from member.................................       11,217          69,167
  Checks in excess of cash..................................         (311)            515
                                                                ---------       ---------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES.........       (9,330)        192,546
                                                                ---------       ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS...................           --               2
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............            2              --
                                                                ---------       ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD..................    $       2       $       2
                                                                =========       =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Interest paid (net of amount capitalized).................    $   8,744       $   5,195
                                                                =========       =========
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                        5
<PAGE>   6

                               DUNKIRK POWER LLC

                          STATEMENT OF MEMBER'S EQUITY
     FOR THE YEAR ENDED DECEMBER 31, 2000 AND THE PERIOD FROM JUNE 11, 1999
                        (INCEPTION) TO DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                                (THOUSANDS OF DOLLARS)
                                                                ----------------------
<S>                                                             <C>
Balance, June 11, 1999......................................           $     --
Contributions from member...................................             69,167
Net income..................................................              3,438
                                                                       --------
Balance, December 31, 1999..................................             72,605
Contributions from member...................................             11,217
Net income..................................................             36,467
                                                                       --------
Balance, December 31, 2000..................................           $120,289
                                                                       ========
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                        6
<PAGE>   7

                               DUNKIRK POWER LLC

                         NOTES TO FINANCIAL STATEMENTS

     Dunkirk Power LLC ("the Company"), a wholly-owned subsidiary of NRG
Northeast Generating LLC ("Northeast Gen"), owns and operates the approximately
600 Megawatt ("MW"), four unit, coal-fired base-load electric generating
facility located in Dunkirk, New York.

     Northeast Gen, a wholly-owned indirect subsidiary of NRG Energy, Inc.
("NRG"), owns electric power generation plants in the northeastern region of the
United States. Northeast Gen was formed for the purpose of financing, acquiring,
owning, operating and maintaining, through its subsidiaries and affiliates the
electric generating facilities owned by Arthur Kill Power LLC, Astoria Gas
Turbine Power LLC, Connecticut Jet Power LLC, Devon Power LLC, Dunkirk Power
LLC, Huntley Power LLC, Middletown Power LLC, Montville Power LLC, Norwalk
Harbor Power LLC, Oswego Harbor Power LLC and Somerset Power LLC.

     At December 31, 1999, Northeast Gen held a 99% interest in Arthur Kill
Power LLC, Astoria Gas Turbine Power LLC, Dunkirk Power LLC, Huntley Power LLC,
Oswego Harbor Power LLC and Somerset Power LLC. Northeast Generating Holding LLC
and NRG Eastern LLC each held a minority interest of 0.5% in Arthur Kill Power
LLC, Astoria Gas Turbine Power LLC, Dunkirk Power LLC, Huntley Power LLC, Oswego
Harbor Power LLC and Somerset Power LLC. Northeast Generating Holding LLC and
NRG Eastern LLC are wholly-owned subsidiaries of NRG Energy, Inc.

     NRG Connecticut Generating LLC, a wholly owned subsidiary of NRG, owned
100% of Connecticut Jet Power LLC, Devon Power LLC, Middletown Power LLC,
Montville Power LLC and Norwalk Harbor Power LLC.

     Effective January 1, 2000, the minority ownership interests held by
Northeast Generating Holding LLC and NRG Eastern LLC as well as the ownership
interests held by NRG Connecticut Generating LLC were transferred to Northeast
Gen. Since all assets and operations were under common ownership and control
since April 27, 1999 (inception of Northeast Gen), the Northeast Gen financial
statements have been presented on a combined basis without minority interest.

     Additional information regarding Northeast Gen and the Company can be found
in NRG's Form 10-K for the twelve months ended December 31, 2000.

1. BUSINESS DEVELOPMENTS

     In June 1999, the Huntley and Dunkirk facilities were acquired from Niagara
Mohawk Power Corporation ("NiMo") for approximately $355 million. The two
coal-fired facilities are located near Buffalo, New York, and have a combined
capacity of 1,360 MW. The Dunkirk facilities were acquired for approximately
$193.3 million and have a capacity of 600 MW.

     The acquisition was accounted for as the purchase of assets. The aggregate
purchase price was allocated among the assets acquired and liabilities assumed
in the following amounts based on an appraisal completed in March 2000:

<TABLE>
<CAPTION>
                                                                (IN THOUSANDS)
                                                                --------------
<S>                                                             <C>
Assets:
  Accounts receivable.......................................       $  1,565
  Inventory.................................................         10,728
  Property, plant and equipment.............................        181,017
                                                                   --------
     Total assets...........................................        193,310
Liabilities:
  Accounts payable-affiliates...............................             25
                                                                   --------
     Total liabilities......................................             25
                                                                   --------
Net assets acquired.........................................       $193,285
                                                                   ========
</TABLE>

                                        7
<PAGE>   8
                               DUNKIRK POWER LLC

                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES IN FINANCIAL STATEMENTS

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect reported amounts of
assets and liabilities at the date of the financial statements and reported
amounts of revenue and expenses during the reporting period. Actual results may
differ from those estimates.

     In recording transactions and balances resulting from business operations,
the Company uses estimates based on the best information available. Estimates
are used for such items as plant depreciable lives, uncollectible accounts and
actuarially determined benefit costs, among others. As better information
becomes available (or actual amounts are determinable), the recorded estimates
are revised. Consequently, operating results can be affected by revisions to
prior accounting estimates.

CASH AND CASH EQUIVALENTS

     The Company considers cash and cash equivalents to include cash and
short-term investments with original maturities of three months or less.

INVENTORY

     Inventory consists of spare parts, coal and fuel oil and is stated at the
lower of weighted average cost or market (Note 5).

PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment are stated at cost. Depreciation is computed
on a straight-line basis over the following estimated useful lives:

<TABLE>
<S>                                                             <C>
Facilities, machinery and equipment.........................    25 to 30 years
Office furnishings and equipment............................     3 to 10 years
</TABLE>

     At December 31, 2000 and 1999, property, plant and equipment consisted of
the following:

<TABLE>
<CAPTION>
                                                             2000           1999
                                                             ----           ----
                                                               (IN THOUSANDS)
<S>                                                        <C>            <C>
Land...................................................    $  1,879       $  1,879
Facilities, machinery and equipment....................     192,437        181,759
Construction in progress...............................         168          3,268
Office furnishings and equipment.......................         121             87
Accumulated depreciation...............................     (10,090)        (3,628)
                                                           --------       --------
Property, plant and equipment, net.....................    $184,515       $183,365
                                                           ========       ========
</TABLE>

DEFERRED FINANCING COSTS

     Deferred financing costs consist of legal and other costs incurred to
obtain debt financing. These costs are being amortized over the terms of the
related debt.

                                        8
<PAGE>   9
                               DUNKIRK POWER LLC

                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED

REVENUE RECOGNITION

     Revenues from the sale of electricity and steam are recorded based upon the
output delivered and capacity provided at rates as specified under contract
terms or prevailing market rates. Revenues and related costs under cost
reimbursable contract provisions are recorded as costs are incurred.

POWER MARKETING ACTIVITIES

     The Company has entered into a contract with a marketing affiliate for the
sale of energy, capacity and ancillary services produced, which enables the
affiliate to engage in forward sales and hedging transactions to manage the
Company's electricity price exposure. Net gains or losses on hedges by the
marketing affiliate, which are physically settled, are recognized in the same
manner as the hedged item. The Company receives the net transaction price on all
contracts that are physically settled by its marketing affiliate.

INCOME TAXES

     The Company has been organized as a Limited Liability Company (LLC).
Therefore, federal and state income taxes are assessed at the member level.
Accordingly, no provision has been made for federal or state income taxes in the
accompanying financial statements.

     At December 31, 2000 and 1999, the accompanying financial statements report
a balance of $184,515 and $183,365, respectively, for net property, plant and
equipment. The tax basis of this property is estimated to be $171,651 and
$180,530, respectively. The primary difference is due to accelerated tax
depreciation.

NEW ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS No. 133"), subsequently amended by
SFAS No. 137 and SFAS No. 138. SFAS No. 133 requires Northeast Gen to record all
derivatives on the balance sheet at fair value. Changes in derivative fair
values will either be recognized in earnings as offsets to the changes in fair
value of related hedging assets, liabilities and firm commitments or, for
forecasted transactions, deferred and recorded as a component of other
accumulated comprehensive income until the hedged transactions occur and are
recognized in earnings. The ineffective portion of a hedging derivative's change
in fair value will be immediately recognized in earnings.

     SFAS No. 133 will apply to Northeast Gen's energy and energy related
commodities financial instruments, long-term power sales contracts and long-term
gas purchase contracts used to mitigate variability in earnings due to
fluctuations in spot market prices, hedge fuel requirements at generation
facilities and protect investment in fuel inventories. The Company does not
enter into long-term power sales contracts, long-term gas purchase contracts, or
other derivative instruments. These activities are conducted by an affiliate of
Northeast Gen and are not allocated to the Company.

     Northeast Gen has adopted SFAS No. 133 effective January 1, 2001. The
effect of adopting SFAS No. 133 was as follows:

     - A one-time after-tax unrealized gain of $7.7 million recorded to other
       accumulated comprehensive income related to the initial adoption of SFAS
       No. 133 during the quarter ended March 31, 2001, and

     - Increased volatility in future earnings is possible due to the impact of
       market fluctuations on derivative instruments used by Northeast Gen.

                                        9
<PAGE>   10
                               DUNKIRK POWER LLC

                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED

3. SHORT-TERM BORROWINGS

     At December 31, 1999, Northeast Gen had $682.3 million in short-term
borrowings under its 364-day credit facility, which had a weighted average
interest rate of 6.86% for the period. Interest on the credit facility is
payable at a variable rate of LIBOR plus 0.125%. The credit facility consisted
of a $646.6 million term loan facility and a $35.7 million working capital
revolving facility. On June 11, 1999, the Company borrowed from Northeast Gen
approximately $124.1 million of the $646.6 million term loan facility proceeds
pursuant to an intercompany loan agreement to finance a portion of its purchase
of its electric generating facilities. The terms of the intercompany loan were
identical to Northeast Gen's 364-day credit facility. During 1999, approximately
$5.6 million of interest expense related to the credit facility was recognized
as part of the Company's results of operations.

4. LONG-TERM DEBT

     On February 22, 2000, Northeast Gen issued $750 million of senior secured
bonds to refinance short-term project borrowings and for certain other purposes.
The bond offering included three tranches: $320 million with an interest rate of
8.065% due in 2004; $130 million with an interest rate of 8.842% due in 2015;
and $300 million with an interest rate of 9.292% due in 2024. Northeast Gen used
$646.6 million of the proceeds to repay short-term borrowings outstanding at
December 31, 1999; accordingly $646.6 million of short-term debt has been
reclassified as long-term debt based on the refinancing. Each of the
subsidiaries of Northeast Gen, of which the Company is one, jointly and
severally guarantee the bonds. The bonds are secured by a security interest in
Northeast Gen's membership or other ownership interest in its subsidiaries that
guarantee the bonds; Northeast Gen's rights under all intercompany notes between
it and its subsidiaries; the power sales and agency agreements, the operations
and maintenance agreements, the corporate services agreements, the transition
power sales contracts entered into by Northeast Gen and its subsidiaries and the
funds administration agreement; the debt service reserve account; and the
revenues from certain power sales contracts entered into by NRG Power Marketing
associated with existing or future facilities owned by Northeast Gen or its
subsidiaries. At December 31, 2000, the Company's outstanding balance under this
debt agreement was $105.4 million. A portion of the interest expense related to
these bonds is recognized as part of the Company's results of operations.

5. INVENTORY

     At December 31, 2000 and 1999, inventory, which is stated at the lower of
weighted average cost or market, consisted of:

<TABLE>
<CAPTION>
                                                                2000         1999
                                                                ----         ----
                                                                 (IN THOUSANDS)
<S>                                                            <C>          <C>
Fuel oil...................................................    $2,669       $   36
Spare parts................................................     6,594        6,125
Coal.......................................................       422        2,448
Other......................................................        --           34
                                                               ------       ------
     Total.................................................    $9,685       $8,643
                                                               ======       ======
</TABLE>

6. RELATED PARTY TRANSACTIONS

     On June 11, 1999, Company entered into a power sales and agency agreement
with NRG Power Marketing Inc., a wholly-owned subsidiary of NRG. The agreement
is effective until December 31, 2030. Under the agreement, NRG Power Marketing
Inc. will (i) have the exclusive right to manage, market and sell all power not
otherwise sold or committed to or by the Company, (ii) procure and provide to
the Company all fuel required to operate its respective facilities and (iii)
market, sell and purchase all emission credits

                                        10
<PAGE>   11
                               DUNKIRK POWER LLC

                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED

owned, earned or acquired by the Company. In addition, NRG Power Marketing Inc.
will have the exclusive right and obligation to effect the direction of the
power output from the facilities.

     Under the agreement, NRG Power Marketing Inc. pays to the Company gross
receipts generated through sales, less costs incurred by NRG Power Marketing
Inc. relative to its providing services (e.g. transmission and delivery costs,
fuel cost, taxes, employee labor, contract services, etc.).

     During 2000 and 1999, the Company recorded gross receipts less costs
incurred from NRG Power Marketing Inc. totaling $91.8 million and $27.5 million,
respectively.

     The Company has no employees and has entered into an operation and
maintenance agreement with a subsidiary of NRG Operating Services, Inc., a
wholly-owned subsidiary of NRG ("NRG Operating Services"). The agreement is
effective for five years, with options to extend beyond five years. Under the
agreement, the NRG Operating Services company operator operates and maintains
its respective facility, including (i) coordinating fuel delivery, unloading and
inventory, (ii) managing facility spare parts, (iii) meeting external
performance standards for transmission of electricity, (iv) providing operating
and maintenance consulting and (v) cooperating with and assisting the Company in
performing the Company's obligations under agreements related to its facilities.

     Under the agreement, the operator will be reimbursed for usual and
customary costs related to providing the services including plant labor and
other operating costs. A demobilization payment will be made if the subsidiary
elects not to renew the agreement. There are also incentive fees and penalties
based on performance under the approved operating budget, the heat rate and
safety.

     During 2000 and 1999, the Company incurred operating and maintenance costs
billed from NRG Operating Services Inc. totaling $24.6 million and $12.1
million, respectively.

     On June 11, 1999, Company entered into an agreement with NRG for corporate
support and services. The agreement is perpetual in term, unless terminated in
writing. Under the agreement, NRG will provide services, as requested, in areas
such as human resources, accounting, finance, treasury, tax, office
administration, information technology, engineering, construction management,
environmental, legal and safety. Under the agreement, NRG is paid for personnel
time as well as out-of-pocket costs.

     During 2000 and 1999, the Company paid NRG approximately $0.4 million and
$0.3 million, respectively, for corporate support and services.

7. SALES TO SIGNIFICANT CUSTOMERS

     During 2000, sales to two customers accounted for 52.2% and 49.7% of the
Company's revenues. During 1999, sales to one customer accounted for 86.0% of
the Company's revenues. During 1999, the Company entered into a transition
agreement with the previous owner of the Company's recently acquired electric
generating facilities for the sale of energy, capacity and other ancillary
services. This transition agreement accounted for a majority of the Company's
revenues during 1999 (Note 8).

8. COMMITMENTS AND CONTINGENCIES

REGULATORY ISSUE

     On March 30, 2000, Northeast Gen received notification from the New York
Independent System Operator (NYISO) of its petition to the Federal Energy
Regulatory Commission (FERC) to place a $2.52 per megawatt hour market cap on
ancillary service revenues. The NYISO also requested authority to impose this
cap on a retroactive basis to March 1, 2000.

     On May 31, 2000, the FERC approved the NYISO's request to impose price
limitations on one ancillary service, Ten Minute Non-Synchronized Reserves
(TMNSR) on a prospective basis only, effective March 28,
                                        11
<PAGE>   12
                               DUNKIRK POWER LLC

                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED

2000. The FERC rejected the NYISO's request for authority to adjust the
market-clearing prices for TMNSR on a retroactive basis. As a result of the FERC
order, (unless the NYISO or other party successfully appeals the order),
Northeast Gen will retain approximately $8.0 million of revenues collected in
February 2000. Northeast Gen has included in revenues, but has not yet collected
for March 2000, approximately $8.2 million, which has been fully reserved for as
of December 31, 2000.

ENVIRONMENTAL

     Environmental laws and/or regulations generally require air emissions and
water discharges to meet specified limits. They also impose potential joint and
several liability, with regard to fault, on entities responsible for certain
releases of hazardous substances to manage such materials properly and to clean
up property affected by their production and discharge. Northeast Gen expects to
spend approximately $51.2 million for capital expenditures between 2001 and 2005
for environmental compliance, which includes the possible installation of
Nitrogen oxides (NOx) control technology at the Somerset facility, resolution of
consent orders for remediation at the Arthur Kill and Astoria facilities, the
resolution of a consent order for water intake at the Arthur Kill facility, and
completing remediation-related requirements under the Connecticut Transfer Act.
During the years 2000 and 1999 Northeast Gen recorded approximately $3.0 million
and $0.1 million of expenditures related to environmental matters.

CONTRACTUAL COMMITMENTS

     During 1999, NRG Energy acquired the Huntley and Dunkirk generating
facilities from Niagara Mohawk Power Corporation ("NiMo"). In connection with
this acquisition, NRG Energy entered into a four-year agreement with NiMo that
requires NRG Energy to provide to NiMo pursuant to a predetermined schedule
fixed quantities of energy and capacity at a fixed price.

LEGAL PROCEEDINGS

     On May 25, 2000, the New York Department of Environmental Conservation
issued a Notice of Violation to the Company and the prior owner of the Huntley
and Dunkirk facilities relating to physical changes made at those facilities
prior to our assumption of ownership. The Notice of Violation alleges that these
changes represent major modifications undertaken without obtaining the required
permits. Although the Company has a right to indemnification by the previous
owner for fines, penalties, assessments, and related losses resulting from the
previous owner's failure to comply with environmental laws and regulations, if
these facilities did not comply with the applicable permit requirements, NRG
Energy could be required, among other things, to install specified pollution
control technology to further reduce air emissions from the Dunkirk and Huntley
facilities and the Company could become subject to fines and penalties
associated with the current and prior operation of the facilities. The Company
is currently in settlement discussions with the Department of Environmental
Conservation and the State Attorney General's office.

                                        12