Fitch Takes Rating Actions on Reliant Energy

Business Wire, May 18, 2007

CHICAGO -- Fitch Ratings has taken the following rating actions regarding Reliant Energy, Inc.:

--Issuer Default Rating (IDR) affirmed at 'B';

--Senior secured debt upgraded to 'BB/RR1' from 'BB-/RR2';

--Senior subordinated convertible notes affirmed at 'B/RR4' and simultaneously withdrawn.

Fitch has also removed Reliant's ratings from Rating Watch Positive, where they were placed on Feb. 2, 2007; the Rating Outlook is Stable.

The upgrade of the senior secured debt is based on an updated recovery analysis. Fitch uses an independent power market model to value individual plants. Higher forward wholesale market prices have increased valuations for Reliant's merchant generation portfolio. Valuation of the retail business was based on a stressed EBITDA multiple. No assumptions were made regarding proceeds from asset sales and application of any such proceeds to debt reduction.

The affirmation of the IDR reflects the uncertainty of operating cash flows generated by an unhedged merchant portfolio and a retail business facing increased competition. Reliant's challenge is to maintain stable retail margins with the expiration of price-to-beat in Texas. A substantial decline in retail margins and/or a decrease in customer retention could lead to a negative rating action.

Fitch's Recovery Ratings (RR) are a relative indicator of creditor recovery prospects on a given obligation within an issuers' capital structure in the event of a default. A broad overview of Fitch's RR methodology as it relates to specific sectors can be found at www.fitchratings.com/recovery.> Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.