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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO.   )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement                    [ ] Confidential, for
Use of the
Commission Only (as
permitted by Rule
14a-6(e)(2))

[X] Definitive Proxy Statement

[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

NRG ENERGY, INC.
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(Name of Registrant as Specified in Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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[NRG LOGO]

April 26, 2001

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of
NRG Energy, Inc. on Wednesday, June 20, 2001, at 1:00 p.m. (Central Standard
Time), at the Radisson Plaza Hotel, 35 South Seventh Street, Minneapolis,
Minnesota.

The matters to be voted on at the meeting are described in the Notice of
Annual Meeting of Stockholders and Proxy Statement on the following pages. In
addition to these matters, we will also report on our current operations and on
our future plans. After the voting, you will have an opportunity to ask
questions.

There are three methods available for voting your proxy. You can mail your
proxy form, you can vote by telephone or you can vote over the Internet.
Instructions for voting by telephone or over the Internet are included on the
proxy form. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE
YOUR PROXY PROMPTLY. YOUR VOICE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES
YOU HOLD.

IF YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE BRING THE ADMISSION TICKET
ATTACHED TO THE ENCLOSED PROXY FORM.

Our annual meetings are helpful in maintaining communications and
understanding between our Board of Directors and stockholders. We hope you will
join us.

Sincerely,

/s/ David H. Peterson
David H. Peterson
Chairman of the Board, Chief Executive
Officer and President

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NRG ENERGY, INC.
(A DELAWARE CORPORATION)

NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS

The Annual Meeting of Stockholders of NRG ENERGY, INC., a Delaware
corporation, will be held on Wednesday, June 20, 2001, at 1:00 p.m. (Central
Standard Time), at the Radisson Plaza Hotel, 35 South Seventh Street,
Minneapolis, Minnesota for the following purposes:

(1) To elect 9 Directors of the Company to serve until the Annual Meeting
of Stockholders in 2002;

(2) To approve the NRG Energy, Inc. 2000 Long-Term Incentive Compensation
Plan;

(3) To approve the Annual Incentive Plan for Designated Corporate Officers;

(4) To ratify the appointment of PricewaterhouseCoopers LLP as independent
auditors for the fiscal year ended December 31, 2001; and

(5) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.

Stockholders who owned stock at the close of business on April 23, 2001,
are entitled to receive notice of, and to vote at, the Annual Meeting.

By order of the Board of Directors

JAMES J. BENDER
Vice President, General Counsel
and Corporate Secretary

Minneapolis, Minnesota
April 26, 2001

PLEASE REMEMBER TO VOTE YOUR PROXY

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NRG ENERGY, INC.
901 MARQUETTE AVENUE, SUITE 2300
MINNEAPOLIS, MINNESOTA 55402

PROXY STATEMENT

INTRODUCTION

The Board of Directors is sending you this proxy statement in connection
with the solicitation of your proxy for use at the Annual Meeting. When you vote
by proxy, you appoint Leonard A. Bluhm and James J. Bender as your
representatives at the Annual Meeting. Leonard A. Bluhm and James J. Bender will
vote your shares, as you have instructed them on the proxy form, at the Annual
Meeting. This way, your shares will be voted whether or not you attend the
Annual Meeting. Even if you plan to attend the meeting, it is a good idea to
vote by proxy in advance of the meeting just in case your plans change.

If an issue comes up for vote at the meeting that is not covered by your
proxy, Leonard A. Bluhm and James J. Bender will vote your shares, under your
proxy, in accordance with their best judgment.

MAILING OF PROXY STATEMENT AND ANNUAL REPORT

This proxy statement, the enclosed proxy materials, our Annual Report on
Form 10-K and our Annual Report to Stockholders for the year 2000 are being
mailed on or about April 30, 2001, to all stockholders who owned stock on April
23, 2001.

VOTING PROCEDURES; REVOCATION OF PROXY

You may vote by mail, in person, by telephone or over the Internet. To vote
by mail, simply complete and sign the proxy form and mail it in the enclosed,
prepaid and preaddressed envelope. If you mark your voting instructions on the
proxy form, your shares will be voted as you instruct. If you return a signed
form but do not provide voting instructions, your shares will be voted FOR the
named nominees and FOR each of the other proposals set forth herein.

If you wish to vote in person, written ballots will be passed out at the
meeting. If you hold your shares in street name (i.e., they are held by your
broker in an account for you), you must request a legal proxy from your broker
in order to vote at the meeting.

If you wish to vote by telephone or over the Internet, please follow the
instructions included on the enclosed proxy form. If you vote by telephone or
over the Internet, it is not necessary to mail in your proxy form.

If you change your mind after voting your proxy, you can revoke your proxy
and change your vote at any time before the polls close at the meeting. You can
revoke your proxy by either signing another proxy with a later date, voting a
second time by telephone or over the Internet or voting again at the meeting.
Alternatively, you may provide a written statement to the Company (Attention:
James J. Bender, Vice President, General Counsel and Corporate Secretary) of
your intention to revoke your proxy.

RECORD DATE; NUMBER OF VOTES

If you owned shares of the Company's stock at the close of business on
April 23, 2001, you are entitled to vote at the meeting. If you owned shares of
common stock of the Company ("Common Stock"), you are entitled to one vote per
share of Common Stock upon each matter presented at the Annual Meeting. Shares
of Class A common stock of the Company ("Class A Common Stock"), all of which
are owned by Xcel Energy Inc. (in August 2000, Northern States Power Company
("NSP") merged with New Century Energies, Inc. ("NCE") to form Xcel Energy Inc.
("Xcel Energy")), will be entitled to ten votes per share of Class A Common
Stock upon each matter presented at the Annual Meeting. On April 23, 2001, there
were 50,896,002 shares of Common Stock and 147,604,500 shares of Class A Common
Stock outstanding.

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EXPENSES OF PROXY SOLICITATION

The Company will pay all costs associated with preparing, assembling and
mailing the proxy materials and proxy statements. The Company also will
reimburse brokers, nominees, fiduciaries and other custodians for their expenses
in forwarding proxy materials to stockholders. Officers and other employees of
the Company may solicit proxies by mail, personal interview or telephone.
Employees of the Company will not receive any additional compensation for
soliciting proxies.

VOTING OF SHARES HELD IN STREET NAME BY YOUR BROKER

Brokerage firms have authority under New York Stock Exchange rules to vote
customers' unvoted shares on certain "routine" matters, such as the election of
directors and the ratification of the selection of independent public
accountants. If you do not vote your proxy, your brokerage firm may either vote
your shares on routine matters or leave your shares unvoted. You are encouraged
to provide instructions to your brokerage firm by voting your proxy. This
ensures your shares will be voted at the meeting. When a brokerage firm votes
its customers' unvoted shares on routine matters, these shares are counted for
purposes of establishing a quorum to conduct business at the meeting. A
brokerage firm, however, cannot vote customers' unvoted shares on "non-routine"
matters, such as the approval of the NRG Energy, Inc. 2000 Long-Term Incentive
Compensation Plan and the Annual Incentive Plan for Designated Corporate
Officers. Accordingly, such shares (sometimes referred to as broker non-votes)
are considered as not entitled to vote on non-routine matters, rather than as
having been voted against the matter.

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PROPOSAL NO. 1 -- ELECTION OF DIRECTORS

GENERAL INFORMATION

The Bylaws of the Company provide that the Board of Directors of the
Company is to consist of one or more members, with such number to be determined
from time to time by resolution of the Board. The Board of Directors, by
resolution, has currently determined this number to be nine. As such, the
following nine individuals are the nominees to be elected to the Board of
Directors to serve until the Annual Meeting of Stockholders in the year 2002 and
until their successors are elected and qualified: David H. Peterson, Pierson M.
Grieve, Luella G. Goldberg, William A. Hodder, Wayne H. Brunetti, James J.
Howard, Gary R. Johnson, Richard C. Kelly and Edward J. McIntyre. Each of these
nominees is currently a director of the Company whose term is scheduled to
expire at the Annual Meeting.

Each of the nominees has indicated a willingness to serve. Should any of
the nominees become unavailable prior to the Annual Meeting, your proxy will be
voted for such person or persons as recommended by a proxy committee appointed
by the Board.

Any stockholder may make recommendations for membership on the Board of
Directors by sending a written statement of the qualifications of the
recommended individual to James J. Bender, Vice President, General Counsel and
Corporate Secretary, 901 Marquette Avenue, Suite 2300, Minneapolis, Minnesota,
55402.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ALL OF THE
NOMINEES NAMED BELOW.

DAVID H. PETERSON has served as Chairman of the Board of the Company since
January 1994, Chief Executive Officer since November 1993, President since 1989
and as a director since 1989. Previously, Mr. Peterson also served as Chief
Operating Officer of the Company from June 1992 to November 1993. Prior to
joining NRG Energy, Mr. Peterson held the position of Vice President,
Non-Regulated Generation, with NSP, as well as serving in various other
management positions with NSP throughout the last 20 years. Mr. Peterson
currently serves as a member of the board of directors of Energy Performance
Systems, Inc.

PIERSON M. (SANDY) GRIEVE has served as a director of the Company since
June 2000. Mr. Grieve is currently a partner of Palladium Equity Partners, LLC
and a member of the boards of directors of The St. Paul Companies, Inc., Mesaba
Aviation and Bank of Naples. Mr. Grieve served as Chairman of the Board and
Chief Executive Officer of Ecolab, Inc. from 1983 to 1996. Prior to that, Mr.
Grieve served as President and Chief Executive Officer of Questor Corp.

LUELLA G. GOLDBERG has served as a director of the Company since June 2000.
Ms. Goldberg is currently a member of the boards of directors of TCF Financial
Corporation, Hormel Foods Corporation, Communications Systems, Inc. and
Personnel Decisions International. Ms. Goldberg also serves as a member of the
supervisory board of ING Group and as a member of the Board of Overseers of the
Carlson School of Management at the University of Minnesota. Ms. Goldberg served
as the Chair of the Wellesley College Board of Trustees from 1985 to 1993, as
acting President of Wellesley College from July 1993 to October 1993 and
currently serves as a Trustee Emerita.

WILLIAM A. HODDER has served as a director of the Company since June 2000.
Mr. Hodder is currently a member of the board of directors of SUPERVALU, Inc.
Mr. Hodder also serves as a member of the Board of Overseers of the Carlson
School of Management at the University of Minnesota. Mr. Hodder served as
Chairman and Chief Executive Officer of Donaldson Company, Inc. from 1994 to
1996 and Chairman, President and Chief Executive Officer from 1985 to 1994. Mr.
Hodder joined Donaldson Company, Inc. as President in 1973.

WAYNE H. BRUNETTI has served as a director of the Company since June 2000.
Mr. Brunetti is currently the President, Chief Executive Officer and a member of
the board of directors of Xcel Energy. Prior to assuming such positions with
Xcel Energy in August 2000, Mr. Brunetti was Vice Chairman,

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President and Chief Executive Officer of NCE. Previously, Mr. Brunetti was Vice
Chairman, President and Chief Operating Officer of Public Service Company of
Colorado before it merged with Southwestern Public Service Company to form NCE.
Mr. Brunetti joined the Public Service Company of Colorado as President and
Chief Operating Officer in 1994.

JAMES J. HOWARD has served as a director of the Company since June 2000.
Mr. Howard is currently the Chairman of Xcel Energy, the Chairman of the Federal
Reserve Bank of Minneapolis and a member of the boards of directors of Ecolab,
Inc., Honeywell International Inc. and Walgreens Co. Mr. Howard served as the
Chairman, President and Chief Executive Officer of NSP from 1994 until August
2000. Mr. Howard joined NSP as President and Chief Executive Officer in 1987.
Prior to joining NSP, Mr. Howard served as President and Chief Operating Officer
of Ameritech.

GARY R. JOHNSON has served as a director of the Company since 1993. Mr.
Johnson is currently Vice President and General Counsel of Xcel Energy.
Previously, Mr. Johnson served as Vice President and General Counsel of NSP from
November 1991 to August 2000.

RICHARD C. KELLY has served as a director of the Company since June 2000.
Mr. Kelly is currently President-Enterprises of Xcel Energy. Previously, Mr.
Kelly served as Executive Vice President, Financial and Support Services, and
Chief Financial Officer for NCE. Prior to that, Mr. Kelly was Senior Vice
President of Finance, Treasurer and Chief Financial Officer for Public Service
Company of Colorado, which he joined in 1968.

EDWARD J. MCINTYRE has served as a director of the Company since 1993. Mr.
McIntyre is currently Vice President and Chief Financial Officer of Xcel Energy.
Prior to assuming such positions with Xcel Energy in August 2000, Mr. McIntyre
was Vice President and Chief Financial Officer of NSP from January 1993. Mr.
McIntyre served as President and Chief Executive Officer of Northern States
Power Company Wisconsin, a wholly-owned subsidiary of NSP, from July 1990 to
December 1992, as Vice President Gas Utility from November 1985 to June 1990,
and has served in various other management positions since joining NSP in 1973.

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INFORMATION CONCERNING THE BOARD OF DIRECTORS

DIRECTOR MEETINGS

In 2000, there were 16 meetings of the Board of Directors of the Company.
The Compensation and Audit Committees of the Board of Directors of the Company
met 6 and 3 times, respectively, during 2000. Each director attended at least
75% of the meetings of the Board of Directors and committees on which such
director served during 2000.

COMMITTEES OF THE NRG ENERGY BOARD OF DIRECTORS

There are two committees of the Board of Directors of the Company whose
duties and responsibilities are described below.

NAME OF COMMITTEE AND MEMBERS                   FUNCTIONS OF THE COMMITTEE
-----------------------------  ------------------------------------------------------------

Compensation                   - Review the Company's compensation policies
Pierson M. Grieve(1)         - Review the form and amount of compensation paid to the
James J. Howard              members of the Board of Directors and to key senior
William A. Hodder              executives of the Company
Richard C. Kelly             - Administer executive annual and long-term incentive plans,
as delegated by the Board of Directors
Audit                          - Review auditing activities of internal and external
William A. Hodder(1)         auditors
Pierson M. Grieve            - Review financial reporting, internal controls and
Luella G. Goldberg           accounting policies and practices
- Review matters affecting protection and recovery of assets
of the Company

---------------
(1) Chairperson

For purposes of complying with Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"), Rule 16b-3 of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and Section 2.9 of the NRG Energy, Inc.
2000 Long-Term Incentive Compensation Plan (the "2000 Plan"), the Board of
Directors has established a subcommittee of the Compensation Committee to
administer the 2000 Plan (the "Incentive Plan Subcommittee"). The Incentive Plan
Subcommittee consists of Pierson M. Grieve and William A. Hodder, each of whom
are "outside directors" within the meaning of Section 162(m) of the Code and
"non-employee" directors within the meaning of Rule 16b-3 of the Exchange Act.
The Incentive Plan Subcommittee did not meet in 2000.

DIRECTOR COMPENSATION

The Company does not award directors who are also employees of the Company
or employees of Xcel Energy any separate compensation or other consideration,
direct or indirect, for service as a director. During 2000, directors not
employed by the Company or Xcel Energy ("Non-Employee Directors") received
annual fees of $30,000 plus $1,000 for each Board of Directors meeting attended
in person, $800 for each committee meeting attended in person and reasonable
travel expenses. Committee chairs received an additional $200 per meeting
attended in person. Non-Employee Directors participating in meetings of the
Board of Directors or a committee by telephone received 50% of such meeting
fees.

In connection with the Company's initial public offering, each of the
Non-Employee Directors received a grant of stock options to purchase 5,000
shares of Common Stock pursuant to the 2000 Plan at an exercise price equal to
$15, the initial public offering price of a share of Common Stock. Such options
will vest in four equal annual installments, beginning on the second anniversary
of the date of each such grant. The Company expects that it will, on an annual
basis, grant stock options to Non-Employee Directors for the purchase of 5,000
shares of Common Stock at an exercise price equal to the fair market value of
the Common Stock on the date of such grant, pursuant to the 2000 Plan.

Each of the Non-Employee Directors participates in the Company's
Independent Director Deferral Plan (the "Deferral Plan"). The Deferral Plan
allows Non-Employee Directors to defer all or a portion of

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his or her annual fees, meeting fees and other fees paid in connection with
service on the Board of Directors to a cash deferral account, a stock unit
account or a combination of such accounts. The Deferral Plan provides for a 20%
premium on fees deferred into a stock unit account. Fees deferred under the
Deferral Plan are paid out in cash upon the retirement of the Non-Employee
Director from service on the Company's Board of Directors or upon two payout
commencement dates other than retirement, as determined by the Non-Employee
Director. Payout of fees deferred under the Deferral Plan are made in
installments, with a minimum of two and maximum of ten such installments, or in
a lump sum.

Each of the Company's directors has an indemnification agreement that
entitles him or her to indemnification for claims asserted against them in their
capacity as directors to the fullest extent permitted by Delaware law.

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BENEFICIAL OWNERSHIP OF SHARES OF COMMON STOCK
AND CLASS A COMMON STOCK

The following table lists the beneficial ownership of Common Stock and
Class A Common Stock owned as of March 15, 2001, by (i) the directors and
nominees of the Company, (ii) the executive officers named in the Summary
Compensation Table that follows and (iii) all the directors and executive
officers of the Company as a group. The following table also lists the
beneficial ownership of Common Stock and Class A Common Stock owned as of March
15, 2001 by each person known by the Company to beneficially own more than five
percent (5%) of the outstanding shares of Common Stock and Class A Common Stock.

NUMBER OF SHARES
NAME OF BENEFICIAL OWNER              CLASS OF STOCK       BENEFICIALLY OWNED(1)    PERCENT OF CLASS
------------------------           --------------------    ---------------------    ----------------

David H. Peterson....................    Common Stock                     150,506(2)              *
Pierson M. Grieve....................    Common Stock                      38,100                 *
Luella G. Goldberg...................    Common Stock                       5,000                 *
William A. Hodder....................    Common Stock                      15,000                 *
Wayne H. Brunetti....................    Common Stock                       2,500                 *
James J. Howard......................    Common Stock                       1,000                 *
Gary R. Johnson......................    Common Stock                          --                --
Richard C. Kelly.....................    Common Stock                       1,000                 *
Edward J. McIntyre...................    Common Stock                       1,000                 *
Craig A. Mataczynski.................    Common Stock                      27,826(3)              *
John A. Noer.........................    Common Stock                         600                 *
James J. Bender......................    Common Stock                      25,750(4)              *
Leonard A. Bluhm.....................    Common Stock                      45,390(5)              *
Xcel Energy Inc.(6)..................    Common Stock                          --(7)             --
Class A Common Stock         147,604,500               100%(8)
Massachusetts Financial Services
Company(9).........................    Common Stock                   2,198,500(10)           6.8%
Directors and executive officers as a
group..............................    Common Stock                     378,762(11)             *

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(1) The number of shares beneficially owned by each person or entity is
determined under the rules of the Securities and Exchange Commission (the
"SEC"), and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, each person or entity is
considered the beneficial owner of any shares: (a) to which such person or
entity has sole or shared voting power or investment power and (b) that
such person or entity has the right to acquire within 60 days through the
exercise of stock options or other similar rights. Unless otherwise
indicated, each person or entity has sole investment and voting power (or
such person shares such powers with his or her spouse) with respect to the
shares set forth in the table above.

(2) Includes 144,506 shares subject to options that are exercisable within 60
days.

(3) Includes 25,826 shares subject to options that are exercisable within 60
days.

(4) Includes 24,650 shares subject to options that are exercisable within 60
days and 100 shares owned by Mr. Bender's wife. Mr. Bender disclaims
beneficial ownership of the shares owned by his wife.

(5) Includes 43,690 shares subject to options that are exercisable within 60
days.

(6) The address for Xcel Energy Inc. is 800 Nicollet Mall, Suite 3000,
Minneapolis, Minnesota, 55402-2023.

(7) Pursuant to an option agreement, which is more fully described below under
the heading "Relationships and Related Transactions," Xcel Energy and its
affiliates have a continuing option to purchase shares of Common Stock to
the extent necessary to maintain or restore an ownership percentage of 80%
of the outstanding shares of Common Stock and Class A Common Stock on a
combined basis.

(8) Xcel Energy currently owns an approximate 74% interest in the Common Stock
and Class A Common Stock of the Company on a combined basis, which
represents 96.7% of the total voting power of the Common Stock and Class A
Common Stock on a combined basis.

(9) The address for Massachusetts Financial Services Company is 500 Boylston
Street, Boston, Massachusetts, 02116.

(10) Based on the Schedule 13G filed with the SEC on February 12, 2001.

(11) Includes 296,062 shares subject to options that are exercisable within 60
days.
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COMPENSATION OF EXECUTIVE OFFICERS

The following tables set forth cash and non-cash compensation for each of
the last three fiscal years ended December 31, for the individual who served as
the Company's Chief Executive Officer during 2000 and each of the four next most
highly compensated executive officers (collectively, the "Named Executive
Officers").

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION                 LONG-TERM COMPENSATION
--------------------------------   -------------------------------------
AWARDS              PAYOUTS
-----------------------   -----------
(A)                         (B)       (C)          (D)                   (F)          (G)           (H)          (I)
(E)                  NUMBER OF
OTHER                 SECURITIES
ANNUAL                 UNDERLYING
COMPEN-   RESTRICTED    OPTIONS                   ALL OTHER
NAME AND                                                    SATION      STOCK       AND SARS       LTIP        COMPEN-
PRINCIPAL POSITION          YEAR   SALARY ($)   BONUS ($)   ($)(1)    AWARDS ($)      (#)       PAYOUTS ($)   SATION ($)
------------------          ----   ----------   ---------   -------   ----------   ----------   -----------   ----------

David H. Peterson........   2000    397,340      474,000    28,678        0         120,000      1,212,067      22,923(3)
Chairman, President &       1999    367,992      192,970     6,131        0               0        155,995      33,201
Chief Executive Officer     1998    345,826      290,220     4,922        0               0          7,724      17,777
Craig A. Mataczynski.....   2000    278,340      276,500     6,303        0          60,000        186,250       3,059(4)
Senior Vice President-      1999    246,250      150,000     4,706        0               0         15,533      15,251
North America               1998    192,091      118,627     3,871        0               0          2,538       5,832
John Noer(2).............   2000    259,992      256,750     6,554        0          60,000              0       2,464(5)
Senior Vice President-      1999          0            0         0        0               0              0           0
Worldwide Operations        1998          0            0         0        0               0              0           0
James J. Bender..........   2000    256,242      256,750     7,131        0          60,000        186,636       2,609(6)
Vice President &            1999    213,746      100,000     6,528        0               0         19,729       6,172
General Counsel             1998    198,758      108,892     7,331        0               0          4,810      49,491
Leonard A. Bluhm.........   2000    204,175      202,438     8,508        0          60,000        391,887       2,467(7)
Executive Vice President    1999    194,590       72,150     5,265        0               0         50,489      12,814
& Chief Financial Officer   1998    189,174       66,500     5,156        0               0          3,172       5,060

---------------
(1) Represents amounts reimbursed during the fiscal year for the payment of
taxes on fringe benefits.

(2) Mr. Noer was hired on January 1, 2000. Prior to such date, Mr. Noer was
employed by NSP.

(3) Includes $7,000 of universal life insurance premiums; $13,478 of imputed
income on life insurance; $1,279 of contributions to the Northern States
Power Company Employee Stock Ownership Plan; $900 of matching contributions
to the NSP Retirement Savings Plan; and $266 of deferred compensation
excess. Does not include $5,789 of incentive pension make-up earned in 1999
and paid in 2000.

(4) Includes $384 of term life insurance premiums; $1,226 of contributions to
the Northern States Power Company Employee Stock Ownership Plan; $900 of
matching contributions to the NSP Retirement Savings Plan; and $549 of
deferred compensation excess. Does not include $4,500 for incentive pension
make-up earned in 1999 and paid in 2000.

(5) Includes $1,279 of contributions to the Northern States Power Company
Employee Stock Ownership Plan; $900 of matching contributions to the NSP
Retirement Savings Plan; and $2,464 of deferred compensation excess. Does
not include $1,320 for incentive pension make-up earned in 1999 and paid in
2000.

(6) Includes $318 of term life insurance premiums; $1,279 of contributions to
the Northern States Power Company Employee Stock Ownership Plan; $900 of
matching contributions to the NSP Retirement Savings Plan; and $112 of
deferred compensation excess. Does not include $3,000 for incentive pension
make-up earned in 1999 and paid in 2000.

(7) Includes $288 of term life insurance premiums; $1,279 of contributions to
the Northern States Power Company Employee Stock Ownership Plan; and $900 of
matching contributions to the NSP Retirement Savings Plan. Does not include
$2,165 for incentive pension make-up earned in 1999 and paid in 2000.

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OPTIONS AND STOCK APPRECIATION RIGHTS (SARS)

The following table indicates for each of the Named Executive Officers the
extent to which the Company used stock options and SARs for executive
compensation purposes in 2000 and the potential value of such stock options and
SARs as determined pursuant to the SEC rules.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS                                                FOR OPTION TERM
-------------------------------------------------------------------------------------------------   -------------------------
(A)                      (B)                    (C)                (D)          (E)           (F)           (G)
NUMBER OF              % OF TOTAL
SECURITIES UNDERLYING       OPTIONS/SARS       EXERCISE OR
OPTIONS/SARS        GRANTED TO EMPLOYEES   BASE PRICE    EXPIRATION
NAME                GRANTED(#)(1)          IN FISCAL YEAR       ($/SHARE)       DATE       5%($)(2)      10%($)(2)
----            ---------------------   --------------------   -----------   ----------   -----------   -----------

David H. Peterson.......         120,000                11.32%             $15.00       5/31/10      1,132,010     2,868,736
Craig A. Mataczynski....          60,000                 5.66%             $15.00       5/31/10        566,005     1,434,368
John A. Noer............          60,000                 5.66%             $15.00       5/31/10        566,005     1,434,368
James J. Bender.........          60,000                 5.66%             $15.00       5/31/10        566,005     1,434,368
Leonard A. Bluhm........          60,000                 5.66%             $15.00       5/31/10        566,005     1,434,368

---------------
(1) Amounts shown represent stock options granted to the Named Executive
Officers for compensation purposes in 2000 under the 2000 Plan and do not
include options held by the Named Executive Officers to purchase shares of
stock of Xcel Energy or stock options granted to the Named Executive
Officers to replace equity units held under the NRG Equity Plan, which is
described below in the Compensation Committee Report on Executive
Compensation. The options set forth in the table above were granted with an
exercise price ($15.00) equal to the initial public offering price of a
share of Common Stock and will vest and become fully exercisable on the
fifth anniversary of the date of the grant. All options expire 10 years from
the date of the grant.

(2) The hypothetical potential appreciation shown in columns (f) and (g) for the
Named Executive Officers is required by the SEC rules. The amounts in these
columns do not represent either the historical or anticipated future
performance of the Company's Common Stock level of appreciation.

The following table indicates for each of the Named Executive Officers the
number and value of all exercisable and unexercisable options and SARs held by
the Named Executive Officers as of December 31, 2000.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES

(A)                   (B)            (C)                     (D)                             (E)
NUMBER OF SECURITIES            VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED               IN-THE-MONEY
SHARES                               OPTIONS/SARS                    OPTIONS/SARS
ACQUIRED ON       VALUE                AT FY-END(#)                    AT FY-END($)
NAME              EXERCISE(#)    REALIZED($)     EXERCISABLE/UNEXERCISABLE(1)    EXERCISABLE/UNEXERCISABLE(2)
----              -----------    ------------    ----------------------------    ----------------------------

David H. Peterson(3)....         0              0                144,506/596,189               2,992,107/11,147,257
Craig A. Mataczynski....         0              0                 25,826/160,429                  525,760/2,753,350
John A. Noer............         0              0                       0/60,000                         --/768,750
James J. Bender.........         0              0                 24,650/151,144                  507,722/2,586,023
Leonard A. Bluhm........         0              0                 43,690/193,601                  910,688/3,495,011

---------------
(1) Includes stock options granted to the Named Executive Officers to replace
equity units held under the NRG Equity Plan but does not include the
following Xcel Energy options that are currently exercisable: David H.
Peterson, 8,672; Craig A. Mataczynski, 1,496; John Noer, 71,648; and Leonard
A. Bluhm, 5,500.

(2) Option values were calculated based on a $27.8125 closing price of Common
Stock, as reported on the New York Stock Exchange on December 29, 2000.

(3) Does not include 12,918 shares of common stock of Xcel Energy (as converted
on a one-for-one basis from shares of common stock of NSP), having a value
of $25,488 at the time of exercise, acquired in 2000 pursuant to the
exercise of NSP non-qualified stock options.

9

13

NRG ENERGY, INC.

COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION

COMPENSATION PHILOSOPHY

The Compensation Committee of the Board of Directors was appointed in May
2000 in connection with the Company's initial public offering and consists of
four members.

The purpose of the Committee is to, on a regular basis, review, approve
and, where applicable, make recommendations to the Board of Directors concerning
executive officer compensation. The Committee's philosophy regarding executive
compensation is that such compensation should be directly aligned with
improvements in corporate performance and increased stockholder value. The
Committee's guidelines, which are intended to reflect such philosophy, include:

- Providing a competitive total compensation package that enables the
Company to attract and retain key executive talent.

- Aligning annual and long-term incentive compensation with the Company's
business strategies and objectives.

- Providing variable compensation opportunities that are directly linked to
the Company's performance and stockholder return.

For the fiscal year 2000, the Compensation Committee evaluated the
competitiveness of its executive compensation based on information obtained in
an executive compensation, industry specific, independent power producer survey.
The Committee also obtained information from an independent compensation
consultant who provided objective and expert advice in the review of executive
compensation plans. The industry sector in which the Company operates is highly
competitive and is undergoing significant change due to deregulation and
globalization. In the future, the Committee intends to evaluate the
competitiveness of its executive compensation by assessing the data contained in
the proxy statements of similar independent power production companies. The
Committee intends to utilize such information to assess the Company's position
in each individual aspect of executive compensation, including base salary,
annual incentive compensation and long-term incentive compensation.

ELEMENTS OF COMPENSATION

Compensation for the Company's executive officers for the fiscal year 2000
consisted of the following elements: base salary, annual incentive compensation
and long-term incentive compensation.

Base Salary.  Annual base salary is designed to compensate executive
officers for their sustained performance. For the fiscal year 2000, annual base
salaries for executive officers were established by reviewing median base pay
levels for each executive's position in the independent power producer survey.
The base salary recommendations also incorporate the executive officer's
individual performance, the general contributions of the executive officer to
overall corporate performance and the level of achievement by the executive
officer with respect to specific annual goals. In general, the 2000 base salary
levels for executive officers, including Mr. Peterson, were increased in
accordance with comparable market data. The base salary amounts paid to the
executive officers for the fiscal year 2000 are reflected in the salary column
of the Summary Compensation Table.

Annual Incentive Compensation.  Annual incentive compensation is designed
to compensate executive officers for satisfying certain Company goals and is
determined as a percentage of each such executive officer's annual base salary.
Annual incentive compensation for the executive officers for the fiscal year
2000 was determined in accordance with median levels of annual incentive awards
for comparable positions, as set forth in the independent power producer survey.
For the fiscal year 2000, the target incentive for annual incentive compensation
for executive officers ranged from 40% to 60% of base salary, with Mr.
Peterson's target incentive being 60% of his base salary. Annual incentive
payout opportunities

10

14

range from 0% to 197.5% of the target incentive. Target incentives for the
executive officers for the fiscal year 2000 were based on either or both of net
income and safety goals. Mr. Peterson's target incentive was based 95% on net
income and 5% on safety goals. Overall the Company exceeded the targets and
achieved the maximum net income and safety goals for 2000 with a net income
growth of 220% from fiscal year 1999. As such, Mr. Peterson received the maximum
payout available for his annual incentive compensation. The annual incentive
compensation paid to the executive officers for the fiscal year 2000 is
reflected in the bonus column of the Summary Compensation Table.

Long-Term Incentive Compensation.  Prior to the Company's initial public
offering and the adoption of the 2000 Plan, each of which occurred in May 2000,
the Company offered the NRG Equity Plan (the "Equity Plan") to its executive
officers and other selected employees. The Equity Plan was established in 1993
to promote the achievement of long-term financial objectives by linking the
long-term incentive compensation of the employees to the achievement of value
creation, as well as to attract and retain employees of outstanding competence,
encourage teamwork among employees and provide employees with an opportunity for
long-term capital accumulation. Under the Equity Plan, the Company made grants
of "equity units," which were intended to simulate stock options. Grants of
equity units were made annually at the discretion of the Board of Directors with
a grant price consistent with the most recent valuation of equity units. Mr.
Peterson received an equity plan payout for vested equity units of approximately
$1,200,000 during the fiscal year 2000.

In connection with the Company's initial public offering, the Company
established the 2000 Plan and discontinued the Equity Plan. All outstanding,
non-vested equity units for active employee participants were terminated and
replaced with a comparable stock option grant. Messrs. Peterson, Bluhm,
Mataczynski and Bender were granted stock options to replace equity units for
620,695; 177,291; 126,255; and 115,794 shares, respectively.

Under the 2000 Plan, the Committee will approve a target number of option
shares for each executive officer, with such targets to be based in part on
competitor proxy information and market surveys regarding long-term incentive
compensation. The Incentive Plan Subcommittee will be responsible for
determining and approving stock option grants for the executive officers.
Options granted will have an exercise price equal to the fair market value of
the Common Stock on the date of grant, and, typically, will be exercisable over
a four-year period in increments of 25% per year. Initial grants included a
one-year waiting period prior to the vesting of any portion of the options.

DISCUSSION OF COMPENSATION IN EXCESS OF ONE MILLION DOLLARS PER YEAR

The Company has considered the implications of Section 162(m) of the Code,
which precludes a public corporation from taking a tax deduction for individual
compensation in excess of $1 million for any of the Named Executive Officers,
subject to certain exemptions. The Company has considered the exemptions to such
limitation, which are also provided in Section 162(m) of the Code, and
specifically the exemption for compensation that is "performance-based" within
the meaning of Section 162(m).

In order to qualify compensation derived by executive officers from stock
options as "performance-based" compensation under Section 162(m) of the Code,
the 2000 Plan was approved by the Board of Directors of the Company and NSP and
is included herein for stockholder approval. Additionally, in order to qualify
bonus payments to executives under Section 162(m) of the Code and preserve the
deductibility of such payments, the Annual Incentive Plan for Designated
Corporate Officers has been approved by the Committee, the Board of Directors
and is included herein for stockholder approval.

Regardless of the foregoing, in the future, the Company may award
compensation to its executive officers that may not qualify under Section 162(m)
of the Code as deductible compensation. The Company will continue to consider
all elements of expense in providing such compensation, including the impact of
Section 162(m) of the Code.

PIERSON M. GRIEVE, CHAIRMAN
JAMES J. HOWARD
WILLIAM A. HODDER
RICHARD C. KELLY
11

15

PENSION PLAN TABLES

The Company participates in Xcel Energy's noncontributory, defined benefit
pension plan. Such plan covers substantially all of the Company's employees. As
of January 1, 1999, the pension benefit formula that applies to the Named
Executive Officers was changed and each Named Executive Officer, together with
all other affected nonbargaining employees, was given an opportunity to choose
between two retirement programs, the traditional program and the pension equity
program. Messrs. Peterson, Bluhm and Noer have selected the traditional program
and Messrs. Mataczynski and Bender have selected the pension equity program.

Under the traditional program applicable to certain of the Named Executive
Officers, the pension benefit is computed by taking the highest average
compensation below the integration level times 1.1333% plus the highest average
compensation above the integration level times 1.6333%. The result is multiplied
by credited service. The integration level is one-third of the social security
wage base. The annual compensation used to calculate average compensation is
base salary for the year. After an employee has reached 30 years of service, no
additional years of service are used in determining the pension benefit under
the traditional program. The benefit amounts under the traditional program are
computed in the form of a straight-life annuity.

Under the pension equity program applicable to certain of the Named
Executive Officers, the formula for determining the pension benefit is average
compensation times credited years of service times 10%. The annual compensation
used to calculate average compensation is base salary for the year plus bonus
compensation paid in that same year. There is no maximum on the number of years
of service used to determine the pension benefit. The benefit amounts under the
pension equity program are computed in the form of a lump sum.

Both programs feature a cash balance side account, which credits $1,400
plus interest annually. The opening balance as of January 1, 1999 was $1,400,
multiplied by years of service.

The employment agreement between Mr. Peterson and the Company, a more
detailed description of which is set forth below, provides that Mr. Peterson
will receive the accumulated value of his pension payments had he begun payments
at his earliest retirement eligibility. Additionally, the employment agreement
provides that, in the event that Mr. Peterson elects a lump sum payment, the
value of his benefits will be calculated based on both his and his spouse's
mortality, subject to certain financial performance measures. Such calculation
of benefits is different from the single mortality basis used for other
employees.

12

16

The following table illustrates the approximate retirement benefits payable
to employees retiring at the normal retirement age of 65 years under the
traditional program applicable to certain of the Named Executive Officers:

ESTIMATED ANNUAL BENEFITS FOR YEARS OF SERVICE INDICATED
YEARS OF SERVICE
AVERAGE COMPENSATION                 -----------------------------------------------------------------------------
(LAST 4 YEARS)                       5            10            15            20            25            30
--------------------                 -------      --------      --------      --------      --------      --------

$  50,000...................    $ 4,500      $  9,000      $ 13,500      $ 19,000      $ 25,000      $ 31,500
100,000...................      8,500        17,000        25,500        35,000        45,500        56,000
150,000...................     12,500        25,000        38,000        51,500        66,000        80,500
200,000...................     16,500        33,500        50,000        68,000        86,500       105,000
250,000...................     21,000        41,500        62,500        84,000       107,000       129,500
300,000...................     25,000        49,500        74,500       100,500       127,500       154,000
350,000...................     29,000        58,000        87,000       117,000       147,500       178,500
400,000...................     33,000        66,000        99,000       133,000       168,000       203,000
450,000...................     37,000        74,000       111,500       149,500       188,500       227,500
500,000...................     41,000        82,500       123,500       166,000       209,000       252,000
550,000...................     45,500        90,500       136,000       182,000       229,500       276,500
600,000...................     49,500        98,500       148,000       198,500       250,000       301,000
650,000...................     53,500       107,000       160,500       215,000       270,000       325,500
700,000...................     57,500       115,000       172,500       231,000       290,500       350,000
750,000...................     61,500       123,000       185,000       247,500       311,000       374,500
800,000...................     65,500       131,500       197,000       264,000       331,500       399,000
850,000...................     70,000       139,500       209,500       280,000       352,000       423,500
900,000...................     74,000       147,500       221,500       296,500       372,500       448,000
950,000...................     78,000       156,000       234,000       313,000       392,500       472,500
1,000,000...................     82,000       164,000       246,000       329,000       413,000       497,000
1,050,000...................     86,000       172,000       258,500       345,500       433,500       521,500
1,100,000...................     90,000       180,500       270,500       362,000       454,000       546,000
1,150,000...................     94,500       188,500       283,000       378,000       474,500       570,500
1,200,000...................     98,500       196,500       295,000       394,500       495,000       595,000

13

17

The following table illustrates the approximate retirement benefits payable
to employees retiring at the normal retirement age of 65 years under the pension
equity program applicable to certain of the Named Executive Officers if paid in
the form of a straight-line annuity:

ESTIMATED ANNUAL BENEFITS FOR YEARS OF SERVICE INDICATED
YEARS OF SERVICE
AVERAGE COMPENSATION                 -----------------------------------------------------------------------------
(LAST 4 YEARS)                       5            10            15            20            25            30
--------------------                 -------      --------      --------      --------      --------      --------

$  50,000...................    $ 3,500      $  7,000      $ 11,000      $ 15,500      $ 20,500      $ 26,500
100,000...................      6,000        12,000        18,500        25,500        33,000        41,500
150,000...................      8,500        17,000        26,000        35,500        46,000        57,000
200,000...................     11,000        22,000        33,500        45,500        58,500        72,000
250,000...................     13,500        27,000        41,500        56,000        71,000        87,000
300,000...................     16,000        32,500        49,000        66,000        83,500       102,500
350,000...................     18,500        37,500        56,500        76,000        96,500       117,500
400,000...................     21,000        42,500        64,000        86,000       109,000       133,000
450,000...................     23,500        47,500        71,500        96,500       121,500       148,000
500,000...................     26,000        52,500        79,500       106,500       134,500       163,000
550,000...................     28,500        57,500        87,000       116,500       147,000       178,500
600,000...................     31,000        62,500        94,500       127,000       159,500       193,500
650,000...................     33,500        67,500       102,000       137,000       172,500       208,500
700,000...................     36,000        73,000       109,500       147,000       185,000       224,000
750,000...................     39,000        78,000       117,000       157,000       197,500       239,000
800,000...................     41,500        83,000       125,000       167,500       210,500       254,500
850,000...................     44,000        88,000       132,500       177,500       223,000       269,500
900,000...................     46,500        93,000       140,000       187,500       235,500       284,500
950,000...................     49,000        98,000       147,500       197,500       248,500       300,000
1,000,000...................     51,500       103,000       155,000       208,000       261,000       315,000
1,050,000...................     54,000       108,000       163,000       218,000       273,500       330,500
1,100,000...................     56,500       113,500       170,500       228,000       286,500       345,500
1,150,000...................     59,000       118,500       178,000       238,000       299,000       360,500
1,200,000...................     61,500       123,500       185,500       248,500       311,500       376,000

The approximate credited years of service as of December 31, 2000, for the
Named Executive Officers were as follows:

Mr. Peterson................................................    36.83
Mr. Mataczynski.............................................    18.42
Mr. Noer....................................................    31.67
Mr. Bender..................................................     5.33
Mr. Bluhm...................................................    29.42

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TOTAL STOCKHOLDER RETURN COMPARISON

The graph below compares the Company's cumulative total stockholder return
on Common Stock with the cumulative total return of the Standard & Poor's 500
Composite Stock Price Index and an index of comparable peer issuers (the "Peer
Group Index") from May 31, 2000, the first date on which the Common Stock began
trading on the New York Stock Exchange, to December 31, 2000, the Company's
fiscal year end (assuming a $100 investment in each vehicle on May 31, 2000 and
the reinvestment of all dividends).

The Peer Group Index consists of the following publicly traded companies in
the global power generation industry: AES Corp., Calpine Corp., Dynegy, Inc.,
Orion Power Holdings, Inc. and Mirant Corp. In accordance with the rules of the
SEC, the returns are indexed to a value of $100 at May 31, 2000, and the returns
of each company in the Peer Group Index have been weighted according to their
market capitalization at December 31, 2000.

[PERFORMANCE GRAPH]

2000
---------------------------------------------------------------------------------
5/31     6/30       7/31       8/31       9/29       10/31      11/30      12/31
----    -------    -------    -------    -------    -------    -------    -------

NRG....................    $100    $109.16    $140.98    $157.89    $219.55    $156.39    $154.14    $167.29
Peer Group Index.......    $100    $104.08    $113.60    $139.11    $159.05    $129.51    $119.04    $140.48
S&P 500................    $100    $102.47    $100.86    $107.13    $101.47    $101.04    $ 93.08    $ 93.53

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EMPLOYMENT AGREEMENTS

DAVID H. PETERSON EMPLOYMENT AGREEMENT

The Company has entered into an employment agreement with Mr. Peterson
which provides that Mr. Peterson will be employed as the Company's highest level
executive officer. The term of the agreement expires June 27, 2004. During the
term of the agreement, Mr. Peterson's base salary will be reviewed at least
annually by the Compensation Committee of the Board of Directors for possible
increase. The agreement provides that Mr. Peterson will receive retirement and
welfare benefits no less favorable than those provided to any other officer of
the Company. In addition, the agreement provides for participation in a
supplemental executive retirement plan such that the aggregate value of the
retirement benefits that Mr. Peterson and his spouse will receive at the end of
the term of the agreement under all of the Company's defined benefit pension
plans and those of the Company's affiliates will not be less than the aggregate
value of the benefits he would have received had he continued, through the end
of the term of the agreement, to participate in the NSP Deferred Compensation
Plan, the NSP Excess Benefit Plan and the NSP Pension Plan. Such retirement
benefits include amounts to compensate Mr. Peterson for the monthly defined
benefit payments he would have received during the term of the agreement and
prior to the date of his termination of employment if monthly benefit payments
had commenced following the month in which he first became eligible for early
retirement under the Xcel Energy Pension Plan.

The agreement also provides for certain additional benefits to be paid upon
Mr. Peterson's death. If Mr. Peterson's employment is terminated by the Company
without cause, or by Mr. Peterson with good reason, in each case as defined in
the agreement, Mr. Peterson will continue to receive his salary, bonus at the
greater of target bonus or actual bonus for the last plan year prior to
termination, incentive compensation with cash replacing equity based awards and
benefits under the agreement as if he had remained employed until the end of the
term of the agreement and then retired, at which time he will be treated as
eligible for retiree welfare benefits and other benefits provided to the retired
senior executives. However, if the termination of employment is a result of a
change of control, as defined in the Equity Plan, the compensation and benefits
will be continued for the longer of 30 months or through the end of the
employment period.

In accordance with the terms of the agreement, Mr. Peterson has agreed not
to compete with the business of the Company during the period of his employment
and for one year after his termination or resignation. Mr. Peterson has also
agreed not to solicit any of the Company's customers for any business purpose
that competes with the Company's business during the period of his employment or
two years after his termination or resignation. Finally, during the period of
his employment and for two years after his termination or resignation, Mr.
Peterson has agreed not to disclose any of the Company's confidential
information to any person not authorized by the Company to receive such
confidential information.

LEONARD A. BLUHM, CRAIG A. MATACZYNSKI AND JAMES J. BENDER EMPLOYMENT
AGREEMENTS

On April 15, 1998, the Company entered into an employment agreement with
each of Messrs. Bluhm, Mataczynski and Bender. Each such agreement was to expire
on April 15, 2001, however, pursuant to the terms of an Extension to Employment
Agreement entered into between the Company and each of Messrs. Bluhm,
Mataczynski and Bender, such agreements have been extended for 45 days and will
expire on May 30, 2001. The employment agreements provide that if the employment
of Messrs. Bluhm, Mataczynski or Bender is terminated due to his death,
disability or for cause, or if any of them voluntarily resigns without good
cause, he will receive his base salary excluding incentives and employee
benefits through the date of termination or resignation. Each such agreement
further provides that if any of Messrs. Bluhm, Mataczynski or Bender is
terminated for any reason other than death, disability or cause, or if any of
them voluntarily resigns for good cause, the Company is obligated to continue to
pay such officer's then current total compensation, including base salary,
anticipated incentives and all employee benefits for a period of three years
following the date of termination or resignation.

Under the terms of each such agreement, each of Messrs. Bluhm, Mataczynski
and Bender have agreed not to compete with the Company's business during the
course of his employment and for one year
16

20

after his resignation or termination. Additionally, Messrs. Bluhm, Mataczynski
and Bender have agreed not to disclose any of the Company's confidential
information or trade secrets or use the information for his or a third party's
benefit.

RELATIONSHIPS AND RELATED TRANSACTIONS

The Company was initially incorporated in Minnesota in 1989, and was
reincorporated in Delaware in 1992, as a wholly owned subsidiary of NSP. The
Company became publicly traded on May 31, 2000. In August 2000, NSP merged with
NCE to form Xcel Energy. Following the completion in March 2001 of a public
offering by the Company of 18.4 million shares of Common Stock (the "March 2001
Offering"), Xcel Energy owns an approximate 74% interest in the Common Stock and
Class A Common Stock of the Company on a combined basis, representing 96.7% of
the total voting power of the Common Stock and Class A Common Stock on a
combined basis. In addition, 4 directors of the Company are executive officers
of Xcel Energy.

The Company and Xcel Energy have entered into material transactions and
agreements with one another and are expected to enter into material transactions
and agreements from time to time in the future. Material agreements and
transactions currently existing or currently proposed between the Company and
Xcel Energy are described below.

OPERATING AGREEMENTS

The Company has two agreements with Xcel Energy for the purchase of thermal
energy. Under the terms of the agreements, Xcel Energy charges the Company for
certain incremental costs, including fuel, labor, plant maintenance and
auxiliary power, incurred by Xcel Energy to produce thermal energy. The Company
paid $5.5 million in 2000 under these agreements. One of the agreements expires
on December 31, 2002, and the other expires on December 31, 2006.

The Company has a renewable 10-year agreement with Xcel Energy, expiring on
December 31, 2001, whereby Xcel Energy agrees to purchase refuse-derived fuel
for use in certain of its boilers, and the Company agrees to pay Xcel Energy an
incentive fee to use refuse-derived fuel. Under this agreement, the Company
received from Xcel Energy $1.5 million in 2000, and the Company paid to Xcel
Energy $2.8 million in 2000.

The Company has entered into an operation and maintenance agreement with
Xcel Energy with respect to its Elk River and Becker facilities, under which the
Company receives a base management fee and is reimbursed for costs it incurs.
The operation and maintenance agreement also provides for a management incentive
fee payable to the Company, based upon the financial performance of the
facilities. The Company earned a total management fee, in addition to reimbursed
expenses, of $2.3 million in 2000. This agreement expires on December 31, 2003.

The Company and Xcel Energy are in the final stages of negotiating an asset
purchase agreement for the sale of the Elk River and Becker facilities by Xcel
Energy to the Company. Such transaction has been approved by the boards of
directors of both the Company and Xcel Energy. Once executed, the asset purchase
agreement will be filed by Xcel Energy with the Minnesota Public Utilities
Commission for approval. The closing on the transaction may not take place
unless and until such approval is obtained.

ADMINISTRATIVE SERVICES AGREEMENT

The Company has entered into an agreement with Xcel Energy to provide for
the reimbursement of actual administrative services that each of the companies
provide to one another at an at-cost basis plus a 1% fee to cover handling
costs, working capital requirements and other miscellaneous costs. Services
provided by Xcel Energy to the Company are provided at the Company's request and
primarily include services related to benefits administration and engineering
support. Employees of the Company participate in certain employee benefit plans
of Xcel Energy. The Company paid Xcel Energy $4.7 million in 2000, as
reimbursement for the cost of services provided.
17

21

TREECYCLE AGREEMENT

In early 2001, a wholly-owned subsidiary of the Company, NRG Processing
Solutions LLC ("NRG PS"), entered into agreements with Xcel Energy to provide
for the assignment by Xcel Energy to NRG PS of various leases and contracts with
respect to Xcel Energy's Treecycle business unit. The Treecycle operation
manages wood waste from Xcel Energy's line-clearance operations in the
Minneapolis and St. Paul metropolitan area. In conjunction with this transfer,
the Company and Xcel Energy have also entered into a one-year processing
agreement whereby NRG PS agreed to process Xcel Energy's wood waste until
December 31, 2001, for a minimum fee of $500,000. Such agreements were approved
by the Minnesota Public Utilities Commission in April 2001.

TAX ALLOCATION AGREEMENT

The Company was formerly a member of Xcel Energy's consolidated tax group
for United States federal income tax purposes. Following the completion of the
March 2001 Offering, Xcel Energy owns equity securities representing less than
80% of the Company's value and, accordingly, the Company is no longer a member
of Xcel Energy's consolidated tax group. The responsibility for payment of taxes
and the allocation between Xcel Energy and the Company of tax benefits and
liabilities was previously governed by a tax sharing agreement between the
Company and Xcel Energy. Such tax sharing agreement was replaced by a tax
allocation agreement, which became effective as of December 2000, that
formalizes the various practices which arose under the previous tax sharing
agreement and reflects the change in the Company's status from a wholly-owned
subsidiary of Xcel Energy to a majority-owned subsidiary.

OPTION AGREEMENT

The Company has entered into an option agreement with Xcel Energy under
which the Company has granted to Xcel Energy and its affiliates a continuing
option to purchase additional shares of Common Stock. In the event that the
Company issues equity securities, Xcel Energy and its affiliates may exercise
options to purchase shares of Common Stock to the extent necessary to maintain
or restore an ownership percentage of 80% of the outstanding shares of Common
Stock and Class A Common Stock on a combined basis. Such option agreement
expires if and when Xcel Energy and its affiliates beneficially own less than
30% of the outstanding Common Stock and Class A Common Stock on a combined
basis.

Following the March 2001 Offering, Xcel Energy's ownership in the Company
was reduced to approximately 74% of the outstanding shares of Common Stock and
Class A Common Stock on a combined basis. Xcel Energy waived its rights under
such option agreement in connection with the March 2001 offering.

REGISTRATION RIGHTS AGREEMENT

The Company has entered into a registration rights agreement with Xcel
Energy, under which the Company has agreed to register the shares of Common
Stock issuable upon conversion of shares of Class A Common Stock held by Xcel
Energy and its affiliates under the following circumstances:

- Demand Rights.  Upon the written request of Xcel Energy, the Company will
register shares of Common Stock held by Xcel Energy and its affiliates
specified in its request for resale under an appropriate registration
statement filed and declared effective by the SEC. Xcel Energy may make a
demand so long as:

- it requests registration of shares with an anticipated aggregate
offering price of at least $20 million;

- it has made no more than four such previous requests;

- the Company has not completed a registered offering of Common Stock
within the last 180 days; and

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- the Chief Executive Officer of the Company has not determined it
advisable to delay the offering for a period of up to 180 days, which
determination may only be made once every twelve months.

- Piggyback Rights.  If at any time the Company registers newly issued
shares of Common Stock or registers outstanding shares of Common Stock
for resale on behalf of any holder of Common Stock, Xcel Energy and its
affiliates may elect to include in such registration any shares of Common
Stock it holds. If the offering is an underwritten offering, the managing
underwriter may exclude up to 75% of the shares of Xcel Energy and its
affiliates if market factors dictate, but only if Xcel Energy and its
affiliates is not exercising a demand right, described above, and only if
all other shares being sold by other stockholders are excluded first.

- Lockup.  In consideration for these registration rights, Xcel Energy and
its affiliates agreed not to sell shares of Common Stock for a period of
180 days from the date of the Company's initial public offering.

- Termination.  The registration rights agreement will terminate upon the
earlier of seven years from the date of the agreement or the date on
which all remaining shares of Common Stock held by Xcel Energy and its
affiliates, or issuable to Xcel Energy and its affiliates upon conversion
of Class A Common Stock, may be sold in any 90-day period in compliance
with Rule 144 under the Securities Act.

Xcel Energy waived its rights under such registration rights agreement in
connection with the March 2001 Offering.

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NRG ENERGY, INC.

AUDIT COMMITTEE REPORT

The Audit Committee of the Company oversees the Company's financial
reporting process on behalf of the Board of Directors. Management has the
primary responsibility for the financial statements and the reporting process,
including the systems of internal controls.

The Audit Committee has three members, each of whom is independent (as
defined by the New York Stock Exchange, where the Company's shares are listed).
The Audit Committee operates under a written charter, which is reviewed and
reassessed annually and approved by the Board of Directors. A copy of the Audit
Committee Charter is included as Appendix A to this Proxy Statement.

In fulfilling its oversight responsibilities regarding the 2000 financial
statements, the Audit Committee reviewed with management and the Company's
independent auditors the audited financial statements contained in the Annual
Report on Form 10-K. The Audit Committee's review included a discussion of the
quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgments and the clarity of disclosures in the
financial statements.

The Audit Committee also reviewed with the Company's independent auditors,
who are responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, such other
matters as are required to be discussed with the Audit Committee under the
Statement on Auditing Standards No. 61. In addition, the Audit Committee has
discussed with the independent auditors the auditor's independence from
management and the Company, including the matters in the written disclosures
required by the Independence Standards Board and received by the Audit
Committee.

The Audit Committee discussed with the Company's independent auditors the
overall scope and plans for their respective audits for the year 2000. The Audit
Committee meets with Xcel Energy's internal auditors and the Company's
independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls and the overall quality of the Company's financial reporting. The Audit
Committee held three meetings during 2000.

In reliance on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board has approved,
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended December 31, 2000, for filing with the SEC. The Audit
Committee and the Board of Directors have also recommended the selection of the
Company's independent auditors for 2001.

AUDIT FEES

PricewaterhouseCoopers LLP, the Company's independent public accountants,
billed an aggregate of $900,000 for their professional services related to the
Company's 2000 annual financial statements and review of the Company's quarterly
financial statements included in the Company's Quarterly Reports on Form 10-Q
filed in 2000.

ALL OTHER FEES

In addition to the fees disclosed in the above paragraph,
PricewaterhouseCoopers LLP billed an aggregate of $3,040,000 for all other
professional services rendered during 2000. Of this amount $1,613,000 was for
consulting related to due diligence projects, $655,000 was for assistance in
completing the Company's initial public offering and other similar SEC related
filings, $484,000 was for consulting related to tax compliance services,
$182,000 was for consulting related to expatriate tax return services and
$106,000 related to benefit plan audits and various accounting related
consultations. No services were provided by PricewaterhouseCoopers LLP with
respect to financial information systems design and implementation.

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The Audit Committee has considered and does not believe the provision of
the services described in the preceding paragraph is incompatible with the
maintenance of PricewaterhouseCoopers LLP's independence.

WILLIAM A. HODDER, CHAIRMAN
LUELLA G. GOLDBERG
PIERSON M. GRIEVE

REPORT OF MANAGEMENT

Management is responsible for the preparation and integrity of the
Company's financial statements. The 2000 financial statements, which are
contained in the Annual Report on Form 10-K, have been prepared in accordance
with generally accepted accounting principles and necessarily include some
amounts that are based on management's estimates and judgment.

To fulfill its responsibility, management maintains a strong internal
control structure, supported by formal policies and procedures that are
communicated throughout the Company. Management also utilizes a staff of
internal auditors who evaluate the adequacy of and investigate the adherence to
these controls, policies and procedures.

PricewaterhouseCoopers LLP, the Company's independent public accountants,
have audited the 2000 financial statements and have rendered an opinion as to
the statements' fairness of presentation, in all material respects, in
conformity with generally accepted accounting principles in the United States.
During the audit, they obtained an understanding of the Company's internal
control structure and performed tests and other procedures to the extent
required by generally accepted auditing standards in the United States.

The Board of Directors pursues its oversight role with respect to the
Company's financial statements through the Audit Committee, which is comprised
solely of non-management directors. The Audit Committee meets periodically with
the Company's independent public accountants, internal auditors and management
to ensure that all are properly discharging their responsibilities. The Audit
Committee approves the scope of the annual audit and reviews the recommendations
that the Company's independent public accountants have for improving the
internal control structure. The Board of Directors, on the recommendation of the
Audit Committee, engages the Company's independent public accountants.

Both PricewaterhouseCoopers LLP, the Company's independent public
accountants, and the internal auditors have unrestricted access to the Audit
Committee.

DAVID H. PETERSON,                                  LEONARD A. BLUHM
CHAIRMAN OF THE BOARD, PRESIDENT                     EXECUTIVE VICE PRESIDENT AND
AND CHIEF EXECUTIVE OFFICER                          CHIEF FINANCIAL OFFICER

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PROPOSAL NO. 2 -- PROPOSAL TO APPROVE THE
NRG ENERGY, INC. 2000 LONG-TERM INCENTIVE COMPENSATION PLAN

The NRG Energy, Inc. 2000 Long-Term Incentive Compensation Plan was
originally adopted by the Company's Board of Directors and the Company's sole
stockholder, NSP, prior to the completion of the Company's initial public
offering. The 2000 Plan is being submitted to the Company's stockholders for
approval at this time so that certain awards made under the 2000 Plan will be
eligible to qualify as "performance-based" compensation, as that term is defined
in Section 162(m) of the Code, and exempted from the one million dollar
deduction limited imposed by Section 162(m) of the Code. In the event that the
2000 Plan is not approved by the stockholders, no further awards will be made
under such plan to the "covered employees," as that term is defined in Section
162(m) of the Code. A summary of the material provisions of the 2000 Plan is set
forth below and is qualified in its entirety by reference to the 2000 Plan as
set forth in Exhibit B.

OBJECTIVES.  The objectives of the 2000 Plan are: (i) to optimize the
profitability and growth of the Company through annual and long-term incentives
that are consistent with the Company's goals and that link the personal
interests of participants with those of the Company's stockholders; (ii) to
provide participants with an incentive for excellence in individual performance;
and (iii) to promote teamwork. The 2000 Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract and retain the
services of participants who make significant contributions to the Company's
success and allow such participants to share in such success.

ADMINISTRATION.  To the extent permitted under the terms of the 2000 Plan,
the Board has delegated the administration of the 2000 Plan to the Incentive
Plan Subcommittee. The Incentive Plan Subcommittee or the Board of Directors,
where applicable, has the power, except as may be limited by law or the
Certificate of Incorporation or Bylaws of the Company and subject to the
provisions of the 2000 Plan: to select employees and directors to participate in
the 2000 Plan; to determine the sizes and types of awards; to determine the
terms and conditions of awards; to construe and interpret the 2000 Plan and any
agreement or instrument entered into under the 2000 Plan; to establish, amend or
waive rules and regulations for the administration of the 2000 Plan; and to
amend the terms and conditions of any outstanding award. All determinations and
decisions made by the Incentive Plan Subcommittee or the Board of Directors,
where applicable, pursuant to the provisions of the 2000 Plan are final,
conclusive and binding.

SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS.  Subject to adjustment in
connection with a change in corporate capitalization, the number of shares of
Common Stock reserved for issuance under the 2000 Plan is 9,000,000, no more
than 900,000 of which may be granted in the form of restricted stock. As of
March 15, 2001, options to purchase approximately 4,331,840 shares of Common
Stock were outstanding. Unless and until the Incentive Plan Subcommittee
determines that an award to a "covered employee" will not be designated to
comply with the "performance-based" compensation exception of Section 162(m) of
the Code, the following restrictions apply to grants of awards in any one fiscal
year to any one participant: (i) the maximum aggregate number of shares of
Common Stock that may be granted in the form of stock options is 900,000; (ii)
the maximum aggregate number of shares of Common Stock that may be granted in
the form of stock appreciation rights is 900,000; (iii) the maximum aggregate
grant of restricted stock is 250,000; and the maximum aggregate payout
(determined as of the end of the applicable performance period) with respect to
cash-based awards or awards of performance shares or performance units is equal
to the value of 250,000 shares of Common Stock.

ELIGIBILITY AND PARTICIPATION.  Any person who is an employee or member of
the Board of Directors of the Company or any subsidiary or affiliate is eligible
to participate in the 2000 Plan, however, only employees of the Company or its
subsidiaries or affiliates are eligible to receive incentive stock options. As
of March 15, 2001, approximately 2,200 employees and each member of the Board of
Directors were designated as currently eligible to participate in the 2000 Plan.

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STOCK OPTIONS.  The Incentive Plan Subcommittee or the Board of Directors,
where applicable, may grant options in such number and upon such terms as it
determines. Each option grant will be evidenced by an award agreement specifying
the option price, the duration of the option, the number of shares of Common
Stock to which the option pertains and whether the option is intended to be an
incentive stock option or a non-qualified stock option. The option price for
each option granted will be equal to at least 100% of the fair market value of a
share of Common Stock on the date the option is granted; provided, however, that
certain options previously granted in place of equity units under the Equity
Plan may have an option price of less than 100% of the fair market value of a
share of Common Stock on the date the option was granted. The closing price of
the Common Stock on March 15, 2001 was $29.96. The Incentive Plan Subcommittee
or the Board of Directors, where applicable, will determine the expiration of
each option grant; provided, however, that no incentive stock option will be
exercisable later than the tenth anniversary of the date of its grant. Options
will be exercisable at such times and be subject to such restrictions and
conditions as approved by the Incentive Plan Subcommittee or the Board of
Directors, where applicable. The full option price of any option must be paid to
the Company (i) in cash or its equivalent, (ii) by tendering shares of Common
Stock which have an aggregate fair market value at the time of exercise equal to
the full option price, or (iii) a combination of cash and shares of Common
Stock. Additionally, the Incentive Plan Subcommittee or the Board, where
applicable, may allow for the cashless exercise of options, subject to
securities law restrictions.

STOCK APPRECIATION RIGHTS.  The Incentive Plan Subcommittee or the Board,
where applicable, may grant Freestanding SARs and Tandem SARs in such number and
upon such terms as it determines. Each SAR will be evidenced by an award
agreement that specifies the grant price and the term of the SAR. The grant
price of a Freestanding SAR will equal the fair market value of a share of
Common Stock on the date of such grant. The grant price of Tandem SARs will
equal the option price of the related option. The term of the SAR will be
determined by the Incentive Plan Subcommittee or the Board, where applicable,
but in no event will exceed ten years. Tandem SARs may be exercised for all or
part of the shares of Common Stock subject to the related option upon surrender
of the right to exercise the equivalent portion of the related option; provided,
however, that a Tandem SAR may be exercised only with respect to the shares of
Common Stock for which its related option is then exercisable. With respect to a
Tandem SAR granted in connection with an incentive stock option: (i) the Tandem
SAR will expire no later than the expiration of the underlying incentive stock
option; (ii) the value of the payout with respect to the Tandem SAR may be for
no more than 100% of the difference between the option price of the underlying
incentive stock option and the fair market value of the shares of Common Stock
subject to the incentive stock option at the time the Tandem SAR is exercised;
and (iii) the Tandem SAR may be exercised only when the fair market value of the
shares of Common Stock subject to the incentive stock option exceed the option
price of the incentive stock option. Freestanding SARs may be exercised upon
whatever terms and conditions the Incentive Plan Subcommittee or the Board of
Directors, where applicable, imposes on such SARs. Upon exercise of a SAR, a
participant is entitled to receive payment from the Company in an amount
determined by multiplying (a) the difference between the fair market value of a
share of Common Stock on the date of exercise over the grant price; by (b) the
number of shares of Common Stock with respect to which the SAR is exercised. At
the discretion of the Incentive Plan Subcommittee or the Board of Directors,
where applicable, the payment made in connection with the exercise of a SAR may
be in cash, the equivalent value in shares of Common Stock or in a combination
of cash and shares of Common Stock.

RESTRICTED STOCK.  The Incentive Plan Subcommittee or the Board of
Directors, where applicable, may grant restricted stock under the 2000 Plan.
Such grants of restricted stock may be made without requiring any payment by the
participant for such shares. Grants of restricted stock will be evidenced by a
restricted stock award agreement specifying the period of restriction and the
number of shares of restricted stock granted. Shares of restricted stock granted
under the 2000 Plan may not be sold or otherwise transferred or assigned until
the end of the applicable period of restriction or upon earlier satisfaction of
any other conditions. The Incentive Plan Subcommittee or the Board of Directors,
where applicable, may impose such conditions or restrictions on any shares of
restricted stock granted pursuant to the 2000 Plan as it may deem advisable
including, but not limited to, a requirement that participants pay a stipulated
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purchase price for each share of restricted stock, restrictions based upon the
achievement of specific performance goals, time-based restrictions on vesting
following the attainment of the performance goals or restrictions under
applicable federal or state securities laws. The Incentive Plan Subcommittee or
the Board of Directors, where applicable, may grant holders of restricted stock
the right to exercise full voting rights with respect to such shares during the
period of restriction. Further, the Incentive Plan Subcommittee or the Board of
Directors, where applicable, may determine that, subject to certain
restrictions, holders of restricted stock will be credited with dividends paid
with respect to such stock.

PERFORMANCE UNITS, PERFORMANCE SHARES AND CASH-BASED AWARDS.  The Incentive
Plan Subcommittee or the Board of Directors, where applicable, may grant
performance units, performance shares and/or cash-based awards, in such number
and upon such terms as it determines. The grant of performance units,
performance shares and/or cash-based awards may be made without requiring any
payment by the participant for such awards. The initial value of performance
units and the value of cash based awards are determined by the Incentive Plan
Subcommittee or the Board of Directors, where applicable, at the time of the
grant. Performance shares will have an initial value equal to the fair market
value of a share of Common Stock on the date of grant. The number and the value
of performance units, performance shares and cash-based awards paid to
participant will be determined by the extent to which certain performance goals
are met. Payment of earned performance units, performance shares and cash-based
awards will be made in a single lump sum following the close of the applicable
performance period and may be made in the form of cash or shares of Common
Stock. Shares of Common Stock may be granted subject to any restrictions deemed
appropriate by the Incentive Plan Subcommittee or the Board of Directors, where
applicable. At the discretion of the Incentive Plan Subcommittee or the Board of
Directors, where applicable, participants may be entitled to receive dividends
declared with respect to shares of Common Stock earned in connection with grants
of performance units and/or performance stock but not yet distributed to such
participant. Additionally, at the discretion of the Incentive Plan Subcommittee
or the Board of Directors, where applicable, participants may be entitled to
exercise their voting rights with respect to such share of stock.

PERFORMANCE MEASURES.  Until the stockholders of the Company approve a
change, the performance measures to be used to determine the degree of payout
and vesting with respect to awards to "covered employees" which are designated
to qualify for the "performance-based" compensation exception to Section 162(m)
of the Code include all, or any one or more, of the following: earnings per
share; net income (before or after taxes); return measures (including, but not
limited to, return on assets, equity or sales); cash flow return on investments
which equals net cash flows divided by owners equity; earnings before or after
taxes; gross revenues; gross margins and share price (including, but not limited
to, growth measures and total stockholder return). The Incentive Plan
Subcommittee or the Board of Directors, where applicable, have discretion to
adjust the determination of the degree of attainment of the pre-established
performance goals; provided, however, that awards designated to qualify for the
"performance-based" compensation exception to Section 162(m) of the Code and
held by a "covered employee," may not be adjusted upward. To the extent that
awards designated to qualify for the "performance based" compensation exception
to 162(m) of the Code and held by a "covered employee" include performance
measures, the Incentive Plan Subcommittee will, following the close of the
performance period, certify in writing that such performance measures have been
attained. In the event that applicable tax and securities laws change to permit
the Incentive Plan Subcommittee or the Board of Directors, where applicable,
discretion to alter the performance measures without obtaining stockholder
approval of such changes, the Incentive Plan Subcommittee or the Board of
Directors, where applicable, will have the sole discretion to make such changes
without obtaining stockholder approval.

CHANGE IN CONTROL.  Except as otherwise provided in the 2000 Plan, for
purposes of the 2000 Plan a "change of control" will be deemed to have occurred
as of the first day that one or more of the following are satisfied: any person
becomes the beneficial owner, directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of the Company's
then outstanding securities; during any period of 2 consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors cease for any reason to constitute a majority thereof; or the
stockholders of the Company approve a plan of complete liquidation, an agreement
for the sale of all or substantially all of the

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Company's assets or a merger or similar corporate reorganization that would
result in the voting securities of the Company outstanding immediately prior to
such merger or reorganization continuing to represent at least 50.1% of the
combined voting power of the voting securities of the Company outstanding
immediately after the merger or reorganization. Upon a "change in control," all
options and SARs granted under the 2000 Plan will become immediately exercisable
and will remain exercisable throughout their entire term; any restriction
periods or restrictions imposed on restricted shares that are not
performance-based will lapse; and target payout opportunities attainable under
all outstanding awards of performance-based restricted stock, performance units,
performance shares and cash-based awards will be deemed to have been fully
earned for the entire performance period as of the effective date of the "change
in control." The vesting of all awards denominated in shares of Common Stock
will be accelerated as of the effective date of the "change in control," and
there will be paid out to participants within thirty (30) days following the
effective date of the "change in control" a pro rata number of shares based upon
an assumed achievement of all relevant targeted performance goals and upon the
length of time within the performance period that has elapsed prior to the
"change in control." Awards denominated in cash will be paid pro rata to
participants in cash within thirty (30) days following the effective date of the
"change in control," with the proration determined as a function of the length
of time within the performance period that has elapsed prior to the "change in
control," and based on an assumed achievement of all relevant targeted
performance goals

AMENDMENT, MODIFICATION AND TERMINATION.  The Board of Directors may, at
any time, amend or terminate the 2000 Plan; provided, however, that no amendment
or termination may adversely affect in any material way any award previously
granted under the 2000 Plan without the written consent of the holder of such
award. Additionally, as the Board deems appropriate, it may make adjustments in
the terms and conditions of awards in recognition of unusual or non-recurring
events affecting the Company or the financial statement of the Company or of
changes in applicable laws, regulations or accounting principles.

FEDERAL TAX CONSIDERATIONS.  The following is a brief description of the
federal income tax treatment that will generally apply to awards under the 2000
Plan based on current federal income tax rules.

Non-Qualified Stock Options.  The grant of a non-qualified stock option
will not result in taxable income to the participant. Generally, the participant
will realize ordinary income at the time of exercise in an amount equal to the
excess of the fair market value of the Common Stock acquired over the exercise
price for those shares and the Company will be entitled to a corresponding
deduction. Gains or losses realized by the participant upon the subsequent
disposition of such shares will be treated as capital gains and losses, with the
basis in such shares of Common Stock equal to the fair market value of the
shares at the time of exercise.

Incentive Stock Options.  The grant of an incentive stock option will not
result in taxable income to the participant. The exercise of an incentive stock
option will not result in taxable income to the participant provided that the
participant was, without a break in service, an employee of the Company or an
affiliate or subsidiary during the period beginning on the date of the grant of
the option and ending on the date three months prior to the date of exercise
(one year prior to the date of exercise if the participant is disabled, as that
term is defined in the Code). The excess of the fair market value of the Common
Stock at the time of the exercise of an incentive stock option over the exercise
price is an adjustment that is included in the calculation of the participant's
alternative minimum taxable income for the tax year in which the incentive stock
option is exercised.

If the participant does not sell or otherwise dispose of the Common Stock
within two years from the date of the grant of the incentive stock option, nor
within one year after the transfer of such Common Stock to the participant,
then, upon disposition of such Common Stock, any amount realized in excess of
the exercise price will be taxed to the participant as a capital gain and the
Company will not be entitled to a corresponding deduction. A capital loss will
be recognized to the extent that the amount realized is less than the exercise
price. If the foregoing holding period requirements are not met, the participant
will generally realize ordinary income at the time of the disposition of the
shares, in an amount equal to the lesser of (i) the excess of the fair market
value of the Common Stock on the date of exercise over the

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exercise price, or (ii) the excess, if any, of the amount realized upon
disposition of the shares over the exercise price and the Company will be
entitled to a corresponding deduction. If the amount realized upon the
disposition of the shares exceeds the value of the shares on the date of
exercise, any additional amount will be a capital gain. If the amount realized
upon the disposition of the shares is less than the exercise price, the
participant will recognize no income, and a capital loss will be recognized
equal to the excess of the exercise price over the amount realized upon the
disposition of the shares.

Stock Appreciation Rights.  The grant of an SAR will not result in taxable
income to the participant. Generally, upon exercise of an SAR, the amount of
cash or the fair market value of Common Stock received will be taxable to the
participant as ordinary income and the Company will be entitled to a
corresponding deduction. If the SAR is settled in Common Stock, gains and losses
realized by the participant upon the disposition of any such shares will be
treated as capital gains and losses, with the basis in such shares equal to the
fair market value of the shares at the time of exercise.

Performance Units.  A participant who has been granted a performance unit
award will not realize taxable income at the time of grant and the Company will
not be entitled to a corresponding deduction. Generally, the participant will
have compensation income at the time of distribution equal to the amount of cash
received and the then fair market value of the distributed shares and the
Company will be entitled to a corresponding deduction.

Restricted and Other Stock.  A participant who has been granted a
restricted stock award will not realize taxable income at the time of grant and
the Company will not be entitled to a corresponding deduction, assuming that the
restrictions constitute a "substantial risk of forfeiture" for federal income
tax purposes. Upon the vesting of stock subject to an award, the holder will
realize ordinary income in an amount equal to the then fair market value of
those shares, and the Company will be entitled to a corresponding deduction.
Gains or losses realized by the participant upon disposition of such shares will
be treated as capital gains and losses, with the basis in such shares equal to
the fair market value of the shares at the time of vesting. Dividends paid to
the holder during the restriction period, if so provided, will also be
compensation income to the participant and the Company will be entitled to a
corresponding deduction. A participant may elect pursuant to Section 83(b) of
the Code to have income recognized at the date of grant of a restricted stock
award and to have the applicable capital gain holding period commence as of that
date and the Company will be entitled to a corresponding deduction. The fair
market value of unrestricted stock is taxable as compensation to the participant
(and deductible by the Company) at the time the stock is transferred.

Withholding of Taxes. The Company may withhold amounts from participants to
satisfy withholding tax requirements. Subject to guidelines established by the
Board, participants may have Common Stock withheld from awards or may tender
Common Stock to the Company to satisfy tax withholding requirements.

One Million Dollar Limit. As previously noted, Section 162(m) of the Code
disallows a federal income tax deduction for certain compensation in excess of
one million dollars per year paid to each of the Company's CEO and its four
other most highly compensated executive officers. Compensation that qualifies as
"performance-based" compensation is not subject to the one million dollar limit.
The 2000 Plan has been structured to permit awards and payments that will
satisfy the requirements applicable to "performance-based" compensation.

Tax Advice. The preceding discussion is based on federal tax laws and
regulations presently in effect, which are subject to change, and the discussion
does not purport to be a complete description of the federal income tax aspects
of the 2000 Plan. A participant may also be subject to state and local taxes in
connection with the grant of awards under the 2000 Plan. The Company suggests
that participants consult with their individual tax advisors to determine the
applicability of the tax rules to the awards granted to them in their personal
circumstances.

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PRIOR ISSUANCES OF OPTIONS UNDER THE 2000 PLAN.  The following table sets
forth certain information regarding options received under the 2000 Plan from
its inception on May 4, 2000, through March 15, 2001, by (i) the Named Executive
Officers, (ii) all current executive officers as a group, (iii) each nominee for
election as a director who has received options under the 2000 Plan, (iv) all
current directors who are not executive officers as a group, and (v) all
employees, including current officers who are not executive officers, as a
group.

AGGREGATE AMOUNT OF COMMON STOCK
SUBJECT TO OPTIONS GRANTED UNDER
THE 2000 PLAN FROM MAY 4, 2000
NAME OF PERSON OR GROUP                            THROUGH MARCH 15, 2001
-----------------------                       --------------------------------

David H. Peterson...........................................                 740,695(1)
Chairman, President & Chief Executive Officer
Craig A. Mataczynski........................................                 186,255(2)
Senior Vice President-North America
John Noer...................................................                  60,000
Senior Vice President-Worldwide Operations
James J. Bender.............................................                 175,794(3)
Vice President & General Counsel
Leonard A. Bluhm............................................                 237,291(4)
Executive Vice President & Chief Financial Officer
Pierson M. Grieve...........................................                   5,000
Nominee for Director
Luella G. Goldberg..........................................                   5,000
Nominee for Director
William A. Hodder...........................................                   5,000
Nominee for Director
All current executive officers as a group...................               1,911,650(5)
All current directors who are not executive officers as a
group.......................................................                  15,000
All employees, including current officers who are not
executive officers, as a group............................               2,405,190

---------------
(1) Includes 620,695 options granted to replace equity units held under the
Equity Plan.

(2) Includes 126,255 options granted to replace equity units held under the
Equity Plan.

(3) Includes 115,794 options granted to replace equity units held under the
Equity Plan.

(4) Includes 177,291 options granted to replace equity units held under the
Equity Plan.

(5) Includes 1,340,850 options granted to current executive officers to replace
equity units held under the Equity Plan.

The amounts that would be receivable by the individuals or groups named in
the table above under the 2000 Plan in the future are not determinable at this
time.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THIS
PROPOSAL TO APPROVE THE 2000 PLAN.

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PROPOSAL NO. 3 -- PROPOSAL TO APPROVE THE
ANNUAL INCENTIVE PLAN FOR DESIGNATED CORPORATE OFFICERS

The Annual Incentive Plan for Designated Corporate Officers (the "Annual
Incentive Plan") was adopted by the Board of Directors of the Company on
February 21, 2001, subject to stockholder approval. If the Annual Incentive Plan
is approved by the stockholders, incentive payments made under such plan will
qualify as "performance based" compensation, which is exempt from the one
million dollar deduction limited imposed by Section 162(m) of the Code. In the
event that the Annual Incentive Plan is not approved by the stockholders, no
compensation will be paid under such plan. A summary of the material provisions
of the Annual Incentive Plan is set forth below and is qualified in its entirety
by reference to the Annual Incentive Plan as set forth in Exhibit C.

PURPOSE.  The principal purpose of the Annual Incentive Plan is to provide
incentives and rewards to key senior executive officers of the Company for
contributing to the success and growth of the Company and to assist the Company
in attracting, motivating and retaining such key senior executive officers.
Amounts paid under the Annual Incentive Plan are intended to qualify as
"performance based" compensation, which is exempt from the one million dollar
deduction limit imposed by Section 162(m) of the Code.

ADMINISTRATION OF THE PLAN.  The Annual Incentive Plan will be administered
by the compensation committee, as that term is defined in the Annual Incentive
Plan. The compensation committee, at any time on or before the 90th day of each
performance period, will designate participants for such performance period,
establish targeted bonus percentages for the performance period for each
participant and establish company performance factors for the performance period
for each participant. Furthermore, following the close of each performance
period and prior to payment of any bonus under the Annual Incentive Plan, the
compensation committee must certify in writing that the company performance
factors and all other factors upon which a bonus is based have been attained.

COMPANY PERFORMANCE FACTORS.  The company performance factors under the
Annual Incentive Plan will be directly and specifically tied to one or more of
the following business criteria, determined with respect to the Company:
consolidated pre-tax earnings, net revenues, net earnings, operating income,
earnings before interest and taxes, cash flow, return on equity, return on net
assets employed, earnings per share or other quantifiable non-financial
strategic operational measures including but not limited to safety, for the
applicable performance period. All such company performance factors will be
computed in accordance with generally accepted accounting principles as in
effect from time to time and as applied by the Company in the preparation of its
financial statements and subject to such other special rules and conditions as
the compensation committee may establish at any time ending on or before the
90th day of the applicable performance period. Such company performance factors
will constitute the sole business criteria upon which the performance goals
under the Annual Incentive Plan will be based.

ELIGIBILITY.  The President and Chief Executive Officer of the Company, and
any of the key senior executive officers of the Company who are designated by
the compensation committee at any time on or before the 90th day of each
performance period, may participate in the Annual Incentive Plan.

LIMITATIONS ON BONUS PAYMENTS.  Each participant in the Annual Incentive
Plan will receive a bonus payment for each performance period in an amount not
greater than: the participant's base pay for the performance period, the
participant's targeted bonus percentage for the performance period or the
participant's company performance factor for the performance period.
Furthermore, no participant will receive a bonus payment under the Annual
Incentive Plan for any performance period in excess of $4,000,000. Finally, the
compensation committee retains sole discretion to reduce the amount of or
eliminate any bonus otherwise payable under the Annual Incentive Plan. In no
event will any participant receive a bonus payment if the company performance
factor and all other factors on which the bonus payment is based is not achieved
during the performance period.

EFFECTIVE DATE, AMENDMENTS AND TERMINATION.  Subject to stockholder
approval, the Annual Incentive Plan will become effective as of January 1, 2001.
The compensation committee may amend the Annual

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Incentive Plan prospectively at any time and for any reason deemed sufficient by
it without notice to any person affected by such plan. Likewise, the
compensation committee may terminate or curtail the benefits of the Annual
Incentive Plan both with regard to persons expecting to receive benefits under
such plan in the future and persons already receiving benefits at any time and
for any reason deemed sufficient by it without notice. In the event that the
Annual Incentive Plan has not been previously discontinued or terminated, the
Annual Incentive Plan will terminate on December 31, 2011. No bonus may be
granted after the termination of the Annual Incentive Plan; provided, however,
that a payment with respect to a performance period that begins before such
termination may be made after such termination. Additionally, the authority of
the compensation committee to amend the Annual Incentive Plan extends beyond the
termination of such plan.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THIS
PROPOSAL TO APPROVE THE ANNUAL INCENTIVE PLAN.

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PROPOSAL NO. 4 -- PROPOSAL TO RATIFY
THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS

Subject to ratification by the stockholders, the Board of Directors has
appointed PricewaterhouseCoopers LLP, as the independent auditors of the Company
for the year ending December 31, 2001. PricewaterhouseCoopers has performed this
function for the Company commencing with the fiscal year 1995. Members of
PricewaterhouseCoopers will be present at the Annual Meeting, will have the
opportunity to make a statement if they so desire and will be available to
respond to appropriate questions from stockholders.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF AUDITORS.

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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under federal securities laws, our directors and executive officers are
required to report, within specified monthly and annual due dates, their initial
ownership in the Company's securities and subsequent acquisitions, dispositions
or other transfers of interest in such securities. The Company is required to
disclose whether it has knowledge that any person required to file such a report
may have failed to do so in a timely manner. To the knowledge of the Company,
all of its directors and officers subject to such reporting obligations have
satisfied their reporting obligations in full for 2000.

QUORUM AND VOTE REQUIRED

The presence in person or by proxy of the holders of a majority of the
voting power of the shares of Common Stock and Class A Common Stock issued,
outstanding and entitled to vote at a meeting for the transaction of business is
required to constitute a quorum. The election of each director will be decided
by plurality vote. As a result, any shares not voted for a director (whether by
abstention, broker non-vote or otherwise) have no impact on the election of
directors except to the extent the failure to vote for an individual results in
another individual receiving a larger number of votes. Approval of the 2000
Plan, approval of the Annual Incentive Plan and ratification of the selection of
independent public accountants require the affirmative vote of the holders of a
majority of the shares of Common Stock and Class A Common Stock present in
person or by proxy at the Annual Meeting. Abstention from voting on these
matters are treated as votes against such matters, while broker non-votes are
treated as shares neither present nor entitled to vote.

2002 STOCKHOLDER PROPOSALS

Any proposal by a stockholder intended to be included in the proxy
statement for the annual stockholder meeting in 2002 must be received by the
Secretary of the Company at 901 Marquette Avenue, Suite 2300, Minneapolis,
Minnesota, 55402, not later than the close of business on December 30, 2001.
Proposals received by that date will be included in the 2002 Proxy Statement if
the proposals are proper for consideration at an annual meeting and are required
for inclusion in the proxy statement by, and conform to, the rules of the SEC.

Even in the event that a proposal by a stockholder is not intended to be
included in the proxy statement, the Company's Bylaws provide that in order for
such proposal to be properly brought before an annual meeting by a stockholder,
the Secretary of the Company must receive written notice thereof by December 30,
2001. The notice must contain (i) a brief description of the business desired to
be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and address, as they appear on the
Company's books, of the stockholder proposing such business, (iii) the class and
number of shares of the Company which are beneficially owned by the stockholder,
and (iv) any material interest of the stockholder in such business.

INVESTOR INFORMATION

STOCKHOLDERS AND OTHER PERSONS MAY OBTAIN ADDITIONAL INFORMATION ABOUT THE
COMPANY BY VISITING THE COMPANY'S WEB SITE AT WWW.NRGENERGY.COM. STOCKHOLDERS
INTERESTED IN OBTAINING, WITHOUT COST, COPIES OF THE EXHIBITS TO THE COMPANY'S
ANNUAL REPORT ON FORM 10-K MAY DO SO BY WRITING TO JAMES J. BENDER, VICE
PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY, 901 MARQUETTE AVENUE, SUITE
2300, MINNEAPOLIS, MINNESOTA, 55402.

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OTHER BUSINESS

The Company does not know of any business, other than that described in the
proxy statement, that may be presented for action at the Annual Meeting of
Stockholders. If any other matters are properly presented at the meeting for
action, the persons named in the accompanying proxy will vote upon them in
accordance with their best judgment.

By order of the Board of Directors
JAMES J. BENDER
Vice President, General Counsel
and Corporate Secretary
Minneapolis, Minnesota
April 26, 2001

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APPENDIX A

NRG ENERGY, INC.
AUDIT COMMITTEE CHARTER

A. AUTHORITY.  The Audit Committee is granted the authority by the Board of
Directors to perform each of the specific duties enumerated in this Committee
Charter. The Audit Committee will be provided adequate resources to discharge
its responsibilities and will receive support from the independent auditors
and/or the Xcel Energy, Inc. Audit Services Department (or NRG internal audit
department if such entity is established). The Audit Committee shall have the
authority to retain special legal, accounting, or other consultants to advise
the Committee. The Audit Committee may request any officer or employee of the
Company or any of its subsidiaries or the Company's outside counsel or
independent auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.

B. RESPONSIBILITY.  The Audit Committee is appointed by the Board to assist
the Board in fulfilling the Board's oversight responsibilities relating to (1)
the integrity of the annual financial statements of the Company, (2) the
compliance by the Company with legal and regulatory requirements and (3) the
independence and performance of the Company's external auditors.

The Audit Committee is the Board of Directors' principal agent in ensuring
the independence of the NRG Companies' independent public accountants, the
integrity of management, and the adequacy of disclosures to shareholders. The
Audit Committee is the focal point for communications between the Board of
Directors, the independent accountants, Xcel internal audit (or NRG internal
audit), and management of any NRG Company regarding matters relating to
financial accounting, reporting, and internal control.

Consistent with the duties and function of the Board generally, the
Committee has oversight, not managerial, duties and authorities in discharging
its responsibilities. While the Audit Committee has the responsibilities and
powers set forth in this Charter, it is not the duty of the Audit Committee to
plan or conduct audits or to determine that the Company's financial statements
are complete and accurate and are in accordance with generally accepted
accounting principles. This is the responsibility of management and the
independent auditor. Nor is it the duty of the Audit Committee to conduct
investigations, to resolve disagreements, if any, between management and the
independent auditor or to assure compliance with laws and regulations and the
Company's Code of Conduct.

The Audit Committee will, of necessity, rely upon management, Xcel internal
audit personnel (or NRG internal audit), and the outside auditors to plan and
coordinate the audit, to determine that the Company's financial statements are
complete and accurate and to determine that the financial statements are
prepared in accordance with generally accepted accounting principles (GAAP). In
light of the foregoing, there can be no assurance that the Company's financial
statements will necessarily be in accordance with GAAP and not contain any
material inaccuracies whether or not the Committee discharges the
responsibilities specified in the Charter.

C. COMMITTEE SIZE AND MEMBERS' QUALIFICATIONS.  The Audit Committee shall
consist of at least three directors. Each member of the Committee must be
independent of management and free from any relationship with the Company that
in the judgment of the full Board would interfere with the exercise of
independent judgment as a Committee member. In determining independence, the
Board will observe the requirements of Rules 303.01 and 303.02 of the New York
Stock Exchange Listed Company Manual.

Each member of the Committee must be financially literate or must become
financially literate within a reasonable period of time after appointment to the
Committee. The Board will determine, in its business judgment, whether a
director meets the financial literacy requirement.

At least one member of the Committee must have accounting or related
financial management expertise, as determined by the Board in its business
judgment.

37

It is the responsibility of management to identify to each member or
prospective member of the Committee those relationships that may affect such
member's qualifications to serve on the Committee. It is expected that this will
be done pursuant to a written questionnaire to be distributed not less
frequently than annually, as well as at the time that a prospective member is
first considered for membership on the Committee. It is the responsibility of
the full Board, based upon the questionnaire responses and other information
deemed relevant by management, to determine the qualifications of any
prospective Committee member; a prospective Committee member will have no
responsibility in this regard other than responding (to his or her knowledge) to
questions specifically directed to him or her.

D. SPECIFIC DUTIES.  The Audit Committee shall:

(Financial Reporting)

1. Review and reassess the adequacy of this Charter annually and submit it
to the Board for approval.

2. Review the annual audited financial statements with management,
including major issues regarding accounting and auditing principles and
practices as well as the adequacy of internal controls that could significantly
affect the Company's financial statements. Review the Form 10-K report to the
Securities and Exchange Commission and recommend its approval to the Board of
Directors.

3. Review an analysis prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection with the
preparation of the Company's financial statements.

4. Review the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement which states
whether the Audit Committee has:

- reviewed and discussed the audited financial statements with management;

- discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, as may be modified
or supplemented; and

- received from the auditors disclosures regarding the auditors'
independence required by Independence Standards Board Standard No. 1, as
may be modified or supplemented, and discussed with the auditors the
auditors' independence.

(Management Reporting)

5. Review major changes to the Company's auditing and accounting principles
and practices as suggested by the independent auditor, Xcel internal auditors
(or NRG internal auditors) or management.

6. Review with the Company's General Counsel legal matters that may have a
material impact on the financial statements, the Company's compliance policies
and any material reports or inquiries received from regulators or governmental
agencies.

(Independent Auditor/ Performance)

7. Recommend annually to the Board the appointment of the independent
auditor. The independent auditor is ultimately accountable to the Board and the
Audit Committee, who have the ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the independent auditor.

8. Meet with the independent auditor prior to the audit to review the scope
and the planning of the audit. Review with the independent auditor new
developments in accounting principles and reporting or industry practices that
may materially affect any NRG Company.

9. Annually review the audit and non-audit fees paid to the independent
auditor.

10. Receive periodic reports from the independent auditor in the form of a
formal written statement delineating all relationships between the auditor and
the Company. Discuss with the independent auditor

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38

relationships or services that may affect the auditor's objectivity or
independence. Recommend that the Board take appropriate action to insure the
independence of the auditor if such action is warranted.

11. In coordination with management, evaluate the performance of the
independent auditor and, if so determined by the Audit Committee, recommend that
the Board replace the independent auditor.

12. Discuss with the independent auditor the following matters related to
the conduct of the audit:

(a) the methods used to account for significant unusual transactions;

(b) the effect of significant accounting policies in controversial or
emerging areas where there is a lack of authoritative guidance;

(c) the process used by management in formulating sensitive accounting
estimates and the basis for the independent auditor's conclusions regarding
the reasonableness and quality of those estimates;

(d) disagreements with management over the application of accounting
principles, the basis for management's accounting estimates, and the
disclosures in the financial statements.

(Periodic Reviews)

13. Review with management, the independent auditor, and the senior
internal auditing executive:

(a) Any management letter provided by the independent auditor or
internal audit and management's response to that letter;

(b) Any difficulties encountered in the course of their audit work,
including any restrictions on the scope of their work or access to required
information; and

(c) Any changes required in the planned scope of audit plans.

14. Meet at least annually with management, the senior internal auditing
executive and the independent auditor in separate executive sessions.

E. MEETINGS.  The Audit Committee shall meet three times during the
calendar year and at such other times as may be requested by its Chairman and
make regular reports to the Board.

F. MEETING ATTENDANCE.  A majority of the members of the Audit Committee
shall constitute a quorum for transaction of any business at any meetings of the
Committee. Physical participation at each meeting by every member is strongly
encouraged to ensure that the Committee is functioning at it's most productive
level. The Chief Accounting Officer shall be the coordinating officer for the
Committee and attend all meetings as appropriate. The Chief Financial Officer,
the General Counsel and the senior internal auditing executive shall also attend
all meetings as appropriate. Other management representatives shall attend as
necessary.

G. SUPPORTING MATERIALS AND AGENDAS.  The Committee secretary and the Chief
Accounting Officer shall prepare the meeting agenda for approval by the Board
Chairman and the Committee Chairman. The agenda and all materials to be reviewed
at a Committee meeting shall be provided to the Committee members at least five
days prior to the meeting date.

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APPENDIX B

NRG ENERGY, INC.

2000 LONG-TERM INCENTIVE COMPENSATION PLAN

ARTICLE 1. ESTABLISHMENT, OBJECTIVES, AND DURATION

1.1. ESTABLISHMENT OF THE PLAN.  NRG Energy, Inc., a Delaware corporation
(hereinafter referred to as the "Company"), hereby establishes an incentive
compensation plan to be known as the "NRG Energy, Inc. 2000 Long-Term Incentive
Compensation Plan" (hereinafter referred to as the "Plan"), as set forth in this
document. The Plan permits the grant of Nonqualified Stock Options, Incentive
Stock Options, Stock Appreciation Rights, Restricted Stock, Performance Shares,
Performance Units, and Cash-Based Awards.

Subject to approval by the Company's stockholders, the Plan shall become
effective as of May 4, 2000 (the "Effective Date") or such later date as of
which the Plan shall be approved by a subcommittee of "outside directors" of the
Corporate Management Committee of Northern States Power Company, and shall
remain in effect as provided in Section 1.3 hereof.

1.2. OBJECTIVES OF THE PLAN.  The objectives of the Plan are to optimize
the profitability and growth of the Company through annual and long-term
incentives which are consistent with the Company's goals and which link the
personal interests of Participants to those of the Company's stockholders; to
provide Participants with an incentive for excellence in individual performance;
and to promote teamwork among Participants.

The Plan is further intended to provide flexibility to the Company, its
Affiliates and Subsidiaries in their ability to motivate, attract, and retain
the services of Participants who make significant contributions to the Company's
success and to allow Participants to share in such success.

1.3. DURATION OF THE PLAN.  The Plan shall commence on the Effective Date,
as described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 15 hereof, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions. However, in no event
may an Award be granted under the Plan on or after the tenth (10th) anniversary
of the Effective Date.

ARTICLE 2. DEFINITIONS

Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized:

2.1. "AFFILIATE" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations of the Exchange Act.

2.2. "AWARD" means, individually or collectively, a grant under this
Plan of Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Stock, Performance Shares, Performance
Units, or Cash-Based Awards.

2.3. "AWARD AGREEMENT" means an agreement entered into by the Company
and each Participant setting forth the terms and provisions applicable to
Awards granted under this Plan.

2.4. "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the
meaning ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act.

2.5. "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of
the Company.

2.6. "CASH-BASED AWARD" means an Award granted to a Participant, as
described in Article 9 herein.

40

2.7. "CHANGE IN CONTROL" of the Company shall be deemed to have
occurred as of the first day that any one or more of the following
conditions shall have been satisfied:

(a) Any Person (other than those Persons in control of the Company
as of the Effective Date, or other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company, or a
corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company) becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing thirty percent
(30%) or more of the combined voting power of the Company's then
outstanding securities; or

(b) During any period of two (2) consecutive years (not including
any period prior to the Effective Date), individuals who at the
beginning of such period constitute the Board (and any new Director,
whose election by the Company's stockholders was approved by a vote of
at least two-thirds (2/3) of the Directors then still in office who
either were Directors at the beginning of the period or whose election
or nomination for election was so approved), cease for any reason to
constitute a majority thereof; or

(c) The stockholders of the Company approve: (i) a plan of complete
liquidation of the Company; or (ii) an agreement for the sale or
disposition of all or substantially all the Company's assets; or (iii) a
merger, consolidation, or reorganization of the Company with or
involving any other corporation, other than a merger, consolidation, or
reorganization that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity) at least fifty and one-tenth percent (50.1%) of
the combined voting power of the voting securities of the Company (or
such surviving entity) outstanding immediately after such merger,
consolidation, or reorganization.

However, in no event shall a Change in Control be deemed to have
occurred (i) upon a sale or sales through a public offering or a
distribution to its shareholders of voting securities of the Company
representing thirty percent (30%) or more of the combined voting power of
the voting securities of the Company by Northern States Power Company
("NSP") or any successor to NSP, (ii) upon the occurrence of any
transaction by which NSP merges with or into New Century Energies, Inc.
("New Century") or any affiliate of New Century, or (iii) with respect to a
Participant, if the Participant is part of a purchasing group which
consummates the Change-in-Control transaction. A Participant shall be
deemed "part of a purchasing group" for purposes of the preceding sentence
if the Participant is an equity participant in the purchasing company or
group (except for: (i) passive ownership of less than three percent (3%) of
the stock of the purchasing company; or (ii) ownership of equity
participation in the purchasing company or group which is otherwise not
significant, as determined prior to the Change in Control by a majority of
the nonemployee continuing Directors).

2.8. "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.

2.9. "COMMITTEE" means any committee appointed by the Board to
administer Awards to Employees, as specified in Article 3 herein. Any such
committee shall be comprised of not less than two members, all of whom
shall be Directors; provided, however, that any member who is not both a
"Non-Employee director" within the meaning of Rule 16b-3 of the Exchange
Act and an "outside director" within the meaning of Code Section 162(m)
shall not serve as a Committee member for purposes of this Plan unless
there would otherwise be less than two members of the Committee.

2.10. "COMPANY" means NRG Energy, Inc., a Delaware corporation, and
any successor thereto as provided in Article 18 herein.

2.11. "COVERED EMPLOYEE" means a Participant who, as of the date of
vesting and/or payout of an Award, as applicable, is one of the group of
"covered employees," as defined in the regulations promulgated under Code
Section 162(m), or any successor statute.

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41

2.12. "DIRECTOR" means any individual who is a member of the Board of
Directors of the Company or any Subsidiary or Affiliate; provided, however,
that any Director who is also employed by the Company or any Subsidiary or
Affiliate shall be considered an Employee under the Plan.

2.13. "DISABILITY" shall have the meaning ascribed to such term in the
Participant's governing long-term disability plan, or if no such plan
exists, at the discretion of the Board.

2.14. "EFFECTIVE DATE" shall have the meaning ascribed to such term in
Section 1.1 hereof.

2.15. "EMPLOYEE" means any employee of the Company or its Subsidiaries
or Affiliates. Directors who are employed by the Company shall be
considered Employees under this Plan.

2.16. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.

2.17. "FAIR MARKET VALUE" shall be determined on the basis of the
closing sale price on the principal securities exchange on which the Shares
are traded or, if there is no such sale on the relevant date, then on the
last previous day on which a sale was reported; if the Shares are not
listed for trading on a national securities exchange, the fair market value
of the Shares shall be determined by the Board in good faith.

2.18. "FREESTANDING SAR" means an SAR that is granted independently of
any Options, as described in Article 7 herein.

2.19. "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase
Shares granted under Article 6 herein and which is designated as an
Incentive Stock Option and which is intended to meet the requirements of
Code Section 422.

2.20. "INSIDER" shall mean an individual who is, on the relevant date,
an officer, director or ten percent (10%) beneficial owner of any class of
the Company's equity securities that is registered pursuant to Section 12
of the Exchange Act, all as defined under and within the meaning of Section
16 of the Exchange Act.

2.21. "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to
purchase Shares granted under Article 6 herein and which is not intended to
meet the requirements of Code Section 422.

2.22. "OPTION" means an Incentive Stock Option or a Nonqualified Stock
Option, as described in Article 6 herein.

2.23. "OPTION PRICE" means the price at which a Share may be purchased
by a Participant pursuant to an Option.

2.24. "PARTICIPANT" means an Employee or Director who has been
selected to receive an Award or who has outstanding an Award granted under
the Plan.

2.25. "PERFORMANCE-BASED EXCEPTION" means the performance-based
exception from the tax deductibility limitations of Code Section 162(m).

2.26. "PERFORMANCE SHARE" means an Award granted to a Participant, as
described in Article 9 herein.

2.27. "PERFORMANCE UNIT" means an Award granted to a Participant, as
described in Article 9 herein.

2.28. "PERIOD OF RESTRICTION" means the period during which the
transfer of Shares of Restricted Stock is limited in some way (based on the
passage of time, the achievement of performance goals, or upon the
occurrence of other events as determined by the Board, at its discretion),
and the Shares are subject to a substantial risk of forfeiture, as provided
in Article 8 herein.

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42

2.29. "PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.

2.30. "RESTRICTED STOCK" means an Award granted to a Participant
pursuant to Article 8 herein.

2.31. "RETIREMENT" shall have the meaning ascribed to such term in the
Company's tax-qualified retirement plan.

2.32. "SHARES" means the shares of common stock of the Company.

2.33. "STOCK APPRECIATION RIGHT" or "SAR" means an Award, granted
alone or in connection with a related Option, designated as an SAR,
pursuant to the terms of Article 7 herein.

2.34. "SUBSIDIARY" means any corporation, partnership, joint venture,
or other entity in which the Company has a majority voting interest.

2.35. "TANDEM SAR" means an SAR that is granted in connection with a
related Option pursuant to Article 7 herein, the exercise of which shall
require forfeiture of the right to purchase a Share under the related
Option (and when a Share is purchased under the Option, the Tandem SAR
shall similarly be canceled).

ARTICLE 3. ADMINISTRATION

3.1. GENERAL.  The Plan shall be administered by the Board, or (subject to
the following) by any Committee appointed by the Board; provided, however, that
all Awards to Covered Employees intended to satisfy the Performance Based
Exception shall be administered exclusively by a Committee and not by the entire
Board. The members of the Committee shall be appointed from time to time by, and
shall serve at the discretion of, the Board of Directors. The Board may delegate
to the Committee any or all of the administration of the Plan; provided,
however, that the administration of the Plan with respect to Awards granted to
Directors may not be so delegated. To the extent that the Board has delegated to
the Committee any authority and responsibility under the Plan, all applicable
references to the Board in the Plan shall be to the Committee. The Committee
shall have the authority to delegate administrative duties to officers or
Directors of the Company.

3.2. AUTHORITY OF THE BOARD.  Except as limited by law or by the
Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Board shall have full power to select Employees and
Directors who shall participate in the Plan; determine the sizes and types of
Awards; determine the terms and conditions of Awards in a manner consistent with
the Plan; construe and interpret the Plan and any agreement or instrument
entered into under the Plan; establish, amend, or waive rules and regulations
for the Plan's administration; and (subject to the provisions of Article 15
herein) amend the terms and conditions of any outstanding Award as provided in
the Plan. Further, the Board shall make all other determinations which may be
necessary or advisable for the administration of the Plan. As permitted by law
(and subject to Section 3.1 herein), the Board may delegate its authority as
identified herein.

3.3. DECISIONS BINDING.  All determinations and decisions made by the Board
pursuant to the provisions of the Plan and all related orders and resolutions of
the Board shall be final, conclusive and binding on all persons, including the
Company, its stockholders, Directors, Employees, Participants, and their estates
and beneficiaries.

ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS

4.1. NUMBER OF SHARES AVAILABLE FOR GRANTS.  Subject to adjustment as
provided in Section 4.2 herein, the number of Shares hereby reserved for
issuance to Participants under the Plan shall be nine million (9,000,000), no
more than nine hundred thousand (900,000) of which may be granted in the form of
Restricted Shares. The Board shall determine the appropriate methodology for
calculating the number
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of shares issued pursuant to the Plan. Unless and until the Board determines
that an Award to a Covered Employee shall not be designed to comply with the
Performance-Based Exception, the following rules shall apply to grants of such
Awards under the Plan:

(a) STOCK OPTIONS:  The maximum aggregate number of Shares that may be
granted in the form of Stock Options, pursuant to all Awards granted in any
one fiscal year to any one single Participant shall be nine hundred
thousand (900,000).

(b) SARS:  The maximum aggregate number of Shares that may be granted
in the form of Stock Appreciation Rights, pursuant to all Awards granted in
any one fiscal year to any one single Participant shall be nine hundred
thousand (900,000).

(c) RESTRICTED STOCK:  The maximum aggregate grant with respect to
Awards of Restricted Stock granted in any one fiscal year to any one
Participant shall be two hundred fifty thousand (250,000).

(d) PERFORMANCE SHARES/PERFORMANCE UNITS AND CASH-BASED AWARDS:  The
maximum aggregate payout (determined as of the end of the applicable
performance period) with respect to Cash-Based Awards or Awards of
Performance Shares or Performance Units granted in any one fiscal year to
any one Participant shall be equal to the value of two hundred fifty
thousand (250,000) Shares.

4.2. ADJUSTMENTS IN AUTHORIZED SHARES.  In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Code Section
368) or any partial or complete liquidation of the Company, such adjustment
shall be made in the number and class of Shares which may be delivered under
Section 4.1, in the number and class of and/or price of Shares subject to
outstanding Awards granted under the Plan, and in the Award limits set forth in
subsections 4.1(a) and 4.1(b), as may be determined to be appropriate and
equitable by the Board, in its sole discretion, to prevent dilution or
enlargement of rights; provided, however, that the number of Shares subject to
any Award shall always be a whole number.

ARTICLE 5. ELIGIBILITY AND PARTICIPATION

5.1. ELIGIBILITY.  Persons eligible to participate in this Plan include all
Employees and Directors.

5.2. ACTUAL PARTICIPATION.  Subject to the provisions of the Plan, the
Board may, from time to time, select from all eligible Employees and Directors,
those to whom Awards shall be granted and shall determine the nature and amount
of each Award.

ARTICLE 6. STOCK OPTIONS

6.1. GRANT OF OPTIONS.  Subject to the terms and provisions of the Plan,
Options may be granted to Participants in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Board.

6.2. AWARD AGREEMENT.  Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Board shall determine. The Award Agreement also shall specify whether the Option
is intended to be an ISO within the meaning of Code Section 422, or an NQSO
whose grant is intended not to fall under the provisions of Code Section 422.

6.3. OPTION PRICE.  The Option Price for each grant of an Option under this
Plan shall be at least equal to one hundred percent (100%) of the Fair Market
Value of a Share on the date the Option is granted; provided, however, that
Options granted in place of, and in satisfaction of, awards under the NRG
Energy, Inc. NRG Officer Equity Plan or the NRG Energy, Inc. NRG Employee Equity
Plan, may be granted with an Option Price less than 100% of Fair Market Value.
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44

6.4. DURATION OF OPTIONS.  Each Option granted to a Participant shall
expire at such time as the Board shall determine at the time of grant; provided,
however, that no ISO shall be exercisable later than the tenth (10th)
anniversary date of its grant.

6.5. EXERCISE OF OPTIONS.  Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Board shall in each instance approve, which need not be the same for each
grant or for each Participant.

6.6. PAYMENT.  Options granted under this Article 6 shall be exercised by
the delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.

(a) PAYMENT IN CASH OR STOCK.  Except as otherwise provided in
subparagraph (b), the Option Price upon exercise of any Option shall be
payable to the Company in full either: (i) in cash or its equivalent, or
(ii) by tendering previously acquired Shares having an aggregate Fair
Market Value at the time of exercise equal to the total Option Price
(provided that the Shares which are tendered must have been held by the
Participant for at least six (6) months prior to their tender to satisfy
the Option Price), or (iii) by a combination of (i) and (ii).

(b) CASHLESS EXERCISE.  The Board also may allow cashless exercise as
permitted under Federal Reserve Board's Regulation T, subject to applicable
securities law restrictions, or by any other means which the Board
determines to be consistent with the Plan's purpose and applicable law.

Subject to any governing rules or regulations, as soon as practicable after
receipt of a written notification of exercise and full payment, the Company
shall deliver to the Participant, in the Participant's name, Share certificates
in an appropriate amount based upon the number of Shares purchased under the
Option(s).

All payments under all of the methods indicated above shall be paid in
United States dollars.

6.7. RESTRICTIONS ON SHARE TRANSFERABILITY.  The Board may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.

6.8. TERMINATION OF EMPLOYMENT/DIRECTORSHIP.  Each Participant's Award
Agreement shall set forth the extent to which the Participant shall have the
right to exercise the Option following termination of the Participant's
employment or directorship with the Company. Such provisions shall be determined
in the sole discretion of the Board, shall be included in the Award Agreement
entered into with each Participant, need not be uniform among all Options issued
pursuant to this Article 6, and may reflect distinctions based on the reasons
for termination.

6.9. NONTRANSFERABILITY OF OPTIONS.

(a) INCENTIVE STOCK OPTIONS.  No ISO granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, all ISOs granted to a Participant under the Plan
shall be exercisable during his or her lifetime only by such Participant.

(b) NONQUALIFIED STOCK OPTIONS.  Except as otherwise provided in a
Participant's Award Agreement, no NQSO granted under this Article 6 may be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in a Participant's
Award Agreement, all NQSOs granted to a Participant under this Article 6
shall be exercisable during his or her lifetime only by such Participant.

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ARTICLE 7. STOCK APPRECIATION RIGHTS

7.1. GRANT OF SARS.  Subject to the terms and conditions of the Plan, SARs
may be granted to Participants at any time and from time to time as shall be
determined by the Board. The Board may grant Freestanding SARs, Tandem SARs, or
any combination of these forms of SAR.

The Board shall have complete discretion in determining the number of SARs
granted to each Participant (subject to Article 4 herein) and, consistent with
the provisions of the Plan, in determining the terms and conditions pertaining
to such SARs.

The grant price of a Freestanding SAR shall equal the Fair Market Value of
a Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Option Price of the related Option.

7.2. EXERCISE OF TANDEM SARS.  Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.

Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.

7.3. EXERCISE OF FREESTANDING SARS.  Freestanding SARs may be exercised
upon whatever terms and conditions the Board, in its sole discretion, imposes
upon them.

7.4. SAR AGREEMENT.  Each SAR grant shall be evidenced by an Award
Agreement that shall specify the grant price, the term of the SAR, and such
other provisions as the Board shall determine.

7.5. TERM OF SARS.  The term of an SAR granted under the Plan shall be
determined by the Board, in its sole discretion; provided, however, that such
term shall not exceed ten (10) years.

7.6. PAYMENT OF SAR AMOUNT.  Upon exercise of an SAR, a Participant shall
be entitled to receive payment from the Company in an amount determined by
multiplying:

(a) The difference between the Fair Market Value of a Share on the
date of exercise over the grant price; by

(b) The number of Shares with respect to which the SAR is exercised.

At the discretion of the Board, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof. The Board's
determination regarding the form of SAR payout shall be set forth in the Award
Agreement pertaining to the grant of the SAR.

7.7. TERMINATION OF EMPLOYMENT/DIRECTORSHIP.  Each Award Agreement shall
set forth the extent to which the Participant shall have the right to exercise
the SAR following termination of the Participant's employment or directorship
with the Company, its Affiliates and/or its Subsidiaries. Such provisions shall
be determined in the sole discretion of the Board, shall be included in the
Award Agreement entered into with Participants, need not be uniform among all
SARs issued pursuant to the Plan, and may reflect distinctions based on the
reasons for termination.

7.8. NONTRANSFERABILITY OF SARS.  Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant.

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ARTICLE 8. RESTRICTED STOCK

8.1. GRANT OF RESTRICTED STOCK.  Subject to the terms and provisions of the
Plan, the Board, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Board shall determine.

8.2. RESTRICTED STOCK AGREEMENT.  Each Restricted Stock grant shall be
evidenced by a Restricted Stock Award Agreement that shall specify the Period(s)
of Restriction, the number of Shares of Restricted Stock granted, and such other
provisions as the Board shall determine.

8.3. TRANSFERABILITY.  Except as provided in this Article 8, the Shares of
Restricted Stock granted herein may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated until the end of the applicable Period of
Restriction established by the Board and specified in the Restricted Stock Award
Agreement, or upon earlier satisfaction of any other conditions, as specified by
the Board in its sole discretion and set forth in the Restricted Stock Award
Agreement. All rights with respect to the Restricted Stock granted to a
Participant under the Plan shall be available during his or her lifetime only to
such Participant.

8.4. OTHER RESTRICTIONS.  Subject to Article 11 herein, the Board shall
impose such other conditions and/or restrictions on any Shares of Restricted
Stock granted pursuant to the Plan as it may deem advisable including, without
limitation, a requirement that Participants pay a stipulated purchase price for
each Share of Restricted Stock, restrictions based upon the achievement of
specific performance goals (Company-wide, divisional, and/or individual),
time-based restrictions on vesting following the attainment of the performance
goals, and/or restrictions under applicable federal or state securities laws.

The Company may retain the certificates representing Shares of Restricted
Stock in the Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied. If the Company
delivers such certificates to the grantee prior to such time, then the Company
shall insert a legend on such certificates indicating that the certificates are
subject to a Period of Restriction.

Except as otherwise provided in this Article 8, Shares of Restricted Stock
covered by each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the applicable Period of
Restriction, at which time any legend indicating the existence of a Period of
Restriction shall be removed.

8.5. VOTING RIGHTS.  If the Board so determines, Participants holding
Shares of Restricted Stock granted hereunder may be granted the right to
exercise full voting rights with respect to those Shares during the Period of
Restriction.

8.6. DIVIDENDS AND OTHER DISTRIBUTIONS.  During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may, in the
discretion of the Board, be credited with dividends paid with respect to such
Shares while they are so held. The Board may apply any restrictions to the
dividends that the Board deems appropriate. Without limiting the generality of
the preceding sentence, if the grant or vesting of Restricted Shares granted to
a Covered Employee is designed to comply with the requirements of the
Performance-Based Exception, the Board may apply any restrictions it deems
appropriate to the payment of dividends declared with respect to such Restricted
Shares, such that the dividends and/or the Restricted Shares maintain
eligibility for the Performance-Based Exception.

8.7. TERMINATION OF EMPLOYMENT/DIRECTORSHIP.  Each Award Agreement shall
set forth the extent to which the Participant shall have the right to receive
unvested Restricted Shares following termination of the Participant's employment
or directorship with the Company. Such provisions shall be determined in the
sole discretion of the Board, shall be included in the Award Agreement entered
into with each Participant, need not be uniform among all Shares of Restricted
Stock issued pursuant to the Plan, and may reflect distinctions based on the
reasons for termination; provided, however that, except in the cases of
terminations connected with a Change in Control and terminations by reason of
death or Disability, the

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vesting of Shares of Restricted Stock which qualify for the Performance-Based
Exception and which are held by Covered Employees shall occur at the time they
otherwise would have, but for the termination.

ARTICLE 9. PERFORMANCE UNITS, PERFORMANCE SHARES, AND CASH-BASED AWARDS

9.1. GRANT OF PERFORMANCE UNITS/SHARES AND CASH-BASED AWARDS.  Subject to
the terms of the Plan, Performance Units, Performance Shares, and/or Cash-Based
Awards may be granted to Participants in such amounts and upon such terms, and
at any time and from time to time, as shall be determined by the Board.

9.2. VALUE OF PERFORMANCE UNITS/SHARES AND CASH-BASED AWARDS.  Each
Performance Unit shall have an initial value that is established by the Board at
the time of grant. Each Performance Share shall have an initial value equal to
the Fair Market Value of a Share on the date of grant. Each Cash-Based Award
shall have a value as may be determined by the Board. The Board shall set
performance goals in its discretion which, depending on the extent to which they
are met, will determine the number and/or value of Performance Units/Shares and
Cash-Based Awards that will be paid out to the Participant. For purposes of this
Article 9, the time period during which the performance goals must be met shall
be called a "Performance Period."

9.3. EARNING OF PERFORMANCE UNITS/SHARES AND CASH-BASED AWARDS.  Subject to
the terms of this Plan, after the applicable Performance Period has ended, the
holder of Performance Units/Shares and Cash-Based Awards shall be entitled to
receive payout on the number and value of Performance Units/ Shares and
Cash-Based Awards earned by the Participant over the Performance Period, to be
determined as a function of the extent to which the corresponding performance
goals have been achieved.

9.4. FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES AND CASH-BASED
AWARDS. Payment of earned Performance Units/Shares and Cash-Based Awards shall
be made in a single lump sum following the close of the applicable Performance
Period. Subject to the terms of the Plan, the Board, in its sole discretion, may
pay earned Performance Units/Shares and Cash-Based Awards in the form of cash or
in Shares (or in a combination thereof) which have an aggregate Fair Market
Value equal to the value of the earned Performance Units/Shares and Cash-Based
Awards at the close of the applicable Performance Period. Such Shares may be
granted subject to any restrictions deemed appropriate by the Board. The
determination of the Board with respect to the form of payout of such Awards
shall be set forth in the Award Agreement pertaining to the grant of the Award.

At the discretion of the Board, Participants may be entitled to receive any
dividends declared with respect to Shares which have been earned in connection
with grants of Performance Units and/or Performance Shares which have been
earned, but not yet distributed to Participants (such dividends shall be subject
to the same accrual, forfeiture, and payout restrictions as apply to dividends
earned with respect to Shares of Restricted Stock, as set forth in Section 8.6
herein). In addition, Participants may, at the discretion of the Board, be
entitled to exercise their voting rights with respect to such Shares.

9.5. TERMINATION OF EMPLOYMENT/DIRECTORSHIP DUE TO DEATH, DISABILITY, OR
RETIREMENT.  Unless determined otherwise by the Board and set forth in the
Participant's Award Agreement, in the event the employment or directorship of a
Participant is terminated by reason of death, Disability, or Retirement during a
Performance Period, the Participant shall receive a payout of the Performance
Units/Shares or Cash-Based Awards which is prorated, as specified by the Board
in its discretion.

Payment of earned Performance Units/Shares or Cash-Based Awards shall be
made at a time specified by the Board in its sole discretion and set forth in
the Participant's Award Agreement. Notwithstanding the foregoing, with respect
to Covered Employees who retire during a Performance Period, payments shall be
made at the same time as payments are made to Participants who did not terminate
employment during the applicable Performance Period.

9.6. TERMINATION OF EMPLOYMENT/DIRECTORSHIP FOR OTHER REASONS.  In the
event that a Participant's employment or directorship terminates for any reason
other than those reasons set forth in Section 9.5

B-9

48

herein, all Performance Units/Shares and Cash-Based Awards shall be forfeited by
the Participant to the Company unless determined otherwise by the Board, as set
forth in the Participant's Award Agreement.

9.7. NONTRANSFERABILITY.  Except as otherwise provided in a Participant's
Award Agreement, Performance Units/Shares and Cash-Based Awards may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, a Participant's rights
under the Plan shall be exercisable during the Participant's lifetime only by
the Participant.

ARTICLE 10. PERFORMANCE MEASURES

Unless and until the Committee proposes for shareholder vote and
shareholders approve a change in the general performance measures set forth in
this Article 10, the attainment of which may determine the degree of payout
and/or vesting with respect to Awards to Covered Employees which are designed to
qualify for the Performance-Based Exception, the performance measure(s) to be
used for purposes of such grants shall include all, or any one or more, of the
following:

(a) Earnings per share;

(b) Net income (before or after taxes);

(c) Return measures (including, but not limited to, return on assets,
equity, or sales);

(d) Cash flow return on investments which equals net cash flows
divided by owners equity;

(e) Earnings before or after taxes;

(f) Gross revenues;

(g) Gross margins; and

(h) Share price (including, but no limited to, growth measures and
total shareholder return).

The Board (with respect to Covered Employees, the Committee) in its sole
discretion shall have the ability to set such performance measures at the
corporate level or the subsidiary/business unit level.

The Board (with respect to Covered Employees, the Committee) shall have the
discretion to adjust the determinations of the degree of attainment of the
preestablished performance goals; provided, however, that Awards which are
designed to qualify for the Performance-Based Exception, and which are held by
Covered Employee, may not be adjusted upward (the Committee shall retain the
discretion to adjust such Awards downward).

In the event that applicable tax and/or securities laws change to permit
Board (or, with respect to Covered Employees, Committee) discretion to alter the
governing performance measures without obtaining shareholder approval of such
changes, the Board (or Committee, as applicable) shall have sole discretion to
make such changes without obtaining shareholder approval. In addition, in the
event that the Board determines that it is advisable to grant Awards which shall
not qualify for the Performance-Based Exception, the Board may make such grants
without satisfying the requirements of Code Section 162(m).

ARTICLE 11.  BENEFICIARY DESIGNATION

Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant's lifetime. In
the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.

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49

ARTICLE 12. DEFERRALS

The Board may permit or require a Participant to defer such Participant's
receipt of the payment of cash or the delivery of Shares that would otherwise be
due to such Participant by virtue of the exercise of an Option or SAR, the lapse
or waiver of restrictions with respect to Restricted Stock, or the satisfaction
of any requirements or goals with respect to Performance Units/Shares. If any
such deferral election is required or permitted, the Board shall, in its sole
discretion, establish rules and procedures for such payment deferrals.

ARTICLE 13. RIGHTS OF EMPLOYEES/DIRECTORS

13.1. EMPLOYMENT.  Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of the
Company.

13.2. PARTICIPATION.  No Employee or Director shall have the right to be
selected to receive an Award under this Plan, or, having been so selected, to be
selected to receive a future Award.

13.3 RIGHTS AS A STOCKHOLDER.  A Participant shall have none of the rights
of a shareholder with respect to shares of Common Stock covered by any Award
until the Participant becomes the record holder of such shares.

ARTICLE 14. CHANGE IN CONTROL

14.1. TREATMENT OF OUTSTANDING AWARDS.  Upon the occurrence of a Change in
Control, unless otherwise specifically prohibited under applicable laws, or by
the rules and regulations of any governing governmental agencies or national
securities exchanges:

(a) Any and all Options and SARs granted hereunder shall become
immediately exercisable, and shall remain exercisable throughout their
entire term;

(b) Any restriction periods and restrictions imposed on Restricted
Shares which are not performance-based shall lapse;

(c) The target payout opportunities attainable under all outstanding
Awards of performance-based Restricted Stock, Performance Units,
Performance Shares, and Cash-Based Awards shall be deemed to have been
fully earned for the entire Performance Period(s) as of the effective date
of the Change in Control. The vesting of all Awards denominated in Shares
shall be accelerated as of the effective date of the Change in Control, and
there shall be paid out to Participants within thirty (30) days following
the effective date of the Change in Control a pro rata number of shares
based upon an assumed achievement of all relevant targeted performance
goals and upon the length of time within the Performance Period which has
elapsed prior to the Change in Control. Awards denominated in cash shall be
paid pro rata to participants in cash within thirty (30) days following the
effective date of the Change in Control, with the proration determined as a
function of the length of time within the Performance Period which has
elapsed prior to the Change in Control, and based on an assumed achievement
of all relevant targeted performance goals.

14.2. TERMINATION, AMENDMENT, AND MODIFICATIONS OF CHANGE-IN-CONTROL
PROVISIONS.  Notwithstanding any other provision of this Plan (but subject to
the limitations of Section 15.3 hereof) or any Award Agreement provision, the
provisions of this Article 14 may not be terminated, amended, or modified on or
after the date of a Change in Control to affect adversely any Award theretofore
granted under the Plan without the prior written consent of the Participant with
respect to said Participant's outstanding Awards; provided, however, the Board
may terminate, amend, or modify this Article 14 at any time and from time to
time prior to the date of a Change in Control.

14.3. POOLING OF INTERESTS ACCOUNTING.  Notwithstanding any other provision
of the Plan to the contrary, in the event that the consummation of a Change in
Control is contingent on using pooling of
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interests accounting methodology, the Board may take any action reasonably
necessary to preserve the use of pooling of interests accounting, provided that
any such action shall not adversely affect any outstanding Awards.

ARTICLE 15. AMENDMENT, MODIFICATION, AND TERMINATION

15.1. AMENDMENT, MODIFICATION, AND TERMINATION.  Subject to the terms of
the Plan, the Board may at any time and from time to time, alter, amend, suspend
or terminate the Plan in whole or in part.

15.2. ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS.  The Board may make adjustments in the terms and conditions
of, and the criteria included in, Awards in recognition of unusual or
non-recurring events (including, without limitation, the events described in
Section 4.2 hereof) affecting the Company or the financial statements of the
Company or of changes in applicable laws, regulations, or accounting principles,
whenever the Board determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan; provided that, unless the Board determines
otherwise at the time such adjustment is considered, no such adjustment shall be
authorized to the extent that such authority would be inconsistent with the
Plan's or any Award's meeting the requirements of Section 162(m) of the Code, as
from time to time amended.

15.3. AWARDS PREVIOUSLY GRANTED.  Notwithstanding any other provision of
the Plan to the contrary (but subject to Section 14.3 hereof), no termination,
amendment, or modification of the Plan shall adversely affect in any material
way any Award previously granted under the Plan, without the written consent of
the Participant holding such Award.

15.4. COMPLIANCE WITH CODE SECTION 162(M).  At all times when Code Section
162(m) is applicable, all Awards granted under the Plan to an Employee who is or
could reasonably be expected to become a Covered Employee, as determined by the
Board, shall comply with the requirements of Code Section 162(m); provided,
however, that in the event the Board determines that such compliance is not
desired with respect to any Award or Awards available for grant under the Plan,
then compliance with Code Section 162(m) will not be required. In addition, in
the event that changes are made to Code Section 162(m) to permit greater
flexibility with respect to any Award or Awards available under the Plan, the
Board may, subject to this Article 15, make any adjustments it deems
appropriate.

ARTICLE 16. WITHHOLDING

16.1. TAX WITHHOLDING.  The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Plan.

16.2. SHARE WITHHOLDING.  With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
or upon any other taxable event arising as a result of Awards granted hereunder,
Participants may elect, subject to the approval of the Board, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which could be imposed on the transaction.
All such elections shall be irrevocable, made in writing, signed by the
Participant, and shall be subject to any restrictions or limitations that the
Board, in its sole discretion, deems appropriate.

ARTICLE 17. INDEMNIFICATION

Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any
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51

claim, action, suit, or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him or her in
settlement thereof, with the Company's approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against him
or her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company's Articles of Incorporation or Bylaws, as a
matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.

ARTICLE 18. SUCCESSORS

All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.

ARTICLE 19. GENERAL PROVISIONS

19.1. GENDER AND NUMBER.  Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

19.2. SEVERABILITY.  In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

19.3. REQUIREMENTS OF LAW.  The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

19.4. DELIVERY OF TITLE.  The Company shall have no obligation to issue or
deliver evidence of title for Shares under the Plan prior to:

(a) Obtaining any approvals from governmental agencies that the
Company determines are necessary or advisable; and

(b) Completion of any registration or other qualification of the
Shares under any applicable national or foreign law or ruling of any
governmental body that the Company determines to be necessary or advisable.

19.5. SECURITIES LAW COMPLIANCE.  With respect to Insiders, transactions
under this Plan are intended to comply with all applicable conditions or Rule
16b-3 or its successors under the 1934 Act. To the extent any provision of the
Plan or action by the Board fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Board.

19.6. NO ADDITIONAL RIGHTS.  Nothing in the Plan shall interfere with or
limit in any way the right of the Company to terminate any Participant's
employment at any time, or confer upon any Participant any right to continue in
the employ of the Company.

No employee shall have the right to be selected to receive an Award under
this Plan or having been so selected, to be selected to receive a future Award.

Neither an Award nor any benefits arising under this Plan shall constitute
part of a Participant's employment contract with the Company or any Affiliate,
and accordingly, this Plan and the benefits hereunder may be terminated at any
time in the sole and exclusive discretion of the Committee without giving rise
to liability on the part of the Company or any Affiliate for severance payments.

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52

19.7. NO EFFECT ON OTHER BENEFITS.  This receipt of Awards under the Plan
shall have no effect on any benefits and obligations to which a Participant may
be entitled from the Company or any Affiliate, under another plan or otherwise,
or preclude a Participant from receiving any such benefits.

19.8. EMPLOYEES BASED OUTSIDE OF THE UNITED STATES.  Notwithstanding any
provision of the Plan to the contrary, in order to comply with provisions of
laws in other countries in which the Company, its Affiliates, and its
Subsidiaries operate or have Employees, the Board or the Committee, in their
sole discretion, shall have the power and authority to:

(a) Determine which Employees employed outside the United States are
eligible to participate in the Plan;

(b) Modify the terms and conditions of any Award granted to Employees
who are employed outside the United States; and

(c) Establish subplans, modified exercise procedures, and other terms
and procedures to the extent such actions may be necessary or advisable.
Any subplans and modifications to Plan terms and procedures established
under this Section 19.8 by the Board or the Committee shall be attached to
this Plan document as Appendices.

19.9. GOVERNING LAW.  To the extent not preempted by federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the state of Delaware.

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53

APPENDIX C

ANNUAL INCENTIVE PLAN FOR
DESIGNATED CORPORATE OFFICERS

1. DEFINITIONS. When the following terms are used herein with initial
capital letters, they shall have the following meanings:

1.1 BASE PAY -- as determined by Compensation Committee.

1.2 CODE -- the Internal Revenue Code of 1986, as it may be amended
from time to time, and any proposed, temporary or final Treasury
Regulations promulgated thereunder.

1.3 COMPANY -- NRG Energy, Inc., a Delaware corporation, and any of
its affiliates that adopt this Plan.

1.4 COMPANY PERFORMANCE FACTOR -- percentage identified in Schedule Z.
The Company Performance Factor shall be directly and specifically tied to
one or more of the following business criteria, determined with respect to
the Company: consolidated pre-tax earnings, net revenues, net earnings,
operating income, earnings before interest and taxes, cash flow, return on
equity, return on net assets employed, earnings per share, or other
quantifiable non-financial strategic operational measures including but not
limited to safety, for the applicable Performance Period, all as computed
in accordance with generally accepted accounting principles as in effect
from time to time and as applied by the Company in the preparation of its
financial statements and subject to such other special rules and conditions
as the Compensation Committee may establish at any time ending on or before
the 90th day of the applicable Performance Period. Such Performance Factors
shall constitute the sole business criteria upon which the performance
goals under this Plan shall be based.

1.5 COMPENSATION COMMITTEE -- a committee comprised solely of two or
more members of the Board of Directors of NRG Energy, Inc., each of whom is
an "outside director" within the meaning of Section 162(m) of the Code and
a "Non-Employee Director" within the meaning of Rule 16b-3 under the
Exchange Act.

1.6 LEGAL REPRESENTATIVE -- shall mean a guardian, legal
representative, or other person acting in a similar capacity with respect
to a Participant.

1.7 PARTICIPANT -- the President and Chief Executive Officer, and any
of the Key Senior Executives of the Company who are designated by the
Compensation Committee at any time ending on or before the 90th day of each
Performance Period as Participants in this Plan.

1.8 PERFORMANCE PERIOD -- the twelve consecutive month period which
coincides with the Company's fiscal year.

1.9 TARGETED BONUS PERCENTAGE -- the percentage identified in Schedule
Y.

2. ADMINISTRATION.

2.1 COMPENSATION COMMITTEE.  The Compensation Committee shall
administer the Plan.

2.2 DETERMINATIONS MADE PRIOR TO EACH PERFORMANCE PERIOD.  At any time
ending on or before the 90th day of each Performance Period, the
Compensation Committee shall:

(a) designate Participants for that Performance Period;

(b) establish Targeted Bonus Percentages for the Performance Period
by amending (in writing) Schedule Y;

(c) establish Company Performance Factors for the Performance
Period by amending (in writing) Schedule Z.

54

2.3 CERTIFICATION.  Following the close of each Performance Period and
prior to payment of any bonus under the Plan, the Compensation Committee
must certify in writing that the Company Performance Factor and all other
factors upon which a bonus is based have been attained.

2.4 SHAREHOLDER APPROVAL.  The material terms of this Plan shall be
disclosed to and approved by shareholders of the Company in accordance with
Section 162(m) of the Code. No bonus shall be paid under this Plan unless
such shareholder approval has been obtained.

3. BONUS PAYMENT.

3.1 FORMULA.  Each Participant shall receive a bonus payment for each
Performance Period in an amount not greater than:

(a) the Participant's Base Pay for the Performance Period, per
schedule "X."

(b) the Participant's Targeted Bonus Percentage for the Performance
Period, per schedule "Y."

(c) the Participant's Company Performance Factor for the
Performance Period, per schedule "Z."

3.2 LIMITATIONS.

(a) No payment if Company Performance Factor not achieved. In no
event shall any Participant receive a bonus payment hereunder if the
Company Performance Factor and all other factors on which the bonus
payment is based is not achieved during the Performance Period.

(b) No payment in excess of pre-established amount. No Participant
shall receive a bonus payment under this Plan for any Performance Period
in excess of $4 million.

(c) Compensation Committee may reduce bonus payment. The
Compensation Committee retains sole discretion to reduce the amount of
or eliminate any bonus otherwise payable under this Plan.

4. AMENDMENTS AND TERMINATION.

The Compensation Committee may amend this Plan prospectively at any time
and for any reason deemed sufficient by it without notice to any person affected
by this Plan and may likewise terminate or curtail the benefits of this Plan
both with regard to persons expecting to receive benefits hereunder in the
future and persons already receiving benefits at the time of such action.

5. MISCELLANEOUS.

5.1 EFFECTIVE DATE.  The effective date of this Plan shall be January
1, 2001.

5.2 TERM OF THE PLAN.  Unless the Plan shall have been discontinued or
terminated, the Plan shall terminate on December 31, 2011. No bonus shall
be granted after the termination of the Plan; provided, however, that a
payment with respect to a Performance Period which begins before such
termination may be made thereafter. In addition, the authority of the
Compensation Committee to amend the Plan, shall extend beyond the
termination of the Plan.

5.3 HEADINGS.  Headings are given to the sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.

5.4 APPLICABILITY TO SUCCESSORS.  This Plan shall be binding upon and
inure to the benefit of the Company and each Participant, the successors
and assigns of the Company, and the beneficiaries, personal representatives
and heirs of each Participant. If the Company becomes a party to any
merger, consolidation or reorganization, this Plan shall remain in full
force and effect as an obligation of the Company or its Successors in
interest.
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55

5.5 EMPLOYMENT RIGHTS AND OTHER BENEFITS PROGRAMS.  The provisions of
this Plan shall not give any Participant any right to be retained in the
employment of the Company. In the absence of any specific agreement to the
contrary, this Plan shall not affect any right of the Company, or of any
affiliate of the Company, to terminate, with or without cause, the
participant's employment at any time. This Plan shall not replace any
contract of employment, whether oral, or written, between the Company and
any Participant, but shall be considered a supplement thereto. This Plan is
in addition to, and not in lieu of, any other employee benefit plan or
program in which any Participant may be or become eligible to participate
by reason of employment with the Company. Receipt of benefits hereunder
shall have such effect on contributions to and benefits under such other
plans or programs as the provisions of each such other plan or program may
specify.

5.6 GOVERNING LAW.  The place of administration of the Plan shall be
in the State of Minnesota. The corporate law of the State of Delaware shall
govern issues relating to the validity and issuance of shares of Common
Stock. Otherwise, the Plan shall be construed and administered in
accordance with the laws of the State of Minnesota, without giving effect
to principles relating to conflict of laws.

5.7 SEVERABILITY.  If any provision of the Plan is or becomes or is
deemed to be invalid, illegal or unenforceable in any jurisdiction such
provision shall be construed or deemed amended to conform to applicable
laws, or if it cannot be so construed or deemed amended without, in the
determination of the Compensation Committee, materially altering the
purpose or intent of the Plan, such provision shall be stricken as to such
jurisdiction, and the remainder of the Plan shall remain in full force and
effect.

5.8 QUALIFIED PERFORMANCE BASED COMPENSATION.  All of the terms and
conditions of the Plan shall be interpreted in such a fashion as to qualify
all compensation paid hereunder to the maximum extent possible as qualified
performance-based compensation within the meaning of Section 162(m) of the
Code.

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56
NRG ENERGY, INC.

ANNUAL MEETING OF STOCKHOLDERS

WEDNESDAY, JUNE 20, 2001
1 PM

RADISSON PLAZA HOTEL
35 SOUTH SEVENTH STREET
MINNEAPOLIS, MN

[LOGO]  NRG ENERGY
901 MARQUETTE AVENUE, SUITE 2300, MINNEAPOLIS, MN 55402            PROXY
--------------------------------------------------------------------------------

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON JUNE 20, 2001.

The shares of stock you hold in your account or in a dividend reinvestment
account will be voted as you specify below.

IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEMS 1, 2, 3, AND 4.

By signing the proxy, you revoke all prior proxies and appoint Leonard A. Bluhm
and James J. Bender, and each of them, with full power of substitution, to vote
your shares on the matters shown on the reverse side and any other matters which
may come before the Annual Meeting and all adjournments.

See reverse for voting instructions.

57
COMPANY #
CONTROL #

THERE ARE THREE WAYS TO VOTE YOUR PROXY

YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.

VOTE BY PHONE -- TOLL FREE -- 1-800-240-6326 -- QUICK *** EASY *** IMMEDIATE

-  Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days
a week.
-  You will be prompted to enter your 3-digit Company Number and your
7-digit Control Number which is located above.
-  Follow the simple instructions the Voice provides you.

VOTE BY INTERNET -- http://www.eproxy.com/nrg -- QUICK *** EASY *** IMMEDIATE

-  Use the Internet to vote your proxy 24 hours a day, 7 days a week.
-  You will be prompted to enter your 3-digit Company Number and your
7-digit Control Number which is located above to obtain your records
and create an electronic ballot.

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to NRG Energy, Inc., c/o Shareowner Services(SM),
P.O. Box 64873, St. Paul, MN 55164-0873.

IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
F     Please detach here    F
--------------------------------------------------------------------------------

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3 AND 4.

1. Election of directors:

01 David H. Peterson             04 William A. Hodder    07 Gary R. Johnson

02 Pierson M. (Sandy) Grieve     05 Wayne H. Brunetti    08 Richard C. Kelly

03 Luella G. Goldberg            06 James J. Howard      09 Edward J. McIntyre

[ ] Vote FOR all nominees               [ ]  Vote WITHHELD
(except as marked)                     from all nominees
[                     ]
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.)

2. To approve the NRG Energy, Inc. 2000 Long-Term Incentive Compensation
Plan;

[ ]For          [ ]   Against       [ ]    Abstain

3. To approve the Annual Incentive Plan for Designated Corporate Officers;

[ ]For          [ ]   Against       [ ]    Abstain

4. To ratify the appointment of PricewaterhouseCoopers LLP as independent
auditors for the fiscal year ended December 31, 2001; and

[ ]For          [ ]   Against       [ ]    Abstain

5. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.

Address Change? Mark Box [ ]     [ ]THIS PROXY WHEN PROPERLY EXECUTED WILL BE
Indicate changes below:             VOTED AS DIRECTED OR, IF NO DIRECTION IS
GIVEN, WILL BE VOTED FOR EACH PROPOSAL.

Date_________________________

ADDRESS AREA

[                  ]

Signature(s) in Box
Please sign exactly as your name(s) appear on Proxy. If held in joint tenancy,
all persons must sign. Trustees, administrators, etc., should include title and
authority. Corporations should provide full name of corporation and title of
authorized officer signing the proxy.