SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 26, 2003
RELIANT RESOURCES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-16455 76-0655566
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
1111 Louisiana Street
Houston, Texas 77002
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 497-3000
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Item 5. Other Events.
(a) FERC Issues Report and Orders on Western Market Manipulation. The
Federal Energy Regulatory Commission, or FERC, issued an order in July
2001 adopting a refund methodology and initiating a hearing schedule
to determine (a) revised mitigated prices for each hour from October
2, 2000 through June 20, 2001, (b) the amount owed in refunds by each
electric wholesale supplier according to the methodology and (c) the
amount currently owed to each electric wholesale supplier. The FERC
issued an order on March 26, 2003, adopting in most respects the
proposed findings of the presiding administrative law judge that had
been issued in December 2002 following a hearing to apply the refund
formula. The most consequential change involved the adoption of a
different methodology for determining the gas price component of the
refund formula. Instead of using California gas indices, the FERC
ordered the use of a proxy gas price based on producing area price
indices plus the posted transportation costs. In addition, the order
allows generators to petition for a reduction of the refund
calculation upon a submittal to the FERC of their actual gas costs and
subsequent FERC approval. Based on this non-final order, Reliant
Resources estimates its refund obligation to be between $133 million
and $189 million for energy sales in California (excluding the $14
million refund related to the FERC settlement in January 2003). The
low range of Reliant Resource's estimate is based on a refund
calculation factoring in a reduction in the total FERC refund based on
the actual cost paid for gas over the proposed proxy gas price. The
high range of Reliant Resource's estimate of the refund obligation
assumes that the refund obligation is not adjusted for the actual cost
paid for gas over the proposed proxy gas price. During 2002, Reliant
Resources recorded reserves for refunds of $118 million related to
energy sales in California. As discussed above, $15 million was
recognized during 2001. As of December 31, 2002, Reliant Resource's
reserve for refunds related to energy sales in California is $133
million, excluding the $14 million related to the FERC settlement in
January 2003. The California refunds, excluding the $14 million
related to the FERC settlement, will likely be offset against unpaid
amounts owed to Reliant Resources for its prior sales in California.
The ultimate outcome of the refunds within the above range related to
power sales in California cannot be estimated and is dependant on the
FERC's final determination.
(b) Attached hereto as Exhibit 99.1 and incorporated by reference herein
is the text of Chapter VI of Federal Energy Regulatory Commission's
Final Report on Price Manipulation in Western Markets dated March 26,
2003 (Docket No. PA02-2-000). The full report can be accessed at
www3.ferc.gov.
(c) Attached hereto as Exhibit 99.2 and incorporated by reference herein
is the text of the Order Proposing Revocation of Market-Based Rate
Authority issued March 26, 2003 (Docket No. EL03-59-000).
(d) Attached hereto as Exhibit 99.3 and incorporated by reference herein
is the text of a slideshow presentation by the Federal Energy
Regulatory Commission on the Final Report on Price Manipulation in
Western Markets dated March 26, 2003.
(e) Attached hereto as Exhibit 99.4 and incorporated by reference herein
is the text of Reliant Resources, Inc.'s press release dated March 26,
2003.
FORWARD-LOOKING STATEMENTS
Some of the statements in this report and the exhibits hereto are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Although Reliant Resources Inc. believes that the
expectations and the underlying assumptions reflected in its forward-looking
statements are reasonable, there can be no assurance that these expectations
will prove to be correct. Forward-looking statements involve a number of risks
and uncertainties, and actual results may differ materially from the results
discussed in the forward-looking statements. References in this report to the
terms "we," "us," "our" or other similar terms mean Reliant Resources, Inc. and
its subsidiaries. The words "anticipate," "estimate," "believe," "continue,"
"could," "intend," "may," "plan," "potential," "predict," "should," "will,"
"expect," "objective," "projection," "forecast," "goal," "guidance," "outlook"
and other similar words are intended to identify our forward-looking statements.
In addition to the matters described in this report and the exhibits hereto, the
following are some of the factors that could cause actual results to differ
materially from those expressed or implied in our forward-looking statements:
o state, federal and international legislative and regulatory
developments, including deregulation, re-regulation and restructuring
of the electric utility industry, changes in or application of
environmental and other laws and regulations to which we are subject,
and changes in or application of laws or regulations applicable to
other aspects of our business, such as commodities trading and hedging
activities;
o the outcome of pending lawsuits, governmental proceedings and
investigations;
o the effects of competition, including the extent and timing of the
entry of additional competitors in our markets;
o liquidity concerns in our markets;
o the degree to which we successfully integrate the operations and
assets of Orion Power Holdings, Inc. into our wholesale energy
segment;
o the successful and timely completion of our construction projects, as
well as the successful start-up of completed projects;
o any reduction in our trading, marketing and origination activities;
o our pursuit of potential business strategies, including acquisitions
or dispositions of assets or the development of additional power
generation facilities;
o the timing and extent of changes in commodity prices and interest
rates;
o the availability of adequate supplies of fuel, water, and associated
transportation necessary to operate our generation portfolio;
o weather variations and other natural phenomena, which can affect the
demand for power from or our ability to produce power at our
generating facilities;
o financial market conditions, our access to capital and the results of
our financing and refinancing efforts, including availability of funds
in the debt/capital markets for merchant generation companies;
o the creditworthiness or bankruptcy or other financial distress of our
counterparties;
o actions by rating agencies with respect to us or our competitors;
o acts of terrorism or war;
o the availability and price of insurance;
o the reliability of the systems, procedures and other infrastructure
necessary to operate our retail electric business, including the
systems owned and operated by the independent system operator in the
Electric Reliability Council of Texas;
o political, legal, regulatory and economic conditions and developments
in the United States and in foreign countries in which we operate,
including the effects of fluctuations in foreign currency exchange
rates;
o the successful operation of deregulating power markets; and
o the resolution of the refusal by certain California market
participants to pay our receivables balances.
Each forward-looking statement speaks only as of the date of the
particular statement, and we undertake no obligation to publicly
update or revise any forward-looking statement, whether as a result of
new information, future events or otherwise
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
99.1 Chapter VI of Federal Energy Regulatory Commission's Final Report
on Price Manipulation in Western Markets dated March 26, 2003
(Docket No. PA02-2-000).
99.2 Order Proposing Revocation of Market-Based Rate Authority issued
March 26, 2003 (Docket No. EL03-59-000).
99.3 Slideshow presentation by the Federal Energy Regulatory
Commission on the Final Report on Price Manipulation in Western
Markets dated March 26, 2003.
99.4 Press release issued by Reliant Resources, Inc. on March 26,
2003.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RELIANT RESOURCES, INC.
(Registrant)
Date: March 28, 2003 By: /s/ Mark M. Jacobs
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Mark M. Jacobs
Executive Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number Exhibit Description
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99.1 Chapter VI of Federal Energy Regulatory Commission's Final Report on
Price Manipulation in Western Markets dated March 26, 2003 (Docket No.
PA02-2-000).
99.2 Order Proposing Revocation of Market-Based Rate Authority issued
March 26, 2003 (Docket No. EL03-59-000).
99.3 Slideshow presentation by the Federal Energy Regualtory Commission on
the Final Report on Price Manipulation in Western Markets dated
March 26, 2003.
99.4 Press release issued by Reliant Resources, Inc. on March 26, 2003.