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CNBC EXCLUSIVE: CNBC TRANSCRIPT: CNBC'S DAVID FABER SPEAKS WITH DAVID CRANE, NRG ENERGY CEO, TODAY ON CNBC'S "SQUAWK ON THE STREET"

FABER: EXELON CONTINUES TO PURSUE ITS HOSTILE BID FOR NRG. EXELON RECENTLY URGING NRG SHAREHOLDERS TO REPLACE NINE NEW DIRECTORS ON THE BOARD OF NRG. THIS MORNING WE'RE JOINED EXCLUSIVELY BY NRG CEO DAVID CRANE. TO GIVE US SOME INSIGHT AHEAD OF WHAT YOU'VE GOT THE VOTE COMING UP. INVESTOR MEETING TODAY.

CRANE: A SERIES OF INVESTOR MEETINGS

FABER: WHAT ARE YOU GOING TO BE TELLING INVESTORS THIS MORNING?

CRANE: WE'LL BE ANSWERING THE QUESTIONS THEY HAVE WHICH IS ABOUT THE OFFER AND, YOU KNOW, IT'S BASICALLY ALL ABOUT VALUE.AND WHAT SHARE OF VALUE NRG SHAREHOLDERS WILL GET UNDER THE EXELON OFFER.

FABER: 0.545%. YOU OF COURSE SAY AND THAT'S PER EXELON SHARE FOR YOURS. NOT A VALUE YOU CONSIDER WORTH EVEN HAVING A CONVERSATION ABOUT AT THIS POINT?

CRANE: IN A SENSE WE'RE ACTUALLY HAVING A CONVERSATION. WE PUT OUT A LETTER LAST WEEK.WE ACKNOWLEDGED THAT 0.545%, WHATEVER IT IS, IS BETTER THAN 0.485% WHICH WAS THEIR PREVIOUS OFFER. IT FAILS TO COMPENSATE NRG SHAREHOLDERS FOR EITHER OUR ORIGINAL VALUE OR FOR THE VALUE WE'VE CREATED SINCE THEY LAUNCHED THEIR OFFER LAST OCTOBER.

FABER: THEY SAY, WELL, OF COURSE, THAT YOU WOULD SAY SOMETHING LIKE THAT THEY, OF COURSE, TAKE ISSUE WITHIT.THEY SAY NRG TAPS NUMEROUS GROWTH OPPORTUNITIES.A CLOSER LOOK REVEALS WHAT THEY CALL MINIMAL VALUE. FOR EXAMPLE, YOUR OWNERSHIP OF RELIANT AND THE BENEFIT THAT YOU SAY IS GOING TO ACCRUE FROM THAT BOTH TO YOUR SHAREHOLDERS AND CONCEIVEABLY IF YOU WERE TO GET TOGETHER WITH EXELON ON A PRICE THAT YOU LIKE TO THEIRS. THEY SAY IT APPEARS ACRETIVE BUT THE EBIDAD PROJECTIONS ARE EXTREMELY AGRESSIVE AND SUGGECT EBIDAD MULTIPLES UNREALISITC -- WHY DO YOU DISAGREE WITH THAT?

CRANE: YOU HAVE TO LOOK AT WHAT EXELON'S SAYING.THEY'RE SAYING OUR RELIANT ACQUISITION IS WORTH $270 MILLION.ONE DOLLAR A SHARE.WE JUST ANNOUNCED LAST WEEK OUR RELIANT ACQUISITION IS GOING TO MAKE $400 MILLION IN THE LAST EIGHT MONTHS OF 2009. YOU HAVE TO ASK YOURSELF, IS SOMETHING THAT MAKES $400 MILLION IN EIGHT MONTHS REALLY WORTH ONLY $270 MILLION FOR THE ENTIRE FRANCHISE?I THINK THE ANSWER TO THAT QUESTION IS PRETTY CLEAR. IT CERTAINLY IS CLEAR TO NRG SHAREHOLDERS.

FABER: THEY SAY, HOWEVER, IN THE MARKET, FOR EXAMPLE, THESE KINDSOF RETAIL BUSINESSES ARE VALUED AT AN EBIDAD MULTIPLE FAR LOWER THAN THAT. THAT ULTIMATELY THERE'S A GREAT DEAL OF VOLATILITY.

CRANE: WELL, THERE IS SOME VOLATILITY IN THE BUSINESS.THE GREAT THING ABOUT THE VOLATILITY IS THAT IT'S A COUNTERCYCLICAL BUSINESS. RIGHT NOW WHILE WE'RE MIRED IN THE DEPTHS OF THIS GREAT RECESSION, THEY'RE DOING THE BEST THEY CAN POSSIBLY DO. FOR NRG'S BUSINESS THEY'VE ALLOWED US TO INCREASE OUR EBIDAD GUIDANCE IN 2009 FROM $2.2 BILLION TO $2.5 BILLION WHICH IS A PRETTY STRONG RESULT IN THIS ENVIRONMENT.

FABER: EBIDAD GUIDANCE FROM TO 2.5 BILLION FOR WHAT YEAR

CRANE: 2009

FABER: WOW THAT SOUNDS PRETTY GOOD

CRANE: I THINK SO

FABER: HOW IS IT THEY'RE VALUED AT $3 BILLION? I DON'T UNDERSTAND. WHAT AM I MISSING THERE?

CRANE: I THINK THEY'RE $3 BILLION VALUE IS THEIR SYNERGY VALUE.THEY'RE SAYING $3 BILLION OF SYNERGIES IN THE TRANSACTION. WHICH WE'RE INTERESTED IN FINDING SYNERGIES AND VALUE WHEREVER IT CAN BE FOUND IT'S A TOUGH NUMBER TO COME UP WITH.

FABER: I WAS CONFUSING OVERALL WITH ENTERPRISE VALUE.LET'S GET BACK TO SOME OF THEIR CRITICISM OR AT LEAST WHAT THEY CONTEND.I DON'T HAVE TIME TO GO THROUGH ALL OF THESE. IN TERMS OF THE ENVIRONMENTAL CAPITAL EXPENDITURES YOU ARE GOING TO FACE, THE INDUSTRY IS GOING TO FACE AS A RESULT CONCEIVABLY OF THE NEW RESTRICTIONS ON CARBON AND THE LIKE, EXELON MAINTAINS THAT THESE REGULATIONS WILL RESULT IN SIGNIFICANT COMPLIANCE COSTS FOR YOUR COAL FIRE GENERATION ASSETS.A GOOD DEAL MORE THAN THEY WOULDFACE AND YOU'RE UNDERESTIMATING THOSE COSTS.

CRANE: WELL, FIRST WE HAVE THE SPLITBETWEEN CARBON AND THE TRADITIONAL POLLUTANTS. WE HAVE TO ADD BACKEND CONTROL TO A COUPLE OF OUR COAL PLANTS AND THAT NUMBER IS NOT AN INSIGNIFICANT NUMBER. IT'S SPREAD OVER THE NEXT TEN YEARS. THEY'RE FAILING TO POINT OUT IS FOR THE BIGGEST SPEND WHICH HAS TO DO WITH A PLANT WE HAVE IN LOUISIANA WE ACTUALLY GET COMPENSATED FOR THAT FROM THE PEOPLE WHO BUY THE POWER FROM THAT PLANT. ACTUALLY ADDING THAT BACK IN CONTROLS AND SORT OF TRADITIONALUTILITIES WILL INCREASE OUR EBIDAD. THAT'S NOT A FAIR COMPARISON. ON CARBON, U.S. SENATOR GRASSLEYON EARLIER, THE CARBON LEGISLATION HAS TO PASS.I THINK THAT THIS -- THIS GROUP OF EIGHT, THE DECISION IN CHINA AND INDIA SORT OF SAYING NO ABOUT A GLOBAL APPROACH PUTS THEWHOLE THING AND WACXMAN-MARKEY INTO QUESTION.WHICH IS UNFORTUNATE.BECAUSE WE THINK WAXMAN-MARKEY OR SOMETHING LIKE IT SHOULD PASS CONGRESS.

FABER: YOU DO?

CRANE: WE DO.

FABER: WE'RE GOING TO HEAR FROM TOP ADVISORY FIRMS WHICH HAVE AN INFLUENCE IN A BATTLE LIKE YOURS. I'M HEARING RISK METRICS ACTUALLY GOING TO GO WITH YOU 100% AND SAY BACK YOUR DIRECTORS, NOT EXELONS. NONETHELESS, WHAT IF THEY DO GET, SAY, FOUR OF THE NINE THAT THEY'RE SEEKING? WOULD YOU FEEL AS THOUGH YOUR SHAREHOLDERS HAVE SAID YOU'VE GOT TO SIT DOWN AND TALK TO THEM

CRANE: AGAIN, I THINK WE'RE HAVING ADIALOGUE WITH THEM NOW.IT'S JUST HAPPENING IN PUBLIC THROUGH LETTERS.

FABER: YOU'RE NOT GETTING ON THE PHONE AND TALKING WITH THEIR CEO AND NEGOTIATING.

CRANE: WE'RE NEGOTIATING IN LETTERS.BUT I WOULD SAY OF THE THREE POTENTIAL OUTCOMES, IF THEY GET NINE THAT'S PARALYSIS FOR THE ENERGY BOARD. IF THEY GET FOUR IT'S CONFUSION.THE NRG SHAREHOLDERS HAVE A WIN/WIN OUTCOME IN THEIR GRASP, WHICH IS TO VOTE FOR ALL OF OUR DIRECTORS. THEN EITHER EXELON WILL INCREASE THEIR OFFER BY A SIGNIFICANT AMOUNT OR THEY'LL GO AWAY. THAT'LL UNLEASH THE POWER OF NRG.

FABER: YOU DON'T BELIEVE THAT POWER'S BEEN UNLEASHED AS OF YET?

CRANE: I THINK WE'VE DONE A PRETTY GOOD JOB OVER THE LAST EIGHT MONTHS WITH THE THINGS WE'VE DONE, THE RELIANT TRANSACTION WITH LEADING THE NUCLEAR RENAISSANCE WITH OUR NUCLEAR PLANT WHICH YOU HAVEN'T ASKED ME ABOUT EITHER. I THINK WE'VE DONE A PRETTY GOOD JOB. TO BE ABLE TO FOCUS 100% ON THE BUSINESS AT HAND, I THINK YOU WOULD SEE WHAT NRG CAN DO.

FABER: DAVID, I DIDN'T ASK YOU ABOUT A LOT OF THINGS. UNFORTUNATELY WE'RE OUT OF TIME. WHY DON'T YOU COME BACK WE CAN TALK ABOUT NUCLEAR, CARBON A LOT OF IMPORTANT THINGS FOR THIS INDUSTRY AS OPPOSED TO THE FIGHT.

CRANE: I'D LOVE TO COME BACK ANY TIME YOU'LL HAVE ME.

FABER: DAVID CRANE, CEO OF NRG.



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