October 24, 2001

Public Utilities Commission of Texas (PUCT) and Reliant Complete Premier Securitization Transaction Ratepayers Save Over $900 Million

New York, October 24, 2001 — The Public Utilities Commission of Texas (PUCT) and Reliant today concluded the sale of approximately $748.9 million of asset-backed Rate Reduction Bonds by Reliant Energy Transition Bond Company LLC, a special purpose corporation created by Reliant Energy, an international energy services and delivery company with $20 billion in annual revenue. The underwriters were lead by Merrill Lynch and Co. The deal will save ratepayers over $900 million, a half-billion dollars on a net present value basis, over the life of the transaction, according to Joseph Fichera, CEO of Saber Partners, who served as the Commission’s chief financial advisor for the deal.

The Reliant Energy Transaction priced with historically low spreads, as compared with all previous Rate Reduction Bond transactions benchmarked to date, demonstrating that Reliant has achieved the lowest cost of funds available in the market. This debut transaction for the state of Texas and Reliant is comprised of four AAA tranches of securities of varying maturity. Most significantly, pricing spreads relative to the highest quality credit card asset-backed securities, which are considered to be the most relevant benchmark for Rate Reduction bonds, came at the tightest levels for all of 2001. The all-in cost is the lowest ever achieved compared to similar transactions.

The compelling benefits of this securitization include:

• Unprecedented cooperation between the PUCT (Saber) and Reliant to structure, market and price the deal
• Ratepayers savings of over $900 million, a half-billion dollars on a net present value basis
• Stabilization of cash flow due to the quality of the asset pool
• Lack of energy shortage due to abundance of supply, power generation capabilities and cooperative project developments criteria to add power supply in Texas
• Self contained energy grid in Texas minimizes the issue of energy shortage problems in other states

“Ratepayers will greatly benefit from this groundbreaking transaction for the state of Texas,” said Fichera. Saber Partners served as the ratepayer ‘watchdog’ and negotiated with underwriters for the best pricing on the bond deal that created the maximum savings for ratepayers.

Saber Partners, LLC, is a full service financial advisory firm for corporate and public sector entities involved in the energy and power industries. Saber Partners acted as chief financial advisor to PUCT on the structure, marketing and pricing for the deal. Saber Partners also serves as the chief financial advisor to Governor Gray Davis of California on energy financial matters.

For more information:
Contact Joseph Fichera at 212-461-2370