1379895--2/26/2009--DYNEGY_HOLDINGS

related topics

{cost, regulation, environmental}

{debt, indebtedness, cash}

{cost, operation, labor}

{capital, credit, financial}

{gas, price, oil}

{competitive, industry, competition}

{tax, income, asset}

{stock, price, operating}

FACTORS THAT MAY AFFECT FUTURE RESULTS Risks Related to the Operation of Our Business Because many of our power generation facilities operate without long-term power sales agreements and because wholesale power prices are subject to significant volatility, our revenues and profitability are subject to wide fluctuations. Our commercial strategy may result in lost opportunities and, in any case, may not be executed as planned. We are exposed to the risk of fuel and fuel transportation cost increases and interruptions in fuel supplies because some of our facilities do not have long-term coal, natural gas or fuel oil supply agreements. Our costs of compliance with existing environmental requirements are significant, and costs of compliance with new environmental requirements could adversely affect our financial condition, results of operations and cash flows. Our business is subject to complex government regulation. Changes in these regulations or in their implementation may affect costs of operating our facilities or our ability to operate our facilities, or increase competition, any of which would negatively impact our results of operations. Availability and cost of emission allowances could materially impact our costs of operations. Competition in wholesale power markets, together with an oversupply of power generation capacity in certain regional markets, may have a material adverse effect on our financial condition, results of operations and cash flows. We do not own or control transmission facilities required to sell the wholesale power from our generation facilities. If the transmission service is inadequate, our ability to sell and deliver wholesale power may be materially adversely affected. Furthermore, these transmission facilities are operated by RTOs and ISOs , which are subject to changes in structure and operation and impose various pricing limitations. These changes and pricing limitations may affect our ability to deliver power to the market that would, in turn, adversely affect the profitability of our generation facilities. Our financial condition, results of operations and cash flows would be adversely impacted by strikes or work stoppages by our unionized employees. Costs of compliance with our Consent Decree may be materially adversely impacted by unforeseen labor, material and equipment costs. Risks Related to Our Financial Structure, Level of Indebtedness and Access to Capital Markets An event of loss and certain other events relating to our Dynegy Northeast Generation facilities could trigger a substantial obligation that would be difficult for us to satisfy. We have significant debt that could negatively impact our business. Our financing agreements governing our debt obligations require us to meet specific financial tests. Our failure to comply with those financial covenants could have a material adverse impact on our business, financial condition, results of operations or cash flows. Our access to the capital markets may be limited. Our non-investment grade status may adversely impact our operations, increase our liquidity requirements and increase the cost of refinancing opportunities. We may not have adequate liquidity to post required amounts of additional collateral. We conduct a substantial portion of our operations through our subsidiaries and may be limited in our ability to access funds from these subsidiaries to service our debt. If our goodwill or amortizable intangible assets become impaired, we may be required to record a significant charge to earnings. The LS Control Group s significant interest in Dynegy could be determinative in matters submitted to a vote by Dynegy s stockholders. In addition, the rights granted to the LS Shareholders (as defined below) under the Shareholder Agreement (as defined below) and Dynegy s amended and restated bylaws provide them significant influence over Dynegy. Such influence could result in Dynegy failing to take actions that Dynegy s other stockholders support.

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1379895--2/26/2009--DYNEGY_HOLDINGS_INC