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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission File No. 333-48900

NRG South Central Generating LLC

(612) 373-5300

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

      Indicate by check mark whether the Registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrants’ knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     þ

      Indicate by check mark whether the registrant is an accelerated filer as defined by Rule 12b-2 of the Act.     Yes o          No þ

      As of the last business day of the most recently completed second fiscal quarter, no voting or non-voting common equity was held by non-affiliates.

      As of the latest practicable date, NRG Central, Inc. owned 50% of the outstanding equity interests of NRG South Central Generating LLC and South Central Generation, Inc. owned 50% of the outstanding equity interests of NRG South Central Generating LLC. NRG Central, Inc. and South Central Generation, Inc. are each wholly-owned subsidiaries of NRG Energy, Inc.

Documents Incorporated by Reference:

Table of Contents

INDEX

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PART I

General

      NRG South Central Generating LLC (NRG South Central), is a Delaware limited liability company formed in 2000. NRG South Central owns approximately 2,500 MW of net electric generating capacity as of December 31, 2002 through its wholly-owned subsidiaries, Louisiana Generating LLC (Louisiana Generating), NRG New Roads Holdings LLC, NRG Sterlington Power LLC (NRG Sterlington), Big Cajun I Peaking Power LLC (Big Cajun 1 Peaking), NRG Bayou Cove LLC and NRG Bayou Peaking Power LLC (together, NRG Bayou Cove). NRG South Central’s headquarters and principal executive offices are located at 901 Marquette Avenue, Suite 2300, Minneapolis, Minnesota 55402. NRG South Central’s phone number is (612) 373-5300.

      NRG South Central is an indirect wholly-owned subsidiary of NRG Energy, Inc. (NRG Energy). NRG Energy is an energy company, primarily engaged in the ownership and operation of power generation facilities and the sale of energy, capacity and related products in the United States and internationally. NRG Energy is a wholly owned subsidiary of Xcel Energy Inc. (Xcel Energy). Xcel Energy directly owns six utility subsidiaries that serve electric and natural gas customers in 12 states. Xcel Energy also owns or has interest in a number of non-regulated businesses, the largest of which is NRG Energy.

      Due to a number of reasons, including the overall down-turn in the energy industry, NRG Energy’s financial condition has deteriorated significantly. As a direct consequence, in 2002 NRG Energy entered into discussions with its creditors in anticipation of a comprehensive restructuring. NRG Energy is working toward this goal by selective divestiture of non-core assets, consolidation of management, reorganization and redirection of power marketing philosophy and activities and an overall financial restructuring that will improve liquidity and reduce debt. In connection with its restructuring efforts, it is likely that NRG Energy (and certain of its subsidiaries) will file for Chapter 11 bankruptcy protection. If NRG Energy seeks protection under Chapter 11 of the Bankruptcy Code, it is likely that NRG Energy would also seek such protection for certain wholly-owned subsidiaries, which may include NRG South Central. For more information about NRG Energy’s restructuring process, refer to the Form 10-K filed by NRG Energy on March 31, 2003.

      As a part of the comprehensive restructuring, NRG Energy’s financial and legal restructuring advisors have been assisting the management of NRG South Central in the preparation of a comprehensive financial and operational restructuring for NRG South Central. NRG South Central and its advisors have been meeting regularly to discuss restructuring issues relating to NRG South Central with an ad hoc committee of its bondholders (the NRG South Central Bondholder Committee). NRG South Central, its management and its financial and legal advisors have engaged in discussions with the NRG Project Bondholder Committee regarding the terms and conditions of a restructuring of the debt of NRG South Central.

      NRG South Central, NRG Energy and Xcel Energy file periodic reports and other documents with the Securities and Exchange Commission. The public may read and copy the materials filed with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The public may also obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, electronic copies of these periodic filings are available through the Commission’s web site at www.sec.gov.

Liquidity Issues

      In December 2001, Moody’s Investor Service (Moody’s) placed NRG Energy’s long-term senior unsecured debt rating on review for possible downgrade. In response, Xcel Energy and NRG Energy put into effect a plan to preserve NRG Energy’s investment grade rating and improve its financial condition. This plan

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      In response to a possible downgrade, during 2002, Xcel Energy contributed $500 million to NRG Energy, and NRG Energy and its subsidiaries sold assets and businesses that provided NRG Energy in excess of $286 million in cash and eliminated approximately $432.0 million in debt. NRG Energy also cancelled or deferred construction of approximately 3,900 MW of new generation projects. On July 26, 2002, Standard & Poors’ (S&P) downgraded NRG Energy’s senior unsecured bonds to below investment grade, and three days later Moody’s also downgraded NRG Energy’s senior unsecured debt rating to below investment grade. Since July 2002, NRG Energy senior unsecured debt, as well as the secured NRG Northeast Generating LLC bonds and the secured NRG South Central Generating LLC bonds and Secured LSP Energy (Batesville) bonds were downgraded multiple times. After NRG Energy failed to make payments due under certain unsecured bond obligations on September 16, 2002, both Moody’s and S&P lowered their ratings on NRG Energy’s and its subsidiaries’ unsecured bonds once again. Currently, NRG Energy’s unsecured bonds carry a rating of between CCC and D at S&P and between Ca and C at Moody’s, depending on the specific debt issue.

      As a result of the downgrade of NRG Energy’s credit rating, declining power prices, increasing fuel prices, the overall down-turn in the energy industry, and the overall down-turn in the economy, NRG Energy has experienced severe financial difficulties. These difficulties have caused NRG Energy to, among other things, miss scheduled principal and interest payments due to its corporate lenders and bondholders, prepay for fuel and other related delivery and transportation services and provide performance collateral in certain instances. NRG Energy has also recorded asset impairment charges of approximately $3.1 billion, related to various operating projects as well as for projects that were under construction which NRG Energy has stopped funding.

      NRG Energy and its subsidiaries (including NRG South Central) have failed to timely make several interest and/or principal payments on its indebtedness. These missed payments have resulted in cross-defaults of numerous other non-recourse and limited recourse debt instruments of NRG Energy and have caused the acceleration of multiple debt instruments of NRG Energy, rendering such debt immediately due and payable. For more specific information regarding NRG Energy’s liquidity issues, refer to “Liquidity Issues” in Item 1 of Form 10-K filed by NRG Energy on March 31, 2003.

      In addition to the payment defaults described above, prior to the downgrades many corporate guarantees and commitments of NRG Energy and its subsidiaries required that they be supported or replaced with letter of credit or cash collateral within 5 to 30 days of a ratings downgrade below Baa3 or BBB- by Moody’s or Standard & Poor’s, respectively. As a result of the downgrades on July 26 and July 29, NRG Energy received demands to post collateral aggregating approximately $1.1 billion. NRG Energy is presently working with various secured project lender groups with respect to the issue of posting collateral and is working toward establishing a comprehensive plan of restructuring.

      In August 2002, NRG Energy retained financial and legal restructuring advisors to assist its management in the preparation of such comprehensive financial and operational restructuring. NRG Energy and its advisors have been meeting regularly to discuss restructuring issues with an ad hoc committee of its bondholders and a steering committee of its bank lenders (the Ad Hoc Creditors Committees). In November 2002, NRG Energy and Xcel Energy presented a comprehensive plan of restructuring to the Ad Hoc Creditors Committees. The restructuring plan has served as a basis for continuing negotiations between the Ad Hoc Creditors Committees, NRG Energy and Xcel Energy related to a consensual plan of reorganization for NRG Energy. If a comprehensive plan of restructuring is ultimately agreed to, it is highly probable that such a plan would be implemented through the commencement of a voluntary Chapter 11 bankruptcy proceeding. If NRG Energy seeks protection under Chapter 11 of the Bankruptcy Code, it is likely that NRG Energy would also seek such protection for certain wholly-owned subsidiaries, which may include NRG South Central. For more specific information regarding NRG Energy’s restructuring efforts, refer to “Liquidity Issues” in Item 1 of Form 10-K filed by NRG Energy on March 31, 2003.

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      On November 22, 2002, five former NRG Energy executives filed an involuntary Chapter 11 petition against NRG Energy in U.S. Bankruptcy Court for the District of Minnesota. Under provisions of federal law, NRG Energy has the full authority to continue to operate its business as if the involuntary petition had not been filed unless and until a court hearing on the validity of the involuntary petition is resolved adversely to NRG Energy. On December 16, 2002, NRG Energy responded to the involuntary petition, contesting the petitioners’ claims and filing a motion to dismiss the case. On February 19, 2003, NRG Energy announced that it had reached a settlement with the petitioners. The U.S. Bankruptcy Court for the District of Minnesota will hear NRG Energy’s motion to approve the settlement and dismiss the involuntary petition. Two of NRG Energy’s creditors have objected to the motion to dismiss. There can be no assurance that the court will dismiss the involuntary petition. The Bankruptcy Court has discretion in the review and approval of the settlement agreement. There is a risk that the Bankruptcy Court may, among other things, reject the settlement agreement or enter an order for relief under Chapter 11.

      On March 26, 2003, Xcel Energy announced that its board of directors had approved a tentative settlement agreement with holders of most of NRG Energy’s long-term notes and the steering committee representing NRG’s bank lenders. The settlement is subject to certain conditions, including the approval of at least a majority in dollar amount of the NRG Energy bank lenders and long-term noteholders and definitive documentation. There can be no assurance that such approvals will be obtained. The terms of the settlement call for Xcel Energy to make payments to NRG Energy over the next 13 months totaling up to $752 million for the benefit of NRG Energy’s creditors in consideration for their waiver of any existing and potential claims against Xcel Energy. Under the settlement, Xcel Energy will make the following payments: (i) $350 million at or shortly following the consummation of a restructuring of NRG Energy’s debt. It is expected this payment would be made prior to year-end 2003; (ii) $50 million on January 1, 2004. At Xcel Energy’s option, it may fill this requirement with either cash or Xcel Energy common stock or any combination thereof; and (iii) $352 million in April 2004.

     NRG South Central Indebtedness and Liquidity Issues

      On March 30, 2000, NRG South Central issued $800 million of senior secured bonds in two tranches. The first tranche was for $500 million with a coupon of 8.962% and a maturity of 2016. The second tranche was for $300 million with a coupon of 9.479% and a maturity of 2024. Interest on the bonds is payable in arrears on each March 15 and September 15. Principal payments are made semi-annually. The proceeds of the bonds were used to finance NRG South Central’s acquisition of the Cajun generating facilities on March 31, 2000. On December 13, 2000, NRG South Central commenced an exchange offer of these bonds for registered bonds that contain similar terms and conditions. The exchange offer closed on January 19, 2001 with all bonds being exchanged. As of December 31, 2002 there remains $750.8 million of outstanding senior secured bonds, which are classified as current. NRG South Central Generating LLC secured bonds currently carry a rating of D at S&P and Caa1 at Moody’s.

      The debt agreements of NRG South Central generally restrict its ability to pay dividends, make distributions or otherwise transfer funds to NRG Energy under certain circumstances such as failure to maintain a required minimum debt service ratio. As of December 31, 2002, NRG South Central did not meet the minimum debt service coverage ratios, and therefore is restricted from making payments to NRG Energy.

      NRG South Central Generating is also precluded from making payments to NRG Energy due to unfunded debt service reserve accounts. Prior to the NRG Energy downgrades (see above), the debt service reserve accounts were funded with letters of guarantee from NRG Energy. Following the downgrade, these accounts were required to be funded with cash from NRG Energy within five to thirty days. The accounts were not funded with cash from NRG Energy within the respective cure period, and an event of default occurred, thereby giving the lenders the right to accelerate the project financings. As a result of this default, the long-term portion of the debt has been reclassified as a current liability, as it is potentially callable within the next twelve months. NRG South Central has approximately $46.0 million of unfunded debt service reserve commitments as of March 31, 2003.

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      NRG South Central and its subsidiaries have failed to timely make the following interest and/or principal payments on its indebtedness:

      In January 2003, the NRG South Central bondholders unilaterally withdrew $35.6 million from a restricted revenue account relating to the September 15, 2002 interest payment and fees; and on March 17, 2003 South Central bondholders were paid $34.4 million due in relation to the March semi-annual interest payment, but the $12.8 million principal payment was deferred. As of March 31, 2003, NRG South Central had cash and cash equivalents, including amounts in restricted cash, of approximately $77.4 million.

      The assets of Big Cajun I Peaking, NRG Sterlington and NRG Bayou Cove have not been pledged as collateral under the NRG South Central Generating LLC secured bonds. The assets of Big Cajun I Peaking, NRG Sterlington and NRG Bayou Cove have, however, been pledged as collateral under the $325,000,000 Series A Floating Rate Senior Secured Bonds due 2019, issued by NRG Peaker Finance Company LLC (the “Peaker financing facility”). The Peaker financing facility is currently in default due to the triggering of its cross-default provisions upon NRG Energy’s default with respect to other debt instruments. At this point, the Peaker financing facility has not been accelerated by its creditors.

      As a part of the comprehensive restructuring of NRG Energy, NRG Energy’s financial and legal restructuring advisors have been assisting the management of NRG South Central in the preparation of a comprehensive financial and operational restructuring for NRG South Central. NRG South Central and its advisors have been meeting regularly to discuss restructuring issues relating to NRG South Central with an ad hoc committee of its bondholders (the NRG South Central Bondholder Committee). NRG South Central, its management and its financial and legal advisors have engaged in discussions with the NRG South Central Bondholder Committee regarding the terms and conditions of a restructuring of the debt of NRG South Central.

NRG South Central Generating Assets

      The Cajun Facilities, located in New Roads, Louisiana, consist of two plants referred to as Big Cajun I and Big Cajun II. As of December 31, 2002, the aggregate net capable capacity of the Cajun facilities was 1,709 MW.

      Big Cajun I, Units 1 and 2, both of which are 100% owned by Louisiana Generating, are natural gas-fired generating facilities with a net capable capacity of 110 MW each. Big Cajun I is used for intermediate/peaking load seasonal operation and typically runs from May through September. As currently configured, Big Cajun I produces approximately 1% of the annual electric output (as measured in kWh) from the Cajun facilities.

      Big Cajun II, Units 1, 2 and 3, are coal-fired generating facilities. Units 1 and 2 are 100% owned by Louisiana Generating and have a net capable capacity of 580 and 575 MW, respectively. Unit 3 has a net capable capacity of 575 MW, of which 58% is owned by Louisiana Generating. Entergy Gulf States owns the remaining portion. Big Cajun II is a base load facility and runs throughout the year. As currently configured, Big Cajun II produces approximately 99% of the annual electric output (as measured in kWh) from the Cajun facilities.

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      During June, 2001 construction concluded with respect to an approximately 238 MW expansion of the Cajun facilities. NRG South Central formed Big Cajun I Peaking Power, a wholly owned subsidiary, to develop, construct and own the expansion project. The energy and capacity generated by the expansion project is being marketed by NRG Power Marketing, a wholly owned subsidiary of NRG Energy. Louisiana Generating purchases the capacity and is entitled to all energy from Big Cajun I Peaking. The assets of Big Cajun I Peaking have been pledged as collateral under the Peaker financing facility.

      NRG Sterlington owns and operates an approximately 200 MW simple cycle gas peaking facility located in Sterlington, Louisiana. Louisiana Generating purchases the capacity and is entitled to all energy from NRG Sterlington. The assets of NRG Sterlington have been pledged as collateral under the Peaker financing facility.

      NRG Bayou Cove was formed to construct, own and operate an approximately 320 MW gas-fired peaking generating facility located in Jennings, Louisiana. The facility became commercially operational in August 2002. The assets of NRG Bayou Cove have been pledged as collateral under the Peaker financing facility.

NRG South Central Subsidiaries and Operations

      Through its subsidiaries, Louisiana Generating and Big Cajun I Peakers, NRG South Central owns the Big Cajun I and Big Cajun II generating facilities in New Roads, Louisiana (the Cajun facilities). The Cajun facilities consist of 100% ownership of four gas-fired intermediate/peaking power generation units which NRG Energy collectively refers to as Big Cajun I. Two of these units were completed and commenced commercial operation in June 2001. The Cajun facilities also include 100% interest in two coal-fired, base-load power generation units, and a 58% interest in a third coal-fired, base load unit, which NRG Energy refers to collectively as Big Cajun II. The Cajun facilities were acquired through a competitive bidding process following a Chapter 11 bankruptcy filing by Cajun Electric Power Cooperative, Inc., a non-profit Louisiana electric membership cooperative corporation. Cajun Electric sold wholesale energy and capacity generated by the Cajun facilities to its cooperative members for more than 20 years under long-term, all-requirements power supply agreements. NRG South Central sells most of the energy and capacity of the Cajun facilities to 11 of Cajun Electric’s former power cooperative members. Seven of these cooperatives have entered into 25-year power purchase agreements with NRG South Central, and four have entered into two to four year power purchase agreements. In addition, NRG South Central sells power under contract to two municipal power authorities and one investor-owned utility that were former customers of Cajun Electric.

      In March 2000, NRG South Central formed NRG New Roads Holdings LLC (New Roads) to hold certain assets that were acquired in conjunction with the purchase of the Cajun facilities but which are not necessary for the operation of the Cajun facilities. NRG Sterlington Power LLC (Sterlington), which was acquired by NRG Energy and contributed to NRG South Central in August 2000, was formed for the purpose of developing, constructing, owning and operating an approximately 200 MW simple cycle gas peaking facility in Sterlington, Louisiana. Louisiana Generating purchases the capacity and is entitled to all energy from NRG Sterlington. In December 2000, NRG Sabine River Works LP and NRG Sabine River Works GP acquired, respectively, a 49% limited partnership interest and a 1% general partnership interest in SRW Cogeneration Limited Partnership (SRW Cogen), that owns and operates an approximately 450 MW natural gas-fired cogeneration plant at the DuPont Company’s Sabine River Works petrochemical facility near Orange, Texas. Subsidiaries of Conoco, Inc. owned the other 50% interest in SRW Cogen. Commercial operation of the plant commenced in November 2001. On November 5, 2002, the investment in SRW Cogen was sold to Conoco, Inc for a nominal amount and assumption of outstanding obligations.

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      During September 2001, NRG Bayou Cove was established as a non-guarantor subsidiary of NRG South Central Generating. NRG Bayou Cove was formed to construct, own and operate approximately 320 MW gas-fired peaking generating facility located near Jennings, Louisiana. The facility became commercially operational in August 2002.

      NRG Energy’s energy marketing subsidiary, NRG Power Marketing Inc. (NRG Power Marketing), provides a full range of energy management services for many of NRG Energy’s generation facilities. These services are provided under bilateral contracts or agency agreements pursuant to which NRG Power Marketing manages the sales and purchases of energy, capacity and ancillary services, procures the fuel (coal and natural gas) and associated transportation and manages the emission allowance credits for these facilities. NRG Power Marketing has continued to provide these services since NRG Energy lost its investment grade ratings in July 2002, and because of NRG Energy’s credit and liquidity limitations, NRG Power Marketing has scaled back its activities. Since July 2002, NRG Power Marketing has focused primarily on procuring fuel for, and marketing the power from, NRG Energy’s North American generation facilities in the spot and short-term markets.

Regulation

      NRG South Central is subject to a broad range of federal, state and local environmental and safety laws and regulations applicable to the development, ownership and operation of its projects. These laws and regulations impose requirements relating to discharges of substances to the air, water and land, the handling, storage and disposal of hazardous substances and wastes and the cleanup of properties affected by pollutants. These laws and regulations generally require that NRG South Central obtain a number of governmental permits and approvals before construction or operation of a power plant commences and, after completion, that its facilities operate in compliance with those permits and applicable legal requirements. NRG South Central could also be held responsible under these laws for the cleanup of pollutants released at its facilities or at off-site locations where it has sent wastes.

      NRG South Central strives at all times to comply with the terms of all environmental and safety laws, regulations, permits and licenses and NRG South Central believes that all of its operating plants are in material compliance with applicable environmental and safety requirements. NRG South Central also does not expect that its liability under environmental laws for the cleanup of contamination at its plants or off-site waste disposal facilities will have a material effect on the results of its operations. NRG South Central cannot assure you, however, that in the future it will not incur material environmental liabilities, that it will obtain all necessary permits for its operations or that it will operate in full compliance with environmental and safety laws and regulations at all times. In addition, regulatory compliance for the construction of new facilities is a costly and time-consuming process. Intricate and rapidly changing environmental regulations may require major capital expenditures for permitting and create a risk of expensive delays or material impairment of project value if projects cannot function as planned due to changing regulatory requirements or local opposition. Environmental laws have become increasingly stringent over time, particularly with regard to the regulation of air emissions from NRG South Central’s plants, which requires regular major capital expenditures for power plant upgrades and modifications. Therefore, it is NRG South Central’s policy to integrate the consideration of potential environmental impacts into every decision it makes, and by doing so, strive to improve its competitive advantage by meeting or exceeding environmental and safety requirements pertaining to the management and operation of its assets. (See Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Environmental Matters).

      Various federal and state laws pertaining to power generation and sales also affect NRG South Central. The Federal Power Act regulates the sale of electricity in the wholesale market. The Federal Energy Regulatory Commission (FERC) is an independent agency within The Department of Energy that regulates the transmission and wholesale sale of electricity in interstate commerce under the authority of The Federal

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      Federal Power Act. The Federal Power Act gives FERC exclusive rate-making jurisdiction over wholesale sales of electricity and transmission of electricity in interstate commerce. FERC regulates the owners of facilities used for the wholesale sale of electricity and its transmission in interstate commerce as “public utilities” under the Federal Power Act. The Federal Power Act also gives FERC jurisdiction to review certain transactions and numerous other activities of public utilities (such as the granting of waivers of certain of the accounting, record-keeping and reporting requirements that are imposed on public utilities with cost-based rate schedules).

      Under the Federal Power Act, an entity that sells electricity in the wholesale market is a public utility, subject to FERC’s jurisdiction. Public utilities are required to obtain FERC’s acceptance of their rate schedules for wholesale sales of electricity. Because NRG South Central’s operating subsidiaries sell energy and capacity in the wholesale market, they are deemed to be public utilities for purposes of the Federal Power Act. In most cases, FERC has granted the NRG South Central operating companies the authority to sell electricity at market-based rates. In New England, New York, PJM (Pennsylvania, New Jersey, Maryland, Delaware and parts of the Midwest) the Midwest and California, FERC has established Independent System Operators (ISOs) which file market based rate tariffs, subject to FERC Approval. These tariffs/market rules dictate how the wholesale markets are to operate and how entities with market based rates shall be compensated within those markets. The ISOs in these regions also control access to, pricing of and the operation of the transmission grid within their footprint. Outside of ISO controlled regions, NRG South Central is allowed to sell at market based rates as determined by willing buyers and sellers. Access to, pricing for and operation of the transmission grid in such regions is controlled by the local transmission owning utility according to their Pro Forma Open Access Transmission Tariff (OATT) filed with and approved by FERC.

      Usually, FERC’s orders which grant NRG South Central market-based rate authority reserve the right to revoke or revise the market-based rate authority on a prospective basis if FERC subsequently determines that NRG South Central possesses excessive market power. If NRG South Central lost its market-based rate authority, NRG South Central may be required to obtain FERC’s acceptance of a cost-of-service rate schedule and may become subject to the accounting, record-keeping and reporting requirements that are imposed only on utilities with cost-based rate schedules. It should be noted, however, that NRG South Central does have the right at any time to petition FERC to grant cost of service based rates pursuant to Section 205 of the Federal Power Act.

      Public Utility Holding Company Act (PUHCA). The Public Utility Holding Company Act, known as PUHCA, provides that any entity that owns, controls or has the power to vote 10% or more of the outstanding voting securities of an “electric utility company,” or a holding company for an electric utility company, is subject to regulation under PUHCA.

      Registered holding companies under PUHCA are required to limit their utility operations to a single, integrated utility system and divest any other operations that are not functionally related to the operation of the utility system. In addition, a company that is a subsidiary of a holding company registered under PUHCA is subject to financial and organizational regulation, including approval by the SEC of certain financings and transactions. Under the Energy Policy Act of 1992, however, FERC can determine that a company engaged exclusively in the business of owning or operating an eligible facility used for the generation of electric energy for sale at wholesale is an EWG. Accordingly, it is exempt from PUHCA requirements. In the case of facilities previously operated by regulated utilities, FERC can make an exempt wholesale generator determination only after the state utility commission finds that allowing the facility or facilities to be eligible for exempt wholesale generator status will benefit consumers, is in the public interest, and does not violate state law. Each of NRG South Central’s operating subsidiaries has been designated by FERC as an EWG or is otherwise exempt from PUHCA because it is a Qualifying Facility under the Public Utility Regulatory Policy Act of 1978.

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      NRG South Central does not expect to engage in any activities that will subject it to regulation under PUHCA. If NRG South Central were to lose its EWG status, it would become subject to regulation under PUHCA. It would be difficult for NRG South Central to comply with PUHCA absent a substantial restructuring.

      With the exception of the provision of utility services by certain utilities in New Orleans and certain municipal utilities, the Louisiana Public Service Commission, or LPSC, regulates all public utilities within Louisiana. The jurisdiction of the, Louisiana Public Service Commission (LPSC), over these public utilities generally includes authority to regulate the rates, services and securities of any entity furnishing electric service in the state. However, Louisiana law does not specifically address the status of entities providing electricity exclusively in the wholesale market. The LPSC has recognized that FERC has jurisdiction over wholesale rates. However, the 11 distribution cooperatives to which Louisiana Generating sells a majority of the energy and capacity generated by the Cajun facilities will continue to be regulated by the LPSC.

      NRG South Central’s Louisiana Generating production facilities provide a substantial amount of their power production to four Louisiana power distribution cooperatives under multi-year “Form C” contracts. Those contracts are currently set to expire in 2004. NRG South Central has negotiated replacement contracts with the cooperatives having terms of five to ten years. Those replacements are subject to LPSC and FERC approval. The LPSC is currently evaluating those contracts. FERC action will follow LPSC action on these contracts. There can be no assurance that the LPSC or FERC will ultimately approve those contracts as negotiated or at all.

Competition

      The entire independent power industry in the United States is in turmoil. Many of NRG South Central’s competitors have announced plans to scale back their growth, sell assets, and restructure their finances. The results of the wholesale restructuring of the independent power industry are impossible to predict, but they may include consolidation within the industry, the sale or liquidation of certain competitors, the re-regulation of certain markets, and the long-term reduction in new investment into the industry. Under any scenario, however, NRG South Central anticipates that it will continue to face competition from numerous companies in the industry, some of which may have more extensive operating experience, larger staffs, and greater financial resources than NRG South Central presently possesses.

      Many companies in the regulated utility industry, with which the independent power industry is closely linked, are also restructuring or reviewing their strategies. Several of these companies are discontinuing going forward with unregulated investments, seeking to divest of their unregulated subsidiaries or attempting to have their regulated subsidiaries acquire their unregulated subsidiaries. This may lead to an increased competition between the regulated utilities and the unregulated power producers within certain markets. In such instances, NRG South Central may compete with regulated utilities in the development of market designs and rulemaking.

      FERC, however, is attempting to level the competitive playing field between regulated utilities and unregulated energy suppliers by providing open, non-discriminatory access to electricity markets and the transmission grid. In April 1996, FERC issued Orders 888 and 889 that required all public utilities to file “open access” transmission tariffs that give wholesale generators, as well as other wholesale sellers and buyers of electricity, access to transmission facilities on a non-discriminatory basis. This led to the formation of the ISOs described above. On December 20, 1999, FERC issued Order 2000, encouraging the creation of Regional Transmission Organizations (RTOs). Finally, on July 31, 2002, FERC issued its Notice of Proposed Rulemaking regarding Standard Market Design. All three orders were intended to eliminate market discrimination by incumbent vertically integrated utilities and to provide for open access to the transmission grid.

      The full effect of these changes on NRG South Central is uncertain at this time, because in many parts of the United States, it has not been determined how entities will attempt to comply with FERC’s initiatives. At

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      In the Southeast, Entergy and Southern Company continue to support their RTO, Setrans. The future of Setrans is uncertain given the recent loss of Santee Cooper.

      Proposals have been introduced in Congress to repeal PURPA and PUHCA, and FERC has publicly indicated support for the PUHCA repeal effort. If the repeal of PURPA or PUHCA occurs, either separately or as part of legislation designed to encourage the broader introduction of wholesale and retail competition, the significant competitive advantages that independent power producers currently enjoy over certain regulated utility companies would be eliminated or sharply curtailed, and the ability of regulated utility companies to compete more directly with independent power companies would be increased. To the extent competitive pressures increase and the pricing and sale of electricity assumes more characteristics of a commodity business, the economics of domestic independent power generation projects may come under increasing pressure. Deregulation may not only continue to fuel the current trend toward consolidation among domestic utilities, but may also encourage the dis-aggregation of vertically-integrated utilities into separate generation, transmission and distribution businesses.

      In addition, the independent system operators who oversee most of the wholesale power markets have in the past imposed, and may in the future continue to impose, price caps and other mechanisms to address some of the volatility in these markets. For example, the independent system operator for the New York power pool and the California independent system operator have imposed price caps. These types of price caps and other mechanisms in New York, California, the New England Power Pool and elsewhere may adversely impact the profitability of NRG Energy’s and NRG South Central’s generation facilities that sell energy into the wholesale power markets. Finally, the regulatory and legislative changes that have recently been enacted in a number of states in an effort to promote competition are novel and untested in many respects. These new approaches to the sale of electric power have very short operating histories, and it is not yet clear how they will operate in times of market stress or pressure, given the extreme volatility and lack of meaningful long-term price history in many of these markets and the imposition of price caps by independent system operators.

Power Markets

      NRG South Central sells energy and capacity generated primarily from the Cajun facilities to cooperative customers under mostly fixed-price long term agreements in the southeast power markets, primarily in Louisiana. In addition, through NRG Power Marketing, NRG South Central sells excess energy and capacity into neighboring regions.

      The southeast power market consists of Louisiana, Mississippi, Tennessee, Alabama, Georgia, Arkansas, northwest Florida and east Texas. State public utilities commissions and state assemblies within the southeast power market have been slower than other parts of the country to restructure the electricity industry. Most states in the southeast power market, including Louisiana, have decided not to pursue retail competition immediately, deciding instead to observe the impact of direct retail access on other states that have taken a more aggressive approach towards restructuring. Texas is the only state in the southeast power market that is has implemented industry restructuring legislation.

      The southeast power market is currently a “bilateral market” functioning without an independent system operator, a power pool or a price exchange. Therefore, all scheduling, coordination and market pricing are determined on a control area basis by each market entity rather than by a single pool market clearing house.

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Significant Customers

      Cajun Electric was a rural electric generation and transmission cooperative formed in 1962 and was wholly-owned by its members, the distribution cooperatives. The distribution cooperatives purchased their electric energy requirements from Cajun Electric for more than 20 years under long-term, all requirements power supply agreements. Following NRG South Central’s acquisition of the Cajun facilities, all 11 of the distribution cooperatives continued to purchase their electric energy requirements from Louisiana Generating. For the years ended December 31, 2002 and 2001, revenues derived from agreements with the distribution cooperatives accounted for approximately 72.6% and 70.9% of NRG South Central’s total revenues, respectively. In total, NRG South Central derived approximately 80.8% and 78.4% of its revenues for the years ended December 31, 2002 and 2001, from long-term, all-requirements power supply agreements with the distribution cooperatives and other wholesale customers.

      During 2002, two customers accounted for 32.8% of NRG South Central’s gross revenues, Southwest Louisiana Electric Membership Corporation (16.9%) and Dixie Electric Membership Corporation (15.9%). During 2001, two customers accounted for 32.1% of NRG South Central’s gross revenues, Southwest Louisiana Electric Membership Corporation (16.4%) and Dixie Electric Membership Corporation (15.7%).

Employees

      As of December 31, 2002, Louisiana Generating had 197 union and 134 non-union employees. With respect to union employees, all such employees are covered by current labor agreements with either the United Steelworkers of America or the International Brotherhood of Electrical Workers. These agreements were renewed in March 2001 and expire April 1, 2006. No significant labor stoppages or disputes have been experienced by NRG South Central. NRG South Central does not have any employees.

Seasonality and Price Volatility

      Annual and quarterly operating results can be significantly affected by weather and price volatility. Significant other events, such as the war in Iraq and the precipitous decline in natural gas inventories and productive capacity, have combined to increase fuel and power price volatility.

Sources and Availability of Raw Materials

      NRG South Central’s raw material requirements primarily include various forms of fossil fuel energy sources, including natural gas and coal. NRG South Central obtains its natural gas and coal from multiple sources and availability is generally not an issue, although localized shortages can and do occur. The prices of natural gas and coal are subject to macro- and micro-economic forces that can change dramatically in both the short term and the long term. For example, the prices of natural gas and oil have been particularly high during the winter of 2002-2003 due to weather volatility and geo-political uncertainty in the Middle East. Natural gas and coal represented approximately 54.4% of NRG South Central’s cost of operations during the year ended December 31, 2002.

      Louisiana Generating has a coal supply agreement with Triton Coal for a term of five years, which began in March 2000. Triton Coal headquartered in Gillette, Wyoming, operates two coal mines in the Powder River Basin in Wyoming.

      Louisiana Generating has a coal transportation agreement with Burlington Northern and Santa Fe Railway and American Commercial Marine Services Company (ACMSC) for a term of five years, which began in March 2000. Burlington Northern and Santa Fe Railway, headquartered in Fort Worth, Texas, transport a variety of manufacturing, agricultural and natural resource commodities, chemicals, consumer and food products, and motor vehicles and automotive parts. ACMSC, headquartered in Jeffersonville, Indiana, is a general cargo stevedore and warehousing logistics specialist which operates a bulk dry cargo and liquid barge line, and terminal offering rail and truck trans-loading for a variety of commodities including steel, paper,

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      The Cajun facilities include a 17.5 mile natural gas pipeline with interconnections to Bridgeline Gas Distribution LLC, Acadian Gas Pipeline System and Texas Eastern Transmission Corporation. Under the power sales agreement, NRG Power Marketing may acquire natural gas and gas transportation rights for NRG South Central’s benefit.

Cautionary Statement Regarding Forward-Looking Information

      The information presented in this annual report includes forward-looking statements in addition to historical information. These statements involve known and unknown risks and relate to future events, or projected business results. In some cases forward-looking statements may be identified by their use of such words as “may,” “expects,” “plans,” “anticipates,” “contemplates,” “believes,” and similar terms. Forward-looking statements are only predictions or expectations and actual results may differ materially from the expectations expressed in any forward-looking statement. While NRG South Central believes that the expectations expressed in such forward-looking statements are reasonable, NRG South Central can give no assurances that these expectations will prove to have been correct. In addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements, factors that could cause actual results to differ materially from those contemplated in any forward-looking statements include, among others, the following:

	•	The possibility of a bankruptcy filing in the near future, either by NRG South Central, NRG Energy and/or one or more of its other subsidiaries, the entry of an order for relief by the Minnesota Bankruptcy Court in respect of a pending involuntary Chapter 11 petition in that court with respect to NRG Energy, or the filing of an involuntary bankruptcy petition in another court by a requisite number of creditors of NRG South Central, NRG Energy or any other subsidiary, as the case may be;
	•	NRG Energy’s ability or the ability of any of its subsidiaries to reach agreements with its lenders, creditors and other stakeholders regarding a comprehensive restructuring of NRG Energy;
	•	Cost and other effects of legal and administrative proceedings, settlements, investigations and claims;
	•	NRG Energy’s ability to sell assets in the amounts and on the time table assumed;
	•	General economic conditions including inflation rates and monetary exchange rate fluctuations; the risk of a significant slowdown in growth in the U.S. economy or risk of delay in growth recovery in the U.S. as a consequence of the September 11, 2001 terrorist attacks and other factors;
	•	The effect on the U.S. economy as a consequence of an invasion of Iraq and other potential actions relating to the U.S. government’s efforts to suppress terrorism;
	•	Trade, monetary, fiscal, taxation, and environmental policies of governments, agencies and similar organizations in geographic areas where NRG South Central has a financial interest;
	•	Customer business conditions including demand for their products or services and supply of labor and materials used in creating their products and services;
	•	Customer financial conditions, including solvency and the ability to pay invoices when due and the outcome of the bankruptcy filing by American Commercial Marine Services Company.
	•	Financial or regulatory accounting principles or policies imposed by the Financial Accounting Standards Board, the Securities and Exchange Commission, the Federal Energy Regulatory Commission and similar entities with regulatory oversight;

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	•	Factors affecting the availability or cost of capital such as changes in: interest rates; market perceptions of the power generation industry, the NRG South Central or its subsidiary; or credit ratings;
	•	Inability of NRG South Central to adequately control or hedge against commodity price volatility due to constraints or limitations on available working capital or market credit.
	•	Factors affecting power generation operations such as unusual weather conditions; catastrophic weather-related damage; unscheduled generation outages, maintenance or repairs; unanticipated changes to fossil fuel, or gas supply costs or availability due to higher demand, shortages, transportation problems or other developments; environmental incidents; or electric transmission or gas pipeline system constraints;
	•	Employee workforce factors including loss or retirement of key executives, collective bargaining agreements with union employees, or work stoppages;
	•	Volatility of energy prices in a deregulated market environment:
	•	Increased competition in the power generation industry;
	•	Cost and other effects of legal and administrative proceedings, settlements, investigations and claims;
	•	Technological developments that result in competitive disadvantages and create the potential for impairment of existing assets;
	•	Limitations on NRG South Central’s ability to control projects in which NRG South Central has less than 100% interest;
	•	Limited operating history at recently acquired or constructed projects provide only a limited basis for management to project the results of future operations;
	•	Risks associated with timely completion of projects under construction, including obtaining competitive commercial agreements, obtaining regulatory and permitting approvals, local opposition, construction delays and other factors beyond NRG South Central’s control;
	•	Factors associated with various investments including competition, operating risks, dependence on certain suppliers and customers, and environmental and energy regulations;
	•	Changes in government regulation or the implementation of new government regulations, or the outcome of any litigation which could adversely affect the continued deregulation of the electric industry;
	•	Changes in market design or implementation of rules that affect NRG South Central’s ability to transmit or sell power in any market.
	•	Other business or investment considerations that may be disclosed from time to time in NRG South Central’s Securities and Exchange Commission filings or in other publicly disseminated written documents.

      NRG South Central’s undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors that could cause NRG South Central’s actual results to differ materially from those contemplated in any forward-looking statements included in this Form 10-K should not be construed as exhaustive.

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      Listed below are descriptions of NRG South Central’s interests in facilities and operations as of December 31, 2002:

Competitive Power Production Facilities

Other Facilities

      NRG New Roads Holdings LLC owns certain assets acquired in conjunction with the purchase of the Cajun facilities, including land, mineral rights and a 540 MW General Electric steam turbine generator.

Item 3 — Legal Proceedings

Pointe Coupee Parish Police Jury and Louisiana Generating, LLC v. United States Environmental Protection Agency and Christine Todd Whitman, Administrator, Adversary Proceeding No. 02-61021 on the docket of the United States Court of Appeals for the Fifth Circuit

      On December 2, 2002, a Petition for Review was filed to appeal the United States Environmental Protection Agency’s approval of the Louisiana Department of Environmental Quality’s (“DEQ”) revisions to the Baton Rouge State Implementation Plan (“SIP”). Pointe Coupee and NRG Energy’s subsidiary, Louisiana Generating, object to the approval of SIP Section 4.2.1. Permitting NOx Sources that purports to require DEQ to obtain offsets of major increases in emissions of nitrogen oxides (NOx) associated with major modifications of existing facilities or construction of new facilities both in the Baton Rouge Ozone Nonattainment Area and in four adjoining attainment parishes referred to as the Region of Influence, including Pointe Coupee Parish. The plaintiffs’ challenge is based on DEQ’s failure to comply with Administrative Procedures Act requirements related to rulemaking and EPA’s regulations which prohibit EPA from approving a SIP not prepared in accordance with state law. The court granted a sixty (60) day stay of this proceeding on February 25, 2003 to allow the parties to conduct settlement discussions. At this time, NRG Energy is unable to predict the eventual outcome of this matter or the potential loss contingencies, if any, to which the Company may be subject.

In the Matter of Louisiana Generating, LLC, Adversary Proceeding No. 2002-1095 1-EQ on the docket of the Louisiana Division of Administrative Law.

      During 2000, DEQ issued a Part 70 Air Permit modification to Louisiana Generating to construct and operate two 240 MW natural gas-fired turbines. The Part 70 Air Permit set emissions limits for the criteria air pollutants, including NOx, based on the application of Best Available Control Technology (“BACT”). The BACT limitation for NOx was based on the guarantees of the manufacturer, Siemens-Westinghouse. Louisiana Generating sought an interim emissions limit to allow Siemens-Westinghouse time to install additional control equipment. To establish the interim limit, DEQ issued a Compliance Order and Notice of Potential Penalty, No. AE-CN-02-0022, on September 8, 2002, which is, in part, subject to the referenced

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      During 2002, NRG Sterlington conducted a review of the Sterlington Power Facility’s Part 70 Air Permit obtained by the facility’s former owner and operator, Koch Power, Inc. Koch had outlined a plan to install eight 25 megawatt (MW) turbines to reach a 200 MW limit in the permit. Due to the inability of several units to reach their nameplate capacity, Koch determined that it would need additional units to reach the electric output target. In August 2000, NRG Sterlington acquired the remaining interests in the facility not originally held on a passive basis and sought the transfer of the Part 70 Air Permit along with a modification to incorporate two 17.5 MW turbines installed by Koch and to increase the total number of turbines to ten. The permit modification was issued February 13, 2002. During further review, NRG Sterlington determined that a ninth unit had been installed prior to issuance of the permit modification. In keeping with its environmental policy, it disclosed this matter to DEQ during April, 2002. Additional information was provided during July 2002. As DEQ has not acted to date to institute an enforcement proceeding, NRG Energy suspects that it may not. However, as it is not time barred from doing so, NRG Energy is unable at this time to predict the eventual outcome or potential loss contingencies, if any, to which the Company may be subject.

      NRG Energy and various of its subsidiaries are in default under various of their credit facilities, financial instruments, construction agreements and other contracts, which have given rise to liens, claims and contingencies against them and may in the future give rise to additional liens, claims and contingencies against them. In addition, NRG Energy and various of its subsidiaries have entered into various guarantees, equity contribution agreements, and other financial support agreements with respect to the obligations of their affiliates, which have given rise to liens, claims and contingencies against them and may in the future give rise to additional liens, claims and contingencies against the party or parties providing the financial support. NRG Energy cannot at this time predict the outcome or financial impact of these matters.

      There are no other material legal proceedings pending, to which NRG South Central or any of its subsidiaries are a party. There are no other material legal proceedings to which an officer or director is a party or has a material interest adverse to NRG South Central or its subsidiaries. There are no other material administrative or judicial proceedings arising under environmental quality or civil rights statutes pending or known to be contemplated by governmental agencies to which NRG South Central is or would be a party.

      No matters were considered during the year ended December 31, 2002.

PART II

Quarterly Stock Data

      There is no established public market for the common equity of NRG South Central.

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Holders

      NRG Central, Inc. owns 50% of the outstanding equity interests of NRG South Central Generating LLC and South Central Generation, Inc. owns 50% of the outstanding equity interests of NRG South Central Generating LLC. NRG Central, Inc. and South Central Generation, Inc. are each wholly-owned subsidiaries of NRG Energy, Inc.

Distributions on Common Equity

      NRG South Central has not paid and does not currently intent to distribute any earnings as distributions.

      The following table presents selected financial data of NRG South Central. This historical data should be read in conjunction with the Consolidated Financial Statements and the related notes thereto in Item 8 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7.