Reliant Energy lowers 2008 financial outlook

The Houston energy company also said it is ending its retail credit relationship with Merrill Lynch & Co. because of "disappointing" results from the structure this year. Reliant has raised $1 billion in new capital to support that move, which aims to lower collateral requirements and provide "more consistent earnings."

The company said Hurricane Ike, which struck the Texas Gulf Coast earlier this month, reduced sales volumes and increased operating costs at its retail unit. Reliant now expects to book $350 million in contribution margins from this business in 2008, down $300 million from a prior forecast.

It said lower commodity prices, warm weather and lower off-peak energy prices will take $480 million from its contribution margin in the wholesale energy business.