So far, my enthusiasm for power companies has somewhat paid off. Even though a mild winter cut demand in many parts of the country, companies like NRG Energy (NYSE:NRG), Mirant (NYSE:MIR), and Dynegy (NYSE:DYN) are still doing all right, even though the stocks have pulled back a bit from February highs.

Since we at The Motley Fool rarely play for small stakes or short engagements, I'm happy to say that NRG Energy continues to report meaningful signs of operational progress. It seems to have better-than-average prospects of producing some real cash flow in the coming years.

This quarter's results were complicated by the inclusion of the Texas Genco purchase. While the reported 34% growth in adjusted EBITDA looks good, it's not quite the real story. On an adjusted basis, EBITDA was basically flat with the year-ago period -- not a bad result, given lower generation in the Northeast and higher coal prices year over year.

Cash flow is also improving, though the timing of cash collateral commitments and returns makes the numbers slightly harder to compare. The company's liquidity position also seems to be in good shape; there's still a lot of debt here, but the company's hedges give me little concern about its ability to pay the bills.

Investors should be watching for incremental progress, not to mention the eventual cash flow that management should be able to produce from its relatively lower-cost generating assets. A recent capacity addition announcement from TXU (NYSE:TXU) and the changing spreads between natural gas and coal prices highlight two of the significant risk factors here, but neither really seems to be a major issue at present.

Assuming that NRG can continue to leverage its restructured balance sheet and deploy capital in intelligent and shareholder-friendly ways, investors should be able to get some juice out of this idea.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).