Executives at wholesale power marketer RRI Energy Inc. (RRI) said Tuesday they see neither the economy nor U.S. power demand picking up anytime soon, requiring the company to hunker down and wait for better times ahead.

"We all hope the economy will improve, but we're not convinced we've seen the bottom and we're prepared for a much more difficult environment than we see today," RRI President and Chief Executive Mark Jacobs said during a webcast presentation for analysts.

Houston-based RRI said Tuesday it expects to report a second-quarter loss from continuing operations before income taxes of $185 million, compared to income of $144 million for the second quarter of 2008. The company plans to report its second-quarter results on Monday.

Analysts surveyed by Thomson Reuters, on average, expect RRI Energy to report a loss of 24 cents a share on revenue of $414 million, including a loss from operations of 13.5 cents a share. In last year's second quarter, RRI, which changed its name in May from Reliant Energy after selling its retail power business, reported earnings of $1.01 a share on revenue of $3.42 billion.

With power demand down nationwide, particularly among industrial users, electricity prices have dropped, forcing companies like RRI, which sell power into the wholesale markets, to figure out how to weather the storm.

RRI has adjusted its hedging strategy to minimize risk and is focused on regional capacity markets, signing power purchase agreements and investing in generation assets that are likely to provide returns not just in the current environment, but later when demand strengthens, Jacobs said.

Jacobs said he expects consolidation in the power industry over time, although he said there were impediments to getting deals done, including the negative way in which credit-rating agencies tend to view such mergers.

"It'll be difficult for deals to get done, but I still think consolidation will occur," he said.

With 14,500 megawatts of generation across the U.S., RRI hedges about a quarter of its coal-fired power generation a year, which can be profitable in up years but lead to losses in down years, the company said, adding that its business is "cyclical."

With about 32% of its generation fueled with coal, RRI profits when the difference between coal and natural gas prices is wide, but sees that value disappear when the gap narrows, as it has this year, to $3 or less, from about $6 last year, according to the company.

RRI would consider selling power plants or other assets for the right price, but getting a fair price would be unlikely in the current economic environment, Jacobs said. He added that the company isn't "looking to sell assets to pay down debt or fund expenditures."

Shares of RRI closed flat Tuesday at $5.34 apiece.

-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; cassandra.sweet@dowjones.com