Shares of NRG Energy Inc. (NRG) climbed Tuesday above what Exelon Corp. (EXC) is offering for the power company, as some investors speculate Exelon may need to raise its bid.

Exelon last fall launched an exchange offer to pay a fixed ratio of 0.485 Exelon share for each NRG share in a bid to create the largest power generator in the U.S. by output. NRG Energy's board has stiffly resisted the bid, saying it undervalues the Princeton, N.J., power plant operator.

NRG shares climbed as high as $24.14 Tuesday before falling to trade recently down 1% to $23.48. Exelon shares traded down 1.1% to $48.75 recently.

Shares are trading as if the market expects Exelon to raise its offer for NRG, said Les Levy, a merger and arbitrage analyst for ICAP Corporates.

Levy said several issues appear to be coming to a head, including an approval of the deal by the Federal Energy Regulatory Commission late last month and the opening of a trial in which NRG is challenging certain aspects of Exelon's hostile bid.

NRG's annual shareholders meeting has become a key event in the takeover battle as well. Exelon has proposed expanding NRG's board and adding its own members as it tries to complete the deal amid the resistance of NRG's current board. But no date has been set for the annual meeting. NRG held its last annual shareholders meeting on May 14, 2008.

Last week, Macquarie Capital analyst Angie Storozynski in a note to client wrote that recent developments at NRG requires Exelon to raise its offer for the company. This includes NRG having a leading proposal to build new nuclear reactors, and improved earnings following the acquisition of Reliant Energy Inc.'s (RRI) retail business in Texas.

"Exelon needs to substantially up its merger offer for NRG to close the deal, in our view," she wrote.

Shares of the two power companies have erased a spread of more than $3.50 in late May, or around a 15% premium for NRG shareholders. The offer when it first became public last fall represented a 37% premium over NRG's closing price at the time.

Neither company had an immediate comment Tuesday.

Exelon owns and operates electric utilities in Illinois and Pennsylvania, and power plants throughout the U.S., including the nation's largest fleet of nuclear power plants. NRG owns power plants with more than 24,000 MW of generation.

-By Mark Peters, Dow Jones Newswires; 201-938-4604; mark.peters@dowjones.com