UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2012~~2013

_______________________



Commission File Number	Exact name of registrants as specified in their charters, addresses of principal executive offices, telephone numbers and states of incorporation	I.R.S. Employer Identification No.
333-68630	EDISON MISSION ENERGY	95-4031807
	3 MacArthur Place, Suite 100 Santa Ana, California 92707 714-513-8000 State of Incorporation: Delaware
333-59348	MIDWEST GENERATION, LLC	33-0868558
	235 Remington Boulevard, Suite A Bolingbrook, Illinois 60440 630-771-7800 State of Incorporation: Delaware

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



Registrant	Title of each Class	Name of each exchange on which registered
Edison Mission Energy	None	not applicable
Midwest Generation, LLC	None	not applicable

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



Registrant	Title of each Class	Name of each exchange on which registered
Edison Mission Energy	Common Stock, par value $0.01 per share	not applicable
Midwest Generation, LLC	None	not applicable

_______________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Edison Mission Energy YES o NO x Midwest Generation, LLC YES o NO x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Edison Mission Energy YES o NO x Midwest Generation, LLC YES o NO x

Indicate by check mark whether the registrant (1) has filed all reports required 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.

Edison Mission Energy YES x NO o Midwest Generation, LLC YES x 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 registrant's 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.

Edison Mission Energy x Midwest Generation, LLC x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Edison Mission Energy YES x NO o Midwest Generation, LLC YES x NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):



Edison Mission Energy	Large accelerated filer o	Accelerated filer o	Non-accelerated filer x	Smaller reporting company o
Midwest Generation, LLC	Large accelerated filer o	Accelerated filer o	Non-accelerated filer x	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Edison Mission Energy YES o NO x Midwest Generation, LLC YES o NO x

Aggregate market value of the registrant's Common Stock held by non-affiliates of Edison Mission Energy as of June 30, ~~2012~~2013: $0. Number of shares outstanding of Edison Mission Energy's Common Stock as of March 1512, ~~2013~~2014: 100 shares (all shares held by an affiliate of Edison Mission Energy).

This combined Form 10-K is filed separately by two registrants: Edison Mission Energy and Midwest Generation, LLC. Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrant.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Amendment No. 1 to Edison Mission Energy's and Midwest Generation's Form 10-K for the fiscal year ended December 31, ~~2012~~2013, which will be filed with the Securities and Exchange Commission no later than 120 days after the end of the fiscal year covered by this annual report on Form 10-K, are incorporated by reference into Part III, Items 10, 11, 12 and 13 hereof.

TABLE OF CONTENTS

	GLOSSARY	1
	EXPLANATORY NOTE	34
	FORWARD-LOOKING STATEMENTS	56
PART I		78
	ITEM 1. BUSINESS	78
	Overview	78
	Chapter 11 Cases	78
	Location and Available Information	89
	Electric Power Industry	810
	Wholesale Markets	910
	Competition	910
	Operating Segments	911
	Overview of EME Facilities	1011
	Seasonality	1213
	Merchant Power Plants	1213
	Midwest Generation Plants	1314
	Natural Gas	1416
	Contracted Power Plants—Domestic	15
	Contracted Power Plants—Domestic and International	16
	Natural Gas	1516
	Coal	1617
	Contracted Power Plants—International	16
	Renewable Energy	17
	Construction and Development Activities	18
	Asset Management and Trading Activities	19
	Asset Management and Trading Activities	18
	Significant Customers	19
	Significant Customers	18
	Insurance	19
	Insurance	18
	Regulatory Matters	19
	Environmental Matters and Regulations	20
	Air Quality	20
	Water Quality	2223
	Coal Combustion Wastes	2223
	Climate Change	2223
	Employees	24
	EME's and Midwest Generation's Relationship with Certain Affiliated Companies	2425
	ITEM 1A. RISK FACTORS	2425
	Risks Related to Restructuring	2425
	Liquidity Risks	2526
	Regulatory and Environmental Risks	2728
	Market Risks	29
	Operating Risks	2930
	ITEM 1B. UNRESOLVED STAFF COMMENTS	30
	ITEM 2. PROPERTIES	30
	ITEM 3. LEGAL PROCEEDINGS	30
	ITEM 4. MINE SAFETY DISCLOSURES	31
PART II		32

	ITEM 4. MINE SAFETY DISCLOSURES	30
	ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	32
PART II		31
	ITEM 6. SELECTED FINANCIAL DATA	33
	ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	31
	ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	35
	ITEM 6. SELECTED FINANCIAL DATA	32
	EDISON MISSION ENERGY OVERVIEW	35
	ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	34
	Highlights of Operating Results	35
	EDISON MISSION ENERGY OVERVIEW	34
	Management's Overview	37
	Highlights of Operating Results	34
	Midwest Generation Environmental Compliance Plans and Costs	38
	Management's Overview	35
	MIDWEST GENERATION, LLC	39
	Construction and Development Activities	37
	Results of Operations	39
	Midwest Generation Environmental Compliance Plans and Costs	37
	Operating Loss	40
	Homer City Lease	38
	Reconciliation of Non-GAAP Disclosures and Statistical Definitions	41
	Non-GAAP Performance Measures	38
	Average Realized Energy Price	41
	Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization, and Restructuring Items	38
	Average Realized Fuel Costs	42
	Adjusted Operating Income	39
	Statistical Definitions	42
	MIDWEST GENERATION, LLC	41
	Other Income (Expense)	42
	Results of Operations	41
	Income Taxes	43
	Operating Income (Loss)	42
	Related Party Transactions	43
	Reconciliation of Non-GAAP Disclosures and Statistical Definitions	42
	New Accounting Guidance	43
	Average Realized Energy Price	43
	EDISON MISSION ENERGY	44
	Average Realized Fuel Costs	44
	Results of Operations	44
	Statistical Definitions	44
	Midwest Generation Plants	44
	Other Income (Expense)	44
	Renewable Energy Projects	44
	Income Taxes	45
	Interest Income (Expense)	46
	Related Party Transactions	45
	Income Taxes	46
	New Accounting Guidance	45
	Results of Discontinued Operations	46
	EDISON MISSION ENERGY	46
	Related Party Transactions	46
	Results of Operations	46
	New Accounting Guidance	47
	Midwest Generation Plants	46
	LIQUIDITY AND CAPITAL RESOURCES	48
	Renewable Energy Projects	47
	Available Liquidity	48
	Energy Trading	48
	Capital Investment Plan	48
	Adjusted Operating Income from Other Projects	48
	Historical Consolidated Cash Flow (EME)	49
	Corporate Administrative and General Expenses	48
	Cash Flows From Operating Activities	49
	Interest Income (Expense)	49
	Cash Flows From Financing Activities	50
	Income Taxes	49
	Cash Flows From Investing Activities	50
	Results of Discontinued Operations	49
	Historical Consolidated Cash Flow (Midwest Generation)	50
	Related Party Transactions	50
	Cash Flows From Operating Activities	51
	New Accounting Guidance	50
	Cash Flows From Financing Activities	51
	LIQUIDITY AND CAPITAL RESOURCES	51
	Cash Flows From Investing Activities	51
	Available Liquidity	51
	Margin, Collateral Deposits and Other Credit Support for Energy Contracts	51
	Capital Investment Plan	51
	EME's Intercompany Tax-Allocation Agreement	51
	Historical Consolidated Cash Flow (EME)	52
	Midwest Generation's Equity Distributions and Tax Payments	52
	Dividend Restrictions in Major Financings	52

	Cash Flows From Operating Activities	52
	Contractual Obligations, Commercial Commitments and Contingencies	53
	Cash Flows From Financing Activities	53
	Commercial Commitments	54
	Cash Flows From Investing Activities	53
	Contingencies	54
	Historical Consolidated Cash Flow (Midwest Generation)	54
	Off-Balance Sheet Transactions	55
	Cash Flows From Operating Activities	54
	Introduction	55
	Cash Flows From Financing Activities	54
	Sale Leaseback	55
	Cash Flows From Investing Activities	54
	EME's Obligations to Midwest Generation	56
	Margin, Collateral Deposits and Other Credit Support for Energy Contracts	54
	MARKET RISK EXPOSURES	57
	EME's Intercompany Tax-Allocation Agreement	55
	Derivative Instruments	57
	Midwest Generation's Equity Distributions and Tax Payments	55
	Unrealized Gains and Losses	57
	Dividend Restrictions in Major Financings	55
	Fair Value Disclosures	57
	Contractual Obligations, Commercial Commitments and Contingencies	56
	Commodity Price Risk	58
	Commercial Commitments	57
	Energy Price Risk	58
	Contingencies	58
	Capacity Price Risk	59
	Off-Balance Sheet Transactions	58
	Coal Price Risk	59
	Introduction	58
	Basis Risk	60
	Sale Leaseback	58
	Credit Risk	60
	EME's Obligations to Midwest Generation	59
	Interest Rate Risk	61
	MARKET RISK EXPOSURES	60
	CRITICAL ACCOUNTING ESTIMATES AND POLICIES	62
	Derivative Instruments	60
	Accounting for Liabilities Subject to Compromise	62
	Unrealized Gains and Losses	60
	Impairment of Long-Lived Assets	62
	Fair Value Disclosures	60
	Derivatives	64
	Commodity Price Risk	61
	Income Taxes	65
	Energy Price Risk	61
	Accounting for Contingencies, Guarantees and Indemnities	67
	Capacity Price Risk	62
	ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	67
	Coal Price Risk	62
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	68
	Basis Risk	63
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	68
	Credit Risk	63
	ITEM 9A. CONTROLS AND PROCEDURES	68
	Interest Rate Risk	64
	ITEM 9B. OTHER INFORMATION	69
	CRITICAL ACCOUNTING ESTIMATES AND POLICIES	65
	Accounting for Liabilities Subject to Compromise	65
	Impairment of Long-Lived Assets	65
	Derivatives	67
	Income Taxes	68
	Accounting for Contingencies, Guarantees and Indemnities	69
	ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	70
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	70
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	70
	ITEM 9A. CONTROLS AND PROCEDURES	70
	ITEM 9B. OTHER INFORMATION	71

iii

	EME REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	7270
	MIDWEST GENERATION REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	7371
	Edison Mission Energy
	CONSOLIDATED STATEMENTS OF OPERATIONS	7472
	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)	75
	CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS	73
	CONSOLIDATED BALANCE SHEETS	7674
	CONSOLIDATED STATEMENTS OF TOTAL EQUITY	7775
	CONSOLIDATED STATEMENTS OF CASH FLOWS	7876
	Midwest Generation, LLC
	CONSOLIDATED STATEMENTS OF OPERATIONS	7977
	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)	80
	CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS	78
	CONSOLIDATED BALANCE SHEETS	8179
	CONSOLIDATED STATEMENTS OF MEMBER'S EQUITY	8280
	CONSOLIDATED STATEMENTS OF CASH FLOWS	8381
	COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	8482
	Note 1. Summary of Significant Accounting Policies	8482
	Note 2. Property, Plant and Equipment	9391
	Note 3. Variable Interest Entities (EME)	9492
	Note 4. Fair Value Measurements	9795
	Note 5. Debt and Credit Agreements (EME)	~~103~~100
	Note 6. Derivative Instruments and Hedging Activities	~~108~~103
	Note 7. Income Taxes	~~114~~109
	Note 8. Compensation and Benefit Plans	~~120~~115
	Note 9. Commitments and Contingencies	~~133~~128
	Note 10. Environmental Developments	~~139~~135
	Note 11. Accumulated Other Comprehensive Loss	~~142~~136
	Note 12. Supplemental Cash Flows Information	~~143~~138
	Note 13. Asset Impairments and Other Charges	~~144~~139
	Note 14. Discontinued Operations (EME)	~~145~~140
	Note 15. Related Party Transactions	~~146~~141
	Note 16. Restructuring Activities	~~148~~143
	Note 17. Condensed Combined Debtors' Financial Information (EME)	~~150~~146
	Note 18. Quarterly Financial Data (unaudited)	~~152~~148
PART III		~~153~~150
	ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	~~153~~150
	ITEM 11. EXECUTIVE COMPENSATION	~~153~~150
	ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	~~153~~150
	ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	~~153~~150
	ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES	~~153~~150

PART IV		~~154~~151
	ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES	~~154~~151
	SIGNATURES	~~160~~157

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GLOSSARY

When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below.

2010 Tax Relief Act	Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010
Acquisition Agreement	a sale of certain assets of EME to NRG pursuant to an Asset Purchase Agreement
Adjusted EBITDA	adjusted earnings before interest, taxes, depreciation and amortization
Ambit	American Bituminous Power Partners, L.P. or its waste coal facility
AOI	adjusted operating income (loss)
AOCI	accumulated other comprehensive income (loss)
ARO(s)	asset retirement obligation(s)
BACT	best available control technology
Bankruptcy Code	Chapter 11 of the United States Bankruptcy Code
Bankruptcy Court	United States Bankruptcy Court for the Northern District of Illinois, Eastern Division
bcf	billion cubic feet
Big 4 Projects	Kern River, Midway-Sunset, Sycamore and Watson natural gas power projects
Btu	British thermal units
CAA	Clean Air Act
CAIR	Clean Air Interstate Rule
Certificate Holders	certain of the holders of the pass-through certificates of Midwest Generation's lessor debt
Chapter 11 Cases	Initial Debtors' chapter 11 cases and the Homer City Debtors chapter 11 cases, collectively
CO2	carbon dioxide
Commonwealth Edison	Commonwealth Edison Company
Confirmation Order	The confirmation order issued by the Bankruptcy Court in March 2014
CPS	Combined Pollutant Standard
CPUC	California Public Utilities Commission
CSAPR	Cross-State Air Pollution Rule
Debtor Entities	~~EME~~collectively ~~and~~19 16debtors composed of ~~its~~the ~~wholly~~Initial ~~owned~~Debtors ~~subsidiaries,~~and ~~including~~the ~~Midwest~~Homer ~~Generation~~City Debtors
EIX	Edison International
EME	Edison Mission Energy
EMMT	Edison Mission Marketing & Trading, Inc.
ERCOT	Electric Reliability Council of Texas
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
FPA	Federal Power Act
GAAP	United States generally accepted accounting principles
GECC	General Electric Capital Corporation
GHG	greenhouse gas
GWh	gigawatt-hours
Homer City	EME Homer City Generation L.P.
ISO(s)	independent system operator(s)
Lehman Brothers	Lehman Brothers Commodity Services, Inc. and Lehman Brothers Holdings, Inc.
LIBOR	London Interbank Offered Rate
LSTC	liabilities subject to compromise
MATS	Mercury and Air Toxics Standards
Midwest Generation	Midwest Generation, LLC
MISO	Midwest Independent Transmission System Operator
MMBtu	million British thermal units
Moody's	Moody's Investors Service, Inc.

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Homer City Debtors	three additional EME subsidiaries that filed during the second quarter 2013
Initial Debtors	EME and 16 of its wholly owned subsidiaries, including Midwest Generation
ISO(s)	independent system operator(s)
LIBOR	London Interbank Offered Rate
LSTC	liabilities subject to compromise
MATS	Mercury and Air Toxics Standards
Midwest Generation	Midwest Generation, LLC
MISO	Midwest Independent Transmission System Operator
MMBtu	million British thermal units
Moody's	Moody's Investors Service, Inc.
MW	megawatts
MWh	megawatt-hours
NAAQS	National Ambient Air Quality Standard(s)
NERC	North American Electric Reliability Corporation
NO_X	nitrogen oxide
NRG	NRG Energy, Inc.
NRG Sale	Sale of substantially all of EME's assets, including its equity interest in substantially all of its debtor and non-debtor subsidiaries, to a wholly owned subsidiary of NRG Energy Inc., upon Bankruptcy Court confirmation and consummation of a plan of reorganization
NSR	New Source Review
OCI	other comprehensive income (loss)
PJM	PJM Interconnection, LLC
Powerton and Joliet Cure Amount	Payment of cure amount as set forth in Asset Purchase Agreement
Powerton and Joliet Sale Leaseback	a sale leaseback transaction for the Powerton Station and Units 7 and 8 of the Joliet Station with third-party lessors in August 2000
PRB	Powder River Basin
PSA	Plan Sponsor Agreement
PSD	Prevention of Significant Deterioration
Purchaser	NRG Energy Holdings Inc., a wholly owned subsidiary of NRG
Reorganization Trust	A new entity to be formed which will make distributions pursuant to the Plan for the benefit of EME's existing creditors
RPM	Reliability Pricing Model
RTO(s)	regional transmission organization(s)
S&P	Standard & Poor's Ratings Services
SCE	Southern California Edison Company
SIP(s)	state implementation plan(s)
SO₂	sulfur dioxide
Settlement Transaction	A proposed settlement transaction with Edison International as contemplated in the Support Agreement
Support Agreement	Transaction Support Agreement dated as of December 16, 2012 by and among EME, Edison International, and certain holders of EME's senior unsecured notes

MW	megawatts
MWh	megawatt-hours
NAAQS	National Ambient Air Quality Standard(s)
NERC	North American Electric Reliability Corporation
NOX	nitrogen oxide
NSR	New Source Review
NYISO	New York Independent System Operator
PJM	PJM Interconnection, LLC
Powerton and Joliet Sale Leaseback	a sale leaseback transaction for the Powerton Station and Units 7 and 8 of the Joliet Station with third-party lessors in August 2000
PRB	Powder River Basin
PSD	Prevention of Significant Deterioration
RPM	Reliability Pricing Model
RTO(s)	regional transmission organization(s)
S&P	Standard & Poor's Ratings Services
SCE	Southern California Edison Company
SIP(s)	state implementation plan(s)
SO2	sulfur dioxide
Settlement Transaction	A proposed settlement transaction with Edison International as contemplated in the Support Agreement
Support Agreement	Transaction Support Agreement dated as of December 16, 2012 by and among EME, Edison International, and certain holders of EME's senior unsecured notes
US EPA	United States Environmental Protection Agency
US Treasury Grant(s)	Cash grants, under the American Recovery and Reinvestment Act of 2009
VIE(s)	variable interest entity(ies)

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The Plan	The Third Amended Plan of Reorganization filed by the Debtor Entities with the Bankruptcy Court
US EPA	United States Environmental Protection Agency
US Treasury Grant(s)	Cash grants, under the American Recovery and Reinvestment Act of 2009
VIE(s)	variable interest entity(ies)

EXPLANATORY NOTE

This annual report combines the annual reports on Form 10-K for the year ended December 31, ~~2012~~2013 of Edison Mission Energy (EME) and Midwest Generation, LLC (Midwest Generation).

EME, an indirect subsidiary of Edison International (EIX), is a holding company whose subsidiaries and affiliates are engaged in the business of ~~developing~~owning, ~~acquiring, owning or~~ leasing, operating and selling energy and capacity from independent power production facilities. Midwest Generation, an indirect wholly owned subsidiary of EME, operates and sells energy and capacity at four coal-fired generating stations and two oil-fired generating peakers in Illinois.

OnAs ~~December~~of ~~17,~~the ~~2012~~date of this filing, EME and 1619 of its wholly owned subsidiaries, including Midwest Generation, have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code (the Bankruptcy Code) in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the Bankruptcy Court). ~~EME~~Information ~~and~~on ~~Midwest~~the ~~Generation~~cases, ~~remain~~including ineach ~~possession~~item offiled ~~their~~on ~~property~~the ~~and~~docket, ~~continue~~is ~~their~~available ~~business~~at ~~operations~~www.edisonmissionrestructuring.com. ~~uninterrupted~~The asinformation ~~"debtors-in-possession"~~set ~~under~~forth ~~the~~on ~~jurisdiction~~this ofweb ~~the~~site ~~Bankruptcy~~shall ~~Court~~not ~~and~~be indeemed ~~accordance~~to ~~with~~be ~~the~~a ~~applicable~~part ~~provisions~~ of, ~~the~~or ~~Bankruptcy~~incorporated ~~Code~~by reference into, EME's and ~~orders~~Midwest ofGeneration's ~~the~~annual ~~Bankruptcy~~report ~~Court.~~on Form 10-K.

The consolidated financial statements of EME reflect the accounts of EME and its subsidiaries, including Midwest Generation, and are labeled debtor-in-possession to reflect EME's status. Midwest Generation's consolidated financial statements include the accounts of Midwest Generation and its subsidiaries and are labeled debtor-in-possession to reflect Midwest Generation's status. All significant intercompany balances and transactions have been eliminated for each reporting entity. The discussion in this annual report and in the notes to the consolidated financial statements generally applies to both EME and Midwest Generation unless otherwise specified as indicated parenthetically next to each corresponding disclosure.

This annual report also includes separate sections under Item 9A. Controls and Procedures and separate Exhibit 31 and Exhibit 32 certifications for EME and Midwest Generation.

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FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect EME and Midwest Generation's current expectations and projections about future events based on EME's and Midwest Generation's knowledge of present facts and circumstances and assumptions about future events and include any statement that does not directly relate to a historical or current fact. Other information distributed by EME and Midwest Generation that is incorporated in this annual report, or that refers to or incorporates this annual report, may also contain forward-looking statements. In this annual report and elsewhere, the words "expects," "believes," "anticipates," "estimates," "projects," "intends," "plans," "probable," "may," "will," "could," "would," "should," and variations of such words and similar expressions, or discussions of strategy or plans, are intended to identify forward-looking statements. Such statements necessarily involve risks and uncertainties that could cause actual results to differ materially from those anticipated. Some of the risks, uncertainties and other important factors that could cause results to differ from those currently expected, or that otherwise could impact EME or Midwest Generation or their respective subsidiaries, include but are not limited to:

• their ability to consummate ~~one~~the orPlan ~~more plans of reorganization~~ with respect to the Chapter 11 Cases, and to consummate the ~~transactions~~NRG ~~contemplated by the Support Agreement, including the Settlement Transaction~~Sale;


•	the existence and duration of the Chapter 11 Cases, and the impact of orders and decisions of the Bankruptcy Court;


•	beliefs and assumptions regarding their ability to continue as going concerns;


•	their ability to meet liquidity requirements during periods of operating losses and capital spending programs, and Midwest Generation's ability to fund cash flow deficits and environmental retrofits;

• their ability to restructure their debt and lease obligations and stabilize their capital structures;


•	their significant cash requirements and limited ability to borrow funds and access the capital markets on reasonable terms;

• EME's continued ability to monetize tax benefits generated by it and its subsidiaries, either through the Settlement ~~Transaction~~Agreement or otherwise;


•	the impact of reduced natural gas prices resulting from, among other things, shale gas technology on electric capacity and energy prices;


•	supply and demand for electric capacity and energy, and the resulting prices and dispatch volumes;


•	volatility of market prices for energy and capacity;


•	the difficulty of predicting wholesale prices, transmission congestion, energy demand, and other aspects of the wholesale power generation market;

• environmental laws and regulations, or changes in the application of those laws and regulations, that could require additional expenditures or otherwise affect the cost and manner of business operations, including compliance with the CPS, the CAIR, the MATS ~~rule~~rules and thermal discharge and other water quality standards;


•	the cost and availability of fuel, sorbents, and other commodities used for power generation and emission controls, and of related transportation services;


•	the cost and availability of emission credits or allowances;


•	transmission congestion in and to each market area and the resulting differences in prices between delivery points;


•	the availability and creditworthiness of counterparties, their ability to pay amounts owed in excess of collateral provided in support of obligations, and the resulting effects on liquidity in power and fuel markets;

• the willingness of counterparties to transact business with EME and Midwest Generation during the Chapter 11 Cases;


•	governmental, statutory, regulatory or administrative changes or initiatives, including the market structure rules applicable to each market and price mitigation strategies adopted by ISOs and RTOs;


•	market volatility and other market conditions that could increase their obligations to post collateral beyond the amounts currently expected, and the potential effect of such conditions on the ability of EME, Midwest Generation and their respective subsidiaries to provide sufficient collateral in support of their hedging activities and purchases of fuel;


•	completion of permitting and construction of their capital projects;

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•	weather conditions, natural disasters and other unforeseen events;

• the extent of additional supplies of capacity, energy and ancillary services from current competitors or new market entrants, including the development of new generation facilities, and technologies that may be able to produce electricity ~~at a lower cost than their generating facilities and/or increased access by competitors to their markets as a result of transmission upgrades;~~

at a lower cost than their generating facilities and/or increased access by competitors to their markets as a result of transmission upgrades;


•	competition in all aspects of their business;


•	operating risks, including equipment failure, availability, heat rate, output, costs of repairs and retrofits, and availability and cost of spare parts;


•	creditworthiness of suppliers and other project participants and their ability to deliver goods and services under their contract obligations or to pay damages if they fail to fulfill those obligations;


•	effects of legal proceedings, changes in or interpretations of tax laws, rates or policies, and changes in accounting standards;


•	general political, economic and business conditions; and


•	their ability to attract and retain skilled people, particularly during the pendency of the Chapter 11 Cases.

Certain of the risk factors listed above are discussed in more detail in "Item 1A. Risk Factors" and in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Risk Exposures." Additional information about the risk factors listed above and other risks and uncertainties is contained throughout this annual report. Readers are urged to read this entire annual report, including the information incorporated by reference, and carefully consider the risks, uncertainties and other factors that affect EME's and Midwest Generation's businesses. Forward-looking statements speak only as of the date they are made, and EME and Midwest Generation are not obligated to publicly update or revise forward-looking statements. Readers should review future reports filed by EME and Midwest Generation with the Securities and Exchange Commission.

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PART I

ITEM 1. BUSINESS

Overview

EME is a holding company whose subsidiaries and affiliates are engaged in the business of developing, acquiring, owning or leasing, operating and selling energy and capacity from independent power production facilities. EME also sells energy and capacity under contracts to specific purchasers, or on a merchant basis in the marketplace and into wholesale markets. It also engages in hedging and energy trading activities in power markets, and provides scheduling and other services through its Edison Mission Marketing & Trading, Inc. (EMMT) subsidiary.

EME's subsidiaries or affiliates typically have been formed to own full or partial interests in one or more power generation facilities and ancillary facilities, with each plant or group of related plants being individually referred to by EME as a project. EME's operating projects primarily consist of coal- and gas-fired generating facilities and wind energy facilities. In December 2012, EME completed a transaction that transferred substantially all of the remaining assets and certain specified liabilities of its coal-fired generating facility in Indiana County, Pennsylvania (Homer City) as well as its leasehold interest in the Homer City generating station to an affiliate of General Electric Capital Corporation (GECC). As of December 31, ~~2012~~2013, EME's subsidiaries and affiliates owned or leased interests in 42 operating projects with an aggregate net physical capacity of 89,~~904~~381 megawatts (MW) of which EME's pro rata share was 7,~~529~~944 MW.

Midwest Generation, an indirect wholly owned subsidiary of EME, was formed in 1999 for the purpose of owning or leasing, making improvements to, and operating and selling the ~~capacity~~energy and ~~energy~~capacity of, the power generation assets it purchased from Commonwealth Edison Company (Commonwealth Edison). EME's coal-fired facilities are primarily owned or leased and operated by Midwest Generation. As of December 31, ~~2012~~2013, Midwest Generation operated 4,619 megawatts (MW) of power plants in Illinois (the Midwest Generation plants):


•	the Powerton, Joliet, Will County, and Waukegan coal-fired generating plants consisting of 4,314 MW; and


•	the Fisk and Waukegan on-site, oil-fired generating peakers consisting of 305 MW.

Midwest Generation leases the Powerton Station and Units 7 and 8 of the Joliet Station from third-party lessors pursuant to a sale-leaseback transaction completed in August 2000 (the Powerton and Joliet Sale Leaseback). Midwest Generation's obligations under these leases are guaranteed by EME. In connection with the Powerton and Joliet Sale Leaseback, Midwest Generation facilitated the issuance of lessor debt of $1.147 billion in the form of pass-through certificates (the Senior Lease Obligation Bonds). Midwest Generation is a party to a contract with EMMT under which EMMT, as an agent for Midwest Generation, sells energy and capacity from the Midwest Generation plants into the wholesale market, engages in hedging activities, and provides scheduling and other services. EMMT has the ability to enter into fuel hedging arrangements on Midwest Generation's behalf.

Midwest Generation is a party to a contract with EMMT under which, EMMT acting as an agent for Midwest Generation, sells energy and capacity from the Midwest Generation plants into the wholesale market, engages in hedging activities, and provides scheduling and other services. EMMT has the ability to enter into fuel hedging arrangements on Midwest Generation's behalf.

EME was formed in 1986 and is incorporated under the laws of the State of Delaware. EME is an indirect subsidiary of EIX. Midwest Generation, a Delaware limited liability company, is a wholly owned subsidiary of Edison Mission Midwest Holdings Co. Edison Mission Midwest Holdings is a wholly owned subsidiary of Midwest Generation EME, LLC, which is in turn a wholly owned subsidiary of EME.

Chapter 11 Cases

On December 17, 2012, EME and 16 of its wholly owned subsidiaries, Camino Energy Company, Chestnut Ridge Energy Company, Edison Mission Energy Fuel Services, LLC, Edison Mission Fuel Resources, Inc., Edison Mission Fuel Transportation, Inc., Edison Mission Holdings Co., Edison Mission Midwest Holdings Co., Midwest Finance Corp., Midwest Generation EME, LLC, Midwest Generation, Midwest Generation Procurement Services, LLC, Midwest Peaker Holdings, Inc., Mission Energy Westside, Inc., San Joaquin Energy Company, Southern Sierra Energy Company, and Western Sierra Energy Company (~~collectively,~~ the ~~Debtor~~Initial ~~Entities~~Debtors) filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. On May 2, 2013, 3 additional EME subsidiaries, EME Homer City Generation L.P. (Homer City), Homer City Property Holdings Inc., and Edison Mission Finance Company (collectively, the ~~Chapter~~Homer 11City ~~Cases~~Debtors) filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. The ~~Chapter~~Initial 11Debtors' ~~Cases~~and ~~are~~the ~~being~~Homer ~~jointly~~City ~~administered~~Debtors' ~~for~~chapter ~~procedural~~11 ~~purposes~~cases ~~only~~(collectively, ~~under~~ the ~~case~~Chapter ~~caption~~11 InCases) reare ~~Edison~~being ~~Mission~~jointly ~~Energy~~administered etunder ~~al.,~~case No. 12-49219 (JPC) ~~(Bankr~~.~~N.D.Ill.).~~ The ~~Debtor~~Initial ~~Entities~~Debtors ~~remain~~and inthe ~~possession~~Homer ofCity ~~their~~Debtors ~~property~~are ~~and~~collectively ~~continue~~referred ~~their~~to ~~business operations uninterrupted~~ as ~~"debtors-in-possession" under~~ the ~~jurisdiction~~Debtor ofEntities. The ~~the~~Debtor ~~Bankruptcy~~Entities ~~Court~~filed ~~and~~the inChapter ~~accordance~~11 ~~with~~Cases ~~the~~due ~~applicable~~to ~~provisions~~a combination of ~~the~~pending ~~Bankruptcy~~debt ~~Code~~maturities, ~~and~~low ~~orders~~realized ofenergy ~~the~~and ~~Bankruptcy~~capacity ~~Court.~~prices, ~~Other~~high ~~than~~fuel ~~the~~costs ~~Debtor~~and ~~Entities~~low generation, ~~none~~and ofcapital ~~EME's~~requirements ~~other~~associated ~~direct~~with orretrofitting ~~indirect~~the ~~subsidiaries~~Midwest isGeneration aplants ~~debtor~~to incomply ~~the~~with ~~Chapter~~governmental ~~11 Cases~~regulations.

~~Following~~The ~~extensive~~Debtor ~~discussions~~Entities ~~with~~remain ~~certain~~in possession of ~~its~~their ~~unsecured~~property ~~noteholders~~and ~~(the~~continue ~~Noteholders)~~their ~~and~~business ~~EIX~~operations ~~regarding~~uninterrupted ~~EME's~~as ~~financial~~"debtors-in-possession" ~~condition,~~under inthe ~~December~~jurisdiction ~~2012,~~of ~~EME~~the ~~entered~~Bankruptcy ~~into~~Court aand ~~Transaction~~in ~~Support~~accordance ~~Agreement~~with (the ~~Support~~applicable ~~Agreement)~~provisions ~~with~~of the

~~Table~~Bankruptcy Code and orders of ~~Contents~~the Bankruptcy Court. Other than the Debtor Entities, none of EME's other direct or indirect subsidiaries is a debtor in the Chapter 11 Cases. The filing of the Chapter 11 Cases automatically stayed most actions against the Debtor Entities, including actions to enforce the payment of EME's $3.7 billion of unsecured senior notes and Midwest Generation's obligations related to the Powerton and Joliet Sale Leaseback.

~~these~~In ~~parties.~~October ~~The~~2013, ~~Support~~EME ~~Agreement~~entered ~~contemplates~~into ~~agreements~~an ~~between~~Asset ~~the~~Purchase ~~parties,~~Agreement ~~subject to~~ (the ~~execution~~Acquisition ofAgreement) ~~definitive documentation~~ and the ~~approval of the Bankruptcy Court, that are intended to maximize the value of the~~ Debtor Entities' ~~estates~~entered ~~and~~into ~~ultimately result in~~ a ~~substantial~~Plan ~~deleveraging~~Sponsor ~~of EME's balance sheet. The Support~~ Agreement ~~provides~~ that, ~~the~~upon ~~parties~~completion, ~~will~~would ~~negotiate~~implement a ~~Master~~reorganization ~~Restructuring Agreement that will provide for amendment and assumption~~ of ~~tax-allocation~~the ~~agreements~~Debtor toEntities ~~provide for tax payments~~ through ~~December 31,~~a ~~2014,~~sale ~~and~~of ~~provides~~substantially ~~for~~all ~~the cancellation~~ of ~~EIX'~~EME’s ~~100 percent~~assets, including its equity ~~interest~~interests in ~~EME~~substantially onall ~~the effective date~~ of aits ~~confirmed~~debtor ~~plan~~and ofnon-debtor ~~reorganization. Under the Support Agreement~~subsidiaries, ~~each party agrees~~ to ~~support~~a ~~Bankruptcy~~wholly ~~Court~~owned ~~approval~~subsidiary of ~~these~~NRG ~~and~~Energy ~~other transactions~~Inc. ~~In addition,~~ (the ~~Support~~Purchaser). The ~~Agreement~~sale ~~contemplates that EME will seek authority to enter into a settlement~~ transaction ~~with EIX within 150 days of the commencement of a case by EME under Chapter 11~~ (the ~~Settlement~~NRG ~~Transaction~~Sale) ~~and~~is ~~permits EME to take any action, or refrain from taking any action, including~~ a ~~decision~~key tocomponent ~~pursue~~of ~~an alternative restructuring transaction, that~~ EME's ~~determines~~plan isof ~~consistent with its fiduciary obligations~~reorganization.

~~The~~In ~~accompanying~~February ~~consolidated~~2014, ~~financial~~EME ~~statements~~entered ~~have~~into ~~been~~a ~~prepared~~Settlement ~~assuming~~Agreement ~~that~~with ~~EME~~EIX and ~~Midwest~~certain ~~Generation~~of ~~will~~its ~~continue~~unsecured ascreditors ~~going~~holding ~~concerns~~a majority of its outstanding senior unsecured notes (the Settlement Agreement). Under ~~Financial~~the ~~statements~~Settlement ~~prepared~~Agreement, EME filed a Third Amended Plan of Reorganization (the Plan) under which, on ~~this~~the ~~basis~~effective ~~assume~~date of the ~~realization~~Plan (the Effective Date), EME will emerge from bankruptcy free of ~~assets~~liabilities but will remain an indirect wholly-owned subsidiary of EIX. A new entity (the Reorganization Trust) will be formed and will make distributions pursuant to the ~~satisfaction~~Plan for the benefit of EME’s existing creditors. All assets and liabilities of EME that are not otherwise discharged in the ~~normal~~bankruptcy ~~course~~or transferred to NRG as part of ~~business~~the ~~for~~NRG Sale will be transferred to the ~~12-month~~Reorganization ~~period~~Trust, ~~following~~with the ~~date~~exception of (i) EME’s income tax benefits generated as of the ~~financial~~Effective ~~statements.~~Date which had not previously been paid to EME under tax-allocation agreements with EIX (EME Tax Attributes), estimated at $1.19 billion, which will be retained by the EIX consolidated tax group, (ii) liabilities totaling $241 million associated with the qualified pension plan, the executive retirement plan, the executive deferred compensation plan and ~~Midwest~~uncertain ~~Generation~~federal and state tax positions, which are ~~currently~~being ~~developing~~assumed aby ~~plan~~EIX ~~for~~and (iii) EME’s indirect interest in Capistrano Wind Partners. EIX has disclosed that they have estimated their ~~restructuring,~~exposure ~~but~~to ~~there~~the isqualified nopension ~~assurance~~plan, ~~such~~executive aretirement plan, ~~will~~executive deferred compensation plan and uncertain federal and state tax positions to be ~~successfully~~approximately ~~implemented~~$350 million. EIX ~~EME's~~will ~~and~~pay ~~Midwest~~the ~~Generation's~~Reorganization ~~ability~~Trust amounts equal to ~~continue~~50% asof ~~going~~the ~~concerns~~EME isTax ~~dependent~~Attributes onas ~~many~~follows: ~~factors,~~$225 million ~~including~~payable on the ~~successful~~Effective ~~development~~Date in cash, with one half of athe ~~confirmed~~balance ~~plan~~payable on each of ~~reorganization~~September 30, 2015 and anSeptember 30, ~~emergence~~2016, together with interest at 5% per annum from ~~bankruptcy.~~the ~~Uncertainty~~Effective asDate. toEME and the ~~outcome~~Reorganization ofTrust ~~these~~will ~~factors~~release ~~raises~~EIX ~~substantial~~and ~~doubt~~its ~~about~~subsidiaries, ~~EME's~~officers, directors, and ~~Midwest~~representatives ~~Generation'~~from all claims, except for those deriving from commercial arrangements between Southern California Edison Company (SCE) and certain of EME’s ~~ability~~subsidiaries toand ~~continue~~obligations asunder ~~going~~the ~~concerns~~Settlement Agreement.

The Bankruptcy Court issued a Confirmation Order in March 2014, which confirmed the Plan. The completion of the NRG Sale is expected in April 2014.

The accompanying consolidated financial statements have been prepared assuming that EME and Midwest Generation will continue as going concerns. Financial statements prepared on this basis assume the realization of assets and the satisfaction of liabilities in the normal course of business for the 12-month period following the date of the financial statements. EME's and Midwest Generation's ability to continue as going concerns is dependent on the successful completion of the NRG Sale and an emergence from bankruptcy. However, there is no assurance that these events will occur within their expected time frames or at all.

For further discussion of these matters, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Edison Mission Energy Overview—Management's Overview."

Location and Available Information

EME's headquarters and principal executive offices are located at 3 MacArthur Place, Suite 100, Santa Ana, California 92707, and its telephone number is (714) 513-8000. Midwest Generation's principal executive offices are located at 235 Remington Boulevard, Suite A, Bolingbrook, Illinois 60440, and its telephone number is (630) 771-7800.

EME's and Midwest Generation's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, are electronically filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and are available on the Securities and Exchange Commission's internet web site at http://www.sec.gov.

Unless indicated otherwise or the context otherwise requires, references to EME in this annual report include EME and its consolidated subsidiaries and the partnerships or limited liability entities through which EME and its partners own and manage their project investments. In addition, references to Midwest Generation in this annual report include Midwest Generation and its consolidated subsidiaries.

Information on the Chapter 11 Cases, including each item filed on the docket, is available at www.edisonmissionrestructuring.com. The information set forth on this web site shall not be deemed to be a part of, or incorporated by reference into, this Annual Report on Form 10-K.

Electric Power Industry

EME and Midwest Generation are both impacted by changes in the United States electric industry. The electric power industry, including companies engaged in providing generation, transmission, distribution and retail sales and service of electric power, has undergone significant deregulation over the last three decades, which has led to increased competition, especially in the generation sector. For further discussion of these regulations, see "Regulatory Matters."

In areas ~~where~~served by independent system operators (ISOs) and regional transmission organizations (RTOs) ~~have been formed~~, market participants have open access to transmission service typically at a system-wide rate. ISOs and RTOs may also operate real-time and day-ahead energy and ancillary service markets, which are governed by Federal Energy Regulatory Commission (FERC) approved tariffs and market rules. The development of such organized markets into which independent power producers are able to sell has reduced their dependence on bilateral contracts with electric utilities. In addition, capacity markets in various regional wholesale power markets compensate supply resources for the capability to supply electricity when needed, and demand resources for the electricity they avoid using.

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Wholesale Markets

EME's largest power plants are the Midwest Generation plants. Power generated at the Midwest Generation plants is primarily sold into PJM Interconnection, LLC (PJM), an RTO which includes all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. Sales may also be made from PJM into the Midwest Independent Transmission System Operator (MISO) RTO, which includes all or parts of Illinois, Wisconsin, Indiana, Michigan, ~~Ohio,~~ and other states in the region.

PJM operates a wholesale spot energy market and determines the market-clearing price for each hour based on bids submitted by participating generators indicating the minimum prices at which a bidder is willing to dispatch energy at various incremental generation levels. PJM requires all load-serving entities and generators, such as the Midwest Generation plants, to maintain prescribed levels of capacity, including a reserve margin, to ensure system reliability. PJM's capacity markets have a single market-clearing price for each capacity zone. In May of each year, PJM conducts ana ~~annual~~ capacity auction (RPM - Reliability Pricing Model) to commit generation, energy efficiency and demand side resources three years forward, and to provide a long-term pricing signal for the construction of capacity resources.

Competition

~~Recent~~Developments ~~developments~~ in shale gas technology have dramatically reduced natural gas prices which in turn ~~have~~has created downward pressure on power prices. As a result, the Midwest Generation plants ~~are~~face ~~now facing~~ increased competition from power generation facilities fueled by natural gas.

State and local environmental regulations, particularly those that impose stringent state specific emission limits, could put the Midwest Generation plants at a disadvantage compared with competing power plants operating in nearby states and subject to less stringent state emission limits or to federal emission limits alone. The Combined Pollutant Standard (CPS) puts the Midwest Generation plants at a disadvantage compared with competing plants not subject to similar regulations, and federal air quality regulations, such as the Mercury and Air Toxics Standards (MATS) rule, put the Midwest Generation plants at a disadvantage compared to plants utilizing other fuels. Potential future climate change regulations could also put the Midwest Generation plants at a disadvantage compared to power plants utilizing other fuels as well as utilities that may be able to recover climate change compliance costs through rate-base mechanisms. The ability of the Midwest Generation plants to compete can also be affected by future environmental regulations and by governmental and regulatory activities designed to support the construction and operation of power generation facilities fueled by renewable energy sources.

EME and Midwest Generation are subject to competition from energy marketers, public utilities, government-owned power agencies, industrial companies, financial institutions, and other independent power producers. These companies may have competitive advantages as a result of scale, the location of their generation facilities or other factors. Some of EME's and Midwest Generation's competitors have a lower cost of capital and, in the case of utilities, may be able to recover fixed costs through rate base mechanisms, allowing them to build, buy and upgrade generation facilities without relying exclusively on market clearing prices to recover their investments.

Operating Segments

EME

EME operates in one line of business, independent power production, with all its continuing operations located in the United States, except Doga Enerji, which is located in the Republic of Turkey. Operating revenues are primarily derived from the generation and sale of energy and capacity from coal-fired, natural gas-fired and wind power plants and energy trading.

Midwest Generation

Midwest Generation operates in one line of business, independent power production, with all its operations located in the United States. Operating revenues are primarily derived from sales of energy and capacity generated from coal-fired generating plants and oil-fired generating peakers.

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Overview of EME Facilities

As of December 31, ~~2012~~2013, EME's operations consisted of ownership or leasehold interests in the following operating projects:

Power Plants	Location	PrimaryElectricPurchaser2	Fuel Type	OwnershipInterest			Net PhysicalCapacity(in MW)	EME'sCapacityPro Rata Share(in MW)
MERCHANT POWER PLANTS
Midwest Generation plants1,9,10	Illinois	PJM	coal	100	%		4,314	4,314
Midwest Generation plants1, 7, 8	Illinois	PJM	coal	100	%		4,314	4,314
Midwest Generation plants1,9	Illinois	PJM	oil	100	%		305	305
Midwest Generation plants1, 7	Illinois	PJM	oil	100	%		305	305
Merchant Natural Gas
Sunrise1,9	California	CAISO	natural gas	50	%		586	293
Sunrise1, 7	California	CAISO	natural gas	50	%		586	293
Merchant Wind
Goat Wind	Texas	ERCOT	wind	99.9	%	3	150	150
Lookout	Pennsylvania	PJM	wind	100	%		38	38
Big Sky	Illinois	PJM	wind	100	%		240	240
Big Sky7	Illinois	PJM	wind	100	%		240	240
CONTRACTED POWER PLANTS – Domestic
Natural Gas
Big 4 Projects
Kern River1	California	SCE	natural gas	50	%		~~300~~305	~~150~~153
Midway-Sunset1	California	PG&E	natural gas	50	%		225	113
Sycamore1,9	California	SCE	natural gas	50	%		300	150
Sycamore1, 7	California	SCE	natural gas	50	%		318	159
Watson4,9	California	SCE	natural gas	49	%		416	204
Watson4, 7	California	SCE	natural gas	49	%		416	204
Westside Projects1
Coalinga	California	PG&E	natural gas	50	%		38	19
Mid-Set	California	PG&E	natural gas	50	%		38	19
Salinas River	California	PG&E	natural gas	50	%		38	19
Sargent Canyon	California	PG&E	natural gas	50	%		38	19
Renewable Energy
Capistrano Wind Partners5
Cedro Hill	Texas	CSA	wind	31	%		150	46
Crofton Bluffs	Nebraska	NPPD	wind	20	%		40	8
Mountain Wind I	Wyoming	PC	wind	31	%		61	19
Mountain Wind II	Wyoming	PC	wind	31	%		80	25
Tapestry Wind
Buffalo Bear	Oklahoma	WFEC	wind	100	%		19	19
Pinnacle	West Virginia	MDGS/USM	wind	100	%		55	55
Taloga	Oklahoma	OGEC	wind	100	%		130	130
Viento Funding II
Elkhorn Ridge9	Nebraska	NPPD	wind	67	%		80	53
San Juan Mesa9	New Mexico	SPS	wind	75	%		120	90
Wildorado	Texas	SPS	wind	99.9	%	3	161	161

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Power Plants	Location	Primary Electric Purchaser²	Fuel Type	Ownership Interest			Net Physical Capacity (in MW)	EME's Capacity Pro Rata Share (in MW)
Walnut Creek⁷	California	SCE	natural gas	100	%		479	479
Renewable Energy
Capistrano Wind Partners⁵
Broken Bow I	Nebraska	NPPD	wind	16	%		80	13
Cedro Hill	Texas	CSA	wind	31	%		150	46
Crofton Bluffs	Nebraska	NPPD	wind	20	%		40	8
Mountain Wind I	Wyoming	PC	wind	31	%		61	19
Mountain Wind II	Wyoming	PC	wind	31	%		80	25
Tapestry Wind
Buffalo Bear	Oklahoma	WFEC	wind	100	%		19	19
Pinnacle	West Virginia	MDGS/USM	wind	100	%		55	55
Taloga	Oklahoma	OGEC	wind	100	%		130	130
Viento Funding II
Elkhorn Ridge⁷	Nebraska	NPPD	wind	67	%	⁵	80	53
San Juan Mesa⁷	New Mexico	SPS	wind	75	%	⁵	120	90
Wildorado	Texas	SPS	wind	99.9	%	³	161	161
Community Wind North	Minnesota	NSPC	wind	99	%	³	30	30
Crosswinds	Iowa	CBPC	wind	99	%	³	21	21
Forward	Pennsylvania	CECG	wind	100	%		29	29
Hardin	Iowa	IPLC	wind	99	%	³	15	15
High Lonesome	New Mexico	APSC	wind	100	%		100	100
Jeffers	Minnesota	NSPC	wind	99.9	%	³	50	50
Laredo Ridge	Nebraska	NPPD	wind	100	%		80	80
Minnesota Wind projects⁶	Minnesota	NSPC/IPLC	wind	99	%	³	50	50
Odin	Minnesota	MRES	wind	99.9	%	³	20	20
Sleeping Bear	Oklahoma	PSCO	wind	100	%		95	95
Spanish Fork	Utah	PC	wind	100	%		19	19
Storm Lake¹	Iowa	MEC	wind	100	%		108	108
Coal
American Bituminous	West Virginia	MPC	waste coal	50	%		80	40
CONTRACTED POWER PLANTS – International
Doga¹	Republic of Turkey	TEDAS	natural gas	80	%		180	144
Total							9,381	7,944

Power Plants	Location	PrimaryElectricPurchaser2	Fuel Type	OwnershipInterest			Net PhysicalCapacity(in MW)	EME'sCapacityPro Rata Share(in MW)
Broken Bow I6	Nebraska	NPPD	wind	100	%		80	80
Community Wind North	Minnesota	NSPC	wind	99	%	3	30	30
Crosswinds	Iowa	CBPC	wind	99	%	3	21	21
Forward	Pennsylvania	CECG	wind	100	%		29	29
Hardin	Iowa	IPLC	wind	99	%	3	15	15
High Lonesome	New Mexico	APSC	wind	100	%		100	100
Jeffers	Minnesota	NSPC	wind	99.9	%	3	50	50
Laredo Ridge	Nebraska	NPPD	wind	100	%		80	80
Minnesota Wind projects7	Minnesota	NSPC/IPLC	wind	99	%	3	50	50
Odin	Minnesota	MRES	wind	99.9	%	3	20	20
Sleeping Bear	Oklahoma	PSCO	wind	100	%		95	95
Spanish Fork	Utah	PC	wind	100	%		19	19
Storm Lake1	Iowa	MEC	wind	100	%		108	108
Huntington Waste-to-Energy8	New York	LIPA	biomass	38	%		25	9
Coal
American Bituminous1,11	West Virginia	MPC	waste coal	50	%		80	40
CONTRACTED POWER PLANTS – International
Doga1	Republic of Turkey	TEDAS	natural gas	80	%		180	144
Total							8,904	7,529


¹	Plant is operated under contract by an EME operations and maintenance subsidiary or the plant is operated or managed directly by an EME subsidiary.


²	Electric purchaser abbreviations are as follows:

APSC Arizona Public Service Company ~~NPPD~~NSPC ~~Nebraska~~Northern ~~Public~~States Power ~~District~~Company CAISO California Independent System Operator ~~NSPC~~OGEC ~~Northern~~Oklahoma ~~States~~Gas ~~Power~~and Electric Company CBPC Corn Belt Power Cooperative ~~OGEC~~PC ~~Oklahoma~~PacifiCorp ~~Gas and Electric Company~~ CECG Constellation Energy Commodities Group, Inc. ~~PC PacifiCorp CSA City of San Antonio~~ PG&E Pacific Gas & Electric Company ~~ERCOT~~CSA ~~Electric~~City ~~Reliability Council~~ of ~~Texas~~San Antonio PJM PJM Interconnection, LLC ~~IPLC~~ERCOT ~~Interstate~~Electric ~~Power~~Reliability ~~and~~Council ~~Light~~of ~~Company~~Texas PSCO Public Service Company of Oklahoma ~~LIPA~~IPLC ~~Long~~Interstate ~~Island~~ Power ~~Authority~~and Light Company SCE Southern California Edison Company MDGS Maryland Department of General Services SPS Southwestern Public Service MEC Mid-American Energy Company TEDAS Türkiye Elektrik Dagitim Anonim Sirketi MPC Monongahela Power Company USM University System of Maryland MRES Missouri River Energy Services WFEC Western Farmers Electric Cooperative NPPD Nebraska Public Power District


³	Represents EME's current ownership interest. If the project achieves a specified rate of return, EME's interest will decrease.


⁴	A dispute exists with one of EME's offtakers at this facility, and currently the facility is only being paid for an output of 397 MW.


⁵	Ownership percentages are calculated based on the partners' investment into each project.

6 ~~Edison~~Composed ~~Mission~~of ~~Wind~~four ~~sold~~individual ~~Broken~~wind ~~Bow I in January 2013 to Capistrano Wind Partners~~projects. ~~For further discussion, see Item 8. Combined Notes to Consolidated Financial Statements—Note 3. Variable Interest Entities.~~

7 ~~Composed~~Material properties owned or leased by EME's subsidiaries and affiliates. Each property represents at least five percent of ~~four~~EME's ~~individual~~income ~~wind~~before ~~projects~~tax, excluding asset impairment charges, or is one in which EME has an investment balance greater than $40 million. Most of these properties are subject to mortgages or other liens or encumbrances granted to the lenders providing financing for the plant or project.

8 InCertain ~~October 2012, a non-debtor subsidiary~~ of ~~EME~~these ~~exercised~~sites anare ~~option~~leased pursuant to ~~sell all of its interest in~~ the ~~project.~~Powerton ~~For~~and ~~further~~Joliet ~~discussion,~~Sale ~~see "Renewable Energy—Biomass—Huntington Waste-to-Energy Project~~Leaseback."

11At December 31, 2013, the fuel sources for these projects were as follows:

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Fuel Source		Percentage of EME's Generation Capacity
Coal		55%
Natural gas/oil		24%
Renewable energy		21%

9 Material properties owned or leased by EME's subsidiaries and affiliates. Each property represents at least five percent of EME's income before tax, excluding asset impairment charges, or is one in which EME has an investment balance greater than $40 million. Most of these properties are subject to mortgages or other liens or encumbrances granted to the lenders providing financing for the plant or project.

10 Certain of these sites are leased pursuant to the Powerton and Joliet Sale Leaseback.

11 In February 2013, the EME operations and maintenance subsidiary that currently operates the plant provided a 180-day notice of its intent to terminate its operations and maintenance contract.

At December 31, 2012, the fuel sources for these projects were as follows:

Fuel Source		Percentage of EME'sGeneration Capacity
Coal		58%
Natural gas/oil		19%
Renewable energy		23%

Seasonality

Due to fluctuations in electric demand resulting from warm weather during the summer months and cold weather during the winter months, electric revenues from Midwest Generation's coal-fired plants normally vary substantially on a seasonal basis. In addition, maintenance outages generally are scheduled during periods of lower projected electric demand (spring and fall), further reducing generation and increasing major maintenance costs which are recorded as an expense when incurred. Accordingly, Midwest Generation's income is seasonal and has significant variability from quarter to quarter. Seasonal fluctuations may also be affected by changes in market prices. For further discussion regarding market prices, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Risk Exposures—Commodity Price Risk—Energy Price Risk."

EME's third quarter equity in income from its unconsolidated energy projects is normally higher than equity in income related to other quarters of the year due to seasonal fluctuations and higher energy contract prices during the summer months.

Merchant Power Plants

A description of EME's larger power plants and major investments in energy projects is set forth below. In addition to the facilities and power plants that EME owns, EME uses the term "its" in regard to facilities and power plants that EME or an EME subsidiary operates under sale leaseback arrangements.

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Midwest Generation Plants

The Midwest Generation plants consist of the following:



Operating Plant or Site	Location	Leased/ Owned	Fuel	Megawatts
Electric Generating Facilities
Joliet Unit 6	Joliet, Illinois	owned	coal	290
Joliet Units 7 and 8	Joliet, Illinois	leased	coal	1,036
Powerton Station	Pekin, Illinois	leased	coal	1,538
Waukegan Station¹	Waukegan, Illinois	owned	coal	689
Will County Station²	Romeoville, Illinois	owned	coal	761
Peaking Units
Fisk	Chicago, Illinois	owned	oil	197
Waukegan	Waukegan, Illinois	owned	oil	108
Total				4,619



Non-Operating Plant or Site	Location
Crawford Station³	Chicago, Illinois
Fisk Station⁴	Chicago, Illinois
Collins Station⁵	Grundy County, Illinois
Crawford peaker⁵	Chicago, Illinois
Joliet peaker⁵	Joliet, Illinois
Calumet peaker⁵	Chicago, Illinois
Electric Junction peaker⁵	Aurora, Illinois
Lombard peaker⁵	Lombard, Illinois
Sabrooke peaker⁵	Rockford, Illinois


¹	The Waukegan Station is composed of Units 7 and 8. Midwest Generation permanently shut down Waukegan Station Unit 6 (100 MW) on December 21, 2007.


²	The Will County Station is composed of Units 3 and 4. Midwest Generation permanently shut down Will County Station Units 1 and 2, totaling 299 MW of capacity, on December 29, 2010 in accordance with the CPS.


³	Midwest Generation permanently shut down Crawford Station Unit 7 (213 MW) on August 28, 2012 and Crawford Station Unit 8 (319 MW) on August 24, 2012.


⁴	Midwest Generation permanently shut down Fisk Station Unit 19 (326 MW) on August 30, 2012.


⁵	Ceased operations before December 31, 2005.

Midwest Generation and Commonwealth Edison have various reciprocal permanent and temporary easements over Midwest Generation's parcels for the location, use, maintenance and repair of those facilities and equipment that are used in connection with the operations of Midwest Generation and Commonwealth Edison.

The Joliet and Powerton Stations

The Joliet Station is located in Joliet, Will County, Illinois, approximately 40 miles southwest of Chicago on an approximately 467-acre site. The operating units comprising the Joliet Station are referred to as Units 6, 7 and 8. The operation of Units 6, 7 and 8 began in 1959, 1965 and 1966, respectively. Joliet Unit 6 is a 290 MW coal-fired unit located adjacent to, but across the Des Plaines River from, Joliet Units 7 and 8. Joliet Units 7 and 8 are coal-fired and have a combined capacity of 1,036 MW. The Powerton Station is a 1,538 MW coal-fired station located in Pekin, Tazewell County, Illinois on an approximately 568-acre site. The site also includes an approximately 1,440-acre lake. The operating units comprising the Powerton Station are referred to as Units 5 and 6 and began operations in 1972 and 1975, respectively.

In conjunction with the Powerton and Joliet Sale Leaseback, Midwest Generation leased substantially all the property on which the generating units are located to the owner trusts under site leases, and the owner trusts in turn subleased their undivided ground interest in the property back to Midwest Generation under site subleases. The terms of the site subleases

1314

~~Table~~are of33.75 years ~~Contents~~for the Powerton property and 30 years for the Joliet property, with renewal options. Rent is due under the leases on each January 2 and July 2.

~~are~~The ~~33.75 years~~filing ~~for~~of the ~~Powerton~~Chapter ~~property~~11 ~~and~~Cases ~~30 years~~constitutes ~~for~~an ~~the~~event ~~Joliet~~of ~~property,~~default ~~with~~under ~~renewal~~the ~~options.~~Powerton ~~Rent~~and isJoliet ~~due~~Sale onLeaseback ~~each January 2~~ and ~~July 2.~~during Asthe apendency ~~result~~ of the Chapter 11 Cases, Midwest Generation did not make any of the three scheduled ~~rent~~lease payments of $76 million due on January 2, 2013, July 2, 2013 and January 2, 2014. Midwest Generation did pay the ratable portion of the rent due under the leases attributable to the period between December 17, 2012 and January 2, 2013 of $7 million and beginning in July 2013, EME and Midwest Generation agreed, among other things, to make monthly rental payments of $3.75 million. For additional information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 19—~~Summary~~Commitments ofand ~~Significant~~Contingencies—Powerton ~~Accounting~~and ~~Policies—Chapter~~Joliet 11Sale ~~Cases~~Leaseback."

The Waukegan Station

The Waukegan Station is a 689 MW coal-fired power plant located in Waukegan, Lake County, Illinois, on Lake Michigan. The Waukegan Station occupies approximately 194 acres, inclusive of the switchyard. The operating units comprising the Waukegan Station are referred to as Units 7 and 8 and began operations in 1958 and 1962, respectively.

The Will County Station

The Will County Station is a 761 MW coal-fired power plant located in Romeoville, Will County, Illinois. The Will County Station is located on approximately 215 acres, inclusive of the switchyard. The operating units comprising the Will County Station are referred to as Units 3 and 4 and began operations between 1955 and 1963.

On-Site Peaking Facilities

The on-site peaking units consist of 305 MW at Fisk and Waukegan, which were commissioned in 1968. The Fisk and Waukegan peaking units burn fuel oil. Natural gas is used by the Fisk peaking unit for ignition.

Power Sales

Energy and capacity from the Midwest Generation plants are sold under terms, including price, duration and quantity, arranged by EMMT, an EME subsidiary engaged in power marketing and trading activities, with customers through a combination of forward energy sales, spot market sales and bilateral agreements (resulting from negotiations or from auctions)~~, forward energy sales and spot market sales~~. Power generated at the Midwest Generation plants is sold into the PJM market.

Fuel Supply

Midwest Generation purchases coal from several suppliers located in the Southern Powder River Basin (PRB) of Wyoming. The total volume of coal consumed annually isdepends ~~largely dependent~~ on the amount of ~~generation~~electricity generated. Excluding consumption from retired ~~units~~stations, historical consumption has ranged between 1413.5 4 million to 16.5 million tons. Coal consumption in the current low natural gas price environment may be lower than the historical range. Coal is transported under transportation agreements with Union Pacific Railroad and various short-haul carriers. In late 2011, Midwest Generation signed agreements, effective January 1, 2012, to provide such fuel transportation on a long-term basis. As of December 31, ~~2012~~2013, Midwest Generation leased approximately 32,~~200~~400 railcars to transport the coal from the mines to the generating stations under leases with ~~remaining~~various ~~terms~~termination ~~that~~dates ~~range~~through ~~from one year to seven years~~2015. ~~Pursuant to an order entered in the Chapter 11 Cases, Midwest Generation rejected a lease related to 1,275 of these railcars.~~ For additional information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 9. Commitments and Contingencies."

Emission Allowances for the Coal Plants

The federal Acid Rain Program requires electric generating stations to hold sulfur dioxide (SO₂) allowances sufficient to cover their annual emissions. Pursuant to Illinois' implementation of the Clean Air Interstate Rule (CAIR), the Midwest Generation plants are required to hold seasonal and annual NO_X allowances. The CAIR remains in effect until a replacement regulation becomes effective.

Cross-State Air Pollution Rule (CSAPR), like the CAIR, is an allowance-based regulation that provides for emissions trading. If CSAPR were to become effective, the amount of actual SO₂ or NO_X emissions from plant operations would need to be matched by a sufficient amount of SO₂ or NO_Xallowances that were either allocated or purchased in the open market. SO₂ allowances under the federal Acid Rain Program could not be used to satisfy the requirements under CSAPR. Midwest Generation believes its current environmental remediation plan developed to comply with the CPS, along with the allowances allocated to it under the CAIR, will be sufficient to comply with the requirements of either the CAIR or CSAPR (as applicable). For additional information, see "Environmental Matters and Regulations—Air Quality."

Natural Gas

Sunrise Project

EME owns a 50% interest in Sunrise Power Company, LLC, which owns a 586 MW natural gas-fired combined cycle facility in Kern County, California (Sunrise). The ~~power~~project ~~purchase~~operates ~~agreement~~on ata ~~Sunrise~~merchant ~~expired~~basis selling into the California ISO market and dispatch depends on ~~June 30~~market conditions. Historically, ~~2012~~Sunrise has operated more during the summer months due to higher demand driven by warmer weather, and for the ~~project~~summer months of 2013, Sunrise had resource adequacy contracts for capacity with PG&E and SDG&E. However, the profitability of Sunrise as a merchant generator depends on market prices for power and natural gas and future results may differ from historical earnings.

14Contracted Power Plants

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continues to operate on a merchant basis selling into the California ISO market until a new power purchase agreement is executed. Dispatch will depend on market conditions and Sunrise may run less than it has in the past. Historically, Sunrise has operated more during the summer months due to higher demand driven by warmer weather, and for the summer months of 2013, Sunrise has resource adequacy contracts for capacity with PG&E and SDG&E. The profitability of Sunrise as a merchant generator is dependent on market prices for power and natural gas and future results may differ from historical earnings.

Contracted Power Plants–Domestic

Natural Gas

InWalnut ~~December 2010,~~Creek the California Public Utilities Commission (CPUC) approved a comprehensive settlement of various issues related to power sales from cogeneration facilities that implements a mechanism to foster new power purchase agreements for such facilities and provides for transition power purchase agreements during implementation. The settlement became effective on November 23, 2011. Cogeneration facilities subject to the settlement, including the Big 4 Projects described below, are eligible to continue to receive administratively set pricing through July 2015 and participate in three competitive solicitations required to be conducted by each investor-owned utility for new seven-year contracts.Project

Walnut Creek is a 479 MW natural gas-fired peaker plant in southern California. Construction on the project began in June 2011 and in December 2012, EME began start-up and testing at the project, including the sale of power on a merchant basis. The project achieved commercial operation in the second quarter of 2013 and began selling power under its 10 year- power sales agreement with SCE in June 2013.

Natural Gas - Cogeneration

In December 2010, the California Public Utilities Commission (CPUC) approved a comprehensive settlement of various issues related to power sales from cogeneration facilities. The settlement establishes a mechanism to foster new power purchase agreements for such facilities and provides for transition power purchase agreements during implementation. The settlement became effective on November 23, 2011. Cogeneration facilities subject to the settlement, including the Big 4 Projects described below, are eligible to continue to receive administratively set pricing through July 2015 and participate in three competitive solicitations required to be conducted by each investor-owned utility for new seven-year contracts.

Big 4 Projects

EME owns partnership investments in Kern River Cogeneration Company (Kern River), Midway-Sunset Cogeneration Company (Midway-Sunset), Sycamore Cogeneration Company (Sycamore) and Watson Cogeneration Company (Watson and collectively with Kern River, Midway-Sunset, and Sycamore, the Big 4 Projects).

Kern River

Kern River ~~sells~~sold electricity to ~~Southern~~SCE ~~California~~under ~~Edison~~a ~~Company~~transition ~~(SCE)~~power ~~under~~purchase anagreement, ~~extension~~pursuant ofto ~~its~~the ~~prior~~settlement ~~power~~described ~~purchase agreement~~above, ~~such~~through ~~extension~~the ~~having~~end ~~revised~~of ~~pricing~~2013. Kern River ~~has~~began ~~entered~~selling ~~into~~electricity ~~new~~under ~~transition~~a ~~and~~ long-term power purchase ~~agreements~~agreement with ~~SCE and~~ PG&E, ~~respectively,~~in ~~both~~January ~~of which are subject to regulatory approval~~2014. Kern River sells steam to Chevron North America Exploration and Production Company, a division of Chevron U.S.A., Inc, ~~and~~under ~~the~~an ~~parties~~agreement ~~are~~that ~~negotiating~~expires toconcurrently ~~extend~~with ~~this~~the ~~arrangement.~~PG&E power purchase agreement. For additional information regarding a dispute between the partners in Kern River, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 9. Commitments and Contingencies—Contingencies—Chevron Adversary Proceeding."

Midway-Sunset

Midway-Sunset sells electricity to PG&E under a power purchase agreement that expires in 2016. ~~EME~~and ~~expects~~sells electricity and steam to Aera Energy LLC under agreements that ~~this~~expire ~~arrangement~~concurrently ~~will~~with bethe ~~replaced~~power bypurchase agreement. Midway-Sunset signed a new ~~long-term~~ power purchase agreement ~~pursuant~~with toPG&E that, upon approval by the ~~settlement~~CPUC, ~~described~~will ~~above~~extend electricity sales through 2020. In connection with the new PG&E agreement, in 2015 Midway-Sunset ~~also~~will ~~sells~~invest ~~electricity~~$14 ~~and~~million ~~steam~~ to ~~Aera~~convert ~~Energy LLC~~two ~~under~~of ~~agreements~~its ~~that~~turbines ~~expire~~to ~~concurrently~~peaking ~~with~~operation, and has extended the ~~PG&E~~Aera ~~power~~agreements ~~purchase~~as ~~agreement~~well.

Sycamore

Sycamore ~~sells~~sold electricity to SCE under ana ~~extension~~transition ~~of its prior~~ power purchase agreement, ~~such~~pursuant ~~extension~~to ~~having~~the ~~revised~~settlement ~~pricing~~described above, through the end of 2013. Sycamore ~~has~~began ~~entered~~selling ~~into~~electricity ~~new~~under ~~transition~~a ~~and~~ long-term power purchase ~~agreements~~agreement with SCE, ~~which~~in ~~are~~January ~~subject to regulatory approval~~2014. Sycamore sells steam to Chevron North America Exploration and Production Company, a division of Chevron U.S.A., Inc., under an agreement that expires inconcurrently ~~2013,~~with ~~and~~ the ~~parties~~SCE ~~are~~power ~~negotiating~~purchase ~~to extend this arrangement~~agreement. For additional information regarding a dispute between the partners in Sycamore, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 9. Commitments and Contingencies—Contingencies—Chevron Adversary Proceeding."

information regarding a dispute between the partners in Sycamore, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 9. Commitments and Contingencies—Contingencies—Chevron Adversary Proceeding."

Watson

Watson sells electricity to SCE under ana ~~extension~~transition ~~of its prior~~ power purchase agreement, ~~such~~pursuant ~~extension~~to ~~having~~the ~~revised~~settlement ~~pricing~~described above. Watson ~~has~~currently ~~entered~~sells ~~into a new transition~~ power ~~purchase~~and ~~agreement~~steam ~~with~~to ~~SCE,~~Tesoro ~~which~~Refining isand ~~subject~~Marketing toCompany ~~regulatory~~LLC ~~approval.~~(Tesoro) ~~EME~~under ~~expects~~agreements that ~~this~~expire ~~arrangement~~in ~~will be replaced by a new long-term power purchase agreement pursuant to the settlement described above~~2014. Tesoro ~~Watson~~assumed ~~currently~~these ~~sells~~agreements ~~power~~from ~~and steam to~~ BP West Coast Products LLC ~~under~~during ~~agreements~~the ~~that~~second ~~expire~~quarter inof ~~2014~~2013.

Westside Projects

EME owns 50% partnership interests in each of Coalinga Cogeneration Company, Mid-Set Cogeneration Company, Salinas River Cogeneration Company, and Sargent Canyon Cogeneration Company, each of which owns a 38 MW natural gas-fired cogeneration facility located in California (collectively, the Westside Projects). These projects sell electricity to PG&E under power purchase agreements that expire in 2016. The power purchase agreements became effective in December 2011.

15Natural Gas - International

~~Table~~Doga ~~of Contents~~Project

~~cogeneration~~EME ~~facility~~owns ~~located~~an 80% interest in ~~California~~Doga ~~(collectively~~Enerji, which owns a 180 MW natural gas-fired cogeneration plant near Istanbul in the ~~Westside~~Republic ~~Projects~~of Turkey (Doga). ~~These~~Doga ~~projects~~sells ~~sell~~ electricity to ~~PG&E~~TEDAS under a power purchase ~~agreements~~agreement that ~~expire~~expires in ~~2016.~~2019, ~~The~~after ~~power~~which ~~purchase~~date ~~agreements~~the ~~became~~facility ~~effective~~is into ~~December~~be ~~2011~~conveyed to the Ministry of Energy and Natural Resources of Turkey.

Walnut Creek Project

Walnut Creek is a 479 MW natural gas-fired peaker plant in southern California. Construction on the project began in June 2011. The project is expected to achieve commercial operation before June 2013 and to qualify for 50% bonus depreciation. Walnut Creek Energy, a subsidiary of EME, was awarded a 10-year power sales agreement by SCE, starting in June 2013, for the output of the plant. Walnut Creek Energy will sell any electricity generated before the start of the power sales agreement on a merchant basis.

Coal

American Bituminous Project

EME owns a 50% interest in American Bituminous Power Partners, L.P., which owns an 80 MW waste coal facility located in Grant Town, West Virginia (Ambit). Ambit sells electricity to Monongahela Power Company under a power purchase agreement that expires in 2036.

Contracted Power Plants–International

Doga Project

EME owns an 80% interest in Doga Enerji, which owns a 180 MW natural gas-fired cogeneration plant near Istanbul in the Republic of Turkey (Doga). Doga sells electricity to TEDAS under a power purchase agreement that expires in 2019, after which date the facility is to be conveyed to the Ministry of Energy and Natural Resources of Turkey.

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Renewable Energy

Wind

EME owns interests in the following operating wind projects which either sell electricity pursuant to long-term power purchase agreements with third parties with original terms ranging from 10 to 30 years or are operated on a merchant basis. The table below provides the project's power purchase agreement expiration for each contracted wind project, the project's primary RTO or ISO for each merchant wind project, either the expiration date of the project's production tax credits or an indication that EME elected to receive a US Treasury Grant, and the project's commercial operation or acquisition date.

Wind Plants	Power PurchaseAgreementExpiration Year/RTO or ISO	Production Tax Credit Expiration Date	Commercial Operation or Acquisition Date
Capistrano Wind Partners
Cedro Hill	2030	Qualified for US Treasury Grant	November 2010
Crofton Bluffs	20326	November 2022	November 2012
Mountain Wind I	2033	July 2018	July 2008
Mountain Wind II	2033	September 2018	September 2008
Tapestry Wind
Buffalo Bear	2033	December 2018	December 2008
Pinnacle	2031	Qualified for US Treasury Grant	December 2011/January 2012
Taloga	2031	Qualified for US Treasury Grant	July 2011
Viento Funding II
Elkhorn Ridge	2029	December 2018	March 2009
San Juan Mesa	2025	December 2015	December 2005
Wildorado	2027	April 2017	April 2007
Big Sky5	PJM	Qualified for US Treasury Grant	February 2011
Broken Bow	20326	December 2022	December 2012
Community Wind North1	2031	Qualified for US Treasury Grant	May 2011
Crosswinds2	20226	June 2017	June 2007
Forward	2017	April 2018	April 2008
Goat Wind5	ERCOT	Phase I - April 2018; Phase II - qualified for US Treasury Grant	April 2008/June 2009
Hardin3	2027	May 2017	May 2007
High Lonesome	2039	Qualified for US Treasury Grant	July 2009
Jeffers	2028	October 2018	October 2008
Laredo Ridge	2031	Qualified for US Treasury Grant	February 2011
Lookout5	PJM	September 2018	October 2008
Minnesota4	2021-20297	June 2009-July 2016	April 2006
Odin	2028	June 2018	May 2008
Sleeping Bear	2032	October 2017	September 2007
Spanish Fork	2028	July 2018	July 2008
Storm Lake	2019	June 2009	May 1999



Wind Plants	Power Purchase Agreement Expiration Year/RTO or ISO	Production Tax Credit Expiration Date	Commercial Operation or Acquisition Date
Capistrano Wind Partners
Broken Bow I	2032⁶	December 2022	December 2012
Cedro Hill	2030	Qualified for US Treasury Grant	November 2010
Crofton Bluffs	2032⁶	November 2022	November 2012
Mountain Wind I	2033	July 2018	July 2008
Mountain Wind II	2033	September 2018	September 2008
Tapestry Wind
Buffalo Bear	2033	December 2018	December 2008
Pinnacle	2031	Qualified for US Treasury Grant	December 2011/January 2012
Taloga	2031	Qualified for US Treasury Grant	July 2011
Viento Funding II
Elkhorn Ridge	2029	December 2018	March 2009
San Juan Mesa	2025	December 2015	December 2005
Wildorado	2027	April 2017	April 2007
Big Sky⁵	PJM	Qualified for US Treasury Grant	February 2011
Community Wind North¹	2031	Qualified for US Treasury Grant	May 2011
Crosswinds²	2022⁶	June 2017	June 2007
Forward	2017	April 2018	April 2008
Goat Wind⁵	ERCOT	Phase I - April 2018; Phase II - qualified for US Treasury Grant	April 2008/June 2009
Hardin³	2027	May 2017	May 2007
High Lonesome	2039	Qualified for US Treasury Grant	July 2009
Jeffers	2028	October 2018	October 2008
Laredo Ridge	2031	Qualified for US Treasury Grant	February 2011
Lookout⁵	PJM	September 2018	October 2008
Minnesota⁴	2021-2029⁷	June 2009-July 2016	April 2006
Odin	2028	June 2018	May 2008
Sleeping Bear	2032	October 2017	September 2007
Spanish Fork	2028	July 2018	July 2008
Storm Lake	2019	June 2009	May 1999


¹	Twelve separate limited liability companies collectively form the wind farm.


²	Ten separate limited liability companies collectively form the wind farm.


³	Seven separate limited liability companies collectively form the wind farm.


⁴	Thirty-four separate limited liability companies each own a small wind-powered electric generation facility.

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⁵	Merchant wind-powered projects.


⁶	Agreement includes a five-year renewal option.


⁷	Each of the Minnesota Wind projects sells electricity under a power purchase agreement with Northern States Power Company that expires between 2025 and 2029, or with Interstate Power and Light Company that expires in 2021.

~~Biomass~~18

Huntington Waste-to-Energy Project

Until January 2013, EME indirectly owned a 38% limited partnership interest in Covanta Huntington LP, which owns a 25 MW waste-to-energy facility located near the Town of Huntington, New York. In October 2012, a non-debtor subsidiary of EME exercised an option to sell all of its interest in the project. In January 2013, EME received $7.5 million in exchange for its indirect interest in the project.

Construction and Development Activities

Recent developments related to EME's construction and development activities include:

• Commercial operation of the Crofton Bluffs and Broken Bow I wind projects commenced on November 1, 2012 and December 1, 2012, respectively. Production tax credits will expire 10 years after the tax-in-service dates, which are also the commercial operation dates. Power purchase agreements will expire in 2032.

• In December 2012, EME began start-up and testing at the Walnut Creek project. Construction on the project began in June 2011. The project is expected to achieve commercial operation before June 2013 and to qualify for 50% bonus depreciation.

Asset Management and Trading Activities

EME's power marketing and trading subsidiary, EMMT, manages the energy and capacity of EME's merchant generating plants and, in addition, trades electric power, natural gas, oil, weather and related commodity and financial products, including forwards, futures, options and swaps. EMMT segregates its activities into two categories:

• Asset Management—EMMT engages in the sale of energy and capacity and the purchase and sale of fuels, including natural gas and fuel oil, through intercompany contracts with EME's subsidiaries that own or lease EME's facilities. Historically, EME ~~uses~~has used derivative instruments to reduce its exposure to market risks that arise from price fluctuations of electricity, capacity, fuel, emission allowances, and transmission rights. The objective of these activities ishas been to sell the output of the facilities on a forward basis or to hedge the risk of future changes in prices or price differences between different locations. Hedging activities typically include on-peak and off-peak periods and may include load service requirements contracts with local utilities. Transactions related to hedging activities are designated separately from EMMT's trading activities. Not all contracts entered into by EMMT for hedging purposes qualify as hedges for accounting purposes. Midwest Generation is a party to a contract with EMMT under which EMMT, as an agent for Midwest Generation, sells energy and capacity from the Midwest Generation plants into the wholesale market, engages in hedging activities, and provides scheduling and other services. EMMT has the ability to enter into fuel hedging arrangements on Midwest Generation's behalf.


•	Trading—EMMT seeks to generate trading profits from volatility in the price of electricity, capacity, fuels, and transmission congestion by buying and selling contracts in wholesale markets under guidelines approved by EME's risk management committee.

Significant Customers

For a discussion of EME's and Midwest Generation's significant customers, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 6. Derivative Instruments and Hedging Activities—Credit Risk."

Insurance

EME and Midwest Generation maintain insurance policies consistent with those normally carried by companies engaged in similar business and owning similar properties. EME's and Midwest Generation's insurance programs include all-risk property insurance, including business interruption, covering real and personal property, including losses from boiler or machinery breakdowns, and the perils of earthquake and flood, subject to specific sublimits. EME and Midwest Generation also carry general liability insurance covering liabilities to third parties for bodily injury or property damage resulting from operations, automobile liability insurance and excess liability insurance. Limits and deductibles in respect of these insurance policies are comparable to those carried by other electric generating facilities of similar size. No assurance can be given that this insurance will be adequate to cover all losses or claims.

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policies are comparable to those carried by other electric generating facilities of similar size. No assurance can be given that this insurance will be adequate to cover all losses or claims.

Regulatory Matters

General

EME's and Midwest Generation's operations are subject to extensive regulation. EME's operating projects, including the Midwest Generation plants, are subject to energy, environmental and other governmental laws and regulations at the federal, state and local levels in connection with project development, ownership and operation, and the use of electric energy, capacity and related products, including ancillary services, from the projects. In addition, EME and Midwest Generation are subject to the market rules, procedures, and protocols of the markets in which they participate.

Federal Power Act

The FERC has exclusive jurisdiction over the rates, terms and conditions of wholesale sales of electricity and transmission services in interstate commerce (other than transmission that is "bundled" with retail sales), including ongoing, as well as initial, rate jurisdiction. The FERC also has jurisdiction over the sale or transfer of specified assets, including wholesale power sales contracts and generation facilities and, in some cases, jurisdiction over the issuance of securities or the assumption of specified liabilities and some interlocking directorates. Dispositions of EME's and Midwest Generation's jurisdictional assets and certain types of financing arrangements may require FERC approval.

Each of EME's domestic generating facilities is either a qualifying facility (QF), as determined by the FERC, or the subsidiary owning the facility is an exempt wholesale generator (EWG). Most ~~qualifying~~QFs ~~facilities~~ are exempt from the ratemaking and several other provisions of the Federal Power Act (FPA). Midwest Generation and EME's other EWGs, except the Goat Wind and Cedro Hill wind projects, are subject to the FERC's ratemaking jurisdiction under the FPA, but have been authorized to sell power at market-based rates to purchasers which are not affiliated electric utility companies as long as the absence of market power is shown. In addition, EME's power marketing subsidiaries, including EMMT, ~~have~~has been authorized by the ~~FERC to make wholesale market sales of power at market-based rates and are subject to the FERC ratemaking regulation under the FPA.~~

If one of the projects in which EME has an interest were to lose its qualifying facility or EWG status, the project would no longer be entitled to the related exemptions from regulation and could become subject to rate regulation by the FERC and state authorities. Loss of status could also trigger defaults under covenants contained in the project's power sales agreements and financing agreements.19

FERC to make wholesale market sales of power at market-based rates and are subject to the FERC ratemaking regulation under the FPA.

If one of the projects in which EME has an interest were to lose its QF or EWG status, the project would no longer be entitled to the related exemptions from regulation and could become subject to rate regulation by the FERC and state authorities. Loss of status could also trigger defaults under covenants contained in the project's power sales agreements and financing agreements.

Dodd-Frank Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) provides the Commodity Futures Trading Commission and the Securities and Exchange Commission with jurisdiction to regulate financial derivative products, including swaps, options and other derivative products, collectively referred to in this annual report as "swaps."

The Dodd-Frank Act subjects swaps to new mandatory clearing and trading requirements, if no exemption applies. It may also impose capital requirements on non-exempt market participants. The clearing and trading requirements could result in increased margining requirements which may increase the costs of hedging activity. EME and Midwest Generation, through EMMT, use swaps to hedge commercial risks associated with the generation, purchase and sale of electricity and fuel to wholesale customers. In addition, EMMT utilizes swaps as part of its proprietary trading activities.

New rules and regulations on clearing, trading or other requirements under the Dodd-Frank Act have been enacted and other rules and regulations are under consideration. The potential impact of those rules and regulations will depend on the content, which remains uncertain.

Reliability Standards

North American Electric Reliability Corporation (NERC) establishes and enforces reliability standards for the bulk power system. EME and Midwest Generation believe they have taken appropriate steps to be substantially compliant with current NERC reliability standards that apply to their operations.

Transmission of Wholesale Power

EME's projects that sell power to wholesale purchasers other than the local utility to which the project may be interconnected require the transmission of electricity over power lines owned by others. Midwest Generation utilizes power lines owned by others for the transmission of electricity. The prices and other terms and conditions of transmission contracts are regulated by the FERC when the entity providing the transmission service is subject to FERC jurisdiction.

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others for the transmission of electricity. The prices and other terms and conditions of transmission contracts are regulated by the FERC when the entity providing the transmission service is subject to FERC jurisdiction.

Environmental Matters and Regulations (EME and Midwest Generation, except as noted)

Legislative and regulatory activities by federal, state, and local authorities in the United States relating to energy and the environment impose numerous restrictions and requirements with respect to the operation of EME's existing facilities, including the Midwest Generation plants, and affect the timing, cost, location, design, construction, and operation of new facilities by EME's subsidiaries, as well as the cost of mitigating the environmental impacts of past operations. In addition, as discussed in "Item 8. Combined Notes to Consolidated Financial Statements—Note 9. Commitments and Contingencies," the United ~~Stated~~States Environmental Protection Agency (US EPA) and others have from time to time sought to involve EME and Midwest Generation in litigation related to facilities owned by EME's subsidiaries. The facilities of EME's subsidiaries which are most affected by environmental regulation are located in Illinois. Additional information about environmental matters, including projected environmental capital expenditures, is included in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Capital Investment Plan" and "—Critical Accounting Estimates and Policies—Impairment of Long-Lived Assets."

Air Quality

The Clean Air Act (CAA), which regulates air pollutants from mobile and stationary sources, has a significant impact on the operation of the Midwest Generation plants. The CAA requires the US EPA to establish concentration levels in the ambient air for six criteria pollutants to protect public health and welfare. These concentration levels are known as National Ambient Air Quality Standards (NAAQS). The six criteria pollutants are carbon monoxide, lead, NO_x, ozone, particulate matter, and SO₂.

Federal environmental regulations require states to adopt state implementation plans (SIPs), for certain pollutants, which detail how the state will attain the standards that are mandated by the relevant law or regulation. The SIPs must be equal to or more stringent than the federal requirements and must be submitted to the US EPA for approval. Each state identifies the areas within its boundaries that meet the NAAQS (attainment areas) and those that do not (non-attainment areas), and must develop a SIP both to bring non-attainment areas into compliance with the NAAQS and to maintain compliant air quality in attainment areas. If the attainment status of areas changes, states may be required to develop new SIPs that address the changes. Many of EME and its subsidiaries facilities are located in areas that have not attained NAAQS for ozone (affected by NOx emissions from power plants) and fine particulate matter (affected by SO2 and NOx emissions from power plants).

areas within its boundaries that meet the NAAQS (attainment areas) and those that do not (non-attainment areas), and must develop a SIP both to bring non-attainment areas into compliance with the NAAQS and to maintain compliant air quality in attainment areas. If the attainment status of areas changes, states may be required to develop new SIPs that address the changes. Many of EME's and its subsidiaries' facilities are located in areas that have not attained NAAQS for ozone (affected by NO_x emissions from power plants) and fine particulate matter (affected by SO₂ and NO_x emissions from power plants).

As described further below, on December 11, 2006, Midwest Generation entered into an agreement with the Illinois Environmental Protection Agency (Illinois EPA), which was subsequently embodied in an Illinois rule called the CPS, to reduce mercury, NO_x and SO₂ emissions at the Midwest Generation plants. The CPS requires Midwest Generation to achieve air emission reductions for NO_x and SO₂, and those reductions should contribute to or effect compliance through SIPs with various existing US EPA ambient air quality standards. It is possible that if lower ozone, particulate matter, NO_x or SO₂ NAAQS are finalized by US EPA in the future, Illinois may implement regulations that are more stringent than those required by the CPS.

Nitrogen Oxide and Sulfur Dioxide

Clean Air Interstate and Cross-State Air Pollution Rules

The CAIR, issued by the US EPA on March 10, 2005, mandated significant reductions in NO_x and SO₂ emission allowance caps under the CAA in 28 eastern states and the District of Columbia. In 2008, the United States Court of Appeals for the District of Columbia Circuit initially vacated the CAIR, but later remanded the CAIR to the US EPA for the issuance of a revised rule. The CAIR remains in effect until a replacement regulation becomes effective.

On July 6, 2011, the US EPA adopted the CSAPR. The CSAPR contemplated emissions reductions for annual SO2 emissions and annual and ozone season NOx emissions in two phases: a first phase originally scheduled to be effective January 1, 2012 and, in most states subject to the program (including Illinois), a second phase effective January 1, 2014 that requires additional reductions in annual SO2 emissions. The CSAPR, like the CAIR, is an allowance-based regulation that provides for emissions trading.

In August 2012, the United States Court of Appeals for the District of Columbia Circuit vacated the CSAPR and directed the US EPA to continue administering the CAIR pending the promulgation of a valid replacement. AThe ~~petition~~U.S. ~~seeking~~Supreme Court agreed to ~~have~~review ~~this~~the ~~decision~~United ~~reviewed~~States byCourt ~~the~~of ~~full~~Appeals for the District of Columbia Circuit's ~~was~~August ~~denied~~2012 decision and heard oral arguments on the matter in ~~January~~December 2013.

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Revised NAAQS for SO₂

In June 2010, the US EPA finalized the primary NAAQS for SO2 by establishing a new one-hour standard at a level of 75 parts per billion. In June 2011, the Illinois EPA submitted its initial recommended attainment/nonattainment designations in connection with the standard. The Illinois EPA recommended designating parts of Tazewell County (where the Powerton plant is located) and Will and Cook Counties as nonattainment with this standard. The recommended designation for parts of Will and Cook Counties included the area where the Will County plant is located, but not the areas where Midwest Generation's other plants in those counties are located. The US EPA approved these designations in August 2013.

Illinois

All of Midwest Generation's Illinois coal-fired electric generating units are subject to the CPS, which specifies the control technologies that are to be installed on some units by specified dates. Midwest Generation must either install the required technology by the specified deadline or shut down the unit. The principal emission standards and control technology requirements for NO_x and SO₂ under the CPS are as described below:

NOx Emissions—Beginning in calendar year 2012 and continuing in each calendar year thereafter, Midwest Generation must comply with an annual and seasonal NOx emission rate of no more than 0.11 lbs/million British thermal units (Btu). Midwest Generation's ~~2012~~2013 fleetwide NOx emission rate complied with this regulation.

SO2 Emissions—Midwest Generation must comply with an overall SO2 annual emission rate beginning with 0.44 lbs/million Btu in 2013 and decreasing annually until it reaches 0.11 lbs/million Btu in 2019 and thereafter. Midwest Generation's 2013 fleetwide SO2 emission rate complied with this regulation, including an emissions tonnage cap of 57,000 tons that applied in 2013.

Testing of dry sorbent injection using Trona on select Midwest Generation units has demonstrated significant reductions in SO2 emissions. Use of dry sorbent injection technology in conjunction with low sulfur coal is expected to require substantially less capital and time to construct than the use of spray dryer absorber technology, but would likely result in higher ongoing operating costs and may consequently result in lower dispatch rates and competitiveness of Midwest Generation's plants, depending on competitors' costs. For additional discussion, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Edison Mission Energy Overview—Midwest Generation Environmental Compliance Plans and Costs."

higher ongoing operating costs and may consequently result in lower dispatch rates and competitiveness of Midwest Generation's plants, depending on competitors' costs. For additional discussion, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Edison Mission Energy Overview—Midwest Generation Environmental Compliance Plans and Costs."

Mercury/Hazardous Air Pollutants

Mercury and Air Toxics Standards Rule

In December 2011, the US EPA announced the MATS rule, limiting emissions of hazardous air pollutants (HAPs) from coal- and oil-fired electrical generating units. The rule became effective on April 16, 2012 with a compliance deadline of April 16, 2015 for existing units. In November 2012, the US EPA issued proposed revisions to aspects of the regulation relating to new units. A number of parties have filed notices of appeal challenging the rule, although the only appeals that are currently moving forward relate to the standards applicable to existing units. EME and Midwest Generation do not expect that these standards will require material changes to the approach for compliance with state and federal environmental regulations already contemplated for CPS compliance.

Illinois

The CPS requires that, beginning in calendar year 2015, and continuing thereafter on a rolling 12-month basis, Midwest Generation must either achieve an emission standard of 0.008 lbs mercury/gigawatt-hours (GWh) gross electrical output or a minimum 90% reduction in mercury for each unit (except Unit 3 at the Will County Station, which will be included in calendar year 2016). In 2012, Midwest Generation notified the Illinois EPA that all units except Waukegan Station Unit 7 and Will County Station Unit 3 were in compliance with these requirements. Midwest Generation is required to install cold side electrostatic precipitator or fabric filtration equipment on Waukegan Station Unit 7 by December 31, 2014 and on Will County Station Unit 3 by December 31, 2015 to comply with the CPS.

Ozone

National Ambient Air Quality Standards

In January 2010, the US EPA proposed a revision to the primary and secondary NAAQS for 8-hour ozone that it had finalized in 2008. The 8-hour ozone standard established in 2008 was 0.075 parts per million. In January 2010, the US EPA proposed establishing a primary 8-hour ozone NAAQS between 0.060 and 0.070 parts per million and a distinct secondary standard to protect sensitive vegetation and ecosystems. In September 2011, President Obama announced that the proposed revision was being withdrawn. The ozone NAAQS established in 2008 remains in place, but the implementation process must be completed before the 0.075 parts-per-million standard can be enforced. New primary and secondary ozone standards are expected to be proposed in 2014.

21In June 2012, the US EPA designated the counties in Illinois where Midwest Generation's coal-fired power plants are located as nonattainment with the 2008 NAAQS, other than Tazewell County, where the Powerton Station is located. Illinois has not yet submitted a SIP outlining how compliance with the 2008 NAAQS will be achieved.

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completed before the 0.075 parts-per-million standard can be enforced. New primary and secondary ozone standards are expected in 2014.

In June 2012, the US EPA designated the counties in Illinois where Midwest Generation's coal-fired power plants are located as nonattainment with the 2008 NAAQS. Illinois has not yet submitted a SIP outlining how compliance with the 2008 NAAQS will be achieved.

Regional Haze

The regional haze rules under the CAA are designed to prevent impairment of visibility in certain federally designated areas. The goal of the rules is to restore visibility in mandatory federal Class I areas, such as national parks and wilderness areas, to natural background conditions by 2064. Sources such as power plants that are reasonably anticipated to contribute to visibility impairment in Class I areas may be required to install best available retrofit technology (BART) or implement other control strategies to meet regional haze control requirements.

In July 2012 the US EPA approved Illinois' regional haze SIP, which provided that the emission reductions that the Midwest Generation plants will be required to make pursuant to the CPS, discussed above in "—Nitrogen Oxide and Sulfur Dioxide—Illinois," satisfy the BART requirement.

New Source Review Requirements

The New Source Review (NSR) regulations impose certain requirements on facilities, such as electric generating stations, if modifications are made to air emissions sources at the facility. Since 1999, the US EPA has pursued a coordinated compliance and enforcement strategy to address NSR compliance issues at the nation's coal-fired power plants. The US EPA has filed enforcement actions against Midwest Generation and Homer City alleging NSR violations. For further discussion, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 9. Commitments and Contingencies—Contingencies."

Water Quality

Clean Water Act

Regulations under the federal Clean Water Act govern critical operating parameters at generating facilities, such as the temperature of effluent discharges and the location, design, and construction of cooling water intake structures at generating facilities. In March 2011, the US EPA proposed standards under the federal Clean Water Act that would affect cooling water intake structures at generating facilities. The standards are intended to protect aquatic organisms by reducing capture in screens attached to cooling water intake structures (impingement) and in the water volume brought into the facilities (entrainment). The regulations are expected to be finalized byin ~~June 2013~~2014. The required measures to comply with the proposed standards regarding entrainment are subject to the discretion of the permitting authority, and EME is unable at this time to assess potential costs of compliance, which could be significant for the Midwest Generation plants.

In June 2013, the US EPA proposed changes to the Steam Electric Guideline Regulation which sets discharge limits for various operations which discharge to waters of the United States. EME is reviewing the proposed rule and intends to provide comments. The rule is scheduled for issuance by May 2014.

Illinois

Midwest Generation is a party to an administrative proceeding before the Illinois Pollution Control Board to determine whether more stringent thermal and effluent water quality standards for the Chicago Area Waterway System and Lower Des Plaines River, which supply cooling water to Midwest Generation's Will County and Joliet Stations, will be implemented. ~~The~~This proceeding could conclude in 2014 and the rule, if implemented, is expected to affect the manner in which those stations use water for station cooling. It is not possible to predict the ~~timing for resolution of the proceeding, the~~ final form of the rule, or how it would impact the operation of the affected stations; however, if the regulations proposed by the Illinois EPA are adopted without modification, significant capital expenditures may be required.

Coal Combustion Wastes

US EPA regulations currently classify coal ash and other coal combustion residuals as solid wastes that are exempt from hazardous waste requirements. This classification enables beneficial uses of coal combustion residuals, such as for cement production and fill materials. Midwest Generation currently provides a portion of its coal combustion residuals for beneficial uses. In June 2010, the US EPA published proposed regulations relating to coal combustion residuals that could result in more stringent requirements for the management and disposal of such materials. For further discussion see "Item 8. Combined Notes to Consolidated Financial Statements—Note 10. Environmental Developments."

Climate Change

There have been a number of federal and state legislative and regulatory initiatives to reduce greenhouse gas (GHG) emissions. Any climate change regulation or other legal obligation that would require substantial reductions in GHG emissions or that would impose additional costs or charges for the GHG emissions could significantly increase the cost of generating electricity from fossil fuels, and especially from coal-fired plants, which could adversely affect EME's and Midwest Generation's businesses.

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emissions or that would impose additional costs or charges for the GHG emissions could significantly increase the cost of generating electricity from fossil fuels, and especially from coal-fired plants, which could adversely affect EME's and Midwest Generation's businesses.

Federal Legislative/Regulatory Developments

In June 2010, the US EPA issued the Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule (GHG Tailoring Rule). This regulation generally subjects newly constructed sources of GHG emissions and newly modified existing major sources to the Prevention of Significant Deterioration (PSD) air permitting program beginning in January 2011 (and later, to the Title V permitting program under the CAA); however, the GHG Tailoring Rule significantly increases the emissions thresholds that apply before facilities are subjected to these programs. The emissions thresholds for carbon dioxide (CO₂) equivalents in the final rule vary from 75,000 tons per year to 100,000 tons per year depending on the date and whether the sources are new or modified.

In June 2012, the United States Court of Appeals for the District of Columbia Circuit dismissed the challenge by industry groups and some states to the GHG Tailoring Rule. In December 2012, petitions for rehearing by the full District of Columbia Circuit filed by states and industry groups were denied. Subsequently, the U.S. Supreme Court agreed to review the District of Columbia Circuit's determination that the CAA required the US EPA to regulate GHGs pursuant to the PSD program once GHGs were regulated under another provision of the CAA. A decision in this appeal is expected by June 2014.

In July 2012, the US EPA published a final rule maintaining the CO₂ equivalent emissions thresholds (for purposes of PSD and Title V permitting) originally established in the GHG Tailoring Rule.

Regulation of GHG emissions pursuant to the PSD program could affect efforts to modify EME's and Midwest Generation's facilities in the future, and could subject new capital projects to additional permitting or emissions control requirements that could delay such projects. In December 2010, the US EPA announced that it had entered into a settlement with various states and environmental groups to resolve a long-standing dispute over regulation of GHGs from electrical generating units pursuant to the New Source Performance Standards in the CAA and would propose performance standards for emissions from new and modified power plants and emissions guidelines for existing power plants. In March 2012, the US EPA announced proposed ~~carbon dioxide~~ CO2 emissions limits for new power plants. Nobut ~~greenhouse~~did ~~gas~~not ~~emissions~~finalize ~~guidelines~~these ~~for existing plants have been announced~~regulations.

~~Since~~In ~~January~~September ~~2010~~2013, the US EPA's ~~Final~~proposed ~~Mandatory~~new ~~Greenhouse~~regulations ~~Gas~~governing ~~Reporting~~CO2 ~~Rule~~emissions ~~has~~from ~~required~~new ~~all~~electric ~~sources~~generating ~~within~~stations. ~~specified~~These ~~categories,~~regulations ~~including~~replace ~~electric~~its ~~generation~~original ~~facilities,~~proposal. The US EPA intends to ~~monitor~~issue ~~emissions~~proposed GHG emission standards for reconstructed and toexisting ~~submit~~electric ~~annual~~generating ~~reports~~stations toin ~~the~~June ~~US EPA~~2014 byand ~~March 31~~to ofpromulgate ~~each~~such ~~year.~~standards ~~EME's~~in ~~2012~~June ~~GHG~~2015. ~~emissions~~States ~~were~~would ~~approximately~~be ~~29 million~~required ~~metric~~to ~~tons.~~submit ~~Midwest~~their ~~Generation's~~implementation ~~2012~~plans ~~GHG~~responding ~~emissions~~to ~~were~~such ~~approximately~~guidelines 25to the US ~~million~~EPA ~~metric~~one ~~tons~~year after the regulations are promulgated.

Since January 2010, the US EPA's Final Mandatory Greenhouse Gas Reporting Rule has required all sources within specified categories, including electric generation facilities, to monitor emissions and to submit annual reports to the US EPA by March 31 of each year. EME's 2013 GHG emissions were approximately 31 million metric tons. Midwest Generation's 2013 GHG emissions were approximately 25 million metric tons.

Regional Initiatives and State Legislation (EME only)

Regional initiatives and state legislation may also require reductions of GHG emissions, and it is not yet clear whether or to what extent any federal legislation would preempt them. If state and/or regional initiatives remain in effect after federal legislation is enacted, generators could be required to satisfy them in addition to federal standards.

EME's operations in California are subject to two laws governing GHG emissions. The first law, the California Global Warming Solutions Act of 2006 (AB 32), establishes a comprehensive program to reduce GHG emissions. AB 32 requires the California Air Resources Board (CARB) to develop regulations, effective in 2012, that would reduce California's GHG emissions to 1990 levels in yearly increments by 2020. In December 2011, the CARB regulation was officially published, establishing a California cap-and-trade program. The first compliance period under the regulations is for 2013 GHG emissions. CARB regulations implementing a cap-and-trade program, and the cap-and-trade program itself, continue to be the subject of litigation. EME's facilities complied with AB 32 in 2013. In December 2011, a federal district court enjoined the Low Carbon Fuel Standard, another AB 32 program regulating the carbon content of transportation fuels (including electricity), on constitutional commerce clause grounds. In September 2013, the United States Court of Appeals for the Ninth Circuit affirmed in part and reversed in part the district court's judgment, vacated the preliminary injunction, and remanded the case to the district court for further proceedings. A motion to rehear the case was denied by the Court of Appeals in January 2014.

The second law, SB 1368, required the CPUC and the California Energy Commission to adopt GHG emissions performance standards restricting the ability of California investor-owned and publicly owned utilities, respectively, to enter into long-term arrangements for the purchase of electricity. The standards that have been adopted prohibit these entities from entering into long-term financial commitments with generators that emit more than 1,100 pounds of CO₂ per MW-hour (MWh) (the performance of a combined-cycle gas turbine generator). EME believes that all of its California facilities meet the SB 1368 standards.

Litigation Developments

Litigation alleging that GHG is a public and private nuisance may affect EME and Midwest Generation whether or not they are named as defendants. The law is unsettled on whether or not this litigation presents questions capable of judicial resolution or political questions that should be resolved by the legislative or executive branches.

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resolution or political questions that should be resolved by the legislative or executive branches. For further discussion, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 10. Environmental Developments."

Employees

At December 31, ~~2012~~2013, EME employed 1,~~283~~047 people, including 586 employees of Midwest Generation. At December 31, ~~2012~~2013, ~~Midwest~~approximately ~~Generation~~42% ~~employed~~and ~~730~~75% ~~people,~~of ~~approximately~~the ~~530~~employees of ~~whom~~EME and Midwest Generation, respectively, were covered by a collective bargaining agreement governing wages, certain benefits and working conditions. This collective bargaining agreement expires on December 31, 2013. Midwest Generation also has a separate collective bargaining agreement governing retirement, health care, disability and insurance benefits that expires on March 31, 2015.

agreement expires on December 31, 2014. Midwest Generation also has a separate collective bargaining agreement governing retirement, health care, disability and insurance benefits that expires on March 31, 2015.

EME's and Midwest Generation's Relationship with Certain Affiliated Companies

EIX is a holding company. EME is an indirect subsidiary of EIX, and Midwest Generation is an indirect subsidiary of EME. EIX is also the corporate parent of SCE, an electric utility that serves customers in California.

EME ~~expects that EME~~ and EIX will continue to provide ongoing shared services to each other and to Midwest Generation in the ordinary course, ~~consistent~~through ~~with~~ the ~~same~~earlier ~~terms~~of ~~and~~the ~~conditions~~consummation onof ~~which~~the ~~those~~NRG ~~services~~Sale ~~have~~or, ~~been~~under ~~provided~~certain ~~in the past~~circumstances, asthrough ~~outlined~~July in31, ~~the Support Agreement~~2014. If EIX fails to provide these services, it could have a material adverse effect on EME. ~~If the Support Agreement is consummated pursuant to a confirmed plan of reorganization, EIX will cease to own EME when EME emerges from bankruptcy.~~

ITEM 1A. RISK FACTORS

Risks Related to Restructuring

EME and Midwest Generation ~~filed~~will ~~voluntary~~be ~~petitions for relief under Chapter 11 of the Bankruptcy Code and are~~ subject to the risks and uncertainties associated with bankruptcy cases for the duration of the Chapter 11 Cases.

EME, Midwest Generation and the other Debtor Entities filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. For the duration of the Chapter 11 Cases, the Debtor Entities' business and operations are, and will continue to be, subject to various risks, including but not limited to, the following:


•	it may be difficult for the Debtor Entities to obtain and maintain commercial relationships on competitive terms with customers, suppliers and others;


•	it may be difficult to retain and motivate key employees through the process of reorganization, and to attract new employees;


•	EME's and Midwest Generation's senior management will be required to spend significant time and effort dealing with bankruptcy and restructuring activities rather than focusing exclusively on business operations; and


•	EME and Midwest Generation may not be able to maintain or obtain sufficient financing sources for operations or to fund any reorganization plan and meet future obligations.

EME and Midwest Generation ~~will~~are also be subject to risks and uncertainties with respect to the actions and decisions of creditors and other third parties who have interests in the Chapter 11 Cases that may be inconsistent with EME's and Midwest Generation's plans. These risks and uncertainties could affect business and operations in various ways and may also affect the date of the Debtor Entities' emergence from Chapter 11 bankruptcy protection. EME and Midwest Generation cannot predict or quantify the ultimate impact that events occurring during the Chapter 11 Cases will have on their business, financial condition and results of operations. These risks could affect EME's and Midwest Generation's ability to continue as going concerns.

~~EME~~Failure ~~may not be able~~ to ~~successfully~~complete ~~implement~~ the ~~restructuring~~NRG ~~set~~Sale ~~forth~~could innegatively ~~the~~affect ~~Support Agreement, including the Settlement Transaction, should~~ EME's ~~determine~~future tobusiness doand sofinancial results.

~~The~~On ~~consummation~~October 18, 2013, EME announced the execution of the ~~restructuring~~Acquisition ~~described~~Agreement inwith NRG and the ~~Support~~Purchaser. ~~Agreement~~Before the NRG Sale may be completed, ~~should~~the ~~EME~~parties ~~elect~~must tosatisfy ~~proceed~~all ~~with~~conditions set forth in the ~~Support~~Acquisition Agreement, isincluding, ~~subject~~among toother things, governmental and regulatory approvals. Certain conditions, such as the confirmation of the Plan and the entry of a ~~number~~Confirmation Order by the Bankruptcy Court, have already been met. If the remaining conditions or requirements are not satisfied or waived the NRG Sale will not be consummated. These conditions or changes could have the effect of ~~risks~~delaying ~~which~~completion ~~include~~of, ~~among~~or ~~other~~imposing ~~things~~additional costs on, ~~that:~~the NRG Sale.

•Termination ~~definitive~~of ~~restructuring~~the ~~documents~~Acquisition ~~may~~Agreement ~~not~~would because ~~completed,~~a ortermination ~~Bankruptcy~~of ~~Court~~the ~~approvals~~Settlement ~~obtained~~Agreement, which in ~~accordance~~turn ~~with~~would create additional uncertainties regarding the ~~deadlines~~confirmation ~~set~~of ~~forth~~the inPlan and could delay the ~~Support~~resolution ~~Agreement;~~of the Chapter 11 Cases.

•If the ~~restructuring~~NRG ~~may~~Sale is not completed, EME still will be ~~accepted~~required byto pay its own costs relating to the ~~requisite~~NRG ~~number~~Sale, including legal, accounting, financial advisory, filing and printing costs. Also, in certain specified circumstances, EME may be required to pay NRG a cash fee of ~~creditors;~~$65 million plus reimbursement of all reasonable and documented out-of-pocket expenses if the Acquisition Agreement is terminated.

•Uncertainties while the ~~Support~~NRG ~~Agreement~~Sale ~~may~~is bepending ~~terminated~~that incould ~~accordance~~adversely ~~with~~affect ~~its~~EME's ~~terms~~financial results.

24The pursuit of the NRG Sale and the preparation for the transition of EME’s assets from EME to NRG may place a significant burden on EME’s management and internal resources. Uncertainty about the effect of the NRG Sale on

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If EME is unable to implement the restructuring contemplated by the Support Agreement, it is unclear whether EME, Midwest Generation and the other Debtor Entities will be able to reorganize their businesses. There can be no assurance as to the timing of receipt of required approvals or when a restructuring plan might become effective. If the restructuring contemplated by the Support Agreement is not completed, or if a protracted reorganization or liquidation were to occur, there can be no assurance as to what, if any, distribution holders of claims against, or equity interests in, the Debtor Entities ultimately would receive with respect to their claims or equity interests; in addition, the Debtor Entities could continue to face ongoing litigation and incur other significant costs.

Differences exist between the utilization of tax benefits from a statutory perspective and the manner in which payments occur under the tax-allocation agreements.

At December 31, 2012, under the tax-allocation agreements as applied, EME is not yet, and may never be, entitled to be paid for either the approximately $102 million of tax benefits generated by EME which have been utilized in the EIX consolidated tax return on a statutory basis or the $120 million of payments EME has made without a corresponding statutory tax requirement. In addition, EME is not yet, and may never be, entitled to be paid for the approximately $1,071 million of tax benefits generated by EME which have not yet been utilized in the EIX consolidated tax return. Capistrano Wind Holdings and Capistrano Wind, LLC have generated $40 million of tax benefits, $16 million, of which has been used by the EIX consolidated tax group, and all of which either payment has been received or payment is expected to be received under the tax-allocation agreements.

Upon EME's exit from the EIX consolidated tax group, or if the tax-allocation agreements terminate or expire, tax benefits that had previously been generated by EME and not utilized in the EIX consolidated tax return on a statutory basis will generally be available for use by EME in its own consolidated tax return, but may be reduced as a result of cancellation of indebtedness income (COD income) or as a result of the application of the consolidated return rules. Use of such tax benefits may also further be limited upon emergence from bankruptcy as a result of the application of limitations in sections 382 or 383 of the Internal Revenue Code if there is a change of ownership of EME. Further, upon EME's exit from the EIX consolidated tax group or if the tax-allocation agreements terminate or expire, tax benefits that had been previously generated by EME and utilized in the EIX consolidated tax return on a statutory basis but are unpaid under the application of the tax-allocation agreements will not be available for use by EME in its own consolidated tax return and will not be payable under the tax-allocation agreements.

Certain of EME's subsidiaries receive significant services from EME and the loss of such services could have a material adverse impact on their financial condition and results of operations.

Certain of EME's subsidiaries receive significant services from EME, including, among others, cash management and accounting services. If the provision of these services were to be delayed, interrupted or otherwise halted for any reason, including as a result of the Chapter 11 Cases, this could have a material adverse impact on their financial condition and results of operations. A replacement supplier of these services may not be found within a reasonable time (or at all) and/or on economic terms that are commercially reasonable.

Liquidity Risks

EME and Midwest Generation have significant cash requirements and significant obligations, and expect to incur substantial losses in 2013 and subsequent years.

At December 31, 2012, EME, and its subsidiaries without contractual dividend restrictions, had cash and cash equivalents of $815 million, which includes Midwest Generation cash and cash equivalents of $95 million. As of December 31, 2012, EME had significant obligations including:

• $3.7 billion senior unsecured debt and $259 million of other obligations were recorded as a liability subject to compromise (LSTC) as a result of the filing of the Chapter 11 Cases;

• $1.4 billion in secured project level debt held by non-debtor EME subsidiaries, which is not guaranteed by EME and is not recorded in LSTC; and

• $1.4 billion of principal and accrued interest on the intercompany loan from Midwest Generation under which EME has historically made payments to Midwest Generation. As a result of the Chapter 11 Cases, EME did not make the scheduled principal and interest payment of $61 million due on January 2, 2013. Future payments, if any, made by EME under the loan will be dependent upon the overall resolution of the Chapter 11 Cases.

~~Table~~employees, customers, suppliers and others may have an adverse effect on their businesses. Employee retention will be particularly challenging prior to the completion of ~~Contents~~the NRG transaction, due to uncertainty about future employment prospects with NRG.

AsEME ofmay ~~December 31,~~not ~~2012,~~be ~~Midwest~~able ~~Generation~~to ~~had~~successfully ~~significant~~implement ~~obligations~~the ~~including:~~restructuring set forth in the Plan.

The effectiveness of the Plan is subject to a number of conditions which include, among other things:


•	Consummation of the NRG Sale, which is expected in April 2014;


•	Payment of the Powerton and Joliet Cure Amount; and


•	Establishment of the Reorganization Trust and funding of escrow accounts therein.

If these conditions are not met, it is unclear whether EME, Midwest Generation and the other Debtor Entities will be able to reorganize their businesses and emerge from Chapter 11 bankruptcy protection. If a protracted reorganization or liquidation were to occur, there can be no assurance as to what, if any, distribution holders of claims against, or equity interests in, the Debtor Entities ultimately would receive with respect to their claims or equity interests; in addition, the Debtor Entities could continue to face ongoing litigation and incur other significant costs.

Material claims have been asserted in the Chapter 11 Cases. The amount of approved claims as ultimately determined by the Bankruptcy Court may be different than the current estimated claims liability.

Although many material claims have been resolved during the pendency of the Chapter 11 Cases, certain of those claims remain unresolved. EME and Midwest Generation have recorded an estimate for expected claims in liabilities subject to compromise; however the ultimate resolution of such claims and other obligations may vary from this estimate. The amount of approved claims as ultimately determined by the Bankruptcy Court could have a material impact on the recoveries of creditors of the relevant Debtor Entities.

Liquidity Risks

EME and Midwest Generation have significant cash requirements and significant obligations, and expect to incur substantial losses in 2014 and subsequent years.

At December 31, 2013, EME, and its subsidiaries without contractual dividend restrictions, had cash and cash equivalents of $1,126 million, which includes Midwest Generation cash and cash equivalents of $118 million. As of December 31, 2013, EME had significant obligations including:


•	$3.7 billion senior unsecured debt and $315 million of other obligations were recorded as a liability subject to compromise (LSTC) as a result of the filing of the Chapter 11 Cases;


•	$1.5 billion in secured project level debt held by non-debtor EME subsidiaries, which is not guaranteed by EME and is not recorded in LSTC; and

•

$1.4 billion of principal and accrued interest on the intercompany loan from Midwest Generation under which EME has historically made payments to Midwest Generation. During the pendency of the Chapter 11 Cases, EME did not make any of the three scheduled principal and interest payments of $61 million due on January 2, 2013, July 2, 2013 and January 2, 2014. Upon consummation of the Plan and the NRG Sale, this loan and accrued interest will be canceled.

As of December 31, 2013, Midwest Generation had significant obligations including:


•	$434 million of lease financing obligations related to the Powerton and Joliet Sale Leaseback, which are recorded in LSTC (these obligations are guaranteed by EME); and

• $95106 million of other obligations in Midwest Generation's LSTC.

In addition, under the CPS, Midwest Generation must install certain ~~environmental~~emissions ~~improvements~~control equipment or permanently retire the units. Currently, Midwest Generation estimates that its CPS compliance plan would require the installation of up to $~~585~~ 833 million of ~~environmental~~emissions ~~improvements~~controls if all units are retrofit. EME's and Midwest Generation's current financial position limits their financial flexibility, places them at a competitive disadvantage compared to competitors that have less debt and increases their vulnerability to general adverse economic and industry conditions.

EME and Midwest Generation have experienced, and continue to experience, operating losses due to low realized energy and capacity prices, high fuel costs and low generation at the Midwest Generation plants. ~~Forward market prices indicate that these trends are expected to continue for a number of years. As a result,~~ EME ~~and~~has ~~Midwest~~been ~~Generation expect that they will incur an operating cash flow deficit and operating losses in 2013 and subsequent years. EME may be~~ limited in the amount of capital it can contribute to Midwest Generation. ~~and~~Forward amarket ~~continuation~~prices ofindicate that these ~~adverse~~ trends ~~coupled~~are ~~with~~expected ~~the need~~ to ~~retrofit~~continue ~~the~~for ~~Midwest~~a ~~Generation~~number ~~plants~~of ~~to comply with governmental regulations will exhaust Midwest Generation's liquidity~~years. IfAs ~~cash~~a ~~flow and other means for assuring liquidity are unavailable or insufficient~~result, Midwest Generation ~~may~~expects ~~be unable~~ to ~~complete~~incur ~~environmental~~an ~~improvements~~operating atcash ~~its~~flow ~~coal~~deficit ~~plants (which in turn could lead to unit shutdowns) or its ability to provide credit support for contracts for power~~ and ~~fuel~~operating ~~related~~losses toin merchant activities may be severely limited. For further discussion of liquidity, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

2014 and subsequent years which, coupled with the need to retrofit the Midwest Generation plants to comply with governmental regulations, will exhaust its liquidity. If cash flow and other means for assuring liquidity are unavailable or insufficient, Midwest Generation may be unable to complete environmental improvements at its coal plants (which in turn could lead to unit shutdowns) or its ability to provide credit support for contracts for power and fuel related to merchant activities may be severely limited. For further discussion of liquidity, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

EME's and Midwest Generation's access to additional capital may be limited and restrictive covenants may adversely affect their operations.

EME's and Midwest Generation's access to the capital markets may be limited by, among other things, the Chapter 11 Cases, their non-investment grade credit ratings, their current operating losses, their long-term business prospects, and general conditions in the financial and credit markets. In addition, the urgency of a capital-raising transaction may require them to pursue additional capital at an inopportune time. They may not be successful in obtaining additional capital for these and other reasons. An inability to access capital when needed may limit their ability to meet their operating needs and, in turn, may have a material adverse effect in their financial condition, results of operation and cash flows.

EME and/or Midwest Generation may seek a debtor-in-possession credit facility (DIP Financing) which would be used to enhance liquidity and working capital and which would be subject to Bankruptcy Court approval and other conditions. There can be no assurance that DIP Financing will be obtained in a timely manner or on commercially competitive terms. It is possible that DIP Financing could impose restrictive covenants limiting the ability of EME, Midwest Generation, or both of them to operate their businesses, finance future operations and capital needs, and take advantage of potential opportunities.

EME and Midwest Generation may not have adequate liquidity to prepay obligations or post required amounts of additional collateral.

The Chapter 11 Cases will likely continue to result in requirements that EME and Midwest Generation either prepay obligations or post significant amounts of collateral in the form of cash, short-term investments, lien capacity, and letters of credit, to support their businesses. Their commodity agreements may require them to post additional collateral under certain circumstances, including, among others, changes in commodity prices for power and fuel. Increases in collateral requirements could strain EME's and Midwest Generation's liquidity and may have a material adverse effect on their financial condition, results of operations and cash flows.

EME ~~receives~~may ~~tax-allocation~~not ~~payments~~be ~~from~~able ~~EIX only~~ to ~~the~~monetize ~~extent that EME is included in the consolidated~~ tax ~~returns~~benefits ofthat ~~EIX,~~it ~~and~~has ~~a payment is due to EME under the mechanics of the intercompany tax-allocation agreements~~generated. ~~EME may be required to make tax-allocation payments to EIX.~~

Historically, EME's ~~right~~participated in tax-allocation agreements with EIX in which EME would be eligible to receive payments ~~under~~from ~~the~~EIX for tax~~-allocation~~ ~~agreements~~losses and ~~the~~credits ~~timing~~generated ~~and~~by ~~amount~~EME. ofAs ~~those~~a ~~payments~~result ~~are~~of ~~dependent~~losses onwithin the ~~inclusion~~EIX ofconsolidated ~~EME~~tax ingroup, ~~the~~EIX ~~consolidated~~has ~~income~~not fully utilized EME's tax ~~returns~~benefits. Further, as a result of ~~EIX~~the ~~and~~tax-allocation ~~other~~agreements ~~factors,~~being ~~including~~applied ~~the~~to ~~amount~~give ofpriority ~~consolidated~~to ~~taxable~~SCE ~~income~~generated ~~and~~tax ~~net~~benefits, ~~operating~~EIX ~~loss~~has ~~carryforwards~~not offully compensated EME for EME's tax benefits utilized by EIX. During 2012, ~~and~~EIX ~~other~~modified the tax-allocation ~~items~~agreements ofto terminate EME's ~~and~~participation ~~other~~on ~~subsidiaries~~December of31, ~~EIX~~2013.

~~During~~The ~~2012,~~parties to the ~~tax-allocation~~Settlement ~~agreements~~Agreement ~~were~~have ~~modified~~agreed tothat ~~provide~~EME will receive payment for ~~termination~~50% of the EME's ~~participation~~Tax onAttributes. ~~December 31~~If the Settlement Agreement is terminated, ~~2013.~~as ~~The~~a ~~Settlement~~result ~~Transaction~~of ~~contemplates~~the termination of the Acquisition Agreement or otherwise, then, as of January 1, 2014 benefits that had been previously generated by EME's ~~participation~~and utilized in the EIX consolidated tax return on a statutory basis but are unpaid under the tax-allocation agreements will not be available for use by EME in its own consolidated tax return and will not be paid by EIX. Additionally, tax benefits that had previously been generated by EME and not utilized in the EIX consolidated tax return on a statutory basis will generally be available for use by EME in its own consolidated return, but may be reduced by cancellation of indebtedness income (COD income) or as a result of the application of the consolidated return rules.

26For further discussion, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 7. Income Taxes."

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would be extended through the earlier of the effective date of EME's plan of reorganization and December 31, 2014. However, there can be no assurance that the Settlement Transaction will be consummated. Termination does not relieve any party of any obligations with respect to any tax year beginning prior to the year of termination. For further discussion, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Intercompany Tax-Allocation Agreement."

As a result of losses within the EIX consolidated tax group, EIX has not been able to fully utilize EME's tax benefits. Further, as a result of the tax-allocation agreements being applied to give priority to SCE generated tax benefits, EIX has not fully compensated EME for EME's tax benefits utilized by EIX. Future tax-sharing payments to EME under the tax-allocation agreements are dependent upon the future taxable income of EIX and its subsidiaries. EME does not control and has little visibility into the taxable income expected to be generated by EIX and its other subsidiaries prior to the expected separation of EME from the EIX consolidated tax group. Without objectively verifiable evidence supporting the taxable income forecast of the EIX consolidated tax group during 2013 and 2014, EME is not currently able to determine whether it is more likely than not that future tax-sharing payments will occur. As a result, as of December 31, 2012, EME recorded a valuation allowance against its net deferred tax assets of $444 million, of which $6 million was reflected in accumulated other comprehensive loss and $438 million in net loss for the year ended December 31, 2012. In addition, EME recorded a non-cash distribution to its parent of $222 million related to tax benefits generated by EME which have been utilized in the EIX consolidated tax return on a statutory basis for which, under the tax-allocation agreements as applied, EME is not yet, and may never be, entitled to be paid. For further discussion, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 7. Income Taxes."

EME is a holding company and may be limited in its ability to access funds from its subsidiaries to meet its obligations.

EME has no material assets other than the stock and other equity interests of its subsidiaries and depends upon dividends and other transfers of funds from its subsidiaries to meet its obligations. EME's subsidiaries are separate and distinct legal entities and have no obligation to provide EME with funds. The ability of EME's subsidiaries to pay dividends and make other payments to EME depends on their operating results and may be restricted by, among other things, applicable corporate and other laws, potentially adverse tax consequences, and restrictions contained in agreements entered into by the subsidiaries. If EME is unable to access the cash flow of its subsidiaries, it may have difficulty meeting its own obligations. For further discussion, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Dividend Restrictions in Major Financings."

The intercompany loan between Midwest Generation and EME will be subject to allowance or disallowance in the Chapter 11 Cases.

~~The~~If the Plan and the NRG Sale are consummated, the intercompany loan between Midwest Generation (as the lender) and EME (as the borrower) will be ~~subject~~canceled. toIf ~~allowance or disallowance as part of~~ the ~~claims~~NRG ~~reconciliation~~Sale ~~process~~does innot ~~the~~close, ~~Chapter 11 Cases. Any party in interest in~~ the ~~Chapter~~intercompany 11loan ~~Cases~~ will ~~have~~be ~~the~~subject ~~ability~~ to ~~object to any such claim. The~~ allowance ~~or disallowance of any claim arising under the intercompany loan could have a material impact on the recoveries of the creditors of the relative Debtor Entities.~~

or disallowance as part of the claims reconciliation process in the Chapter 11 Cases. Any party in interest in the Chapter 11 Cases will have the ability to object to any such claim. The allowance or disallowance of any claim arising under the intercompany loan could have a material impact on the recoveries of the creditors of the relevant Debtor Entities.

Regulatory and Environmental Risks

EME and Midwest Generation are subject to extensive environmental regulation and permitting requirements that may involve significant and increasing costs.

EME's and Midwest Generation's operations are subject to extensive and frequently changing environmental regulations with respect to, among other things, air quality, water quality and waste disposal, which involve significant and increasing costs and substantial uncertainty. ~~They~~EME and Midwest Generation are required to obtain, and comply with conditions established by, licenses, permits and other approvals in order to construct, operate or modify their facilities. Failure to comply with these requirements could subject them to civil or criminal liability, the imposition of liens or fines, or actions by regulatory agencies seeking to curtail operations of their projects. They may also be exposed to risks arising from past, current or future contamination at their former or existing facilities or ~~with~~arising ~~respect~~from to off-site waste disposal sites that have been used in their operations.

EME and Midwest Generation devote significant resources to environmental monitoring, emissions control equipment and emission allowances to comply with environmental regulatory requirements. ~~They~~and believe that they are currently in substantial compliance with environmental regulatory requirements. However, the US EPA has filed enforcement actions against Midwest Generation and Homer City alleging violations of the CAA and other regulations at the Midwest Generation plants and the Homer City plant previously owned by Homer City. For more detail with respect to these matters, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 9. Commitments and Contingencies."

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The current trend is toward more stringent standards, stricter regulation, and more expansive application of environmental regulations. The adoption of laws and regulations to implement CO₂ controls could adversely affect coal-fired power plants. Other environmental laws, particularly with respect to air emissions, disposal of ash, wastewater discharge and cooling water systems, are also generally becoming more stringent. The continued operation of EME's and Midwest Generation's facilities, particularly the Midwest Generation plants, is expected to require substantial capital expenditures for environmental controls. If EME and Midwest Generation cannot comply with all applicable regulations, they could be required to retire or suspend operations at some facilities, or restrict or modify the operations of facilities, and business, results of operations and financial condition could be adversely affected.

EME and Midwest Generation are required to surrender emission allowances equal to emissions of specific substances in connection with the operation of their facilities. This may require the purchase of allowances, which are subject to price volatility and which could be unavailable.

Typically, environmental laws require a lengthy and complex process for obtaining licenses, permits and approvals prior to construction, operation or modification of a project or generating facility. EME and Midwest Generation cannot provide assurance that they will be able to obtain and comply with all necessary licenses, permits and approvals for their plants. If there is a delay in obtaining required approvals or permits, or if they fail to obtain and comply with such permits, the operation of their facilities may be interrupted or become subject to additional costs.

The controls required at Midwest Generation's coal plants as a result of environmental regulations, including the CPS, are expected to require material expenditures.

Capital expenditures relating to required environmental controls for the Midwest Generation plants (including the CPS, to which all of Midwest Generation's coal-fired generating units are subject) are expected to be significant. Midwest Generation voluntarily shut down coal-fired operations at the Fisk and Crawford Stations in August of 2012 and may ultimately decide to shut down other units rather than install controls. Unit shutdowns could have an adverse effect on EME's and Midwest Generation's businesses, results of operation and financial condition. For more information about environmental compliance plans, see "Item 1. Business—Environmental Matters and Regulations—Air Quality—Nitrogen Oxide and Sulfur Dioxide," "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Edison Mission Energy Overview—Midwest Generation Environmental Compliance Plans and Costs," "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates and Policies—Impairment of Long-Lived Assets" and "Item 8. Combined Notes to Consolidated Financial Statements—Note 10. Environmental Developments."

EME and Midwest Generation are subject to extensive energy industry regulation.

EME's and Midwest Generation's operations are subject to extensive regulation by governmental agencies. EME's and Midwest Generation's projects are subject to federal laws and regulations that govern, among other things, transactions by and with purchasers of power, including utility companies, the development and construction of generation facilities, the ownership and operation of generation facilities, and access to transmission. Generation facilities are also subject to federal, state and local laws and regulations that govern, among other things, the geographical location, zoning, land use and operation of a project. EME and Midwest Generation must obtain and periodically renew licenses, permits and approvals for facilities in the course of business. The FERC may impose various forms of market mitigation measures, including price caps and operating restrictions, where it determines that potential market power might exist and that the public interest requires mitigation. RTOs and ISOs may impose bidding and scheduling rules, both to curb the potential exercise of market power and to facilitate market functions. Such actions may materially affect EME's and Midwest Generation's results of operations. The facilities are also subject to mandatory reliability standards promulgated by NERC, compliance with which can increase the facilities' operating costs or capital expenditures.

This extensive governmental regulation creates significant risks and uncertainties for EME's and Midwest Generation's businesses. Existing regulations may be revised or reinterpreted and new laws and regulations may be adopted or become applicable to their facilities or operations in a manner that may have a detrimental effect on their businesses or result in significant additional costs.

The generation and transmission of electricity are dangerous and involve inherent risks of injury to employees and the general public.

Electricity and the facilities that produce and transmit it ~~are~~can be dangerous for employees and the general public. Injuries caused by such facilities can subject EME or Midwest Generation to liabilities that, despite the existence of insurance coverage, can be significant but are also very difficult to predict. The range of possible liabilities includes amounts that could adversely affect EME's and Midwest Generation's liquidity and results of operations.

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Market Risks

EME and Midwest Generation have substantial interests in merchant energy power plants which are subject to market risks related to wholesale energy prices. Wholesale energy prices have substantially declined in recent years.

EME's merchant energy power plants, including the Midwest Generation plants, do not have long-term power purchase agreements. Consequently, these projects are subject to market forces which determine the amount and price of energy, capacity and ancillary services sold from the power plants. Unlike most other commodities, electric power can be stored economically only on a very limited basis and generally must be produced when it is to be used. As a result, the wholesale power markets are subject to significant and unpredictable price fluctuations over relatively short periods of time. Due to the volume of sales into PJM from the Midwest Generation plants, EME and Midwest Generation have concentrated exposure to market conditions and fluctuations in PJM. The prices at which the Midwest Generation plants can sell their power and capacity have declined significantly due largely to lower priced natural gas which supplies power plants that compete with the Midwest Generation plants, the increased use of demand response technology, and changes in final demand for power during the economic slowdown.

Market prices of energy, capacity and ancillary services sold from these power plants are influenced by multiple factors beyond the control of EME and Midwest Generation, and thus there is considerable uncertainty whether or when current depressed prices will recover. Hedging activities may not cover the entire exposure of their assets or positions to market price volatility, and the level of coverage will vary over time. The effectiveness of hedging activities may depend on the amount of credit available to post collateral, either in support of performance guarantees or as cash margin, and liquidity requirements may be greater than anticipated or difficult to meet. There is no assurance that EME's and Midwest Generation's hedging strategies will successfully mitigate market risks. For more detail with respect to these matters, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Risk Exposures—Commodity Price Risk."

EME's and Midwest Generation's financial results can be affected by changes in prices, transportation cost, and supply interruptions related to fuel, sorbents, and other commodities used for power generation and emission controls.

In addition to volatile power prices, EME's and Midwest Generation's businesses are subject to changes in the cost of fuel, transportation, sorbents, and other commodities used for power generation and emission controls~~, and in the cost of transportation~~. These costs can be volatile and are influenced by many factors outside EME's and Midwest Generation's control. The price at which energy can be sold may not rise or fall at the same rate as a corresponding rise or fall in commodity costs. Operations at the Midwest Generation plants are dependent upon the availability and affordability of coal which is available only from a limited number of suppliers and is transported by rail under a multi-year, long-term transportation contract. All of these factors may have an adverse effect on EME's and Midwest Generation's financial condition and results of operations. For additional information, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Risk Exposures—Coal Price Risk."

plants are dependent upon the availability and affordability of coal which is available only from a limited number of suppliers and is transported by rail under a multi-year, long-term transportation contract. All of these factors may have an adverse effect on EME's and Midwest Generation's financial condition and results of operations. For additional information, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Risk Exposures—Coal Price Risk."

Competition could adversely affect EME's and Midwest Generation's businesses.

EME and Midwest Generation have numerous competitors in all aspects of their businesses, some of whom may have greater liquidity, greater access to credit and other financial resources, lower cost structures, greater ability to withstand losses, larger staffs or more experience. Multiple participants in the wholesale markets, including many regulated utilities, have a lower cost of capital than most merchant generators and often are able to recover fixed costs through rate base mechanisms, allowing them to build, buy and upgrade generation assets without relying exclusively on market clearing prices to recover their investments. These factors could affect EME's and Midwest Generation's ability to compete effectively in the markets in which those entities operate. Newer plants owned by competitors are often more efficient than the Midwest Generation plants and some of EME's older facilities and may also have lower costs of operation. Over time, some merchant facilities may become obsolete in their markets, or be unable to compete with such plants.

Operating Risks

EME's and Midwest Generation's capital projects may not be successful.

EME's and Midwest Generation's capital projects are subject to risks including, without limitation, risks related to financing, construction, permitting, and governmental approvals. Significant expenditures may be required before a project is determined to be feasible or economically attractive. The timing of such projects may be delayed beyond the date that equipment is ready for installation, in which case they may be required to incur material equipment and/or material costs with no deployment plan at delivery.

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EME's and Midwest Generation's projects may be affected by general operating risks and hazards customary in the power generation industry, and there may not be adequate insurance to cover all these hazards.

The operation of power generation facilities is a potentially dangerous activity that involves many operating risks, including transmission disruptions and constraints, equipment failures or shortages, and system limitations, degradation and interruption. EME's and Midwest Generation's operations are also subject to risks of human performance and workforce capabilities. There can be no assurance that their insurance will be sufficient or effective under all circumstances or protect against all hazards to which they may be subject or that insurance coverage will continue to be available on terms similar to those presently available, or at all. The Midwest Generation plants are older facilities that are subject to higher risks of failure or outage, and EME has experienced serial defects in certain models of wind turbines deployed at its wind projects.

EME and Midwest Generation may be unable to retain and attract skilled personnel.

Uncertainties concerning the Chapter 11 Cases could affect EME's and Midwest Generation's ability to retain and attract qualified personnel with necessary applicable experience. If they are unable to successfully retain and attract an appropriately qualified workforce, their results of operations will be negatively affected.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

EME's and Midwest Generation's power generation and ancillary facilities are described in "Item 1. Business—Overview of EME Facilities" and "Merchant Power Plants—Midwest Generation Plants," respectively. Most of these properties are subject to mortgages or other liens or encumbrances granted to the lenders providing financing for the plant or project.

EME leases its principal office in Santa Ana, California. The office lease is currently for approximately 8571,000 square feet and expires on December 31, 2020. EME also leases office space in Chicago, Illinois; Bolingbrook, Illinois; and Boston, Massachusetts. The Chicago lease is for approximately 8,000 square feet and expires on November 30, 2016. The Bolingbrook lease is for approximately 20,000 square feet and expires on ~~March 31~~June 30, 2014. The Boston lease is for approximately 35,000 square feet and expires on September 30, 2017. Some of the leases contain extension and/or early termination options.

ITEM 3. LEGAL PROCEEDINGS

For a discussion of the material legal proceedings specifically affecting EME and Midwest Generation, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 9. Commitments and Contingencies."

ITEM 4. MINE SAFETY DISCLOSURES (EME only)

Under the Dodd-Frank Act, each operator of a coal or other mine is required to include certain mine safety results within its periodic reports filed with the Securities and Exchange Commission. In accordance with the reporting requirements included in Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K, the required mine safety results regarding certain mining safety and health matters are discussed below and are detailed further in Exhibit 95 included in this annual report.

Ambit, in which EME has a 50% indirect ownership interest, is an operator of coal mines that are subject to the Federal Mine Safety and Health Act of 1977 (the Mine Act). On July 10, 2012, Ambit was issued Citation Number 7103676 for excessive dust conditions on a haul road at its Barrackville site. The citation was issued as Significant & Substantial under Section 104 of the Mine Act and was issued directly to Ambit under its MSHA Mine ID Number (46-08264). The proposed penalty was one hundred dollars.

~~Table~~ITEM of4. ~~Contents~~MINE SAFETY DISCLOSURES (EME only)

None.

PART II


ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

EME

~~All~~As of the ~~outstanding~~date ~~common~~hereof, ~~stock~~100 shares of ~~EME~~the ~~is,~~outstanding ascommon stock of ~~the~~EME ~~date~~are ~~hereof,~~ owned by Mission Energy Holding Company, which is a wholly owned subsidiary of Edison Mission Group Inc., a wholly owned subsidiary of EIX. There is no market for EME's common stock. Dividends on EME's common stock are paid when declared by EME's board of directors. EME did not pay or declare any dividends during ~~2012~~2013, ~~2011~~2012 and ~~2010~~2011. For more information about dividend restrictions, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Dividend Restrictions in Major Financings" and "Item 8. Combined Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."

Midwest Generation

Midwest Generation is wholly owned by Edison Mission Midwest Holdings Co., which is an indirect wholly owned subsidiary of EME. There is no market for Midwest Generation's membership interest.

Distributions on the membership interest will be paid when declared by Midwest Generation's board of managers. Midwest Generation paid cash distributions to Edison Mission Midwest Holdings totaling $225 ~~million~~ ~~in 2011 and $125~~ million in ~~2010~~2011. No cash distributions were made by Midwest Generation in 2013 and 2012. For more information about distributions and restrictions on distributions, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Midwest Generation Equity Distributions and Tax Payments" and "—Dividend Restrictions in Major Financings."

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ITEM 6. SELECTED FINANCIAL DATA

EME

The following selected financial data was derived from EME's audited financial statements and is qualified in its entirety by the more detailed information and financial statements, including notes to the financial statements, included in this annual report. Beginning in the third quarter of 2012, Homer City met the definition of a discontinued operation and all previously issued financial statements have been restated to reflect discontinued operations reported subsequent to the original issuance date.

	Years Ended December 31,
(in millions)	~~2012~~2013			~~2011~~2012			~~2010~~2011			~~2009~~2010			~~2008~~2009
INCOME STATEMENT DATA
Operating Revenues	$	1,~~287~~331		$	1,~~653~~287		$	1,~~788~~653		$	1,~~715~~788		$	21,~~095~~715
Operating Expenses1	1,~~615~~910			21,~~351~~615			12,~~594~~351			1,~~511~~594			1,~~441~~511
Operating income (loss)	(~~328~~579		)	(~~698~~328		)	~~194~~(698		)	~~204~~194			~~654~~204
Income (loss) from continuing operations before reorganization items and income taxes	(~~594~~615		)	(~~888~~594		)	65(888		)	3265			~~537~~32
Reorganization items	43			—			—			—			—
Reorganization items, net	120			43			—			—			—
Provision (benefit) for income taxes	~~160~~(93		)	~~(441~~160		)	(16441		)	(6016		)	~~167~~(60		)
Income (loss) from continuing operations	(~~797~~642		)	(~~447~~797		)	81(447		)	9281			~~370~~92
Income (loss) from operations of discontinued subsidiaries, net of tax	~~(112~~1		)	(~~632~~112		)	82(632		)	~~102~~82			~~131~~102
Net Income (Loss)	(~~909~~641		)	(~~1,079~~909		)	~~163~~(1,079		)	~~194~~163			~~501~~194
Net (Income) Loss Attributable to Noncontrolling Interests	(1629		)	1(16		)	1			31			—3
Net Income (Loss) Attributable to EME Common Shareholder	$	(~~925~~670	)	$	(~~1,078~~925	)	$	~~164~~(1,078	)	$	~~197~~164		$	~~501~~197

1 Operating expenses inincluded ~~2012~~asset ~~and~~impairment ~~2011~~charges ~~included~~of $466 million, $15 million, $704 million and $~~704~~40 million ofin ~~asset~~2013, ~~impairment~~2012, ~~charges~~2011 and 2010, respectively. For additional information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 13. Asset Impairments and Other Charges."

	December 31,
(in millions)	~~2012~~2013			~~2011~~2012		~~2010~~2011		~~2009~~2010		~~2008~~2009
BALANCE SHEET DATA
Current assets	$	1,~~323~~535		$	1,~~941~~323	$	1,~~579~~941	$	1,~~554~~579	$	21,~~439~~554
Total assets	76,~~520~~973			87,~~323~~520		98,~~321~~323		89,~~633~~321		98,~~080~~633
Current liabilities	~~820~~529			~~548~~820		~~497~~548		~~557~~497		~~668~~557
Long-term debt net of current portion	749			4,855		4,342		3,929		4,638
Liabilities subject to compromise	4,015			3,959		—		—		—
Liabilities subject to compromise	3,959			—		—		—		—
Long-term debt net of current portion	1,171			749		4,855		4,342		3,929
Total EME common shareholder's equity	444			1,662		2,817		2,761		2,684
Total EME common shareholder's equity (deficit)	(121		)	444		1,662		2,817		2,761

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Midwest Generation

The following selected financial data was derived from Midwest Generation's audited financial statements and is qualified in its entirety by the more detailed information and financial statements, including the notes to the financial statements, included in this annual report.

	Years Ended December 31,
(in millions)	~~2012~~2013			~~2011~~2012			~~2010~~2011			~~2009~~2010		~~2008~~2009
INCOME STATEMENT DATA
Operating revenues from marketing affiliate	$	~~892~~817		$	~~1,286~~892		$	1,~~479~~286		$	1,~~487~~479	$	1,~~778~~487
Operating expenses1	21,~~489~~403			12,~~802~~489			1,~~191~~802			1,~~117~~191		1,~~068~~117
Operating income (loss)	(~~1,597~~586		)	(~~516~~1,597		)	~~288~~(516		)	~~370~~288		~~710~~370
Interest and other income	77			74			69			55		50
Total other income (expense)	(23		)	77			74			69		55
Income (loss) before reorganization items and income taxes	(~~1,520~~609		)	(~~442~~1,520		)	~~357~~(442		)	~~425~~357		~~760~~425
Reorganization items	6			—			—			—		—
Reorganization items, net	41			6			—			—		—
Provision (benefit) for income taxes	(6217		)	(~~172~~62		)	~~142~~(172		)	~~166~~142		~~283~~166
Net income (loss)	$	(~~1,464~~633	)	$	(~~270~~1,464	)	$	~~215~~(270	)	$	~~259~~215	$	~~477~~259

¹Operating expenses included asset impairment charges of $466 million, $640 million and $40 million in 2013, 2011 and 2010, respectively. Operating expenses in 2012 included a $1.4 billion charge for a valuation allowance on Midwest Generation's note receivable from EME. For additional information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 13. Asset Impairments and Other Charges" and "—Note 15. Related Party Transactions."

1 Operating expenses in 2012 included a $1.4 billion charge for a valuation allowance on Midwest Generation's note receivable from EME. For additional information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 15. Related Party Transactions." Operating expenses in 2011 included asset impairment charges of $640 million. For additional information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 13. Asset Impairments and Other Charges."



	December 31,
(in millions)	2013		2012		2011		2010		2009
BALANCE SHEET DATA
Current assets	$	273	$	322	$	610	$	680	$	677
Total assets	1,806		2,428		4,190		4,942		5,063
Current liabilities	91		41		239		263		333
Liabilities subject to compromise	540		529		—		—		—
Lease financings, net of current portion	—		2		439		556		665
Other long-term obligations	113		190		243		345		320
Member's equity	1,062		1,666		3,269		3,778		3,745

	December 31,
(in millions)	2012		2011		2010		2009		2008
BALANCE SHEET DATA
Current assets	$	322	$	610	$	680	$	677	$	1,193
Total assets	2,428		4,190		4,942		5,063		5,711
Current liabilities	41		239		263		333		380
Long-term debt	—		—		—		—		475
Lease financings, net of current portion	2		439		556		665		785
Liabilities subject to compromise	529		—		—		—		—
Other long-term obligations	190		243		345		320		296
Member's equity	1,666		3,269		3,778		3,745		3,775

Table of Contents


ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EDISON MISSION ENERGY OVERVIEW

Highlights of Operating Results

~~Net~~The following table reconciles net loss attributable to the EME common shareholder ison ~~composed~~EME's consolidated statements of ~~the~~operations ~~following~~to ~~components~~earnings before interest, taxes, depreciation and amortization, as adjusted for certain items discussed below (Adjusted EBITDA):

	Years EndedDecember 31,									Year EndedDecember 31,~~2010~~2011
(in millions)	~~2012~~2013			~~2011~~2012			Change
Net income (loss) attributable to EME common shareholder	$	(925	)	$	(1,078	)	$	153		$	164
Net loss attributable to EME common shareholder	$	(670	)	$	(925	)	$	255		$	(1,078	)
Less: Non-Core Items - Net of Tax
Depreciation and amortization	271			268			3			289
Asset impairments and other charges
Net interest expense	89			324			(235		)	321
Midwest Generation plants	—			(386		)	386			—
Loss on early extinguishment of debt	3			—			3			—
Wind projects and other charges	—			(41		)	41			—
Asset impairments and other charges1	464			28			436			714
Ambit project	(9		)	—			(9		)	—
Reorganization items, net	120			43			77			—
Write-off of capitalized costs	—			—			—			(24		)
Restructuring costs2	7			—			7			—
Gain on sale of March Point	—			5			(5		)	—
Provision (benefit) for income taxes3	(13		)	230			(243		)	(375		)
Settlement of tax disputes	—			—			—			16
Gain on sale of investments4	—			—			—			(8		)
Tax valuation allowance	(438		)	—			(438		)	—
Loss (income) from discontinued operations, net of tax	(1		)	112			(113		)	632
Reorganization items	(25		)	—			(25		)	—
Adjusted EBITDA	$	270		$	80		$	190		$	495
Income (loss) from discontinued operations	(112		)	(632		)	520			82
Total non-core items	(584		)	(1,054		)	470			74
Core Earnings (Loss)	$	(341	)	$	(24	)	$	(317	)	$	90

~~EME's~~1 ~~earnings~~For ~~(loss)~~additional isinformation ~~prepared~~see in"Item ~~accordance with United States generally accepted accounting principles (GAAP)~~8. ~~Management~~Combined ~~uses~~Notes ~~core earnings (loss) internally for financial planning and for analysis of performance and when communicating with external stakeholders regarding EME's earnings results~~ to ~~facilitate~~Consolidated ~~comparisons~~Financial ofStatements—Note ~~EME's performance from period to period~~13. ~~Core~~Asset ~~earnings~~Impairments ~~(loss) is a non-GAAP financial measure~~ and ~~may~~Other ~~not be comparable to those of other companies~~Charges. Core earnings (loss) is defined as net income (loss) attributable to EME's shareholder excluding income (loss) from discontinued operations and income or loss from significant discrete items that management does not consider representative of ongoing earnings such as: exit activities, sale of assets, early debt extinguishment costs, other activities that are no longer continuing, asset impairments, reorganization items, and certain tax, regulatory or legal proceedings. "

~~EME's~~2 ~~core~~For ~~loss~~additional ininformation ~~2012~~see ~~increased~~"Item ~~compared~~8. Combined Notes to ~~2011~~Consolidated ~~primarily~~Financial ~~due~~Statements—Note to16. ~~the~~Restructuring ~~following~~Activities—Cost ~~pre-tax~~Reduction ~~items:~~Activities."

•3 ~~$351~~Provision ~~million~~(benefit) ~~increase~~for inincome ~~loss~~taxes ~~from~~excludes the ~~Midwest~~impact ~~Generation~~of ~~plants~~production ~~primarily~~tax ~~attributable~~credits ~~to lower capacity~~ and ~~average~~includes ~~realized~~changes ~~energy~~in ~~prices,~~the ~~reduced~~valuation ~~generation~~allowance. ~~and~~For ~~higher~~additional ~~fuel prices~~information, ~~partially~~see ~~offset~~"Item by8. ~~lower~~Combined ~~planned~~Notes ~~maintenance~~to ~~costs~~Consolidated ~~and~~Financial ~~lower~~Statements—Note ~~depreciation~~7. Income Taxes."

•4 ~~$24~~Reflects ~~million decrease in~~ the ~~results~~sale of ~~Sunrise~~March ~~due~~Point toin ~~the transition from sales under a long-term power purchase agreement to merchant operations;~~2011.

•Adjusted ~~$15~~EBITDA ~~million~~is ~~decrease~~equal to net income (loss) under generally accepted accounting principles in the ~~results~~United States of America (GAAP) before net interest expense, income tax expense (benefit), depreciation and amortization, adjusted to include the ~~Big~~impact 4of ~~Projects~~production tax credits and exclude the ~~Westside~~impact ~~Projects~~of ~~due~~discontinued tooperations, ~~lower~~gain (loss) on sale of assets, gain (loss) on early extinguishment of debt and leases, impairment of assets and investments, restructuring costs, and reorganization items. Production tax credits are recognized as wind energy ~~margins~~is ~~resulting~~generated ~~from~~based ~~lower~~on ~~natural~~a ~~gas~~per-kilowatt-hour ~~prices~~rate prescribed in ~~2012~~applicable federal and ~~due~~state tostatutes. This non-GAAP financial measure reflects an additional ~~revenue~~way inof ~~2011~~viewing ~~from~~EME's abusiness ~~CPUC-approved~~and ~~settlement~~augments ~~that~~the ~~provided~~understanding ~~for~~of ~~price~~facts ~~adjustments~~and ~~for~~trends ~~energy~~affecting ~~sold~~the ~~prior~~business. This non-GAAP financial measure should not be relied upon to the ~~settlement~~exclusion asof ~~discussed~~GAAP infinancial ~~"Item~~measures 1.and ~~Business—Contracted~~may ~~Power~~not ~~Plants–Domestic—Natural~~be ~~Gas";~~comparable to those of other companies' non-GAAP financial measures having the same or similar names.

• $15 million lower income from distributions received from Doga;

Table of Contents

• $8 million decrease in energy trading due to lower revenues from trading power and PJM congestion contracts;

• $4 million increase in interest expense primarily due to new project financings, partially offset by the cessation of interest accrual on EME's unsecured senior notes upon the filing of the Chapter 11 Cases; and

• $12 million decrease in renewable energy income attributable to income allocated to outside investors in Capistrano Wind Partners partially offset by income from projects that achieved commercial operations in the second half of 2011 and 2012.

EME had a core loss in 2011 compared to core earnings in 2010 primarily due to the following pre-tax items:

• $206 million decrease in income from the Midwest Generation plants primarily due to lower average realized energy and capacity prices and generation;

• $60 million increase in interest expense due to new energy project financings ($33 million) and lower capitalized interest ($27 million);

• $36 million decrease in energy trading due to reduced revenues from trading power contracts and the allocation to Homer City of benefits from an arrangement that allowed EMMT to deliver a portion of Homer City's power into the New York Independent System Operator (NYISO); and

• The decrease was partially offset by an $18 million increase in renewable energy income due to the increase in wind projects in operation coupled with higher generation due to more favorable wind conditions, partially offset by lower realized energy prices at the merchant wind projects.

Non-core items in 2012 included:

• An earnings charge of $438 million resulting from the tax valuation allowance recorded in the fourth quarter of 2012;

• Classification of $112 million loss as discontinued operations, primarily related to Homer City , including an after-tax earnings charge of $53 million ($89 million pre-tax) to reflect the ultimate carrying value of assets and liabilities transferred to an affiliate of GECC;

• An after-tax earnings charge of $25 million ($43 million pre-tax) related to reorganization items recorded in the fourth quarter of 2012 due to the filing of the Chapter 11 Cases; and

• An after-tax earnings charge of $9 million ($15 million pre-tax) recorded in the fourth quarter of 2012 resulting from the recognition of an impairment of Ambit.

Non-core items in 2011 included:

• Classification of $632 million loss as discontinued operations, primarily related to Homer City, including an after-tax earnings charge of $623 million ($1,032 million pre-tax) recorded in the fourth quarter of 2011 resulting from the write-off of prepaid rent and leasehold improvements related to the Homer City lease;

• An after-tax earnings charge of $386 million ($640 million pre-tax) recorded in the fourth quarter of 2011 resulting from the impairment of the Fisk, Crawford and Waukegan Stations;

• An after-tax earnings charge of $18 million ($30 million pre-tax) recorded in the fourth quarter of 2011 related to the write-down of five wind projects, totaling 158 MW of generating capacity;

• An after-tax earnings charge of $23 million ($36 million pre-tax) in 2011 resulting primarily from EME's decision to reduce its development pipeline and ongoing development activities; and

• An after-tax earnings benefit of $5 million in 2011 from the sale of the March Point project.

Management's Overview

During 2012, EME and Midwest Generation experienced operating losses due to low realized energy and capacity prices, high fuel costs and low generation at the Midwest Generation plants. These operating losses are a continuation of trends initially experienced in the fourth quarter of 2011. A continuation of these adverse trends coupled with pending debt maturities and the need to retrofit its Midwest Generation plants to comply with governmental regulations were expected to exhaust EME and Midwest Generation's liquidity. Consequently, on December 17, 2012, the Debtor Entities filed the Chapter 11 Cases. The Debtor Entities remain in possession of their property and continue their business operations uninterrupted as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. Other than the Debtor Entities, none of EME's other direct or indirect subsidiaries is a debtor in the Chapter 11 Cases.

Following extensive discussions with certain of the Noteholders and EIX regarding EME's financial condition, in December 2012, EME entered into the Support Agreement with these parties that, pursuant to a plan of reorganization and pending court approval, would transition EIX's equity interest to EME's creditors, retire existing public debt, and enhance EME's access to

~~Table~~ The following table shows the Adjusted EBITDA of ~~Contents~~EME's projects:

liquidity. Under the Support Agreement, each party agrees to support Bankruptcy Court approval of certain transactions. In addition, the Support Agreement contemplates that EME will seek authority to enter into the Settlement Transaction. Under the Settlement Transaction, among other things:



	Years Ended December 31,
(in millions)	2013			2012			2011
Midwest Generation plants	$	(72	)	$	(152	)	$	225
Renewable energy projects	152			143			144
Energy trading¹	77			66			74
Walnut Creek	71			(2		)	(1		)
Big 4 Projects²	45			36			44
Sunrise²	(7		)	8			32
Doga²	6			11			26
Westside Projects²	6			—			7
Other projects	8			16			15
	$	286		$	126		$	566
Corporate administrative and general	(96		)	(115		)	(137		)
Production tax credits	80			69			66
Adjusted EBITDA	$	270		$	80		$	495

•1 ~~Certain~~Adjusted ~~claims~~EBITDA ~~between~~for ~~EME,~~energy ~~EIX,~~trading ~~and~~does ~~the~~not ~~Noteholders~~include ~~who~~administrative ~~have~~and ~~signed~~general ~~the~~costs, ~~Support~~which ~~Agreement~~are ~~would~~included bein ~~released~~corporate ~~prior~~administrative toand ~~the~~general ~~effective date of a plan of reorganization, subject~~ to ~~the~~calculate ~~parties~~consolidated ~~continuing~~Adjusted ~~performance of their obligations under the Support Agreement;~~EBITDA.

•2 ~~The~~Adjusted ~~application~~EBITDA ofis ~~the~~equal ~~Edison Mission Group and Mission Energy Holding Company tax-allocation agreements~~ to ~~EME~~equity ~~would~~in beincome ~~extended~~(loss) ~~through~~from ~~the~~unconsolidated ~~earlier of the effective date of a plan of reorganization with respect to EME or December 31, 2014;~~affiliates.

~~• EIX would cease to own~~ EME's ~~when~~Adjusted ~~EME~~EBITDA ~~emerges~~in ~~from~~2013 ~~bankruptcy~~increased ~~pursuant~~compared to a2012 ~~plan~~primarily ofdue ~~reorganization;~~to ~~and~~the following:

• ~~Upon~~$80 ~~effectiveness~~million ofincrease ain ~~plan~~results offrom ~~reorganization~~the ~~with~~Midwest ~~respect~~Generation plants primarily attributable to ~~EME,~~lower ~~EIX~~plant ~~would~~operations ~~assume~~and ~~approximately~~support ~~$200~~fuel ~~million~~costs ofpartially ~~EME's~~offset ~~employee~~by ~~retirement~~lower ~~related~~capacity ~~liabilities.~~revenues;

~~Under~~• $73 million increase in results from Walnut Creek which achieved commercial operation in the ~~Support~~second ~~Agreement,~~quarter ~~among~~of ~~other~~2013 ~~things:~~and began selling power under its power purchase agreement with SCE in June 2013;

• ~~EME~~$20 ~~will~~million ~~pay~~increase in the ~~reasonable~~results ~~and~~of ~~documented~~the ~~fees~~renewable ~~and~~energy ~~expenses~~projects ofprimarily attributable to the ~~professional~~results ~~advisors~~of toBroken ~~the~~Bow ~~Noteholders~~I and Crofton Bluffs wind projects that achieved commercial operation in ~~connection~~the ~~with~~fourth quarter of 2012, and higher generation and merchant pricing at Big Sky and Goat Wind projects, partially offset by higher plant operations costs at the ~~Settlement~~High ~~Transaction~~Lonesome wind project and income allocated to outside investors of Capistrano Wind Partners;

• ~~EME~~$19 ~~will~~million ~~consult~~decrease ~~with~~in ~~the~~corporate ~~professional~~administrative ~~advisors~~and togeneral ~~the~~expenses ~~Noteholders~~due ~~regarding~~to ~~material~~lower ~~decisions~~departmental ~~during~~spending ~~the~~and ~~pendency~~a ofreduction ~~its~~in ~~Chapter~~shared 11services ~~Cases;~~charges ~~and~~from EIX;

• ~~EME~~$11 ~~agrees~~million toincrease ~~seek~~in ~~the~~energy ~~reasonable~~trading ~~consent~~income ofprimarily ~~the~~attributable ~~Noteholders~~ to ~~make~~higher ~~material~~power ~~capital~~and ~~expenditures~~natural orgas ~~payments~~trading ~~with~~revenues ~~respect to the Powerton Station~~ and ~~Units~~marketing 7service ~~and 8 of Joliet Station~~fees, ~~which~~partially ~~are~~offset ~~facilities~~by ~~subject~~lower torevenues ~~the~~from ~~Powerton~~congestion ~~and Joliet Sale Leaseback.~~contracts;

~~Prior~~• to$9 ~~the~~million ~~consummation~~increase ofin the ~~Settlement~~results ~~Transaction~~of ~~and~~ the ~~releases~~Big ~~contained~~4 ~~therein,~~Projects ~~EME~~due ~~may~~to ~~terminate~~higher ~~the~~energy ~~Support~~margin ~~Agreement~~at Watson and ~~consider~~Sycamore ~~any alternative transaction. If the Settlement Transaction~~ and ~~release~~a ~~described~~property ~~above~~tax isrefund ~~not~~at ~~approved~~Watson; ~~by July 15, 2013, the Support Agreement is subject to termination.~~ and

~~The~~• filing of the Chapter 11 Cases constitutes events of default of Midwest Generation's obligations under the Powerton and Joliet Sale Leaseback, and under instruments governing the Senior Lease Obligation Bonds issued to finance these leases. On December 16, 2012, EME and Midwest Generation entered into a forbearance agreement with the Powerton and Joliet leases' owner-lessors, the owner-lessors' equity owners, and approximately 72 percent of the holders of the Senior Lease Obligation Bonds. Under the terms of the agreement, the parties agreed to forbear from exercising certain rights and remedies for 60 days. Under the terms of the agreement, Midwest Generation did not make the scheduled payments of $76 6 million onincrease ~~January 2,~~in ~~2013 but on February 15, 2013, did pay~~ the ~~ratable~~results ~~portion~~ of ~~the~~Westside ~~rent~~Projects ~~due~~primarily ~~under the leases~~ attributable to ~~the~~higher ~~period~~energy ~~between December 17~~margin, ~~2012~~partially ~~and~~offset ~~January 2, 2013 of $7 million. On February 28, 2013, the parties agreed to extend the forbearance agreement until the earlier of April 5, 2013 or notice of withdrawal from the agreement~~ by ~~approximately~~higher ~~60 percent~~fuel ofcosts ~~the holders of the Senior Lease Obligation Bonds. The Chapter 11 Cases may also constitute events of default under the $191 million nonrecourse financing of the Wildorado, San Juan Mesa~~ and ~~Elkhorn~~operating ~~Ridge wind projects (the Viento II Financing) and the $69 million nonrecourse financing of the High Lonesome wind project~~expenses. Short-term forbearance agreements have been executed with the lenders and the EME subsidiary borrowers to these financing agreements and, as a result, the EME subsidiaries that have obligations pursuant to these financings are currently not included in the Chapter 11 Cases. The Chapter 11 Cases could also potentially give rise to counterparty rights and remedies under other documents.

The filing of the Chapter 11 Cases has implications to the future ability of EME to collect tax-allocation payments. Historically, EME participated in tax-allocation agreements with EIX in which EME would be eligible to receive tax sharing payments for tax losses and credits generated by EME. During 2012, the tax-allocation agreements were modified to provide for termination of EME's participation on December 31, 2013. ~~The~~increase ~~Settlement Transaction contemplates that EME's participation~~ in ~~the~~Adjusted ~~tax-allocation~~EBITDA ~~agreements~~was ~~would~~partially beoffset extended through the earlier of the effective date of EME's plan of reorganization and December 31, 2014. However, there can be no assurance that the Settlement Transaction will be consummated. Upon EME's exit from the EIX consolidated tax group, or if the tax-allocation agreements terminate or expire, tax benefits that had previously been generated by ~~EME and not utilized in~~ the EIX consolidated tax return on a statutory basis will generally be available for use by EME in its own consolidated tax return, but may be reduced as a result of cancellation of indebtedness income (COD income) or as a result of the application of the consolidated return rules. Use of such tax benefits may also further be limited upon emergence from bankruptcy as a result of the application of limitations in sections 382 or 383 of the Internal Revenue Code if there is a change of ownership of EME. Further, upon EME's exit from the EIX consolidated tax group or if the tax-allocation agreements terminate or expire, tax benefits that had been previously generated by EME and utilized in the EIX consolidated tax return on a statutory basis but are unpaid under the application of the tax-allocation agreements will not be available for use by EME in its own consolidated tax return and will not be payable following:


•	$15 million decrease in the results of the Sunrise project primarily due to lower generation and lower merchant prices; and


•	$5 million decrease attributable to lower distributions received from the Doga project.

EME's Adjusted EBITDA in 2012 decreased compared to 2011 primarily due to the following:


•	$377 million decrease in results from the Midwest Generation plants primarily attributable to lower capacity and average realized energy prices, reduced generation and higher fuel prices, partially offset by lower planned maintenance costs;


•	$24 million decrease in the results of the Sunrise project due to lower revenues as the project transitioned to merchant generation;


•	$15 million decrease in the results of the Big 4 Projects and the Westside Projects due to lower energy margins resulting from lower natural gas prices in 2012 and due to additional revenue in 2011 from a CPUC-approved settlement that

~~Table~~provided offor ~~Contents~~price adjustments for energy sold prior to the settlement as discussed in "Item 1. Business—Contracted Power Plants—Natural Gas - Cogeneration";

~~under~~• ~~the tax-allocation agreements. At December 31, 2012, under the tax-allocation agreements as applied, EME is not yet, and may never be, entitled to be paid for either the approximately~~ $~~102~~ 15 million ofdecrease ~~tax benefits generated by EME which have been utilized~~ in ~~the~~distributions ~~EIX~~received ~~consolidated~~from ~~tax return on a statutory basis or~~ the ~~$120 million~~Doga ofproject ~~payments~~compared ~~EME has made without a corresponding statutory tax requirement. In addition, EME is not yet, and may never be, entitled~~ to be2011 ~~paid~~due for the approximately $1,071 million of tax benefits generated by EME which have not yet been utilized in the EIX consolidated tax return. Capistrano Wind Holdings and Capistrano Wind, LLC have generated $40 million of tax benefits, $16 million, of which has been used by the EIX consolidated tax group, and all of which either payment has been received or payment is expected to ~~be received under~~ the ~~tax-allocation~~release agreements. The accompanying consolidated financial statements have been prepared assuming that EME and Midwest Generation will continue as going concerns. Financial statements prepared on this basis assume the realization of ~~assets~~previously ~~and~~restricted ~~the~~cash ~~satisfaction of liabilities~~ in ~~the~~2011 normal course of business for the 12-month period following the date of the financial statements. EME and Midwest Generation are currently developing a plan for their restructuring, but there is no assurance such a plan will be successfully implemented. EME's and Midwest Generation's ability to continue as ~~going concerns is dependent on many factors, including the successful development of~~ a ~~confirmed~~result ~~plan~~ of ~~reorganization and an emergence from bankruptcy. Uncertainty as to~~ the ~~outcome~~repayment of ~~these~~the ~~factors~~remaining ~~raises~~project ~~substantial~~debt; ~~doubt about EME's~~ and ~~Midwest Generation's ability to continue as going concerns.~~

~~Construction~~• $8 million decrease in energy trading income due to lower revenues from trading power and ~~Development~~PJM ~~Activities~~congestion contracts.

~~Recent~~The ~~developments~~2012 ~~related~~decrease toin ~~EME's~~Adjusted ~~construction~~EBITDA ~~and~~was ~~development~~partially ~~activities~~offset ~~include~~by the following:

• ~~Commercial~~$22 ~~operation~~million ofdecrease ~~the~~in ~~Crofton~~corporate ~~Bluffs~~administrative and ~~Broken~~general ~~Bow~~expenses Iattributable ~~wind~~to ~~projects~~lower ~~commenced~~development onexpenses ~~November~~at 1,wind ~~2012~~projects and ~~December~~lower 1,departmental ~~2012, respectively~~spending. Each project receives production tax credits and has executed a long-term power purchase agreement. In December 2012 and January 2013, EME sold Crofton Bluffs and Broken Bow I, respectively, to Capistrano Wind Partners. For further discussion see "Item 8. Combined Notes to Consolidated Financial Statements—Note 3. Variable Interest Entities."

•Management's In December 2012, EME began start-up and testing at the Walnut Creek project. Construction on the project began in June 2011. The project is expected to achieve commercial operation before June 2013 and to qualify for 50% bonus depreciation.Overview

The Debtor Entities filed the Chapter 11 Cases due to a combination of pending debt maturities, low realized energy and capacity prices, high fuel costs and low generation, and capital requirements associated with retrofitting the Midwest Generation ~~Environmental~~plants ~~Compliance~~to ~~Plans~~comply ~~and~~with ~~Costs~~governmental regulations.

InDuring ~~2012,~~the ~~Midwest~~pendency ~~Generation~~of ~~continued~~the toChapter ~~develop~~11 ~~and~~Cases, ~~implement~~activities ahave ~~compliance~~focused ~~program~~on ~~that~~developing ~~includes~~strategic alternatives to maximize the ~~operation~~value of ~~activated~~the ~~carbon~~Debtors' ~~injection~~Estates. EME ~~systems,~~and ~~Selective~~Midwest ~~Non-Catalytic~~Generation ~~Reduction~~sponsored ~~(SNCR)~~several ~~systems,~~initiatives ~~upgrades~~during 2013 intended to ~~particulate~~reduce ~~removal~~expenses, ~~systems~~preserve liquidity, stabilize operations and ~~the~~relationships ~~use~~with ofvendors, ~~dry~~employees, ~~sorbent~~and ~~injection~~other essential constituents, ~~combined~~and ~~with~~reconcile claims submitted through the ~~use~~Bankruptcy ofCourt. As ~~low~~a ~~sulfur~~result, ~~PRB~~at ~~coal~~December 31, to2013, ~~meet~~EME ~~emissions~~increased ~~limits~~cash ~~for~~and ~~criteria~~cash ~~pollutants,~~equivalents ~~such~~by as$288 ~~NOx~~million and ~~SO2~~Midwest asGeneration ~~well~~reduced asplant ~~for~~operations ~~hazardous~~expense ~~air~~by ~~pollutants,~~$111 ~~such~~million as ~~mercury~~compared to the balances at December 31, ~~acid~~2012. During ~~gas~~2013, ~~and~~plant ~~non-mercury~~reliability ~~metals~~was also improved.

~~Decisions~~EME whether or not to proceed with retrofitting of any particular units to comply with CPS requirements for SO2 emissions, including those that have received permits, are subject to a number of factors such as market conditions, regulatory and ~~legislative developments, liquidity and forecasted commodity prices and capital and operating costs applicable at the time decisions are required or made.~~ Midwest Generation ~~may~~ also ~~elect~~developed tothe ~~shut down units or curtail generation~~Plan, ~~instead~~which ofis ~~installing controls,~~ to be inachieved ~~compliance~~through ~~with~~ the ~~CPS.~~NRG ~~During~~Sale ~~the~~and ~~third quarter of 2012,~~ the ~~Illinois~~Settlement ~~Pollution Control Board granted Midwest Generation's request to extend Waukegan Unit 7's unit specific retrofit requirements from December 31, 2013 to December 31, 2014~~Agreement. These ~~Midwest~~activities ~~Generation~~ultimately ~~has~~culminated ~~also~~in ~~requested from~~ the ~~Illinois~~confirmation ~~Pollution~~of ~~Control~~the ~~Board~~Plan aby ~~variance from~~ the ~~system-wide~~Bankruptcy ~~annual~~Court ~~SO2 emission rate~~ in ~~2015~~March ~~and~~2014. Completion ~~2016 and an extension~~ of ~~Waukegan~~the ~~Unit~~NRG ~~8's~~Sale ~~unit~~is ~~specific~~expected ~~retrofit~~in ~~requirements~~April ~~from December 31,~~ 2014 ~~until May 31, 2015~~. ~~There is no assurance that these requests will be granted.~~

The cost reduction and business stabilization efforts protected the value of the Debtor Entities, despite the continued weak market conditions for merchant generators. However, as a result of continuing low commodity prices and based on further analysis of their capital allocation strategy, EME and Midwest Generation recorded an impairment charge of $464 million related to Midwest Generation's Will County Station. This impairment does not constitute a decision on further operations of this station, including capital investments necessary to comply with state and federal environmental regulations. For additional information, see Note 13—Impairment of Long-Lived Assets.

Plan of Reorganization and the NRG Sale

The Plan implements a reorganization of the Debtor Entities through a sale of substantially all of EME's assets under the NRG Sale and through the terms of the Settlement Agreement, which establishes a path for EME to emerge from bankruptcy free of liabilities as a wholly-owned subsidiary of EIX. Upon the NRG Sale, the Purchaser will acquire substantially all of EME’s assets, including its equity interests in substantially all of its debtor and non-debtor subsidiaries, for a total purchase price of $2.635 billion, subject to certain adjustments provided in the Acquisition Agreement. The Acquisition Agreement provides for $350 million of the total purchase price to be paid in the form of 12,671,977 newly issued shares of NRG’s common stock which trades on the New York Stock Exchange under the ticker symbol NRG. Upon closing, the Purchaser will assume substantially all of the liabilities related to assets to be acquired, including, among other things, (i) all liabilities of EME under the Powerton and Joliet leases, other than the cure amount as set forth in the Acquisition Agreement (the Powerton and Joliet Cure Amount); (ii) all trade and vendor accounts payable and accrued liabilities arising from the operation of the Debtor Entities’ businesses prior to the date of the closing of the transaction; and (iii) all cure amounts and other liabilities of the Debtor Entities other than the Homer City Debtors and certain agreed-upon excluded liabilities. NRG will not acquire (i) the Homer City Debtors, (ii) potential litigation claims of EME against its parent, EIX and (iii) various tax attributes of EME, including tax losses, tax loss carryforwards, tax credits, and tax refunds.

~~Table~~The Plan generally provides for each of ~~Contents~~EME’s general unsecured creditors to receive a pro rata portion of the NRG stock and cash consideration to be paid by the Purchaser to EME under the Acquisition Agreement (less certain distributions to be paid to other creditors of EME) and a pro rata share of any new securities issued by the reorganized successor entity.

~~Midwest~~Under ~~Generation~~the ~~voluntarily~~Settlement ~~ceased~~Agreement, ~~coal-fired~~a ~~operations~~Reorganization atTrust will be formed, which will make distributions pursuant to the ~~Crawford~~Plan ~~and~~for ~~Fisk~~the ~~Stations~~benefit inof ~~August~~EME’s ~~2012,~~existing ~~however,~~creditors. ~~other~~All ~~units~~assets and liabilities of EME that are not ~~retrofitted~~otherwise ~~may~~discharged ~~continue~~in tothe ~~operate~~bankruptcy ~~for~~or astransferred ~~long~~to NRG as ~~regulations~~part ~~and~~of ~~law~~the ~~allow.~~NRG ~~Final~~Sale ~~decisions~~will be transferred to ~~retrofit~~the orReorganization ~~shut~~Trust, ~~down~~with ~~units~~the exception of (i) the EME Tax Attributes, estimated at $1.19 billion, which will be ~~made~~retained inby ~~light~~the ofEIX consolidated tax group, (ii) liabilities totaling $241 million associated with the ~~timing~~qualified ~~requirements~~pension ~~under~~plan, the ~~CPS~~executive retirement plan, the executive deferred compensation plan and ~~other~~uncertain ~~applicable~~federal ~~environmental~~and ~~regulations~~state tax positions, which are being assumed by EIX and (iii) EME’s indirect interest in Capistrano Wind Partners. EIX has disclosed that they have estimated their exposure to the ~~economic~~qualified ~~projections~~pension ofplan, ~~those~~executive ~~retrofits~~retirement plan, onexecutive adeferred ~~unit-by-unit~~compensation ~~basis,~~plan atand uncertain federal and state tax positions to be approximately $350 million. EIX will pay the ~~time~~Reorganization Trust amounts equal to 50% of the ~~decision~~EME isTax ~~made.~~Attributes ~~Based~~as follows: $225 million payable on ~~work~~the toEffective ~~date~~Date in cash, with one half of the ~~estimated~~balance ~~costs~~payable on each of ~~retrofitting~~September 30, ~~the~~2015 ~~Midwest~~and ~~Generation~~September 30, ~~plants~~2016, ~~are~~together aswith ~~follows:~~interest at 5% per annum from the Effective Date.

Unit	Remaining Cost(in millions)			Unit	Remaining Cost(in millions)
Joliet 6		$	75	Waukegan 7		$	59
Joliet 7		111		Waukegan 8		64
Joliet 8		124		Will County 3		104
Powerton 5		127		Will County 4		90
Powerton 6		69

The estimated value of the EME Tax Attributes will be updated within approximately six months of the Effective Date. When the updated estimate is finalized, the amounts of the two installment payments remaining to be made by EIX will be fixed and EIX will deliver to the Reorganization Trust two zero coupon promissory notes evidencing its obligation to make those payments.

~~Waukegan~~EME ~~Unit~~and 7the Reorganization Trust will release EIX and ~~Will~~its ~~County~~subsidiaries, ~~Unit~~officers, 3directors, ~~are~~and ~~subject~~representatives tofrom ~~unique~~all ~~CPS~~claims, ~~requirement~~except tofor ~~convert~~those ~~hot-side~~deriving ~~electrostatic~~from ~~precipitator~~commercial ~~(ESP)~~arrangements ~~equipment~~between toSCE ~~cold-side~~and ~~ESP~~certain orof ~~fabric~~EME’s ~~filtration~~subsidiaries ~~equipment~~and obligations under the Settlement Agreement. ~~For~~EIX ~~further~~and ~~discussion~~its ~~related~~subsidiaries tothat ~~impairment~~directly ~~policies~~and onindirectly own EME will provide a similar release to EME and ~~Midwest~~the ~~Generation's~~Reorganization ~~unit~~Trust. ofUnder ~~account~~the Plan, ~~see~~EIX ~~"Critical~~and ~~Accounting~~its ~~Estimates~~subsidiaries, officers, directors and ~~Policies—Impairment~~representatives will also be beneficiaries of ~~Long~~orders of the Bankruptcy Court releasing them from claims of third parties in EME’s bankruptcy proceedings and the Reorganization Trust will be obligated to set aside $50 million in escrow to secure its obligations to EIX under the Settlement Agreement, including its obligation to protect against liabilities, if any, not discharged in the Chapter 11 Cases for which the Reorganization Trust remains responsible. Such escrowed amount will decline over time to zero on the later of September 30, 2016 and the date on which certain third-~~Lived~~party ~~Assets~~claims pending on September 30, 2016 are resolved."

~~Midwest~~The ~~Generation~~following ~~is not expected to generate sufficient cash flows from operating activities~~conditions, and ~~will likely need to borrow funds~~others, ~~receive~~shall ~~additional~~have ~~contributions~~been ~~from~~satisfied ~~EME~~ or ~~find~~waived ~~other~~for ~~sources of capital to fund~~ the ~~retrofits~~Plan ~~of its coal-fired plants. EME's ability~~ to ~~provide~~become ~~capital~~effective: ~~to Midwest Generation is subject to its own liquidity constraints and oversight by EME's creditors.~~

~~For~~• ~~additional~~Consummation ~~discussion~~ of ~~environmental~~the ~~regulatory~~NRG ~~developments~~Sale, ~~see~~which ~~“Item~~is 1.expected ~~Business—Environmental~~in ~~Matters~~April ~~and Regulations" and "Item 8. Combined Notes to Consolidated Financial Statements—Note 10. Environmental Developments."~~ 2014;

~~Homer~~• ~~City~~Payment ~~Lease~~of the Powerton and Joliet Cure Amount; and

On• ~~September 21,~~Establishment ~~2012, Homer City and Homer City Generation, L.P., an affiliate~~ of ~~GECC, entered into~~ the ~~Homer~~Reorganization ~~City~~Trust ~~Master Transaction Agreement (MTA) for the divestiture by Homer City of substantially all of its remaining assets~~ and ~~certain~~funding ~~specified liabilities. On December 14, 2012, the transaction closed and Homer City Generation, L.P. assumed control~~ of ~~Homer~~escrow ~~City.~~accounts therein.

~~Beginning~~Midwest in the third quarter of 2012, Homer City met the definition of a discontinued operation and EME recorded a $113 million charge ($68 million after tax) to write down assets held for sale to net realizable value during the third quarter of 2012. The charge was reduced to $89 million ($53 million after tax) when the transaction closed to reflect the ultimate carrying value of assets and liabilities transferred to Homer City Generation, ~~L.P.~~Environmental AsCompliance ~~part~~Plans ~~of the closing, Homer City Generation, L.P. agreed to waive Homer City's contractual obligation to Homer City Generation L.P. to establish~~ and ~~fund voluntary employee beneficiary association trusts as originally required under the MTA.~~Costs

~~For~~All ~~further~~of ~~discussion,~~Midwest ~~see~~Generation's ~~"Item~~Illinois 8.coal-fired electric generating units are subject to an Illinois regulation called the Combined ~~Notes~~Pollutant Standard (CPS), which sets emission limits for mercury, nitrogen oxide and SO2 and specifies the control technologies that are to ~~Consolidated~~be ~~Financial~~installed ~~Statements—Note~~on 14some units by specified dates. ~~Discontinued~~Midwest ~~Operations~~Generation must install the required technology by the specified deadline, shut down the unit, or curtail generation to be in compliance with the CPS."

~~Non~~On April 4, 2013, Midwest Generation was granted a variance, subject to various conditions, by the Illinois Pollution Control Board from the CPS system-~~GAAP~~wide ~~Performance~~annual ~~Measures~~SO2 emission rate in 2015 and 2016 and an extension of the Waukegan Unit 8 unit specific retrofit requirements from December 31, 2014 until May 31, 2015. Among the conditions of the variance, the Illinois Pollution Control Board accelerated the unit specific retrofit requirements of Powerton Unit 6 to December 31, 2014 and required the retrofitting of Waukegan Unit 7 by December 31, 2014. Midwest Generation has accepted the variance. As a result of the variance, it is more likely that Midwest Generation will install environmental controls at Waukegan Unit 7, which had been impaired from an accounting perspective during the fourth quarter of 2011. If Midwest Generation ultimately decides to install environmental controls at Waukegan Unit 7, less of Midwest Generation's available liquidity will be available to install environmental controls at other units.

~~EME~~Decisions ~~considers~~whether ~~earnings~~to orproceed ~~loss~~with ~~before~~retrofitting ~~interest,~~of ~~taxes,~~any ~~depreciation~~particular ~~and~~units ~~amortization~~to ~~and~~comply ~~restructuring~~with ~~items~~CPS ~~(Adjusted~~requirements ~~EBITDAR)~~for SO2 and ~~adjusted~~mercury ~~operating~~emissions, ~~income~~including orthose ~~loss~~that ~~(AOI)~~have ~~key~~received ~~operational~~permits, ~~metrics.~~are ~~These~~subject ~~non-GAAP~~to ~~financial~~a ~~measures~~number ~~reflect an additional way~~ of ~~viewing~~factors ~~EME's~~such ~~business~~as ~~and~~market ~~augment~~conditions, ~~the~~regulatory ~~understanding of facts~~ and ~~trends~~legislative ~~affecting~~developments, ~~our~~liquidity, ~~business.~~forecasted ~~These~~commodity ~~non-GAAP~~prices, ~~financial~~and ~~measures~~capital ~~should~~and ~~not~~operating becosts ~~relied~~applicable ~~upon~~at to the ~~exclusion~~time ofdecisions ~~GAAP~~are ~~financial~~required ~~measures~~or ~~and~~made. ~~may~~Midwest ~~not~~Generation beis ~~comparable~~not expected to ~~those~~generate ofsufficient ~~other~~cash ~~companies'~~flows ~~non-GAAP~~from ~~financial~~operating ~~measures having the same or similar names.~~

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization, and Restructuring Items

Adjusted EBITDAR is equal to net income (loss) under GAAP before interest expense, income tax expense (benefit), depreciation and amortization expense, production tax credits from EME's wind projects, and excludes amounts from gain on sale of assets, loss on early extinguishment of debt and leases, impairment of assets and investments, and reorganization items. Production tax credits are recognized as wind energy is generated based on a per-kilowatt-hour rate prescribed in applicable federal and state statutes. Management believes that Adjusted EBITDAR is another way to measure financial

~~Table~~activities, and will likely need to borrow funds or find other sources of ~~Contents~~capital to fund the retrofits of its coal-fired plants. As part of the NRG Sale, NRG has committed to invest in environmental upgrades in an amount not to exceed $350 million at the Powerton and Joliet Stations.

~~performance~~All capital projects needed to comply with nitrogen oxide emission limits of the CPS have been completed. Capital projects needed to comply with mercury limits of the CPS have been completed except for the projects that must be undertaken on anWaukegan ~~ongoing~~Unit 7 ~~basis~~and Will County Unit 3. ~~The~~Waukegan ~~following~~Unit 7 ~~table~~and ~~reconciles~~Will ~~EBITDAR~~County Unit 3 are subject to ~~net~~a ~~income~~unique CPS requirement to convert hot-side electrostatic precipitator (~~loss~~ESP) ~~attributable~~equipment to cold-side ESP or fabric filtration equipment in order to reduce mercury emissions. Final decisions to retrofit or shut down units will be made in light of the ~~EME~~timing ~~common~~requirements ~~shareholder~~under the CPS and other applicable environmental regulations and the economic projections of those retrofits, on ~~EME's~~a ~~consolidated~~unit-by-unit ~~statements~~basis, at the time the decision is made. Based on work to date through December 31, 2013, the estimated costs of ~~operations~~retrofitting the Midwest Generation plants for full CPS compliance, as well as compliance with the federal Mercury and Air Toxics Standards (MATS), are as follows:

	Years Ended December 31,
Unit	Remaining Cost(in millions)					Unit	Remaining Cost(in millions)
(in millions)	2012			2011				2010
Joliet 6		$	75			Waukegan 7		$	55
Adjusted EBITDAR	$	80		$	495			$	661
Joliet 7		114				Waukegan 8		64
Depreciation and amortization	(268		)	(289		)		(229		)
Joliet 8		129				Will County 3		104
Net interest expense	(324		)	(321		)		(260		)
Powerton 5		133				Will County 4		93
Asset impairment and other charges1	(28		)	(714		)		(44		)
Powerton 6		66
Reorganization items	(43		)	—				—
(Provision) benefit for income taxes2	(230		)	375				(46		)
Gain on sale of investments3	—			8				—
Income (loss) from operations of discontinued subsidiaries, net of tax	(112		)	(632		)		82
Net income (loss) attributable to EME common shareholder	$	(925	)	$	(1,078	)		$	164

1 For additional ~~information~~discussion of environmental regulatory developments, see "“Item 1. Business—Environmental Matters and Regulations" and "Item 8. Combined Notes to Consolidated Financial Statements—Note 13 10. ~~Asset~~Environmental ~~Impairments and Other Charges~~Developments."

2 Provision (benefit) for income taxes includes the impact of production tax credits. For additional information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 7. Income Taxes."

3 Reflects the sale of March Point in 2011.

Adjusted Operating Income

AOI is equal to operating income (loss) under GAAP, plus equity in income of unconsolidated affiliates, dividend income from projects, production tax credits, other income and expenses, and net income or loss attributable to noncontrolling interests. Production tax credits are recognized as wind energy is generated based on a per-kilowatt-hour rate prescribed in applicable federal and state statutes. Management believes that inclusion of earnings of unconsolidated affiliates, dividend income from projects, production tax credits, other income and expenses, and net income or loss attributable to noncontrolling interests in AOI is meaningful for investors as these components are integral to the operating results of EME. The following table shows the AOI of EME's projects:

	Years Ended December 31,
(in millions)	2012			2011			2010
Midwest Generation plants	$	(253	)	$	(542	)	$	264
Renewable energy projects	57			39			51
Energy trading	66			74			110
Big 4 Projects	36			44			52
Sunrise	8			32			33
Doga	11			26			15
March Point	—			8			17
Westside Projects	—			7			1
Other projects	(8		)	9			9
Other operating income (expense)1	1			(36		)	—
	(82		)	(339		)	552
Corporate administrative and general	(115		)	(137		)	(145		)
Corporate depreciation and amortization	(20		)	(24		)	(19		)
AOI2	$	(217	)	$	(500	)	$	388

1 In 2011, primarily related to EME's decision to reduce its development pipeline and ongoing development activities. For additional information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 13. Asset Impairments and Other Charges."

Table of Contents

The following table reconciles AOI to operating income (loss) as reflected on EME's consolidated statements of operations:

	Years Ended December 31,
(in millions)	2012			2011			2010
AOI	$	(217	)	$	(500	)	$	388
Less:
Equity in income of unconsolidated affiliates	46			86			104
Dividend income from projects	12			30			19
Production tax credits	69			66			62
Other income (loss), net	—			15			8
Net (income) loss attributable to noncontrolling interests	(16		)	1			1
Consolidated EME Operating Income (Loss)	$	(328	)	$	(698	)	$	194

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MIDWEST GENERATION, LLC

Results of Operations

As of December 31, ~~2012~~2013, Midwest Generation operates 4,619 MW of total net physical capacity at the Midwest Generation plants.

In accordance with GAAP, Midwest Generation accounts for the Powerton and Joliet Sale Leaseback as a lease financing in its separate consolidated financial statements. Accordingly, Midwest Generation records the power plants as assets in a similar manner to a capital lease and records depreciation expense from the power plants and interest expense from the lease financing. For additional discussion of the Powerton and Joliet Sale Leaseback, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—Sale Leaseback."

~~The following table reconciles Midwest Generation's results of operations to the EME consolidated AOI results of the Midwest Generation plants as reported by EME (EME AOI):~~39

	Years Ended December 31,
	2012						2011						2010
(in millions)	Midwest Generation		Consoli- dation Adjust- ments		EME AOI		Midwest Generation		Consoli- dation Adjust- ments		EME AOI		Midwest Generation	Consoli- dation Adjust- ments		EME AOI
Operating Revenues	892		—		892		1,286		—		1,286		1,479	—		1,479
Operating Expenses
Fuel	582		—		582		512		—		512		519	—		519
Plant operations	369		—		369		457		(1	)	456		447	1		448
Plant operating leases1	—		75		75		—		75		75		—	75		75
Depreciation and amortization2	128		(41	)	87		158		(41	)	117		155	(41	)	114
Asset impairments and other charges	14		—		14		653		(3	)	650		48	(6	)	42
Administrative and general	18		—		18		22		—		22		22	—		22
Impairment of loan to affiliate3	1,378		(1,378	)	—		—		—		—		—	—		—
Total operating expenses	2,489		(1,344	)	1,145		1,802		30		1,832		1,191	29		1,220
Operating Income (Loss)	(1,597	)	1,344		(253	)	(516	)	(30	)	(546	)	288	(29	)	259
Other Income	—		—		—		3		1		4		5	—		5
AOI	(1,597	)	1,344		(253	)	(513	)	(29	)	(542	)	293	(29	)	264

The following table reconciles Midwest Generation's results of operations to the EME consolidated Adjusted EBITDA results of the Midwest Generation plants as reported by EME:



	Years Ended December 31,
	2013									2012									2011
(in millions)	Midwest Generation			Adjust- ments			EME Adjusted EBITDA			Midwest Generation			Adjust- ments			EME Adjusted EBITDA			Midwest Generation			Adjust- ments			EME Adjusted EBITDA
Operating Revenues	$	817		$	—		$	817		$	892		$	—		$	892		$	1,286		$	—		$	1,286
Operating Expenses
Fuel	539			—			539			582			—			582			512			—			512
Plant operations	258			—			258			369			—			369			457			(1		)	456
Plant operating leases¹	—			75			75			—			75			75			—			75			75
Depreciation and amortization	119			(119		)	—			128			(128		)	—			158			(158		)	—
Asset impairments and other charges	465			(465		)	—			14			(14		)	—			653			(653		)	—
Administrative and general²	22			(5		)	17			18			—			18			22			—			22
Impairment of loan to affiliate³	—			—			—			1,378			(1,378		)	—			—			—			—
Total operating expenses	1,403			(514		)	889			2,489			(1,445		)	1,044			1,802			(737		)	1,065
Operating Income (Loss)	(586		)	514			(72		)	(1,597		)	1,445			(152		)	(516		)	737			221
Other Income	—			—			—			—			—			—			3			1			4
Adjusted EBITDA	$	(586	)	$	514		$	(72	)	$	(1,597	)	$	1,445		$	(152	)	$	(513	)	$	738		$	225


¹	Represents levelized rent expense of the Powerton and Joliet Sale Leaseback as recorded as an operating lease at EME.

2 ~~The~~Adjustment ~~consolidation adjustment~~ represents ~~depreciation~~restructuring ~~recorded~~costs bywhich ~~Midwest~~are ~~Generation~~excluded ~~for~~from ~~the~~Adjusted ~~Powerton and Joliet Sale Leaseback accounted for as a lease financing~~EBITDA.

3 Represents the valuation allowance charge recorded byon Midwest Generation's ~~on its~~ note receivable from EME. For additional information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 15. Related Party Transactions."

Table of Contents

The following table presents key additional data for Midwest Generation:

	Years Ended December 31,
	2012			2011			2010
	2013			2012			2011
Statistics1
Generation (in GWh)	22,913			28,145			29,798
Generation (in GWh)2	22,694			22,913			28,145
Aggregate plant performance
Equivalent availability	8589.92		%	8285.9		%	82.29		%
Capacity factor	5360.62		%	6253.26		%	62.32		%
Load factor	6267.45		%	7562.04		%	75.80		%
Forced outage rate	43.60		%	54.36		%	65.23		%
Average realized price/MWh	$	34.26		$	36.83		$	40.12
Average realized price/MWh2	$	34.38		$	34.26		$	36.83
Capacity revenues only (in millions)	$	9735		$	~~244~~97		$	~~263~~244
Average realized fuel costs/MWh	$	2423.6276		$	1824.0662		$	1718.1706


¹	For an explanation of how the statistical data is determined, see "—Reconciliation of Non-GAAP Disclosures and Statistical Definitions."

~~Operating~~2 ~~Income~~gigawatt-hours (~~Loss~~GWh); megawatt-hours (MWh).

~~Midwest~~Operating Generation's operating loss increased $1.1 billion in 2012 compared to 2011. Excluding a $1.4 billion affiliate loan impairment charge in 2012 and $640 million of impairment charges in 2011, both discussed below, Midwest Generation's operating loss increased $343 million in 2012 primarily attributable to lower capacity and average realized energy prices, reduced generation and higher fuel prices, partially offset by lower planned maintenance costs and lower depreciation. Reduced generation primarily resulted from lower economic dispatch. Lower planned maintenance costs were the result of a reduction in scope related to the voluntary shutdown of coal-fired operations at the Fisk and Crawford Stations in 2012, cost savings on the execution of projects and the deferral of projects into future years. Loss

~~As a result of the Chapter 11 Cases,~~ Midwest Generation's ~~determined~~operating ~~that it was probable a~~ loss ~~would~~decreased be$1.0 billion ~~realized~~ in ~~connection~~2013 ~~with~~compared ~~its~~to ~~intercompany loan with EME~~2012. ~~Payments~~Excluding ~~due~~a ~~under~~$464 million ~~the~~impairment ~~intercompany~~charge ~~loan~~related ~~have not been made and Midwest Generation is unable~~ to ~~determine~~the ~~whether~~Will ~~any~~County ~~future~~Station ~~payments~~in ~~will~~2013 beand ~~made. As~~ a ~~result, Midwest Generation recorded a~~ $1.4 billion ~~charge,~~affiliate ~~equal to the full carrying amount of the~~ loan ~~and~~impairment ~~accrued~~charge ~~interest,~~in ~~during the fourth quarter of~~ 2012~~. In addition~~, ~~during the fourth quarter of 2011,~~ Midwest Generation's ~~recorded~~operating aloss decreased $~~640~~97 million ~~charge~~in ~~resulting~~2013 ~~from~~primarily ~~the~~attributable ~~impairment of the long-lived assets of the Fisk, Crawford and Waukegan Stations. For further discussion, see "Item 8. Combined Notes~~ to ~~Consolidated~~lower ~~Financial~~plant ~~Statements—Note 13.~~operations ~~Asset Impairments~~ and ~~Other~~support ~~Charges"~~fuel ~~and "—Note 15. Related Party Transactions."~~

Midwest Generation's operating loss was $516 million in 2011 compared to operating income of $288 million in 2010. Excluding the $640 million of impairment charges, the 2011 decrease in operating income was primarily attributable to lower energy and capacity revenues and generation. The decline in energy revenues was due to lower average realized energy prices and lower generation due to the permanent shutdown of Will County Units 1 and 2 at the end of 2010 in accordance with the CPS. The decline in capacity revenues was due to lower capacity prices from the RPM auction. In addition, the change in operating income was impacted by a $40 million pre-tax charge in 2010 related to the write-off of capitalized engineering and other costs related to a change in air emissions control technology at the Powerton Station and a $24 million gain from the sale of bankruptcy claims against Lehman Brothers Commodity Services, Inc. and Lehman Brothers Holdings, Inc. (Lehman Brothers). The claims originated from power contracts that were terminated in 2008 due to the bankruptcy of Lehman Brothers.

~~Included~~costs inpartially ~~fuel~~offset by lower capacity revenues. Lower plant operations costs were ~~$3 million~~driven ~~and~~by $13 43 million inof ~~2011~~savings ~~and~~associated ~~2010,~~with ~~respectively,~~the ~~related~~voluntary toshutdown of the ~~net~~coal-fired ~~cost~~Fisk ofand ~~emission~~Crawford ~~allowances.~~Stations ~~Midwest~~in ~~Generation~~August ~~did~~2012 ~~not~~and ~~have~~$68 ~~any~~million ~~emission~~of ~~allowances~~cost ~~costs~~reduction inactivities ~~2012.~~implemented ~~Also~~at ~~included~~all inthe Midwest Generation stations. Lower support fuel costs were ~~unrealized~~primarily ~~losses~~attributable ofto ~~$4 million,~~lower ~~$4 million~~volumes ~~and~~associated ~~$7 million~~with insystem ~~2012,~~optimization ~~2011~~ and ~~2010,~~lower ~~respectively,~~prices ~~due~~of toactivated ~~oil~~carbon ~~futures~~and ~~contracts~~urea. ~~that~~For ~~were~~further ~~accounted~~discussion ~~for~~of asimpairment ~~economic~~charges, ~~hedges~~see "Item 8.Combined ~~These~~Notes ~~contracts~~to ~~were~~Consolidated ~~entered~~Financial ~~into~~Statements—Note as13. ~~economic~~Asset ~~hedges~~Impairments ofand ~~the~~Other ~~variable~~Charges" ~~fuel~~and ~~price~~"—Note 15. ~~component~~Related ofParty ~~rail transportation costs~~Transactions."

Midwest Generation's operating loss increased $1.1 billion in 2012 compared to 2011. Excluding the $1.4 billion affiliate loan impairment charge in 2012 and $640 million of impairment charges in 2011, Midwest Generation's operating loss increased $343 million in 2012 primarily attributable to lower capacity and average realized energy prices, reduced generation and higher fuel prices, partially offset by lower planned maintenance costs and lower depreciation. Reduced generation primarily resulted from lower economic dispatch. Lower planned maintenance costs were the result of a reduction in scope related to the voluntary shutdown of coal-fired operations at the Fisk and Crawford Stations in 2012, cost savings on the execution of projects and the deferral of projects into future years.

Reconciliation of Non-GAAP Disclosures and Statistical Definitions

Average realized energy price and average realized fuel costs are presented as an aid in understanding the operating results of Midwest Generation. These statistical measures are both non-GAAP performance measures since they exclude unrealized gains or losses recorded as operating revenues or fuel costs. Management believes that these measures are meaningful for investors as this information reflects the impact of hedge contracts at the time of actual generation in period-over-period comparisons or as compared to real-time market prices. These measures may not be comparable to those of other companies.

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gains or losses recorded as operating revenues or fuel costs. Management believes that these measures are meaningful for investors as this information reflects the impact of hedge contracts at the time of actual generation in period-over-period comparisons or as compared to real-time market prices. These measures may not be comparable to those of other companies.

Average Realized Energy Price

The average realized energy price reflects the average price at which energy is sold into the market including the effects of hedges, real-time and day-ahead sales, and PJM fees and ancillary services. It is determined by dividing (i) operating revenues adjusted for unrealized gains (losses) and other non-energy related revenues by (ii) generation as shown in the table below. Revenues related to capacity sales are excluded from the calculation of average realized energy price. The following table shows the average realized energy price for Midwest Generation:

(in millions)	Years Ended December 31,
	2012			2011			2010
	2013			2012			2011
Operating revenues	$	~~892~~817		$	~~1,286~~892		$	1,~~479~~286
Adjusted for:
Unrealized (gains) losses	21			(32		)	6(3		)
Capacity and other revenues1	(109		)	(247		)	(290		)
Capacity and other revenues	(38		)	(109		)	(247		)
Realized revenues	$	~~785~~780		$	~~1,036~~785		$	1,~~195~~036
Generation (in GWh)	22,~~913~~694			2822,~~145~~913			2928,~~798~~145
Average realized energy price/MWh	$	34.2638		$	3634.8326		$	4036.1283

1 A gain from the sale of the bankruptcy claims against Lehman Brothers is included in 2010.

A reconciliation of the operating revenues of Midwest Generation presented in the preceding table and renewable energy projects presented in "Edison Mission Energy—Results of Operations—Renewable Energy Projects" to consolidated EME operating revenues is set forth below:

	Years Ended December 31,
(in millions)	~~2012~~2013		~~2011~~2012		~~2010~~2011
Operating revenues
Midwest Generation	$	~~892~~817	$	~~1,286~~892	$	1,~~479~~286
EME Renewable energy projects	~~255~~279		~~221~~255		~~137~~221
Other EME subsidiaries	~~140~~235		~~146~~140		~~172~~146
Consolidated EME operating revenues as reported	$	1,~~287~~331	$	1,~~653~~287	$	1,~~788~~653

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Average Realized Fuel Costs

The average realized fuel costs for Midwest Generation reflects the average cost per MWh at which fuel is consumed for generation sold into the market, including emission allowance costs and the effects of hedges. It is determined by dividing (i) fuel costs adjusted for unrealized gains (losses) and the cost of coal sales by (ii) generation as shown in the table below:

(in millions)	Years Ended December 31,
	2012			2011			2010
	2013			2012			2011
Fuel costs	$	~~582~~539		$	~~512~~582		$	~~519~~512
Adjusted for:
Unrealized losses	(4—		)	(4		)	(74		)
Cost of coal sales1	~~(14~~—		)	—(14		)	—
Realized fuel costs	$	~~564~~539		$	~~508~~564		$	~~512~~508
Generation (in GWh)	22,~~913~~694			2822,~~145~~913			2928,~~798~~145
Average realized fuel costs/MWh	$	2423.6276		$	1824.0662		$	1718.1706


¹	During 2012, Midwest Generation sold one million tons of coal.

A reconciliation of the fuel costs of Midwest Generation to consolidated EME fuel costs is set forth below:

	Years Ended December 31,
(in millions)	~~2012~~2013		~~2011~~2012		~~2010~~2011
Fuel costs
Midwest Generation	$	~~582~~539	$	~~512~~582	$	~~519~~512
Other EME subsidiaries	2025		1820		1218
Consolidated EME fuel costs as reported	$	~~602~~564	$	~~530~~602	$	~~531~~530

Statistical Definitions

•

Equivalent availability reflects the impact of the unit's inability to achieve full load, referred to as derating, as well as outages which result in a complete unit shutdown. The Midwest Generation plants are not available during periods of planned and unplanned maintenance. The equivalent availability factor is defined as the number of MWh the coal plants are available to generate electricity divided by the product of the capacity of the coal plants (in MW) and the number of hours in the period.


•	The capacity factor indicates how much power a unit generated compared to the maximum amount of power that could be generated according to its rating. It is defined as the actual number of MWh generated by the coal plants divided by the product of the capacity of the coal plants (in MW) and the number of hours in the period.


•	The load factor indicates how much power a unit generated compared to the maximum amount of power that a unit was available to generate electricity. It is determined by dividing capacity factor by the equivalent availability factor.


•	The forced outage rate refers to forced outages and deratings excluding events outside of management's control as defined by NERC. Examples include floods, tornado damage and transmission outages.

Other Income (Expense)

	Years Ended December 31,
(in millions)	~~2012~~2013			~~2011~~2012			~~2010~~2011
Interest and other income	$	—		$	3—		$	53
Interest income from affiliate	~~110~~—			~~111~~110			~~112~~111
Interest expense	(3323		)	(4033		)	(4840		)
Total other income	$	77		$	74		$	69
Total other income (expense)	$	(23	)	$	77		$	74

Interest expense decreased $7 million in 2012 from 2011 and $8 million in 2011 from 2010. The decreases were primarily due to lower interest related to the Powerton and Joliet Sale Leaseback. Subsequent to the filing of the Chapter 11 Cases, 42

44Beginning in 2013, Midwest Generation ceased accruing interest income on its intercompany loan with EME. For additional information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 15. Related Party Transactions." The declines in interest expense primarily relate to the Powerton and Joliet Sale Leaseback.

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Midwest Generation classified $13 million of accrued interest due on the Powerton and Joliet Sale Leaseback as LSTC but did not cease accruing interest on its capital lease obligation.

Income Taxes

~~Midwest Generation's effective tax rates were 4%, 39% and 40% in 2012, 2011 and 2010, respectively.~~ The valuation allowance Midwest Generation recorded in 2013 and 2012 resulted in a significant variance between the effective tax rate and the statutory rate. Midwest Generation's effective tax rate was 39% in 2011. ~~and~~Midwest ~~2010~~Generation's ~~varied~~effective tax rates also differ from the federal statutory rate of 35% ~~primarily~~ due to state income taxes. For further discussion, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 7. Income Taxes."

Related Party Transactions

For a discussion of related party transactions, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—Income Taxes and Tax-Allocation Agreements" and "—Note 15. Related Party Transactions."

New Accounting Guidance

For a discussion of new accounting guidance affecting Midwest Generation see "Item 8. Combined Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—New Accounting Guidance."

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EDISON MISSION ENERGY

Results of Operations

Midwest Generation Plants

In accordance with GAAP, EME records rent expense related to the Powerton and Joliet Sale Leaseback on a levelized basis over the terms of the respective leases, which is reflected below under plant operating leases. Neither the value of the leased assets nor the lessor debt is reflected on EME's consolidated balance sheet. For additional discussion of the Powerton and Joliet Sale Leaseback, see "Liquidity and Capital Resources—Off-Balance Sheet Transactions—Sale Leaseback."

The following table presents ~~AOI~~Adjusted EBITDA for the Midwest Generation plants as part of the consolidated financial statements of EME:

	Years Ended December 31,
(in millions)	~~2012~~2013			~~2011~~2012			~~2010~~2011
Operating Revenues	$	~~892~~817		$	~~1,286~~892		$	1,~~479~~286
Operating Expenses
Fuel	~~582~~539			~~512~~582			~~519~~512
Plant operations	~~369~~258			~~456~~369			~~448~~456
Plant operating leases	75			75			75
Depreciation and amortization	87			117			114
Administrative and general	17			18			22
Asset impairments and other charges	14			650			42
	889			1,044			1,065
Administrative and general	18			22			22
Other Income	—			—			4
Total operating expenses	1,145			1,832			1,220
Adjusted EBITDA	$	(72	)	$	(152	)	$	225
Operating Income (Loss)	(253		)	(546		)	259
Other Income	—			4			5
AOI	$	(253	)	$	(542	)	$	264

For a discussion of Midwest Generation's operating results and additional data for the Midwest Generation plants, see "Midwest Generation, LLC—Results of Operations."

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Renewable Energy Projects

The following table presents ~~AOI~~Adjusted EBITDA and key performance measures related to EME's renewable energy projects:

	Years Ended December 31,
(in millions, except operating data)	2012			2011			2010
(in millions, except operating statistics)	2013			2012			2011
Operating Revenues	$	~~255~~279		$255	~~221~~		$221	~~137~~
Production Tax Credits	69			66			62
	324			287			199
Operating Expenses
Plant operations	8997			7889			5578
Depreciation and amortization	155			141			89
Administrative and general	3			6			4
Asset impairments and other charges	—			30			3
	100			95			82
Administrative and general	6			4			3
Equity in income (loss) from unconsolidated affiliates	—			(1		)	1
Total operating expenses	250			253			150
Other income	2			—			3
Equity in income from unconsolidated affiliates	(1		)	1			—
Net (income) loss attributable to noncontrolling interests	(29		)	(16		)	1
Other Income	—			3			2
Renewable energy projects	$	152		$	143		$	144
Net (Income) Loss Attributable to Noncontrolling Interests	(16		)	1			—
Production tax credits	80			69			66
AOI	$	57		$	39		$	51
Adjusted EBITDA	$	232		$	212		$	210
Statistics1
Generation (in GWh)2	56,~~991~~318			5,~~564~~991			35,~~646~~564
Aggregate plant performance2
Equivalent availability3	9394.51		%	9193.75		%	91.87		%
Capacity factor	3435.96		%	3534.69		%	3335.06		%


¹	The statistics section summarizes key performance measures related to wind projects, which represents substantially all of the renewable energy projects.

2 Includes renewable energy projects that are not consolidated by EME. Generation excluding unconsolidated projects was 5,~~197~~569 GWh in ~~2012~~2013, 45,~~816~~197 GWh in ~~2011~~2012 and 34,~~037~~816 GWh in ~~2010~~2011.


³	Equivalent availability for renewable energy projects reflects the impact of the projects inability to generate power at full capacity, including outages due to regular maintenance. Equivalent availability is defined as the number of MWh the units are available to generate electricity divided by the product of the capacity of the units (in MW) and the number of hours in the period.

~~AOI~~Adjusted EBITDA from renewable energy projects, ~~excluding~~increased ~~the~~ $~~30 million~~20 ~~impairment charge recorded in 2011, decreased $12~~ million in ~~2012~~2013 compared to ~~2011~~2012. ~~and~~Revenues increased $1824 million inand ~~2011~~production ~~compared~~tax tocredits ~~2010.~~increased ~~For~~$11 ~~further discussion of the 2011 impairment charge~~million, ~~see~~mainly ~~"Item 8.~~as ~~Combined~~a ~~Notes~~result toof ~~Consolidated~~the ~~Financial~~Broken ~~Statements—Note 13.~~Bow ~~Asset~~I ~~Impairments~~ and ~~Other~~Crofton ~~Charges."~~Bluffs ~~The~~wind ~~2012 decrease was primarily attributable to income allocated to outside investors in Capistrano Wind Partners partially offset by income from~~ projects ~~that~~achieving ~~achieved~~ commercial ~~operations~~operation in the ~~second~~fourth ~~half~~quarter of ~~2011~~2012 and ~~2012.~~also ~~For~~as ~~additional~~a ~~information,~~result ~~see "Item 8. Combined Notes to Consolidated Financial Statements—Note 3. Variable Interest Entities—Projects or Entities that are Consolidated—Capistrano Wind Equity Capital." EME's share~~ of ~~installed~~higher ~~capacity~~generation ofand ~~new~~higher ~~wind~~energy ~~projects~~prices ~~that~~at ~~commenced~~the ~~operations~~merchant ~~during~~Big ~~2012,~~Sky ~~2011~~ and ~~2010~~Goat ~~was~~Wind ~~88 MW, 295 MW and 150 MW, respectively~~projects.

~~The~~Plant ~~2011~~operations ~~increase~~expense ~~was~~increased ~~primarily~~$8 ~~due~~million toprimarily ~~the~~as ~~increase~~a inresult ~~wind~~of ~~projects~~the inBroken ~~operation~~Bow ~~coupled~~I ~~with~~and ~~higher~~Crofton ~~generation~~Bluffs ~~due to more favorable~~ wind ~~conditions,~~projects ~~partially~~achieving ~~offset~~commercial byoperations ~~lower~~and ~~realized~~increased ~~energy~~expenses ~~prices~~ at the ~~merchant~~Big ~~wind~~Sky projects. AOI in 2010 included payments from Suzlon Wind Energy Corporation for availability losses of $2 million. Payments under the availability guarantee are designed to compensate EME for lost earnings, including production tax credits and ~~are~~High ~~paid~~Lonesome ~~on a pre-tax basis~~projects. ~~The payments impact period-to-period comparisons that include production tax credits, which are after tax.~~

47Net income attributable to noncontrolling interests increased $13 million primarily as a result of the sale of the Broken Bow I and Crofton Bluffs wind projects to Capistrano Wind Partners.

~~Table~~Adjusted EBITDA increased $2 million in 2012 compared to 2011. Revenues increased $34 million and production tax credits increased $3 million, primarily attributable to Taloga and Pinnacle wind projects that achieved commercial operation in the second half of ~~Contents~~2011. EME' share of installed capacity of new wind projects that commenced operations during 2012 and 2011 was 88 MW and 295 MW, respectively.

~~The~~Plant ~~following~~operations ~~table~~expense ~~reconciles~~increased ~~AOI~~$11 ~~from~~million ~~EME's~~in ~~renewable~~2012 ~~energy~~compared ~~projects~~to 2011 primarily due to ~~its~~the ~~operating~~addition ~~income~~of asnew ~~included~~projects inthat ~~EME's~~achieved ~~consolidated~~commercial ~~statements~~operation ofand ~~operations:~~increased expenses at the Big Sky and High Lonesome projects.

	Years Ended December 31,
(in millions)	2012			2011			2010
AOI	$	57		$	39		$	51
Less:
Equity in income of unconsolidated affiliates	(1		)	1			—
Production tax credits	69			66			62
Other income	—			3			2
Net (income) loss attributable to noncontrolling interests	(16		)	1			—
Operating Income (Loss)	$	5		$	(32	)	$	(13	)

In 2012, $16 million of net income from the wind projects was allocated to outside investors in Capistrano Wind Partners. For additional information, see "Combined Notes to Consolidated Financial Statements—Note 3. Variable Interest Entities—Projects or Entities that are Consolidated—Capistrano Wind Partners."

~~Energy~~The ~~Trading~~following table reconciles Adjusted EBITDA from EME's renewable energy projects to its operating income (loss) as included in EME's consolidated statements of operations:

AOI from energy trading activities decreased $8 million in 2012 compared to 2011 and $36 million in 2011 compared to 2010. The 2012 decrease was primarily due to lower revenues from trading power and PJM congestion contracts. The 2011 decrease was due to reduced revenues from trading power contracts partially offset by increased congestion revenues due to outages in the PJM markets. The 2011 decrease is also partially due the allocation to Homer City of benefits from an arrangement that allowed EMMT to deliver a portion of Homer City's power into the NYISO. For additional information regarding Homer City, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 13. Discontinued Operations."



	Years Ended December 31,
(in millions)	2013			2012			2011
Adjusted EBITDA	$	232		$	212		$	210
Less:
Depreciation and amortization	154			149			136
Asset impairments and other charges¹	(2		)	—			30
Production tax credits²	80			69			66
Equity in income (loss) of unconsolidated affiliates	—			(1		)	1
Other income	2			—			3
Net (income) loss attributable to noncontrolling interests	(29		)	(16		)	1
Operating Income (Loss)	$	27		$	11		$	(27	)

~~Adjusted~~1 ~~Operating~~For ~~Income~~further ~~from~~discussion of the 2011 impairment charge, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 13. Asset Impairments and Other ~~Projects~~Charges."

~~The~~2 ~~CPUC-approved~~Production ~~comprehensive~~tax ~~settlement~~credits ~~related~~are toincluded ~~power sales from cogeneration facilities became effective~~ in ~~November~~the ~~2011~~provision ~~and~~(benefit) ~~resulted~~for ~~in $11 million of additional non-recurring adjusted operating~~ income ~~in 2011~~taxes. ~~For additional information, see "Item 1. Business—Contracted Power Plants–Domestic—Natural Gas."~~

Big 4 Projects. AOI from the Big 4 Projects decreased $8 million in both 2012 compared to 2011 and 2011 compared to 2010. The 2012 decrease was primarily due to lower energy margins resulting from lower natural gas prices and due to additional revenue in 2011 resulting from the settlement discussed above. The 2011 decrease was primarily due to lower energy margins at Watson and lower contracted capacity under Midway-Sunset's new power purchase agreement, partially offset by additional revenues resulting from the settlement discussed above.45

Westside Projects. AOI from the Westside Projects decreased $7 million in 2012 compared to 2011 and increased $6 million in 2011 compared to 2010. The 2012 decrease was primarily due to lower energy margins resulting from lower natural gas prices and due to additional revenue in 2011 resulting from the settlement discussed above. The 2011 increase was primarily attributable to new power purchase agreements, which became effective upon the settlement discussed above, and provided higher capacity prices retroactive to 2010.

Sunrise. AOI from Sunrise decreased $24 million in 2012 compared to 2011 and decreased $1 million in 2011 compared to 2010. The 2012 decrease was due to the transition from sales under a long-term power purchase agreement to merchant operations. Sunrise will continue to operate on a merchant basis selling into the California ISO market until a new power purchase agreement is executed. The profitability of Sunrise as a merchant generator is dependent on market prices for power and natural gas and future results may differ from historical earnings. For additional information, see "Market Risk Exposures—Commodity Price Risk."

Doga. The 2012 decrease in AOI was due to $15 million higher distributions from the project in 2011. The $11 million increase in 2011 as compared to 2010 was due to the release of previously restricted cash as a result of the repayment of the remaining project debt. AOI is recognized when cash is distributed from the project since Doga is accounted for on the cost method.

Corporate Administrative and General Expenses

Corporate administrative and general expenses decreased $22 million in 2012 compared to 2011 and decreased $8 million in 2011 compared to 2010. During 2012, EME incurred $22 million of consulting costs related to the Chapter 11 Cases and has

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recorded these professional fees as part of reorganization items. For further information see "Item 8. Combined Notes to Consolidated Financial Statements—Note 16. Restructuring Activities." The 2011 decrease related to a reduction in development costs incurred pursuing renewable projects.

Interest Income (Expense)

	Years Ended December 31,
(in millions)	~~2012~~2013			~~2011~~2012			~~2010~~2011
Interest income	$	2		$	12		$	21
Interest expense, net of capitalized interest
EME debt	~~(254~~—		)	(~~257~~254		)	(~~229~~257		)
Nonrecourse debt	(7291		)	(6572		)	(3365		)
	$	(326	)	$	(322	)	$	(262	)
Interest expense, net	$	(89	)	$	(324	)	$	(321	)

EME's net interest expense ~~increased~~decreased $4235 million in ~~2012~~2013 from ~~2011~~2012 and increased $603 million in ~~2011~~2012 from ~~2010~~2011. The ~~2012~~2013 ~~increase~~decrease in net interest expense was primarily due to ~~higher~~the ~~debt~~fact ~~balances~~that ~~from~~EME ~~new~~ceased ~~project~~accruing ~~financings~~interest ~~partially~~on ~~offset~~its by$3.7 ~~higher~~billion ~~capitalized~~of ~~interest~~unsecured senior notes during the pendency of the Chapter 11 Cases. The ~~2011~~2012 increase in net interest expense was primarily due to higher debt balances from new project financings ~~and~~partially ~~lower~~offset by higher capitalized interest. ~~Capitalized~~Unpaid contractual interest ~~was~~for ~~$31 million,~~the ~~$27 million~~years ~~and~~ended ~~$54 million~~December ~~in 2012~~31, ~~2011~~2013 and ~~2010, respectively. The~~ 2012 ~~increase~~ was ~~due~~$281 tomillion ~~the~~and ~~Walnut~~$11 ~~Creek~~million, ~~project construction~~respectively. ~~The~~For ~~2011~~additional ~~decrease~~information, ~~was~~see ~~due~~"Item to8. ~~completion~~Combined ofNotes ~~the~~to ~~renewable~~Consolidated ~~energy~~Financial ~~projects~~Statements—Note 16. ~~under~~Restructuring ~~construction in 2010 and 2011~~Activities—LSTC."

EME did not make $97 million and $38 million of interest payments on its $3.7 billion of unsecured senior notes due on November 15, 2012 and December 17, 2012, respectively. Subsequent to the filing of Chapter 11 Cases, EME classified the unsecured senior notes as LSTC and ceased accruing interest expense. Unpaid contractual interest expense related to the period after the filing of the Chapter 11 Cases was $11 million.

Income Taxes

Historically, EME's ~~right~~participated toin ~~receive payments under the~~ tax-allocation agreements ~~and~~with ~~the~~EIX ~~timing~~in ~~and~~which ~~amount of those payments are dependent on the inclusion of~~ EME inwould ~~the~~be ~~consolidated~~eligible ~~income~~to ~~tax~~receive ~~returns~~payments offrom EIX ~~and~~for ~~other~~tax ~~factors,~~losses ~~including the amount of consolidated taxable income~~ and ~~net~~credits ~~operating~~generated ~~loss~~by ~~carryforwards~~EME. ofDuring ~~EIX~~2012, ~~and other tax items of EME and other subsidiaries of~~ EIX. ~~Without~~modified ~~objectively verifiable evidence supporting~~ the ~~taxable income forecast of the EIX consolidated~~ tax-allocation ~~group~~agreements ~~during~~to ~~2013~~terminate ~~and 2014,~~ EME's isparticipation ~~not~~on ~~currently~~December ~~able~~31, ~~to determine whether it is more likely than not that future tax-sharing payments will occur~~2013. As a result, as of December 31, 2013 and 2012, EME recorded a valuation allowance ~~against its net deferred tax assets~~ of $~~444~~752 million, ofand ~~which~~ $6444 million, ~~was~~respectively. ~~reflected~~Upon inthe ~~accumulated~~effectiveness ~~other~~of ~~comprehensive~~the ~~loss~~Settlement ~~and~~Agreement, ~~$438 million~~EME inwould ~~net~~expect ~~loss~~to ~~for~~reverse the ~~year~~valuation ~~ended~~allowance ~~December~~it ~~31,~~has ~~2012~~recorded. ~~In addition,~~ EME also recorded a ~~non-cash distribution to its parent of~~ $~~222~~27 million ~~related~~non-cash toincome tax ~~benefits~~benefit ~~generated~~offset by ~~EME~~an ~~which~~equal ~~have~~valuation ~~been~~allowance ~~utilized~~during in the ~~EIX~~fourth ~~consolidated~~quarter ~~tax~~of ~~return~~2013 onrelated ato ~~statutory~~excess ~~basis for which, under the~~ tax~~-allocation~~ ~~agreements~~benefits asthat ~~applied,~~had ~~EME is~~ not ~~yet,~~been ~~and~~generated ~~may~~by ~~never be, entitled to be paid~~EME.

The valuation allowance EME recorded in 2013 and 2012 resulted in a significant variance between the effective tax rate and the statutory rate. EME's effective tax rate was 50% in 2011. ~~In 2010,~~ EME's effective tax ~~rate~~rates ~~differed~~also ~~significantly~~differ from the federal statutory rate of 35% due to ~~the~~production ~~resolution~~tax ofcredits, estimated state income tax ~~issues~~benefits allocated from ~~1986~~EIX, ~~through~~and ~~2002.~~taxes ~~EME's~~on income ~~taxes~~allocated ~~from~~to ~~continuing~~noncontrolling ~~operations~~interests. inProduction ~~2010~~tax ~~included~~credits aof $1680 million, $69 million and $66 million were included in income taxes for 2013, 2012 and 2011, respectively. Estimated state income tax ~~benefit~~benefits ~~resulting~~allocated from ~~the~~EIX ~~California~~of ~~Franchise~~$5 ~~Tax~~million, ~~Board's~~$3 million ~~acceptance~~ and ~~application~~$6 million ofwere recognized for the ~~federal~~years ~~settlement~~ended ofDecember 31, ~~tax~~2013, ~~disputes~~2012 ~~finalized~~and ~~with~~2011, ~~the~~respectively. ~~Internal~~The ~~Revenue~~benefit ~~Service~~for state taxes was lower in ~~2009~~2012 ~~for~~due ~~tax~~to ~~years~~an ~~1986~~adjustment ~~through~~in ~~2002~~state apportionment factors.

~~Furthermore,~~For ~~EME's~~further ~~effective tax rates differ from the federal statutory rate of 35% due to production tax credits~~discussion, ~~estimated~~see ~~state income tax benefits allocated from EIX, and taxes on income allocated to noncontrolling interests. Production tax credits of $69~~"Item ~~million, $66 million and $62 million were included in income taxes for 2012, 2011 and 2010, respectively~~8.Combined ~~Estimated~~Notes ~~state~~to ~~income~~Consolidated ~~tax~~Financial ~~benefits~~Statements—Note ~~allocated from EIX of $3 million, $6 million and $~~7 ~~million were recognized for the years ended December 31, 2012, 2011 and 2010, respectively~~. ~~The~~Income ~~benefit for state taxes was lower in 2012 due to an adjustment in state apportionment factors~~Taxes."

Results of Discontinued Operations

EME's income (loss) from discontinued operations primarily reflects the results of Homer City and was $1 million, $(112) million inand ~~2012,~~ $(632) million in 2013, 2012 and 2011, respectively. The 2013 results from discontinued operations reflects the withdrawal from the benefit plan that provided postretirement medical, dental, vision, and ~~$82 million~~life insurance coverage to certain Homer City retirees and the subsequent cost, reflected in ~~2010~~reorganization items, for a Bankruptcy Court approved settlement between the Homer City Debtors and the union for the affected Homer City retirees. InThe 2012, results reflect a pre-tax charge of $89 million ($53 million after tax) associated with the divestiture of Homer City. The 2011 results included a pre-tax earnings charge of $1,032 million ($623 million after tax) recorded in the fourth quarter of 2011 resulting from the write-off of prepaid rent and leasehold improvements related to the Homer City lease. For additional information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 14. Discontinued Operations."

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($623 million after tax) recorded in the fourth quarter of 2011 resulting from the write-off of prepaid rent and leasehold improvements related to the Homer City lease. The 2010 results reflect the classification of Homer City as a discontinued operation. For additional information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 13. Discontinued Operations."

Related Party Transactions

EME owns interests in partnerships that sell electricity generated by their project facilities to SCE and others under the terms of power purchase agreements. Sales by these partnerships to SCE under these agreements amounted to $233 million, $277 million and $367 million in 2012, 2011 and 2010, respectively. For ~~further~~a discussion of related party transactions, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—Income Taxes and Tax-Allocation Agreements," "—Note 5. Debt and Credit Agreements—Credit Facilities and Letters of Credit" and "—Note 15. Related Party Transactions."

New Accounting Guidance

For a discussion of new accounting guidance affecting EME, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—New Accounting Guidance."

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LIQUIDITY AND CAPITAL RESOURCES (EME and Midwest Generation, except as noted)

Available Liquidity

The following table summarizes EME's and Midwest Generation's available liquidity at December 31, ~~2012~~2013:

(in millions)	~~Cash~~Debtor ~~and Cash Equivalents~~Entities			Non-debtor Entities		Cash and Cash Equivalents
EME as a holding company	$	$564	~~328~~	—		$	564
EME subsidiaries without contractual dividend restrictions
Midwest Generation	118			—		118
Midwest Generation		95
Other EME subsidiaries	3			441		444
Other EME subsidiaries		392
EME and subsidiaries without contractual dividend restrictions	685			441		1,126
EME and subsidiaries without contractual dividend restrictions		815
EME subsidiaries with contractual dividend restrictions	—			50		50
EME subsidiaries with contractual dividend restrictions		73
Total	$	685		$	491	$	1,176
Total		$	888

EME, as a holding company, does not directly operate any revenue-producing generation facilities. EME relies on cash distributions ~~and tax payments~~ from its projects ~~and tax benefits received under a tax-allocation agreement with EIX~~ to meet its obligations, including debt service obligations on long-term debt. The timing and amount of payments from EIX under the tax allocation agreement is uncertain and the timing and amount of distributions from EME's subsidiaries may be restricted. For further discussion of liquidity, tax-allocation payments and the Chapter 11 Cases, see "Item 1A. Risk Factors—Liquidity Risks" and "Edison Mission Overview—Management's Overview." For further details, including the restricted net assets of EME, see "—Dividend Restrictions in Major Financings" and "Item 8. Combined Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements—Restricted Net Assets of Subsidiaries."

Midwest Generation generates liquidity through cash flows from operations and payments by EME under an intercompany loan issued in connection with the Powerton and Joliet Sale Leaseback. ~~As a result of the Chapter 11 Cases~~However, ~~EME~~at ~~did not make the scheduled principal and interest payment of $61~~December ~~million due to Midwest Generation on January 2~~31, ~~2013. Midwest Generation determined that it was probable a loss would be realized in connection with this intercompany loan. As a result~~2012, Midwest Generation recorded a $1.4 billion charge, equal to the full carrying amount of the loan and accrued interest, ~~during~~and ~~the~~ceased ~~fourth~~accruing ~~quarter~~interest ofincome ~~2012.~~associated ~~Future~~with ~~payments, if any, made by EME under~~ the intercompany loan. ~~will~~During ~~be dependent upon~~ the ~~overall~~pendency ~~resolution~~ of the Chapter 11 Cases~~. Likewise~~, ~~under~~EME ~~the~~did ~~terms~~not ofmake aany ~~forbearance agreement with the Powerton and Joliet leases' owner-lessors, the owner-lessors' equity owners, and approximately 72 percent~~ of the ~~holders~~three ~~of the Senior Lease Obligation Bonds, Midwest Generation did not make the~~ scheduled ~~lease payments of~~ $7661 million onprincipal ~~January 2,~~and ~~2013~~interest ~~but~~payments ondue ~~February 15,~~to ~~2013,~~Midwest ~~did~~Generation. ~~pay~~Upon ~~the~~consummation ~~ratable portion~~ of the ~~rent~~Plan ~~due~~and ~~under~~ the ~~leases~~NRG ~~attributable to the period between December 17~~Sale, ~~2012~~this loan and ~~January 2,~~accrued ~~2013~~interest ofwill ~~$7 million.~~be canceled. For additional ~~discussion~~information ofon the ~~Powerton and Joliet Sale Leaseback and~~ intercompany loan, see "—Off-Balance Sheet Transactions."—EME's ~~The~~Obligations ~~Chapter 11 Cases could also potentially give rise~~ to ~~counterparty~~Midwest ~~rights and remedies under other documents~~Generation. "

Likewise, during the pendency of the Chapter 11 Cases, Midwest Generation did not make any of the three scheduled $76 million lease payments under the Powerton and Joliet Sale Leaseback and the Senior Lease Obligation Bonds issued to finance these leases. Midwest Generation did pay the ratable portion of the rent due under the leases attributable to the period between December 17, 2012 and January 2, 2013 of $7 million and beginning in July 2013, EME and Midwest Generation agreed, among other things, to make monthly rental payments of $3.75 million. Upon consummation of the NRG Sale, Midwest Generation will assume the Powerton and Joliet leases and EME will retain all liabilities with respect to the payment of the Powerton and Joliet Cure Amount. The cure amount would have been approximately $147 million at December 31, 2013. For additional information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 16. Restructuring Activities—NRG Sale.

Capital Investment Plan

Forecasted capital expenditures through ~~2015~~2016 by EME's subsidiaries for existing projects ~~and corporate activities~~ are as follows:

(in millions)	~~2013~~2014		~~2014~~2015		~~2015~~2016
Midwest Generation
Environmental	$	~~109~~125	$	~~328~~235	$	~~148~~229
Plant capital	217		3617		3133
Walnut Creek Project1	81		—		—
Walnut Creek Project	6		—		—
Other capital2	21		17		15
Total	$	138	$	252	$	262
Total	$	232	$	381	$	194

1Midwest Generation's forecasted environmental expenditures are based on using dry scrubbing with sodium-based sorbents and upgrading particulate removal systems to comply with CPS requirements for SO2 and mercury emissions and the United States Environmental Protection Agency's (US EPA) MATS regulations on hazardous air pollutant emissions. On April 4, 2013, Midwest Generation was granted a variance, subject to various conditions, by the Illinois Pollution Control Board from the CPS system-wide annual SO2 emission rate in 2015 and 2016 and an extension of the Waukegan Unit 8 unit specific retrofit requirements from December 31, 2014 until May 31, 2015. For additional information on environmental expenditures, see "Edison Mission Energy Overview—~~Construction~~Midwest ~~and~~Generation ~~Development~~Environmental ~~Activities~~Compliance Plans and Costs."

~~2 Primarily represents EME corporate and information technology related expenditures.~~48

51The timing of commencing capital projects may vary from the amounts set forth in the above table. Midwest Generation is not expected to generate sufficient cash flows from operating activities, and will likely need to borrow funds or find other sources of capital to fund the retrofits of its coal-fired plants. As part of the NRG Sale, NRG has committed to invest in environmental upgrades in an amount not to exceed $350 million at the Powerton and Joliet Stations.

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Midwest Generation's forecasted environmental expenditures are based on using dry scrubbing with sodium-based sorbents and upgrading particulate removal systems to comply with CPS requirements for SO2 emissions and the US EPA's regulation on hazardous air pollutant emissions. Decisions regarding whether or not to expend capital will be made as required, subject to the requirements of the CPS and other regulations and are subject to a number of factors, such as events and developments during the Chapter 11 Cases, market conditions, regulatory and legislative developments, liquidity and forecasted commodity prices and capital and operating costs applicable at the time decisions are required or made. Furthermore, the timing of commencing capital projects may vary from the amounts set forth in the above table. Plant capital expenditures for Midwest Generation includes capital projects for boiler and turbine controls, major boiler components and electrical systems. For additional information on environmental expenditures, see "Edison Mission Energy Overview—Midwest Generation Environmental Compliance Plans and Costs."

Midwest Generation is not expected to generate sufficient cash flows from operating activities, and will likely need to borrow funds, receive additional contributions from EME or find other sources of capital to fund the retrofits of its coal-fired plants.

At December 31, 2012, EME's development pipeline of potential wind projects was approximately 650 MW. Future development of the wind portfolio is dependent on the availability of third-party capital. To the extent that third-party capital is available, the success of development efforts will depend upon, among other things, obtaining permits and agreements necessary to support an investment. Further development is also dependent upon federal subsidies in the form of production tax credits for wind generation facilities. This tax credit was scheduled to expire on December 31, 2012 but has been extended under the American Taxpayer Relief Act of 2012 to also be available for projects that are under construction by December 31, 2013.

Historical Consolidated Cash Flow (EME only)

The following table presents EME's condensed consolidated statement of cash flows:

(in millions)	~~2012~~2013			~~2011~~2012			~~2010~~2011
Operating cash flows from continuing operations	$	~~(467~~233	)	$	~~660~~(467	)	$	~~577~~660
Operating cash flows from discontinued operations, net	(462		)	(3446		)	29(34		)
Net cash (used in) provided by operating activities	(513		)	626			606
Net cash provided by (used in) operating activities	231			(513		)	626
Net cash provided by financing activities from continuing operations	~~564~~112			~~277~~564			~~235~~277
Investing cash flows from continuing operations	(~~430~~57		)	(~~664~~430		)	(~~544~~664		)
Investing cash flows from discontinued operations, net	~~(31~~—		)	(1431		)	(1814		)
Net cash used in investing activities	(~~461~~57		)	(~~678~~461		)	(~~562~~678		)
Net (decrease) increase in cash and cash equivalents from continuing operations	$	(333	)	$	273		$	268
Net increase (decrease) in cash and cash equivalents from continuing operations	$	288		$	(333	)	$	273
Net (decrease) increase in cash and cash equivalents from discontinued operations	$	(77	)	$	(48	)	$	11
Net decrease in cash and cash equivalents from discontinued operations	$	(2	)	$	(77	)	$	(48	)

Cash Flows From Operating Activities

The ~~decrease~~fluctuation in cash provided by operating activities from continuing operations in ~~2012~~2013 as compared to ~~2011~~cash used in operating activities from continuing operations in 2012 was ~~primarily~~mainly attributable to ~~decreased~~lower ~~operating~~rent ~~income~~payments for the leased facilities at the Powerton and Joliet plants due to ~~declining~~the ~~energy~~forbearance ~~prices,~~agreement ~~increased~~(see ~~operating~~"—Available ~~costs~~Liquidity") and ~~higher~~fewer ~~interest~~coal ~~payments~~purchases ~~due~~as toexisting ~~new~~coal ~~energy~~inventory ~~project~~was ~~financings~~utilized. The ~~decrease~~fluctuation was also attributable to $15 million of tax-allocation payments ~~made~~received, net of ~~receipts~~payments, ~~of $62 million~~ in ~~2012~~2013 compared to tax-allocation payments ~~received~~, net of ~~payments made~~receipts, of $~~213~~62 million ~~and $116 million~~ in ~~2011~~2012 and ~~2010,~~tax-allocation ~~respectively.~~payments ~~Operating~~received, ~~cash~~net ~~flows~~of ~~were~~payments, ~~also impacted by timing~~ of ~~cash~~$213 ~~receipts~~million ~~and~~in ~~disbursements related to working capital items~~2011. ~~The~~2013 ~~2011~~operating ~~increase in~~ cash ~~provided~~flows byalso ~~operating~~increased ~~activities from continuing operations was primarily attributable to an increase in US Treasury Grants received partially offset by a decrease in operating income~~ due to ~~declining~~the ~~energy~~classification ~~prices,~~of ~~increasing~~pre-petition ~~operating~~obligations ~~costs,~~as ~~and higher interest payments due to new energy project financings~~LSTC.

52The decrease in cash provided by operating activities from continuing operations in 2012 as compared to 2011 was primarily attributable to decreased operating income due to declining energy prices, increased operating costs and higher interest payments due to new energy project financings. The remaining changes relate to the timing of cash receipts and disbursements related to working capital items.

~~Table of Contents~~49

Cash Flows From Financing Activities

The change in financing activities is primarily due to cash contributions from noncontrolling interests and the timing of financings and repayment of debt as summarized in the following table:

(in millions)	~~2012~~2013			~~2011~~2012			~~2010~~2011
Cash contributions from noncontrolling interests	$	~~288~~94		$	—288		$	—
Long-term debt financings
Debt financings
Renewable energy projects	79			294			211
Walnut Creek Project	149			195			187
Walnut Creek project	—			187			—
Renewable energy projects	22			79			326
Short-term debt financings
Other projects	4			—			—
Renewable energy projects	—			32			96
Walnut Creek project	195			—			—
Debt repayments
Renewable energy projects	(36		)	(89		)	(33		)
Walnut Creek Project	(60		)	—			—
Other projects	(20		)	(18		)	(15		)
Renewable energy projects	(40		)	(36		)	(89		)
Borrowing held in escrow pending completion of project construction	97			(97		)	—
Other projects	(23		)	(20		)	(18		)
Financing costs and others	(39		)	(32		)	(24		)
Borrowing held in escrow pending completion of project construction	—			97			(97		)
Total cash provided by financing activities	$	564		$	277		$	235
Financing costs and others	(34		)	(39		)	(32		)
Total cash provided by financing activities	$	112		$	564		$	277

Cash Flows From Investing Activities

The change in investing activities is primarily due to the timing of capital expenditures and cash collateral to secure letter of credit facilities associated with the termination of EME's revolving credit facility. Changes in other investing activities are reflected in the following table:

(in millions)	~~2012~~2013			~~2011~~2012			~~2010~~2011
Capital expenditures
Midwest Generation plants
Environmental	$	21(12	)	$	82(21	)	$	32(82	)
Plant capital	9(4		)	21(9		)	75(21		)
Walnut Creek project	203			258			—
Walnut Creek Project	(70		)	(203		)	(258		)
Renewable energy projects	~~114~~(3		)	~~298~~(114		)	~~414~~(298		)
Other capital expenditures	8(3		)	13(8		)	35(13		)
Investments in other assets	84			30(8		)	7(30		)
Collateral for letter of credit facilities	4927			—(49		)	—
Other investing activities	184			(3818		)	~~(19~~38		)
Homer City plant	31—			14(31		)	18(14		)
Total cash used in investing activities	$	~~461~~(57	)	$	~~678~~(461	)	$	~~562~~(678	)

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Historical Consolidated Cash Flow (Midwest Generation only)

The following table presents Midwest Generation's condensed consolidated statement of cash flows:

(in millions)	~~2012~~2013			~~2011~~2012			~~2010~~2011
Net cash provided by operating activities	$	1343		$	~~364~~13		$	~~401~~364
Net cash used in financing activities	(~~116~~6		)	(~~334~~116		)	(~~245~~334		)
Net cash used in investing activities	(1514		)	(~~112~~15		)	(98112		)
Net (decrease) increase in cash and cash equivalents	$	(118	)	$	(82	)	$	58
Net increase (decrease) in cash and cash equivalents	$	23		$	(118	)	$	(82	)

Cash Flows From Operating Activities

The ~~2012~~increase ~~decrease~~ in ~~net~~ cash provided by operating activities ~~was primarily attributable to lower capacity prices, lower average realized energy prices, higher fuel prices and reduced generation. The 2011 decrease~~ in ~~net~~2013 ~~cash~~as ~~provided~~compared byto ~~operating~~2012 ~~activities~~ was primarily attributable to ~~lower~~fewer ~~revenues~~coal ~~due~~purchases toas ~~lower~~existing ~~average~~coal ~~realized~~inventory ~~energy~~was ~~prices~~utilized, ~~and~~which ~~the~~was ~~timing~~partially ofoffset ~~cash~~by ~~receipts~~lower ~~and~~capacity ~~disbursements~~revenues. ~~related~~2013 tooperating ~~working~~cash ~~capital~~flows ~~items,~~also ~~partially~~increased ~~offset~~due byto ~~higher~~the ~~payments~~classification ~~for settlements~~ of ~~derivative~~pre-petition ~~contracts~~obligations inas ~~2010~~LSTC.

The 2012 decrease in net cash provided by operating activities was primarily attributable to lower capacity prices, lower average realized energy prices, higher fuel prices and reduced generation. The remaining changes relate to the timing of cash receipts and disbursements related to working capital items.

Cash Flows From Financing Activities

The decrease in ~~2012~~2013 was primarily due to ~~$225 million~~lower ofrent ~~distributions~~payments ~~made~~for bythe ~~Midwest~~leased ~~Generation~~facilities toat ~~its~~the ~~parent~~Powerton inand ~~2011,~~Joliet ~~with~~plants nodue ~~distributions~~to ~~made~~the inforbearance ~~2012.~~agreement ~~The~~(see ~~2011~~"—Available ~~increase~~Liquidity") in ~~net~~2013 ~~cash~~as ~~used~~compared inwith ~~financing~~2012. ~~activities~~The decrease in 2012 was primarily due to $~~100~~ 225 million of ~~higher~~ distributions made by Midwest Generation to its parent in 2011, aswith ~~compared~~no todistributions ~~2010~~made in 2012.

Cash Flows From Investing Activities

Net cash used in investing activities consisted primarily of capital expenditures for ~~2012~~2013, ~~2011~~2012 and ~~2010~~2011.

Margin, Collateral Deposits and Other Credit Support for Energy Contracts

To reduce their exposure to market risk, EME and Midwest Generation hedge a portion of their electricity price exposure through Edison Mission Marketing & Trading, Inc. (EMMT). In connection with entering into contracts, EMMT may be required to support its risk of nonperformance through parent guarantees, margining, or other credit support. EME has entered into guarantees in support of certain of EMMT's hedging and trading activities. However, EME ~~has~~and EMMT have historically also provided collateral in the form of cash and letters of credit for the benefit of counterparties. EME's ability to provide collateral during the Chapter 11 Cases is limited. For further details, see "~~Item 8.~~ Combined Notes to Consolidated Financial Statements—Note 6. Derivative Instruments and Hedging Activities—~~Margin~~EME—Summary ~~and~~of ~~Collateral~~Derivative ~~Deposits~~Instruments."

Midwest Generation anticipates that sales of its power through EMMT may require additional credit support, depending upon market conditions and the strategies adopted for the sale of this power. Changes in forward market prices and margin requirements and increases in merchant sales could further increase the need for credit support related to hedging activities. Midwest Generation has only a limited ability to provide collateral to support bilateral contracts for power and fuel to the extent that any such transactions relate to its merchant energy operations. Pursuant to an order from the Bankruptcy Court, such credit support would require prior written notice to certain of Midwest Generation's unsecured creditors, who would have an opportunity to object. In the event of an objection, Midwest Generation would not be able to provide collateral unless the Bankruptcy Court orders otherwise. There is no assurance that Midwest Generation will be able to provide credit support to EMMT.

Future cash collateral requirements for hedging and trading activities may be higher than the margin and collateral requirements at December 31, ~~2012~~2013, if wholesale energy prices change or if EMMT enters into additional transactions. EME estimates that, under existing arrangements, margin and collateral requirements for energy and congestion contracts outstanding as of December 31, ~~2012~~2013 could increase by approximately $192 million over the remaining life of the contracts using a 95% confidence level.

~~EME’~~EMMT's approach to trading and risk management depends, in part, on the ability to use clearing brokers to enter into market transactions. As a result of its financial position, ~~EME~~EMMT has limited access to enter into such transactions and has been subject to increased initial collateral and margin requirements. There is no assurance that ~~EME~~EMMT will continue to be able to utilize clearing brokers. If ~~EME~~EMMT becomes unable to utilize clearing brokers, it may seek to execute bilateral transactions with third parties which could be unavailable on commercially reasonable terms or at all.

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EME's Intercompany Tax-Allocation Agreement

Historically, EME isparticipated ~~included~~ in ~~the consolidated federal and combined state income~~ tax ~~returns of EIX and is eligible to participate in tax~~-allocation agreements with EIX ~~and~~in ~~its~~which ~~subsidiaries.~~ EME's ~~right~~would be eligible to receive payments ~~under~~from ~~the tax-allocation agreements and the timing and amount of those payments are dependent on the inclusion of EME in the consolidated income tax returns of~~ EIX ~~and~~for ~~other factors, including the amount of consolidated taxable income and net operating loss carryforwards of EIX, and other~~ tax ~~items~~losses ~~of EME~~ and ~~other~~credits ~~subsidiaries~~generated ofby ~~EIX. Based on the application of the factors cited above,~~ EME ~~is obligated during periods it generates taxable income to make payments under the tax-allocation agreements~~. Tax-allocation receipts and payments may also be affected by redetermination of utilization of net operating losses resulting from carryback of net operating losses on a consolidated basis or settlement of tax liabilities for prior periods. During 2012, EIX modified the tax-allocation agreements ~~were modified~~ to ~~provide~~terminate ~~for termination of~~ EME's participation on December 31, 2013. The Settlement Transaction contemplates that EME's participation in the tax-allocation agreements would be extended through the earlier of the effective date of EME's plan of reorganization and December 31, 2014. However, there can be no assurance that the Settlement Transaction will be consummated. Termination does not relieve any party of any obligations with respect to any tax year beginning prior to the year of termination. The parties to the Settlement Agreement have estimated the EME

In 2012, EME made tax-allocation payments to EIX of approximately $185 million related to the displacement, under the tax-allocation agreements, of tax benefits previously received for 2009 federal income taxes. Realization of the deferred tax assets is dependent on generating sufficient consolidated taxable income by the EIX consolidated tax group prior to expiration of the loss and credit carryforwards. Without objectively verifiable evidence supporting the taxable income forecast of the EIX consolidated tax group during 2013 and 2014, EME is not currently able to determine whether it is more likely than not that future tax-sharing payments will occur. As a result, as of December 31, 2012, EME recorded a valuation allowance against its net deferred tax assets of $444 million, of which $6 million was reflected in accumulated other comprehensive loss and $438 million in net loss for the year ended December 31, 2012. In addition, EME recorded a non-cash distribution to its parent of $222 million related to tax benefits generated by EME which have been utilized in the EIX consolidated tax return on a statutory basis for which, under the tax-allocation agreements as applied, EME is not yet, and may never be, entitled to be paid. 51

Tax Attributes to be $1.19 billion and have agreed that EIX will pay the Reorganization Trust amounts equal to 50% of the EME Tax Attributes as follows: $225 million payable on the Effective Date in cash, with one half of the balance payable on each of September 30, 2015 and September 30, 2016, together with interest at 5% per annum from the Effective Date.

During 2013, in connection with EIX's finalization of their 2012 consolidated tax returns, EME recorded a net non-cash contribution from EIX of $25 million related to tax benefits which EME had previously believed would be utilized in the EIX consolidated tax return on a statutory basis but would not be paid under the tax-allocation agreements. In addition, EME received a net tax-allocation payment from EIX of approximately $12 million as a partial payment for tax benefits previously recorded as non-cash distributions.

If the Settlement Agreement is terminated, as a result of the termination of the Acquisition Agreement or otherwise, then, as of January 1, 2014 benefits that had been previously generated by EME and utilized in the EIX consolidated tax return on a statutory basis but are unpaid under the tax-allocation agreements will not be available for use by EME in its own consolidated tax return and will not be paid by EIX. At December 31, 2013, EME has a non-cash distribution to its parent of $185 million related to tax benefits for which, under the tax-allocation agreements as applied, EME has not yet, and may never be, entitled to be paid. In addition, EME has not yet, and may never be, paid for the approximately $1,435 million of tax benefits generated by EME which have not yet been utilized in the EIX consolidated tax return.

Capistrano Wind Holdings and Capistrano Wind, LLC, which still participate in tax-allocation agreements with EIX, have generated $126 million of tax benefits, $27 million of which has been used by the EIX consolidated tax group, for all of which either payment has been received or payment is expected to be received under the tax-allocation agreements.

Midwest Generation's Equity Distributions and Tax Payments

Midwest Generation is included in the consolidated federal and state income tax returns of EIX and is party to a tax-allocation agreement with its parent, Edison Mission Midwest Holdings. Midwest Generation's tax-allocation agreement only permits the use of net operating losses to offset future taxable income and does not include the right to receive payments. As a result, benefits for Midwest Generation's tax losses that would have been utilized by Midwest Generation in a hypothetical tax return prepared on a separate return basis are accounted for as non-cash equity distributions. The following table summarizes the cash payments made by Midwest Generation as equity distributions through Edison Mission Midwest Holdings, non-cash equity distributions, and payments made pursuant to tax-allocation agreements:

(in millions)	~~2012~~2013		~~2011~~2012		~~2010~~2011
Cash equity distributions	$	—	$	~~225~~—	$	~~125~~225
Non-cash equity distributions	~~106~~—		—106		—
Tax payments under tax-allocation agreements	—		8—		~~136~~8
Total	$	~~106~~—	$	~~233~~106	$	~~261~~233

For further information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 7. Income Taxes—Midwest Generation—Intercompany Tax-Allocation Agreement," and "Item 1A. Risk Factors—Liquidity Risks."

Dividend Restrictions in Major Financings

Each of EME's direct or indirect subsidiaries is organized as a legal entity separate and apart from EME and its other subsidiaries. Except for certain of EME's wind projects in portfolio financings, assets of EME's subsidiaries are not available to satisfy EME's obligations or the obligations of any of its other subsidiaries. However, unrestricted cash or other assets that are available for distribution may, subject to applicable law and the terms of financing arrangements of the parties, be advanced, loaned, paid as dividends or otherwise distributed or contributed to EME or to its subsidiary holding companies. For further details, including the restricted net assets of EME, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements—~~Restricted~~Debt ~~Net Assets of Subsidiaries~~Covenants."

55Covenants in the Powerton and Joliet Sale Leaseback documents include restrictions on the ability of EME and Midwest Generation to, among other things, incur debt, create liens on its property, merge or consolidate, sell assets, make investments, engage in transactions with affiliates, make distributions, make capital expenditures, enter into agreements restricting its ability to make distributions, engage in other lines of business, enter into swap agreements, or engage in transactions for any speculative purpose. For further discussion on the Powerton and Joliet Sale Leaseback, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 9. Commitments and Contingencies."

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Covenants in the Powerton and Joliet Sale Leaseback documents include restrictions on the ability of EME and Midwest Generation to, among other things, incur debt, create liens on its property, merge or consolidate, sell assets, make investments, engage in transactions with affiliates, make distributions, make capital expenditures, enter into agreements restricting its ability to make distributions, engage in other lines of business, enter into swap agreements, or engage in transactions for any speculative purpose.

Contractual Obligations, Commercial Commitments and Contingencies

EME

The following table summarizes significant prospective cash requirements for EME as of December 31, ~~2012~~2013 under existing contractual obligations, including payments due by period. ~~EME~~As described in the Acquisition Agreement, the Purchaser is in the process of evaluating the Debtor Entities' executory contracts in order to determine which contracts may be rejected. A provision for claims associated with the contracts that have been rejected/filed to reject with the Bankruptcy Court is included in LSTC below. For further discussion, see "~~Item 1.~~Edison ~~Business~~Mission Energy Overview—~~Chapter~~Plan 11of ~~Cases.~~Reorganization and the NRG Sale"

			Payments Due by Period
(in millions)	Total		Less than1 year		1 to 3years		3 to 5years		More than5 years
Long-term debt of EME's non-debtor subsidiaries1	$	1,~~247~~751	$	98369	$	~~438~~254	$	~~221~~290	$	~~490~~838
Short-term debt2	~~387~~4		~~387~~4		—		—		—
Power plant and other operating lease obligations3	~~847~~776		~~170~~287		~~252~~115		5520		~~370~~354
Capital lease obligations4	3		1		2		—		—
Purchase obligations4
Midwest Generation fuel supply contracts	~~320~~194		~~170~~194		~~150~~—		—		—
Midwest Generation coal transportation agreements5	21,~~154~~836		~~283~~259		~~536~~514		~~475~~425		~~860~~638
Gas transportation agreements	3932		7		1415		1510		3—
Capital expenditures	859		499		36—		—		—
Other contractual obligations	~~114~~122		5148		4250		209		115
Employee benefit plan contribution6	~~107~~19		2319		45—		39—		—
Total excluding LSTC7	$	54,~~303~~743	$	1,~~239~~196	$	~~1,515~~948	$	~~825~~754	$	1,~~724~~845
LSTC8	34,~~959~~015
Total	$	98,~~262~~758

1 Amount is primarily project debt, including $~~191~~257 million of interest payments over the applicable period of the debt. For additional details, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."

2 Amount is primarily project debt~~, including $5 million of interest payments over the applicable period of the debt~~. For additional details, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."


³	Amount is primarily related to the Powerton and Joliet Sale Leaseback. For further discussion, see "—Off-Balance Sheet Transactions—Sale Leaseback" and "Item 8. Combined Notes to Consolidated Financial Statements—Note 9. Commitments and Contingencies."


⁴	For additional details, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 9. Commitments and Contingencies."


⁵	Reflects a reduction in minimum volumes for the voluntarily cessation of coal-fired operations at the Fisk and Crawford Stations.

6 Amount includes estimated ~~contribution~~contributions for 2014 for EME to participate in EIX sponsored pension plans and postretirement benefits other than pensions. The ~~estimated~~consummation ~~contributions~~of ~~beyond~~the ~~2017~~NRG ~~are~~Sale ~~not~~would ~~available~~terminate participation in the EIX sponsored plans. For more information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 8. Compensation and Benefit Plans—Pension Plans and Postretirement Benefits Other than Pensions."

7 The contractual obligations table does not include derivative obligations, AROs and the total net liability for uncertain tax positions of $~~161~~168 million ($52 million current tax liability and $116 million non-current tax liability) at December 31, ~~2012~~2013. EME cannot make reliable estimates of the cash flows by period due to uncertainty surrounding the timing of resolving these open tax issues with the Internal Revenue Service. For more information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 6. Derivative Instruments and Hedging Activities," "—Note 2. Property, Plant and Equipment" and "—Note 7. Income Taxes," respectively.

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the timing of resolving these open tax issues with the Internal Revenue Service. For more information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 6. Derivative Instruments and Hedging Activities," "—Note 2. Property, Plant and Equipment" and "—Note 7. Income Taxes," respectively.


⁸	Amount primarily reflects $3.7 billion of EME's unsecured senior notes that was previously recorded as long-term debt. For additional details, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements" and "—Note 16. Restructuring Activities."

Midwest Generation

The following table summarizes significant prospective cash requirements for Midwest Generation as of December 31, ~~2012~~2013 under existing contractual obligations and other commercial commitments, including payments due by period. ~~Midwest~~As ~~Generation~~described in the Acquisition Agreement, the Purchaser is in the process of evaluating ~~its~~Midwest Generation's executory contracts in order to determine which contracts may be rejected. A provision for claims associated with the contracts that have been rejected/filed to reject with the Bankruptcy Court is included in LSTC below. For further discussion, see "~~Item 1.~~Edison ~~Business~~Mission Energy Overview—~~Chapter~~Plan 11of ~~Cases.~~Reorganization and the NRG Sale"

			Payments Due by Period
(in millions)	Total		Less than1 year		1 to 3years		3 to 5years		More than5 years
Lease financings not included in LSTC1	$	9	$	7	$	2	$	—	$	—
Operating lease obligations1	$	4	2		2		—		—
Operating lease obligations2	38		8		14		10		6
Purchase obligations1
Purchase obligations2
Fuel supply contracts	194		194		—		—		—
Fuel supply contracts	320		170		150		—		—
Coal transportation agreements2	1,836		259		514		425		638
Coal transportation agreements3	2,154		283		536		475		860
Capital expenditures	9		9		—		—		—
Capital expenditures	61		25		36		—		—
Other contractual obligations	15		15		—		—		—
Other contractual obligations	20		19		1		—		—
Employee benefit plan contribution3	14		14		—		—		—
Employee benefit plan contribution4	80		18		33		29		—
Total excluding LSTC4	$	2,072	$	493	$	516	$	425	$	638
Total excluding LSTC5	$	2,682	$	530	$	772	$	514	$	866
LSTC5	540
LSTC6	529
Total	$	2,612
Total	$	3,211

1 ~~Amount primarily represents the portion of the rent and interest due under the Powerton and Joliet Sale Leaseback attributable to the period between December 17, 2012 and January 2, 2013.~~ For ~~further~~additional ~~discussion~~details, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 9. Commitments and Contingencies."

2 ~~For~~Reflects ~~additional~~a ~~details,~~reduction ~~see~~in ~~"Item~~minimum 8.volumes ~~Combined~~for ~~Notes~~the tovoluntarily ~~Consolidated~~cessation ~~Financial~~of ~~Statements—Note~~coal-fired 9.operations ~~Commitments~~at the Fisk and ~~Contingencies~~Crawford Stations."

3 ~~Reflects~~Amount aincludes ~~reduction~~estimated incontributions ~~minimum~~for ~~volumes~~2014 for ~~the~~Midwest ~~voluntarily~~Generation ~~cessation~~to participate in EIX sponsored pension plans and postretirement benefits other than pensions. The consummation of ~~coal-fired~~the ~~operations~~NRG atSale would terminate participation in the ~~Fisk~~EIX sponsored plans. For more information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 8. Compensation and ~~Crawford~~Benefit ~~Stations~~Plans—Pension Plans and Postretirement Benefits Other than Pensions."

4 ~~Amount~~The ~~includes~~contractual ~~estimated~~obligations ~~contribution~~table does not include derivative obligations, AROs and the total net liability for ~~pension~~uncertain ~~plans~~tax positions of $43 million ($41 million current tax liability and ~~postretirement~~$2 ~~benefits~~million ~~other~~non-current ~~than~~tax ~~pensions~~liability) at December 31, 2013. ~~The~~Midwest ~~estimated~~Generation ~~contributions~~cannot ~~beyond~~make ~~2017~~reliable ~~are~~estimates ~~not~~of ~~available~~the cash flows by period due to uncertainty surrounding the timing of resolving these open tax issues with the Internal Revenue Service. For more information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 86. ~~Compensation~~Derivative Instruments and ~~Benefit~~Hedging ~~Plans~~Activities," "—~~Pension~~Note ~~Plans~~2. ~~and~~Property, ~~Postretirement~~Plant ~~Benefits~~and ~~Other~~Equipment" ~~than~~and ~~Pensions~~"—Note 7. Income Taxes," respectively.

5 ~~The~~Amount ~~contractual~~primarily ~~obligations~~reflects ~~table~~principal ~~does~~payments ~~not~~related include derivative obligations, AROs and the total net liability for uncertain tax positions of $42 million at December 31, 2012. Midwest Generation cannot make reliable estimates of the cash flows by period due to ~~uncertainty surrounding~~ the ~~timing~~Powerton ofand ~~resolving~~Joliet ~~these~~Sale ~~open~~Leaseback ~~tax~~that ~~issues~~were ~~with~~previously ~~the~~recorded ~~Internal~~as ~~Revenue~~lease ~~Service~~financing. For ~~more~~further ~~information~~discussion, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 69. ~~Derivative~~Commitments ~~Instruments~~ and ~~Hedging Activities,~~Contingencies" ~~"—Note 2. Property, Plant~~ and ~~Equipment~~" ~~and "~~—Note 716. ~~Income~~Restructuring ~~Taxes," respectively~~Activities."

6 Amount primarily reflects principal payments related to the Powerton and Joliet Sale Leaseback that were previously recorded as lease financing. For further discussion, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 9. Commitments and Contingencies" and "—Note 16. Restructuring Activities."

Commercial Commitments (EME only)

At December 31, ~~2012~~2013, letters of credit under EME's and its subsidiaries' credit facilities aggregated $163 million and were scheduled to expire as follows: $91 59 million in ~~2013~~2014, $2 17 million in ~~2014~~2017, $21 9 million in ~~2017~~2018, $18 27 million in ~~2018~~2020, $18 million in 2021, ~~and~~ $13 million in 2022 and $20 million in 2023. Standby letters of credit include $30 22 million issued in connection with the power purchase agreement with ~~SCE~~Southern California Edison Company, an affiliate of EME, under the Walnut Creek credit facility. At December 31, ~~2012~~2013, EME had $49 22 million of cash collateral supporting its standby letters of credit. ~~Certain~~For ~~letters~~further ofdiscussion, ~~credit~~see ~~are~~"Item ~~subject to automatic annual renewal provisions~~8. ~~EME~~Combined ~~does~~Notes ~~not currently have the ability~~ to ~~replace~~Consolidated ~~the~~Financial ~~expiring~~Statements—Note ~~standby~~5. ~~letters~~Debt ~~of credit~~ and ~~will~~Credit ~~need~~Agreements—Credit toFacilities ~~negotiate~~and aLetters ~~letter~~ of ~~credit facility prior to the expiration of its existing standby letters of credit~~Credit."

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On February 20, 2013, the Bankruptcy Court approved an agreement between EME and DNB Bank, the lender pursuant to EME's secured letter of credit facility. Pursuant to this agreement, DNB Bank has agreed to forbear from sending notices of non-renewal to beneficiaries of outstanding letters of credit, and to allow existing letters of credit to renew automatically in accordance with their terms. In exchange, EME consented to lift the automatic stay to permit DNB Bank to setoff any obligations due and owing under the applicable documents against EME's cash collateral.

EME may seek a DIP Financing which would be used to enhance liquidity and working capital and/or provide for the issuance of letters of credit, and which would be subject to Bankruptcy Court approval and other conditions. The agreement with DNB Bank contemplates that EME will have sought court approval of a DIP Financing package that includes a letter of credit facility by March 31, 2013. Failure to replace the letters of credit by its their applicable maturity date dates could result in draws under the letters of credit that could cause defaults under project agreements unless the beneficiaries of the letter of credit agree to accept cash collateral in lieu of a letter of credit. There is no assurance that EME will complete a DIP Financing.

Contingencies

For a discussion of contingencies related to the Midwest Generation New Source Review and other litigation, the Homer City NSR and other litigation, environmental remediation and the Chevron adversary proceeding, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 9. Commitments and Contingencies—Contingencies."

Off-Balance Sheet Transactions

Introduction

Midwest Generation has off-balance sheet activities related to operating leases in place primarily for leased railcars and operating equipment with termination dates in various years through ~~2019~~2017. For further discussion, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 9. Commitments and Contingencies—Lease Commitments."

EME has off-balance sheet transactions in two principal areas: investments in projects accounted for under the equity method, which is discussed in detail in "Item 8. Combined Notes to Consolidated Financial Statements—Note 3. Variable Interest Entities," and operating leases resulting from the Powerton and Joliet Sale Leaseback discussed below.

Sale Leaseback (EME only)

Midwest Generation has entered into the Powerton and Joliet Sale Leaseback and EME has provided guarantees related to this transaction. Neither the value of the leased assets nor the lessor debt is reflected on EME's consolidated balance sheet. In accordance with GAAP, EME records rent expense related to the Powerton and Joliet Sale Leaseback on a levelized basis over the terms of the respective leases, which is reflected below under plant operating leases.

The lessor equity and lessor debt associated with the Powerton and Joliet Sale Leaseback is summarized in the following table:

Power Station(s)		Acquisition Price(in millions)		Equity ~~Investor~~Investor1		Original Equity Investment in Owner-Lessor (in millions)		Amount of Lessor Debt at December 31, ~~2012~~2013 (in millions)		Maturity Date of Lessor Debt
Powerton/Joliet		$1,367		PSEG/Citigroup, Inc.		$238		$345 Series B		2016

1 PSEG- PSEG Resources, Inc.

The lease payments to be made are structured to service the lessor debt and provide a return to the owner-lessor's equity investors. To the extent that EME's cash rent payments exceed the amount levelized over the term of each lease, EME records prepaid rent. To the extent that EME's cash rent payments are less than the amount levelized, EME reduces the amount of prepaid rent.

~~For~~Each ~~further~~lease ~~discussion~~sets forth a termination value payable upon certain circumstances, ~~see~~which ~~"Item 8~~generally declines over time. ~~Combined~~A ~~Notes~~default tounder ~~Consolidated~~the ~~Financial~~terms ~~Statements—Note~~of 1the Powerton and Joliet leases could result in foreclosure and a loss by Midwest Generation of its lease interest in the plant. ~~Summary~~In addition, under certain circumstances, a default would trigger obligations under EME's guarantee of ~~Significant~~such ~~Accounting~~leases. ~~Policies—Sale~~These ~~Leaseback"~~events could have an adverse effect on EME's and ~~"—Note 9.~~Midwest ~~Commitments~~Generation's results of operations and ~~Contingencies—Lease~~financial ~~Commitments~~position."

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The following table summarizes the lease payments and rent expense:

	Years Ended December 31,
(in millions)	~~2012~~2013		~~2011~~2012		~~2010~~2011
Powerton and Joliet Stations
Midwest Generation lease payments	$	~~151~~30	$	151	$	~~170~~151
EME rent expense	$	75	$	75	$	75

At December 31, ~~2012~~2013 and ~~2011~~2012, EME's aggregate prepaid rent was $~~836~~791 million and $~~760~~836 million, respectively. During the pendency of the Chapter 11 Cases, Midwest Generation did not make any of the three scheduled $76 million lease payments under the Powerton and Joliet Sale Leaseback and the Senior Lease Obligation Bonds issued to finance these leases. Prior to the filing of the Chapter 11 Cases, EME and Midwest Generation had entered into a forbearance agreement with the owner-lessors, the owner-lessors' equity owners, and the Certificate Holders under which Midwest Generation paid the ratable portion of the rent due under the leases attributable to the period between December 17, 2012 and January 2, 2013 of $7 million. After the expiration of the forbearance agreement, beginning in July 2013, EME and Midwest Generation agreed, among other things, to make monthly rental payments of $3.75 million. Upon consummation of the NRG Sale, Midwest Generation will assume the Powerton and Joliet leases and EME will retain all liabilities with respect to the payment of the Powerton and Joliet Cure Amount.

The filing of the Chapter 11 Cases constitutes events of default under the Powerton and Joliet Sale Leaseback. However, EME and Midwest Generation have entered into a forbearance agreement which expires the earlier of April 5, 2013 or upon notice of withdrawal from the agreement by approximately 60 percent of the holders of the Senior Lease Obligation Bonds. In the event the forbearance expires or is otherwise cancelled, each owner-lessor and the certificate holders can exercise certain rights under the applicable lease. Each lease sets forth a termination value payable upon certain circumstances, which generally declines over time. A default under the terms of the Powerton and Joliet leases could result in foreclosure and a loss by Midwest Generation of its lease interest in the plant. In addition, under certain circumstances, a default would trigger obligations under EME's guarantee of such leases. These events could have an adverse effect on EME's and Midwest Generation's results of operations and financial position. 55

For further discussion, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—Sale Leaseback," "—Note 9. Commitments and Contingencies—Lease Commitments" and "—Note 16. Restructuring Activities—NRG Sale."

EME's Obligations to Midwest Generation (EME only)

Proceeds, ~~in the aggregate amount~~ of ~~approximately~~ $1.4367 billion, were received by Midwest Generation from the ~~sale of the~~ Powerton and Joliet ~~plants, described above under "—~~Sale Leaseback." These proceeds were loaned to EME through four intercompany notes and used by EME to repay corporate indebtedness. EME is obligated to repay the principal on the notes in a series of installments and interest is due semi-annually on January 2 and July 2. Although interest and principal payments historically made by EME to Midwest Generation under the intercompany loan ~~assist~~assisted in the payment of the lease rental payments owed by Midwest Generation, the intercompany obligation does not appear on EME's consolidated balance sheet. ~~The~~During ~~following~~the ~~table~~pendency ~~summarizes~~of the Chapter 11 Cases, EME did not make any of the three scheduled principal and interest payments ~~due~~of ~~under~~$61 million. ~~this~~Upon ~~intercompany~~consummation of the Plan and the NRG Sale, this loan: and accrued interest will be canceled. For additional information, see "Item 8. Combined Notes to Consolidated Financial Statements— Note 15. Related Party Transactions" and "—Note 16. Restructuring Activities—NRG Sale."

Years Ending December 31,(in millions)	Principal Amount		Interest Amount		Total
2013	$	12	$	109	$	121
2014	545		86		631
2015	283		40		323
2016	483		—		483
Total	$	1,323	$	235	$	1,558

As a result of the Chapter 11 Cases, EME did not make the scheduled principal and interest payment of $61 million due on January 2, 2013. Future payments, if any, made by EME under the loan will be dependent upon the overall resolution of the Chapter 11 Cases. For further discussion, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 15. Related Party Transactions."

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MARKET RISK EXPOSURES (EME and Midwest Generation, except as noted)

Introduction

EME's and Midwest Generation's primary market risk exposures are associated with the sale of electricity and capacity from, and the procurement of fuel for, its merchant power plants. These market risks arise from price fluctuations of electricity, capacity, fuel, emission allowances, and transmission rights. Additionally, EME's financial results can be affected by fluctuations in interest rates. EME and Midwest Generation ~~manage~~have historically managed these risks in part by using derivative instruments in accordance with established policies and procedures. Both EME and Midwest Generation use commodity derivatives for non-trading purposes. EME also has derivatives used for trading purposes.

Derivative Instruments

EME and Midwest Generation ~~use~~have historically used derivative instruments to reduce its exposure to market risks that arise from price fluctuations of electricity, capacity, fuel, emission allowances, and transmission rights. For derivative instruments recorded at fair value, changes in fair value are recognized in earnings at the end of each accounting period unless the instrument qualifies for hedge accounting. For derivatives that qualify for cash flow hedge accounting, changes in their fair value are recognized in other comprehensive income until the hedged item settles and is recognized in earnings. However, the ineffective portion of a derivative that qualifies for cash flow hedge accounting is recognized currently in earnings.

Unrealized Gains and Losses

Unrealized gains and losses from derivative instruments (other than the effective portion of derivatives that qualify for hedge accounting) are recorded as part of operating revenues or fuel costs. The following table summarizes unrealized gains (losses) from non-trading activities:

	Years Ended December 31,
(in millions)	~~2012~~2013			~~2011~~2012			~~2010~~2011
Midwest Generation
Non-qualifying hedges	$	(41	)	$	(24	)	$	(112	)
Ineffective portion of cash flow hedges	(2—		)	1(2		)	(21		)
Total unrealized losses	$	(61	)	$	(16	)	$	(131	)

At December 31, ~~2012~~2013, no cumulative unrealized gains ofor ~~$1 million~~losses were recognized from non-qualifying hedge contracts or the ineffective portion of cash flow hedges related to ~~2013~~2014.

Fair Value Disclosures

In determining the fair value of EME's and Midwest Generation's derivative positions, third-party market pricing is used where available. For further explanation of the fair value hierarchy and a discussion of EME's and Midwest Generation's derivative instruments, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 4. Fair Value Measurements" and "—Note 6. Derivative Instruments and Hedging Activities," respectively.

The net fair value of commodity derivatives used for non-trading purposes for both EME and Midwest Generation at December 31, ~~2012~~2013 was ~~a liability of $1 million~~zero. A 10% change in the market price of the underlying commodity at December 31, ~~2012~~2013 would increase or decrease the net fair value of non-trading commodity derivatives by approximately $131 million.

EME also has derivatives used for trading purposes. The net fair value of EME's derivatives used for trading purposes at December 31, ~~2012~~2013 was $8459 million. A 10% change in the market price of the underlying commodity at December 31, ~~2012~~2013 would increase or decrease the net fair value of trading contracts by approximately $136 million. The impact of changes to the various inputs used to determine the fair value of Level 3 derivatives would not be anticipated to be material to EME's results of operations as such changes would be offset by similar changes in derivatives classified within Level 3 as well as other levels. Level 3 assets and liabilities are 5650% and 52%, respectively, of derivative assets and liabilities measured at fair value before the impact of offsetting collateral and netting as of December 31, ~~2012~~2013.

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Commodity Price Risk

Introduction

EME's and Midwest Generation's merchant operations are exposed to commodity price risk, which reflects the potential impact of a change in the market value of a particular commodity. Commodity price risks are actively monitored, with oversight provided by a risk management committee, to ensure compliance with EME's and Midwest Generation's risk management policies. Despite this, there can be no assurance that all risks have been accurately identified, measured and/or mitigated.

Energy Price Risk

EME is exposed to energy price risk through its indirect ownership of Midwest Generation, 428 MW of merchant renewable energy projects in PJM and ERCOT, ~~and~~ 50% of the Sunrise project, and its proprietary trading. Midwest Generation is exposed to energy price risk through sales of energy and capacity into the PJM market. Energy and capacity from Midwest Generation are sold under terms, including price, duration and quantity, arranged by EMMT with customers through a combination of bilateral agreements (resulting from negotiations or from auctions), forward energy sales, and spot market sales. Power is sold into PJM at spot prices based upon locational marginal pricing.

The following table depicts the average historical market prices for energy per megawatt-hour at the Northern Illinois Hub:

	2012		2011		2010
	2013		2012		2011
24-Hour Average Historical Market Prices1	$	2832.5618	$	3328.2156	$	33.1221


¹	Energy prices were calculated at the Northern Illinois Hub delivery point using historical hourly day-ahead prices as published by PJM or provided on the PJM web-site.

The following table sets forth the forward market prices for energy per megawatt-hour as quoted for sales into the Northern Illinois Hub at December 31, ~~2012~~2013:

	24-Hour Forward Energy Prices1
2013 calendar "strip"2		$	30.07
2014 calendar "strip"2		$	31.45
2014 calendar "strip"2		$	30.99
2015 calendar "strip"2		$	30.34


¹	Energy prices were determined by obtaining broker quotes and information from other public sources relating to the Northern Illinois Hub delivery point.


²	Market price for energy purchases for the entire calendar year.

Power prices remained low in ~~2012~~2013 due to an abundance of low-priced natural gas ~~and the sales volume from Midwest Generation has been correspondingly affected~~. Forward market prices at the Northern Illinois Hub fluctuate as a result of a number of factors, including natural gas prices, transmission congestion, changes in market rules, electricity demand (which in turn is affected by weather, economic growth, and other factors), plant outages in the region, and the amount of existing and planned power plant capacity. The actual spot prices for electricity delivered by Midwest Generation into these markets may vary materially from the forward market prices set forth in the preceding table.

EMMT engages in hedging activities for Midwest Generation to hedge the risk of future changes in the price of electricity. The following table summarizes the hedge positions at December 31, ~~2012~~2013 for electricity expected to be generated in ~~2013~~2014:

	MWh (in thousands)					Average price/MWh1
Midwest Generation2		~~3,616~~170					$	3643.5166

1 The above hedge positions ~~include~~consist ~~forward~~of futures contracts accounted for ~~the~~as ~~sale~~economic ofhedges ~~power and futures contracts~~ during different periods of the year and the day. Market prices tend to be higher during on-peak periods and during summer months, although there is significant variability of power prices during different periods of time. Accordingly, the above hedge positions are not directly comparable to the 24-hour Northern Illinois Hub prices set forth above.

2 Includes hedging transactions primarily at the ~~American Electric Power (AEP)/Dayton Hub and the~~ Northern Illinois Hub, ~~both~~ in PJM~~, and to a lesser extent the Indiana Hub in MISO~~.

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Sunrise (EME only)

Beginning July 1, 2012, Sunrise, in which EME has a 50% interest, operated as a merchant generator and sold power at spot prices from its 586 MW facility into the California ISO market. Spot prices are currently expected to be between the price for the NP15 and SP15 trading locations in that market. As a gas-fired merchant generator, Sunrise purchases natural gas based on spot prices and, accordingly, the plant is dispatched in periods when the power prices exceed the cost of fuel and other variable operations and maintenance costs. Dispatch ~~will~~depends ~~depend~~ on market conditions ~~and Sunrise may run less than it has in the past~~. Historically, Sunrise has operated more during the summer months due to higher demand driven by warmer weather, and for the summer months of 2013, Sunrise ~~has~~had resource adequacy contracts for capacity with PG&E and SDG&E.

Capacity Price Risk

EME and Midwest Generation are exposed to capacity price risk through sales of capacity into the PJM market. Under the RPM, capacity commitments are made in advance to provide a long-term pricing signal for construction and maintenance of capacity resources. The following table summarizes the status of capacity sales for Midwest Generation at December 31, ~~2012~~2013:

	RPM Capacity Sold in Base Residual Auction			Other Capacity Purchases,Net of Sales1							AggregateAveragePrice perMW-day
	MW	Price perMW-day		MW			Average Price per MW-day
January 1, 2013 to May 31, 2013	4,704	$	16.46	(450	)			$	15.67		$	16.54
January 1, 2014 to May 31, 2014	4,650	$	27.73	(2,207	)	2		$	6.08	2	$	47.29	2
June 1, 2013 to May 31, 2014	4,650	27.73		(2,430	)			7.01			50.40
June 1, 2014 to May 31, 2015	4,625	125.99		(704	)			5.65			147.59
June 1, 2014 to May 31, 2015	4,625	125.99		(700	)			5.54			147.47
June 1, 2015 to May 31, 2016	3,620	136.00		0.2				43.00			135.99
June 1, 2015 to May 31, 2016	3,620	136.00		—				—			136.00
June 1, 2016 to May 31, 2017	3,331	59.37		—				—			59.37


¹	Other capacity sales and purchases, net includes contracts executed in advance of the RPM base residual auction to hedge the price risk related to such auction, participation in RPM incremental auctions and other capacity transactions entered into to manage capacity risks.


²	Includes the impact of a 13 MW capacity swap transaction executed between Big Sky and Midwest Generation.

The RPM auction capacity price for the delivery period of June 1, 2016 to May 31, 2017 of $59.37 per MW-day for the western portion of PJM, affecting Midwest Generation, was substantially down from the prior auction mainly due to increased competition from new or upgrades to existing, gas-fired generation, higher imports from nearby markets and low growth in demand due to the slow economy. The impact of lower capacity prices for these periods compared to previous years will have an adverse effect on Midwest Generation's revenues unless such lower capacity prices are offset by increased energy prices.

Revenues from the sale of capacity beyond the periods set forth above will depend upon the amount of capacity available and future market prices either in PJM or nearby markets if those facilities have an opportunity to capture a higher value associated with those markets.

Coal Price Risk

Midwest Generation purchases coal primarily from the Southern PRB of Wyoming. Coal purchases are made under a variety of supply agreements. The following table summarizes the amount of coal Midwest Generation has under contract at December 31, ~~2012~~2013:

		2013		2014
Amount of Coal Under Contract in Millions of Equivalent Tons1		11.8		9.8



		2014
Amount of Coal Under Contract in Millions of Equivalent Tons¹		13.4


¹	The amount of coal under contract in equivalent tons is calculated based on contracted tons and applying an 8,800 Btu equivalent.

Midwest Generation is subject to price risk for purchases of coal that are not under contract. Market prices of PRB coal based on 8,800 Btu per pound heat content and 0.8 pounds of SO2 per million British thermal units (MMBtu) sulfur content ~~decreased~~increased to a price of $1012.07 per ton at ~~December 28~~January 3, ~~2012~~2014, compared to a price of $~~12.75~~10 per ton at December 28, 2012. and decreased compared to a price of $1312.6075 per ton at December 31, 2011 ~~and 2010~~, ~~respectively,~~ as reported by the Energy Information Administration.

In July 2012, Midwest Generation agreed to sell one million tons of coal scheduled to be delivered in the second half of 2012 in order to better manage coal inventories. This transaction resulted in a loss of approximately $6 million recorded in the third quarter of 2012. For additional information, see "Midwest Generation, LLC—Results of Operations—Reconciliation of Non-GAAP Disclosures and Statistical Definitions—Average Realized Fuel Costs."59

~~Based~~In on2013, Midwest Generation's ~~anticipated~~did ~~coal~~not ~~requirements~~take indelivery ~~excess~~ of ~~the~~9.8 ~~amount~~million tons of coal under ~~contract~~a long-term coal supply agreement. In order to meet coal demand, Midwest Generation ~~expects~~entered ~~that~~into ashort-term ~~10%~~requirements ~~change~~contracts inmore reflective of market prices with the ~~price~~same ofcounterparty. ~~coal~~For atfurther ~~December 31~~discussion, ~~2012~~see ~~would~~"Item 8. ~~increase~~Combined orNotes ~~decrease~~to ~~2013~~Consolidated ~~pre-tax~~Financial ~~income~~Statements—Note 9. byCommitments ~~approximately~~and ~~$3 million~~Contingencies—Fuel Supply Contracts."

62In 2012, Midwest Generation agreed to sell one million tons of coal in order to better manage coal inventories. This transaction resulted in a loss of approximately $6 million recorded in the third quarter of 2012.

~~Table~~Midwest ofGeneration ~~Contents~~believes it is fully contracted in 2014 based on its anticipated coal requirements in 2014.

Basis Risk

Sales made from Midwest Generation in the day-ahead market receive the actual day-ahead prices at the busbars (delivery points) of the individual plants. In order to mitigate price risk from changes in forward spot prices at the individual plant busbars, Midwest Generation may enter into cash settled futures contracts as well as forward contracts with counterparties for energy to be delivered in future periods. Currently, a liquid market for entering into these contracts at the individual plant busbars does not exist. A liquid market does exist for settlement points at the Northern Illinois Hub and the AEP/Dayton and Indiana ~~(Cinergy)~~ Hubs. Midwest Generation's hedging activities use these settlement points (and, to a lesser extent, other similar trading hubs) to enter into hedging contracts. To the extent that, on the settlement date of a hedge contract, spot prices at the relevant busbar are lower than spot prices at the settlement point, the proceeds actually realized from the related hedge contract are effectively reduced by the difference. This is referred to as "basis risk." During ~~2012~~2013, day-ahead prices at the individual busbars of Midwest Generation compared to the AEP/Dayton Hub, Indiana Hub ~~(Cinergy Hub)~~ and Northern Illinois Hub were on average lower by 8%, lower by 21% and ~~higher~~lower by less than by 1%, respectively. During ~~2011~~2012, day-ahead prices at the individual busbars of Midwest Generation ~~were lower~~ compared to the AEP/Dayton Hub, Indiana Hub ~~(Cinergy Hub)~~ and Northern Illinois Hub bywere anon average oflower 14by 8%, 4lower by 2% and higher by less than 1%, respectively. Differences in day-ahead pricing between the individual busbars of Midwest Generation generally arise due to transmission congestion.

In order to mitigate basis risk, Midwest Generation may purchase financial transmission rights and basis swaps in PJM. A financial transmission right is a financial instrument that entitles the holder to receive the difference between actual day-ahead prices for two delivery points in exchange for a fixed amount.

Credit Risk

For further information related to credit risk and how EME and Midwest Generation manage credit risk, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 6. Derivative Instruments and Hedging Activities."

The credit risk exposure from counterparties of merchant energy hedging and trading activities is measured as the sum of net receivables (accounts receivable less accounts payable) and the current fair value of net derivative assets. EME's subsidiaries enter into master agreements and other arrangements in conducting such activities which typically provide for a right of setoff in the event of bankruptcy or default by the counterparty. At December 31, ~~2012~~2013, the balance sheet exposure as described above, by the credit ratings of EME's counterparties, was as follows:

	December 31, 2012
	December 31, 2013
(in millions)	Exposure2		Collateral			Net Exposure
Credit Rating1
A or higher	$	7269	$	—		$	7269
A-	—		—			—
BBB+	—7		—			—7
BBB	1—		—			1—
BBB-	—		—			—
Below investment grade	—1		—(1		)	—
Total	$	7377	$	—(1	)	$	7376


¹	EME assigns a credit rating based on the lower of a counterparty's Standard & Poor's Ratings Services (S&P) or Moody's Investors Service, Inc. (Moody's) rating. For ease of reference, the above table uses the S&P classifications to summarize risk, but reflects the lower of the two credit ratings.


²	Exposure excludes amounts related to contracts classified as normal purchase and sales and non-derivative contractual commitments that are not recorded on the consolidated balance sheet, except for any related accounts receivable.

The credit risk exposure set forth in the above table is composed of $4443 million of net accounts receivable and payables and $2934 million representing the fair value of derivative contracts. The exposure is based on master netting agreements with the related counterparties. Credit ratings may not be reflective of the actual related credit risks. In addition to the amounts set forth in the above table, EME's subsidiaries have posted a $6171 million cash margin in the aggregate with ~~PJM,~~various ~~NYISO, MISO, clearing brokers and other~~ counterparties to support hedging and trading activities. The margin posted to support these activities also exposes EME to credit risk of the related entities.

63The coal plants sell electric power generally into the PJM market by participating in PJM's capacity and energy markets or transacting in capacity and energy on a bilateral basis. Sales into PJM accounted for approximately 62% and 100% of EME's and Midwest Generation's consolidated operating revenues, respectively, in 2013. At December 31, 2013, EME's account receivable due from PJM was $32 million.

~~Table~~EME's turbine supply agreements contain significant suppliers' obligations for failure to meet performance obligations and warranty agreements. EME's reliance on these contractual provisions is subject to credit risks. Generally, these are unsecured obligations of ~~Contents~~the turbine manufacturer. A material adverse development with respect to EME's turbine suppliers may have a material impact on EME's wind projects. Two of EME's turbine suppliers, Suzlon Wind Energy Corporation and Clipper Windpower, LLC (Clipper), have been experiencing significant adverse credit and liquidity issues. As a result, EME's ability to enforce performance and warranty guarantees is subject to the credit risk of these counterparties. In April 2013, EME entered into a settlement agreement with Clipper with respect to claims under and termination of the turbine supply, maintenance, and warranty agreements and other related documents.

The coal plants sell electric power generally into the PJM market by participating in PJM's capacity and energy markets or transacting in capacity and energy on a bilateral basis. Sales into PJM accounted for approximately 64% and 92% of EME's and Midwest Generation's consolidated operating revenues, respectively, in 2012. At December 31, 2012, EME's account receivable due from PJM was $40 million.

EME's turbine supply agreements contain significant suppliers' obligations related to the manufacturing and delivery of turbines, and payments, for delays in delivery and for failure to meet performance obligations and warranty agreements. EME's reliance on these contractual provisions is subject to credit risks. Generally, these are unsecured obligations of the turbine manufacturer. A material adverse development with respect to EME's turbine suppliers may have a material impact on EME's wind projects. Two of EME's turbine suppliers, Suzlon Wind Energy Corporation and Clipper Windpower, LLC, are currently experiencing significant adverse credit and liquidity issues. As a result, EME's ability to enforce performance and warranty guarantees is subject to the credit risk of these counterparties.

Interest Rate Risk (EME only)

Interest rate changes can affect earnings and the cost of capital for capital improvements or new investments in power projects. EME mitigates the risk of interest rate fluctuations for a number of its project financings by arranging for fixed rate financing or variable rate financing with interest rate swaps, interest rate options, or other hedging mechanisms ~~for a number of its project financings~~. A 10 percent change in market interest rates at December 31, ~~2012~~2013 would increase or decrease the fair value of the interest rate swap agreements by approximately $1514 million. The fair market values of fixed interest rate obligations are subject to interest rate risk. Both the fair market value and carrying value of EME's consolidated long-term debt (including current portion) were $1.15 billion at December 31, ~~2012~~2013. A 10 percent change in market interest rates at December 31, ~~2012~~2013 would increase or decrease the fair value of total long-term debt by approximately $1 million. Based on the amount of unhedged variable rate debt outstanding as of December 31, ~~2012~~2013, a 10 percent change in market interest rates at December 31, ~~2012~~2013 would increase or decrease EME's 2013 annual income before taxes by approximately $1 million.

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CRITICAL ACCOUNTING ESTIMATES AND POLICIES (EME and Midwest Generation, except as noted)

Introduction

The accounting policies described below are considered critical to obtaining an understanding of EME's and Midwest Generation's consolidated financial statements because their application requires the use of significant estimates and judgments by management. Management estimates and judgments are inherently uncertain and may differ significantly from actual results achieved. Management considers an accounting estimate to be critical if the estimate requires significant assumptions and changes in the estimate or if different estimates that could have been selected had been used could have a material impact on the results of operations or financial position. For more information on accounting policies, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies."

Accounting for Liabilities Subject to Compromise

On December 17, 2012, the Debtor Entities filed for protection under Chapter 11 of the Bankruptcy Code.

Nature of Estimates Required. The Debtor Entities are considered debtors-in-possession and are required to present unsecured pre-petition obligations that have at least a possibility of not being fully repaid as a separate line item on the consolidated balance sheet called LSTC. Evaluation of actual or potential bankruptcy claims related to contingencies, not already reflected on the balance sheet are accrued and reported as LSTC. LSTC, including claims that have become known after the bankruptcy filing, are reported on the basis of the expected amount of the allowed claim. Adjustments to amounts classified as LSTC are presented as a separate line item on the consolidated statement of operations called Reorganization items.

Key Assumptions and Approach Used. The determination of potential claims and the expected amount of an allowed claim requires significant management judgment. At December 31, ~~2012~~2013, LSTC primarily consisted of ~~liabilities~~the ~~outstanding~~Senior atNotes ~~the~~and ~~Debtor~~related ~~Entities~~interest onpayable, ~~the~~accounts ~~filing~~payable ~~date~~and accrued liabilities, and other liabilities, which are subject to possible compromise in connection with the Chapter 11 Cases. In addition, $1032 million of LSTC was recorded at December 31, ~~2012~~2013 relating to contracts rejected during the Chapter 11 Cases. The claims related to rejected contracts were determined based on the gross amounts outstanding under the rejected contracts in periods subsequent to the commencement of the Chapter 11 Cases.

Effect if Different Assumptions Used. The amounts classified as LSTC on the consolidated balance sheets and the corresponding impacts to Reorganization items on the consolidated statements of operations could be materially different. For further discussion, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies" and "—Note 16. Restructuring Activities."

Impairment of Long-Lived Assets

Nature of Estimates Required. Long-lived assets, including intangible assets, are evaluated for impairment in accordance with applicable authoritative guidance. Authoritative guidance requires that if the undiscounted expected future cash flow from a company's assets or group of assets (without interest charges) is less than its carrying value, asset impairment must be recognized on the financial statements. The impairment charges, if applicable, are calculated as the excess of the asset's carrying value over its fair value, which represents the discounted expected future cash flows attributable to the asset or, in the case of assets expected to be sold, at fair value less costs to sell. Long-lived assets are evaluated for impairment whenever indicators exist or when there is a commitment to sell or dispose of the asset. These evaluations may result from significant decreases in the market price of an asset, a significant adverse change in the extent or manner in which an asset is being used in its physical condition, a significant adverse change in legal factors or in the business climate that could affect the value of an asset, as well as economic or operational analyses.

Key Assumptions and Approach Used. The assessment of impairment requires significant management judgment to determine: (1) if an indicator of impairment has occurred, (2) how assets should be grouped, (3) the forecast of undiscounted expected future cash flow over the asset's estimated useful life to determine if an impairment exists, and (4) if an impairment exists, the fair value of the asset or asset group. Factors that are considered important, which could trigger an impairment, include operating losses from a project, projected future operating losses, the financial condition of counterparties, or significant negative industry or economic trends. The determination of fair value requires management to apply judgment in: (1) estimating future prices of energy and capacity in wholesale energy markets and fuel prices that are susceptible to significant change, (2) environmental and maintenance expenditures, and (3) the time period due to the length of the estimated remaining useful lives.

In preparing long-term cash forecasts, EME and Midwest Generation include assumptions about future prices for electricity, capacity, fuel and related products and services, as applicable, future operations and maintenance costs and future capital

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expenditure requirements under different scenarios. As appropriate, EME and Midwest Generation use a probability weighted approach when determining whether impairment indicators exist. Assumptions included in the long-term cash flow forecasts for merchant projects include:


•	Observable market prices for electricity, fuel and related products and services to the extent available and long-term prices developed based on a fundamental price model;


•	Long-term capacity prices based on the assumption that capacity markets would continue consistent with their current structure, with expected increases in revenues as a result of declines in reserve margins beyond the price of the latest auctions;


•	Trends for additions and retirements for generation resources; and


•	Plans for compliance with both existing and possible future environmental regulations.

The fair value of EME's and Midwest Generation's long-lived assets as determined using the discounted cash flow models discussed above qualify as Level 3 in the fair value hierarchy. EME and Midwest Generation include allocated acquired emission allowances, when applicable, as part of each power plant asset group. In the case of the Powerton and Joliet Stations, EME also includes prepaid rent in the respective asset group. EME's and Midwest Generation's unit of account is at the plant level and, accordingly, the closure of a unit at a multi-unit site would not result in an impairment of property, plant and equipment unless such condition were to affect an impairment assessment on the entire plant.

Effect if Different Assumptions Used. The estimates and assumptions used to determine whether an impairment exists are subject to a high degree of uncertainty. The estimated fair value of an asset would change materially if different estimates and assumptions were used to determine the amounts or timing of future revenues, environmental compliance costs or operating expenditures.

Effect on ~~2012~~2013 Results.

Midwest Generation - Will County Station

In connection with the preparation of its financial statements in the third quarter of 2013, Midwest Generation concluded, based on continued low realized energy and capacity prices, high fuel costs and low generation and further analysis of its capital allocation strategy, that indicators of potential impairment existed for its Will County Station and an impairment evaluation was performed.

The long-lived asset group that was subject to the impairment evaluation was determined to include the property, plant and equipment of the station. Management utilized the probability weighted estimates of future undiscounted cash flows to be received at the Will County Station and concluded that such amounts did not recover its carrying amount. Forecasted commodity prices and plant dispatch levels are the most significant input into the cash flow estimates. However, as part of these alternative cash flow scenarios, management considered a shortened estimated useful life of the station if environmental improvements were not made.

To measure the amount of the impairment loss, management used the market approach, which considers sales of similar facilities and numerous recent decisions by other power generators to shut down similar coal plants rather than install additional equipment, corroborated by the income approach, which considers discounted cash flows. This resulted in an impairment charge related to the Will County Station of $464 million. The estimated fair value of zero for the Will County Station was determined using both observable inputs and unobservable inputs, which are Level 3 inputs as defined by accounting guidance for fair value measurements. These inputs included a range of zero to $169 per kilowatt hour of recent transactions for scrubbed coal plants in similar markets.

Merchant Wind Projects (EME only)

Due to the decline in forecasted power prices since the fourth quarter of 2011, EME reviewed the long-term cash forecasts for the merchant wind projects in a manner consistent with the Key Assumptions and Approach Used described above. The expected future undiscounted cash flows of these projects recovered the carrying amount of these asset groups and, accordingly, no impairments were recorded. The expected future cash flows for these merchant wind projects are dependent upon a number of assumptions, the most significant of which are expected future power prices and operating costs. A decline in the forecasted cash flows in future periods could result in impairment, requiring a write-down of the carrying amount to fair value. The carrying values of the Goat Wind, Big Sky and Lookout asset groups at December 31, 2013 were $177 million, $308 million and $57 million, respectively.

Effect on 2012 Results

Ambit (EME only)

The Ambit project has operated under constrained liquidity conditions for a number of years. In 2012, the avoided energy costs, which form the basis for the project's energy revenues under its power purchase agreement, declined significantly. As a result, in 2013 Ambit did not make all of its scheduled land lease payments; ~~in 2013 due to~~ the ~~non-EME~~land ~~general~~lease ~~partner~~is ofsubordinated ~~the~~to ~~project~~debt service. In February 2013, the EME operations and maintenance subsidiary that ~~currently~~operated ~~operates~~ the plant provided a 180-day notice of its intent to terminate its operations and maintenance contract. ~~Ambit is working to implement a transition plan through which plant employees would become employees of Ambit or a third party operator.~~

These factors were considered indicators of potential impairment and in connection with the preparation of its year-end financial statements in the fourth quarter of 2012, EME reviewed the Ambit project for impairment. The results of the impairment analysis indicated that the probability weighted future undiscounted cash flows are not expected to be sufficient to recover the respective carrying value of the long-lived assets of $49 million. The asset group at the project consisted of property, plant and equipment and deferred revenue. The fair value of the asset group was determined to be $34 million, resulting in an impairment charge of $15 million.

~~Merchant~~Effect ~~Wind~~on ~~Projects~~2011 ~~(EME only)~~Results

Due to the decline in forecasted power prices since the fourth quarter of 2011, EME reviewed the long-term cash forecasts for the merchant wind projects in a manner consistent with the Key Assumptions and Approach Used described above. The expected future undiscounted cash flows of these projects recovered the carrying amount of these asset groups and, accordingly, no impairments were recorded. The expected future cash flows for these merchant wind projects are dependent upon a number of assumptions, the most significant of which are expected future power prices and operating costs. A decline in the forecasted cash flows in future periods could result in impairment, requiring a write-down of the carrying amount to fair value. The carrying values of the Goat Wind, Big Sky and Lookout asset groups at December 31, 2012 were $189 million, $326 million and $60 million, respectively.

Effect on 2011 Results.

Midwest Generation Plants

In connection with the preparation of its year-end financial statements in the fourth quarter of 2011, Midwest Generation concluded, based on the current energy price environment, it was less likely that Midwest Generation would install environmental controls required by the CPS at its Fisk, Crawford and Waukegan Stations; and such assessment was an indicator that these stations were impaired. The long-lived asset groups that were subject to the impairment evaluation were determined to include the property, plant and equipment of each station. Management updated the probability weighted future undiscounted cash flows expected to be received at these stations and concluded that such amounts did not recover the respective station's carrying amounts. As part of these alternative cash flow scenarios, management considered a shortened estimated useful life of each station if environmental improvements were not made and a forecasted reduction in generation from lower forward power prices.

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determined to include the property, plant and equipment of each station. Management updated the probability weighted future undiscounted cash flows expected to be received at these stations and concluded that such amounts did not recover the respective station's carrying amounts. As part of these alternative cash flow scenarios, management considered a shortened estimated useful life of each station if environmental improvements were not made and a forecasted reduction in generation from lower forward power prices.

To measure the amount of the impairment loss, the income approach was considered the most relevant, but market data obtained prior to the significant decline in power prices was used to corroborate the income approach. The discounted cash flow analysis assumptions that have the most significant impact on fair value are forecasted energy and capacity prices. The discounted cash flow analysis indicated a fair value of zero. Midwest Generation also concluded it was unlikely that a third party would consummate the purchase of the Fisk, Crawford or Waukegan Stations in the current economic and regulatory environment resulting in a determination that the fair value of each of these stations was zero. This resulted in impairment charges of $115 million, $186 million and $339 million for the Fisk, Crawford and Waukegan Stations, respectively. Environmental and other remediation or ongoing maintenance costs are expected to be offset by the salvage value of the asset groups. Midwest Generation voluntarily ceased coal-fired operations at the Fisk and Crawford Stations in August 2012.

Selected Wind Projects (EME only)

In connection with the preparation of its year-end financial statements in the fourth quarter of 2011, EME reviewed the Storm Lake wind project and four small wind projects in Minnesota for impairment, based on an expected future increase in operating costs and declines in long-term power prices that the projects could potentially realize following the term of the power purchase agreements. The probability weighted future undiscounted cash flows of each project were not expected to be sufficient to recover the respective carrying value of each of these long-lived assets ($53 million in aggregate). The income approach was utilized to determine fair value for these asset groups. The most significant assumptions used in determining fair value were discount rates, future wind generation, the future availability of the project to generate energy and future plant operations expense. The asset groups at each project consisted of property, plant and equipment and, where appropriate, deferred revenue. In aggregate, the fair value of these five asset groups was determined to be $23 million, resulting in an impairment charge of $30 million.

Derivatives

EME and Midwest Generation use derivative instruments to manage exposure to changes in electricity, fuel oil, gas and interest rates. Derivative instruments that do not meet the normal purchases and sales exception at fair value are recorded with changes in the derivative's fair value recognized currently in earnings unless specific hedge accounting criteria are met. For derivatives that qualify for cash flow hedge accounting treatment, the effective portion of the changes in the derivative's fair value is recognized in other comprehensive income until the hedged item is recognized in earnings. EME records derivative instruments used for trading at fair value with changes in fair value recognized in income.

fair value is recognized in other comprehensive income until the hedged item is recognized in earnings. EME records derivative instruments used for trading at fair value with changes in fair value recognized in income.

Management's judgment is required to determine if a transaction meets the definition of a derivative and, if it does, whether the normal purchases and sales exception applies or whether individual transactions qualify for hedge accounting treatment. Management's judgment is also required to determine the fair value of derivative transactions.

Key Assumptions and Approach Used. EME and Midwest Generation determine the fair value of derivative instruments based on forward market prices in active markets adjusted for nonperformance risk. If quoted market prices are not available, internally developed models are used to determine the fair value. When actual market prices or relevant observable inputs are not available, it is appropriate to use unobservable inputs which reflect management assumptions, including extrapolating limited short-term observable data and developing correlations between liquid and non-liquid trading hubs. In assessing nonperformance risks, EME and Midwest Generation review credit ratings of counterparties (and related default rates based on such credit ratings) and prices of credit default swaps. The market price (or premium) for credit default swaps represents the price that a counterparty would pay to transfer the risk of default, typically bankruptcy, to another party. A credit default swap is not directly comparable to the credit risks of derivative contracts, but provides market information of the related risk of nonperformance.

In addition, a fair value hierarchy is established that prioritizes the inputs to valuation techniques used to measure fair value. For further information, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 4. Fair Value Measurements."

Effect if Different Assumptions Used. As described above, fair value is determined using a combination of market information or observable data and unobservable inputs which reflect management's assumptions. Changes in observable data would impact results. In addition, unobservable inputs could have an impact on results. Fair value for Level 3 derivatives is derived using observable and unobservable inputs. As of December 31, 2013, EME Level 3 derivatives had a net fair value of $32 million. Midwest Generation did not have Level 3 derivatives as of December 31, 2013. While it is difficult to determine the impact of a change in any one input, if the fair value of EME Level 3 derivatives were increased or decreased by 10%, the impact would be a $21 million increase or decrease to operating revenues.

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derived using observable and unobservable inputs. As of December 31, 2012, EME Level 3 derivatives had a net fair value of $51 million. Midwest Generation did not have Level 3 derivatives as of December 31, 2012. While it is difficult to determine the impact of a change in any one input, if the fair value of EME Level 3 derivatives were increased or decreased by 10%, the impact would be a $10 million increase or decrease to operating revenues.

For EME's and Midwest Generation's derivative instruments that are measured at fair value using quantitative pricing models, a significant change in estimate could affect EME's and Midwest Generation's results of operations. For further sensitivities in EME's and Midwest Generation's assumptions used to calculate fair value, see "Market Risk Exposures—Derivative Instruments—Fair Value Disclosures." For further information on derivative instruments, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 6. Derivative Instruments and Hedging Activities."

Income Taxes

During 2012, EIX modified the tax-allocation agreements to terminate EME's isparticipation on December 31, 2013. However, under the Plan, EME will continue to be included in the consolidated federal and combined state income tax returns of EIX. EME's tax provision is determined using the “benefits for losses” method. This method is similar to a separate company return, except that EME recognizes, without regard to separate company limitations, additional tax liabilities or benefits based on the impact to the combined group including EME's taxable income or losses and state apportionment factors. Realization of any tax benefits generated by EME is dependent on EME's continued inclusion in the consolidated EIX tax returns, and the generation of sufficient consolidated taxable income by the EIX consolidated tax group prior to the expiration of the loss and credit carryforwards. Midwest Generation's tax provision is determined based on a hypothetical tax return prepared on a separate return basis, except for the use of state tax apportionment factors of the EIX group for purposes of determining state income taxes.

Midwest Generation's tax provision is determined based on a hypothetical tax return prepared on a separate return basis, except for the use of state tax apportionment factors of the EIX group for purposes of determining state income taxes.

Nature of Estimates Required. As part of the process of preparing their consolidated financial statements, EME and Midwest Generation are each required to estimate their income taxes for each jurisdiction in which they operate. This process involves estimating actual current period tax expense together with assessing temporary differences resulting from differing treatment of items, such as depreciation, for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within each of their respective consolidated balance sheets.

EME and Midwest Generation take certain tax positions they believe are applied in accordance with the applicable tax laws. However, these tax positions are subject to interpretation by the Internal Revenue Service, state tax authorities and the courts. EME and Midwest Generation determine their uncertain tax positions in accordance with the authoritative guidance.

In evaluating the realization of tax sharing assets, EME must determine the likelihood of receiving future tax-sharing payments under the tax-allocation agreements. In evaluating the realization of its deferred income tax assets, EME must determine whether it is more likely than not the EIX consolidated tax group will generate sufficient taxable income to utilize EME's deferred income tax assets during the period in which EME will likely remain part of the EIX consolidated income tax returns, or if it is more likely than not EME would utilize the deferred income tax assets on its own, after its expected separation from the group at its emergence from bankruptcy. Midwest Generation must determine whether it is more likely than not it would utilize its own deferred income tax assets in a hypothetical tax return prepared on a separate company basis.65

Historically, in evaluating the realization of tax sharing assets, EME determined whether it was more likely than not the EIX consolidated tax group would generate sufficient taxable income to utilize EME's deferred income tax assets during the period in which EME was a part of the EIX consolidated income tax returns, or if it was more likely than not EME would utilize the deferred income tax assets on its own, after its expected separation from the consolidated group.

Midwest Generation must determine whether it is more likely than not it would utilize its own deferred income tax assets in a hypothetical tax return prepared on a separate company basis.

Key Assumptions and Approach Used. Accounting for tax obligations requires management judgment. Management uses judgment in determining whether the evidence indicates it is more likely than not, based solely on the technical merits, that a tax position will be sustained, and to determine the amount of tax benefits to be recognized. Judgment is also used in determining the likelihood a tax position will be settled and possible settlement outcomes. In assessing its uncertain tax positions, EME and Midwest Generation consider, among others, the following factors: the facts and circumstances of the position, regulations, rulings, and case law, opinions or views of legal counsel and other advisers, and the experience gained from similar tax positions. Management evaluates uncertain tax positions at the end of each reporting period and makes adjustments when warranted based on changes in fact or law.

In evaluating the future utility of deferred income tax assets, EME and Midwest Generation consider existing performance and objectively verifiable evidence of future performance.

Effect if Different Assumptions Used. Actual income taxes may differ from the estimated amounts which could have a significant impact on the liabilities, revenues and expenses recorded in the financial statements. EME and Midwest Generation continue to be under audit or subject to audit for multiple years in various jurisdictions. Significant judgment is required to determine the tax treatment of particular tax positions that involve interpretations of complex tax laws. A tax liability has been recorded with respect to tax positions in which the outcome is uncertain and the effect is estimable. Such liabilities are based on judgment and a final determination could take many years from the time the liability is recorded. Furthermore, settlement of tax positions included in open tax years may be resolved by compromises of tax positions based on current factors and business considerations that may result in material adjustments to income taxes previously estimated.

68Effect on EME's Results. At December 31, 2012, EME established a valuation allowance for its deferred tax assets as it was not able to obtain objectively verifiable evidence supporting the taxable income forecast of the EIX consolidated tax group and was not able to determine whether it was more likely than not that future tax-sharing payments would occur. As a result, as of December 31, 2012, EME recorded a valuation allowance against its net deferred tax assets of $444 million, of which $6 million was reflected in accumulated other comprehensive loss and $438 million in net loss on the consolidated statements of operations. In addition, at December 31, 2012, EME recorded a non-cash distribution to its parent of $222 million related to tax benefits for which, under the tax-allocation agreements as applied, EME has not yet, and may never be, entitled to be paid.

~~Table~~At December 31, 2013, EME increased its deferred tax asset valuation allowance to $752 million due to the accumulation of ~~Contents~~unpaid tax benefits related to net operating losses and production tax credits and $167 million related to an asset impairment charge on the Will County Station. In addition, at December 31, 2013, EME has not yet, and may never be, entitled to be paid for the $185 million remaining as a non-cash distribution to its parent.

~~Furthermore,~~Upon ~~settlement~~the effectiveness of ~~tax~~the ~~positions~~Settlement ~~included~~Agreement, inEME ~~open~~would ~~tax~~expect ~~years~~to ~~may~~reverse bethe ~~resolved~~valuation byallowance ~~compromises~~it ofhas ~~tax~~recorded. ~~positions~~For ~~based~~further ondiscussion, ~~current~~see ~~factors~~"Item 8. ~~and~~Combined ~~business~~Notes ~~considerations~~to ~~that~~Consolidated ~~may~~Financial ~~result~~Statements—Note 16. inRestructuring ~~material~~Activities—Plan ~~adjustments~~of ~~to income taxes previously estimated~~Reorganization. "

Effect on ~~2012~~Midwest Generation's Results. ~~EME's~~As ~~right~~a toresult ~~receive payments under the tax-allocation agreements and the timing and amount~~ of ~~those~~recognized ~~payments~~losses ~~are dependent on the inclusion of EME in the consolidated income tax returns of EIX~~ and ~~other factors, including~~ the ~~amount~~indications of ~~consolidated~~expected taxable income and net operating loss carryforwards of EIX, and other tax items of EME and other subsidiaries of EIX. Without objectively verifiable evidence supporting the taxable income forecast of the EIX consolidated tax group during 2013 and 2014, EME is not currently able to determine whether it is more likely than not that future ~~tax-sharing payments will occur. As a result~~losses, asMidwest ofGeneration ~~December 31, 2012, EME~~ recorded a valuation allowance of $533 million against its net deferred tax assets ~~of $444 million~~, of which $612 million was reflected in accumulated other comprehensive loss and $~~438~~521 million in net loss for the year ended December 31, 2012. InAt ~~addition~~December 31, ~~EME~~2012, ~~recorded a non-cash distribution to its parent of~~ $~~222~~ 106 million ~~related~~of to tax benefits ~~generated~~that bywould ~~EME which~~ have been ~~utilized~~collected inby ~~the~~Midwest ~~EIX~~Generation ~~consolidated~~in a hypothetical tax return prepared on a ~~statutory~~separate return basis ~~for~~but ~~which,~~was ~~under~~not ~~the~~collectible ~~tax-allocation~~under ~~agreements~~Midwest asGeneration's ~~applied,~~tax ~~EME~~allocation isagreement ~~not~~were ~~yet,~~accounted ~~and~~for ~~may~~as ~~never~~non-cash ~~be,~~distributions ~~entitled~~ to beMidwest ~~paid.~~Generation's parent.

AsAt aDecember ~~result~~31, ~~of the recently recognized losses and the indications of expected future losses~~2013, Midwest Generation ~~recorded~~increased ~~a valuation allowance of $533 million against~~ its ~~net~~ deferred tax ~~assets,~~asset ofvaluation ~~which~~allowance ~~$12 million~~to ~~was reflected in accumulated other comprehensive loss and~~ $~~521~~767 million indue ~~net~~to ~~loss for~~ the ~~year~~accumulation ~~ended~~of ~~December 31,~~unpaid ~~2012.~~tax Inbenefits ~~addition,~~related ~~Midwest~~to ~~Generation~~net ~~recognized~~operating alosses ~~non-cash~~and ~~distribution of~~ $~~106~~167 million related to ~~reflect~~an ~~tax~~asset ~~benefits~~impairment ~~that~~charge ~~would~~described ~~have been collected by Midwest Generation in a hypothetical tax return prepared on a separate return basis but is not collectible under Midwest Generation's Tax Allocation Agreement~~above. ~~For further discussion related to non-cash distribution.~~

For further discussion, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 7. Income Taxes."

Accounting for Contingencies, Guarantees and Indemnities

Nature of Estimates Required. EME and Midwest Generation record loss contingencies when they determine that the outcome of future events is probable of occurring and when the amount of the loss can be reasonably estimated. When a guarantee or indemnification subject to authoritative guidance is entered into, EME and Midwest Generation record a liability for the estimated fair value of the underlying guarantee or indemnification. Gain contingencies are recognized in the financial statements when they are realized.

Key Assumptions and Approach Used. The determination of a reserve for a loss contingency is based on management judgment and estimates with respect to the likely outcome of the matter, including the analysis of different scenarios. Liabilities are recorded or adjusted when events or circumstances cause these judgments or estimates to change. In assessing whether a loss is a reasonable possibility, EME and Midwest Generation may consider the following factors, among others: the nature of the litigation, claim or assessment, available information, opinions or views of legal counsel and other advisors, and the experience gained from similar cases. EME and Midwest Generation provide disclosures for material contingencies when there is a reasonable possibility that a loss or an additional loss may be incurred. Some guarantees and indemnifications could have a significant financial impact under certain circumstances, and management also considers the probability of such circumstances occurring when estimating the fair value.

Midwest Generation agreed to reimburse Commonwealth Edison and Exelon Generation Company LLC for 50% of specific asbestos claims pending as of February 2003 and related expenses less recovery of insurance costs, and agreed to a sharing arrangement for liabilities and expenses associated with future asbestos-related claims as specified in a supplemental agreement. The estimated liability is based on studies that estimate future losses based on claims experience and other available information. In calculating future losses, various assumptions were made, including, but not limited to, the settlement of future claims under the supplemental agreement, the distribution of exposure sites and that the filing date of asbestos claims will not be after 2044. At December 31, ~~2012~~2013, Midwest Generation had $53 million recorded in LSTC related to this contractual indemnity.

Effect if Different Assumptions Used. Actual amounts realized upon settlement of contingencies may be different than amounts recorded and disclosed and could have a significant impact on the liabilities, revenues and expenses recorded on the consolidated financial statements. In addition, for guarantees and indemnities actual results may differ from the amounts recorded and disclosed and could have a significant impact on EME's and Midwest Generation's consolidated financial statements. For a discussion of contingencies, guarantees and indemnities, see "Item 8. Combined Notes to Consolidated Financial Statements—Note 9. Commitments and Contingencies—Guarantees and Indemnities," "—Contingencies" and "Item 1. Business—Environmental Matters and Regulations."

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information responding to Item 7A is filed with this report under "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations."

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm - Edison Mission Energy	7270
Report of Independent Registered Public Accounting Firm - Midwest Generation	7371
EDISON MISSION ENERGY
Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010	74
Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011	72
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2012, 2011 and 2010	75
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2013, 2012 and 2011	73
Consolidated Balance Sheets at December 31, 2012 and 2011	76
Consolidated Balance Sheets at December 31, 2013 and 2012	74
Consolidated Statements of Total Equity for the years ended December 31, 2012, 2011 and 2010	77
Consolidated Statements of Total Equity for the years ended December 31, 2013, 2012 and 2011	75
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010	78
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011	76
MIDWEST GENERATION, LLC
Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010	79
Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011	77
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2012, 2011 and 2010	80
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2013, 2012 and 2011	78
Consolidated Balance Sheets at December 31, 2012 and 2011	81
Consolidated Balance Sheets at December 31, 2013 and 2012	79
Consolidated Statements of Member's Equity for the years ended December 31, 2012, 2011 and 2010	82
Consolidated Statements of Member's Equity for the years ended December 31, 2013, 2012 and 2011	80
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010	83
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011	81
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	8482


ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

EME

Disclosure Controls and Procedures

EME's management, under the supervision and with the participation of the company's President and Chief Financial Officer, has evaluated the effectiveness of EME's disclosure controls and procedures (as that term is defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on that evaluation, the President and Chief Financial Officer concluded that, as of the end of the period, EME's disclosure controls and procedures were effective.

Management's Report on Internal Control over Financial Reporting

EME's management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f), for EME. Under the supervision and with the participation of its President and Chief Financial Officer, EME's management conducted an evaluation of the effectiveness of EME's internal control over financial reporting based on the framework set forth in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation under the COSO framework, EME's management concluded that EME's internal control over financial reporting was effective as of December 31, ~~2012~~2013.

Internal Control Over Financial Reporting

There were no changes in EME's internal control over financial reporting (as that term is defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the fourth quarter of the most recent year to which this report relates that have materially affected, or are reasonably likely to materially affect, EME's internal control over financial reporting.

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Midwest Generation

Disclosure Controls and Procedures

Midwest Generation's management, under the supervision and with the participation of the company's President and Chief Financial Officer, has evaluated the effectiveness of Midwest Generation's disclosure controls and procedures (as that term is defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on that evaluation, the President and Chief Financial Officer concluded that, as of the end of the period, Midwest Generation's disclosure controls and procedures were effective.

Management's Report on Internal Control over Financial Reporting

Midwest Generation's management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f), for Midwest Generation. Under the supervision and with the participation of its President and Chief Financial Officer, Midwest Generation's management conducted an evaluation of the effectiveness of Midwest Generation's internal control over financial reporting based on the framework set forth in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation under the COSO framework, Midwest Generation's management concluded that Midwest Generation's internal control over financial reporting was effective as of December 31, ~~2012~~2013.

Internal Control Over Financial Reporting

There were no changes in Midwest Generation's internal control over financial reporting (as that term is defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the fourth quarter of the most recent year to which this report relates that have materially affected, or are reasonably likely to materially affect, Midwest Generation's internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

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EDISON MISSION ENERGY AND SUBSIDIARIES

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of Edison Mission Energy:

In our opinion, the consolidated financial statements listed in the index appearing under Item 8 present fairly, in all material respects, the financial position of Edison Mission Energy (the “Company”) and its subsidiaries at December 31, ~~2012~~2013 and ~~2011~~2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, ~~2012~~2013 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the index appearing under Item 15(a)(2) present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully discussed in Note 1 to the consolidated financial statements, on December 17, 2012, the Company and several of its subsidiaries filed voluntary petitions for relief under the provisions of Chapter 11 of the United States Bankruptcy Code. Uncertainties inherent in the bankruptcy process raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are described in Note 16. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As discussed in the Consolidated Statements of Total Equity, the Company changed the manner in which it accounts for variable interest entities as of January 1, 2010.

/s/ PricewaterhouseCoopers LLP

Los Angeles, California

March 1512, ~~2013~~2014

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MIDWEST GENERATION, LLC AND SUBSIDIARIES

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Managers and Member of Midwest Generation, LLC:

In our opinion, the consolidated financial statements listed in the index appearing under Item 8 present fairly, in all material respects, the financial position of Midwest Generation, LLC (the “Company”) and its subsidiaries at December 31, ~~2012~~2013 and ~~2011~~2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, ~~2012~~2013 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully discussed in Note 1 to the consolidated financial statements, on December 17, 2012, the Company filed voluntary petitions for relief under the provisions of Chapter 11 of the United States Bankruptcy Code. Uncertainties inherent in the bankruptcy process raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are described in Note 16. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ PricewaterhouseCoopers LLP

Los Angeles, California

March 1512, ~~2013~~2014

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ITEM 1. FINANCIAL STATEMENTS

EDISON MISSION ENERGY AND SUBSIDIARIES

(Debtor-in-Possession)

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions)

	Years Ended December 31,
	2012			2011			2010
	2013			2012			2011
Operating Revenues	$	1,~~287~~331		$	1,~~653~~287		$	1,~~788~~653
Operating Expenses
Fuel	~~602~~564			~~530~~602			~~531~~530
Plant operations	~~495~~405			~~571~~495			~~538~~571
Plant operating leases	75			75			75
Depreciation and amortization	~~268~~271			~~289~~268			~~229~~289
Asset impairments and other charges	28464			~~714~~28			44714
Administrative and general	~~147~~131			~~172~~147			~~177~~172
Total operating expenses	1,~~615~~910			21,~~351~~615			12,~~594~~351
Operating income (loss)	(328		)	(698		)	194
Operating loss	(579		)	(328		)	(698		)
Other Income (Expense)
Equity in income from unconsolidated affiliates	4645			8646			~~104~~86
Dividend income	126			3012			1930
Interest income	2			1			2
Interest expense, net	(89		)	(324		)	(321		)
Interest expense	(326		)	(322		)	(262		)
Loss on early extinguishment of debt	(3		)	—			—
Other income, net	—5			15—			815
Total other expense	(~~266~~36		)	(~~190~~266		)	(~~129~~190		)
Income (loss) from continuing operations before reorganization items and income taxes	(594		)	(888		)	65
Loss from continuing operations before reorganization items and income taxes	(615		)	(594		)	(888		)
Reorganization items	43			—			—
Reorganization items, net	120			43			—
Provision (benefit) for income taxes	~~160~~(93		)	~~(441~~160		)	(16441		)
Income (Loss) From Continuing Operations	(797		)	(447		)	81
Loss From Continuing Operations	(642		)	(797		)	(447		)
Income (Loss) from Operations of Discontinued Subsidiaries, net of tax (Note 14)	~~(112~~1		)	(~~632~~112		)	82(632		)
Net Income (Loss)	(909		)	(1,079		)	163
Net Loss	(641		)	(909		)	(1,079		)
Net (Income) Loss Attributable to Noncontrolling Interests (Note 3)	(1629		)	1(16		)	1
Net Income (Loss) Attributable to Edison Mission Energy Common Shareholder	$	(925	)	$	(1,078	)	$	164
Net Loss Attributable to Edison Mission Energy Common Shareholder	$	(670	)	$	(925	)	$	(1,078	)
Amounts Attributable to Edison Mission Energy Common Shareholder
Income (loss) from continuing operations, net of tax	$	(813	)	$	(446	)	$	82
Loss from continuing operations, net of tax	$	(671	)	$	(813	)	$	(446	)
Income (loss) from discontinued operations, net of tax	~~(112~~1		)	(~~632~~112		)	82(632		)
Net Income (Loss) Attributable to Edison Mission Energy Common Shareholder	$	(925	)	$	(1,078	)	$	164
Net Loss Attributable to Edison Mission Energy Common Shareholder	$	(670	)	$	(925	)	$	(1,078	)

The accompanying notes are an integral part of these consolidated financial statements.

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EDISON MISSION ENERGY AND SUBSIDIARIES

(Debtor-in-Possession)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME (~~LOSS)

(in millions)

	Years Ended December 31,
	2012			2011			2010
	2013			2012			2011
Net Income (Loss)	$	(909	)	$	(1,079	)	$	163
Net Loss	$	(641	)	$	(909	)	$	(1,079	)
Other comprehensive income (loss), net of tax
Valuation allowance on deferred tax asset	(6—		)	—(6		)	—
Pension and postretirement benefits other than pensions:
Prior service adjustment, net of tax	—(2		)	—			(7—		)
Net gain (loss) adjustment, net of tax expense (benefit) of $4, $(10) and $(10) for 2012, 2011 and 2010, respectively	—			(15		)	(14		)
Net gain (loss) adjustment, net of tax expense (benefit) of $22, $4 and $(10) for 2013, 2012 and 2011, respectively	35			—			(15		)
Amortization of net loss and prior service adjustment included in expense, net of tax	45			24			12
Unrealized gains (losses) on derivatives qualified as cash flow hedges
Unrealized gains (losses) on derivatives qualified as cash flow hedges:
Unrealized holding gains (losses) arising during the periods, net of income tax expense (benefit) of $(6), $(7), and $37 for 2012, 2011 and 2010, respectively	(17		)	(12		)	55
Unrealized holding gains (losses) arising during the periods, net of income tax expense (benefit) of $19, $(6) and $(7) for 2013, 2012 and 2011, respectively	34			(17		)	(12		)
Reclassification adjustments included in net income (loss), net of income tax benefit of $16, $25 and $96 for 2012, 2011 and 2010, respectively	(25		)	(38		)	(144		)
Reclassification adjustments included in net loss, net of income tax expense (benefit) of $(3), $16 and $25 for 2013, 2012 and 2011, respectively	5			(25		)	(38		)
Other comprehensive loss, net of tax	(44		)	(63		)	(109		)
Other comprehensive income (loss), net of tax	77			(44		)	(63		)
Comprehensive Income (Loss)	(953		)	(1,142		)	54
Comprehensive Loss	(564		)	(953		)	(1,142		)
Comprehensive (Income) Loss Attributable to Noncontrolling Interests	(1629		)	1(16		)	1
Comprehensive Income (Loss) Attributable to Edison Mission Energy Common Shareholder	$	(969	)	$	(1,141	)	$	55
Comprehensive Loss Attributable to Edison Mission Energy Common Shareholder	$	(593	)	$	(969	)	$	(1,141	)

The accompanying notes are an integral part of these consolidated financial statements.

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EDISON MISSION ENERGY AND SUBSIDIARIES

(Debtor-in-Possession)

CONSOLIDATED BALANCE SHEETS

(in millions)

	December 31, 2012		December 31, 2011
	December 31, 2013		December 31, 2012
Assets
Current Assets
Cash and cash equivalents	$	~~888~~1,176	$	~~1,221~~888
Accounts receivable—trade	7383		~~107~~73
Receivables from affiliates	83		48
Inventory	~~175~~114		~~169~~175
Derivative assets	5344		4053
Restricted cash and cash equivalents	117		~~103~~11
Margin and collateral deposits	6171		4161
Prepaid expenses and other	5437		4954
Assets of discontinued operations	—		207
Total current assets	1,535		1,323
Total current assets	1,323		1,941
Investments in Unconsolidated Affiliates	513		534
Investments in Unconsolidated Affiliates	534		523
Property, Plant and Equipment, less accumulated depreciation of $1,314 and $1,431 at respective dates	3,877		4,516
Property, Plant and Equipment, less accumulated depreciation of $1,431 and $1,295 at respective dates	4,516		4,472
Other Assets
Deferred financing costs	4434		7144
Long-term derivative assets	3718		6237
Restricted deposits	102		22102
Rent payments in excess of levelized rent expense under plant operating leases	~~836~~791		~~760~~836
Deferred taxes	—		205
Other long-term assets	103		128
Other long-term assets	128		222
Total other assets	1,048		1,147
Total other assets	1,147		1,342
Total Assets	$	6,973	$	7,520
Assets of Discontinued Operations	—		45
Total Assets	$	7,520	$	8,323

EDISON MISSION ENERGY AND SUBSIDIARIES

(Debtor-in-Possession)

CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share amounts)

	December 31, 2012			December 31, 2011
	December 31, 2013			December 31, 2012
Liabilities and Shareholder's Equity
Current Liabilities
Accounts payable	$	2935		$	7829
Payables to affiliates	3416			~~187~~34
Accrued liabilities and other	67149			~~163~~67
Derivative liabilities	—			1
Interest payable	2			1
Interest payable	1			33
Current portion of long-term debt	323			307
Deferred taxes	—			2
Short-term debt	4			382
Current portion of long-term debt	307			57
Total current liabilities	529			820
Short-term debt	382			—
Liabilities subject to compromise	4,015			3,959
Liabilities of discontinued operations	—			27
Long-term debt net of current portion	1,171			749
Total current liabilities	820			548
Deferred taxes and tax credits, net (Note 7)	58			81
Liabilities subject to compromise	3,959			—
Deferred revenues	506			533
Long-term debt net of current portion	749			4,855
Long-term derivative liabilities	56			118
Deferred taxes and tax credits	81			—
Other long-term liabilities	377			528
Deferred revenues	533			530
Total Liabilities	6,712			6,788
Long-term derivative liabilities	118			90
Other long-term liabilities	528			627
Liabilities of discontinued operations	—			9
Total Liabilities	6,788			6,659
Commitments and Contingencies (Notes 5, 6, 9 and 10)
Equity
Common stock, par value $0.01 per share (10,000 shares authorized; 100 shares issued and outstanding at each date)	64			64
Additional paid-in capital	1,~~095~~137			1,~~327~~095
Retained earnings (deficit)	(577		)	365
Retained deficit	(1,261		)	(577		)
Accumulated other comprehensive loss	(~~138~~61		)	(94138		)
Total Edison Mission Energy common shareholder's equity	444			1,662
Total Edison Mission Energy common shareholder's equity (deficit)	(121		)	444
Noncontrolling Interests	~~288~~382			2288
Total Equity	~~732~~261			~~1,664~~732
Total Liabilities and Equity	$	76,~~520~~973		$	87,~~323~~520

Filing Compare · EDISON MISSION ENERGY