1010775--3/1/2007--MIRANT

related topics

{debt, indebtedness, cash}

{operation, natural, condition}

{gas, price, oil}

{financial, litigation, operation}

{regulation, change, law}

{stock, price, operating}

{condition, economic, financial}

{cost, contract, operation}

{investment, property, distribution}

{operation, international, foreign}

{competitive, industry, competition}

{loss, insurance, financial}

{cost, regulation, environmental}

Our revenues are unpredictable because many of our facilities operate without long-term power sales agreements, and our revenues and results of operations depend on market and competitive forces that are beyond our control. Changes in commodity prices may negatively affect our financial results by increasing the cost of producing power or lowering the price at which we are able to sell our power, and we may be unsuccessful at managing this risk. We are exposed to the risk of fuel and fuel transportation cost increases and volatility and interruption in fuel supply because our facilities generally do not have long-term agreements for natural gas, coal and oil fuel supply. Some of our generation facilities depend on only one or a few customers or suppliers. These parties, as well as other parties with whom we have contracts, may fail to perform their obligations, or may terminate their existing agreements, which may result in a default on project debt or a loss in revenues and may require us to institute legal proceedings to enforce the relevant agreements. Operation of our generation facilities involves risks that may have a material adverse impact on our cash flows and results of operations. Our asset management and proprietary trading activities may increase the volatility of our quarterly and annual financial results. Our results are subject to quarterly and seasonal fluctuations. We compete to sell energy and capacity in the wholesale power markets against some competitors that enjoy competitive advantages, including the ability to recover fixed costs through rate base mechanisms and a lower cost of capital. Operating in foreign countries involves a number of risks. Our business and activities are subject to extensive environmental requirements and could be adversely affected by such requirements, including future changes to them. Major environmental construction projects planned by 2010 at our Mid-Atlantic coal facilities may not meet their anticipated schedule, which would restrict these units from running at their maximum economic levels. In the event that the operating constraints were sufficiently severe, Mirant Mid-Atlantic may not have sufficient cash flow to permit it to make distributions or, if more severe, to meet its obligations. The expected decommissioning and/or site remediation obligations of certain of our generation facilities may negatively affect our cash flows. Our level of indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our obligations. Mirant Corporation and its holding company subsidiaries, including Mirant Americas Generation and Mirant North America, may not have access to sufficient cash to meet their obligations if their subsidiaries, in particular, Mirant Mid-Atlantic, are unable to make distributions. We may be unable to generate sufficient liquidity to service our debt and to post required amounts of cash collateral necessary to effectively hedge market risks. Our business is subject to complex government regulations. Changes in these regulations, or their administration, by legislatures, state and federal regulatory agencies, or other bodies may affect the costs of operating our facilities or our ability to operate our facilities. Such cost impacts, in turn, may negatively affect our financial condition and results of operations. We may be liable for certain underfunded liabilities with respect to pension plans offered by Mirant and its affiliates. Changes in technology may significantly affect our generation business by making our generation facilities less competitive. Terrorist attacks, future war or risk of war may adversely affect our results of operations, our ability to raise capital or our future growth. Our operations are subject to hazards customary to the power generation industry. We may not have adequate insurance to cover all of these hazards. The subsidiaries that own our generation facilities in New York, including our Lovett and Bowline facilities, have not emerged from Chapter 11. We may be subject to claims that were not discharged in the bankruptcy cases, which could have a material adverse effect on our results of operations and profitability. We are currently involved in significant litigation that, if decided adversely to us, could materially adversely affect our results of operations and profitability.

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1010775--3/1/2007--MIRANT_CORP