1099534--3/1/2010--EME_HOMER_CITY_GENERATION

related topics

{cost, regulation, environmental}

{loss, insurance, financial}

{debt, indebtedness, cash}

Homer City is subject to extensive environmental regulation and permitting requirements that may involve significant and increasing costs. Homer City is subject to extensive energy industry regulation. Homer City's ability to make payments of lease rent under the facility leases is subject to market risks related to wholesale energy prices. Homer City's financial results can be affected by changes in fuel prices, fuel transportation cost increases, and interruptions in fuel supply. Homer City may not hedge market risks effectively. Competition could adversely affect Homer City's business. The accounting for Homer City's hedging activities may increase the volatility of its quarterly and annual financial results. Restrictions in the participation agreements and facility leases limit or prohibit Homer City from entering into some transactions that it otherwise might enter into. Restrictions in the financing documents binding on Homer City and its affiliates limit the ability of Homer City to enter into specified transactions that it otherwise might enter into. The Homer City facilities may be affected by general operating risks and hazards customary in the power generation industry. Homer City may not have adequate insurance to cover all these hazards. The creditworthiness of Homer City's customers, suppliers, transporters and other business partners could affect Homer City's business and operations.

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1099534--3/1/2010--EME_HOMER_CITY_GENERATION_LP