1158323--3/7/2006--MISSION_ENERGY_HOLDING

related topics

{debt, indebtedness, cash}

{cost, regulation, environmental}

{gas, price, oil}

{competitive, industry, competition}

{loss, insurance, financial}

{acquisition, growth, future}

MEHC depends upon cash flows from EME to service its debt. EME has substantial interests in merchant energy power plants which are subject to market risks related to wholesale energy prices. EME's financial results can be affected by changes in fuel prices, fuel transportation cost increases, and interruptions in fuel supply. EME may not be able to hedge market risks effectively. EME is exposed to credit and performance risk from third parties under supply and transportation contracts. EME is subject to extensive energy industry regulation. EME is subject to extensive environmental regulation and permitting requirements that may involve significant and increasing costs. The ability of EME's largest subsidiary, Midwest Generation, LLC, to make distributions is restricted. EME and its subsidiaries have a substantial amount of indebtedness, including long-term lease obligations. Competition could adversely affect EME's business. Restrictions in EME's certificate of incorporation, its credit facilities and the MEHC financing documents limit the ability of EME and its subsidiaries to enter into specified transactions that they otherwise may enter into and may significantly impede their ability to refinance their debt. EME's projects may be affected by general operating risks and hazards customary in the power generation industry. EME may not have adequate insurance to cover all these hazards. EME's future acquisitions and development projects may not be successful.

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1158323--3/7/2006--MISSION_ENERGY_HOLDING_CO