930835--2/28/2007--EDISON_MISSION_ENERGY

related topics
{debt, indebtedness, cash}
{cost, regulation, environmental}
{gas, price, oil}
{loss, insurance, financial}
{competitive, industry, competition}
{acquisition, growth, future}
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 involve significant and increasing costs. EME's development projects or future acquisitions may not be successful. Competition could adversely affect EME's business. EME's parent, MEHC, depends upon cash flows from EME to service its debt. EME may not be able to raise capital on favorable terms, to refinance existing EME or subsidiary indebtedness or to fund operations, capital expenditures, future acquisitions and development activities, which could adversely affect its results of operations. EME and its subsidiaries have a substantial amount of indebtedness, including long-term lease obligations. The ability of EME's largest subsidiary, Midwest Generation, to make distributions is restricted. 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 or borrow additional funds. 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. The accounting for EME's hedging and proprietary trading activities may increase the volatility of its quarterly and annual financial results.

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