Employees
At December 31, 2013, EME employed 1,047 people, including 586 employees of Midwest Generation. At December 31, 2013,
approximately 42% and 75% of the employees of 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, 2014. Midwest Generation also has a separate collective bargaining agreement governing retirement, health care, disability and insurance
benefits that expires on March 31, 2015.
Interconnection Agreement (Midwest Generation only)
Midwest Generation has entered into interconnection agreements with Commonwealth Edison to provide interconnection services necessary
to connect the Midwest Generation plants with its transmission systems. Unless terminated earlier in accordance with their terms, the interconnection
F-81
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 9. Commitments and Contingencies (EME and Midwest Generation, except as noted) (Continued)
agreements
will terminate on a date mutually agreed to by both parties. Midwest Generation is required to compensate Commonwealth Edison for all reasonable costs associated with any modifications,
additions or replacements made to the interconnection facilities or transmission systems in connection with any modification, addition or upgrade to the Midwest Generation plants.
Guarantees and Indemnities
EME and certain of its subsidiaries have various financial and performance guarantees and indemnity agreements which are issued in the
normal course of business. The contracts discussed below included performance guarantees.
Environmental Indemnities Related to the Midwest Generation Plants
In connection with the acquisition of the Midwest Generation plants, EME and Midwest Generation agreed to indemnify Commonwealth Edison
with respect to specified environmental liabilities before and after December 15, 1999, the date of sale. The indemnification obligations are reduced by any insurance proceeds and tax benefits
related to such indemnified claims and are subject to a requirement that Commonwealth Edison takes all reasonable steps to mitigate losses related to any such indemnification claim. Also, in
connection with the Powerton and Joliet Sale Leaseback, EME agreed to indemnify the owner-lessors for specified environmental liabilities. These indemnities are not limited in term or amount. Due to
the nature of the obligations under these indemnities, a maximum potential liability cannot be determined. Commonwealth Edison has advised EME that Commonwealth Edison believes it is entitled to
indemnification for all liabilities, costs, and expenses that it may be required to bear as a result of the litigation discussed below under "ContingenciesMidwest Generation
New Source Review and Other Litigation," and one of the Powerton-Joliet owner-lessors has made a similar request for indemnification. Except as discussed below, EME and Midwest Generation have not
recorded a liability related to these environmental indemnities.
Midwest
Generation entered into a supplemental agreement with Commonwealth Edison and Exelon Generation Company LLC on February 20, 2003 to resolve a dispute regarding
interpretation of Midwest Generation's reimbursement obligation for asbestos claims under the environmental indemnities set forth in the Asset Sale Agreement. Under this supplemental agreement,
Midwest Generation agreed to reimburse Commonwealth Edison and Exelon Generation 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 the agreement. The obligations under this agreement are not subject to a
maximum liability. The supplemental agreement had an initial five-year term with an automatic renewal provision for subsequent one-year terms (subject to the right of either party to terminate). There
were approximately 290 cases for which Midwest Generation was potentially liable that had not been settled and dismissed at December 31, 2013. Midwest Generation had $53 million recorded
in LSTC at December 31, 2013 and 2012 related to this contractual indemnity. For discussion of LSTC, see Note 16Restructuring Activities.
F-82
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 9. Commitments and Contingencies (EME and Midwest Generation, except as noted) (Continued)
Indemnities Related to the Homer City Plant (EME only)
In connection with the 1999 acquisition of the Homer City plant from NYSEG and Penelec (sellers), Homer City agreed to indemnify the
sellers with respect to specified environmental liabilities before and after the date of sale. EME guaranteed this indemnity obligation of Homer City. In connection with Homer City's divestiture of
assets to an affiliate of GECC on December 14, 2012, EME re-affirmed its guaranty to NYSEG and Penelec. Also in connection with the recent asset transfer to the GECC affiliate, all operative
documents with respect to Homer City's sale leaseback (including all EME indemnities in favor of the former owner-lessors) were terminated. In connection with the transfer, the GECC affiliate did not
assume (and Homer City retained) liabilities for monetary fines and penalties for violations of environmental laws or environmental permits prior to the closing date. EME has not recorded a liability
related to this indemnity. For discussion of the New Source Review lawsuit filed against Homer City, see "ContingenciesHomer City New Source Review and Other Litigation."
Indemnities Provided under Asset Sale and Sale Leaseback Agreements
The asset sale agreements for the sale of EME's international assets contain indemnities from EME to the purchasers, including
indemnification for taxes imposed with respect to operations of the assets prior to the sale and for pre-closing environmental liabilities. Not all indemnities under the asset sale agreements have
specific expiration dates. At December 31, 2013 and 2012, EME had $20 million recorded in LSTC related to these matters. For discussion of LSTC, see
Note 16Restructuring Activities.
In
connection with the Powerton and Joliet Sale Leaseback and, previously, a sale leaseback transaction related to the Collins Station in Illinois, EME, Midwest Generation and another
wholly owned subsidiary of EME entered into tax indemnity agreements. Under certain of these tax indemnity agreements, Midwest Generation, as the lessee in the Powerton and Joliet Sale Leaseback
agreed to indemnify the respective owner-lessors for specified adverse tax consequences that could result from certain situations set forth in each tax indemnity agreement, including specified
defaults under the respective leases. Although the Collins Station lease terminated in April 2004, Midwest Generation's indemnities in favor of its former lease equity investors are still in effect.
EME provided similar indemnities in the Powerton and Joliet Sale Leaseback. The potential indemnity obligations under these tax indemnity agreements could be significant. Due to the nature of these
potential obligations, EME
and Midwest Generation cannot determine a range of estimated obligations which would be triggered by a valid claim from the owner-lessors. EME and Midwest Generation have not recorded a liability for
these matters.
Other Indemnities
EME and Midwest Generation provide other indemnifications through contracts entered into in the normal course of business. These
include, among other things, indemnities for specified environmental liabilities and for income taxes with respect to assets sold. EME's and Midwest Generation's obligations under these agreements may
or may not be limited in terms of time and/or amount, and in some instances EME and Midwest Generation may have recourse against third parties.
F-83
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 9. Commitments and Contingencies (EME and Midwest Generation, except as noted) (Continued)
EME
and Midwest Generation cannot determine a range of estimates and have not recorded a liability related to these indemnities.
Contingencies
In addition to the matters disclosed in these notes, EME and Midwest Generation are involved in other legal, tax and regulatory
proceedings before various courts and governmental agencies regarding matters arising in the ordinary course of business. EME and Midwest Generation believe the outcome of these other proceedings,
individually and in the aggregate, will not materially affect their results of operations or liquidity.
Midwest Generation New Source Review and Other Litigation
In August 2009, the US EPA and the State of Illinois filed a complaint in the United States District Court for the Northern District of
Illinois alleging that Midwest Generation
or Commonwealth Edison performed repair or replacement projects at six Illinois coal-fired electric generating stations in violation of the Prevention of Significant Deterioration (PSD) requirements
and of the New Source Performance Standards of the Clean Air Act (CAA), including alleged requirements to obtain a construction permit and to install controls sufficient to meet best available control
technology (BACT) emission rates. The US EPA also alleged that Midwest Generation and Commonwealth Edison violated certain operating permit requirements under Title V of the CAA. Finally, the US EPA
alleged violations of certain opacity and particulate matter standards at the Midwest Generation plants. In addition to seeking penalties ranging from $25,000 to $37,500 per violation, per day, the
complaint called for an injunction ordering Midwest Generation to install controls sufficient to meet BACT emission rates at all units subject to the complaint and other remedies. The remedies sought
by the plaintiffs in the lawsuit could go well beyond the requirements of the Combined Pollutant Standard (CPS). Several Chicago-based environmental action groups intervened in the case.
Nine
of the ten PSD claims raised in the complaint have been dismissed, along with claims related to alleged violations of Title V of the CAA, to the extent based on the dismissed PSD
claims, and all claims asserted against Commonwealth Edison and EME. The dismissals were affirmed by the Seventh Circuit Court of Appeals in July 2013. The court denied a motion to dismiss a claim by
the Chicago-based environmental action groups for civil penalties in the remaining PSD claim, but noted that the plaintiffs will be required to convince the court that the statute of limitations
should be equitably tolled. The court did not address other counts in the complaint that allege violations of opacity and particulate matter limitations under the Illinois State Implementation Plan
and Title V of the CAA. In February 2012, certain of the environmental action groups that had intervened in the case entered into an agreement with Midwest Generation to dismiss without prejudice all
of their opacity claims as to all defendants. The agreed upon motion to dismiss was approved by the court on March 26, 2012.
In
January 2012, two complaints were filed against Midwest Generation in Illinois state court by residents living near the Crawford and Fisk Stations on behalf of themselves and all
others similarly situated, each asserting claims of nuisance, negligence, trespass, and strict liability. The plaintiffs seek to have their suits certified as a class action and request injunctive
relief, as well as compensatory and punitive damages. The complaints are similar to two complaints previously filed in the United States District Court for the Northern District of Illinois, which
were dismissed in October 2011 for lack of
F-84
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 9. Commitments and Contingencies (EME and Midwest Generation, except as noted) (Continued)
federal
jurisdiction. Midwest Generation's motions to dismiss the cases were denied in August 2012, following which the plaintiffs filed amended complaints alleging substantially similar claims and
requesting similar relief. Midwest Generation has filed motions to dismiss the amended complaints, and these complaints are stayed as a result of the Chapter 11 Cases.
In
October 2012, Midwest Generation and the Illinois Environmental Protection Agency entered into Compliance Commitment Agreements outlining specified environmental remediation measures
and groundwater monitoring activities to be undertaken at its Powerton, Joliet, Crawford, Will County and Waukegan generating stations. Midwest Generation has submitted certification to the Illinois
Environmental Protection Agency that all compliance measures have been successfully completed. Also in October 2012, several environmental groups filed a complaint before the Illinois Pollution
Control Board against Midwest Generation, alleging violations of the Illinois groundwater standards through the operation of coal ash disposal ponds at its Powerton, Joliet, Waukegan and Will County
generating stations. The complaint requests the imposition of civil penalties, injunctive relief and remediation. The matter was stayed as a result of the Chapter 11 Cases, although that stay
was lifted in part in April 2013 so that the proceedings could continue for the sole purpose of adjudicating Midwest Generation's motion to dismiss the complaint. In October 2013, the Pollution
Control Board denied Midwest Generation's motion to dismiss the complaint, and in December 2013 the Bankruptcy Court granted the environmental groups' motion to lift the stay as to the remainder of
the case.
In
December 2012, the Sierra Club filed a complaint before the Illinois Pollution Control Board against Midwest Generation, alleging violations of sulfur dioxide (SO
2
)
emissions standards at its Powerton, Joliet, Waukegan and Will County generating stations. The complaint is based on alleged violations of the US EPA National Ambient Air Quality Standards (NAAQS)
regulations for 1-hour SO
2
, which have not yet been incorporated into any specific state implementation plan in Illinois. The complaint requests the imposition of civil penalties,
injunctive relief, and the imposition of further reductions on SO
2
emissions to offset past emissions. The complaint was stayed as a result of the Chapter 11 Cases. In November
2013, the Bankruptcy Court granted the plaintiffs' motion to lift the stay.
Adverse
decisions in these cases could involve penalties, remedial actions and damages that could have a material impact on the financial condition and results of operations of Midwest
Generation and EME. EME cannot predict the outcome of these matters or estimate the impact on the Midwest Generation plants, or its and Midwest Generation's results of operations, financial position
or cash flows. EME and Midwest Generation have not recorded a liability for these matters.
Homer City New Source Review and Other Litigation (EME only)
In January 2011, the US EPA filed a complaint in the United States District Court for the Western District of Pennsylvania against
Homer City, the sale leaseback owner participants of the Homer City plant, and two prior owners of the Homer City plant. The complaint alleged violations of the PSD and Title V provisions of the CAA,
as a result of projects in the 1990s performed by prior owners without PSD permits and the subsequent failure to incorporate emissions limitations that meet BACT into the station's Title V operating
permit. In addition to seeking penalties ranging from $32,500 to $37,500 per violation, per day, the complaint called for an injunction ordering Homer City to install controls sufficient to meet BACT
emission rates at all units subject to the complaint and for other remedies.
F-85
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 9. Commitments and Contingencies (EME and Midwest Generation, except as noted) (Continued)
The
PADEP, the State of New York, and the State of New Jersey intervened in the lawsuit. In October 2011, all of the claims in the US EPA's lawsuit were dismissed with prejudice. The dismissal was
affirmed by the United States Court of Appeals for the Third Circuit in August 2013, and in December 2013 the plaintiffs' request for rehearing was denied.
Adverse
decisions in this case could involve penalties, remedial actions and damages. EME cannot predict the outcome of these matters or estimate the impact on its results of operations,
financial position or cash flows. EME has not recorded a liability for these matters.
Environmental Remediation
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.
With
respect to potential liabilities arising under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) or similar laws for the investigation and
remediation of contaminated property, EME and Midwest Generation accrue a liability to the extent the costs are probable and can be reasonably estimated. Midwest Generation had accrued a probable
amount of approximately $8 million at December 31, 2013 for estimated environmental investigation and remediation costs for two stations at the Midwest Generation plants. This estimate
is based upon the number of sites, the scope of work and the estimated costs for investigation and/or remediation where such expenditures could be reasonably estimated. EME and Midwest Generation also
have identified sites for which a reasonable estimate cannot be made. Future estimated costs may vary based on changes in regulations or requirements of federal, state or local governmental agencies,
changes in technology, and actual costs of disposal. In addition, future remediation costs will be affected by the nature and extent of contamination discovered at the sites that require remediation.
Given the prior history of the operations at its facilities, EME and Midwest Generation cannot be certain that the existence or extent of all contamination at its sites has been fully identified.
Chevron Adversary Proceeding (EME only)
In December 2012, Chevron Kern River Company and Chevron Sycamore Cogeneration Company filed a complaint against Southern Sierra Energy
Company and Western Sierra Energy in the Chapter 11 Cases. The plaintiffs and defendants are partners in the Kern River and Sycamore projects. The complaint alleged that the filing of the
Chapter 11 Cases constituted a default under the partnership agreements related to those projects, entitling the defendants to expel the plaintiffs from the partnerships and pay for their
interests at a price based on the net book value of the partnerships, and sought a declaratory judgment, injunctive relief, and relief from the automatic stay in support of those alleged remedies. In
January 2013, the Bankruptcy Court denied the plaintiffs' request for relief from the automatic stay and a preliminary injunction. The plaintiffs filed a notice of appeal, and the defendants moved to
stay proceedings until the plaintiffs' appeal was decided. In September 2013, the U.S. District Court issued an order denying the plaintiffs' request for leave to appeal the denial of the
F-86
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 9. Commitments and Contingencies (EME and Midwest Generation, except as noted) (Continued)
preliminary
injunction, and permitting their appeal from denial of the motion for relief from the automatic stay.
In
November 2013, Chevron Kern River Company and Chevron Sycamore Cogeneration Company filed an amended complaint that reiterated the allegations and requests of the initial complaint
and added (i) allegations regarding the NRG sale and (ii) a request for damages for breach based on a reduction in value in their interests in the Kern River and Sycamore partnerships.
In January 2014, the Bankruptcy Court dismissed the amended complaint with prejudice.
Insurance
At December 31, 2013 and 2012, EME had receivables of $1 million and $3 million, respectively. During 2013 and
2011, $1 million and $5 million, respectively, related to business interruption insurance coverage was recorded and has been reflected in other income, net on EME's consolidated
statements of operations, of which $2 million has been reflected in interest and other income on Midwest Generation's consolidated statements of operations. EME received $6 million and
$2 million during 2013 and 2012, respectively, of which $2 million in 2012 was received by Midwest Generation, in cash payments related to insurance claims.
Note 10. Environmental Developments (EME, Midwest Generation)
Midwest Generation Environmental Compliance Plans and Costs
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 SO
2
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. Based on work to date through December 31, 2013, the estimated costs of 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:
|
|
|
|
|
|
|
|
|
|
Unit
|
|
Remaining Cost
(in millions)
|
|
Unit
|
|
Remaining Cost
(in millions)
|
|
Joliet 6
|
|
$
|
75
|
|
Waukegan 7
|
|
$
|
55
|
|
Joliet 7
|
|
|
114
|
|
Waukegan 8
|
|
|
64
|
|
Joliet 8
|
|
|
129
|
|
Will County 3
|
|
|
104
|
|
Powerton 5
|
|
|
133
|
|
Will County 4
|
|
|
93
|
|
Powerton 6
|
|
|
66
|
|
|
|
|
|
|
F-87
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 10. Environmental Developments (EME, Midwest Generation) (Continued)
Greenhouse Gas Regulation
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.
In
September 2013, the US EPA proposed new regulations governing carbon dioxide emissions from new electric generating stations. These regulations replace its original proposal. The US
EPA intends to issue proposed GHG emission standards for reconstructed and existing electric generating stations in June 2014 and to promulgate such standards in June 2015. States would be required to
submit their implementation plans responding to such guidelines to the US EPA one year after the regulations are promulgated.
Cross-State Air Pollution Rule
In August 2012, the United States Court of Appeals for the District of Columbia Circuit vacated the US EPA's Cross-State Air Pollution
Rule (CSAPR) and directed the US EPA to continue administering the Clean Air Interstate Rule (CAIR) pending the promulgation of a
valid replacement. The U.S. Supreme Court agreed to review the United States Court of Appeals for the District of Columbia Circuit's August 2012 decision and heard oral arguments on the matter in
December 2013.
Hazardous Air Pollutant Regulations
In December 2011, the US EPA announced the Mercury and Air Toxics Standards (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.
Water Quality
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 in 2014. The required measures to comply with the proposed
standards regarding entrainment are subject to the discretion of the
F-88
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 10. Environmental Developments (EME, Midwest Generation) (Continued)
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.
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. Two different proposed approaches are under consideration.
The
first approach, under which the US EPA would list these residuals as special wastes subject to regulation as hazardous wastes, could require EME and Midwest Generation to incur
additional capital and operating costs. The second approach, under which the US EPA would regulate these residuals as nonhazardous wastes, would establish minimum technical standards for units that
are used for the disposal of coal combustion residuals, but would allow procedural and enforcement mechanisms (such as permit requirements) to be exclusively a matter of state law. Many of the
proposed technical standards are similar under both proposed options (for example, surface impoundments may need to be retrofitted, depending on which standard is finally adopted), but the second
approach is not expected to require the retrofitting of landfills used for the disposal of coal combustion residuals.
Note 11. Accumulated Other Comprehensive Loss (EME, Midwest Generation)
EME
EME's AOCI, net of tax and including discontinued operations, consisted of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Unrealized Gains
and Losses on Cash
Flow Hedges
|
|
Unrecognized Losses
and Prior Service
Adjustments, Net(1)
|
|
Valuation Allowance
on Deferred Tax
Asset
|
|
AOCI
|
|
Balance at December 31, 2011
|
|
$
|
(34
|
)
|
$
|
(60
|
)
|
$
|
|
|
$
|
(94
|
)
|
OCI before reclassifications
|
|
|
(17
|
)
|
|
|
|
|
(6
|
)
|
|
(23
|
)
|
Amount reclassified from AOCI
|
|
|
(25
|
)
|
|
4
|
|
|
|
|
|
(21
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2012
|
|
|
(76
|
)
|
|
(56
|
)
|
|
(6
|
)
|
|
(138
|
)
|
OCI before reclassifications
|
|
|
34
|
|
|
33
|
|
|
|
|
|
67
|
|
Amount reclassified from AOCI
|
|
|
5
|
|
|
5
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2013
|
|
$
|
(37
|
)
|
$
|
(18
|
)
|
$
|
(6
|
)
|
$
|
(61
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
For
further detail, see Note 8Compensation and Benefit Plans.
F-89
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 11. Accumulated Other Comprehensive Loss (EME, Midwest Generation) (Continued)
-
(2)
-
EME
and Midwest Generation do not expect to reclassify unrealized losses on cash flow hedges into earnings in the next 12 months. For further
explanation, see "Unrealized Losses on Cash Flow Hedges."
The
after-tax amounts recorded in AOCI at December 31, 2013 and 2012 for commodity contracts were losses of none and $1 million, respectively, and for interest rate
contracts was losses of $37 million and $75 million, respectively. EME's significant items reclassified out of AOCI and the effect on the statement of operations consisted of:
|
|
|
|
|
|
(in millions)
|
|
Year Ended
December 31, 2013
|
|
Affected Line Item in the Statement of
Operations
|
Unrealized gains and losses on cash flow hedges
|
|
|
|
|
|
Electricity commodity hedges
|
|
$
|
(3
|
)
|
Operating revenues
|
Interest rate contracts
|
|
|
(5
|
)
|
Interest expense
|
Tax benefit
|
|
|
3
|
|
Benefit for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
Total, net
|
|
$
|
(5
|
)
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of retirement benefit items
|
|
|
|
|
|
Unamortized prior service cost on terminated plan
|
|
$
|
(3
|
)
|
Plant operations and administrative and general(1)
|
Actuarial losses
|
|
|
(5
|
)
|
Plant operations and administrative and general(1)
|
Tax benefit
|
|
|
3
|
|
Provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
Total, net
|
|
$
|
(5
|
)
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
For
the year ended December 31, 2013, $5 million and $3 million were reclassified from AOCI to plant operations, and administrative and
general expenses, respectively
F-90
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 11. Accumulated Other Comprehensive Loss (EME, Midwest Generation) (Continued)
Midwest Generation
Midwest Generation's AOCI, net of tax, consisted of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Unrealized Gains
and Losses on Cash
Flow Hedges
|
|
Unrecognized Losses
and Prior Service
Adjustments, Net(1)
|
|
Valuation Allowance
on Deferred Tax
Asset
|
|
AOCI
|
|
Balance at December 31, 2011
|
|
$
|
21
|
|
$
|
(38
|
)
|
$
|
|
|
$
|
(17
|
)
|
OCI before reclassifications
|
|
|
4
|
|
|
(1
|
)
|
|
(12
|
)
|
|
(9
|
)
|
Amount reclassified from AOCI
|
|
|
(26
|
)
|
|
2
|
|
|
|
|
|
(24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2012
|
|
|
(1
|
)
|
|
(37
|
)
|
|
(12
|
)
|
|
(50
|
)
|
OCI before reclassifications
|
|
|
(1
|
)
|
|
25
|
|
|
|
|
|
24
|
|
Amount reclassified from AOCI
|
|
|
2
|
|
|
3
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2013
|
|
$
|
|
|
$
|
(9
|
)
|
$
|
(12
|
)
|
$
|
(21
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
For
further detail, see Note 8Compensation and Benefit Plans.
Midwest
Generation's significant items reclassified out of AOCI and the effect on the statement of operations consisted of:
|
|
|
|
|
|
(in millions)
|
|
Year Ended
December 31, 2013
|
|
Affected Line Item in the Statement of
Operations
|
Unrealized gains and losses on cash flow hedges
|
|
|
|
|
|
Electricity commodity hedges
|
|
$
|
(4
|
)
|
Operating revenues
|
Tax benefit
|
|
|
2
|
|
Benefit for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
Total, net
|
|
$
|
(2
|
)
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of retirement benefit items
|
|
|
|
|
|
Prior services costs
|
|
$
|
(1
|
)
|
Plant operations
|
Actuarial losses
|
|
|
(3
|
)
|
Plant operations
|
Tax benefit
|
|
|
1
|
|
Provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
Total, net
|
|
$
|
(3
|
)
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized Losses on Cash Flow Hedges (EME, Midwest Generation)
At December 31, 2013, unrealized losses on cash flow hedges, net of tax, consisted of interest rate swap contracts that qualify
for hedge accounting. These losses arise because current forecasts of future interest rates are lower than the contract rates. No unrealized losses on
commodity cash flow hedges are expected to be reclassified into earnings during the next 12 months as no commodity cash flow hedges are designated beyond December 31, 2013.
F-91
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 12. Supplemental Cash Flows Information (EME, Midwest Generation)
EME
Supplemental cash flows information for EME, including discontinued operations, consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
(in millions)
|
|
2013
|
|
2012
|
|
2011
|
|
Cash paid (received)
|
|
|
|
|
|
|
|
|
|
|
Interest (net of amount capitalized)(1)
|
|
$
|
62
|
|
$
|
168
|
|
$
|
290
|
|
Income taxes
|
|
|
(17
|
)
|
|
59
|
|
|
(216
|
)
|
Cash payments under plant operating leases
|
|
|
30
|
|
|
199
|
|
|
311
|
|
Details of assets acquired
|
|
|
|
|
|
|
|
|
|
|
Fair value of assets acquired
|
|
$
|
|
|
$
|
|
|
$
|
1
|
|
Liabilities assumed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
$
|
|
|
$
|
|
|
$
|
1
|
|
Non-cash contribution from EIX(2)
|
|
$
|
25
|
|
$
|
|
|
$
|
|
|
Non-cash distribution to EIX(2)
|
|
$
|
|
|
$
|
222
|
|
$
|
|
|
Non-cash activities from vendor financing
|
|
$
|
9
|
|
$
|
11
|
|
$
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Interest
paid by EME for December 31, 2013, 2012 and 2011 was $69 million, $199 million and $317 million, respectively. Interest
capitalized by EME for December 31, 2013, 2012 and 2011 was $7 million, $31 million and $27 million, respectively.
-
(2)
-
During
2013, EME received a non-cash contribution from EIX related to the tax-allocation agreements. During 2012, EME recorded a non-cash distribution to EIX related to the
tax-allocation agreements. See Note 7Income TaxesEMEDeferred Tax Assets and Liabilities.
EME's
accrued capital expenditures at December 31, 2013, 2012 and 2011 were $9 million, $31 million and $29 million, respectively. Accrued capital
expenditures will be included as an investing activity in the consolidated statements of cash flows in the period paid.
F-92
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 12. Supplemental Cash Flows Information (EME, Midwest Generation) (Continued)
Midwest Generation
Supplemental cash flows information for Midwest Generation consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
(in millions)
|
|
2013
|
|
2012
|
|
2011
|
|
Cash paid
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
24
|
|
$
|
36
|
|
$
|
43
|
|
Income taxes
|
|
|
|
|
|
|
|
|
8
|
|
Non-cash distribution to parent(1)
|
|
$
|
|
|
$
|
106
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
During
2012, Midwest Generation recorded a non-cash distribution to its parent related to the tax-allocation agreements. See
Note 7Income TaxesMidwest GenerationDeferred Tax Assets and Liabilities.
Midwest
Generation's accrued capital expenditures at December 31, 2013, 2012 and 2011 were $9 million, $9 million and $4 million, respectively. Accrued
capital expenditures will be included as an investing activity in the consolidated statements of cash flows in the period paid.
Note 13. Asset Impairments and Other Charges (EME, Midwest Generation)
EME
Asset impairments and other charges for EME consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
(in millions)
|
|
2013
|
|
2012
|
|
2011
|
|
Midwest Generation plants impairments
|
|
$
|
466
|
|
$
|
|
|
$
|
640
|
|
Ambit impairment
|
|
|
|
|
|
15
|
|
|
|
|
Wind projects impairment and other charges
|
|
|
(2
|
)
|
|
13
|
|
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EME asset impairments and other charges(1)
|
|
$
|
464
|
|
$
|
28
|
|
$
|
714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
fair value of long-lived assets as determined using the discounted cash flow models discussed below qualify as Level 3 in the fair value
hierarchy.
2013 Impairments
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
F-93
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 13. Asset Impairments and Other Charges (EME, Midwest Generation) (Continued)
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. For additional information on the impairment policy of long-lived assets, see Note 1Summary of Significant Accounting PoliciesImpairment of Long-Lived Assets.
2012 Impairments
Ambit
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; the land
lease is subordinated to debt service. In February 2013, the EME operations and maintenance subsidiary that operated the plant provided a 180-day notice of its intent to terminate its operations and
maintenance contract.
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. For additional information on the impairment policy of long-lived assets, see
Note 1Summary of Significant Accounting PoliciesImpairment of Long-Lived Assets.
2011 Impairments
Wind Projects
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
F-94
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 13. Asset Impairments and Other Charges (EME, Midwest Generation) (Continued)
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. For additional
information on the impairment policy of long-lived assets, see Note 1Summary of Significant Accounting PoliciesImpairment of Long-Lived Assets.
During
the fourth quarter of 2011, EME significantly reduced development of renewable energy projects to conserve cash and in light of more limited market opportunities. As a result, EME
reduced staffing and undertook efforts to reduce funding joint development projects, thereby reducing the development pipeline of potential wind projects to a projected installed capacity of
approximately 1,300 megawatts at the end of 2011. These changes triggered charges of $34 million.
Fisk, Crawford and Waukegan Stations
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.
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. For additional information on the impairment policy of long-lived
assets, see Note 1Summary of Significant Accounting PoliciesImpairment of Long-Lived Assets.
Midwest Generation
Midwest Generation's asset impairments and other charges were $465 million, $14 million and $653 million for the
years ended December 31, 2013, 2012 and 2011, respectively. Of the 2013 charges,
F-95
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 13. Asset Impairments and Other Charges (EME, Midwest Generation) (Continued)
$464 million
related to the Will County Station. Of the 2011 charges, $640 million related to the Fisk, Crawford and Waukegan Stations. See above for further discussion of impairment
charges on the Midwest Generation plants.
Note 14. Discontinued Operations (EME only)
In September 2012, Homer City, a wholly owned indirect subsidiary of EME, and Homer City Generation, L.P., an affiliate of GECC, entered into the Homer City Master Transaction
Agreement (MTA) for the divestiture by Homer City of substantially all of its remaining assets and certain specified liabilities. Accordingly, in the third quarter of 2012, Homer City met the
definition of a discontinued operation and was classified separately on EME's consolidated financial statements. In December 2012, the transaction closed and Homer City Generation, L.P. assumed
control of Homer City. On May 2, 2013, the Homer City Debtors filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code.
The
2013 results from discontinued operations reflects the withdrawal from the benefit plan that provided postretirement medical, dental, vision, and life insurance coverage to certain
Homer City retirees and the subsequent cost, reflected in reorganization items, for a Bankruptcy Court approved settlement between the Homer City Debtors and the union for the affected Homer City
retirees. EME recorded an impairment charge of $1,032 million ($623 million after tax) in 2011 related to Homer City's long-lived assets, and an asset write-down of $89 million
($53 million after tax) in 2012 to reflect the ultimate carrying value of assets and liabilities transferred to Homer City Generation, L.P.
Summarized
results of discontinued operations for EME are:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
(in millions)
|
|
2013
|
|
2012
|
|
2011
|
|
Total operating revenues
|
|
$
|
|
|
$
|
395
|
|
$
|
527
|
|
Total operating expenses
|
|
|
29
|
|
|
(496
|
)
|
|
(538
|
)
|
Asset impairments and other charges
|
|
|
|
|
|
(89
|
)
|
|
(1,032
|
)
|
Other income
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before reorganization items and income taxes
|
|
|
29
|
|
|
(185
|
)
|
|
(1,043
|
)
|
Reorganization items, net
|
|
|
22
|
|
|
|
|
|
|
|
Provision (benefit) for income taxes
|
|
|
6
|
|
|
(73
|
)
|
|
(411
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations of discontinued subsidiaries
|
|
$
|
1
|
|
$
|
(112
|
)
|
$
|
(632
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-96
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 14. Discontinued Operations (EME only) (Continued)
The
assets and liabilities associated with the discontinued operations are segregated on the consolidated balance sheets as follows:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
(in millions)
|
|
2013
|
|
2012
|
|
Cash and cash equivalents
|
|
$
|
|
|
$
|
2
|
|
Other current assets
|
|
|
|
|
|
7
|
|
Carrying value adjustment
|
|
|
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets of discontinued operations
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 15. Related Party Transactions (EME, Midwest Generation)
In November 2013, the Bankruptcy Court entered an order approving the Debtor Entities' continued performance under various agreements and arrangements that govern shared services between
EIX and EME and its subsidiaries. The shared services agreement with EIX is expected to terminate at the earlier of the consummation of the NRG Sale or, under certain circumstances, by July 31,
2014.
EME
Historically, specified administrative services such as payroll, employee benefit programs, insurance, and information technology have
been shared among all affiliates of EIX, and the costs of these corporate support services have been allocated to all affiliates, including EME. As a result of the Chapter 11 Cases, certain of
these services have been reduced or canceled. Costs are allocated based on one of the following formulas: percentage of time worked, equity in investment and advances, number of employees, or
multi-factor (operating revenues, operating expenses, total assets and number of employees). In addition, EME is billed for any services directly requested for its benefit. Labor and expenses of these
directly requested services are specifically identified and billed at cost, subject to a reasonable markup. EME believes the allocation methodologies utilized are reasonable. EME made reimbursements
for the cost of these programs and other services totaling $12 million, $60 million and $60 million in 2013, 2012 and 2011, respectively. The amount due to (from) EIX was
$1 million and $(1) million at December 31, 2013 and 2012, respectively.
Edison
Mission Operation & Maintenance, Inc., a direct, wholly owned affiliate of EME, has entered into operation and maintenance agreements with partnerships in which EME
has a 50% or less ownership interest. Pursuant to the negotiated agreements, Edison Mission Operation & Maintenance is to perform all operation and maintenance activities necessary for the
production of power by these partnerships' facilities. The agreements continue until terminated by either party. Edison Mission Operation & Maintenance is paid for all costs incurred with
operating and maintaining such facilities and may also earn incentive compensation as set forth in the agreements. EME also has investments in wind projects that are accounted for under the equity
method for which Edison Mission Operation & Maintenance has entered into operation and maintenance agreements with these wind projects. EME recorded revenues under the operation and maintenance
agreements of $25 million for 2013, $24 million for 2012 and $23 million for 2011, reflected in operating revenues on EME's consolidated
F-97
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 15. Related Party Transactions (EME, Midwest Generation) (Continued)
statements
of operations. Receivables from affiliates for Edison Mission Operation & Maintenance totaled $3 million and $4 million at December 31, 2013 and 2012,
respectively.
EME
owns interests in partnerships that sell electricity generated by their project facilities to Southern California Edison Company (SCE) and others under the terms of power purchase
agreements. Sales by these partnerships to SCE under these agreements amounted to $297 million, $233 million and $277 million in 2013, 2012 and 2011, respectively.
The
Walnut Creek Project began selling power under its 10-year power purchase agreement with SCE in June 2013. EME recorded operating revenues on its consolidated statements of
operations of $84 million for 2013. The amount due from SCE was $8 million at December 31, 2013. For further information on Walnut Creek related party transactions, see
Note 5Debt and Credit AgreementsCredit Facilities and Letters of Credit.
Midwest Generation
EMMT Agreement
Midwest Generation has entered into a master purchase, sale and services agreement with EMMT, pursuant to which EMMT arranges for
purchases and sales of the following products, including related services: (i) energy and capacity; (ii) natural gas; (iii) fuel oil; and (iv) emission allowances. Midwest
Generation compensates EMMT with respect to these transactions, and reimburses EMMT for brokers' fees, taxes, and other reasonably incurred direct out-of-pocket expenses. Payment for these services is
due within 30 days of billing. The net fees earned by EMMT were $1 million during each of 2013, 2012 and 2011. The amount due from EMMT was $47 million and $39 million at
December 31, 2013 and 2012, respectively.
Notes Receivable from EME
Proceeds of $1.367 billion were received by Midwest Generation from the Powerton and Joliet Sale Leaseback and were loaned to
EME through four intercompany notes. EME is obligated to repay the principal on the notes in a series of installments on the dates and in the amounts set forth on a schedule to each note and interest
is due semi-annually on January 2 and July 2 at an 8.30% fixed interest rate. The notes are due to be repaid in full by January 2, 2016. At December 31, 2012, Midwest
Generation determined that it was probable a loss would be realized in connection with this intercompany loan and recorded a $1.4 billion charge, equal to the full carrying amount of the loan
and accrued interest, and ceased accruing interest income. In addition, during the pendency of the Chapter 11 Cases, EME did not make any of the three scheduled $61 million principal and
interest
F-98
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 15. Related Party Transactions (EME, Midwest Generation) (Continued)
payments
due to Midwest Generation. Notes receivable from EME on Midwest Generation's consolidated balance sheet consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
|
|
December 31, 2012
|
|
(in millions)
|
|
Carrying
Value
|
|
Valuation
Allowance
|
|
Net
|
|
Carrying
Value
|
|
Valuation
Allowance
|
|
Net
|
|
Current portion of notes receivable from affiliate
|
|
$
|
19
|
|
$
|
(19
|
)
|
$
|
|
|
$
|
12
|
|
$
|
(12
|
)
|
$
|
|
|
Interest receivable from affiliate
|
|
|
55
|
|
|
(55
|
)
|
|
|
|
|
55
|
|
|
(55
|
)
|
|
|
|
Notes receivable from affiliate
|
|
|
1,304
|
|
|
(1,304
|
)
|
|
|
|
|
1,311
|
|
|
(1,311
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,378
|
|
$
|
(1,378
|
)
|
$
|
|
|
$
|
1,378
|
|
$
|
(1,378
|
)
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income from affiliate included in interest and other income on Midwest Generation's consolidated statement of operations was none, $110 million and $111 million
for the years ended December 31, 2013, 2012 and 2011, respectively. The fair value of the note receivable from EME was zero at December 31, 2013 and December 31, 2012. Upon
consummation of the Plan and the NRG Sale, this loan and accrued interest will be canceled. For additional information, see Note 16Restructuring ActivitiesNRG Sale.
Services Agreements with EME and EIX
Historically, specified administrative services such as payroll, employee benefit programs, insurance, and information technology have
been shared among all affiliates of EIX, and the costs of these corporate support services have been allocated to all affiliates, including Midwest Generation. As a result of the Chapter 11
Cases, certain of these services have been reduced or canceled. Costs are allocated based on one of the following formulas: percentage of time worked, equity in investment and advances, number of
employees, or multi-factor (operating revenues, operating expenses, total assets and number of employees). In addition, Midwest Generation is billed for any services directly requested for its
benefit. Labor and expenses of these directly requested services are specifically identified and billed at cost, subject to a reasonable markup. Midwest Generation believes the allocation
methodologies utilized are reasonable. Midwest Generation made reimbursements for the cost of these programs and other services totaling $17 million, $27 million and $30 million
for the years ended December 31, 2013, 2012 and 2011, respectively. The amount due to EIX and EME was none and $1 million at December 31, 2013 and 2012, respectively, related to
these agreements.
Management and Support Agreements with Midwest Generation EME, LLC
Midwest Generation has entered into agreements with Midwest Generation EME for management and administrative services and support
services, including construction and construction management, operations and maintenance management, technical services and training, environmental, health and safety services, administrative and IT
support, and other managerial and technical services needed to operate and maintain electric power facilities. Under the terms of the agreements, Midwest Generation reimburses Midwest Generation EME
for actual costs incurred by functional area in providing support services, or in the case of specific tasks requested by Midwest Generation, the amount negotiated for the task. Actual costs billable
under these agreements for the years ended December 31, 2013, 2012 and 2011 were $29 million, $23 million and $24 million, respectively. The amount due to Midwest
Generation EME was $6 million and $2 million at December 31, 2013 and 2012, respectively, related to these agreements.
F-99
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 16. Restructuring Activities (EME, Midwest Generation)
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.
NRG Sale
On October 18, 2013, EME, Midwest Generation, and certain other Debtor Entities entered into a Plan Sponsor Agreement (the PSA)
with NRG Energy, Inc. (NRG), the Purchaser, the Official Committee of Unsecured Creditors appointed in the Chapter 11 Cases, the counterparties to the Powerton and Joliet Sale Leaseback
and certain of EME's noteholders that are signatories to the PSA, that provides for the parties to support and pursue confirmation by the Bankruptcy Court of the Plan, that will implement a
reorganization of the Debtor Entities through a sale of substantially all of the assets of EME to NRG pursuant to the Acquisition Agreement. The PSA contains representations, warranties and covenants
of the parties to support and pursue confirmation of the Plan.
The
Acquisition Agreement between EME, NRG and the Purchaser, a wholly owned subsidiary of NRG, provides for the sale of substantially all of EME's assets, including the outstanding
equity interests in certain of EME's direct subsidiaries (and thereby such subsidiaries' assets and liabilities), EME's cash and cash equivalents and EME's interest in substantially all of the other
assets used in the operation of EME's and its subsidiaries' businesses (the Acquired Assets) to the Purchaser upon Bankruptcy Court confirmation and consummation of the Plan. 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.
In
particular, with respect to the Powerton and Joliet leases, at the closing of the transaction, NRG will (i) replace the existing EME guarantees with NRG guarantees;
(ii) replace EME as a party to the tax indemnity agreements relating to the Powerton and Joliet leases; and (iii) covenant to make a capital investment in the Powerton and Joliet
Stations, provided that NRG will not be obligated to make capital investments in excess of $350 million.
In
consideration of the foregoing, at the closing of the transaction, EME will retain all liabilities with respect to the payment of the Powerton and Joliet Cure Amount and would be
responsible for bearing the costs of such cure payment for all amounts due under the lease before January 2, 2014. In addition, the intercompany note issued by EME for the benefit of Midwest
Generation, will be canceled. Midwest Generation will assume the Powerton and Joliet leases and the other operative documents related thereto, as modified by mutual agreement of the parties, and all
monetary defaults under each lease would be cured at closing. The Acquired Assets do not include (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.
The
total purchase price to be paid by the Purchaser for the Acquired Assets is $2.635 billion, subject to certain adjustments provided in the Acquisition Agreement. The
Acquisition Agreement
F-100
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 16. Restructuring Activities (EME, Midwest Generation) (Continued)
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.
The
Acquisition Agreement provides specific termination rights to each party, which include a right to terminate if certain milestone dates are not met, for material breaches of the
Acquisition Agreement not cured within a specified period or if EME enters into or seeks approval of a superior proposal. Under specified circumstances, NRG will be entitled to receive a cash fee of
$65 million, and expense reimbursement of all reasonable and documented out-of-pocket expenses, if the Acquisition Agreement is terminated.
Before
the NRG Sale may be completed, the parties must satisfy all conditions set forth in the Acquisition Agreement, including, among other things, governmental and regulatory
approvals. Certain conditions, such as the confirmation of the Plan and the entry of a Confirmation Order by the
Bankruptcy Court, have already been met. Certain other closing conditions have already been satisfied, including the receipt of various government and regulatory approvals and the declaration of
effectiveness of the Registration Statement for the common stock to be issued by NRG as a portion of the purchase price. The Acquisition Agreement contains certain representations and warranties made
by EME, NRG and the Purchaser. There are also various pre-closing and post-closing covenants binding on the parties. If the remaining conditions or requirements are not satisfied or waived the NRG
Sale will not be consummated.
Plan of Reorganization
The Plan generally provides for each of 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.
Under
the Settlement Agreement, a Reorganization Trust will be formed, which will make distributions pursuant to the Plan for the benefit of EME's existing creditors. All assets and
liabilities of EME that are not otherwise discharged in the bankruptcy or transferred to NRG as part of the NRG Sale will be transferred to the Reorganization Trust, with the exception of
(i) the 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 uncertain federal and 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 qualified pension plan, executive retirement plan, executive deferred compensation plan
and uncertain federal and state tax positions to be approximately $350 million. 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.
F-101
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 16. Restructuring Activities (EME, Midwest Generation) (Continued)
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.
EME
and the Reorganization Trust will release EIX and its subsidiaries, officers, directors, and representatives from all claims, except for those deriving from commercial arrangements
between SCE and certain of EME's subsidiaries and obligations under the Settlement Agreement. EIX and its subsidiaries that directly and indirectly own EME will provide a similar release to EME and
the Reorganization Trust. Under the Plan, EIX and its subsidiaries, officers, directors and representatives will also be beneficiaries of 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-party claims pending on September 30, 2016 are resolved.
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 following conditions, and others,
shall have been satisfied or waived for the Plan to become effective:
-
-
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.
LSTC
EME's LSTC are summarized below:
|
|
|
|
|
|
|
|
(in millions)
|
|
December 31,
2013
|
|
December 31,
2012
|
|
Senior notes, net
|
|
$
|
3,700
|
|
$
|
3,700
|
|
Accounts payable and accrued liabilities
|
|
|
53
|
|
|
32
|
|
Interest payable
|
|
|
154
|
|
|
154
|
|
Other
|
|
|
108
|
|
|
73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities subject to compromise
|
|
$
|
4,015
|
|
$
|
3,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
connection with the filing of the Chapter 11 Cases, EME classified both its $3.7 billion unsecured senior notes and $154 million of accrued interest related to
the unsecured senior notes as LSTC and ceased accruing interest expense. The accrued interest reclassified to LSTC primarily relates to $97 million and $38 million of interest payments
that were due on November 15 and December 17, 2012, respectively, that EME did not make. Unpaid contractual interest for the years ended December 31, 2013 and 2012 was
$281 million and $11 million, respectively.
F-102
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 16. Restructuring Activities (EME, Midwest Generation) (Continued)
Midwest
Generation's LSTC are summarized below:
|
|
|
|
|
|
|
|
(in millions)
|
|
December 31,
2013
|
|
December 31,
2012
|
|
Lease financing
|
|
$
|
434
|
|
$
|
434
|
|
Accounts payable and accrued liabilities
|
|
|
42
|
|
|
29
|
|
Interest payable
|
|
|
11
|
|
|
13
|
|
Other
|
|
|
53
|
|
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities subject to compromise
|
|
$
|
540
|
|
$
|
529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
connection with the filing of the Chapter 11 Cases, Midwest Generation classified $13 million of accrued interest due on the Powerton and Joliet Sale Leaseback as LSTC
but did not cease accruing interest expense. Upon closing of the NRG Sale, approximately $32 million of LSTC will be transferred from Midwest Generation to EME. For further discussion, see
Note 9Commitments and ContingenciesLease Commitments.
Claims
The Bankruptcy Court established June 17, 2013 and October 29, 2013 as the bar date for filing proofs of claim against
the Initial Debtors and Homer City Debtors estates, respectively.
As
of the date of this filing, EME and Midwest Generation have received 766 and 303 proofs of claim, respectively. New and amended claims may be filed in the future, including claims
amended to assign value to claims originally filed with no value. EME and Midwest Generation are in the process of reconciling such claims to the amounts listed in LSTC. LSTC have been recorded based
on the expected probable claim, which is subject to judgment and could change as new information develops during the reconciliation process. Differences in liability amounts estimated and claims filed
by creditors will be investigated and resolved, including through the filing of objections with the Bankruptcy Court as appropriate. Through this process, EME and Midwest Generation may identify
additional liabilities that need to be recorded as LSTC and the Bankruptcy Court may determine liabilities currently estimated as part of LSTC are without merit. The claims resolution process may take
considerable time to complete. The resolution of such claims could result in material adjustments to EME or Midwest Generation's financial statements. Determination of how liabilities will ultimately
be treated cannot be made until the Bankruptcy Court approves a plan of reorganization. Accordingly, the ultimate amount or treatment of such liabilities is not determinable at this time.
Reorganization Items
Reorganization items represent the direct and incremental costs of bankruptcy, such as professional fees, LSTC claim adjustments and
losses related to terminated contracts that are probable and can be estimated. Write off of unamortized deferred financing costs and debt discounts relate to EME's unsecured pre-petition debt, which
has been reclassified to LSTC on the consolidated balance sheet following the Chapter 11 filing on December 17, 2012. Professional fees primarily relate to legal advisors and consultants
working directly on the bankruptcy filing.
F-103
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 16. Restructuring Activities (EME, Midwest Generation) (Continued)
EME's
and Midwest Generation's significant items in reorganization charges, excluding discontinued operations, consisted of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2013
|
|
2012
|
|
(in millions)
|
|
Midwest
Generation
|
|
Other EME
Subsidiaries
|
|
EME
|
|
Midwest
Generation
|
|
Other EME
Subsidiaries
|
|
EME
|
|
Provision for allowable claims
|
|
$
|
19
|
|
$
|
|
|
$
|
19
|
|
$
|
6
|
|
$
|
|
|
$
|
6
|
|
Write off of unamortized deferred financing costs and debt discounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
|
|
|
15
|
|
Professional fees
|
|
|
22
|
|
|
79
|
|
|
101
|
|
|
|
|
|
22
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reorganization items, net
|
|
$
|
41
|
|
$
|
79
|
|
$
|
120
|
|
$
|
6
|
|
$
|
37
|
|
$
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost Reduction Activities
EME eliminated approximately 150 positions in its regional and corporate offices and generating stations in April 2013, including 120
positions at Midwest Generation. EME recorded charges of approximately $7 million, and Midwest Generation recorded its share of these charges, a total of $5 million, in administrative
and general expense on their respective consolidated statements of operations in the second quarter of 2013.
Shutdown of Fisk and Crawford
Midwest Generation voluntarily ceased coal-fired operations at the Fisk and Crawford Stations in August 2012. Midwest Generation
decommissioned and retired the units during the fourth quarter of 2012. During the second quarter of 2012, EME recorded a charge of $9 million (pre-tax) related to severance and other employee
benefits due to the approximately 200 employees affected by the planned shutdowns; and Midwest Generation recorded a charge of $6 million (pre-tax) related to severance and other employee
benefits due to the approximately 175 employees affected by the planned shutdowns. These charges were included in administrative and general expense on each of EME's and Midwest Generation's
consolidated statements of operations.
Note 17. Condensed Combined Debtors' Financial Information (EME only)
The financial statements below represent the condensed combined financial statement of the Debtor Entities. Non-debtor EME subsidiaries are accounted for as non-consolidated subsidiaries
in these financial statements, as such, their net loss is included as "Equity in loss of non-debtor entities, net of
tax" in the Debtors' Statements of Operations and its net assets are included as "Investment in non-debtor entities" in the Debtors' Statements of Financial Position.
Intercompany
transactions among the Debtor Entities have been eliminated in the condensed combined financial statements of the Debtor Entities contained here.
F-104
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 17. Condensed Combined Debtors' Financial Information (EME only) (Continued)
Debtor Entities' Condensed Combined Statements of Operations
|
|
|
|
|
|
|
|
|
|
Years Ended
December 31,
|
|
(in millions)
|
|
2013
|
|
2012
|
|
Operating revenues
|
|
$
|
826
|
|
$
|
901
|
|
Operating expenses
|
|
|
(1,517
|
)
|
|
(1,262
|
)
|
Other income (expense)
|
|
|
45
|
|
|
(226
|
)
|
Reorganization items
|
|
|
(120
|
)
|
|
(43
|
)
|
Provision for income taxes
|
|
|
(41
|
)
|
|
(153
|
)
|
Income from Operations of Discontinued Subsidiaries
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to debtor entities
|
|
|
(803
|
)
|
|
(783
|
)
|
Equity in loss of non-debtor entities, net of tax
|
|
|
133
|
|
|
(142
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Debtors
|
|
$
|
(670
|
)
|
$
|
(925
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debtors Entities' Condensed Combined Statements of Comprehensive Loss
|
|
|
|
|
|
|
|
|
|
Years Ended
December 31,
|
|
(in millions)
|
|
2013
|
|
2012
|
|
Net Loss
|
|
$
|
(670
|
)
|
$
|
(925
|
)
|
Other comprehensive loss, net of tax
|
|
|
77
|
|
|
(44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Loss
|
|
|
(593
|
)
|
$
|
(969
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debtor Entities' Condensed Combined Statements of Financial Position
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
(in millions)
|
|
2013
|
|
2012
|
|
Total current assets
|
|
|
838
|
|
$
|
638
|
|
Investments in unconsolidated affiliates
|
|
|
146
|
|
|
152
|
|
Property, plant and equipment, less accumulated depreciation of $555 and $845 at respective dates
|
|
|
898
|
|
|
1,428
|
|
Investment in non-debtor entities
|
|
|
2,042
|
|
|
2,019
|
|
Total other assets
|
|
|
873
|
|
|
974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
4,797
|
|
$
|
5,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-105
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 17. Condensed Combined Debtors' Financial Information (EME only) (Continued)
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
(in millions)
|
|
2013
|
|
2012
|
|
Total current liabilities
|
|
|
250
|
|
$
|
94
|
|
Liabilities subject to compromise
|
|
|
4,014
|
|
|
3,959
|
|
Deferred taxes
|
|
|
117
|
|
|
131
|
|
Other long-term liabilities
|
|
|
155
|
|
|
295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
4,536
|
|
$
|
4,479
|
|
Total equity
|
|
|
261
|
|
|
732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
4,797
|
|
$
|
5,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debtors' Condensed Combined Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
Years Ended
December 31,
|
|
(in millions)
|
|
2013
|
|
2012
|
|
Operating cash flows from continuing operations
|
|
$
|
(3
|
)
|
$
|
(598
|
)
|
Operating cash flows from discontinued operations, net
|
|
|
(2
|
)
|
|
(46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(5
|
)
|
|
(644
|
)
|
Net cash provided by financing activities
|
|
|
223
|
|
|
173
|
|
Investing cash flows from continuing operations
|
|
|
40
|
|
|
(109
|
)
|
Investing cash flows from discontinued operations, net
|
|
|
|
|
|
(31
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
40
|
|
|
(140
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents from continuing operations
|
|
|
260
|
|
|
(534
|
)
|
Cash and cash equivalents at beginning of period from continuing operations
|
|
|
425
|
|
|
959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period from continuing operations
|
|
|
685
|
|
|
425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents from discontinued operations
|
|
|
(2
|
)
|
|
(77
|
)
|
Cash and cash equivalents at beginning of period from discontinued operations
|
|
|
2
|
|
|
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period from discontinued operations
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for reorganization items, net
|
|
$
|
72
|
|
$
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-106
EDISON MISSION ENERGY AND SUBSIDIARIES
MIDWEST GENERATION, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 18. Quarterly Financial Data (unaudited) (EME, Midwest Generation)
The following table summarizes the unaudited quarterly statements of operations for EME.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$
|
307
|
|
$
|
315
|
|
$
|
385
|
|
$
|
324
|
|
Operating loss
|
|
|
(47
|
)
|
|
(63
|
)
|
|
(431)
|
(1)
|
|
(38
|
)
|
Loss from continuing operations
|
|
|
(81
|
)
|
|
(102
|
)
|
|
(447
|
)
|
|
(12
|
)
|
Income (loss) from operations of discontinued subsidiaries, net of tax
|
|
|
(1
|
)
|
|
18
|
|
|
(1
|
)
|
|
(15
|
)
|
Net loss
|
|
$
|
(82
|
)
|
$
|
(84
|
)
|
$
|
(448
|
)
|
$
|
(27
|
)
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$
|
343
|
|
$
|
324
|
|
$
|
340
|
|
$
|
280
|
|
Operating loss
|
|
|
(48
|
)
|
|
(98
|
)
|
|
(71
|
)
|
|
(111
|
)
|
Loss from continuing operations
|
|
|
(58
|
)
|
|
(75
|
)
|
|
(86
|
)
|
|
(578
|
)
|
Income (loss) from operations of discontinued subsidiaries, net of tax
|
|
|
(24
|
)
|
|
(29
|
)
|
|
(76
|
)
|
|
17
|
|
Net loss
|
|
$
|
(82
|
)
|
$
|
(104
|
)
|
$
|
(162
|
)
|
$
|
(561
|
)
|
-
(1)
-
Reflects
a $464 million pre-tax ($297 million, after tax) impairment charge related to Will County. For more information, see
Note 13Asset Impairments and Other Charges.
The
following table summarizes the unaudited quarterly statements of operations for Midwest Generation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$
|
179
|
|
$
|
203
|
|
$
|
232
|
|
$
|
203
|
|
Operating loss
|
|
|
(60
|
)
|
|
(40
|
)
|
|
(463)
|
(1)
|
|
(23
|
)
|
Provision (benefit) for income taxes
|
|
|
|
|
|
1
|
|
|
(1
|
)
|
|
(17
|
)
|
Net loss
|
|
$
|
(74
|
)
|
$
|
(74
|
)
|
$
|
(471
|
)
|
$
|
(14
|
)
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$
|
233
|
|
$
|
213
|
|
$
|
253
|
|
$
|
193
|
|
Operating loss
|
|
|
(33
|
)
|
|
(88
|
)
|
|
(39
|
)
|
|
(1,437)
|
(2)
|
Benefit for income taxes
|
|
|
(5
|
)
|
|
(27
|
)
|
|
(7
|
)
|
|
(23
|
)
|
Net loss
|
|
$
|
(9
|
)
|
$
|
(42
|
)
|
$
|
(12
|
)
|
$
|
(1,401
|
)
|
-
(1)
-
Reflects
a $464 million pre-tax ($297 million, after tax) impairment charge related to Will County. For more information, see
Note 13Asset Impairments and Other Charges.
-
(2)
-
Reflects
a $1.4 billion pre-tax charge for a valuation allowance recorded by Midwest Generation on its note receivable from EME. For more
information, see Note 15Related Party Transactions.
F-107
NRG Energy, Inc.
12,671,977 Shares of Common Stock
PROSPECTUS
March 27, 2014