1.0.0.3 false Fair Value Measurements false 1 $ false false USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 2 Notes to Consolidated Financial Statements 0 eme_NotesToFinancialStatementsAbstract eme false na duration string Notes to Financial Statements [Abstract] false false false false false true false false false 1 false false 0 0 false false Notes to Financial Statements [Abstract] false 3 Fair Value Measurements 1 us-gaap_FairValueDisclosuresTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=Content-Type content="text/html; charset=utf-8"> <META content="MSHTML 6.00.6000.16809" name=GENERATOR></HEAD> <BODY> Note 2. Fair Value Measurements         SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (referred to as an "exit price" in SFAS No. 157). SFAS No. 157 clarifies that a fair value measurement for a liability should reflect the entity's nonperformance risk. In addition, SFAS No. 157 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The <A name=page_xxx45001_1_11></A>hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under SFAS No. 157 are: <UL> <DL compact> <DT style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> <DD style="FONT-FAMILY: times">Level 1Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities; <DT style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> <DD style="FONT-FAMILY: times">Level 2Pricing inputs that include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the derivative instrument; and <DT style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> <DD style="FONT-FAMILY: times">Level 3Prices or valuations that require inputs that are both significant to the fair value measurements and unobservable. </DD></DL></UL>         EME's assets and liabilities carried at fair value primarily consist of derivative contracts and money market funds. Derivative contracts primarily relate to power and include contracts for forward physical sales and purchases, options and forward price swaps which settle only on a financial basis (including futures contracts). Derivative contracts can be exchange traded or over-the-counter traded.         The fair value of derivative contracts takes into account quoted market prices, time value of money, volatility of the underlying commodities and other factors. Derivatives that are exchange traded in active markets for identical assets or liabilities are classified as Level 1. The majority of derivative contracts used for hedging purposes are based on forward market prices in active markets (PJM West Hub, Northern Illinois Hub peak and AEP/Dayton) adjusted for nonperformance risks. EME obtains forward market prices from traded exchanges (ICE Futures U.S. or New York Mercantile Exchange) and available broker quotes. Then, EME selects a primary source that best represents traded activity for each market to develop observable forward market prices in determining the fair value of these positions. Broker quotes or prices from exchanges are used to validate and corroborate the primary source. These price quotations reflect mid-market prices (average of bid and ask) and are obtained from sources that EME believes to provide the most liquid market for the commodity. EME considers broker quotes to be observable when corroborated with other information which may include a combination of prices from exchanges, other brokers, and comparison to executed trades. The majority of the fair value of EME's derivative contracts determined in this manner are classified as Level 2.         Derivatives that trade infrequently (such as financial transmission rights and over-the-counter derivatives at illiquid locations), derivatives with counterparties that have significant nonperformance risks, as discussed below, and long-term power agreements are classified as Level 3. For illiquid financial transmission rights, EME reviews objective criteria related to system congestion on a quarterly basis and other underlying drivers and adjusts fair value when EME concludes a change in objective criteria would result in a new valuation that better reflects the fair value. Changes in fair values are based on the hypothetical sale of illiquid positions. For illiquid long-term power agreements, fair value is based upon a discounting of future electricity prices derived from a proprietary model using the risk free discount rate for a similar duration contract, adjusted for credit risk and market liquidity. Changes in fair value are based on changes to forward market prices, including forecasted prices for illiquid forward periods. In circumstances where EME cannot verify fair value with observable market transactions, it is possible that a different valuation model could produce a materially different estimate of fair value. As markets continue to develop and more pricing information becomes available, EME continues to assess valuation methodologies used to determine fair value.         In assessing nonperformance risks, EME reviews credit ratings of counterparties (and related default rates based on such credit ratings) and prices of credit default swaps. The market price (or premium) for credit default swaps represents the price that a counterparty would pay to transfer the <A name=page_xxx45001_1_12></A>risk of default, typically bankruptcy, to another party. A credit default swap is not directly comparable to the credit risks of derivative contracts, but provides market information of the related risk of nonperformance. EME reduced the fair value of derivative assets for nonperformance risks by $5 million at June 30, 2009.         Investments in money market funds are generally classified as Level 1 as fair value is determined by observable market prices (unadjusted) in active markets.          The following table sets forth EME's assets and liabilities that were accounted for at fair value by level within the fair value hierarchy as of June 30, 2009 and December 31, 2008:  <DIV align=center> <TABLE cellSpacing=0 cellPadding=0 border=0> <TBODY> <TR> <TD style="FONT-FAMILY: times" align=left width=10></TD> <TD style="FONT-FAMILY: times" align=left width=197></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=29></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=25></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=21></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=38></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=29></TD> <TD style="FONT-FAMILY: times" width=3></TD></TR> <TR vAlign=bottom> <TH style="FONT-FAMILY: times" noWrap align=left colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 67pt; BORDER-BOTTOM: #000000 1pt solid">As of June 30, 2009 </DIV></TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 23pt; BORDER-BOTTOM: #000000 1pt solid">Level 1 </DIV></TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 23pt; BORDER-BOTTOM: #000000 1pt solid">Level 2 </DIV></TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 23pt; BORDER-BOTTOM: #000000 1pt solid">Level 3 </DIV></TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 42pt; BORDER-BOTTOM: #000000 1pt solid">Netting and Collateral(2) </DIV></TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 18pt; BORDER-BOTTOM: #000000 1pt solid">Total </DIV></TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR vAlign=bottom> <TH style="FONT-FAMILY: times" align=left colSpan=2>  </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" align=middle colSpan=14>(in millions) </TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR vAlign=top bgColor=#cceeff> <TD style="FONT-FAMILY: times" colSpan=2> Assets at Fair Value</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=top bgColor=white> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> Money market funds(1)</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>1,560</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right></TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>1</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right></TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>1,561</TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=top bgColor=#cceeff> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> Derivative contracts</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>19</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>497</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>266</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>(394</TD> <TD style="FONT-FAMILY: times">)</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>388</TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=top bgColor=white> <TD style="FONT-FAMILY: times" colSpan=2> Liabilities at Fair Value</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=top bgColor=#cceeff> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> Derivative contracts</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right></TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>(159</TD> <TD style="FONT-FAMILY: times">)</TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>(26</TD> <TD style="FONT-FAMILY: times">)</TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>165</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>(20</TD> <TD style="FONT-FAMILY: times">)</TD></TR></TBODY></TABLE></DIV>   <DIV align=center> <TABLE cellSpacing=0 cellPadding=0 border=0> <TBODY> <TR> <TD style="FONT-FAMILY: times" align=left width=10></TD> <TD style="FONT-FAMILY: times" align=left width=197></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=29></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=25></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=21></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=38></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=29></TD> <TD style="FONT-FAMILY: times" width=3></TD></TR> <TR vAlign=bottom> <TH style="FONT-FAMILY: times" noWrap align=left colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 85pt; BORDER-BOTTOM: #000000 1pt solid">As of December 31, 2008 </DIV></TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 23pt; BORDER-BOTTOM: #000000 1pt solid">Level 1 </DIV></TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 23pt; BORDER-BOTTOM: #000000 1pt solid">Level 2 </DIV></TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 23pt; BORDER-BOTTOM: #000000 1pt solid">Level 3 </DIV></TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 42pt; BORDER-BOTTOM: #000000 1pt solid">Netting and Collateral(2) </DIV></TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 18pt; BORDER-BOTTOM: #000000 1pt solid">Total </DIV></TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR vAlign=bottom> <TH style="FONT-FAMILY: times" align=left colSpan=2>  </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" align=middle colSpan=14>(in millions) </TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR vAlign=top bgColor=#cceeff> <TD style="FONT-FAMILY: times" colSpan=2> Assets at Fair Value</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=top bgColor=white> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> Money market funds(1)</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>1,581</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right></TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>3</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right></TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>1,584</TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=top bgColor=#cceeff> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> Derivative contracts</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>2</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>417</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>221</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>(300</TD> <TD style="FONT-FAMILY: times">)</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>340</TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=top bgColor=white> <TD style="FONT-FAMILY: times" colSpan=2> Liabilities at Fair Value</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=top bgColor=#cceeff> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> Derivative contracts</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right></TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>(145</TD> <TD style="FONT-FAMILY: times">)</TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>(8</TD> <TD style="FONT-FAMILY: times">)</TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>126</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>(27</TD> <TD style="FONT-FAMILY: times">)</TD></TR></TBODY></TABLE></DIV> <HR align=left width="26%" color=#000000 noShade SIZE=1> <DL compact> <DT style="MARGIN-BOTTOM: -9pt; FONT-FAMILY: times">(1) <DD style="FONT-FAMILY: times">Included in cash and cash equivalents and short-term investments on EME's consolidated balance sheet. <DT style="MARGIN-BOTTOM: -9pt; FONT-FAMILY: times">(2) <DD style="FONT-FAMILY: times">Represents cash collateral and the impact of netting across the levels of the fair value hierarchy. Netting among positions classified within the same level is included in that level. </DD></DL>         The following table sets forth a summary of changes in the fair value of assets and liabilities, net categorized as Level 3 for the periods ended June 30, 2009 and 2008:  <DIV align=center> <TABLE cellSpacing=0 cellPadding=0 border=0> <TBODY> <TR> <TD style="FONT-FAMILY: times" align=left width=10></TD> <TD style="FONT-FAMILY: times" align=left width=267></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=26></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=26></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=21></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=21></TD> <TD style="FONT-FAMILY: times" width=3></TD></TR> <TR vAlign=bottom> <TH style="FONT-FAMILY: times" align=left colSpan=2>  </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" align=middle colSpan=5>Three Months Ended June 30, </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" align=middle colSpan=5>Six Months Ended June 30, </TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR vAlign=bottom> <TH style="FONT-FAMILY: times" align=middle colSpan=2>  </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 17pt; BORDER-BOTTOM: #000000 1pt solid">2009 </DIV></TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 17pt; BORDER-BOTTOM: #000000 1pt solid">2008 </DIV></TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 17pt; BORDER-BOTTOM: #000000 1pt solid">2009 </DIV></TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 17pt; BORDER-BOTTOM: #000000 1pt solid">2008 </DIV></TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR vAlign=bottom> <TH style="FONT-FAMILY: times" align=left colSpan=2>  </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" align=middle colSpan=11>(in millions) </TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR vAlign=bottom bgColor=#cceeff> <TD style="FONT-FAMILY: times" colSpan=2> Fair value at beginning of periods</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>269</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>111</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>216</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>120</TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=bottom bgColor=white> <TD style="FONT-FAMILY: times" colSpan=2> Total realized/unrealized gains (losses):</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=bottom bgColor=#cceeff> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> Included in earnings(1)</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>(49</TD> <TD style="FONT-FAMILY: times">)</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>59</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>97</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>92</TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=bottom bgColor=white> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> Included in accumulated other comprehensive income</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right></TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>(4</TD> <TD style="FONT-FAMILY: times">)</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right></TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>(6</TD> <TD style="FONT-FAMILY: times">)</TD></TR> <TR vAlign=bottom bgColor=#cceeff> <TD style="FONT-FAMILY: times" colSpan=2> Purchases and settlements, net</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>29</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>(38</TD> <TD style="FONT-FAMILY: times">)</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>(60</TD> <TD style="FONT-FAMILY: times">)</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>(75</TD> <TD style="FONT-FAMILY: times">)</TD></TR> <TR vAlign=bottom bgColor=white> <TD style="FONT-FAMILY: times" colSpan=2> Transfers in or out of Level 3</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>(8</TD> <TD style="FONT-FAMILY: times">)</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>(7</TD> <TD style="FONT-FAMILY: times">)</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>(12</TD> <TD style="FONT-FAMILY: times">)</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>(10</TD> <TD style="FONT-FAMILY: times">)</TD></TR> <TR style="FONT-SIZE: 1.5pt" vAlign=top> <TD style="FONT-FAMILY: times" colSpan=2> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" align=right colSpan=2> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" align=right colSpan=2> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" align=right colSpan=2> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" align=right colSpan=2> </TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=bottom bgColor=#cceeff> <TD style="FONT-FAMILY: times" colSpan=2> Fair value at June 30</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>241</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>121</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>241</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>121</TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR style="FONT-SIZE: 1.5pt" vAlign=top> <TD style="FONT-FAMILY: times" colSpan=2> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times" align=right colSpan=2> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times" align=right colSpan=2> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times" align=right colSpan=2> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times" align=right colSpan=2> </TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=bottom bgColor=white> <TD style="FONT-FAMILY: times" colSpan=2> Change during the periods in unrealized gains (losses) related to assets and liabilities, net held at June 30(1)</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>13</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>34</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>71</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>37</TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR style="FONT-SIZE: 1.5pt" vAlign=top> <TD style="FONT-FAMILY: times" colSpan=2> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times" align=right colSpan=2> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times" align=right colSpan=2> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times" align=right colSpan=2> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times" align=right colSpan=2> </TD> <TD style="FONT-FAMILY: times"> </TD></TR></TBODY></TABLE></DIV> <HR align=left width="26%" color=#000000 noShade SIZE=1> <DL compact> <DT style="MARGIN-BOTTOM: -9pt; FONT-FAMILY: times">(1) <DD style="FONT-FAMILY: times">Reported in operating revenues on EME's consolidated statements of income. <A name=page_xxx45001_1_13></A></DD></DL>         The increase in the fair value of Level 3 derivative contracts during the first six months of 2009 is primarily due to load requirements services contracts. The energy price risk related to these contracts was substantially hedged, but such hedge contracts are classified as Level 2 and, therefore, not reflected as an offsetting position in Level 3. Long-term Obligations         The carrying amounts and fair values of EME's long-term obligations as of June 30, 2009 and December 31, 2008 were as follows:  <DIV align=center> <TABLE cellSpacing=0 cellPadding=0 border=0> <TBODY> <TR> <TD style="FONT-FAMILY: times" align=left width=249></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=29></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=32></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=29></TD> <TD style="FONT-FAMILY: times" width=18></TD> <TD style="FONT-FAMILY: times" align=right width=5></TD> <TD style="FONT-FAMILY: times" width=32></TD> <TD style="FONT-FAMILY: times" width=3></TD></TR> <TR vAlign=bottom> <TH style="FONT-FAMILY: times" align=left>  </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" align=middle colSpan=5>June 30, 2009 </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" align=middle colSpan=5>December 31, 2008 </TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR vAlign=bottom> <TH style="FONT-FAMILY: times" align=middle>  </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 31pt; BORDER-BOTTOM: #000000 1pt solid">Carrying Amount </DIV></TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 36pt; BORDER-BOTTOM: #000000 1pt solid">Fair Value </DIV></TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 31pt; BORDER-BOTTOM: #000000 1pt solid">Carrying Amount </DIV></TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" noWrap align=middle colSpan=2> <DIV style="MARGIN-BOTTOM: 0pt; WIDTH: 36pt; BORDER-BOTTOM: #000000 1pt solid">Fair Value </DIV></TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR vAlign=bottom> <TH style="FONT-FAMILY: times" align=left>  </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" align=middle colSpan=11>(in millions) </TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR vAlign=top bgColor=#cceeff> <TD style="FONT-FAMILY: times"> Long-term obligations</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>4,769</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>3,894</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>4,638</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>$</TD> <TD style="FONT-FAMILY: times" align=right>3,982</TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=top bgColor=white> <TD style="FONT-FAMILY: times"> Long-term obligations due within one year</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>39</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>39</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>24</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>24</TD> <TD style="FONT-FAMILY: times"> </TD></TR></TBODY></TABLE></DIV>         In assessing the fair value of EME's long-term obligations, EME primarily uses quoted market prices, except for floating-rate debt for which the carrying amounts were considered a reasonable estimate of fair value. </BODY></HTML> Note 2. Fair Value Measurements         SFAS No. 157 defines fair value as the price that would be false false No definition available. No authoritative reference available. false false 1 2 false UnKnown UnKnown UnKnown false true