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<table style="font-size:10pt; font-family:'Times New Roman',times,serif;">
<tr>
<td>
<p style="FONT-FAMILY: times"><font size="2"><b>Note 3.
Derivative Instruments<br /></b></font></p>
<p style="FONT-FAMILY: times">
<font size="2"> EME
uses derivative instruments to reduce EME's exposure to market
risks that arise from fluctuations in electricity, capacity and
fuel prices, emission allowances and transmission rights.
Additionally, EME's financial results can be affected by
fluctuations in interest rates. To the extent that EME does not use
derivative instruments to hedge these market risks, the unhedged
portions will be subject to the risks and benefits of spot market
price movements. Hedge transactions are primarily entered into
using derivative instruments including:</font></p>
<ul>
<li style="list-style: none">
<dl compact="compact">
<dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times">
<font size="2">•</font></dt>
<dd style="FONT-FAMILY: times"><font size="2">futures contracts
cleared on the Intercontinental Trading Exchange and the New York
Mercantile Exchange or executed bilaterally with
counterparties,</font> <font size="2"><br />
<br /></font></dd>
<dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times">
<font size="2">•</font></dt>
<dd style="FONT-FAMILY: times"><font size="2">forward sales
transactions entered into on a bilateral basis with third parties,
including electric utilities, power marketing companies and
financial institutions,</font> <font size="2"><br />
<br /></font></dd>
<dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times">
<font size="2">•</font></dt>
<dd style="FONT-FAMILY: times"><font size="2">full requirements
services contracts or load requirements services contracts for the
procurement of power for electric utilities' customers, with such
services providing for the delivery of a bundled product including,
but not limited to, energy, transmission, capacity, and ancillary
services, generally for a fixed unit price,</font>
<font size="2"><br />
<br /></font></dd>
<dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times">
<font size="2">•</font></dt>
<dd style="FONT-FAMILY: times"><font size="2">capacity
transactions, and</font> <font size="2"><br />
<br /></font></dd>
<dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times">
<font size="2">•</font></dt>
<dd style="FONT-FAMILY: times"><font size="2">interest rate swaps
entered into on a bilateral basis with
counterparties.</font></dd></dl></li></ul>
<p style="FONT-FAMILY: times">
<font size="2"> The
extent to which EME hedges its market price risk depends on several
factors. First, EME evaluates over-the-counter market prices to
determine if forward market prices are sufficiently attractive
compared to the risks associated with the fluctuating spot market.
Second, EME evaluates the sufficiency of its credit capacity at EME
and Midwest Generation and whether the forward sales markets have
sufficient liquidity to enable EME to identify appropriate
counterparties for hedge transactions. Hedge transactions entered
into by EME follow authoritative guidance on derivatives and
hedging.</font></p>
<p style="FONT-FAMILY: times">
<font size="2"> Authoritative
guidance on derivatives and hedging establishes accounting and
reporting standards for derivative instruments (including certain
derivative instruments embedded in other contracts). A company is
required to record derivatives on its balance sheets as either
assets or liabilities measured at fair value unless otherwise
exempted from derivative treatment as a normal sale and purchase.
All changes in the fair value of derivative instruments are
recognized currently in earnings, unless specific hedge criteria
are met, which requires that EME formally document, designate, and
assess the effectiveness of transactions that receive hedge
accounting.</font></p>
<p style="FONT-FAMILY: times">
<font size="2"> The
accounting requirements for cash flow hedges provide that the
effective portion of gains or losses on derivative instruments
designated and qualifying as cash flow hedges be reported as a
component of other comprehensive income and be reclassified into
earnings in the same period during which the hedged forecasted
transaction affects earnings. The remaining gains or losses on the
derivative instruments, if any, must be recognized currently in
earnings.</font></p>
<p style="FONT-FAMILY: times">
<font size="2"> Many
of the derivative instruments entered into for risk management
purposes (also referred to as non-trading purposes) meet the
requirements for hedge accounting. However, not all derivative
instruments entered into for risk management purposes will qualify
for hedge accounting treatment. Furthermore, EME utilizes
derivative contracts that are designed to adjust financial and/or
physical positions that reduce costs or increase gross margin.
Accordingly, risk management positions may not be designated as
cash flow hedges and are thus marked to market through current
period earnings (derivatives that are entered into for risk
management, but which are not designated as cash flow hedges, are
referred to as economic hedges).</font></p>
<p style="FONT-FAMILY: times">
<font size="2"> Authoritative
guidance on derivatives and hedging affects the timing of income
recognition, but has no effect on cash flow. To the extent that
income varies from accrual accounting (i.e., revenue
recognition based on the settlement of transactions), EME records
unrealized gains or losses. EME classifies unrealized gains and
losses from commodity contracts in operating revenues or fuel
expenses based on the item being hedged. In addition, the results
of derivative activities are recorded in cash flows from operating
activities in the consolidated statements of cash flows.</font></p>
<p style="FONT-FAMILY: times">
<font size="2"> Derivative
instruments that are utilized for trading purposes are measured at
fair value and included in the balance sheet as derivative assets
or liabilities. In the absence of quoted market prices, derivative
instruments are valued at fair value as determined through the
methodology outlined in Note 2—Fair Value Measurements.
Resulting gains and losses are recognized in operating revenues in
the accompanying consolidated statements of income in the period of
change.</font></p>
<p style="FONT-FAMILY: times">
<font size="2"> Where
EME's derivative instruments are subject to a master netting
agreement and the criteria of authoritative guidance are met, EME
presents its derivative assets and liabilities on a net basis in
its consolidated balance sheet.</font></p>
<p style="FONT-FAMILY: times"><font size="2"><b><i>Notional Volumes
of Derivative Instruments</i></b></font></p>
<p style="FONT-FAMILY: times">
<font size="2"> The
following table summarizes the notional volumes of derivatives used
for hedging and trading activities at September 30,
2009:</font></p>
<div style="PADDING-RIGHT: 0pt; PADDING-LEFT: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 10%; WIDTH: 54%; PADDING-TOP: 0pt; POSITION: relative">
<p style="FONT-FAMILY: times"><font size="2">
<!-- COMMAND=ADD_TABLEWIDTH,"150%" --></font></p>
<!-- User-specified TAGGED TABLE -->
<div align="center">
<table cellspacing="0" cellpadding="0" width="150%" border="0">
<tr style="HEIGHT: 0px"><!-- TABLE COLUMN WIDTHS SET -->
<td style="FONT-FAMILY: times" align="left" width="67"></td>
<td style="FONT-FAMILY: times" width="3%"></td>
<td style="FONT-FAMILY: times" align="left" width="100"></td>
<td style="FONT-FAMILY: times" width="3%"></td>
<td style="FONT-FAMILY: times" align="left" width="64"></td>
<td style="FONT-FAMILY: times" width="3%"></td>
<td style="FONT-FAMILY: times" align="left" width="96"></td>
<td style="FONT-FAMILY: times" width="3%"></td>
<td style="FONT-FAMILY: times" align="right" width="7"></td>
<td style="FONT-FAMILY: times" width="50"></td>
<td style="FONT-FAMILY: times" width="3%"></td>
<td style="FONT-FAMILY: times" align="right" width="7"></td>
<td style="FONT-FAMILY: times" width="46"></td>
<td style="FONT-FAMILY: times" width="3%"></td>
<td style="FONT-FAMILY: times" align="right" width="7"></td>
<td style="FONT-FAMILY: times" width="45"></td>
<td style="FONT-FAMILY: times" width="12"></td>
<!-- TABLE COLUMN WIDTHS END --></tr>
<tr style="HEIGHT: 0px" valign="bottom">
<th style="FONT-FAMILY: times" align="left">
<font size="2"> </font><br /></th>
<th style="FONT-FAMILY: times"><font size="2"> </font></th>
<th style="FONT-FAMILY: times" align="left">
<font size="2"> </font><br /></th>
<th style="FONT-FAMILY: times"><font size="2"> </font></th>
<th style="FONT-FAMILY: times" align="left">
<font size="2"> </font><br /></th>
<th style="FONT-FAMILY: times"><font size="2"> </font></th>
<th style="FONT-FAMILY: times" align="left">
<font size="2"> </font><br /></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
align="center" colspan="5"><font size="1"><b>Hedging
Activities</b></font></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" align="left" colspan="2">
<font size="1"> </font><br /></th>
<th style="FONT-FAMILY: times">
<font size="1"> </font></th></tr>
<tr style="HEIGHT: 0px" valign="bottom">
<th style="FONT-FAMILY: times" nowrap="nowrap" align="left">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 40pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Commodity
<!-- COMMAND=ADD_SCROPPEDRULE,40pt --></b></font></div></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="left">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 40pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Instrument
<!-- COMMAND=ADD_SCROPPEDRULE,40pt --></b></font></div></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="left">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 48pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Classification
<!-- COMMAND=ADD_SCROPPEDRULE,48pt --></b></font></div></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="left">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 31pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Unit of<br />
Measure
<!-- COMMAND=ADD_SCROPPEDRULE,31pt --></b></font></div></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="center"
colspan="2">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 37pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Cash Flow<br />
Hedges <!-- COMMAND=ADD_SCROPPEDRULE,37pt --></b></font></div></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="center"
colspan="2">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 34pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Economic<br />
Hedges <!-- COMMAND=ADD_SCROPPEDRULE,34pt --></b></font></div></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="center"
colspan="2">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 32pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Trading<br />
Activities
<!-- COMMAND=ADD_SCROPPEDRULE,32pt --></b></font></div></th>
<th style="FONT-FAMILY: times">
<font size="1"> </font></th></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="#CCEEFF">
<td style="FONT-FAMILY: times">
<font size="2">Electricity</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times">
<font size="2">Forwards/Futures</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">Sales</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">GWh</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">21,487</font></td>
<td style="FONT-FAMILY: times">
<font size="2"><sup>(1)</sup></font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">18,871</font></td>
<td style="FONT-FAMILY: times">
<font size="2"><sup>(3)</sup></font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">22,055</font></td>
<td style="FONT-FAMILY: times">
<font size="2"> </font></td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="white">
<td style="FONT-FAMILY: times">
<font size="2">Electricity</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times">
<font size="2">Forwards/Futures</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">Purchases</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">GWh</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">—</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">18,025</font></td>
<td style="FONT-FAMILY: times">
<font size="2"><sup>(3)</sup></font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">23,445</font></td>
<td style="FONT-FAMILY: times">
<font size="2"> </font></td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="#CCEEFF">
<td style="FONT-FAMILY: times">
<font size="2">Electricity</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">Capacity</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">Sales</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times">
<font size="2">MW-Day<br /></font><font size="1">(in
thousands)</font></td>
<td style="FONT-FAMILY: times"><font size="1"> </font></td>
<td style="FONT-FAMILY: times"><font size="1"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">320</font></td>
<td style="FONT-FAMILY: times">
<font size="2"><sup>(2)</sup></font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">—</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">733</font></td>
<td style="FONT-FAMILY: times">
<font size="2"><sup>(2)</sup></font></td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="white">
<td style="FONT-FAMILY: times">
<font size="2">Electricity</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">Capacity</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">Purchases</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times">
<font size="2">MW-Day<br /></font><font size="1">(in
thousands)</font></td>
<td style="FONT-FAMILY: times"><font size="1"> </font></td>
<td style="FONT-FAMILY: times"><font size="1"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">18</font></td>
<td style="FONT-FAMILY: times">
<font size="2"><sup>(2)</sup></font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">—</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">867</font></td>
<td style="FONT-FAMILY: times">
<font size="2"><sup>(2)</sup></font></td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="#CCEEFF">
<td style="FONT-FAMILY: times">
<font size="2">Electricity</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times">
<font size="2">Congestion</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">Sales</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">GWh</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">—</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">136</font></td>
<td style="FONT-FAMILY: times">
<font size="2"><sup>(4)</sup></font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">10,277</font></td>
<td style="FONT-FAMILY: times">
<font size="2"><sup>(4)</sup></font></td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="white">
<td style="FONT-FAMILY: times">
<font size="2">Electricity</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times">
<font size="2">Congestion</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">Purchases</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">GWh</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">—</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">2,454</font></td>
<td style="FONT-FAMILY: times">
<font size="2"><sup>(4)</sup></font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">138,567</font></td>
<td style="FONT-FAMILY: times">
<font size="2"><sup>(4)</sup></font></td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="#CCEEFF">
<td style="FONT-FAMILY: times"><font size="2">Natural
gas</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times">
<font size="2">Forwards/Futures</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">Sales</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">billion cubic
feet</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">—</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">3.7</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">36.3</font></td>
<td style="FONT-FAMILY: times">
<font size="2"> </font></td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="white">
<td style="FONT-FAMILY: times"><font size="2">Natural
gas</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times">
<font size="2">Forwards/Futures</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">Purchases</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">billion cubic
feet</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">—</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">—</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">35.0</font></td>
<td style="FONT-FAMILY: times">
<font size="2"> </font></td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="#CCEEFF">
<td style="FONT-FAMILY: times"><font size="2">Fuel oil</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times">
<font size="2">Forwards/Futures</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">Sales</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">Barrels</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">—</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">—</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">150,000</font></td>
<td style="FONT-FAMILY: times">
<font size="2"> </font></td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="white">
<td style="FONT-FAMILY: times"><font size="2">Fuel oil</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times">
<font size="2">Forwards/Futures</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">Purchases</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">Barrels</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">—</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">600,000</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">150,000</font></td>
<td style="FONT-FAMILY: times">
<font size="2"> </font></td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="#CCEEFF">
<td style="FONT-FAMILY: times"><font size="2">Coal</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times">
<font size="2">Forwards/Futures</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">Purchases</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2">Tons</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">—</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">285,000</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">—</font></td>
<td style="FONT-FAMILY: times">
<font size="2"> </font></td></tr></table></div>
<!-- end of user-specified TAGGED TABLE --></div>
<div style="PADDING-RIGHT: 0pt; PADDING-LEFT: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 10%; PADDING-TOP: 0pt; POSITION: relative; TEXT-ALIGN: left">
<!-- COMMAND=ADD_LINERULETXT,NOSHADE COLOR="#000000" SIZE="1.0PT" WIDTH="10%" ALIGN="LEFT" -->
<hr style="COLOR: #000000" align="left" width="10%"
noshade="noshade" size="1" />
<dl compact="compact">
<dt style="MARGIN-BOTTOM: -9pt; FONT-FAMILY: times">
<font size="1">(1)</font></dt>
<dd style="FONT-FAMILY: times"><font size="1">EME's hedge products
include forward and futures contracts that qualify for hedge
accounting. This category excludes power contracts for the Illinois
Plants which meet the normal sales and purchase exception and are
accounted for on the accrual method.<br />
<br /></font></dd>
<dt style="MARGIN-BOTTOM: -9pt; FONT-FAMILY: times">
<font size="1">(2)</font></dt>
<dd style="FONT-FAMILY: times"><font size="1">EME's hedge
transactions for capacity result from bilateral trades. Capacity
sold in the PJM RPM auction is not accounted for as a
derivative.<br />
<br /></font></dd>
<dt style="MARGIN-BOTTOM: -9pt; FONT-FAMILY: times">
<font size="1">(3)</font></dt>
<dd style="FONT-FAMILY: times"><font size="1">EME also entered into
transactions that adjust financial and physical positions, or
day-ahead and real-time positions to reduce costs or increase gross
margin. These positions largely offset each other. The net sales
positions of these categories are primarily related to hedge
transactions that are not designated as cash flow hedges.<br />
<br /></font></dd>
<dt style="MARGIN-BOTTOM: -9pt; FONT-FAMILY: times">
<font size="1">(4)</font></dt>
<dd style="FONT-FAMILY: times"><font size="1">Congestion contracts
are financial transmission rights, transmission congestion
contracts or congestion revenue rights. These positions are similar
to a swap, where the buyer is entitled to receive a stream of
revenues (or charges) based on the hourly day-ahead price
differences between two locations.</font></dd></dl></div>
<p style="FONT-FAMILY: times">
<font size="2"> In
addition, Viento Funding II, Inc., an EME subsidiary, in
conjunction with the closing of its wind financing, entered into
seven-year amortizing interest rate swaps accounted for as cash
flow hedges with a total notional amount of approximately
$170 million at September 30, 2009. The interest rate
swaps entitle Viento Funding II to receive a floating (six-month
LIBOR) rate and pay a fixed rate of 3.175%. The interest rate swap
agreements expire in June 2016.</font></p>
<p style="FONT-FAMILY: times"><font size="2"><b><i>Fair Value of
Derivative Instruments</i></b></font></p>
<p style="FONT-FAMILY: times">
<font size="2"> The
following table summarizes the gross fair value of derivative
instruments at September 30, 2009:</font></p>
<div style="PADDING-RIGHT: 0pt; PADDING-LEFT: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 10%; WIDTH: 54%; PADDING-TOP: 0pt; POSITION: relative">
<p style="FONT-FAMILY: times"><font size="2">
<!-- COMMAND=ADD_TABLEWIDTH,"150%" --></font></p>
<!-- User-specified TAGGED TABLE -->
<div align="center">
<table cellspacing="0" cellpadding="0" width="150%" border="0">
<tr style="HEIGHT: 0px"><!-- TABLE COLUMN WIDTHS SET -->
<td style="FONT-FAMILY: times" align="left" width="10"></td>
<td style="FONT-FAMILY: times" align="left" width="10"></td>
<td style="FONT-FAMILY: times" align="left"></td>
<td style="FONT-FAMILY: times" width="12"></td>
<td style="FONT-FAMILY: times" align="right" width="7"></td>
<td style="FONT-FAMILY: times" width="53"></td>
<td style="FONT-FAMILY: times" width="12"></td>
<td style="FONT-FAMILY: times" align="right" width="7"></td>
<td style="FONT-FAMILY: times" width="50"></td>
<td style="FONT-FAMILY: times" width="12"></td>
<td style="FONT-FAMILY: times" align="right" width="7"></td>
<td style="FONT-FAMILY: times" width="45"></td>
<td style="FONT-FAMILY: times" width="12"></td>
<td style="FONT-FAMILY: times" align="right" width="7"></td>
<td style="FONT-FAMILY: times" width="53"></td>
<td style="FONT-FAMILY: times" width="12"></td>
<td style="FONT-FAMILY: times" align="right" width="7"></td>
<td style="FONT-FAMILY: times" width="50"></td>
<td style="FONT-FAMILY: times" width="12"></td>
<td style="FONT-FAMILY: times" align="right" width="7"></td>
<td style="FONT-FAMILY: times" width="41"></td>
<td style="FONT-FAMILY: times" width="12"></td>
<td style="FONT-FAMILY: times" align="right" width="7"></td>
<td style="FONT-FAMILY: times" width="50"></td>
<td style="FONT-FAMILY: times" width="12"></td>
<!-- TABLE COLUMN WIDTHS END --></tr>
<tr style="HEIGHT: 0px" valign="bottom">
<th style="FONT-FAMILY: times" align="left" colspan="3">
<font size="2"> </font><br /></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
align="center" colspan="8"><font size="1"><b>Derivative
Assets</b></font></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
align="center" colspan="8"><font size="1"><b>Derivative
Liabilities</b></font></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" align="left" colspan="2">
<font size="1"> </font><br /></th>
<th style="FONT-FAMILY: times">
<font size="1"> </font></th></tr>
<tr style="HEIGHT: 0px" valign="bottom">
<th style="FONT-FAMILY: times" align="center" colspan="3">
<font size="1"> </font><br /></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="center"
colspan="2">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 93pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Short-term
<!-- COMMAND=ADD_SCROPPEDRULE,93pt --></b></font></div></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="center"
colspan="2">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 91pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Long-term
<!-- COMMAND=ADD_SCROPPEDRULE,91pt --></b></font></div></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="center"
colspan="2">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 30pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Subtotal
<!-- COMMAND=ADD_SCROPPEDRULE,30pt --></b></font></div></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="center"
colspan="2">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 93pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Short-term
<!-- COMMAND=ADD_SCROPPEDRULE,93pt --></b></font></div></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="center"
colspan="2">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 91pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Long-term
<!-- COMMAND=ADD_SCROPPEDRULE,91pt --></b></font></div></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="center"
colspan="2">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 30pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Subtotal
<!-- COMMAND=ADD_SCROPPEDRULE,30pt --></b></font></div></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="center"
colspan="2">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 37pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Net Assets
<!-- COMMAND=ADD_SCROPPEDRULE,37pt --></b></font></div></th>
<th style="FONT-FAMILY: times">
<font size="1"> </font></th></tr>
<tr style="HEIGHT: 0px" valign="bottom">
<th style="FONT-FAMILY: times" align="left" colspan="3">
<font size="1"> </font><br /></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" align="center" colspan="20">
<font size="1"><b>(in millions)</b></font><br /></th>
<th style="FONT-FAMILY: times">
<font size="1"> </font></th></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="#CCEEFF">
<td style="FONT-FAMILY: times" valign="bottom" colspan="3">
<p style="MARGIN-LEFT: 10pt; TEXT-INDENT: -10pt; FONT-FAMILY: times">
<font size="2">Non-trading activities</font></p></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="white">
<td style="FONT-FAMILY: times"><font size="0"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" colspan="2">
<p style="MARGIN-LEFT: 10pt; TEXT-INDENT: -10pt; FONT-FAMILY: times">
<font size="2">Cash flow hedges</font></p></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">297</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">87</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">384</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">59</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">8</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">67</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">317</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="#CCEEFF">
<td style="FONT-FAMILY: times"><font size="0"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" colspan="2">
<p style="MARGIN-LEFT: 10pt; TEXT-INDENT: -10pt; FONT-FAMILY: times">
<font size="2">Economic hedges</font></p></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">222</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">44</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">266</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">202</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">39</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">241</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">25</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="white">
<td style="FONT-FAMILY: times" valign="bottom" colspan="3">
<p style="MARGIN-LEFT: 10pt; TEXT-INDENT: -10pt; FONT-FAMILY: times">
<font size="2">Trading activities</font></p></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">341</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">123</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">464</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">287</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">62</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">349</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">115</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td></tr>
<tr style="FONT-SIZE: 1.5pt; HEIGHT: 0px" valign="top">
<td style="FONT-FAMILY: times" valign="bottom" colspan="3">
</td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="#CCEEFF">
<td style="FONT-FAMILY: times" valign="bottom" colspan="3">
<p style="MARGIN-LEFT: 10pt; TEXT-INDENT: -10pt; FONT-FAMILY: times">
</p></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">860</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">254</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">1,114</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">548</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">109</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">657</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">457</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="white">
<td style="FONT-FAMILY: times" valign="bottom" colspan="3">
<p style="MARGIN-LEFT: 10pt; TEXT-INDENT: -10pt; FONT-FAMILY: times">
<font size="2">Netting and collateral received</font></p></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">(652</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2">)</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">(147</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2">)</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">(799</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2">)</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">(543</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2">)</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">(89</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2">)</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">(632</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2">)</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">(167</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2">)</font></td></tr>
<tr style="FONT-SIZE: 1.5pt; HEIGHT: 0px" valign="top">
<td style="FONT-FAMILY: times" valign="bottom" colspan="3">
</td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="#CCEEFF">
<td style="FONT-FAMILY: times"><font size="0"> </font></td>
<td style="FONT-FAMILY: times"><font size="0"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<p style="MARGIN-LEFT: 10pt; TEXT-INDENT: -10pt; FONT-FAMILY: times">
<font size="2">Total</font></p></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">208</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">107</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">315</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">5</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">20</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">25</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">290</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td></tr>
<tr style="FONT-SIZE: 1.5pt; HEIGHT: 0px" valign="top">
<td style="FONT-FAMILY: times" valign="bottom" colspan="3">
</td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom">
</td></tr></table></div>
<!-- end of user-specified TAGGED TABLE --></div>
<p style="FONT-FAMILY: times"><font size="2"><b><i>Income Statement
Impact of Derivative Instruments</i></b></font></p>
<p style="FONT-FAMILY: times">
<font size="2"> The
following table provides the activity of accumulated other
comprehensive income for the nine months ended September 30,
2009, containing the information about the changes in the fair
value of cash flow hedges and reclassification from accumulated
other comprehensive income into results of operations:</font></p>
<div style="PADDING-RIGHT: 0pt; PADDING-LEFT: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 10%; WIDTH: 80%; PADDING-TOP: 0pt; POSITION: relative">
<p style="FONT-FAMILY: times"><font size="2">
<!-- COMMAND=ADD_TABLEWIDTH,"100%" --></font></p>
<!-- User-specified TAGGED TABLE -->
<div align="center">
<table cellspacing="0" cellpadding="0" width="100%" border="0">
<tr style="HEIGHT: 0px"><!-- TABLE COLUMN WIDTHS SET -->
<td style="FONT-FAMILY: times" align="left"></td>
<td style="FONT-FAMILY: times" width="12"></td>
<td style="FONT-FAMILY: times" align="right" width="7"></td>
<td style="FONT-FAMILY: times" width="81"></td>
<td style="FONT-FAMILY: times" width="12"></td>
<td style="FONT-FAMILY: times" align="left" width="112"></td>
<!-- TABLE COLUMN WIDTHS END --></tr>
<tr style="HEIGHT: 0px" valign="bottom">
<th style="FONT-FAMILY: times" align="left">
<font size="2"> </font><br /></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="center"
colspan="2">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 51pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Cash Flow<br />
Hedge Activity<sup>(1)</sup>
<!-- COMMAND=ADD_SCROPPEDRULE,51pt --></b></font></div></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="center">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 69pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Income<br />
Statement Location
<!-- COMMAND=ADD_SCROPPEDRULE,69pt --></b></font></div></th></tr>
<tr style="HEIGHT: 0px" valign="bottom">
<th style="FONT-FAMILY: times" align="left">
<font size="1"> </font><br /></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" align="center" colspan="2">
<font size="1"><b>(in millions)</b></font><br /></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" align="left">
<font size="1"> </font><br /></th></tr>
<tr style="HEIGHT: 0px" valign="bottom" bgcolor="#CCEEFF">
<td style="FONT-FAMILY: times">
<p style="MARGIN-LEFT: 10pt; TEXT-INDENT: -10pt; FONT-FAMILY: times">
<font size="2">Accumulated other comprehensive income derivative
gain at December 31, 2008</font></p></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">398</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times">
<font size="2"> </font></td></tr>
<tr style="HEIGHT: 0px" valign="bottom" bgcolor="white">
<td style="FONT-FAMILY: times">
<p style="MARGIN-LEFT: 10pt; TEXT-INDENT: -10pt; FONT-FAMILY: times">
<font size="2">Effective portion of changes in fair
value</font></p></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">100</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times">
<font size="2"> </font></td></tr>
<tr style="HEIGHT: 0px" valign="bottom" bgcolor="#CCEEFF">
<td style="FONT-FAMILY: times">
<p style="MARGIN-LEFT: 10pt; TEXT-INDENT: -10pt; FONT-FAMILY: times">
<font size="2">Reclassification from accumulated other
comprehensive income to net income</font></p></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">(179</font></td>
<td style="FONT-FAMILY: times"><font size="2">)</font></td>
<td style="FONT-FAMILY: times"><font size="2">Operating
revenues</font></td></tr>
<tr style="FONT-SIZE: 1.5pt; HEIGHT: 0px" valign="top">
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td></tr>
<tr style="HEIGHT: 0px" valign="bottom" bgcolor="white">
<td style="FONT-FAMILY: times">
<p style="MARGIN-LEFT: 10pt; TEXT-INDENT: -10pt; FONT-FAMILY: times">
<font size="2">Accumulated other comprehensive income derivative
gain at September 30, 2009</font></p></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" align="right">
<font size="2">319</font></td>
<td style="FONT-FAMILY: times"><font size="2"> </font></td>
<td style="FONT-FAMILY: times">
<font size="2"> </font></td></tr>
<tr style="FONT-SIZE: 1.5pt; HEIGHT: 0px" valign="top">
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times"
valign="bottom" align="right" colspan="2"> </td>
<td style="FONT-FAMILY: times" valign="bottom"> </td>
<td style="FONT-FAMILY: times" valign="bottom">
</td></tr></table></div>
<!-- end of user-specified TAGGED TABLE --></div>
<div style="PADDING-RIGHT: 0pt; PADDING-LEFT: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 10%; PADDING-TOP: 0pt; POSITION: relative; TEXT-ALIGN: left">
<!-- COMMAND=ADD_LINERULETXT,NOSHADE COLOR="#000000" SIZE="1.0PT" WIDTH="10%" ALIGN="LEFT" -->
<hr style="COLOR: #000000" align="left" width="10%"
noshade="noshade" size="1" />
<dl compact="compact">
<dt style="MARGIN-BOTTOM: -9pt; FONT-FAMILY: times">
<font size="1">(1)</font></dt>
<dd style="FONT-FAMILY: times"><font size="1">Unrealized derivative
gains are before income taxes. The after-tax amounts recorded in
accumulated other comprehensive income at September 30, 2009
and December 31, 2008 were $192 million and
$240 million, respectively.</font></dd></dl></div>
<p style="FONT-FAMILY: times">
<font size="2"> The
portion of a cash flow hedge that does not offset the change in the
value of the transaction being hedged, which is commonly referred
to as the ineffective portion, is immediately recognized in
earnings. EME recorded net gains (losses) of $11 million and
$23 million during the third quarters of 2009 and 2008,
respectively, and $16 million and $(8) million during the nine
months ended September 30, 2009 and 2008, respectively,
representing the amount of cash flow hedge ineffectiveness and are
reflected in operating revenues in the consolidated statements of
income.</font></p>
<p style="FONT-FAMILY: times">
<font size="2"> The
effect of realized and unrealized gains (losses) from derivative
instruments used for economic hedging and trading purposes on the
consolidated statements of income for the periods ended
September 30, 2009 is presented below:</font></p>
<div style="PADDING-RIGHT: 0pt; PADDING-LEFT: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 10%; WIDTH: 80%; PADDING-TOP: 0pt; POSITION: relative">
<p style="FONT-FAMILY: times"><font size="2">
<!-- COMMAND=ADD_TABLEWIDTH,"100%" --></font></p>
<!-- User-specified TAGGED TABLE -->
<div align="center">
<table cellspacing="0" cellpadding="0" width="100%" border="0">
<tr style="HEIGHT: 0px"><!-- TABLE COLUMN WIDTHS SET -->
<td style="FONT-FAMILY: times" align="left"></td>
<td style="FONT-FAMILY: times" width="12"></td>
<td style="FONT-FAMILY: times" align="left" width="107"></td>
<td style="FONT-FAMILY: times" width="12"></td>
<td style="FONT-FAMILY: times" align="right" width="7"></td>
<td style="FONT-FAMILY: times" width="91"></td>
<td style="FONT-FAMILY: times" width="12"></td>
<td style="FONT-FAMILY: times" align="right" width="7"></td>
<td style="FONT-FAMILY: times" width="91"></td>
<td style="FONT-FAMILY: times" width="12"></td>
<!-- TABLE COLUMN WIDTHS END --></tr>
<tr style="HEIGHT: 0px" valign="bottom">
<th style="FONT-FAMILY: times" nowrap="nowrap" align="left">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 16pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Type
<!-- COMMAND=ADD_SCROPPEDRULE,16pt --></b></font></div></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="center">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 69pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Income<br />
Statement Location
<!-- COMMAND=ADD_SCROPPEDRULE,69pt --></b></font></div></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="center"
colspan="2">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 66pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Three Months<br />
Ended<br />
September 30, 2009
<!-- COMMAND=ADD_SCROPPEDRULE,66pt --></b></font></div></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" nowrap="nowrap" align="center"
colspan="2">
<div style="MARGIN-BOTTOM: 0pt; WIDTH: 66pt; BORDER-BOTTOM: #000000 1pt solid">
<font size="1"><b>Nine Months<br />
Ended<br />
September 30, 2009
<!-- COMMAND=ADD_SCROPPEDRULE,66pt --></b></font></div></th>
<th style="FONT-FAMILY: times">
<font size="1"> </font></th></tr>
<tr style="HEIGHT: 0px" valign="bottom">
<th style="FONT-FAMILY: times" align="left">
<font size="1"> </font><br /></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" align="left">
<font size="1"> </font><br /></th>
<th style="FONT-FAMILY: times"><font size="1"> </font></th>
<th style="FONT-FAMILY: times" align="center" colspan="5">
<font size="1"><b>(in millions)</b></font><br /></th>
<th style="FONT-FAMILY: times">
<font size="1"> </font></th></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="#CCEEFF">
<td style="FONT-FAMILY: times" valign="bottom">
<p style="MARGIN-LEFT: 10pt; TEXT-INDENT: -10pt; FONT-FAMILY: times">
<font size="2">Economic hedges</font></p></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2">Operating revenue</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">19</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">$</font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">35</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="white">
<td style="FONT-FAMILY: times" valign="bottom">
<p style="MARGIN-LEFT: 10pt; TEXT-INDENT: -10pt; FONT-FAMILY: times">
</p></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom"><font size="2">Fuel
expense</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">(2</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2">)</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2">12</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td></tr>
<tr style="HEIGHT: 0px" valign="top" bgcolor="#CCEEFF">
<td style="FONT-FAMILY: times" valign="bottom">
<p style="MARGIN-TOP: 12pt; MARGIN-LEFT: 10pt; TEXT-INDENT: -10pt; FONT-FAMILY: times">
<font size="2">Trading activities</font></p></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<p style="MARGIN-TOP: 12pt; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; FONT-FAMILY: times"
align="left"><font size="2">Operating revenue</font></p></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2"><br />
16</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td>
<td style="FONT-FAMILY: times" valign="bottom" align="right">
<font size="2"><br />
43</font></td>
<td style="FONT-FAMILY: times" valign="bottom">
<font size="2"> </font></td></tr></table></div>
<!-- end of user-specified TAGGED TABLE --></div>
<p style="FONT-FAMILY: times"><font size="2"><b><i>Contingent
Features/Credit Related Exposure</i></b></font></p>
<p style="FONT-FAMILY: times">
<font size="2"> Certain
derivative instruments contain margin and collateral deposit
requirements. Since EME's credit ratings are below investment
grade, EME has historically provided collateral in the form of cash
and letters of credit for the benefit of counterparties related to
the net of accounts payable, accounts receivable, unrealized losses
and unrealized gains in connection with derivative activities.
Certain derivative contracts do not require margin, but contain
provisions that require EME or Midwest Generation to comply with
the terms and conditions of their respective credit facilities. The
credit facilities each contain financial covenants. Some hedge
contracts include provisions related to a change in control or
material adverse effect resulting from amendments or modifications
to the related credit facility. Failure by EME or Midwest
Generation to comply with these provisions may result in a
termination event under the hedge contracts, enabling the
counterparties to terminate and liquidate all outstanding
transactions and demand immediate payment of amounts owed to them.
EMMT also has hedge contracts that do not require margin, but
provide that each party can request additional credit support in
the form of adequate assurance of performance in the case of an
adverse development affecting the other party. The aggregate fair
value of all derivative instruments with credit-risk-related
contingent features is in an asset position on September 30,
2009 and, accordingly, the contingent features described above do
not currently have a liquidity exposure. Future increases in power
prices could expose EME or Midwest Generation to termination
payments or additional collateral postings under the contingent
features described above.</font></p>
<p style="FONT-FAMILY: times"><font size="2"><b><i>Margin and
Collateral Deposits</i></b></font></p>
<p style="FONT-FAMILY: times">
<font size="2"> Margin
and collateral deposits include cash deposited with counterparties
and brokers as credit support under energy contracts. The amount of
margin and collateral deposits generally varies based on changes in
fair value of the related positions. EME presents a portion of its
margin and cash collateral deposits net with its derivative
positions on EME's consolidated balance sheets. Amounts recognized
for cash collateral provided to others that have been offset
against net derivative liabilities totaled $65 million and
$51 million at September 30, 2009 and December 31,
2008, respectively. Amounts recognized for cash collateral received
from others that have been offset against net derivative assets
totaled $232 million and $225 million at
September 30, 2009 and December 31, 2008,
respectively.</font></p></td></tr></table>
Note 3.
Derivative Instruments
EME
uses derivative instruments to reduce EME's exposure to market
risks
false
false
|
No definition available.
No authoritative reference available.
false
false
1
2
false
UnKnown
UnKnown
UnKnown
false
true