1.0.0.3 false Financial Instruments 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 Financial Instruments 1 us-gaap_DebtDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <table style="font-size:10pt; font-family:'Times New Roman',times,serif;"> <tr> <td> Note 10. Financial Instruments Long-Term Obligations        Long-term obligations include both corporate debt and non-recourse project debt, whereby lenders rely on specific project assets to repay such obligations. At December 31, 2009, recourse debt to EME totaled $3.7 billion and non-recourse project debt totaled $266 million. Long-term obligations consist of the following: <div style="PADDING-RIGHT: 0pt; PADDING-LEFT: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 20%; WIDTH: 60%; PADDING-TOP: 0pt; POSITION: relative">   <div align="center"> <table cellspacing="0" cellpadding="0" width="100%" border="0"> <tr style="HEIGHT: 0px"> <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="58"></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="58"></td> <td style="FONT-FAMILY: times" width="12"></td></tr> <tr style="HEIGHT: 0px" valign="bottom"> <th style="FONT-FAMILY: times" align="left" colspan="3">  </th> <th style="FONT-FAMILY: times"> </th> <th style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" align="center" colspan="5">December 31, </th> <th style="FONT-FAMILY: times"> </th></tr> <tr style="HEIGHT: 0px" valign="bottom"> <th style="FONT-FAMILY: times" align="left" colspan="3">(in millions) </th> <th style="FONT-FAMILY: times"> </th> <th style="FONT-FAMILY: times" align="center" colspan="2">2009 </th> <th style="FONT-FAMILY: times"> </th> <th style="FONT-FAMILY: times" align="center" colspan="2">2008 </th> <th style="FONT-FAMILY: times"> </th></tr> <tr style="FONT-SIZE: 1.5pt; HEIGHT: 0px" valign="bottom"> <th style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" align="center" colspan="9"> </th> <th style="FONT-FAMILY: times"> </th></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="#CCEEFF"> <td style="FONT-FAMILY: times" valign="top" colspan="3"> Recourse</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="white"> <td style="FONT-FAMILY: times" valign="top" colspan="3"> EME (parent only)</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="#CCEEFF"> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" valign="top" colspan="2"> Senior Notes, net</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="white"> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" valign="top"> due 2009 (7.73%)</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">$</td> <td style="FONT-FAMILY: times" valign="top" align="right"></td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">$</td> <td style="FONT-FAMILY: times" valign="top" align="right">13</td> <td style="FONT-FAMILY: times" valign="top"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="#CCEEFF"> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" valign="top"> due 2013 (7.50%)</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">500</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">500</td> <td style="FONT-FAMILY: times" valign="top"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="white"> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" valign="top"> due 2016 (7.75%)</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">500</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">500</td> <td style="FONT-FAMILY: times" valign="top"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="#CCEEFF"> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" valign="top"> due 2017 (7.00%)</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">1,200</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">1,200</td> <td style="FONT-FAMILY: times" valign="top"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="white"> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" valign="top"> due 2019 (7.20%)</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">800</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">800</td> <td style="FONT-FAMILY: times" valign="top"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="#CCEEFF"> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" valign="top"> due 2027 (7.625%)</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">700</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">700</td> <td style="FONT-FAMILY: times" valign="top"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="white"> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" valign="top" colspan="2"> Credit Agreement due 2012 (weighted average rate of 3.42% at 12/31/08)</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right"></td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">376</td> <td style="FONT-FAMILY: times" valign="top"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="#CCEEFF"> <td style="FONT-FAMILY: times" valign="top" colspan="3"> Non-recourse</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="white"> <td style="FONT-FAMILY: times" valign="top" colspan="3"> EME CP Holdings Co. Note Purchase Agreement due 2015 (7.31%)</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" align="right"> 61</td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" align="right"> 67</td> <td style="FONT-FAMILY: times"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="#CCEEFF"> <td style="FONT-FAMILY: times" valign="top" colspan="3"> Midwest Generation $500 million Credit Facility (weighted average rate of 2.34% at 12/31/08)</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" align="right"></td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" align="right">475</td> <td style="FONT-FAMILY: times"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="white"> <td style="FONT-FAMILY: times" valign="top" colspan="3"> Viento Funding II, Inc. Term Loan due 2016 (LIBOR plus 3.875%) (4.315% at 12/31/09)</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" align="right">178</td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" align="right"></td> <td style="FONT-FAMILY: times"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="#CCEEFF"> <td style="FONT-FAMILY: times" valign="top" colspan="3"> Other</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">27</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">31</td> <td style="FONT-FAMILY: times" valign="top"> </td></tr> <tr style="FONT-SIZE: 1.5pt; HEIGHT: 0px" valign="top"> <td style="FONT-FAMILY: times" colspan="3"> </td> <td style="FONT-FAMILY: times"> </td> <td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" align="right" colspan="5"> </td> <td style="FONT-FAMILY: times"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="white"> <td style="FONT-FAMILY: times" valign="top" colspan="3"> Subtotal</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">$</td> <td style="FONT-FAMILY: times" valign="top" align="right">3,966</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">$</td> <td style="FONT-FAMILY: times" valign="top" align="right">4,662</td> <td style="FONT-FAMILY: times" valign="top"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="#CCEEFF"> <td style="FONT-FAMILY: times" valign="top" colspan="3"> Less current maturities of long-term obligations</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">37</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">24</td> <td style="FONT-FAMILY: times" valign="top"> </td></tr> <tr style="FONT-SIZE: 1.5pt; HEIGHT: 0px" valign="top"> <td style="FONT-FAMILY: times" colspan="3"> </td> <td style="FONT-FAMILY: times"> </td> <td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" align="right" colspan="5"> </td> <td style="FONT-FAMILY: times"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="white"> <td style="FONT-FAMILY: times" valign="top" colspan="3"> Total</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">$</td> <td style="FONT-FAMILY: times" valign="top" align="right">3,929</td> <td style="FONT-FAMILY: times" valign="top"> </td> <td style="FONT-FAMILY: times" valign="top" align="right">$</td> <td style="FONT-FAMILY: times" valign="top" align="right">4,638</td> <td style="FONT-FAMILY: times" valign="top"> </td></tr> <tr style="FONT-SIZE: 1.5pt; HEIGHT: 0px" valign="top"> <td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" colspan="9"> </td> <td style="FONT-FAMILY: times"> </td></tr></table></div> </div> Senior Notes        EME has $3.7 billion of senior notes due 2013 through 2027. The senior notes are redeemable by EME at any time at a price equal to 100% of the principal amount, plus accrued and unpaid interest and liquidated damages, if any, of the senior notes plus a "make-whole" premium. The senior notes are EME's senior unsecured obligations, ranking equal in right of payment to all of EME's existing and future senior unsecured indebtedness, and will be senior to all of EME's future subordinated indebtedness. EME's secured debt and its other secured obligations are effectively senior to the senior notes to the extent of the value of the assets securing such debt or other obligations. None of EME's subsidiaries have guaranteed the senior notes and, as a result, all the existing and future liabilities of EME's subsidiaries are effectively senior to the senior notes.        EME recorded a total pre-tax loss of $160 million ($98 million after tax) on early extinguishment of debt in 2007 related to the early repayment of EME's 7.73% senior notes due June 15, 2009 and Midwest Generation's 8.75% second priority senior secured notes due May 1, 2034. Credit Agreements        During 2007, EME amended its existing $500 million secured credit facility maturing in June 2012, increasing the total borrowings available thereunder to $600 million, and subject to the satisfaction of conditions as set forth in the secured credit facility, EME is permitted to increase the amount available under the secured credit facility to an amount that does not exceed 15% of EME's consolidated net tangible assets, as defined in the secured credit facility. Loans made under this credit facility bear interest, at EME's election, at either LIBOR (which is based on the interbank Eurodollar market) or the base rate (which is calculated as the higher of Citibank, N.A.'s publicly announced base rate and the federal funds rate in effect from time to time plus 0.50%) plus, in both cases, an applicable margin. The applicable margin depends on EME's debt ratings. At December 31, 2009, EME had no borrowings outstanding and $101 million of letters of credit outstanding under this credit facility. The credit facility contains financial covenants which require EME to maintain an interest coverage ratio not less than 1.20 and a corporate debt to corporate capital ratio not more than 0.75. A failure to meet a ratio threshold could trigger other provisions, such as mandatory prepayment provisions or restrictions on dividends. At December 31, 2009, the interest coverage ratio was 1.72 for the year ended December 31, 2009 and the corporate debt to corporate capital ratio was 0.54.        EME's corporate credit agreement contains covenants that restrict its ability and the ability of several of its subsidiaries to make distributions. This restriction impacts the subsidiaries that own interests in the Westside projects, the Sunrise project, the fossil-fueled facilities, and the Big 4 projects. These subsidiaries would not be able to make a distribution to EME's shareholder if an event of default were to occur and be continuing under EME's secured credit agreement after giving effect to the distribution.        During 2007, Midwest Generation also amended and restated its existing $500 million senior secured working capital facility. Borrowings made under this credit facility currently bear interest at LIBOR plus 0.875%, except if average utilized commitments during a period exceed $250 million, in which case the margin increases to 1%. The working capital facility matures in June 2012, with an option to extend for up to two years. The working capital facility contains financial covenants which require Midwest Generation to maintain a debt to capitalization ratio of no greater than 0.60 to 1. At December 31, 2009, the debt to capitalization ratio was 0.18 to 1. Midwest Generation uses its secured working capital facility to provide credit support for its hedging activities and for general working capital purposes. Midwest Generation can also support its hedging activities by granting liens to eligible hedge counterparties. As of December 31, 2009, Midwest Generation had no borrowings outstanding and $3 million of letters of credit had been utilized under the working capital facility. Viento Funding II Wind Financing        In June 2009, EME completed through its subsidiary, Viento Funding II, Inc., a non-recourse financing of its interests in the Wildorado, San Juan Mesa and Elkhorn Ridge wind projects. The financing included a $189 million seven-year term loan and a $13 million letter of credit facility which replaced project letters of credit previously issued under the EME corporate credit facility. Interest under the term loan accrues at LIBOR plus 3.875% initially, with the rate increasing 0.25% on the third and sixth anniversaries of the closing date. Viento Funding II entered into interest rate swap agreements to hedge the majority of the variable interest rate under the term loan. For further details regarding the interest rate swap agreements, see Note 3Derivative Instruments and Risk Management.        In July 2009, Viento Funding II amended the credit agreement to add a working capital facility. Availability under the working capital facility is initially $3.8 million and increases semi-annually to $5.2 million by maturity. The agreement restricts the use of proceeds from the working capital facility to operation and maintenance expenditures at these three wind projects.        Distributions from Viento Funding II are subject to compliance with the terms and conditions of its credit facilities, including a covenant to meet a 12-month historic debt service coverage ratio as specified in the agreements of 1.20 to 1.0. Viento Funding II's payment obligations are secured by pledges of its direct and indirect ownership interests in the three wind projects. Big Sky Turbine Financing        In October 2009, EME, through its subsidiary, Big Sky, entered into turbine financing arrangements totaling approximately $206 million for wind turbine purchase obligations related to the 240 MW Big Sky wind project with the following principal terms: <dl compact="compact"> <dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"></dt> <dd style="FONT-FAMILY: times">Big Sky's repayment obligations are guaranteed by EME until the commercial operations date of the Big Sky wind project (or shortly thereafter); </dd> <dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"></dt> <dd style="FONT-FAMILY: times">interest under the loan accrues at six-month LIBOR plus 2.5% prior to the release of the EME guarantee, and at six-month LIBOR plus 3.5% thereafter; and </dd> <dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"></dt> <dd style="FONT-FAMILY: times">the loan has a five-year final maturity. However, specific events, including project performance, may trigger earlier repayment. The loan is secured by a leasehold mortgage on the project's real property assets, a pledge of all other collateral of the Big Sky wind project, as well as a cash reserve account into which one-third of distributable cash flow, if any, of the Big Sky wind project is to be deposited on a monthly basis. </dd></dl>        As of December 31, 2009, no amounts were outstanding under this loan. Annual Maturities on Long-Term Obligations        Annual maturities on long-term debt at December 31, 2009, for the next five years are summarized as follows: $37 million in 2010, $36 million in 2011, $40 million in 2012, $545 million in 2013, and $48 million in 2014. Standby Letters of Credit        As of December 31, 2009, standby letters of credit under EME and its subsidiaries' credit facilities aggregated $119 million and were scheduled to expire as follows: $111 million in 2010 and $8 million in 2011. </td></tr></table> Note 10. Financial Instruments Long-Term Obligations        Long-term obligations include both corporate debt and false false No definition available. No authoritative reference available. false false 1 2 false UnKnown UnKnown UnKnown false true