| STATEMENTS OF INCOME (USD $) | ||||
| In Millions | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
| Operating Revenues from Marketing Affiliate | $170 | $236 | $496 | $548 |
| Operating Expenses | ||||
| Fuel | 65 | 78 | 192 | 202 |
| Loss on sale of emission allowances | 1 | |||
| Plant operations | 22 | 22 | 77 | 108 |
| Depreciation and amortization | 16 | 16 | 48 | 48 |
| Administrative and general | 1 | 1 | 3 | 3 |
| Total operating expenses | 104 | 117 | 321 | 361 |
| Operating income | 66 | 119 | 175 | 187 |
| Other Income (Expense) | ||||
| Interest and other income | 3 | 5 | ||
| Interest expense | (32) | (31) | (95) | (95) |
| Total other expense | (32) | (28) | (95) | (90) |
| Income before income taxes | 34 | 91 | 80 | 97 |
| Provision for income taxes | 14 | 36 | 31 | 38 |
| Net Income | $20 | $55 | $49 | $59 |
| STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | ||||
| In Millions | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
| Net Income | $20 | $55 | $49 | $59 |
| Unrealized gains (losses) on derivatives qualified as cash flow hedges: | ||||
| Other unrealized holding gains (losses) arising during period, net of income tax expense (benefit) of $(5) and $153 for the three months and $8 and $19 for the nine months ended September 30, 2009 and 2008, respectively | (6) | 213 | 5 | 26 |
| Reclassification adjustments included in net income, net of income tax expense (benefit) of $18 and $20 for the three months and $19 and $(15) for the nine months ended September 30, 2009 and 2008, respectively | (23) | (27) | (20) | 21 |
| Other comprehensive income (loss) | (29) | 186 | (15) | 47 |
| Comprehensive Income (Loss) | ($9) | $241 | $34 | $106 |
| STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) (USD $) | ||||
| In Millions | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
| Other unrealized holding gains (losses) arising during period, tax expense (benefit) | ($5) | $153 | $8 | $19 |
| Reclassificiation adjustments included in net income, tax expense (benefit) | $18 | $20 | $19 | ($15) |
| BALANCE SHEETS (USD $) | ||
| In Millions | Sep. 30, 2009
| Dec. 31, 2008
|
| Current Assets | ||
| Cash and cash equivalents | $115 | $59 |
| Due from affiliates | 1 | |
| Fuel inventory | 62 | 51 |
| Spare parts inventory | 30 | 28 |
| Derivative assets | 95 | 78 |
| Intangible assets | 38 | 36 |
| Other current assets | 9 | 15 |
| Total current assets | 350 | 267 |
| Property, Plant and Equipment | 2,221 | 2,199 |
| Less accumulated depreciation and amortization | 524 | 476 |
| Net property, plant and equipment | 1,697 | 1,723 |
| Deferred taxes | 88 | 80 |
| Long-term derivative assets | 23 | 54 |
| Restricted deposits | 27 | 37 |
| Long-term intangible assets | 11 | 25 |
| Total Assets | 2,196 | 2,186 |
| Current Liabilities | ||
| Accounts payable | 23 | 20 |
| Accrued liabilities | 3 | 10 |
| Due to affiliates | 42 | 152 |
| Interest payable | 45 | 27 |
| Interest payable to affiliate | 9 | 7 |
| Derivative liabilities | 3 | 1 |
| Deferred taxes | 31 | 35 |
| Current portion of lease financing | 63 | 57 |
| Total current liabilities | 219 | 309 |
| Long-term debt to affiliate | 484 | 358 |
| Lease financing, net of current portion | 1,087 | 1,150 |
| Benefit plans and other | 47 | 43 |
| Long-term derivative liabilities | 1 | |
| Total Liabilities | 1,837 | 1,861 |
| Commitments and Contingencies (Note 7) | ||
| Partners' Equity | 359 | 325 |
| Total Liabilities and Partners' Equity | $2,196 | $2,186 |
| STATEMENTS OF PARTNERS' EQUITY (USD $) | |||
| In Millions | 3 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2009 | Dec. 31, 2008
|
| Beginning Balance | $325 | ||
| Net Income | 20 | 49 | |
| Other comprehensive loss | (29) | (15) | |
| Ending Balance | 359 | 359 | 325 |
| Chestnut Ridge Energy Company | |||
| Beginning Balance | 324 | ||
| Net Income | 49 | ||
| Other comprehensive loss | (15) | ||
| Ending Balance | 358 | 358 | 324 |
| Mission Energy Westside Inc | |||
| Beginning Balance | 1 | ||
| Net Income | 0 | ||
| Other comprehensive loss | 0 | ||
| Ending Balance | $1 | $1 | $1 |
| STATEMENTS OF CASH FLOWS (USD $) | ||
| In Millions | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
| Cash Flows From Operating Activities | ||
| Net Income | $49 | $59 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 47 | 49 |
| Deferred taxes | (1) | (10) |
| Loss on sale of emission allowances | 1 | |
| Increase in due to affiliates | 4 | 23 |
| Increase in inventory | (13) | (17) |
| Decrease (increase) in other current assets | 2 | (6) |
| Decrease in intangible assets | 12 | 13 |
| Increase in accounts payable and other current liabilities | 1 | 1 |
| Increase in interest payable | 20 | 30 |
| Increase in other liabilities | 5 | 1 |
| Increase in derivative assets and liabilities | (11) | (7) |
| Net cash provided by operating activities | 116 | 136 |
| Cash Flows From Financing Activities | ||
| Borrowings on long-term obligation to affiliate | 25 | |
| Repayments of long-term obligation to affiliate | (14) | (21) |
| Repayments of lease financing | (58) | (53) |
| Net cash used in financing activities | (47) | (74) |
| Cash Flows From Investing Activities | ||
| Capital expenditures | (24) | (33) |
| Proceeds from sale of emission allowances | 1 | |
| Decrease in restricted deposits | 10 | |
| Net cash used in investing activities | (13) | (33) |
| Net increase in cash and cash equivalents | 56 | 29 |
| Cash and cash equivalents at beginning of period | 59 | 142 |
| Cash and cash equivalents at end of period | $115 | $171 |
| Summary of Significant Accounting Policies | |
| 9 Months Ended
Sep. 30, 2009 | |
| NOTES TO FINANCIAL STATEMENTS | |
| Summary of Significant Accounting Policies | Note1. Summary of Significant Accounting Policies Basis of Presentation EME Homer City's significant accounting policies are described in "Note1Summary of Significant Accounting Policies" on page60 of EME Homer City's annual report on Form10-K for the year ended December31, 2008. EME Homer City follows the same accounting policies for interim reporting purposes, with the exception of accounting principles adopted as of January1, 2009 as discussed below in "New Accounting Requirements." This quarterly report should be read in conjunction with such financial statements. In the opinion of management, all adjustments, including recurring accruals, have been made that are necessary to fairly state the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in the United States of America for the periods covered by this quarterly report on Form10-Q. The results of operations for the nine months ended September30, 2009 are not necessarily indicative of the operating results for the full year. Management has performed an evaluation of subsequent events through November6, 2009, the date the financial statements were issued. Cash Equivalents Cash equivalents include money market funds totaling $3million and $38million at September30, 2009 and December31, 2008, respectively. The carrying value of cash equivalents equals the fair value as all investments have maturities of less than three months. For further discussion of money market funds, see Note2Fair Value Measurements. New Accounting Requirements Accounting Requirements Adopted General Principles In June 2009, the FASB issued an accounting standard establishing the FASB Accounting Standards Codification (Codification) as the source of authoritative, nongovernmental U.S.GAAP superseding existing FASB, American Institute of Certified Public Accountants (AICPA), Emerging Issues Task Force (EITF) and related literature. Following this action, the FASB will not issue new standards in the form of Statements, FASB Staff Positions or EITF Abstracts. Instead, the FASB will issue Accounting Standards Updates. Two levels of U.S.GAAP will exist: authoritative and non-authoritative. The Codification is not intended to change U.S.GAAP or guidance issued by the Securities and Exchange Commission. EME Homer City adopted the Codification effective July1, 2009. Subsequent Events In May 2009, the FASB issued authoritative guidance that sets forth the period subsequent to the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; the circumstances under which an entity should recognize these events or transactions; and the disclosures that an entity should make. EME Homer City adopted this guidance effective April1, 2009. The adoption had no impact on EME Homer City's results of operations, financial position or cash flows. Fair Value Measurements and Disclosures In April 2009, the FASB issued authoritative guidance affirming the objective of a fair value measurement, which is to identi |
| Fair Value Measurements | |
| 9 Months Ended
Sep. 30, 2009 | |
| NOTES TO FINANCIAL STATEMENTS | |
| Fair Value Measurements | Note2. Fair Value Measurements Fair value is defined 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"). Authoritative guidance on fair value measurements and disclosures clarifies that a fair value measurement for a liability should reflect the entity's nonperformance risk. In addition, a fair value hierarchy is established that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets and liabilities (Level1 measurements) and the lowest priority to unobservable inputs (Level3 measurements). The three levels of the fair value hierarchy are: Level1Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities; Level2Pricing 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 Level3Prices or valuations that require inputs that are both significant to the fair value measurements and unobservable. EME Homer City'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 Level1. The majority of derivative contracts used for hedging purposes are based on forward market prices in active markets (PJM West Hub) adjusted for nonperformance risks. EMMT obtains forward market prices from traded exchanges (ICE Futures U.S. or New York Mercantile Exchange) and available broker quotes. Then, EMMT 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 EMMT believes to provide the most liquid market for the commodity. EMMT 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 Homer City's derivative contracts determined in this manner are classified as Level2. Derivatives that trade infrequently (such as financial transmissio |
| Derivative Instruments | |
| 9 Months Ended
Sep. 30, 2009 | |
| NOTES TO FINANCIAL STATEMENTS | |
| Derivative Instruments | Note3. Derivative Instruments EME Homer City uses derivative instruments to reduce its exposure to market risks that arise from fluctuations in electricity, capacity and fuel prices, emission allowances and transmission rights. To the extent that EME Homer City 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: futures contracts cleared on the Intercontinental Trading Exchange and the New York Mercantile Exchange or executed bilaterally with counterparties, forward sales transactions entered into on a bilateral basis with third parties, including electric utilities, power marketing companies and financial institutions, and capacity transactions. The extent to which EME Homer City hedges its market price risk depends on several factors. First, EME Homer City 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 Homer City evaluates the sufficiency of EMMT's credit capacity and whether the forward sales markets have sufficient liquidity to enable EME Homer City to identify appropriate counterparties for hedge transactions. In the case of hedging transactions related to the generation and capacity of the Homer City facilities, credit support is provided by EME. Hedge transactions entered into by EME Homer City follow authoritative guidance on derivatives and hedging. 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 Homer City formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. 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. 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 Homer City utilizes derivative contracts that are designed to adjust financial and/or physical positions that r |
| Accumulated Other Comprehensive Income | |
| 9 Months Ended
Sep. 30, 2009 | |
| NOTES TO FINANCIAL STATEMENTS | |
| Accumulated Other Comprehensive Income | Note4. Accumulated Other Comprehensive Income Accumulated other comprehensive income consisted of the following: Unrealized Gains (Losses) on Cash Flow Hedges Unrecognized Gains (Losses) and Prior Service Adjustments, Net(1) Accumulated Other Comprehensive Income (inmillions) Balance at December31, 2008 $ 76 $ (5 ) $ 71 Current period change (15 ) (15 ) Balance at September30, 2009 $ 61 $ (5 ) $ 56 (1) For further detail, see Note5Compensation and Benefit Plans. Unrealized gains on cash flow hedges, net of tax, at September30, 2009, included futures and forward electricity contracts that qualify for hedge accounting. These gains arise because current forecasts of future electricity prices are lower than EME Homer City's contract prices. As EME Homer City's hedged positions are realized, $49million, after tax, of the net unrealized gains on cash flow hedges at September30, 2009 are expected to be reclassified into earnings during the next 12months. Management expects that reclassification of net unrealized gains will increase energy revenue recognized at market prices. Actual amounts ultimately reclassified into earnings over the next 12months could vary materially from this estimated amount as a result of changes in market conditions. The maximum period over which a cash flow hedge is designated is through December31, 2010. |
| Compensation and Benefit Plans | |
| 9 Months Ended
Sep. 30, 2009 | |
| NOTES TO FINANCIAL STATEMENTS | |
| Compensation and Benefit Plans | Note5. Compensation and Benefit Plans Pension Plans and Postretirement Benefits Other Than Pensions Pension Plans As of September30, 2009, EME Homer City had made approximately $0.5million in contributions to its pension plans and estimates to make $0.1million of contributions in the last three months of 2009. The following are components of pension expense: Three Months Ended September30, Nine Months Ended September30, 2009 2008 2009 2008 (inmillions) Service cost $ 0.4 $ 0.4 $ 1.0 $ 1.1 Interest cost 0.4 0.4 1.2 1.2 Expected return on plan assets (0.3 ) (0.3 ) (0.8 ) (1.1 ) Amortization of net loss (gain) (0.1 ) 0.2 (0.1 ) Total expense $ 0.5 $ 0.4 $ 1.6 $ 1.1 Postretirement Benefits Other Than Pensions As of September30, 2009, EME Homer City had made approximately $0.5million in contributions to its postretirement benefits other than pensions and estimates to make $0.1million of contributions in the last three months of 2009. The following are components of postretirement benefits expense: Three Months Ended September30, Nine Months Ended September30, 2009 2008 2009 2008 (inmillions) Service cost $ 0.2 $ 0.2 $ 0.5 $ 0.6 Interest cost 0.3 0.3 1.2 1.1 Amortization of prior service credit (0.2 ) (0.1 ) Amortization of net loss 0.1 0.2 0.2 Total expense $ 0.5 $ 0.6 $ 1.7 $ 1.8 |
| Income Taxes | |
| 9 Months Ended
Sep. 30, 2009 | |
| NOTES TO FINANCIAL STATEMENTS | |
| Income Taxes | Note6. Income Taxes EME Homer City had effective income tax provision rates during the nine months ended September30, 2009 and 2008 of 39% and 40%, respectively. EME Homer City's effective income tax provision rate varies from the federal statutory rate of 35% primarily due to state income taxes and estimated benefits from a federal deduction related to qualified domestic production activities under Section199 of the Internal Revenue Code. In May2009, Edison International and the Internal Revenue Service completed a settlement of federal tax disputes and affirmative claims for open tax years 1986 through 2002. The settlement includes the resolution of issues pertaining to EME Homer City which were timing in nature. During the second quarter of 2009, EME Homer City recorded an income tax benefit of $0.3million due to the settlement and related estimated impact of interest and state income taxes. The amount recorded is subject to change based on the final determination of interest and state taxes and items affected under the tax-allocation agreement. |
| Commitments and Contingencies | |
| 9 Months Ended
Sep. 30, 2009 | |
| NOTES TO FINANCIAL STATEMENTS | |
| Commitments and Contingencies | Note7. Commitments and Contingencies Commitments Capital Improvements At September30, 2009, EME Homer City had firm commitments to spend approximately $10million on capital expenditures during the remainder of 2009 primarily related to non-environmental improvements such as upgrades to boiler and turbine controls, replacement of major boiler components and main power transformer replacement. These capital expenditures are planned to be financed by cash generated from operations. Fuel Supply Contracts At September30, 2009, EME Homer City had fuel purchase commitments with various third-party suppliers for the purchase of bituminous steam coal and fuel oil. The contracts require EME Homer City to purchase a minimum quantity over the term of the contracts, with an option at EME Homer City's discretion to purchase additional amounts as stated in the agreements. Based on the contract provisions that consist of fixed prices, subject to adjustment clauses in certain cases, these minimum commitments are currently estimated to be $523million summarized as follows: remainder of 2009$45million; 2010$268million; 2011$131million, and 2012$79million. Coal Transportation Agreements During September2009, EME Homer City entered into a contract for the transport of coal by rail to its facilities for 2010 and 2011. At September30, 2009, based on the contract provisions which consist of minimum quantities, these commitments are currently estimated to aggregate $26million, summarized as follows: 2010$14million and 2011$12million. Interconnection Agreement EME Homer City's general partner, Mission Energy Westside, is a party to an interconnection agreement with NYSEG and Penelec to provide interconnection services necessary to interconnect the Homer City facilities with NYSEG's and Penelec's transmission systems. Unless terminated earlier in accordance with specified terms, the interconnection agreement will terminate on a date mutually agreed to by Mission Energy Westside, NYSEG and Penelec. This date will not exceed the retirement date of the Homer City units. NYSEG and Penelec have agreed to extend the interconnection services (but not the expiration of the agreement) to modifications, additions or upgrades to, or repowering of the Homer City units. Mission Energy Westside is required to compensate NYSEG and Penelec for all reasonable costs associated with any modifications, additions or replacements made to NYSEG's or Penelec's interconnection facilities or transmission systems in connection with any modification, addition or upgrade to, or repowering of the Homer City units. Guarantees and Indemnities Tax Indemnity Agreements In connection with the sale-leaseback transaction related to the Homer City facilities, EME Homer City and its indirect parent, EME, entered into tax indemnity agreements. Under these tax indemnity agreements, EME Homer City and EME agreed to indemnify the equity investors in the sale-leaseback transaction for specified adverse tax consequences that could result in certain situations set forth in the tax indemnity agreements, including specified defaults under the respective leases. The potential indemni |
| Supplemental Cash Flows Information | |
| 9 Months Ended
Sep. 30, 2009 | |
| NOTES TO FINANCIAL STATEMENTS | |
| Supplemental Cash Flows Information | Note8. Supplemental Cash Flows Information Nine Months Ended September30, 2009 2008 (inmillions) Cash paid Interest $ 75 $ 64 Income taxes 9 21 Non-cash investing and financing activities Non-cash settlement of intercompany tax liabilities through an increase in the subordinated revolving loan agreement with affiliate $ 115 $ |
| Document and Entity Information (USD $) | |||
| In Millions, except Share data | 9 Months Ended
Sep. 30, 2009 | Nov. 06, 2009
| Jun. 30, 2008
|
| Document and Entity Information | |||
| Entity Registrant Name | EME HOMER CITY GENERATION LP | ||
| Entity Central Index Key | 0001099534 | ||
| Document Type | 10-Q | ||
| Document Period End Date | 2009-09-30 | ||
| Amendment Flag | false | ||
| Current Fiscal Year End Date | --12-31 | ||
| Entity Well-known Seasoned Issuer | No | ||
| Entity Voluntary Filers | No | ||
| Entity Current Reporting Status | Yes | ||
| Entity Filer Category | Non-accelerated Filer | ||
| Entity Public Float | $0 | ||
| Entity Common Stock, Shares Outstanding | 0 |
