Eme Homer City Generation 10-K 1 Mar 10 2009 FY Annual report Financial data

STATEMENTS OF INCOME

STATEMENTS OF INCOME (USD $)
In Millions	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
STATEMENTS OF INCOME
Operating Revenues from Marketing Affiliate	$663	$717	$764
Operating Expenses
Fuel	251	270	306
Loss on sale of emission allowances	1		1
Plant operations	102	126	119
Depreciation and amortization	63	64	61
Loss on sale of assets	3
Administrative and general	4	4	4
Total operating expenses	424	464	491
Operating income	239	253	273
Other Income (Expense)
Interest and other income		5	8
Interest expense	(128)	(124)	(139)
Total other expense	(128)	(119)	(131)
Income before income taxes	111	134	142
Provision for income taxes	44	49	54
Net Income	$67	$85	$88

BALANCE SHEETS

BALANCE SHEETS (USD $)
In Millions	Dec. 31, 2009	Dec. 31, 2008
Current Assets
Cash and cash equivalents	$121	$59
Fuel inventory	58	51
Spare parts inventory	31	28
Derivative assets	81	78
Intangible assets	41	36
Other current assets	10	15
Total current assets	342	267
Property, Plant and Equipment	2,223	2,199
Less accumulated depreciation and amortization	540	476
Net property, plant and equipment	1,683	1,723
Deferred taxes	102	80
Long-term derivative assets	1	54
Restricted deposits	27	37
Long-term intangible assets	5	25
Total Assets	2,160	2,186
Current Liabilities
Accounts payable	19	20
Accrued liabilities	7	10
Due to affiliates	60	152
Interest payable	25	27
Interest payable to affiliate	9	7
Derivative liabilities	1	1
Deferred taxes	31	35
Current portion of lease financing	65	57
Total current liabilities	217	309
Long-term debt to affiliate	459	358
Lease financing, net of current portion	1,084	1,150
Benefit plans and other	43	43
Long-term derivative liabilities		1
Total Liabilities	1,803	1,861
Commitments and Contingencies (Note 9)
Partners' Equity	357	325
Total Liabilities and Partners' Equity	$2,160	$2,186

STATEMENTS OF PARTNERS' EQUITY

STATEMENTS OF PARTNERS' EQUITY (USD $)
In Millions	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007	Dec. 31, 2006
Begining Balance	$325	$155	$137
Net Income	67	85	88
Other comprehensive income (loss)	(35)	85	(70)
Ending Balance	357	325	155	137
Chestnut Ridge Energy Company
Begining Balance	324	154	136
Net Income	67	85	88
Other comprehensive income (loss)	(35)	85	(70)
Ending Balance	356	324	154	136
Mission Energy Westside Inc.
Begining Balance	1	1	1
Ending Balance	$1	$1	$1	$1

STATEMENTS OF COMPREHENSIVE INC

STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Millions	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
STATEMENTS OF COMPREHENSIVE INCOME
Net Income	$67	$85	$88
Pension and postretirement benefits other than pensions:
Prior service adjustment, net of tax		2
Net gain (loss) adjustment, net of tax expense (benefit) of $2, $(4) and $1 for 2009, 2008 and 2007, respectively	3	(7)	2
Unrealized gains (losses) on derivatives qualified as cash flow hedges:
Unrealized holding gains (losses) arising during period, net of income tax expense (benefit) of $9, $46 and $(85) for 2009, 2008 and 2007, respectively	6	64	(116)
Reclassification adjustments included in net income, net of income tax expense (benefit) of $35, $(18) and $(32) for 2009, 2008 and 2007, respectively	(44)	26	44
Other comprehensive income (loss)	(35)	85	(70)
Comprehensive Income	$32	$170	$18

1_STATEMENTS OF COMPREHENSIVE I

STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $)
In Millions	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
STATEMENTS OF COMPREHENSIVE INCOME
Net gain (loss) adjustment, tax expense (benefit)	$2	($4)	$1
Unrealized holding gains (losses) arising during period, income tax expense (benefit)	9	46	(85)
Reclassificiation adjustments included in net income, income tax expense (benefit)	$35	($18)	($32)

STATEMENTS OF CASH FLOWS

STATEMENTS OF CASH FLOWS (USD $)
In Millions	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
Cash Flows From Operating Activities
Net income	$67	$85	$88
Adjustments to reconcile income to net cash provided by operating activities:
Depreciation and amortization	63	62	62
Deferred taxes	(1)	(4)	(18)
Loss on sale of assets	3
Loss on sale of emission allowances	1		1
Increase in due to/from affiliates	26	(16)	50
Decrease (increase) in inventory	(10)	(23)	16
Decrease (increase) in other current assets		(11)	16
Decrease (increase) in intangible assets	15	(12)	(44)
Increase (decrease) in accounts payable and other current liabilities		(3)	5
Decrease in interest payable		(5)	(33)
Increase (decrease) in other liabilities	2	(2)	(1)
Decrease (increase) in derivative assets and liabilities	(15)	(21)	10
Net cash provided by operating activities	151	50	152
Cash Flows From Financing Activities
Refund of deposit under lease swap agreement			45
Borrowings on long-term obligation to affiliate	25
Repayments of long-term obligation to affiliate	(42)	(36)	(118)
Repayments of lease financing	(57)	(53)	(49)
Net cash used in financing activities	(74)	(89)	(122)
Cash Flows From Investing Activities
Capital expenditures	(26)	(44)	(12)
Proceeds from sale of emission allowances	1
Decrease in restricted deposits	10		10
Net cash used in investing activities	(15)	(44)	(2)
Net increase (decrease) in cash and cash equivalents	62	(83)	28
Cash and cash equivalents at beginning of period	59	142	114
Cash and cash equivalents at end of period	$121	$59	$142

Summary of Significant Accounti

Summary of Significant Accounting Policies
	12 Months Ended Dec. 31, 2009
NOTES TO FINANCIAL STATEMENTS
Summary of Significant Accounting Policies	Note1. Summary of Significant Accounting Policies Homer City is a Pennsylvania limited partnership between Chestnut Ridge Energy Company, as a limited partner with a 99.9percent interest, and Mission Energy WestsideInc., as a general partner with a 0.1percent interest. Both Chestnut Ridge Energy and Mission Energy Westside are wholly owned subsidiaries of Edison Mission HoldingsCo., a wholly owned subsidiary of EME. EME is an indirect wholly owned subsidiary of Edison International. The partnership was formed on October31, 1998 for the purpose of acquiring, owning and operating three coal-fired electric generating units, and related facilities, which are referred to as the "Homer City facilities," located near Pittsburgh, Pennsylvania for the purpose of producing electric energy. Homer City derives revenue from the sale of energy, capacity and ancillary services into PJM and from bilateral contracts with power marketers and load-serving entities within PJM. Homer City has a contract with EMMT, a marketing affiliate, to sell energy, capacity and ancillary services from the Homer City facilities, which enables this marketing affiliate to engage in forward sales and hedging transactions to manage electricity price exposure. On December7, 2001, Homer City completed a sale-leaseback of the Homer City facilities to third-party lessors for an aggregate purchase price of $1.591billion, made up of $782million in cash and assumption of debt (the fair value of which was $809million). This transaction has been accounted for as a lease financing for accounting purposes. Basis of Presentation The preparation of financial statements in conformity with GAAP requires Homer City to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Homer City has performed an evaluation of subsequent events through the date the financial statements were issued. Cash Equivalents Cash equivalents include money market funds totaling $40million and $38million at December31, 2009 and 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. Derivative Instruments Authoritative guidance on derivatives and hedging establishes accounting and reporting standards for derivative instruments (including certain derivative instruments embedded in other contracts). Homer City 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 Homer City formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. The accounting

Fair Value Measurements

Fair Value Measurements
	12 Months Ended Dec. 31, 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"). Fair value for a liability should reflect the entity's nonperformance risk. Fair value is determined using a hierarchy to prioritize inputs to valuation models. 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. 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 Homer City's derivative contracts determined in this manner are classified as Level2. Financial transmission rights and over-the-counter derivatives that trade infrequently at illiquid locations are classified as Level3. For illiquid financial transmission rights, EMMT reviews objective criteria related to

Derivative Instruments and Risk

Derivative Instruments and Risk Management
	12 Months Ended Dec. 31, 2009
NOTES TO FINANCIAL STATEMENTS
Derivative Instruments and Risk Management	Note3. Derivative Instruments and Risk Management Homer City uses derivative instruments to reduce its exposure to market risks that arise from fluctuations in the prices of electricity, capacity, fuel, emission allowances, and transmission rights. To the extent that 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 Homer City hedges its market price risk depends on several factors. First, 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, Homer City evaluates the sufficiency of EMMT's credit capacity and whether the forward sales markets have sufficient liquidity to enable 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. 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, Homer City utilizes derivative contracts 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). 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), Homer City records unrealized gains or losses. Homer City classifies unrealized gains and losses from commodity contracts in operating revenues. In addition, the results of derivative activities are recorded in cash flows from operating activities in the statements of cash flows. Where Homer City's derivative instruments are subject to a master netting agreement and the criteria of authoritative guidance are met, Homer City presents its derivative assets and liabilities on a net basis on its balance sheet. Notional Volumes of Derivative Instruments The following table summarizes the notional volumes of derivatives used for hedging activities at December31, 2009:

Accumulated Other Comprehensive

Accumulated Other Comprehensive Income (Loss)
	12 Months Ended Dec. 31, 2009
NOTES TO FINANCIAL STATEMENTS
Accumulated Other Comprehensive Income (Loss)	Note4. Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) consisted of the following: (in millions) Unrealized Gains(Losses) onCashFlow Hedges Unrecognized Gains (Losses) and Prior Service Adjustments, Net1 Accumulated Other Comprehensive Income (Loss) Balance at December31, 2007 $ (14 ) $ $ (14 ) Change for 2008 90 (5 ) 85 Balance at December31, 2008 76 (5 ) 71 Change for 2009 (38 ) 3 (35 ) Balance at December31, 2009 $ 38 $ (2 ) $ 36 1 For further detail, see Note8Compensation and Benefit Plans. Unrealized gains on cash flow hedges, net of tax, at December31, 2009, consist primarily of futures and forward electricity contracts that qualify for hedge accounting. These gains arise because current forecasts of future electricity prices are lower than Homer City's contract prices. As Homer City's hedged positions are realized, $39million, after tax, of the net unrealized gains on cash flow hedges at December31, 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 June30, 2011.

Property, Plant and Equipment

Property, Plant and Equipment
	12 Months Ended Dec. 31, 2009
NOTES TO FINANCIAL STATEMENTS
Property, Plant and Equipment	Note5. Property, Plant and Equipment At December31, 2009 and 2008, property, plant and equipment consisted of the following: December31, (in millions) 2009 2008 Land $ 7 $ 7 Power plant facilities 3 3 Plant and equipment under lease financing 1,589 1,591 Leasehold improvements 150 127 Emission allowances 434 434 Construction in progress 29 26 Equipment, furniture and fixtures 10 10 Capitalized leased equipment 1 1 2,223 2,199 Less accumulated depreciation and amortization 540 476 Property, plant and equipment, net $ 1,683 $ 1,723 As a result of the sale-leaseback transaction on December7, 2001, a majority of the generating facilities and equipment were classified as power plant and equipment under lease financing. Homer City recorded amortization expense related to the leased facilities of $47million for all three years ended December31, 2009, 2008 and 2007. Accumulated amortization related to the leased facilities was $381million and $335million at December31, 2009 and 2008, respectively. Asset Retirement Obligations Authoritative guidance on AROs requires entities to record the fair value of a liability for an ARO in the period in which it is incurred, including a liability for the fair value of a conditional ARO if the fair value can be reasonably estimated even though uncertainty exists about the timing and/or method of settlement. When an ARO liability is initially recorded, the entity capitalizes the cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is increased to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. Homer City recorded a liability representing expected future costs associated with site reclamation, facilities dismantlement and removal of environmental hazards as follows: (in millions) 2009 2008 2007 Beginning balance $ 3 $ 6 $ 6 Liabilities incurred during the period 2 Accretion expense Change in estimates (3 ) Ending balance $ 5 $ 3 $ 6

Long-Term Debt

Long-Term Debt
	12 Months Ended Dec. 31, 2009
NOTES TO FINANCIAL STATEMENTS
Long-Term Debt	Note6. Long-Term Debt Homer City entered into a subordinated revolving loan agreement during 1999 with Edison Mission FinanceCo. This loan agreement bears interest at a fixed rate of 8.0% on outstanding amounts and terminates on March18, 2014. On December8, 2003, Homer City amended and restated the loan agreement with Edison Mission Finance and issued a note evidencing its repayment obligations under the loan agreement. The amended and restated loan agreement had no effect on the financial terms of the agreement. Homer City owed approximately $459million and $358million under the loan agreement at December31, 2009 and 2008, respectively. Homer City is restricted under the participation agreements entered into as a part of the sale-leaseback transaction from making any payments under this facility unless specified conditions are met. Homer City incurred interest costs related to its affiliate debt of $36million, $29million and $38million for the years ended December31, 2009, 2008 and 2007, respectively.

Income Taxes

Income Taxes
	12 Months Ended Dec. 31, 2009
NOTES TO FINANCIAL STATEMENTS
Income Taxes	Note7. Income Taxes Income tax provision includes the current tax provision from operating income and the change in deferred income taxes during the year. The components of the net accumulated deferred income tax asset were: December31, (in millions) 2009 2008 Deferred tax assets Property, plant and equipment basis differences $ 114 $ 88 Accrued expenses and liabilities 6 5 State taxes 3 3 Other 1 1 Total 124 97 Deferred tax liabilities Lease financing $ 21 $ 1 Derivative instruments 32 51 Total 53 52 Deferred tax asset, net $ 71 $ 45 Classification of accumulated deferred income taxes: Included in non-current assets $ 102 $ 80 Included in current liabilities $ 31 $ 35 The provision for income taxes is comprised of the following: Years Ended December31, (in millions) 2009 2008 2007 Current Federal $ 32 $ 43 $ 56 State 14 12 19 Total current 46 55 75 Deferred Federal $ 1 $ (3 ) $ (18 ) State (3 ) (3 ) (3 ) Total deferred (2 ) (6 ) (21 ) Provision for income taxes $ 44 $ 49 $ 54 Variations from the 35% federal statutory rate are as follows: Years Ended December31, (in millions) 2009 2008 2007 Provision for federal income taxes at statutory rate $ 39 $ 47 $ 50 Increase (decrease) in taxes from: State tax, net of federal benefit 6 5 10 Other (1 ) (3 ) (3 ) Changes in uncertain tax positions (3 ) Total provision for income taxes $ 44 $ 49 $ 54 Effective tax rate 40% 37% 38% Accounting for Uncertainty in Income Taxes Homer City had no unrecognized tax benefits at December31, 2009, 2008 and 2007. During 2007, unrecognized tax benefits were reduced by $2million related to tax positions taken during a prior year and reduced by $2million related to settlements during 2007. The total amount of accrued interest and penalties was none and $0.4million as of December31, 2009 and 2008, respectively. The total amount of interest and penalties recognized in income tax expense was not material for each of 2009, 2008 and 2007. Homer City is included in the federal consolidated income tax return filed by Edison International. In May 2009, Edison International and the Internal Revenue Service completed a settlement of federal tax disputes and affirmative claims for open tax years 1986 through 2002. As a result, state tax years for the same periods are now open pending review by state taxing authorities of agreed final federal adjustments. The settlement includes the resolution of issues pertaining to Homer City which were timing in nature. During the second quarter of 2009, Homer City recorded an income tax benefit of $0.3million due to the settlement and related estimated impact of interest

Compensation and Benefit Plans

Compensation and Benefit Plans
	12 Months Ended Dec. 31, 2009
NOTES TO FINANCIAL STATEMENTS
Compensation and Benefit Plans	Note8. Compensation and Benefit Plans Employees of Homer City are eligible for various benefit plans of Edison International. Employee Savings Plan A 401(k) plan is maintained to supplement eligible employees' retirement income. Homer City matches 100% of non-union employee contributions up to 6% of such employees' base annual compensation. Homer City also matches 70% of contributions made by union employees, up to 4% of base annual compensation. Employer contributions vest 20% per year. Contribution expense was approximately $1million for each year ended December31, 2009, 2008 and 2007. Pension Plans and Postretirement Benefits Other Than Pensions Pension Plans Homer City maintains a pension plan specifically for the benefit of its union employees. A portion of Homer City's non-union employees participate in the Edison International pension plan. Eligibility depends on a number of factors, including the employee's hire date. Both plans are noncontributory, defined benefit pension plans and cover employees who fulfill minimum service requirements. The Edison International plan has a cash balance feature. The expected contributions (all by employer) for the plans are approximately $2million for the year ended December31, 2010. Volatile market conditions have affected the value of the trusts established to fund its future long-term pension benefits. The market value of the investments (reflecting investment returns, contributions and benefit payments) within the plan trusts declined significantly during 2008. This reduction in the value of plan assets will result in increased future expense and increased future contributions. Improved market conditions in 2009 partially offset the impacts of the 2008 market conditions. The Pension Protection Act of 2006 establishes new minimum funding standards and restricts plans underfunded by more than 20% from providing lump sum distributions and adopting amendments that increase plan liabilities. Information on plan assets and benefit obligations is shown below: Years Ended December31, (in millions) 2009 2008 Change in projected benefit obligation Projected benefit obligation at beginning of year $ 27 $ 25 Service cost 1 1 Interest cost 2 2 Actuarial gain (1 ) Projected benefit obligation at end of year $ 30 $ 27 Change in plan assets Fair value of plan assets at beginning of year $ 15 $ 19 Actual return (loss) on plan assets 3 (6 ) Employer contributions 1 2 Fair value of plan assets at end of year $ 19 $ 15 Funded status at end of year $ (11 ) $ (12 ) Amounts recognized in balance sheets: Long-term liabilities $ (11 ) $ (12 ) Amounts recognized in accumulated other comprehensive income: Net loss $ 2 $ 5 Accumulated benefit obligation at end of year $ 26 $ 23 Pension plans with an accumulated benefit obligation in excess of plan assets: Projected benefit obligation $ 30 $ 27 Accumulated benefit obligation 26 23 Fair

Commitments and Contingencies

Commitments and Contingencies
	12 Months Ended Dec. 31, 2009
NOTES TO FINANCIAL STATEMENTS
Commitments and Contingencies	Note9. Commitments and Contingencies Lease Commitments Homer City had operating leases in place relating mainly to tractors and trucks. Homer City also has a lease financing with respect to its facilities, which is described in more detail below. At December31, 2009, the future minimum payments over the next five years were as follows: Years Ending December31, (in millions) Operating Leases Lease Financing 2010 $ 1 $ 155 2011 160 2012 160 2013 149 2014 138 Thereafter 1,367 Total future commitments $ 1 $ 2,129 Amount representing interest 980 Net commitments $ 1,149 Operating lease expense amounted to $1million, $2million and $2million in 2009, 2008 and 2007, respectively. Facilities Sale-Leaseback On December7, 2001, Homer City completed the sale-leaseback of its Homer City facilities to third-party lessors for an aggregate purchase price of $1.591billion, comprised of $782million in cash and assumption of debt (the fair value of which was $809million). The leases Homer City entered into as part of this transaction are referred to as facility leases. The transaction has been accounted for as a lease financing for accounting purposes, which means that Homer City reflects the Homer City facilities as an asset on its balance sheet, although Homer City has no legal ownership, and records the net present value of the future minimum lease payments as lease debt. Under the terms of the 33.67year leases, Homer City is obligated to make semi-annual lease payments on each April1 and October1. The gain on the sale of the Homer City facilities has been deferred and is being amortized over the term of the lease. Under the participation agreements entered into as part of the sale-leaseback transaction, Homer City's ability to enter into specified transactions and to engage in specified business activities, including financing and investment activities, is subject to significant restrictions. These restrictions could affect, and in some cases significantly limit or prohibit, its ability to, among other things, merge, consolidate or sell its assets, create liens on its properties or assets, enter into non-permitted trading activities, enter into transactions with its affiliates, incur indebtedness, create, incur, assume or suffer to exist guarantees or contingent obligations, make restricted payments to its partners, make capital expenditures, own subsidiaries, liquidate or dissolve, engage in non-permitted business activities, sublease its leasehold interests in the facilities or make improvements to the facilities. Accordingly, Homer City's liquidity is substantially based on its ability to generate cash flow from operations. If Homer City is unable to generate cash flow from operations necessary to meet its obligations, Homer City will have limited ability to obtain additional capital unless its partners provide additional funding, which they are under no legal obligation to do. The rent payments that Homer City owes under the sale-leaseback transaction are comprised of two component

Related-Party Transactions

Related-Party Transactions
	12 Months Ended Dec. 31, 2009
NOTES TO FINANCIAL STATEMENTS
Related-Party Transactions	Note10. Related-Party Transactions EMMT Agreements Homer City has entered into a master purchase, sale and services agreement with EMMT, pursuant to which EMMT arranges for purchases and sales of the following products, including related services: (i)electric energy and capacity; (ii)fuel oil; and (iii)emission allowances. Homer City compensates EMMT with respect to these transactions and reimburses EMMT for brokers fees, taxes, and other reasonably incurred direct out-of-pocket expenses. Payment for these services is due within 30days of billing. The net fees earned by EMMT were $1million for each of the years ended December31, 2009, 2008 and 2007. EMMT prepays in full for the following month's expected power generation. As a result of the accelerated payments, Homer City had payables due to EMMT of $50million and $65million at December31, 2009 and 2008, respectively. Homer City entered into several transactions through EMMT for the purchase or sale of SO2 and NOx allowances. All transactions were completed at market price on the date of the transaction. Homer City received (paid) $1million, $(33) million and $(74) million during 2009, 2008 and 2007, respectively, for net sales (purchases) of SO2 and NOx allowances. Affiliate Financing Homer City obtained financing from Edison Mission Finance in connection with its acquisition of the Homer City facilities. For further discussion, see Note6Long-Term Debt. Services Agreements with EME and Edison International Certain administrative services such as payroll, employee benefit programs, insurance, and information technology are shared among all affiliates of Edison International and the costs of these corporate support services are allocated to all affiliates. The cost of services provided by Edison International and EME, including those related to Homer City, are allocated based on one of the following formulas: percentage of the time worked, equity in investment and advances, number of employees, or multi-factor (operating revenues, operating expenses, total assets and total employees). Homer City participates in a common payroll and benefit program with all Edison International employees. In addition, Homer City is billed for any direct labor and out-of-pocket expenses for services directly requested for the benefit of the partnership. Homer City believes the allocation methodologies are reasonable. Homer City made reimbursements for the cost of these programs and other services totaling $9million for the year ended December31, 2009 and $8million for each of the years ended December31, 2008 and 2007. Homer City had a net payable of $2million and $1million at December31, 2009 and 2008, respectively, related to these agreements. Homer City participates in the insurance program of Edison International, including property, general liability, workers compensation and various other specialty policies. Homer City's insurance premiums are generally based on its share of risk related to each policy. In connection with the property insurance program, a portion of the risk is reinsured by a captive insurance subsidiary of Edison International. Management and Administration Agre

Supplemental Cash Flows Informa

Supplemental Cash Flows Information
	12 Months Ended Dec. 31, 2009
NOTES TO FINANCIAL STATEMENTS
Supplemental Cash Flows Information	Note11. Supplemental Cash Flows Information Years Ended December31, (in millions) 2009 2008 2007 Cash paid Interest $ 127 $ 130 $ 172 Income taxes 9 22 4 Non-cash investing and financing activities Non-cash settlement of intercompany tax liabilities through an increase in the subordinated revolving loan agreement with affiliate $ 118 $ 42 $

Quarterly Financial Data

Quarterly Financial Data (unaudited)
	12 Months Ended Dec. 31, 2009
NOTES TO FINANCIAL STATEMENTS
Quarterly Financial Data (unaudited)	Note12. Quarterly Financial Data (unaudited) (in millions) First Second Third Fourth Total 2009 Operating revenues $ 165 $ 161 $ 170 $ 167 $ 663 Operating income 49 60 66 64 239 Provision for income taxes 7 10 14 13 44 Net income 11 18 20 18 67 2008 Operating revenues $ 185 $ 127 $ 236 $ 169 $ 717 Operating income 67 1 119 66 253 Provision for income taxes 14 (12 ) 36 11 49 Net income 22 (18 ) 55 26 85

Document and Entity Information

Document and Entity Information (USD $)
	12 Months Ended Dec. 31, 2009	Mar. 01, 2010	Jun. 30, 2009
Document and Entity Information
Entity Registrant Name	EME HOMER CITY GENERATION LP
Entity Central Index Key	0001099534
Document Type	10-K
Document Period End Date	2009-12-31
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