Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2013

The following table sets forth EME's assets and liabilities that were accounted for at fair value by level within the fair value hierarchy:



	December 31, 2013
(in millions)	Level 1		Level 2		Level 3		Netting and Collateral¹			Total
Assets at Fair Value
Money market funds²	983		$	—	$	—	$	—		$	983
Derivative contracts
Electricity	$	—	$	28	$	33	$	(4	)	$	57
Interest rate	—		5		—		—			5
Total assets	$	983	$	33	$	33	$	(4	)	$	1,045
Liabilities at Fair Value
Derivative contracts
Electricity	$	—	$	—	$	1	$	(1	)	$	—
Natural gas	1		—		—		(1		)	—
Interest rate	—		56		—		—			56
Total liabilities	$	1	$	56	$	1	$	(2	)	$	56



	December 31, 2012
(in millions)	Level 1		Level 2		Level 3		Netting and Collateral¹			Total
Assets at Fair Value
Money market funds²	615		$	—	$	—	$	—		$	615
Derivative contracts
Electricity	$	—	$	41	$	52	$	(3	)	$	90
Total assets	$	615	$	41	$	52	$	(3	)	$	705
Liabilities at Fair Value
Derivative contracts
Electricity	$	—	$	6	$	1	$	(7	)	$	—
Natural gas	3		—		—		(3		)	—
Interest rate	—		118		—		—			118
Total liabilities	$	3	$	124	$	1	$	(10	)	$	118


¹	Represents cash collateral and the impact of netting across the levels of the fair value hierarchy. Netting among positions classified within the same level is included in that level.


²	Money market funds are included in cash and cash equivalents on EME's consolidated balance sheets.

The following table sets forth Midwest Generation's assets and liabilities that were accounted for at fair value by level within the fair value hierarchy:



	December 31, 2013
(in millions)	Level 1		Level 2		Netting¹		Total
Assets at Fair Value
Money market funds²	$	101	$	—	$	—	$	101
Total assets	$	101	$	—	$	—	$	101
	December 31, 2012
(in millions)	Level 1		Level 2		Netting¹		Total
Assets at Fair Value
Money market funds²	75		$	—	$	—	$	75
Derivative contracts
Electricity	$	—	$	2	$	—	$	2
Total assets	$	75	$	2	$	—	$	77
Liabilities at Fair Value
Derivative contracts
Electricity	$	—	$	3	$	—	$	3
Total liabilities	$	—	$	3	$	—	$	3


¹	Represents the impact of netting across the levels of the fair value hierarchy. Netting among positions classified within the same level is included in that level.


²	Money market funds are included in cash and cash equivalents on Midwest Generation's consolidated balance sheets.

Valuation Techniques and Significant Unobservable Inputs Used to Determine Fair Value for Level 3 Assets and Liabilities

The following table sets forth the valuation techniques and significant unobservable inputs used to determine fair value for EME's Level 3 assets and liabilities:



	December 31, 2013
	Fair Value (in millions)						Valuation Techniques	Significant Unobservable Input	Range	Weighted Average
	Assets			Liabilities			Valuation Techniques	Significant Unobservable Input	Range	Weighted Average
Electricity
Congestion contracts	$	54		$	21		Latest auction pricing	Congestion prices	$(35.56) - $16.06	$0.08
Power contracts	4			5			Discounted cash flows	Power prices	$30.51 - $60.15	$36.86
Netting	(25		)	(25		)
Total	$	33		$	1



	December 31, 2012
	Fair Value (in millions)						Valuation Techniques	Significant Unobservable Input	Range	Weighted Average
	Assets			Liabilities			Valuation Techniques	Significant Unobservable Input	Range	Weighted Average
Electricity
Congestion contracts	$	71		$	20		Latest auction pricing	Congestion prices	$(8.93) - $18.03	$0.19
Power contracts	2			2			Discounted cash flows	Power prices	$22.54 - $48.85	$39.62
Netting	(21		)	(21		)
Total	$	52		$	1

Summary of Changes in Fair Value of Level 3 Assets and Liabilities

The following table sets forth a summary of changes in the fair value of EME's consolidated Level 3 net derivative assets and liabilities:



(in millions)	2013			2012
Fair value of net assets at beginning of period	$	51		$	83
Total realized/unrealized gains (losses)
Included in earnings¹	(11		)	9
Included in AOCI²	—			1
Purchases	46			58
Settlements	(54		)	(46		)
Transfers out of Level 3	—			(54		)
Fair value of net assets at end of period	$	32		$	51
Change during the period in unrealized gains (losses) related to assets and liabilities held at end of period¹	$	(2	)	$	22


¹	Reported in operating revenues on EME's consolidated statements of operations.


²	Included in reclassification adjustments in EME's consolidated statement of OCI.

Carrying Amounts and Fair Values of Long-Term Debt, Including Current Portion

The carrying amounts and fair values of EME's long-term debt were as follows:



	December 31, 2013				December 31, 2012
(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	$	1,494	$	1,491	$	1,056	$	1,057

- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 15

-Subparagraph b-d

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 18

-Subparagraph c(2), d, e, f

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 32

-Subparagraph a, c(1), c(2), c(3), d

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 2

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19207-110258

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 10

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13433-108611

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 11

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13467-108611

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 12

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13476-108611

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 10

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 9: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 30

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612

Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 14

-Subparagraph a

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 45

-Paragraph 2

-URI http://asc.fasb.org/extlink&oid=6447952&loc=d3e13220-108610

Reference 12: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 19

-Subparagraph a, b, c(1), d(1)

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

+ References+ Details