-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BUA7P+0qNNKix6yXSUzq1wZAel0c214jC6vNEzXo7zmaFPyvypDIAtatyoi/aWXi xuock/TRY0qYACdp0GYooQ== 0001047469-07-006226.txt : 20070809 0001047469-07-006226.hdr.sgml : 20070809 20070809094647 ACCESSION NUMBER: 0001047469-07-006226 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20070630 FILED AS OF DATE: 20070809 DATE AS OF CHANGE: 20070809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDISON MISSION ENERGY CENTRAL INDEX KEY: 0000930835 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 954031807 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-68630 FILM NUMBER: 071038098 BUSINESS ADDRESS: STREET 1: 18101 VON KARMAN AVE STREET 2: STE 1700 CITY: IRVINE STATE: CA ZIP: 92612 BUSINESS PHONE: 9497525588 MAIL ADDRESS: STREET 1: 18101 VON KARMAN AVE STREET 2: STE 1700 CITY: IRVINE STATE: CA ZIP: 92612 FORMER COMPANY: FORMER CONFORMED NAME: MISSION ENERGY CO DATE OF NAME CHANGE: 19941003 10-Q 1 a2178984z10-q.htm FORM 10-Q
QuickLinks -- Click here to rapidly navigate through this document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark one)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2007
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission file number 333-68630

EDISON MISSION ENERGY
(Exact name of registrant as specified in its charter)

Delaware		95-4031807
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
18101 Von Karman Avenue, Suite 1700 Irvine, California		92612
(Address of principal executive offices)		(Zip Code)
Registrant's telephone number, including area code: (949) 752-5588

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ý NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of "accelerated filer" and "large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO ý

Number of shares outstanding of the registrant's Common Stock as of August 9, 2007: 100 shares (all shares held by an affiliate of the registrant).

TABLE OF CONTENTS

		Page
	Glossary	ii
PART I—Financial Information
Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	59
Item 4.	Controls and Procedures	59
PART II—Other Information
Item 1.	Legal Proceedings	60
Item 1A.	Risk Factors	60
Item 6.	Exhibits	60
	Signatures	61

GLOSSARY

When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below.

Ameren		Ameren Corporation
Btu		British thermal units
CAIR		Clean Air Interstate Rule
Commonwealth Edison		Commonwealth Edison Company
EME		Edison Mission Energy
EME Homer City		EME Homer City Generation L.P.
EMMT		Edison Mission Marketing & Trading, Inc.
Exelon Generation		Exelon Generation Company LLC
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
FIN 46(R)		Financial Accounting Standards Interpretation No. 46, "Consolidation of Variable Interest Entities"
FIN No. 39-1		Financial Accounting Standards Board Staff Position No. 39-1, "Amendment of FASB Interpretation No. 39"
FIN No. 48		Financial Accounting Standards Interpretation No. 48, "Accounting for Uncertainty in Income Taxes"
Fitch		Fitch Ratings
GAAP		generally accepted accounting principles
GWh		gigawatt-hours
Illinois Plants		EME's largest power plants (fossil fuel), located in Illinois
ISO		independent system operator
LIBOR		London Interbank Offered Rate
MD&A		Management's Discussion and Analysis of Financial Condition and Results of Operations
MEHC		Mission Energy Holding Company
Midwest Generation		Midwest Generation, LLC
MISO		Midwest Independent Transmission System Operator
MMBtu		million British thermal units
Moody's		Moody's Investors Service, Inc.
MW		megawatts
MWh		megawatt-hours
NAPP		Northern Appalachian
NOV		Notice of Violation
NOx		nitrogen oxide
NYISO		New York Independent System Operator

PG&E		Pacific Gas & Electric Company
PJM		PJM Interconnection, LLC
PRB		Powder River Basin
RPM		Reliability Pricing Model
S&P		Standard & Poor's Ratings Services
SCE		Southern California Edison Company
SCR		selective catalytic reduction
SFAS		Statement of Financial Accounting Standards issued by the FASB
SFAS No. 133		Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities"
SFAS No. 155		Statement of Financial Accounting Standards No. 155, "Accounting for Certain Hybrid Financial Instruments"
SFAS No. 157		Statement of Financial Accounting Standards No. 157, "Fair Value Measurements"
SFAS No. 159		Statement of Financial Accounting Standards No. 159, "Fair Value Option for Financial Assets and Liabilities, Including an Amendment of FASB Statement No. 115"
SIP		state implementation plan
SO2		sulfur dioxide
US EPA		United States Environmental Protection Agency

iii

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EDISON MISSION ENERGY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In millions, Unaudited)

			Three Months Ended June 30,						Six Months Ended June 30,
			2007			2006			2007			2006
Operating Revenues			$	570		$	463		$	1,243		$	977
Operating Expenses
	Fuel			152			142			328			291
	Plant operations			181			155			313			279
	Plant operating leases			44			44			88			88
	Depreciation and amortization			41			36			76			71
	Gain on sale of assets			—			(1	)		—			(5	)
	Administrative and general			45			33			84			64

		Total operating expenses		463			409			889			788

Operating income				107			54			354			189

Other Income (Expense)
	Equity in income from unconsolidated affiliates			54			46			80			71
	Dividend income			10			1			11			1
	Interest income			22			23			46			43
	Interest expense			(69	)		(73	)		(129	)		(145	)
	Loss on early extinguishment of debt			(160	)		(143	)		(160	)		(143	)
	Other income (expense), net			1			9			—			17

		Total other income (expense)		(142	)		(137	)		(152	)		(156	)

	Income (loss) from continuing operations before income taxes			(35	)		(83	)		202			33
	Provision (benefit) for income taxes			(16	)		(40	)		68			1

Income (Loss) From Continuing Operations				(19	)		(43	)		134			32
	Income from operations of discontinued subsidiaries, net of tax (Note 5)			2			4			5			77

Net Income (Loss)			$	(17	)	$	(39	)	$	139		$	109

The accompanying notes are an integral part of these consolidated financial statements.

EDISON MISSION ENERGY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions, Unaudited)

			Three Months Ended June 30,						Six Months Ended June 30,
			2007			2006			2007			2006
Net Income (Loss)			$	(17	)	$	(39	)	$	139		$	109
Other comprehensive income (loss), net of tax:
	Minimum pension liability adjustment, net of income tax effect			—			(2	)		—			(2	)
	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 $30 and $45 for the three months and $(85) and $172 for the six months ended June 30, 2007 and 2006, respectively		48			67			(121	)		253
		Reclassification adjustments included in net income (loss), net of income tax expense (benefit) of $(7) and $(12) for the three months and $(19) and $8 for the six months ended June 30, 2007 and 2006, respectively		10			17			25			(12	)

Other comprehensive income (loss)				58			82			(96	)		239

Comprehensive Income			$	41		$	43		$	43		$	348

The accompanying notes are an integral part of these consolidated financial statements.

EDISON MISSION ENERGY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, Unaudited)

			June 30, 2007		December 31, 2006
Assets
Current Assets
	Cash and cash equivalents		$	641	$	1,213
	Short-term investments			317		558
	Accounts receivable—trade			215		178
	Receivables from affiliates			150		51
	Inventory			164		158
	Derivative assets			146		272
	Margin and collateral deposits			178		69
	Deferred taxes			37		—
	Prepaid expenses and other			93		96

		Total current assets		1,941		2,595

Investments in Unconsolidated Affiliates				382		367

Property, Plant and Equipment				4,506		4,272
	Less accumulated depreciation and amortization			1,007		981

		Net property, plant and equipment		3,499		3,291

Other Assets
	Deferred financing costs			43		45
	Long-term derivative assets			95		114
	Restricted cash			62		91
	Rent payments in excess of levelized rent expense under plant operating leases			668		556
	Long-term margin and collateral deposits			14		4
	Other long-term assets			410		187

		Total other assets		1,292		997

Total Assets			$	7,114	$	7,250

The accompanying notes are an integral part of these consolidated financial statements.

EDISON MISSION ENERGY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, Unaudited)

			June 30, 2007		December 31, 2006
Liabilities and Shareholder's Equity
Current Liabilities
	Accounts payable		$	27	$	67
	Payables to affiliates			9		6
	Book overdrafts			20		2
	Accrued liabilities			237		270
	Derivative liabilities			63		82
	Interest payable			36		28
	Deferred taxes			—		59
	Current maturities of long-term obligations			112		132

		Total current liabilities		504		646

Long-term obligations net of current maturities				3,845		3,035
Deferred taxes and tax credits				378		347
Deferred revenues				64		61
Long-term derivative liabilities				53		9
Other long-term liabilities				544		523

Total Liabilities				5,388		4,621

Minority Interest				45		47

Commitments and Contingencies (Note 8)
Shareholder's Equity
	Common stock, par value $0.01 per share; 10,000 shares authorized; 100 shares issued and outstanding as of June 30, 2007 and December 31, 2006			64		64
	Additional paid-in capital			1,257		2,174
	Retained earnings (Note 1)			355		243
	Accumulated other comprehensive income			5		101

Total Shareholder's Equity				1,681		2,582

Total Liabilities and Shareholder's Equity			$	7,114	$	7,250

The accompanying notes are an integral part of these consolidated financial statements.

EDISON MISSION ENERGY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions, Unaudited)

			Six Months Ended June 30,
			2007			2006
Cash Flows From Operating Activities
	Net income		$	139		$	109
	Less: Income from discontinued operations			(5	)		(77	)

	Income from continuing operations, net		$	134		$	32
	Adjustments to reconcile income to net cash provided by (used in) operating activities:
		Equity in income from unconsolidated affiliates		(79	)		(71	)
		Distributions from unconsolidated affiliates		53			88
		Depreciation and amortization		83			76
		Deferred taxes and tax credits		(3	)		42
		Gain on sale of assets		—			(4	)
		Loss on early extinguishment of debt		160			143
	Changes in operating assets and liabilities:
		Decrease (increase) in margin and collateral deposits		(119	)		363
		Decrease (increase) in receivables		(130	)		3
		Increase in inventory		(6	)		(63	)
		Decrease in prepaid expenses and other		29			10
		Increase in rent payments in excess of levelized rent expense		(112	)		(112	)
		Decrease in accounts payable and other current liabilities		(83	)		(36	)
		Increase (decrease) in interest payable		9			(21	)
		Decrease (increase) in derivative assets and liabilities		7			(26	)
		Other operating—assets		—			(1	)
		Other operating—liabilities		25			(26	)

	Operating cash flow from continuing operations			(32	)		397
	Operating cash flow from discontinued operations			5			82

		Net cash provided by (used in) operating activities		(27	)		479

Cash Flows From Financing Activities
	Borrowings on long-term debt			2,905			1,315
	Payments on long-term debt agreements			(2,117	)		(1,293	)
	Cash dividends to parent			(925	)		(12	)
	Payments to affiliates related to stock-based awards			(28	)		(9	)
	Excess tax benefits related to stock option exercises			9			4
	Premium paid on extinguishment of debt and financing costs			(161	)		(153	)

		Net cash used in financing activities		(317	)		(148	)

Cash Flows From Investing Activities
	Capital expenditures			(244	)		(118	)
	Proceeds from return of capital and loan repayments			6			—
	Purchase of interest of acquired companies			(23	)		(18	)
	Proceeds from sale of interest in projects			—			43
	Purchase of short-term investments			(30	)		(173	)
	Maturities and sales of short-term investments			270			97
	Decrease (increase) in restricted cash			30			(12	)
	Proceeds from (investments in) other assets			(237	)		23

		Net cash used in investing activities		(228	)		(158	)

Net increase (decrease) in cash and cash equivalents				(572	)		173
Cash and cash equivalents at beginning of period				1,213			1,155

Cash and cash equivalents at end of period			$	641		$	1,328

The accompanying notes are an integral part of these consolidated financial statements.

EDISON MISSION ENERGY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2007
(Unaudited)

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

EME's significant accounting policies were described in Note 1 to its Consolidated Financial Statements included in its annual report on Form 10-K for the year ended December 31, 2006. EME follows the same accounting policies for interim reporting purposes, with the exception of the change in accounting for uncertain tax positions (discussed below in "New Accounting Pronouncements"). 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 consolidated financial position and results of operations and cash flows in accordance with accounting principles generally accepted in the United States for the periods covered by this quarterly report on Form 10-Q. The results of operations for the six months ended June 30, 2007 are not necessarily indicative of the operating results for the full year.

Certain prior year reclassifications have been made to conform to the current year financial statement presentation. Except as indicated, amounts reflected in the notes to the consolidated financial statements relate to continuing operations of EME.

Short-term Investments

At June 30, 2007 and December 31, 2006, EME had classified all marketable debt securities as held-to-maturity and carried at amortized cost plus accrued interest which approximated their fair value. Gross unrealized holding gains and losses were not material.

Held-to-maturity securities, which all mature within one year, consisted of the following:

	June 30, 2007		December 31, 2006
	(in millions)
Commercial paper	$	269	$	417
Certificates of deposit		47		141
Corporate bonds		1		—

Total	$	317	$	558

Income Taxes

EME is included in the consolidated federal and state income tax returns of Edison International and participates in tax-allocation and payment agreements with other subsidiaries of Edison International. EME calculates its tax provision in accordance with these tax agreements. EME's current tax liability or benefit is determined on a "with and without" basis. This means Edison International computes its combined federal and state tax liabilities including and excluding EME's taxable income or loss and state apportionment factors. This method is similar to a separate company return, except that EME recognizes, without regard to separate company limitations, additional tax liabilities or benefits

based on the impact to the combined group of including EME's taxable income or losses and state apportionment factors.

EME accounts for deferred income taxes using the asset-and-liability method, wherein deferred tax assets and liabilities are recognized for future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities using enacted income tax rates. Investment and energy tax credits are deferred and amortized over the term of the power purchase agreement of the respective project. Interest expense and penalties associated with income taxes are reflected in the caption "Provision for income taxes" on the consolidated statements of income. For further discussion of income taxes, see Note 7—Income Taxes.

Inventory

Inventory is stated at the lower of weighted average cost or market. Inventory at June 30, 2007 and December 31, 2006 consisted of the following:

	June 30, 2007		December 31, 2006
	(in millions)
Coal and fuel oil	$	118	$	112
Spare parts, materials and supplies		46		46

Total	$	164	$	158

New Accounting Pronouncements

Accounting Principles Adopted

Statement of Financial Accounting Standards Interpretation No. 48—

In July 2006, the FASB issued FIN No. 48, which clarifies the accounting for uncertain tax positions. FIN No. 48 requires an enterprise to recognize, in its financial statements, the best estimate of the impact of a tax position by determining if the weight of the available evidence indicates it is more likely than not, based solely on the technical merits, that the position will be sustained on audit. EME adopted FIN No. 48 effective January 1, 2007. EME recorded a cumulative-effect adjustment that decreased retained earnings by $1 million upon adoption of FIN No. 48.

Statement of Financial Accounting Standards No. 155—

In February 2006, the FASB issued SFAS No. 155, which amends SFAS No. 133 and SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." SFAS No. 155 allows financial instruments that have embedded derivatives to be accounted for at fair value at acquisition, at issuance, or when a previously recognized financial instrument is subject to a remeasurement event, on an instrument-by-instrument basis, in cases in which a derivative would otherwise have to be bifurcated. SFAS No. 155 is effective for all financial instruments acquired, issued, or subject to remeasurement after January 1, 2007. The fair value election provided for in paragraph 4(c) of this Statement may also be applied upon adoption of this Statement for hybrid financial instruments that had been bifurcated under paragraph 12 of SFAS No. 133 prior to the adoption of this Statement. The adoption of this standard had no effect on EME's consolidated financial statements for the six months ended June 30, 2007.

Accounting Principles Not Yet Adopted

FASB Staff Position FIN No. 39-1—

In April 2007, the FASB issued FIN No. 39-1. FIN No. 39-1 amends paragraph 3 of FIN No. 39 to replace the terms conditional contracts and exchange contracts with the term derivative instruments as defined in SFAS No. 133. FIN No. 39-1 also states that under master netting arrangements if collateral is based on fair value, then it must be netted with the fair value of derivative assets/liabilities if an entity qualified and elected the option to net those amounts. EME will adopt FIN No. 39-1 on January 1, 2008. Adoption of this position will result in netting a portion of margin and cash collateral deposits with derivative liabilities on EME's consolidated balance sheets, but will have no impact on EME's consolidated statements of income (loss).

Statement of Financial Accounting Standards No. 157—

In September 2006, the FASB issued SFAS No. 157, which clarifies the definition of fair value, establishes a framework for measuring fair value and expands the disclosures on fair value measurements. EME will adopt SFAS No. 157 on January 1, 2008. EME is currently evaluating the impact of adopting SFAS No. 157 on its consolidated financial statements.

Statement of Financial Accounting Standards No. 159—

In February 2007, the FASB issued SFAS No. 159, which provides an option to report eligible financial assets and liabilities at fair value, with changes in fair value recognized in earnings. Upon adoption, the first remeasurement to fair value would be reported as a cumulative-effect adjustment to the opening balance of retained earnings. EME will adopt SFAS No. 159 on January 1, 2008. EME is currently evaluating whether it will opt to report any financial assets and liabilities at fair value and the impact, if adopted, on its consolidated financial statements.

Stock-Based Compensation

Edison International's stock options, performance shares, deferred stock units and, beginning in 2007, restricted stock units have been granted to EME employees under Edison International's long-term incentive compensation programs. Edison International usually does not issue new common stock for equity awards settled. Rather, a third party is used to facilitate the exercise of stock options and the purchase and delivery of outstanding common stock for settlement of option exercises, performance shares, and restricted stock units. Performance shares earned are settled half in cash and half in common stock; however, Edison International has discretion under certain of the awards to pay the half subject to cash settlement in common stock. Deferred stock units granted to management are settled in cash, not stock and represent a liability.

On April 26, 2007, Edison International's shareholders approved a new incentive plan (the 2007 Performance Incentive Plan) that includes stock-based compensation. No additional awards will be granted under Edison International's prior stock-based compensation plans on or after April 26, 2007, and all future issuances will be made under the new plan. The maximum number of shares of Edison International's common stock that may be issued or transferred pursuant to awards under the new incentive plan is 8.5 million shares, plus the number of any shares subject to awards issued under Edison International's prior plans and outstanding as of April 26, 2007, which expire, cancel or terminate without being exercised or shares being issued. As of June 30, 2007, Edison International has approximately 8.4 million shares remaining for future issuance under its stock-based compensation plan. For further discussion, see "Stock-Based Compensation" in Note 6.

Note 2. Refinancing

Senior Notes Offering

On May 7, 2007, EME completed a private offering of $1.2 billion of its 7.00% senior notes due 2017, $800 million of its 7.20% senior notes due 2019 and $700 million of its 7.625% senior notes due 2027. EME will pay interest on the senior notes on May 15 and November 15 of each year, beginning on November 15, 2007.

The senior notes are EME's senior unsecured obligations, ranking equal in right of payment to all EME's existing and future senior unsecured indebtedness, and will be senior to all 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 of the existing and future liabilities of EME's subsidiaries are effectively senior to the senior notes.

EME used the net proceeds of the offering of the senior notes, together with cash on hand, to purchase approximately $587 million of EME's outstanding 7.73% senior notes due 2009, to purchase $999.8 million of Midwest Generation's 8.75% second priority senior secured notes due 2034, to repay the outstanding amount ($327.8 million) of Midwest Generation's senior secured term loan facility, and to make a dividend payment of $899 million to MEHC which enabled MEHC to purchase $795.7 million of its 13.5% senior secured notes due 2008. The net proceeds of the offering of the senior notes, together with cash on hand, were also used to pay related tender premiums, consent fees, and accrued interest. EME recorded a total pre-tax loss of approximately $160 million (approximately $98 million after tax) on early extinguishment of debt during the second quarter of 2007.

Redemption of MEHC Senior Secured Notes

On June 25, 2007, MEHC redeemed in full its senior secured notes. As a result of the redemption, EME is no longer subject to financial and investment restrictions that were contained in the indenture pursuant to which the senior secured notes were issued. Following the redemption, MEHC no longer files reports with the U.S. Securities and Exchange Commission.

Credit Agreement Amendments

On May 7, 2007, EME amended its existing $500 million secured credit facility, increasing the total borrowings available thereunder to $600 million.

On June 29, 2007, Midwest Generation completed a refinancing of indebtedness by amending and restating its existing credit facility. The refinancing provided, among other things, for: (a) the option to extend the maturity of the working capital facility by up to two years, subject to the satisfaction of enumerated conditions, (b) the option to grant first or second priority liens to eligible hedge counterparties, (c) the release of collateral in the event that the unsecured debt of Midwest Generation is rated investment grade, (d) a reduction in the interest rate applicable to the working capital facility, and (e) a modification of covenants, including the incurrence of indebtedness covenant and the financial covenants. The refinancing also eliminates the term loan facility.

After giving effect to the refinancing, the working capital facility interest rate was lowered to LIBOR + 0.55% from LIBOR + 1.50%. The working capital facility matures in 2012, with an option to extend for up to two years. Also, as part of the refinancing, Midwest Generation's financial covenants were modified, with its debt to capitalization ratio to be no greater than 0.60 to 1.

Midwest Generation intends to use its secured working capital facility to provide credit support for its hedging activities and for general working capital purposes. Midwest Generation may also support its hedging activities by granting first or second priority liens to eligible hedge counterparties. As of June 30, 2007, $32.6 million had been utilized under the working capital facility.

Note 3. Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) consisted of the following:

	Unrealized Gains (Losses) on Cash Flow Hedges			Unrecognized Losses and Prior Service Costs, Net			Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance at December 31, 2006	$	111		$	(10	)	$	101
Current period change		(96	)		—			(96	)

Balance at June 30, 2007	$	15		$	(10	)	$	5

Unrealized gains on cash flow hedges, net of tax, at June 30, 2007, included unrealized gains on commodity hedges related to Midwest Generation and EME Homer City futures and forward electricity contracts that qualify for hedge accounting. These gains arise because current forecasts of future electricity prices in these markets are lower than the contract prices. The decrease in unrealized gains during the six months ended June 30, 2007 resulted from an increase in market prices for power.

As EME's hedged positions for continuing operations are realized, approximately $37 million, after tax, of the net unrealized gains on cash flow hedges at June 30, 2007 are expected to be reclassified into earnings during the next 12 months. Management expects that reclassification of net unrealized gains will offset energy revenue recognized at market prices. Actual amounts ultimately reclassified into earnings over the next 12 months 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 December 31, 2009.

Under SFAS No. 133, the portion of a cash flow hedge that does not offset the change in value of the transaction being hedged, which is commonly referred to as the ineffective portion, is immediately recognized in earnings. EME recorded net losses of approximately $9 million and $6 million during the second quarters of 2007 and 2006, respectively, and $10 million and $17 million during the six months ended June 30, 2007 and 2006, respectively, representing the amount of cash flow hedges' ineffectiveness for continuing operations, reflected in operating revenues in EME's consolidated income statements.

Note 4. Variable Interest Entities

U.S. Wind Force is a development stage enterprise formed to develop wind projects in West Virginia, Pennsylvania and Maryland. In December 2006, a subsidiary of EME entered into a loan agreement with U.S. Wind Force to fund the redemption of a membership interest held by another party, repayment of loans, distributions to equity holders and future development of wind projects. In accordance with FIN 46(R), EME determined that it is the primary beneficiary and, accordingly, EME consolidated U.S. Wind Force at December 15, 2006. At June 30, 2007, the assets consolidated included $17 million of intangible assets, primarily related to project development rights, and are classified as part of other long-term assets in EME's consolidated balance sheet. As project development is completed, the project development rights will be considered part of property, plant and equipment and depreciated over the estimated useful lives of the respective projects.

EME completed a review of the application of FIN 46(R) to its subsidiaries and affiliates and concluded that it had significant variable interests in variable interest entities as defined in this Interpretation. As of June 30, 2007, these entities consisted of five equity investments (the Big 4 projects and the Sunrise project) that had interests in natural gas-fired facilities with a total generating capacity of 1,782 MW. An operations and maintenance subsidiary of EME operates the Big 4 projects, but EME does not supply the fuel consumed or purchase the power generated by these facilities. EME determined that it is not the primary beneficiary in these entities; accordingly, EME continues to account for its variable interests on the equity method. EME's maximum exposure to loss in these variable interest entities is generally limited to its investment in these entities, which totaled $336 million as of June 30, 2007.

Note 5. Discontinued Operations

Lakeland Project

EME previously owned a 220 MW power plant located in the United Kingdom, referred to as the Lakeland project. An administrative receiver was appointed in 2002 as a result of a default by the project's counterparty, a subsidiary of TXU Europe Group plc. Following a claim for termination of the power sales agreement, the Lakeland project received a settlement of £116 million (approximately $217 million). EME is entitled to receive the remaining amount of the settlement after payment of creditor claims. As creditor claims have been settled, EME received payments of £61 million (approximately $106 million) in the first quarter of 2006, £9 million (approximately $16 million) in April 2006 and £4 million (approximately $8 million) in January 2007. The after-tax income attributable to the Lakeland project was none and $10 million for the second quarters of 2007 and 2006, respectively, and $5 million and $83 million for the six months ended June 30, 2007 and 2006, respectively. Beginning in 2002, EME reported the Lakeland project as discontinued operations and accounts for its ownership of Lakeland Power on the cost method (earnings are recognized as cash is distributed from the project).

Summarized Financial Information for Discontinued Operations

	Three Months Ended June 30,		Six Months Ended June 30,
	2007	2006	2007	2006
	(in millions)
Income before income taxes and minority interest	5	7	11	119
Provision for income taxes	3	3	6	42
Income from operations of discontinued foreign subsidiaries	2	4	5	77

Note 6. Compensation and Benefit Plans

Pension Plans and Postretirement Benefits Other Than Pensions

Pension Plans

EME previously disclosed in its financial statements for the year ended December 31, 2006 that it expected to contribute approximately $14 million to its pension plans in 2007. As of June 30, 2007, approximately $1 million in contributions have been made. EME continues to expect to contribute approximately $13 million to its pension plans in the last six months of 2007. Expected contribution

funding in 2007 could vary from anticipated amounts, depending on the funded status at year-end and the tax-deductible funding limitations.

Components of pension expense are:

	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
	(in millions)
Service cost	$	4		$	4		$	8		$	9
Interest cost		2			2			5			4
Expected return on plan assets		(2	)		(1	)		(4	)		(3	)

Total expense	$	4		$	5		$	9		$	10

Postretirement Benefits Other Than Pensions

EME previously disclosed in its financial statements for the year ended December 31, 2006 that it expected to contribute approximately $1 million to its postretirement benefits other than pensions in 2007. As of June 30, 2007, $0.4 million in contributions have been made. EME continues to expect to contribute $0.6 million to its postretirement benefits other than pensions in the last six months of 2007. Expected contribution funding in 2007 could vary from anticipated amounts, depending on the funded status at year-end and tax-deductible funding limitations.

Components of postretirement benefits expense are:

	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
	(in millions)
Service cost	$	—		$	—		$	1		$	1
Interest cost		1			1			2			2
Amortization of unrecognized prior service credit		(1	)		(1	)		(1	)		(1	)
Amortization of net actuarial loss		1			1			1			1

Total expense	$	1		$	1		$	3		$	3

Stock-Based Compensation

Total stock-based compensation expense (reflected in the caption "Administrative and general" on the consolidated statements of income) was $4 million and $2 million for the second quarters of 2007 and 2006, respectively, and $6 million and $4 million for the six months ended June 30, 2007 and 2006, respectively. The income tax benefit recognized in the income statement was $2 million and $1 million for the second quarters of 2007 and 2006, respectively, and $2 million and $2 million for the six months ended June 30, 2007 and 2006, respectively.

Stock Options

A summary of the status of Edison International's stock options granted to EME employees is as follows:

			Weighted-Average
	Stock Options		Exercise Price		Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding, December 31, 2006	3,014,145		$	25.52
Granted	368,735		$	47.61
Transferred to affiliates	3,305		$	43.04
Forfeited	(15,441	)	$	44.23
Exercised	(762,473	)	$	19.97

Outstanding at June 30, 2007	2,608,271		$	30.17	7.15

Vested and expected to vest at June 30, 2007	2,504,632		$	29.82	7.10	$	60,480,604

Exercisable at June 30, 2007	1,322,014		$	23.39	6.23	$	40,423,883

Stock options granted in 2007 do not accrue dividend equivalents.

The amount of cash used by Edison International to settle stock options exercised by EME employees was $11 million and $6 million for the quarters ended June 30, 2007 and 2006, respectively, and $44 million and $19 million for the six months ended June 30, 2007 and 2006, respectively. Cash received by Edison International from options exercised by EME employees was $4 million and $3 million for the quarters ended June 30, 2007 and 2006, respectively, and $18 million and $8 million for the six months ended June 30, 2007 and 2006, respectively. The estimated tax benefit from options exercised was $9 million and $4 million for the six months ended June 30, 2007 and 2006, respectively.

Note 7. Income Taxes

EME's income tax provision from continuing operations was $68 million and $1 million for the six months ended June 30, 2007 and 2006, respectively. Income tax benefits are recognized pursuant to a tax-allocation agreement with Edison International. During the six months ended June 30, 2007 and 2006, EME recognized $12 million and $9 million, respectively, of production tax credits related to wind projects and $7 million and $3 million, respectively, related to estimated state income tax benefits allocated from Edison International.

The total amount of unrecognized tax benefits (excluding the effect of federal income taxes on unrecognized state tax benefits) was $147 million and $140 million as of June 30, 2007 and the date of adoption of FIN No. 48, respectively. The change results from positions expected to be taken for 2007. The total amount of unrecognized tax benefits as of June 30, 2007 and the date of adoption that, if recognized, would affect the effective tax rate was $126 million and $119 million, respectively.

The total amount of accrued interest and penalties was $47 million and $41 million as of June 30, 2007 and the date of adoption, respectively. The total amount of interest expense and penalties recognized in income tax expense was $1 million and $2 million for the quarters ended June 30, 2007 and 2006, respectively, and $6 million and $4 million for the six months ended June 30, 2007 and 2006, respectively.

EME and its subsidiaries remain subject to examination by the Internal Revenue Service, the California Franchise Tax Board, and other state authorities from 1994 to present. EME continues its efforts to resolve open tax issues with the Internal Revenue Service and state authorities. The timing for resolving these open tax positions is subject to uncertainty, but it is reasonably possible that some portion of these open tax positions could be resolved in the next twelve months.

Note 8. Commitments and Contingencies

Contractual Obligations

Long-term Debt

EME's long-term debt maturities as of June 30, 2007 for the remainder of 2007 and the following four years were (in millions):

July through December 2007	$	104
2008		17
2009		25
2010		12
2011		13

These amounts have been updated primarily to reflect EME's financing activities completed during the second quarter of 2007. See Note 2—Refinancing.

Commitments

Capital Improvements

At June 30, 2007, EME's subsidiaries had firm commitments to spend approximately $229 million during the remainder of 2007 and $24 million in 2008 on capital and construction expenditures. The majority of these expenditures relate to the construction of wind projects. Also included are expenditures for dust collection and mitigation systems and environmental improvements. These expenditures are planned to be financed by cash on hand, cash generated from operations or existing subsidiary credit agreements.

Turbine Commitments

At June 30, 2007, EME had entered into agreements with vendors securing 669 wind turbines (1,414 MW) with remaining commitments of $382 million in 2007, $534 million in 2008, and $426 million in 2009. At June 30, 2007, EME had recorded wind turbine deposits of $262 million included in other long-term assets in its consolidated balance sheet.

In addition, EME had entered into an agreement to purchase five gas turbines and related equipment for an aggregate purchase price of approximately $145 million. In June 2007, EME entered into a change order agreement with the seller of the turbines reducing the number of gas turbines to four with a remaining commitment of $26 million at June 30, 2007. In addition, EME recorded $21 million included in prepaid expenses and other in its consolidated balance sheet with respect to a refund of the turbine payments. Subsequent to June 30, 2007, EME entered into additional change order agreements reducing the number of gas turbines to one. EME expects to receive refunds totaling $92 million during the third quarter of 2007 with respect to the four turbines.

Fuel Supply Contracts

Midwest Generation and EME Homer City have entered into additional fuel purchase commitments during the first six months of 2007. These additional commitments are currently estimated to be $6 million for the remainder of 2007, $208 million in 2008, $153 million in 2009, and $77 million in 2010.

Coal Transportation Agreements

Midwest Generation has contractual agreements for the transport of coal to its facilities. The primary contract is with Union Pacific Railroad (and various delivering carriers) which extends through 2011. Midwest Generation's commitments under this contract are based on actual coal purchases from the PRB. Accordingly, contractual obligations for transportation are based on coal volumes set forth in fuel supply contracts. The increase in transportation commitments entered into during the first six months of 2007 relates to additional volumes of fuel purchases using the terms of existing transportation agreements. These commitments are currently estimated to be $8 million for the remainder of 2007, $110 million for 2008, $75 million for 2009, and $77 million for 2010.

Standby Letters of Credit

At June 30, 2007, standby letters of credit aggregated $83 million and were scheduled to expire as follows: $16 million in 2007 and $67 million in 2008.

Guarantees and Indemnities

EME and certain of its subsidiaries have various financial and performance guarantees and indemnifications which are issued in the normal course of business. As discussed below, these contracts include performance guarantees, guarantees of debt and indemnifications.

Tax Indemnity Agreements

In connection with the sale-leaseback transactions that EME has entered into related to the Powerton and Joliet Stations in Illinois, the Collins Station in Illinois, and the Homer City facilities in Pennsylvania, EME and several of its subsidiaries entered into tax indemnity agreements. Under these tax indemnity agreements, these entities agreed to indemnify the lessors in the sale-leaseback transactions for specified adverse tax consequences that could result in certain situations set forth in each tax indemnity agreement, including specified defaults under the respective leases. The potential indemnity obligations under these tax indemnity agreements could be significant. Due to the nature of these potential obligations, EME cannot determine a maximum potential liability which would be triggered by a valid claim from the lessors. EME has not recorded a liability related to these indemnities. In connection with the termination of the Collins Station lease in April 2004, Midwest Generation will continue to have obligations under the tax indemnity agreement with the former lease equity investor.

Indemnities Provided as Part of the Acquisition of the Illinois Plants

In connection with the acquisition of the Illinois Plants, EME agreed to indemnify Commonwealth Edison with respect to specified environmental liabilities before and after December 15, 1999, the date of sale. The indemnification claims are reduced by any insurance proceeds and tax benefits related to such claims and are subject to a requirement that Commonwealth Edison takes all reasonable steps to mitigate losses related to any such indemnification claim. Due to the nature of the obligation under this

indemnity, a maximum potential liability cannot be determined. This indemnification for environmental liabilities is not limited in term and would be triggered by a valid claim from Commonwealth Edison. Except as discussed below, EME has not recorded a liability related to this indemnity.

Midwest Generation entered into a supplemental agreement with Commonwealth Edison and Exelon Generation on February 20, 2003 to resolve a dispute regarding interpretation of its reimbursement obligation for asbestos claims under the environmental indemnities set forth in the Asset Sale Agreement. Under this supplemental agreement, Midwest Generation agreed to reimburse Commonwealth Edison and Exelon Generation for 50% of specific asbestos claims pending as of February 2003 and related expenses less recovery of insurance costs, and agreed to a sharing arrangement for liabilities and expenses associated with future asbestos-related claims as specified in the agreement. As a general matter, Commonwealth Edison and Midwest Generation apportion responsibility for future asbestos-related claims based upon the number of exposure sites that are Commonwealth Edison locations or Midwest Generation locations. The obligations under this agreement are not subject to a maximum liability. The supplemental agreement has a five-year term with an automatic renewal provision (subject to the right of either party to terminate). Payments are made under this indemnity upon tender by Commonwealth Edison of appropriate proof of liability for an asbestos-related settlement, judgment, verdict, or expense. There were approximately 179 cases for which Midwest Generation was potentially liable and that had not been settled and dismissed at June 30, 2007. Midwest Generation had recorded a $64 million liability at June 30, 2007 related to this matter.

The amounts recorded by Midwest Generation for the asbestos-related liability are based upon a number of assumptions. Future events, such as the number of new claims to be filed each year, the average cost of disposing of claims, as well as the numerous uncertainties surrounding asbestos litigation in the United States, could cause the actual costs to be higher or lower than projected.

Indemnity Provided as Part of the Acquisition of the Homer City Facilities

In connection with the acquisition of the Homer City facilities, EME Homer City agreed to indemnify the sellers with respect to specific environmental liabilities before and after the date of sale. Payments would be triggered under this indemnity by a claim from the sellers. EME guaranteed the obligations of EME Homer City. Due to the nature of the obligation under this indemnity provision, it is not subject to a maximum potential liability and does not have an expiration date. EME has not recorded a liability related to this indemnity.

Indemnities Provided under Asset Sale Agreements

The asset sale agreements for the sale of EME's international assets contain indemnities from EME to the purchasers, including indemnification for taxes imposed with respect to operations of the assets prior to the sale and for pre-closing environmental liabilities. Not all indemnities under the asset sale agreements have specific expiration dates. Payments would be triggered under these indemnities by valid claims from the sellers or purchasers, as the case may be. At June 30, 2007, EME had recorded a liability of $94 million related to these matters.

In connection with the sale of various domestic assets, EME has from time to time provided indemnities to the purchasers for taxes imposed with respect to operations of the asset prior to the sale. EME has also provided indemnities to purchasers for items specified in each agreement (for example, specific pre-existing litigation matters and/or environmental conditions). Due to the nature of the obligations under these indemnity agreements, a maximum potential liability cannot be determined. Not all indemnities under the asset sale agreements have specific expiration dates. Payments would be

triggered under these indemnities by valid claims from the sellers or purchasers, as the case may be. EME has not recorded a liability related to these indemnities.

Capacity Indemnification Agreements

EME has guaranteed, jointly and severally with Texaco Inc., the obligations of March Point Cogeneration Company under its project power sales agreements to repay capacity payments to the project's power purchaser in the event that the power sales agreements terminate, March Point Cogeneration Company abandons the project, or the project fails to return to normal operations within a reasonable time after a complete or partial shutdown, during the term of the power sales agreements. In addition, a subsidiary of EME has guaranteed the obligations of Sycamore Cogeneration Company under its project power sales agreement to repay capacity payments to the project's power purchaser in the event that the project unilaterally terminates its performance or reduces its electric power producing capability during the term of the power sales agreement. The obligations under the indemnification agreements as of June 30, 2007, if payment were required, would be $89 million. EME has not recorded a liability related to these indemnities.

Subsidiary Guarantee for Performance of Unconsolidated Affiliate

A subsidiary of EME has guaranteed the obligations of an unconsolidated affiliate to make payments to a third party for power delivered under a fixed-price power sales agreement that expires in August 2007. EME believes there is sufficient cash flow to pay the power suppliers, assuming timely payment by the power purchasers. Due to the nature of this indemnity, a maximum potential liability cannot be determined. To the extent EME's subsidiary would be required to make payments under the guarantee, EME's subsidiary and EME are indemnified by Peabody Energy Corporation pursuant to the 2000 Purchase and Sale Agreement for Citizens Power LLC. EME's subsidiary has not recorded a liability related to this indemnity.

Contingencies

FERC Notice Regarding Investigatory Proceeding against EMMT

At the end of October 2006, EMMT was advised by the enforcement staff at the FERC that it is prepared to recommend that the FERC initiate a formal investigatory proceeding and seek monetary sanctions against EMMT for alleged violation of the Energy Policy Act of 2005 and the FERC's rules regarding market behavior, all with respect to certain bidding practices previously employed by EMMT. EMMT is engaged in discussions with the staff to explore the possibility of resolution of this matter. Should a formal proceeding be commenced, EMMT will be entitled to contest any alleged violations before the FERC and an appropriate court. EME believes that EMMT has complied with all applicable laws and regulations and intends to contest vigorously any allegation of violation. EME cannot predict at this time the outcome of this matter or estimate the possible liability should the outcome be adverse.

Midway-Sunset Cogeneration Company

San Joaquin Energy Company, a wholly owned subsidiary of EME, owns a 50% general partnership interest in Midway-Sunset Cogeneration Company, which owns a 225 MW cogeneration facility near Fellows, California. Midway-Sunset is a party to several proceedings pending at the FERC involving claims for refunds from entities that sold power and related services into the California markets operated by the California Power Exchange and the California Independent System Operator (collectively the California Markets) at prices that were allegedly not just and reasonable, as required by the Federal Power Act.

Midway-Sunset is a party to these proceedings because Midway-Sunset was a seller in the California Markets during 2000 and 2001, both for its own account and on behalf of SCE and PG&E, the utilities to which the majority of Midway-Sunset's power was contracted for sale. As a seller into the California Markets, Midway-Sunset is potentially liable for refunds to purchasers in these markets.

The claims asserted against Midway-Sunset for refunds related to power sold into the California Markets, including power sold on behalf of SCE and PG&E, are estimated to be less than $70 million for all periods under consideration. Midway-Sunset has calculated its potential liability for refunds related to power sold into the California Markets on its own behalf (excluding power sold on behalf of SCE and PG&E) to be approximately $0.5 million for the period October 2, 2000 through June 20, 2001. Midway Sunset's potential liability for sales on its own behalf during the period May 1, 2000 through October 1, 2000 has not yet been calculated but is not expected to be material. These calculations were made in accordance with the methodology approved by the FERC, but it is possible that this methodology will be challenged.

Because Midway-Sunset did not retain any proceeds from power sold into the California Markets on behalf of SCE and PG&E in excess of the amounts to which it was entitled under the pre-existing power sales contracts, but instead passed those proceeds on to the utilities, EME believes that PG&E and SCE are obligated to reimburse Midway-Sunset for any refund liability that it incurs as a result of sales made into the California Markets on their behalf. Midway-Sunset intends vigorously to assert these positions. However, at this time EME cannot predict the outcome of this matter.

Challenges of Illinois Power Procurement Auction Results

EMMT participated successfully in the first Illinois power procurement auction, held in September 2006 according to rules approved by the Illinois Commerce Commission, and entered into two load requirements services contracts through which it is delivering electricity, capacity and specified ancillary, transmission and load following services necessary to serve a portion of Commonwealth Edison's residential and small commercial customer load, using contracted supply from Midwest Generation.

EME believes that EMMT's actions in regard to the Illinois auction were appropriate and lawful and intends to defend vigorously all of the matters described below. However, at this time EME cannot predict the outcome of these matters.

FERC Complaint—

On March 16, 2007, the Office of the Attorney General for the State of Illinois filed a complaint at the FERC alleging that the prices resulting from the Illinois auction resulted in unjust and unreasonable rates under the Federal Power Act and that participating wholesale sellers in the Illinois auction had colluded and manipulated the results of the auction. All successful participants in the Illinois auction, including EMMT, were named as respondents. The Office of the Attorney General asked the FERC to order refunds and to revoke the respondents' market-based rate pricing authority. On July 24, 2007, Midwest Generation and EMMT, along with other power generation companies and utilities, entered into a settlement with the Illinois Attorney General. The settlement is subject to enacting legislation. See Note 10—Subsequent Event for further discussion.

Class Action Lawsuits—

ratepayers in Illinois, against Commonwealth Edison, Ameren, and all of the successful participants in the Illinois auction, including EMMT. The lawsuit alleges that the defendants, including EMMT, colluded and conspired to manipulate the auction results by price-fixing. The lawsuit seeks unspecified damages. On April 26, 2007, the defendants transferred the complaint to the U.S. District Court for the Northern District of Illinois, Eastern Division. On June 4, 2007, the defendants filed a motion to dismiss the case, which remains pending.

On March 30, 2007, David Schafer, Tim Perry, Pat Martin and Michael Murray, individually and on behalf of an alleged class of similarly situated electric ratepayers in Illinois, filed a complaint in the Circuit Court of Cook County, Illinois, against Commonwealth Edison, Ameren, and all of the successful participants in the Illinois auction, including EMMT. EMMT has not been formally served in the case. The lawsuit alleges that the defendants, including EMMT, colluded and conspired to manipulate the auction results by price-fixing. The lawsuit seeks unspecified damages. On April 26, 2007, the defendants transferred the complaint to the U.S. District Court for the Northern District of Illinois, Eastern Division. On June 4, 2007, the defendants filed a motion to dismiss the case, which remains pending.

Midwest Generation Potential Environmental Proceeding

On July 31, 2007, the US EPA issued a NOV to Midwest Generation and Commonwealth Edison. In the NOV, the US EPA alleges that, beginning in the early 1990's and into 2003, Midwest Generation or Commonwealth Edison performed construction projects at six Illinois coal-fired electric generating stations in violation of the Prevention of Significant Deterioration requirements and of the New Source Performance Standards of the Clean Air Act, including alleged requirements to obtain a construction permit and to install Best Available Control Technology at the time of the projects. The US EPA also alleges that Midwest Generation and Commonwealth Edison violated certain operating permit requirements under Title V of the Clean Air Act. Finally, the US EPA alleges violations of certain opacity and particulate matter standards at the Illinois Plants. The US EPA has invited Midwest Generation and Commonwealth Edison to meet with the US EPA by August 30, 2007 to discuss the alleged violations. Midwest Generation is investigating the claims made by the US EPA in the NOV and potential responses and cannot predict at this time what effect this matter may have on its facilities, its results of operations or financial position.

Litigation

EME experiences other routine litigation in the normal course of its business. None of such pending routine litigation is expected to have a material adverse effect on EME's consolidated financial position or results of operations.

Environmental Matters and Regulations

The construction and operation of power plants are subject to environmental regulation by federal, state and local authorities. EME believes that it is in substantial compliance with existing environmental regulatory requirements. Typically, environmental laws and regulations require a lengthy and complex process for obtaining licenses, permits and approvals prior to construction, operation or modification of a project or generating facility. Meeting all the necessary requirements can delay or sometimes prevent the completion of a proposed project, as well as require extensive modifications to existing projects, which may involve significant capital expenditures. If EME fails to comply with applicable environmental laws, it may be subject to injunctive relief or penalties and fines imposed by regulatory authorities.

With respect to EME's potential liabilities arising under CERCLA or similar laws for the investigation and remediation of contaminated property, EME accrues a liability to the extent the costs are probable and can be reasonably estimated. Midwest Generation had accrued approximately $4 million at June 30, 2007 for estimated environmental investigation and remediation costs for the Illinois Plants. This estimate is based upon the number of sites, the scope of work and the estimated costs for environmental activity where such expenditures could be reasonably estimated. Future estimated costs may vary based on changes in regulations or requirements of federal, state, or local governmental agencies, changes in technology, and actual costs of disposal. In addition, future remediation costs will be affected by the nature and extent of contamination discovered at the sites that requires remediation. Given the prior history of the operations at its facilities, EME cannot be certain that the existence or extent of all contamination at its sites has been fully identified. However, based on available information, management believes that future costs in excess of the amounts disclosed on all known and quantifiable environmental contingencies will not be material to EME's financial position. See "Note 12. Commitments and Contingencies—Environmental Matters and Regulations" in EME's financial statements included in its annual report on Form 10-K for the year ended December 31, 2006 for a more complete discussion of EME's environmental contingencies.

Note 9. Supplemental Statements of Cash Flows Information

		Six Months Ended June 30,
		2007		2006
		(in millions)
Cash paid
	Interest (net of amount capitalized)	$	127	$	163
	Income taxes		152		168
	Cash payments under plant operating leases		200		199
Details of assets acquired
	Fair value of assets acquired	$	29	$	29
	Liabilities assumed		—		—

During the first six months of 2007, EME accrued $19 million in connection with the purchase price of wind projects acquired in March 2007 due upon completion of construction. EME subsequently paid $2 million towards the purchase price of the Mountain Wind I project during the second quarter of 2007. During the first six months of 2006, EME accrued $11 million in connection with the purchase price of the Wildorado wind project paid upon completion of the project in April 2007. Also in 2006, EME received a capital contribution of $76 million in the form of ownership interests in a portfolio of wind projects and a small biomass project.

Note 10. Subsequent Event

Illinois Settlement

2007, but has not yet been signed by the Governor of Illinois. No assurance can be given that the terms of the settlement agreement will be implemented as contemplated or that the legislation necessary for the settlement to become effective will be signed by the Governor of Illinois.

As part of the settlement, Midwest Generation has agreed to pay $25 million over three years toward approximately $1 billion in utility customer rate relief and startup costs of the new Illinois Power Agency. The remainder is to be funded by subsidiaries of Exelon Corporation, subsidiaries of Ameren, Dynegy Holdings Inc., and Mid-American Energy Company. Also as part of the settlement, the Illinois Attorney General has agreed to file motions to dismiss auction-related complaints filed at the FERC, the Illinois Commerce Commission and in the Illinois courts.

Subject to the foregoing, Midwest Generation plans to make a payment of $7.5 million within ten business days after the settlement becomes effective (or on such later date as the Illinois Attorney General may specify in writing), followed by monthly payments of $750,000 beginning in January 2008 and continuing until the total commitment has been funded. These payments are non-refundable; however, Midwest Generation's obligations to make the monthly payments will cease if, at any time prior to December 2009, as further described in the rate relief package and related agreements, Illinois imposes an electric rate freeze or an additional tax on generators.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This MD&A contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect EME's current expectations and projections about future events based on EME's knowledge of present facts and circumstances and assumptions about future events and include any statement that does not directly relate to a historical or current fact. Other information distributed by EME that is incorporated in this report, or that refers to or incorporates this report, may also contain forward-looking statements. In this quarterly report on Form 10-Q, the words "expects," "believes," "anticipates," "estimates," "projects," "intends," "plans," "probable," "may," "will," "could," "would," "should," and variations of such words and similar expressions, or discussions of strategy or plans, are intended to identify forward-looking statements. Such statements necessarily involve risks and uncertainties that could cause actual results to differ materially from those anticipated. Some of the risks, uncertainties and other important factors that could cause results to differ, or that otherwise could impact EME or its subsidiaries, include but are not limited to:

•: supply and demand for electric capacity and energy, and the resulting prices and dispatch volumes, in the wholesale markets to which EME's generating units have access;
•: the cost and availability of coal, natural gas, and fuel oil, and associated transportation;
•: market volatility and other market conditions that could increase EME's obligations to post collateral beyond the amounts currently expected, and the potential effect of such conditions on the ability of EME and its subsidiaries to provide sufficient collateral in support of their hedging activities and purchases of fuel;
•: the cost and availability of emission credits or allowances;
•: transmission congestion in and to each market area and the resulting differences in prices between delivery points;
•: governmental, statutory, regulatory or administrative changes or initiatives affecting EME or the electricity industry generally, including the market structure rules applicable to each market;
•: environmental regulations that could require additional expenditures or otherwise affect EME's cost and manner of doing business;
•: the ability of EME to successfully implement its business strategy, including development projects and future acquisitions;
•: the extent of additional supplies of capacity, energy and ancillary services from current competitors or new market entrants, including the development of new generation facilities and technologies that may be able to produce electricity at a lower cost than EME's generating facilities and/or increased access by competitors to EME's markets as a result of transmission upgrades;
•: the ability to EME to borrow funds and access capital markets on favorable terms;
•: the difficulty of predicting wholesale prices, transmission congestion, energy demand, and other aspects of the complex and volatile markets in which EME and its subsidiaries participate;
•: operating risks, including equipment failure, availability, heat rate, output and availability and cost of spare parts and repairs;
•: project development risks, including those related to siting, financing, construction, permitting, and governmental approvals;
•: effects of legal proceedings, changes in or interpretations of tax laws, rates or policies, and changes in accounting standards;

•: general political, economic and business conditions;
•: weather conditions, natural disasters and other unforeseen events; and
•: EME's continued participation and the continued participation by EME's subsidiaries in tax-allocation and payment agreements with EME's respective affiliates.

Additional information about risks and uncertainties, including more detail about the factors described above, is contained throughout this MD&A and in the "Risk Factors" section included in Part I, Item 1A of EME's Annual Report on Form 10-K for the year ended December 31, 2006. Readers are urged to read this entire quarterly report on Form 10-Q and carefully consider the risks, uncertainties and other factors that affect EME's business. Forward-looking statements speak only as of the date they are made, and EME is not obligated to publicly update or revise forward-looking statements. Readers should review future reports filed by EME with the Securities and Exchange Commission.

This MD&A discusses material changes in the results of operations, financial condition and other developments of EME since December 31, 2006, and as compared to the second quarter of 2006 and six months ended June 30, 2006. This discussion presumes that the reader has read or has access to the MD&A included in Item 7 of EME's annual report on Form 10-K for the year ended December 31, 2006.

This MD&A is presented in four sections:

		Page
Management's Overview; Critical Accounting Policies		23
Results of Operations		27
Liquidity and Capital Resources		36
Market Risk Exposures		46

MANAGEMENT'S OVERVIEW; CRITICAL ACCOUNTING POLICIES

Management's Overview

Results of Operations

Net income (loss) is comprised of the following components:

	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007		2006
	(in millions)
Income (loss) from continuing operations	$	(19	)	$	(43	)	$	134	$	32
Income from discontinued operations		2			4			5		77

Net Income (Loss)	$	(17	)	$	(39	)	$	139	$	109

Income (loss) from continuing operations during the second quarters of 2007 and 2006, and six months ended June 30, 2007 and 2006 included a $98 million and $88 million, respectively, loss on early extinguishment of debt. EME's improvement in income (loss) from continuing operations during the second quarter of 2007 and six months ended June 30, 2007 was primarily attributable to an increase in energy margins at the Illinois Plants driven by higher generation and energy prices. The year to date improvement was also due to higher wholesale energy margins at the Homer City facilities mainly due to higher energy prices and generation.

EME's income from discontinued operations during the second quarter of 2006 and six months ended June 30, 2007 and 2006, net of tax, was primarily related to distributions authorized by the liquidators of the Lakeland power project. The activities of the Lakeland liquidator are near completion and substantially all the distributions from the Lakeland project have been made.

Business Development

EME has undertaken a number of activities in 2007 with respect to wind projects, including the following:

•: In March 2007, EME acquired three wind projects in development in Utah and Wyoming totaling 212 MW. One of the projects, the 61 MW Mountain Wind I project, commenced construction during the second quarter of 2007 with completion scheduled during the first quarter of 2008. The estimated capital cost of this project, excluding capitalized interest, is $104 million. The project plans to sell electricity to PacifiCorp under a 20-year power purchase agreement. The other two projects are in preliminary stages of development.
•: In March 2007, EME acquired the remaining membership interests in two wind projects, totaling 67 MW, under development in Pennsylvania. Construction of these projects commenced during the second quarter of 2007 with completion scheduled during the first quarter of 2008. The estimated capital cost, excluding capitalized interest, is $121 million. The 29 MW Forward project plans to sell electricity to Constellation New Energy under a 10-year power purchase agreement. The 38 MW Lookout project plans to sell electricity into PJM as a merchant wind generator.
•: In March 2007, EME purchased from Mitsubishi Power Systems Americas, Inc. wind turbines and related services and warranties for an aggregate purchase price of approximately $256 million with deliveries scheduled for 2008 and 2009. EME also made a reservation fee payment of $8 million for additional turbines for 2009 delivery. In June 2007, EME exercised its option to acquire 83 turbines (totaling 199 MW) for 2008 and 2009 delivery. The aggregate purchase price for these turbines and related services and warranties was approximately $248 million (a portion of which is denominated in Japanese yen and subject to exchange rate fluctuations).
•: In April 2007, EME acquired six projects in development in Texas and Oklahoma totaling 700 MW. These projects are in various stages of development with target completion dates of 2008 through 2010. The purchase price for these projects is comprised of an initial payment and subsequent payments tied to milestones and adjustments based on EME's projected internal rate of return in individual projects. Completion of development of these projects is dependent on a number of items, including, among other things, obtaining power sales agreements, and in certain cases, permits and interconnection agreements.
•: In June 2007, EME acquired a 99.9% interest in a 20 MW wind project under development in Minnesota. Construction of this project commenced in May 2007 with completion scheduled during the first quarter of 2008. The estimated capital cost, excluding capitalized interest, is $33 million. The project plans to sell electricity to Missouri River Energy Services under a 20-year power purchase agreement.
•: In June 2007, EME contracted with Suzlon Wind Energy Corporation for the purchase of 300 wind turbines (totaling 630 MW) together with related services and warranties, for an aggregate purchase price of approximately $698 million with deliveries scheduled for 2008 and 2009.

As of June 30, 2007, EME had a development pipeline of potential wind projects with an installed capacity of approximately 3,100 MW (the development pipeline represents potential projects with respect to which EME either owns the project rights or has exclusive negotiation rights).

PJM Reliability Pricing Model

In April 2007, PJM completed the first capacity auction under the PJM Reliability Pricing Model. EME participated in the auction for the period June 1, 2007 through May 31, 2008. After accounting for previous forward sales of capacity, EMMT sold net 2,628 MW of capacity from the Illinois Plants and net 786 MW of capacity from the Homer City facilities. The Illinois Plants and the Homer City facilities are located in the "Rest of Market" area which had a clearing price of $40.80 per MW-day.

In July 2007, EME participated in the auction for the period June 1, 2008 through May 31, 2009. After accounting for previous forward sales of capacity, EMMT sold net 3,283 MW of capacity from the Illinois Plants and net 820 MW of capacity from the Homer City facilities. The Illinois Plants and the Homer City facilities are located in the "Rest of Market" area which had a clearing price of $111.92 per MW-day.

For further discussion regarding the PJM and recent auctions, see "Market Risk Exposures—Commodity Price Risk—Capacity Price Risk."

Illinois Settlement

On July 24, 2007, Midwest Generation and its affiliate EMMT, along with other power generation companies and utilities, entered into a settlement agreement with the Illinois Attorney General. The settlement is subject to the passage of legislation which if enacted and signed by the Governor of Illinois will, among other things, establish a new Illinois Power Agency to manage future power procurement for Commonwealth Edison and Ameren (beginning with the planning year June 1, 2009 through May 31, 2010). The settlement legislation was passed by the Illinois legislature on July 26, 2007, but has not yet been signed by the Governor of Illinois. No assurance can be given that the terms of the settlement agreement will be implemented as contemplated or that the legislation necessary for the settlement to become effective will be signed by the Governor of Illinois.

Refinancing

Senior Notes Offering

•: purchase substantially all of EME's outstanding 7.73% senior notes due 2009,
•: purchase substantially all of Midwest Generation's 8.75% second priority senior secured notes due 2034,
•: repay the outstanding balance of Midwest Generation's senior secured term loan facility ($327.8 million), and
•: make a dividend payment of $899 million to MEHC which enabled MEHC to purchase substantially all of its 13.5% senior secured notes due 2008.

Redemption of MEHC Senior Secured Notes

The refinancing activities improved EME's overall liquidity, operating flexibility and ability to capitalize on growth opportunities. EME recorded a total pre-tax loss of approximately $160 million (approximately $98 million after tax) on early extinguishment of debt during the second quarter of 2007.

Credit Agreement Amendments

During the second quarter of 2007, EME amended its existing $500 million secured credit facility, increasing the total borrowings available thereunder to $600 million, and Midwest Generation amended and restated its existing $500 million senior secured working capital facility. The changes to the senior secured working capital facility included a reduction in the interest rate, a longer maturity date, and fewer restrictive covenants. Midwest Generation intends to use its secured working capital facility to provide credit support for its hedging activities and for general working capital purposes. Midwest Generation may also support its hedging activities by granting first or second priority liens to eligible hedge counterparties.

ERP Initiative

Progress continued during the first six months of 2007 on preparation for the installation of an enterprise resources planning application from SAP. Procurement and material management systems were implemented for three of the Illinois Plants on July 2, 2007, as well as the EME financial systems. Implementation of human resources systems is scheduled for the second quarter of 2008 as part of an Edison International enterprise-wide project.

Critical Accounting Policies

For a discussion of EME's critical accounting policies, refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates" of EME's annual report on Form 10-K for the year ended December 31, 2006.

RESULTS OF OPERATIONS

Introduction

This section discusses operating results for the second quarters of 2007 and 2006 and six months ended June 30, 2007 and 2006 under the following headings:

		Page
Results of Continuing Operations		27
Results of Discontinued Operations		35
New Accounting Pronouncements		35

Results of Continuing Operations

Overview

EME operates in one line of business, independent power production. Operating revenues are primarily derived from the sale of power generated from the Illinois Plants and the Homer City facilities. Intercompany interest expense and income between EME and its consolidated subsidiaries have been eliminated in the following project results, except as described below with respect to loans provided to EME from a wholly owned subsidiary, Midwest Generation, and loans from Midwest Generation to EMMT for margining. Equity in income from unconsolidated affiliates relates to energy projects accounted for under the equity method. EME recognizes its proportional share of the income or loss of such entities.

EME uses the words "earnings" or "losses" in this section to describe income or loss from continuing operations before income taxes.

The following section provides a summary of the operating results for the second quarters of 2007 and 2006 and six months ended June 30, 2007 and 2006 together with discussions of the contributions by specific projects and of other significant factors affecting these results.

		Three Months Ended June 30,						Six Months Ended June 30,
		2007			2006			2007			2006
		(in millions)
Project Earnings (Losses) Before Income Taxes(1)
	*Consolidated operations*
	Illinois Plants	$	88		$	25		$	277		$	152
	Homer City		38			35			102			33
	Energy Trading(2)		36			26			62			55
	San Juan Mesa		1			1			3			5
	Gain on sale of assets		—			—			—			4
	Storm Lake		2			3			4			3
	Wildorado		2			—			2			—
	Other		1			(1	)		3			—
	*Unconsolidated affiliates*
	Big 4 projects		45			32			63			55
	Sunrise		6			5			4			3
	Doga		10			5			14			4
	Other		4			2			9			3

			233			133			543			317
	Corporate interest income		18			20			38			37
	Corporate interest expense		(81	)		(64	)		(136	)		(130	)
	Corporate administrative and general		(36	)		(25	)		(68	)		(49	)
	Loss on early extinguishment of debt		(160	)		(143	)		(160	)		(143	)
	Other income (expense), net		(2	)		—			(3	)		10

		$	(28	)	$	(79	)	$	214		$	42

(1): Project earnings are equal to income from continuing operations before income taxes, except with respect to wind projects, which also include production tax credits. Wind project earnings, including the production tax credits set forth in the table below, were $6 million and $4 million for the second quarters of 2007 and 2006, respectively, and $11 million and $9 million for the six months ended June 30, 2007 and 2006, respectively. The project earnings for the wind projects include $7 million and $4 million of production tax credits for the second quarters of 2007 and 2006, respectively, and $12 million and $9 million for the six months ended June 30, 2007 and 2006, respectively. Production tax credits are recognized as wind energy is generated based upon a per kilowatt-hour rate prescribed in applicable federal and state statutes. Under GAAP, production tax credits generated by the wind projects are recorded as a reduction in income taxes. Accordingly, project earnings (losses) represent a non-GAAP performance measure which may not be comparable to those of other companies. Management believes that inclusion of production tax credits in project earnings for wind projects is more meaningful for investors as federal and state subsidies are an integral part of the economics of these projects. The following table reconciles the total project earnings as shown above with income from continuing operations before income taxes under GAAP:

	Three Months Ended June 30,						Six Months Ended June 30
	2007			2006			2007			2006
	(in millions)
Project earnings (losses)	$	(28	)	$	(79	)	$	214		$	42
Less: Production tax credits		(7	)		(4	)		(12	)		(9	)

Income (loss) from continuing operations before income taxes	$	(35	)	$	(83	)	$	202		$	33

(2): Income from energy trading represents the gains recognized from price changes related to contracts for electricity, fuels and transmission congestion. The overhead cost of energy trading is included in administrative and general expenses.

Earnings from Consolidated Operations

Illinois Plants

			Three Months Ended June 30,						Six Months Ended June 30,
			2007			2006			2007			2006
			(in millions)
Operating Revenues			$	334		$	266		$	765		$	612
Operating Expenses
	Fuel			85			72			194			166
	Gain on sale of emission allowances(1)			—			—			(4	)		(6	)
	Plant operations			127			115			216			196
	Plant operating leases			18			18			37			37
	Depreciation and amortization			25			25			50			50
	Loss from disposal of assets			1			—			1			—
	Administrative and general			6			7			11			12

	Total operating expenses			262			237			505			455

Operating Income				72			29			260			157

Other Income (Expense)
	Interest income on note receivable from EME			28			28			56			56
	Interest expense and other			(12	)		(32	)		(39	)		(61	)

	Total other income (expense)			16			(4	)		17			(5	)

Income Before Taxes			$	88		$	25		$	277		$	152

Statistics
	Generation (in GWh)
		Energy only contracts		4,445			5,493			11,143			12,738
		Load requirements services contracts(2)		1,681			—			3,613			—

		Total		6,126			5,493			14,756			12,738
	Aggregate plant performance
		Equivalent availability(3)		61.5%			66.0%			74.7%			76.4%
		Capacity factor(4)		50.0%			44.8%			60.5%			52.3%
		Load factor(5)		81.3%			67.9%			81.1%			68.4%
		Forced outage rate(6)		6.0%			7.7%			6.0%			5.0%
	Average realized price/MWh
		Energy only contracts(7)	$	49.04		$	46.70		$	49.06		$	45.85
		Load requirements services contracts(8)	$	62.58		$	—		$	62.21		$	—
	Capacity revenue only (in millions)		$	4		$	7		$	6		$	13
	Average fuel costs/MWh		$	13.82		$	13.42		$	13.13		$	13.14

(1): The Illinois Plants sold excess SO₂ emission allowances to the Homer City facilities at fair market value. Sales to the Homer City facilities were $10 million for both the quarter ended and six months ended June 30, 2007. These sales reduced operating expenses. EME eliminated $8 million of intercompany profit during the second quarter of 2007 on emission allowances sold but not yet used by the Homer City facilities at June 30, 2007. In addition, EME recorded $4 million and $6 million of intercompany profit during the first quarters of 2007 and 2006, respectively, on emission allowances sold by the

Illinois Plants to the Homer City facilities in the fourth quarters of 2006 and 2005, respectively, but not used by the Homer City facilities until the first quarters of 2007 and 2006, respectively.

(2): Represents two load requirements services contracts, awarded as part of an Illinois auction, with Commonwealth Edison that commenced on January 1, 2007.
(3): The equivalent availability factor is defined as the number of MWh the coal units are available to generate electricity divided by the product of the capacity of the coal units (in MW) and the number of hours in the period. Equivalent availability reflects the impact of the unit's inability to achieve full load, referred to as derating, as well as outages which result in a complete unit shutdown. The coal units are not available during periods of planned and unplanned maintenance.
(4): The capacity factor is defined as the actual number of MWh generated by the coal plants divided by the product of the capacity of the coal plants (in MW) and the number of hours in the period.
(5): The load factor is determined by dividing capacity factor by the equivalent availability factor.
(6): Midwest Generation refers to unplanned maintenance as a forced outage.
(7): The average realized energy price reflects the average price at which energy is sold into the market including the effects of hedges, real-time and day-ahead sales and PJM fees and ancillary services. It is determined by dividing (i) operating revenue less unrealized SFAS No. 133 gains (losses) and other non-energy related revenue by (ii) generation. Revenue related to capacity sales are excluded from the calculation of average realized energy price.
(8): The average realized price reflects the contract price for sales to Commonwealth Edison under load requirements services contracts that include energy, capacity and ancillary services. It is determined by dividing (i) contract revenue less PJM operating and ancillary charges by (ii) generation.

Earnings from the Illinois Plants increased $63 million and $125 million for the second quarter of 2007 and six months ended June 30, 2007, respectively, compared to the corresponding periods of 2006. The increases in earnings were primarily due to higher energy revenues resulting from higher generation and average realized energy prices as compared to 2006 and lower interest expense due to the repayment of debt in May 2007. Partially offsetting these increases were higher planned maintenance costs. Earnings for the six months ended June 30, 2007 were also adversely affected by an increase in unrealized losses in 2007 related to hedge contracts described below.

Included in operating revenues were unrealized gains (losses) of $4 million and $1 million for the second quarters of 2007 and 2006, respectively, and $(18) million and $11 million for the six months ended June 30, 2007 and 2006, respectively. Unrealized gains (losses) are primarily due to power contracts that did not qualify for hedge accounting under SFAS No. 133 (sometimes referred to as economic hedges). These energy contracts were entered into to hedge the price risk related to projected sales of power. During 2007, power prices increased, resulting in mark-to-market losses on economic hedges. At June 30, 2007, unrealized losses of $11 million were recognized primarily from economic hedges related to subsequent periods. See "Market Risk Exposures—Commodity Price Risk" for more information regarding forward market prices.

The earnings of the Illinois Plants included interest income of $28 million for both the second quarters of 2007 and 2006 and $56 million for both the six months ended June 30, 2007 and 2006 related to loans to EME. In August 2000, Midwest Generation, which owns or leases the Illinois Plants, entered into a sale-leaseback transaction of the Powerton-Joliet facilities. The proceeds from the sale of these facilities were loaned to EME, which also provided a guarantee of the related lease obligations of Midwest Generation. The Powerton-Joliet sale-leaseback is recorded as an operating lease for accounting purposes.

Homer City

			Three Months Ended June 30,					Six Months Ended June 30,
			2007		2006			2007			2006
			(in millions)
Operating Revenues			$	176	$	151		$	374		$	274
Operating Expenses
	Fuel(1)			68		68			140			129
	Gain on sale of emission allowances(2)			—		—			—			—
	Plant operations			41		28			75			63
	Plant operating leases			26		26			51			51
	Depreciation and amortization			4		4			7			8
	Administrative and general			1		1			2			2

	Total operating expenses			140		127			275			253

Operating Income				36		24			99			21

Other Income (Expense)
	Interest and other income			2		12			4			13
	Interest expense			—		(1	)		(1	)		(1	)

	Total other income			2		11			3			12

Income Before Taxes			$	38	$	35		$	102		$	33

Statistics
	Generation (in GWh)			3,160		2,866			6,453			5,387
	Aggregate plant performance
		Equivalent availability(3)		83.5%		74.3%			85.0%			73.1%
		Capacity factor(4)		76.7%		69.5%			78.7%			65.7%
		Load factor(5)		91.8%		93.6%			92.6%			89.9%
		Forced outage rate(6)		1.8%		19.9%			3.9%			22.8%
	Average realized energy price/MWh(7)		$	54.32	$	47.38		$	56.13		$	48.41
	Capacity revenue only (in millions)		$	7	$	4		$	13		$	6
	Average fuel costs/MWh		$	21.62	$	24.13		$	21.72		$	24.03

(1): Included in fuel costs were $6 million and $9 million during the second quarters of 2007 and 2006, respectively, and $12 million and $21 million during the six months ended June 30, 2007 and 2006, respectively, related to the net cost of SO₂ emission allowances. See "Market Risk Exposures—Commodity Price Risk—Emission Allowances Price Risk" for more information regarding the price of SO₂ allowances.
(2): The Homer City facilities sold excess NO_X emission allowances to the Illinois Plants at fair market value. Sales to the Illinois Plants were $6 million in the first quarter of 2006. These sales reduced operating expenses. EME eliminated the intercompany transaction for emission allowances sold but not yet used by the Illinois Plants at June 30, 2006.
(3): The equivalent availability factor is defined as the number of MWh the coal units are available to generate electricity divided by the product of the capacity of the coal units (in MW) and the number of hours in the period. Equivalent availability reflects the impact of the unit's inability to achieve full load, referred to as derating, as well as outages which result in a complete unit shutdown. The coal units are not available during periods of planned and unplanned maintenance.
(4): The capacity factor is defined as the actual number of MWh generated by the coal plants divided by the product of the capacity of the coal plants (in MW) and the number of hours in the period.
(5): The load factor is determined by dividing capacity factor by the equivalent availability factor.
(6): Homer City refers to unplanned maintenance as a forced outage.

(7): The average realized energy price reflects the average price at which energy is sold into the market including the effects of hedges, real-time and day-ahead sales and PJM fees and ancillary services. It is determined by dividing (i) operating revenue less unrealized SFAS No. 133 gains (losses) and other non-energy related revenue by (ii) total generation.

Earnings from Homer City increased $3 million and $69 million for the second quarter of 2007 and six months ended June 30, 2007, respectively, compared to the corresponding periods of 2006. The increases in earnings were primarily attributable to higher generation and average realized energy prices and lower SO₂ emission allowances as compared to 2006. Partially offsetting these increases were higher maintenance costs in 2007 related to the planned outage at Unit 2 of the Homer City facilities and estimated insurance recovery of approximately $11 million related to the Unit 3 outage recorded during the second quarter of 2006 reflected in other income (expense), net in EME's consolidated statements of income (loss). The Unit 3 outage reduced the amount of generation during the six-month period ended June 30, 2006.

Included in operating revenues were unrealized gains (losses) from hedging activities of $(3) million and $9 million for the second quarters of 2007 and 2006, respectively, and $(2) million and $4 million for six months ended June 30, 2007 and 2006, respectively. Unrealized gains (losses) were primarily attributable to the ineffective portion of forward and futures contracts which are derivatives that qualify as cash flow hedges under SFAS No. 133. The ineffective portion of hedge contracts at Homer City was primarily attributable to changes in the difference between energy prices at PJM West Hub (the settlement point under forward contracts) and the energy prices at the Homer City busbar (the delivery point where power generated by the Homer City facilities is delivered into the transmission system). At June 30, 2007, unrealized losses of $13 million were recognized primarily from the ineffective portion of cash flow hedges related to subsequent periods. See "Market Risk Exposures—Commodity Price Risk" for more information regarding forward market prices.

Homer City Unit 3 Outage—

On January 29, 2006, the main power transformer on Unit 3 of the Homer City facilities failed resulting in a suspension of operations at this unit. Homer City secured a replacement transformer and Unit 3 returned to service on May 5, 2006. The main transformer failure resulted in claims under Homer City's property and business interruption insurance policies. At June 30, 2007, Homer City had recorded a $13 million receivable related to these claims. Resolution of the claims is subject to a number of uncertainties, including computations of the lost profit during the outage period.

Seasonal Disclosure

Due to higher electric demand resulting from warmer weather during the summer months and cold weather during the winter months, electric revenues from the Illinois Plants and the Homer City facilities vary substantially on a seasonal basis. In addition, maintenance outages generally are scheduled during periods of lower projected electric demand (spring and fall) further reducing generation and increasing major maintenance costs which are recorded as an expense when incurred. Accordingly, earnings from the Illinois Plants and the Homer City facilities are seasonal and have significant variability from quarter to quarter. Seasonal fluctuations may also be affected by changes in market prices. See "Market Risk Exposures—Commodity Price Risk—Energy Price Risk Affecting Sales from the Illinois Plants" and "—Energy Price Risk Affecting Sales from the Homer City Facilities" for further discussion regarding market prices.

Energy Trading

EME seeks to generate profit by utilizing its subsidiary, EMMT, to engage in trading activities in those markets in which it is active as a result of its management of the merchant power plants of Midwest Generation and Homer City. EMMT trades power, fuel and transmission congestion primarily in the eastern power grid using products available over the counter, through exchanges and from ISOs. Earnings from energy trading activities increased $10 million and $7 million for the second quarter of 2007 and six months ended June 30, 2007, respectively, compared to the corresponding periods of 2006. The increase in earnings from energy trading activities was partially attributable to gains on capacity transactions.

San Juan Mesa

Earnings from the San Juan Mesa wind project decreased $2 million for the six months ended June 30, 2007, compared to the corresponding period of 2006. The year-to-date decline in earnings was primarily due to a decrease in EME's ownership interest of the San Juan Mesa wind project to 75% from 100% in March 2006. During the first quarter of 2006, EME completed the sale of 25% of its ownership interest in the San Juan Mesa wind project to Citi Renewable Investments I LLC, a wholly owned subsidiary of Citicorp North America, Inc. Proceeds from the sale were $43 million. EME recorded a pre-tax gain on the sale of approximately $4 million during the first quarter of 2006.

Wildorado

Earnings from the Wildorado wind project were $2 million for both the second quarter of 2007 and six months ended June 30, 2007. EME had no comparable results from the Wildorado wind project in 2006. Commercial operation of the Wildorado wind project commenced during April 2007.

Earnings from Unconsolidated Affiliates

Big 4 Projects

Earnings from the Big 4 projects increased $13 million and $8 million for the second quarter of 2007 and six months ended June 30, 2007, respectively, compared to the corresponding periods of 2006. The increases in earnings were primarily due to payments received in settlement of claims related to the natural gas purchase contracts during the second quarter of 2007 and a planned outage at the Sycamore Cogeneration plant during the second quarter of 2006. Partially offsetting these increases were lower volumes sold in 2007 for the Kern River project.

The earnings from the Big 4 projects included interest expense from Edison Mission Energy Funding of $1 million for both the second quarters of 2007 and 2006 and $2 million and $3 million for the six months ended June 30, 2007 and 2006, respectively.

Doga

Earnings from the Doga project increased $5 million and $10 million for the second quarter of 2007 and six months ended June 30, 2007, respectively, compared to the corresponding periods of 2006. The increases in earnings were primarily due to the recognition of distributions received from the Doga project. Effective March 31, 2007, EME accounted for its ownership in the Doga project on the cost method (earnings are recognized as cash is distributed from the project).

Other

Earnings from other unconsolidated affiliates increased $2 million and $6 million for the second quarter of 2007 and six months ended June 30, 2007, respectively, compared to the corresponding periods of 2006. The 2007 increases in earnings were attributable to an increase in earnings from the Westside projects primarily due to payments received in settlement of claims related to the natural gas purchase contracts and lower maintenance expense, partially offset by lower steam and energy prices.

Seasonal Disclosure

EME's third quarter equity in income from its energy projects is materially higher than equity in income related to other quarters of the year due to warmer weather during the summer months and because a number of EME's energy projects located on the West Coast have power sales contracts that provide for higher payments during the summer months.

Corporate Interest Expense

	Three Months Ended June 30,				Six Months Ended June 30,
	2007		2006		2007		2006
	(in millions)
Interest expense to third parties	$	53	$	36	$	79	$	74
Interest expense to Midwest Generation(1)		28		28		57		56

Total corporate interest expense	$	81	$	64	$	136	$	130

(1): Includes interest expense of EMMT related to loans from Midwest Generation for margining.

Interest Expense to Third Parties

EME's interest expense to third parties increased $17 million and $5 million for the second quarter of 2007 and six months ended June 30, 2007, respectively, compared to the corresponding periods of 2006. The increase was primarily attributable to $2.7 billion of new debt entered into by EME as part of its refinancing activities in May 2007. Partially offsetting this increase was an increase in capitalized interest of $4 million and $10 million for the second quarter of 2007 and six months ended June 30, 2007, respectively, due to wind projects under construction.

Corporate Administrative and General Expenses

Administrative and general expenses increased $11 million and $19 million for the second quarter of 2007 and six months ended June 30, 2007, respectively, compared to the corresponding periods of 2006. The increase was primarily due to higher development costs incurred in 2007 (mostly related to wind projects) and higher performance-based compensation. See "Management's Overview; Critical Accounting Policies—Management's Overview."

Loss on Early Extinguishment of Debt

Loss on early extinguishment of debt was $160 million for the second quarter of 2007 and six months ended June 30, 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.

Loss on early extinguishment of debt was $143 million for the second quarter of 2006 and six months ended June 30, 2006 related to the early repayment of EME's 10% senior notes due August 15, 2008 and 9.875% senior notes due April 15, 2011.

Other Income (Expense), Net

Other income (expense), net decreased $2 million and $13 million for the second quarter of 2007 and six months ended June 30, 2007, respectively, compared to the corresponding periods of 2006. The 2007 year-to-date decrease was partially attributable to an $8 million gain related to receipt of shares from Mirant Corporation from settlement of a claim recorded during the first quarter of 2006.

Income Taxes

EME's income tax provision from continuing operations was $68 million and $1 million for the six months ended June 30, 2007 and 2006, respectively. Income tax benefits are recognized pursuant to a tax-allocation agreement with Edison International. See "Liquidity and Capital Resources—EME's Liquidity as a Holding Company—Intercompany Tax-Allocation Agreement." During the six months ended June 30, 2007 and 2006, EME recognized $12 million and $9 million, respectively, of production tax credits related to wind projects and $7 million and $3 million, respectively, related to estimated state income tax benefits allocated from Edison International.

Results of Discontinued Operations

Income from discontinued operations, net of tax, was $2 million and $4 million for the second quarters of 2007 and 2006, respectively, and $5 million and $77 million during the first six months of 2007 and 2006, respectively, largely attributable to distributions received from the Lakeland project, discussed below.

Lakeland Project

EME previously owned a 220 MW power plant located in the United Kingdom, referred to as the Lakeland project. An administrative receiver was appointed in 2002 as a result of default by the project's counterparty, a subsidiary of TXU Europe Group plc. Following a claim for termination of the power sales agreement, the Lakeland project received a settlement of £116 million (approximately $217 million). EME is entitled to receive the remaining amount of the settlement after payment of creditor claims. As creditor claims have been settled, EME received payments of £61 million (approximately $106 million) in the first quarter of 2006, £9 million (approximately $16 million) in April 2006 and £4 million (approximately $8 million) in January 2007. The after-tax income attributable to the Lakeland project was none and $10 million for the second quarters of 2007 and 2006, respectively, and $5 million and $83 million for the six months ended June 30, 2007 and 2006, respectively. Beginning in 2002, EME reported the Lakeland project as discontinued operations and accounts for its ownership of Lakeland Power on the cost method (earnings are recognized as cash is distributed from the project).

New Accounting Pronouncements

For a discussion of new accounting pronouncements affecting EME, see "Edison Mission Energy and Subsidiaries Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—New Accounting Pronouncements."

LIQUIDITY AND CAPITAL RESOURCES

Introduction

The following discussion of liquidity and capital resources is organized in the following sections:

		Page
EME's Liquidity		36
Capital Expenditures		37
EME's Historical Consolidated Cash Flow		38
Credit Ratings		39
Margin, Collateral Deposits and Other Credit Support for Energy Contracts		39
EME's Liquidity as a Holding Company		40
Dividend Restrictions in Major Financings		41
Contractual Obligations and Contingencies		42
Off-Balance Sheet Transactions		44
Environmental Matters and Regulations		44

For a complete discussion of these issues, read this quarterly report on Form 10-Q in conjunction with EME's annual report on Form 10-K for the year ended December 31, 2006.

EME's Liquidity

At June 30, 2007, EME and its subsidiaries had cash and cash equivalents and short-term investments of $1.0 billion, EME had a total of $522 million of available borrowing capacity under its $600 million corporate credit facility, and Midwest Generation had a total of $467 million of available borrowing capacity under its $500 million working capital facility. EME's consolidated debt at June 30, 2007 was $4.0 billion. In addition, EME's subsidiaries had $4.0 billion of long-term lease obligations related to the sale-leaseback transactions that are due over periods ranging up to 28 years.

Capital Expenditures

At June 30, 2007, the three-year estimated capital expenditures by EME's subsidiaries related to existing projects, corporate activities and turbine commitments were as follows:

		July through December 2007		2008		2009
		(in millions)
Illinois Plants
	Plant capital expenditures	$	11	$	45	$	26
	Environmental expenditures		25		39		66
Homer City Facilities
	Plant capital expenditures		11		26		20
	Environmental expenditures		6		9		15
Wind and Thermal Projects
	Projects under construction		194		—		—
	Turbine commitments		408		534		426
Corporate capital expenditures			8		7		7

Total		$	663	$	660	$	560

Expenditures for Existing Projects

Plant capital expenditures relate to non-environmental projects such as upgrades to boiler and turbine controls and dust collection/mitigation systems, a spare main power transformer, railroad interconnection and an expansion of a coal cleaning plant refuse site. Environmental expenditures relate to environmental projects such as mercury emission monitoring and control and SCR performance improvements at the Homer City facilities and various projects at the Illinois Plants to achieve specified emissions reductions such as installation of mercury controls. EME plans to finance these expenditures with financings, cash on hand or cash generated from operations. See further discussion regarding these and possible additional capital expenditures, including environmental control equipment at the Homer City facilities, under "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Management's Overview—Business Strategy," "Liquidity and Capital Resources—Environmental Matters and Regulations—Air Quality Regulation—Clean Air Act—Illinois," and "Liquidity and Capital Resources—Environmental Matters and Regulations—Air Quality Regulation—Mercury Regulation" of EME's annual report on Form 10-K for the year ended December 31, 2006.

Expenditures for New Projects

EME expects to make substantial investments in new projects during the next three years. As of June 30, 2007, EME had a development pipeline of potential wind projects with an installed capacity of approximately 3,100 MW (the development pipeline represents potential projects which EME either owns the project rights or has exclusive negotiation rights). Completion of these projects is dependent upon a number of items which may include, depending on the project's status, completion of a power sales agreement, permits, an interconnection agreement or other agreements necessary to start construction. Additional projects may from time to time be added to the development pipeline, and

there is no assurance that the projects included in the development pipeline currently or added in the future will lead to the successful completion of a wind project.

EME's Historical Consolidated Cash Flow

Consolidated Cash Flows from Operating Activities

Cash used in operating activities from continuing operations increased $429 million in the first six months of 2007, compared to the first six months of 2006. The 2007 increase was primarily attributable to an increase of $119 million in required margin and collateral deposits in 2007 for EME's hedging and trading activities, compared to a decrease of $363 million in 2006. This change resulted from an increase in forward market prices in 2007 from 2006. The increase was also due to timing of cash receipts and disbursements related to working capital items. Partially offsetting these increases was higher pre-tax income from continuing operations in 2007 compared to 2006.

Cash provided by operating activities from discontinued operations decreased $77 million in the first six months of 2007, compared to the first six months of 2006. The 2007 decrease reflects higher distributions received in 2006 compared to 2007 from the Lakeland power project. See "Results of Operations—Results of Discontinued Operations—Lakeland Project" for more information regarding these distributions.

Consolidated Cash Flows from Financing Activities

Cash used in financing activities from continuing operations increased $169 million in the first six months of 2007, compared to the first six months of 2006. The 2007 increase was primarily attributable to dividend payments made to MEHC of $925 million in 2007 compared to $12 million in 2006. In May 2007, net proceeds of $2.7 billion were received from EME's issuance of senior notes, which were mostly used to repay $587 million of EME's outstanding senior notes, $999.8 million of Midwest Generation's second priority senior secured notes, $327.8 million of Midwest Generation's senior secured term loan facility. In June 2006, net proceeds of $1 billion were received from EME's issuance of senior notes, which were mostly used to repay $965 million of EME's outstanding senior notes. Tender premiums and related fees paid associated with the foregoing financings were $137 million and $136 million in 2007 and 2006, respectively.

Consolidated Cash Flows from Investing Activities

Cash used in investing activities from continuing operations increased $70 million in the first six months of 2007, compared to the first six months of 2006. The 2007 increase was primarily due to higher capital expenditures and turbine deposits in 2007, compared to 2006, largely related to the wind projects. Mostly offsetting these increases was net maturities and sales of marketable securities of $240 million in the first six months of 2007, compared to net purchases of marketable securities of $76 million in the first six months of 2006. In addition, EME received proceeds of $43 million from the sale of 25% of its ownership interest in the San Juan Mesa project during the first quarter of 2006. EME also paid $11 million and $18 million towards the purchase price of the Wildorado wind project during the second quarter of 2007 and first quarter of 2006, respectively.

Credit Ratings

Overview

Credit ratings for EME, Midwest Generation and EMMT, at June 30, 2007, were as follows:

	Moody's Rating	S&P Rating	Fitch Rating
EME	B1	BB-	BB-
Midwest Generation	Baa3	BB+	BBB-
EMMT	Not Rated	BB-	Not Rated

EME cannot provide assurance that its current credit ratings or the credit ratings of its subsidiaries will remain in effect for any given period of time or that one or more of these ratings will not be lowered. EME notes that these credit ratings are not recommendations to buy, sell or hold its securities and may be revised at any time by a rating agency.

EME does not have any "rating triggers" contained in subsidiary financings that would result in it being required to make equity contributions or provide additional financial support to its subsidiaries.

Credit Rating of EMMT

The Homer City sale-leaseback documents restrict EME Homer City's ability to enter into trading activities, as defined in the documents, with EMMT to sell forward the output of the Homer City facilities if EMMT does not have an investment grade credit rating from S&P or Moody's or, in the absence of those ratings, if it is not rated as investment grade pursuant to EME's internal credit scoring procedures. These documents include a requirement that the counterparty to such transactions, and EME Homer City, if acting as seller to an unaffiliated third party, be investment grade. EME currently sells all the output from the Homer City facilities through EMMT, which has a below investment grade credit rating, and EME Homer City is not rated. Therefore, in order for EME to continue to sell forward the output of the Homer City facilities, either: (1) EME must obtain consent from the sale-leaseback owner participant to permit EME Homer City to sell directly into the market or through EMMT; or (2) EMMT must provide assurances of performance consistent with the requirements of the sale-leaseback documents. EME has obtained a consent from the sale-leaseback owner participant that will allow EME Homer City to enter into such sales, under specified conditions, through December 31, 2008. EME Homer City continues to be in compliance with the terms of the consent. EME is permitted to sell the output of the Homer City facilities into the spot market at any time. See "Market Risk Exposures—Commodity Price Risk—Energy Price Risk Affecting Sales from the Homer City Facilities."

Margin, Collateral Deposits and Other Credit Support for Energy Contracts

In connection with entering into contracts in support of EME's hedging and energy trading activities (including forward contracts, transmission contracts and futures contracts), EME's subsidiary, EMMT, has entered into agreements to mitigate the risk of nonperformance. EME has entered into guarantees in support of EMMT's hedging and trading activities; however, because the credit ratings of EMMT and EME are below investment grade, EME has historically also provided collateral in the form of cash and letters of credit for the benefit of counterparties related to accounts payable and unrealized losses in connection with these hedging and trading activities. At June 30, 2007, EMMT had deposited $93 million in cash with brokers in margin accounts in support of futures contracts and had deposited $99 million with counterparties in support of forward energy and transmission contracts. In

addition, EME had issued letters of credit of $32 million in support of commodity contracts at June 30, 2007.

Future cash collateral requirements may be higher than the margin and collateral requirements at June 30, 2007, if wholesale energy prices increase or the amount hedged increases. EME estimates that margin and collateral requirements for energy contracts outstanding as of June 30, 2007 could increase by approximately $260 million over the remaining life of the contracts using a 95% confidence level.

Midwest Generation has cash on hand and a $500 million working capital facility to support margin requirements specifically related to contracts entered into by EMMT related to the Illinois Plants. At June 30, 2007, Midwest Generation had available $467 million of borrowing capacity under this credit facility. As of June 30, 2007, Midwest Generation had $68 million in loans receivable from EMMT for margin advances. In addition, EME has cash on hand and $522 million of borrowing capacity available under a $600 million working capital facility to provide credit support to subsidiaries. See "—EME's Liquidity as a Holding Company" for further discussion.

EME's Liquidity as a Holding Company

Overview

At June 30, 2007, EME had corporate cash and cash equivalents and short-term investments of $745 million to meet liquidity needs. See "—EME's Liquidity." Cash distributions from EME's subsidiaries and partnership investments and unused capacity under its corporate credit facility represent EME's major sources of liquidity to meet its cash requirements. The timing and amount of distributions from EME's subsidiaries may be affected by many factors beyond its control. See "—Dividend Restrictions in Major Financings."

Historical Distributions Received By EME

The following table is presented as an aid in understanding the cash flow of EME's continuing operations and its various subsidiary holding companies which depend on distributions from subsidiaries and affiliates to fund general and administrative costs and debt service costs of recourse debt.

		Six Months Ended June 30,
		2007		2006
		(in millions)
Distributions from Consolidated Operating Projects:
	Edison Mission Midwest Holdings (Illinois Plants)(1)	$	295	$	380
	EME Homer City (Homer City facilities)		63		—
	Holding companies of other consolidated operating projects		4		3
Distributions from Unconsolidated Operating Projects:
	Edison Mission Energy Funding Corp. (Big 4 Projects)(2)		28		41
	Holding company for Doga project		23		—
	Sunrise Power Company		9		7
	Holding companies for Westside projects		6		6
	Holding companies of other unconsolidated operating projects		2		1

Total Distributions		$	430	$	438

(1): Subsequent to June 30, 2007, Edison Mission Midwest Holdings made an additional distribution of $100 million.

(2): The Big 4 projects consist of investments in the Kern River project, Midway-Sunset project, Sycamore project and Watson project. Distributions reflect the amount received by EME after debt service payments by Edison Mission Energy Funding Corp.

Intercompany Tax-Allocation Agreement

EME is included in the consolidated federal and combined state income tax returns of Edison International and is eligible to participate in tax-allocation payments with other subsidiaries of Edison International in circumstances where domestic tax losses are incurred. The right of EME to receive and the amount of and timing of tax-allocation payments are dependent on the inclusion of EME in the consolidated income tax returns of Edison International and its subsidiaries and other factors, including the consolidated taxable income of Edison International and its subsidiaries, the amount of net operating losses and other tax items of EME, its subsidiaries, and other subsidiaries of Edison International and specific procedures regarding allocation of state taxes. EME receives tax-allocation payments for tax losses when and to the extent that the consolidated Edison International group generates sufficient taxable income in order to be able to utilize EME's consolidated tax losses in the consolidated income tax returns for Edison International and its subsidiaries. Based on the application of the factors cited above, EME is obligated during periods it generates taxable income to make payments under the tax-allocation agreements. EME made tax-allocation payments to Edison International of $156 million and $162 million during the first six months of 2007 and 2006, respectively.

Dividend Restrictions in Major Financings

General

Each of EME's direct or indirect subsidiaries is organized as a legal entity separate and apart from EME and its other subsidiaries. Assets of EME's subsidiaries are not available to satisfy EME's obligations or the obligations of any of its other subsidiaries. However, unrestricted cash or other assets that are available for distribution may, subject to applicable law and the terms of financing arrangements of the parties, be advanced, loaned, paid as dividends or otherwise distributed or contributed to EME or to its subsidiary holding companies.

Key Ratios of EME's Principal Subsidiaries Affecting Dividends

Set forth below are key ratios of EME's principal subsidiaries required by financing arrangements at June 30, 2007 or for the twelve months ended June 30, 2007:

Subsidiary		Financial Ratio		Covenant		Actual
Midwest Generation (Illinois Plants)		Debt to Capitalization Ratio		Less than or equal to 0.60 to 1		0.24 to 1
EME Homer City (Homer City facilities)		Senior Rent Service Coverage Ratio		Greater than 1.7 to 1		2.64 to 1

For a more detailed description of the covenants binding EME's principal subsidiaries that may restrict the ability of those entities to make distributions to EME directly or indirectly through the other holding companies owned by EME, refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Dividend Restrictions in Major Financings" of EME's annual report on Form 10-K for the year ended December 31, 2006.

Contractual Obligations and Contingencies

Contractual Obligations

Long-term Debt

EME's long-term principal debt maturities plus interest payments as of June 30, 2007 were $247 million for the remainder of 2007, $299 million in 2008, $305 million in 2009, $290 million in 2010, $291 million in 2011, and $5.7 billion thereafter. These amounts have been updated primarily to reflect EME's financing activities completed during the second quarter of 2007. See "Management's Overview—Refinancing—Senior Notes Offering" for additional details.

Capital Improvements

Turbine Commitments

Fuel Supply Contracts

Coal Transportation Agreements

transportation agreements. These commitments are currently estimated to be $8 million for the remainder of 2007, $110 million for 2008, $75 million for 2009, and $77 million for 2010.

Contingencies

Challenges of Illinois Power Procurement Auction Results

FERC Complaint—

On March 16, 2007, the Office of the Attorney General for the State of Illinois filed a complaint at the FERC alleging that the prices resulting from the Illinois auction resulted in unjust and unreasonable rates under the Federal Power Act and that participating wholesale sellers in the Illinois auction had colluded and manipulated the results of the auction. All successful participants in the Illinois auction, including EMMT, were named as respondents. The Office of the Attorney General asked the FERC to order refunds and to revoke the respondents' market-based rate pricing authority. On July 24, 2007, Midwest Generation and EMMT, along with other power generation companies and utilities, entered into a settlement agreement with the Illinois Attorney General. The settlement is subject to enacting legislation. See "Management's Overview—Illinois Settlement" for further discussion.

Class Action Lawsuits—

On April 4, 2007, EMMT was served with a complaint filed in the Circuit Court of Cook County, Illinois, by Saul R. Wexler, individually and on behalf of an alleged class of similarly situated electric ratepayers in Illinois, against Commonwealth Edison, Ameren, and all of the successful participants in the Illinois auction, including EMMT. The lawsuit alleges that the defendants, including EMMT, colluded and conspired to manipulate the auction results by price-fixing. The lawsuit seeks unspecified damages. On April 26, 2007, the defendants transferred the complaint to the U.S. District Court for the Northern District of Illinois, Eastern Division. On June 4, 2007, the defendants filed a motion to dismiss the case, which remains pending.

Midwest Generation Potential Environmental Proceeding

Litigation

Off-Balance Sheet Transactions

For a discussion of EME's off-balance sheet transactions, refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Off-Balance Sheet Transactions" of EME's annual report on Form 10-K for the year ended December 31, 2006. There have been no significant developments with respect to EME's off-balance sheet transactions that affect disclosures presented in EME's annual report.

Environmental Matters and Regulations

For a discussion of EME's environmental matters, refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Environmental Matters and Regulations" of EME's annual report on Form 10-K for the year ended December 31, 2006 and the notes to the Consolidated Financial Statements set forth therein. There have been no significant developments with respect to environmental matters specifically affecting EME since the filing of EME's annual report, except as follows:

Air Quality Regulation

Clean Air Act

Illinois—

The Combined Pollutant Standard, filed on January 5, 2007 in the pending state rulemaking related to the Illinois SIP for the CAIR and previously reported as expected to become final in the spring of 2007, is currently expected to become final in the summer or early fall of 2007. The Illinois Pollution Control Board published a first notice order for the proposed Combined Pollutant Standard and CAIR rules on May 11, 2007. The written comment period, which follows the first notice order, expired on June 25, 2007. The Board published a second notice order on July 26, 2007. The second

notice order marks the beginning of review by the Joint Committee on Administrative Rules, the final stage of rulemaking in Illinois.

Midwest Generation Potential Environmental Proceeding

On July 31, 2007, the US EPA issued a NOV to Midwest Generation and Commonwealth Edison with respect to alleged violations of the Clean Air Act and certain opacity and particulate matter standards. See "—Contractual Obligations and Contingencies—Contingencies—Midwest Generation Potential Environmental Proceeding" for further discussion.

Water Quality Regulation

Clean Water Act—Cooling Water Intake Structures

On July 9, 2007, the US EPA published in the Federal Register a notice immediately suspending the requirements for cooling water intake structures, pending further rulemaking. The US EPA is expected to begin another rulemaking process in October 2007. Although the rule to be generated in the new rulemaking process could have a material impact on EME's operations, its compliance criteria have not yet been finalized, and EME cannot reasonably determine the financial impact at this time.

Pennsylvania

EME Homer City and the Pennsylvania Department of Environmental Protection have entered into a consent order and agreement related to selenium discharge, which was filed in Pennsylvania state court on July 17, 2007. Under the consent order and agreement, EME Homer City agreed to pay a civil penalty of $200,000 and to install modifications to its wastewater system to achieve consistent compliance with discharge limits. Until the pilot programs have been completed and the treatment system design has been finalized, EME will be unable to estimate the costs for ongoing treatment.

Climate Change

On April 2, 2007, the United States Supreme Court issued an opinion in Massachusetts et. al. v. Environmental Protection Agency, et. al., ruling that US EPA has the authority to regulate greenhouse gas emissions of new motor vehicles under the Clean Air Act and that it has a duty to (i) determine whether greenhouse gas emissions of new motor vehicles contribute to climate change or (ii) offer a reasoned explanation for its failure to make such a determination when presented with a request for a rulemaking on the issue by the state claimants. The Court ruled that US EPA's failure to make the necessary determination or offer a reasonable explanation for its refusal to do so was impermissible. While this case hinged on a provision of the Clean Air Act related to emissions of motor vehicles, a parallel provision of the Clean Air Act applies to stationary sources such as electric generators. EME believes that the Court's Massachusetts decision may spur additional congressional action to require reductions of greenhouse gas emissions by all material sources, including electric generators.

MARKET RISK EXPOSURES

Introduction

EME's primary market risk exposures are associated with the sale of electricity and capacity from and the procurement of fuel for its merchant power plants. These market risks 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. EME manages these risks in part by using derivative financial instruments in accordance with established policies and procedures.

This section discusses these market risk exposures under the following headings:

		Page
Commodity Price Risk		46
Accounting for Energy Contracts		54
Fair Value of Financial Instruments		55
Credit Risk		56
Interest Rate Risk		58
Foreign Exchange Rate Risk		58
Regulatory Matters		58

For a complete discussion of these issues, read this quarterly report on Form 10-Q in conjunction with EME's annual report on Form 10-K for the year ended December 31, 2006.

Commodity Price Risk

Overview

EME's revenues and results of operations of its merchant power plants will depend upon prevailing market prices for capacity, energy, ancillary services, emission allowances or credits, coal, natural gas and fuel oil, and associated transportation costs in the market areas where EME's merchant plants are located. Among the factors that influence the price of energy, capacity and ancillary services in these markets are:

•: prevailing market prices for coal, natural gas and fuel oil, and associated transportation;
•: the extent of additional supplies of capacity, energy and ancillary services from current competitors or new market entrants, including the development of new generation facilities and/or technologies that may be able to produce electricity at a lower cost than EME's generating facilities and/or increased access by competitors to EME's markets as a result of transmission upgrades;
•: transmission congestion in and to each market area and the resulting differences in prices between delivery points;
•: the market structure rules established for each market area and regulatory developments affecting the market areas, including any price limitations and other mechanisms adopted to address volatility or illiquidity in these markets or the physical stability of the system;
•: the cost and availability of emission credits or allowances;
•: the availability, reliability and operation of competing power generation facilities, including nuclear generating plants, where applicable, and the extended operation of such facilities beyond their presently expected dates of decommissioning;
•: weather conditions prevailing in surrounding areas from time to time; and

•: changes in the demand for electricity or in patterns of electricity usage as a result of factors such as regional economic conditions and the implementation of conservation programs.

A discussion of commodity price risk for the Illinois Plants and the Homer City facilities is set forth below.

Introduction

EME's merchant operations expose it to commodity price risk, which represents the potential loss that can be caused by a change in the market value of a particular commodity. Commodity price risks are actively monitored by a risk management committee to ensure compliance with EME's risk management policies. Policies are in place which define risk management processes, and procedures exist which allow for monitoring of all commitments and positions with regular reviews by EME's risk management committee. Despite this, there can be no assurance that all risks have been accurately identified, measured and/or mitigated.

In addition to prevailing market prices, EME's ability to derive profits from the sale of electricity will be affected by the cost of production, including costs incurred to comply with environmental regulations. The costs of production of the units vary and, accordingly, depending on market conditions, the amount of generation that will be sold from the units is expected to vary.

EME uses "value at risk" to identify, measure, monitor and control its overall market risk exposure in respect of its Illinois Plants, its Homer City facilities, and its trading positions. The use of value at risk allows management to aggregate overall commodity risk, compare risk on a consistent basis and identify the risk factors. Value at risk measures the possible loss over a given time interval, under normal market conditions, at a given confidence level. Given the inherent limitations of value at risk and relying on a single risk measurement tool, EME supplements this approach with the use of stress testing and worst-case scenario analysis for key risk factors, as well as stop-loss limits and counterparty credit exposure limits.

Hedging Strategy

To reduce its exposure to market risk, EME hedges a portion of its merchant portfolio risk through EMMT, an EME subsidiary engaged in the power marketing and trading business. To the extent that EME does not hedge its merchant portfolio, the unhedged portion will be subject to the risks and benefits of spot market price movements. Hedge transactions are primarily implemented through:

•: the use of contracts cleared on the Intercontinental Trading Exchange and the New York Mercantile Exchange,
•: forward sales transactions entered into on a bilateral basis with third parties, including electric utilities and power marketing companies,
•: full requirements services contracts or load requirements services contracts for the procurement of power for electric utilities' customers, with such services including the delivery of a bundled product including, but not limited to, energy, transmission, capacity, and ancillary services, generally for a fixed unit price, and
•: participation in capacity auctions.

The extent to which EME enters into contracts to hedge its market price risk depends on several factors. First, EME evaluates over-the-counter market prices to determine whether sales at forward market prices are sufficiently attractive compared to assuming the risk associated with fluctuating spot market sales. Second, EME's ability to enter into hedging transactions depends upon its and Midwest Generation's credit capacity and upon the forward sales markets having sufficient liquidity to enable EME to identify appropriate counterparties for hedging transactions.

In the case of hedging transactions related to the generation and capacity of the Illinois Plants, Midwest Generation is permitted to use its working capital facility and cash on hand to provide credit support for these hedging transactions entered into by EMMT under an energy services agreement between Midwest Generation and EMMT. Utilization of this credit facility in support of hedging transactions provides additional liquidity support for implementation of EME's contracting strategy for the Illinois Plants. In addition, Midwest Generation is permitted to grant liens on its property in support of hedging transactions associated with the Illinois Plants. In the case of hedging transactions related to the generation and capacity of the Homer City facilities, credit support is provided by EME pursuant to intercompany arrangements between it and EMMT. See "—Credit Risk" below.

Energy Price Risk Affecting Sales from the Illinois Plants

All the energy and capacity from the Illinois Plants is sold under terms, including price and quantity, arranged by EMMT with customers through a combination of bilateral agreements (resulting from negotiations or from auctions), forward energy sales and spot market sales. As discussed further below, power generated at the Illinois Plants is generally sold into the PJM market.

Midwest Generation sells its power into PJM at spot prices based upon locational marginal pricing. Hedging transactions related to the generation of the Illinois Plants are generally entered into at the Northern Illinois Hub in PJM, and may also be entered into at other trading hubs, including the AEP/Dayton Hub in PJM and the Cinergy Hub in the MISO. These trading hubs have been the most liquid locations for hedging purposes. However, hedging transactions which settle at points other than the Northern Illinois Hub are subject to the possibility of basis risk. See "—Basis Risk" below for further discussion.

PJM has a short-term market, which establishes an hourly clearing price. The Illinois Plants are situated in the PJM control area and are physically connected to high-voltage transmission lines serving this market.

The following table depicts the average historical market prices for energy per megawatt-hour during the first six months of 2007 and 2006.

	24-Hour Northern Illinois Hub Historical Energy Prices(1)
	2007		2006
January	$	35.75	$	42.27
February		56.64		42.66
March		42.04		42.50
April		48.91		43.16
May		44.49		39.96
June		39.76		34.80

Six-Month Average	$	44.60	$	40.89

(1): Energy prices were calculated at the Northern Illinois Hub delivery point using hourly real-time prices as published by PJM.

Forward market prices at the Northern Illinois Hub fluctuate as a result of a number of factors, including natural gas prices, transmission congestion, changes in market rules, electricity demand (which in turn is affected by weather, economic growth, and other factors), plant outages in the region, and the amount of existing and planned power plant capacity. The actual spot prices for electricity delivered by the Illinois Plants into these markets may vary materially from the forward market prices set forth in the table below.

The following table sets forth the forward market prices for energy per megawatt-hour as quoted for sales into the Northern Illinois Hub at June 30, 2007:

		24-Hour Northern Illinois Hub Forward Energy Prices(1)
2007
	July	$	45.87
	August		50.61
	September		37.31
	October		36.18
	November		38.48
	December		44.63
2008 Calendar "strip"(2)		$	46.09

(1): Energy prices were determined by obtaining broker quotes and information from other public sources relating to the Northern Illinois Hub delivery point.
(2): Market price for energy purchases for the entire calendar year, as quoted for sales into the Northern Illinois Hub.

The following table summarizes Midwest Generation's hedge position (primarily based on prices at the Northern Illinois Hub) at June 30, 2007:

		2007		2008		2009
Energy Only Contracts(1)
	MWh		8,250,150		10,837,600		2,048,000
	Average price/MWh(2)	$	48.07	$	61.38	$	60.00
Load Requirements Services Contracts
	Estimated MWh(3)		4,071,803		5,613,433		1,631,859
	Average price/MWh(4)	$	64.35	$	64.01	$	63.65
Total estimated MWh			12,321,953		16,451,033		3,679,859

(1): Primarily at Northern Illinois Hub.
(2): The energy only contracts include forward contracts for the sale of power and futures contracts during different periods of the year and the day. Market prices tend to be higher during on-peak periods and during summer months, although there is significant variability of power prices during different periods of time. Accordingly, the above hedge position at June 30, 2007 is not directly comparable to the 24-hour Northern Illinois Hub prices set forth above.
(3): Under a load requirements services contract, the amount of power sold is a portion of the retail load of the purchasing utility and thus can vary significantly with variations in that retail load. Retail load depends upon a number of factors, including the time of day, the time of the year and the utility's number of new and continuing customers. Estimated MWh have been forecast based on historical patterns and on assumptions regarding the factors that may affect retail loads in the future. The actual load will vary from that used for the above estimate, and the amount of variation may be material.
(4): The average price per MWh under a load requirements services contract (which is subject to a seasonal price adjustment) represents the sale of a bundled product that includes, but is not limited to, energy, capacity and ancillary services. Furthermore, as a supplier of a portion of a utility's load, Midwest Generation will incur charges from PJM as a load-serving entity. For these reasons, the average price per MWh under a load requirements services contract is not comparable to the sale of power under an energy only contract. The average price per MWh under a load requirements services contract represents the sale of the bundled product based on an estimated customer load profile.

Energy Price Risk Affecting Sales from the Homer City Facilities

All the energy and capacity from the Homer City facilities is sold under terms, including price and quantity, arranged by EMMT with customers through a combination of bilateral agreements (resulting

from negotiations or from auctions), forward energy sales and spot market sales. Electric power generated at the Homer City facilities is generally sold into the PJM market. PJM has a short-term market, which establishes an hourly clearing price. The Homer City facilities are situated in the PJM control area and are physically connected to high-voltage transmission lines serving both the PJM and NYISO markets.

The following table depicts the average historical market prices for energy per megawatt-hour at the Homer City busbar and in PJM West Hub (EME Homer City's primary trading hub) during the first six months of 2007 and 2006:

	Historical Energy Prices(1) 24-Hour PJM
	Homer City				West Hub
	2007		2006		2007		2006
January	$	40.30	$	48.67	$	44.63	$	54.57
February		64.27		49.54		73.93		56.39
March		55.00		53.26		61.02		58.30
April		52.42		48.50		58.74		49.92
May		48.12		44.71		53.89		48.55
June		45.88		38.78		60.19		45.78

Six-Month Average	$	51.00	$	47.24	$	58.73	$	52.25

(1): Energy prices were calculated at the Homer City busbar (delivery point) and PJM West Hub using historical hourly real-time prices provided on the PJM-ISO web-site.

Forward market prices at the PJM West Hub fluctuate as a result of a number of factors, including natural gas prices, transmission congestion, changes in market rules, electricity demand (which in turn is affected by weather, economic growth and other factors), plant outages in the region, and the amount of existing and planned power plant capacity. The actual spot prices for electricity delivered by the Homer City facilities into these markets may vary materially from the forward market prices set forth in the table below.

The following table sets forth the forward market prices for energy per megawatt-hour as quoted for sales into the PJM West Hub at June 30, 2007:

2007		24-Hour PJM West Hub Forward Energy Prices(1)
	July	$	64.02
	August		69.02
	September		49.57
	October		48.52
	November		50.71
	December		57.24
2008 Calendar "strip"(2)		$	62.36

(1): Energy prices were determined by obtaining broker quotes and information from other public sources relating to the PJM West Hub delivery point. Forward prices at PJM West Hub are generally higher than the prices at the Homer City busbar.
(2): Market price for energy purchases for the entire calendar year, as quoted for sales into the PJM West Hub.

The following table summarizes EME Homer City's hedge position at June 30, 2007:

		2007			2008			2009
MWh			3,820,375			7,232,000			2,048,000
Average price/MWh(1)		$	64.24		$	60.86		$	71.05

(1): The above hedge positions include forward contracts for the sale of power during different periods of the year and the day. Market prices tend to be higher during on-peak periods and during summer months, although there is significant variability of power prices during different periods of time. Accordingly, the above hedge position at June 30, 2007 is not directly comparable to the 24-hour PJM West Hub prices set forth above.

The average price/MWh for EME Homer City's hedge position is based on PJM West Hub. Energy prices at the Homer City busbar have been lower than energy prices at the PJM West Hub. See "—Basis Risk" below for a discussion of the difference.

Capacity Price Risk

On June 1, 2007, PJM implemented the RPM for capacity. The purpose of the RPM is to provide a long-term pricing signal for capacity resources. The RPM allows PJM to satisfy the region's need for generation capacity, which is then allocated among the load-serving entities through a locational reliability charge.

The first RPM auction took place in April 2007 and resulted in a fixed price for Midwest Generation and EME Homer City's capacity sold into the auction (included in PJM as "rest of market" location) of $40.80/MW per day for the period from June 1, 2007 through May 31, 2008. The second auction took place in July 2007 and resulted in a fixed price for Midwest Generation and EME Homer City's capacity sold into the auction of $111.92/MW per day for the period from June 1, 2008 through May 31, 2009. Subsequent auctions will be conducted in October 2007 and January 2008 to auction capacity for periods through May 2011.

Midwest Generation entered into hedge transactions in advance of the RPM auctions with counterparties that are settled through PJM. In addition, the load service requirements contracts entered into by Midwest Generation with Commonwealth Edison include energy, capacity and ancillary services (sometimes referred to as a "bundled product"). Under PJM's business rules, Midwest

Generation sells all of its available capacity (unit capacity less forced outages) into the RPM and is subject to a locational reliability charge for the load under these contracts. This means that the locational reliability charge generally offsets the related amounts sold in the RPM, which Midwest Generation presents net in the table below.

Prior to the RPM auctions for the relevant delivery periods, EME Homer City sold a portion of its capacity to an unrelated third party for the delivery periods from June 1, 2007 through May 31, 2008 and June 1, 2008 through May 31, 2009. EME Homer City will not receive the RPM auction clearing price for this previously sold capacity. The price EME Homer City will receive for these capacity sales is a function of NYISO capacity clearing prices resulting from separate NYISO capacity auctions.

The following table summarizes the status of capacity sales for Midwest Generation and EME Homer City at July 27, 2007:

		July 1, 2007 to May 31, 2008				June 1, 2008 to May 31, 2009
		Midwest Generation		EME Homer City		Midwest Generation		EME Homer City
Fixed Price Capacity Sales
Through RPM Auction, Net
	MW		2,625		786		3,283		820
	Price per MW-day	$	40.80	$	40.80	$	111.92	$	111.92
Non-unit Specific Capacity Sales
	MW		500		—		880		—
	Price per MW-day	$	21.29		—	$	64.35		—
Variable Capacity Sales
	MW		—		870		—		881
	Price per MW-day(1)		—	$	69.39		—	$	72.56

(1): Actual contract price is a function of NYISO capacity auction clearing prices. Capacity price per MW-day is based on forward over-the-counter NYISO prices on July 27, 2007.

Revenues from the sale of capacity from Midwest Generation and EME Homer City beyond the periods set forth above will depend upon the amount of capacity available and future market prices either in PJM or nearby markets if EME has an opportunity to capture a higher value associated with those markets. Under PJM's RPM system, the market price for capacity is generally determined by aggregate market-based supply conditions and an administratively set aggregate demand curve. Among the factors influencing the supply of capacity in any particular market are plant forced outage rates, plant closings, plant delistings (due to plants being removed as capacity resources and/or to export capacity to other markets), capacity imports from other markets, and new entry.

Basis Risk

Sales made from the Illinois Plants and the Homer City facilities in the real-time or day-ahead market receive the actual spot prices or day-ahead prices, as the case may be, at the busbars (delivery points) of the individual plants. In order to mitigate price risk from changes in spot prices at the individual plant busbars, EME may enter into cash settled futures contracts as well as forward contracts with counterparties for energy to be delivered in future periods. Currently, a liquid market for entering into these contracts at the individual plant busbars does not exist. A liquid market does exist for a settlement point at the PJM West Hub in the case of the Homer City facilities and for a settlement point at the Northern Illinois Hub in the case of the Illinois Plants. EME's hedging activities use these

settlement points (and, to a lesser extent, other similar trading hubs) to enter into hedging contracts. EME's revenues with respect to such forward contracts include:

•: sales of actual generation in the amounts covered by the forward contracts with reference to PJM spot prices at the busbar of the plant involved, plus,
•: sales to third parties at the price under such hedging contracts at designated settlement points (generally the PJM West Hub for the Homer City facilities and the Northern Illinois Hub for the Illinois Plants) less the cost of power at spot prices at the same designated settlement points.

Under PJM's market design, locational marginal pricing, which establishes market prices at specific locations throughout PJM by considering factors including generator bids, load requirements, transmission congestion and losses, can cause the price of a specific delivery point to be higher or lower relative to other locations depending on how the point is affected by transmission constraints. To the extent that, on the settlement date of a hedge contract, spot prices at the relevant busbar are lower than spot prices at the settlement point, the proceeds actually realized from the related hedge contract are effectively reduced by the difference. This is referred to as "basis risk." During the six months ended June 30, 2007, transmission congestion in PJM has resulted in prices at the Homer City busbar being lower than those at the PJM West Hub by an average of 13%, compared to 10% during the six months ended June 30, 2006. The monthly average difference during the 12 months ended June 30, 2007 ranged from 3% to 24%. In contrast to the Homer City facilities, during the past 12 months, the prices at the Northern Illinois Hub were substantially the same as those at the individual busbars of the Illinois Plants.

By entering into cash settled futures contracts and forward contracts using the PJM West Hub and the Northern Illinois Hub (or other similar trading hubs) as settlement points, EME is exposed to basis risk as described above. In order to mitigate basis risk, EME may purchase financial transmission rights and basis swaps in PJM for EME Homer City. A financial transmission right is a financial instrument that entitles the holder to receive the difference of actual spot prices for two delivery points in exchange for a fixed amount. Accordingly, EME's hedging activities include using financial transmission rights alone or in combination with forward contracts and basis swap contracts to manage basis risk.

Coal Price Risk

The Illinois Plants and the Homer City facilities purchase coal primarily obtained from the Southern PRB of Wyoming and from mines located near the facilities in Pennsylvania, respectively. Coal purchases are made under a variety of supply agreements extending through 2010. The following table summarizes the amount of coal under contract at June 30, 2007 for the remainder of 2007 and the following three years.

	Amount of Coal Under Contract in Millions of Tons(1)
	July through December 2007	2008	2009	2010
Illinois Plants	9.2	14.6	11.7	11.7
Homer City facilities	2.7	4.3	3.5	0.2

(1): The amount of coal under contract in tons is calculated based on contracted tons and applying an 8,800 Btu equivalent for the Illinois Plants and 13,000 Btu equivalent for the Homer City facilities.

EME is subject to price risk for purchases of coal that are not under contract. Prices of NAPP coal, which are related to the price of coal purchased for the Homer City facilities, increased during the first six months of 2007 from 2006 year-end prices. The price of NAPP coal (with 13,000 Btu per

pound heat content and <3.0 pounds of SO₂ per MMBtu sulfur content) increased to $45.15 per ton at June 29, 2007 from $43.00 per ton at December 15, 2006, as reported by the Energy Information Administration. The 2007 increase in the NAPP coal price was in line with normal market price volatility. Prices of PRB coal (with 8,800 Btu per pound heat content and 0.8 pounds of SO₂ per MMBtu sulfur content), which is purchased for the Illinois Plants decreased during the first six months of 2007 from 2006 year-end prices due to continuing high stockpiles and oversupply of market. The price of PRB coal decreased from $9.90 per ton at December 15, 2006 to $9.15 per ton at June 29, 2007, as reported by the Energy Information Administration.

Emission Allowances Price Risk

The federal Acid Rain Program requires electric generating stations to hold SO₂ allowances, and Illinois and Pennsylvania regulations implemented the federal NO_X SIP Call requirement. As part of the acquisition of the Illinois Plants and the Homer City facilities, EME obtained the rights to the emission allowances that have been or are allocated to these plants. EME purchases (or sells) emission allowances based on the amounts required for actual generation in excess of (or less than) the amounts allocated under these programs. The average price of purchased SO₂ allowances decreased to $517 per ton during the first six months of 2007 from $664 per ton during 2006. The price of SO₂ allowances, determined by obtaining broker quotes and information from other public sources, was $544 per ton as of July 31, 2007.

For a discussion of environmental regulations related to emissions, refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Environmental Matters and Regulations" of EME's annual report on Form 10-K for the year ended December 31, 2006.

Accounting for Energy Contracts

EME uses a number of energy contracts to manage exposure from changes in the price of electricity, including forward sales and purchases of physical power and forward price swaps which settle only on a financial basis (including futures contracts). EME follows SFAS No. 133, and under this Standard these energy contracts are generally defined as derivative financial instruments. Importantly, SFAS No. 133 requires changes in the fair value of each derivative financial instrument to be recognized in earnings at the end of each accounting period unless the instrument qualifies for hedge accounting under the terms of SFAS No. 133. For derivatives that do qualify for cash flow hedge accounting, changes in their fair value are recognized in other comprehensive income until the hedged item settles and is recognized in earnings. However, the ineffective portion of a derivative that qualifies for cash flow hedge accounting is recognized currently in earnings. For further discussion of derivative financial instruments, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Management's Overview; Critical Accounting Estimates—Critical Accounting Estimates—Derivative Financial Instruments and Hedging Activities" of EME's annual report on Form 10-K for the year ended December 31, 2006.

SFAS No. 133 affects the timing of income recognition, but has no effect on cash flow. To the extent that income varies under SFAS No. 133 from accrual accounting (i.e., revenue recognition based on settlement of transactions), EME records unrealized gains or losses. EME classifies unrealized gains and losses from energy contracts as part of operating revenues. The results of derivative activities are recorded as part of cash flows from operating activities in the consolidated statements of cash flows.

The following table summarizes unrealized gains (losses) from non-trading activities for the second quarters of 2007 and 2006 and six months ended June 30, 2007 and 2006:

		Three Months Ended June 30,						Six Months Ended June 30,
		2007			2006			2007			2006
		(in millions)
Non-qualifying hedges
	Illinois Plants	$	4		$	2		$	(18	)	$	10
	Homer City		2			4			1			2
Ineffective portion of cash flow hedges
	Illinois Plants		—			(1	)		—			1
	Homer City		(5	)		5			(3	)		2

Total unrealized gains (losses)		$	1		$	10		$	(20	)	$	15

Fair Value of Financial Instruments

Non-Trading Derivative Financial Instruments

The following table summarizes the fair values for outstanding derivative financial instruments (used in) EME's continuing operations for purposes other than trading, by risk category (in millions):

		June 30, 2007		December 31, 2006
Commodity price:
	Electricity	$	1	$	184

In assessing the fair value of EME's non-trading derivative financial instruments, EME uses a variety of methods and assumptions based on the market conditions and associated risks existing at each balance sheet date. The fair value of commodity price contracts takes into account quoted market prices, time value of money, volatility of the underlying commodities and other factors. The decrease in fair value of electricity contracts at June 30, 2007 as compared to December 31, 2006 is attributable to an increase in the average market prices for power as compared to contracted prices at June 30, 2007, which is the valuation date. The following table summarizes the maturities and the related fair value, based on actively traded prices, of EME's commodity derivative assets and liabilities as of June 30, 2007 (in millions):

		Total Fair Value			Maturity <1 year			Maturity 1 to 3 years			Maturity 4 to 5 years			Maturity >5 years
Prices actively quoted		$	1		$	43		$	(42	)	$	—		$	—

Energy Trading Derivative Financial Instruments

The fair value of the commodity financial instruments related to energy trading activities as of June 30, 2007 and December 31, 2006, are set forth below (in millions):

	June 30, 2007				December 31, 2006
	Assets		Liabilities		Assets		Liabilities
Electricity	$	142	$	18	$	313	$	207
Other		—		—		5		—

Total	$	142	$	18	$	318	$	207

The change in the fair value of trading contracts for the six months ended June 30, 2007, was as follows (in millions):

Fair value of trading contracts at January 1, 2007	$	111
Net gains from energy trading activities		65
Amount realized from energy trading activities		(58	)
Other changes in fair value		6

Fair value of trading contracts at June 30, 2007	$	124

Quoted market prices are used to determine the fair value of the financial instruments related to energy trading activities, except for the power sales agreement with an unaffiliated electric utility that EME's subsidiary purchased and restructured and a long-term power supply agreement with another unaffiliated party. EME's subsidiary recorded these agreements at fair value based upon a discounting of future electricity prices derived from a proprietary model using a discount rate equal to the cost of borrowing the non-recourse debt incurred to finance the purchase of the power supply agreement. The following table summarizes the maturities, the valuation method and the related fair value of energy trading assets and liabilities (as of June 30, 2007) (in millions):

	Total Fair Value		Maturity <1 year		Maturity 1 to 3 years		Maturity 4 to 5 years		Maturity >5 years
Prices actively quoted	$	41	$	37	$	4	$	—	$	—
Prices based on models and other valuation methods		83		3		14		20		46

Total	$	124	$	40	$	18	$	20	$	46

Credit Risk

In conducting EME's hedging and trading activities, EME contracts with a number of utilities, energy companies, financial institutions, and other companies, collectively referred to as counterparties. In the event a counterparty were to default on its trade obligation, EME would be exposed to the risk of possible loss associated with re-contracting the product at a price different from the original contracted price if the non-performing counterparty were unable to pay the resulting liquidated damages owed to EME. Further, EME would be exposed to the risk of non-payment of accounts receivable accrued for products delivered prior to the time a counterparty defaulted.

To manage credit risk, EME looks at the risk of a potential default by counterparties. Credit risk is measured by the loss that would be incurred if counterparties failed to perform pursuant to the terms of their contractual obligations. EME measures, monitors and mitigates credit risk to the extent possible. To mitigate credit risk from counterparties, master netting agreements are used whenever possible and counterparties may be required to pledge collateral when deemed necessary. EME also takes other appropriate steps to limit or lower credit exposure. Processes have also been established to determine and monitor the creditworthiness of counterparties. EME manages the credit risk on the portfolio based on credit ratings using published ratings of counterparties and other publicly disclosed information, such as financial statements, regulatory filings, and press releases, to guide it in the process of setting credit levels, risk limits and contractual arrangements, including master netting agreements. A risk management committee regularly reviews the credit quality of EME's counterparties. Despite this, there can be no assurance that these efforts will be wholly successful in mitigating credit risk or that collateral pledged will be adequate.

The credit risk exposure from counterparties of merchant energy activities (excluding load requirements services contracts) are measured as either: (i) the sum of 60 days of accounts receivable, current fair value of open positions, and a credit value at risk, or (ii) the sum of delivered and unpaid accounts receivable and the current fair value of open positions. EME's subsidiaries enter into master agreements and other arrangements in conducting hedging and trading activities which typically provide for a right of setoff in the event of bankruptcy or default by the counterparty. Accordingly, EME's credit risk exposure from counterparties is based on net exposure under these agreements. At June 30, 2007, the amount of exposure as described above, broken down by the credit ratings of EME's counterparties, was as follows:

S&P Credit Rating	June 30, 2007
	(in millions)
A or higher	$	19
A-		18
BBB+		80
BBB		31
BBB-		2
Below investment grade		—

Total	$	150

EME's plants owned by unconsolidated affiliates in which EME owns an interest sell power under power purchase agreements. Generally, each plant sells its output to one counterparty. Accordingly, a default by a counterparty under a power purchase agreement, including a default as a result of a bankruptcy, would likely have a material adverse effect on the operations of such power plant.

In addition, coal for the Illinois Plants and the Homer City facilities is purchased from suppliers under contracts which may be for multiple years. A number of the coal suppliers to the Illinois Plants and the Homer City facilities do not currently have an investment grade credit rating and, accordingly, EME may have limited recourse to collect damages in the event of default by a supplier. EME seeks to mitigate this risk through diversification of its coal suppliers and through guarantees and other collateral arrangements when available. Despite this, there can be no assurance that these efforts will be successful in mitigating credit risk from coal suppliers.

EME's merchant plants sell electric power generally into the PJM market by participating in PJM's capacity and energy markets or transact capacity and energy on a bilateral basis. Sales into PJM accounted for approximately 49% of EME's consolidated operating revenues for the six months ended

June 30, 2007. Moody's rates PJM's senior unsecured debt Aa3. PJM, an ISO with over 300 member companies, maintains its own credit risk policies and does not extend unsecured credit to non-investment grade companies. Any losses due to a PJM member default are shared by all other members based upon a predetermined formula. At June 30, 2007, EME's account receivable due from PJM was $86 million.

Beginning in January 2007, EME also derived a significant source of its revenues from the sale of energy, capacity and ancillary services generated at the Illinois Plants to Commonwealth Edison under load requirements services contracts. Sales under these contracts accounted for 19% of EME's consolidated operating revenues during the six months ended June 30, 2007. Commonwealth Edison's senior unsecured debt rating was downgraded below investment grade by S&P in October 2006 and by Moody's in March 2007. As a result, Commonwealth Edison is required to pay EME twice a month for sales under these contracts. At June 30, 2007, EME's account receivable due from Commonwealth Edison was $21 million. Commonwealth Edison has stated that it would face possible bankruptcy if an electric rate freeze, which expired January 1, 2007, was re-introduced. In addition, the Illinois Attorney General and other parties have appeals pending before the Illinois Supreme Court pertaining to the Illinois Commerce Commission orders which authorized Commonwealth Edison and Ameren to procure power through a reverse auction process. On July 24, 2007, Midwest Generation and EMMT, along with other power generation companies and utilities, entered into a settlement agreement with the Illinois Attorney General. The settlement is subject to enacting legislation. See "Management's Overview—Illinois Settlement" for further discussion. EME is unable to predict whether the settlement agreement will be implemented as contemplated or that the legislation necessary for the settlement to become effective, or other policy changes affecting utility rates or procurement practices, will be enacted.

Interest Rate Risk

Interest rate changes can affect earnings and the cost of capital for capital improvements or new investments in power projects. EME mitigates the risk of interest rate fluctuations by arranging for fixed rate financing or variable rate financing with interest rate swaps, interest rate options or other hedging mechanisms for a number of its project financings. The fair market values of long-term fixed interest rate obligations are subject to interest rate risk. The fair market value of EME's consolidated long-term obligations (including current portion) was $3.8 billion at June 30, 2007, compared to the carrying value of $4.0 billion.

Foreign Exchange Rate Risk

EME is exposed to foreign currency risk associated with the purchase of certain turbines in which a portion of the purchase price is denominated in Japanese yen. Under the terms of the related agreement, EME has the option of fixing the foreign currency rate pertaining to the 2009 turbines through August 30, 2007. See "Management's Overview—Business Development."

Regulatory Matters

For a discussion of EME's regulatory matters, refer to "Item 1. Business—Regulatory Matters" of EME's annual report on Form 10-K for the year ended December 31, 2006. There have been no

significant developments with respect to regulatory matters specifically affecting EME since the filing of EME's annual report on Form 10-K for the year ended December 31, 2006, except as follows:

Illinois Auction Challenges and Settlement

Legal actions have been instituted against successful participants in the 2006 Illinois power procurement auction, including EMMT. For further discussion, see "Liquidity and Capital Resources—Contractual Obligations and Contingencies—Contingencies—Challenges of Illinois Power Procurement Auction Results." Midwest Generation and EMMT, along with other power generation companies and utilities, have entered into a settlement agreement with the Illinois Attorney General. The settlement agreement is subject to enacting legislation. See "Management's Overview-Illinois Settlement" for further discussion.

PJM Matters

As previously reported, on December 22, 2006, the FERC issued an order conditionally approving the RPM settlement subject to PJM making certain compliance filings. The compliance filings were made by PJM on January 22, 2007 and February 20, 2007, and accepted by the FERC on June 25, 2007 and July 11, 2007, respectively. On June 1, 2007, PJM implemented marginal losses for transmission for its competitive wholesale electric market. For further discussion regarding the RPM and recent auctions, see "—Commodity Price Risk—Capacity Price Risk." EME is still evaluating the impact that marginal loss pricing in PJM will have on its results of operations, but continues to believe that it may reduce locational marginal prices for some of its units relative to the locational marginal prices for the benchmark locations of Western Hub and Northern Illinois Hub.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of market risk sensitive instruments, refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Risk Exposures" of EME's annual report on Form 10-K for the year ended December 31, 2006. Refer to "Market Risk Exposures" in Item 2 of this quarterly report on Form 10-Q for an update to that disclosure.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

EME's management, under the supervision and with the participation of the company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of EME's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period, EME's disclosure controls and procedures are effective.

Internal Control Over Financial Reporting

There were no changes in EME's internal control over financial reporting (as such term is defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, EME's internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For a discussion of EME's legal proceedings, refer to "Item 3. Legal Proceedings" of EME's annual report on Form 10-K for the year ended December 31, 2006. There have been no significant developments with respect to legal proceedings specifically affecting EME since the filing of EME's annual report on Form 10-K for the year ended December 31, 2006, except as follows:

Midwest Generation Potential Environmental Proceeding

ITEM 1A. RISK FACTORS

For a discussion of the risks, uncertainties, and other important factors which could materially affect EME's business, financial condition, or future results, refer to "Item 1A. Risk Factors" of EME's annual report on Form 10-K for the year ended December 31, 2006. The risks described in EME's annual report on Form 10-K are not the only risks facing EME. Additional risks and uncertainties that are not currently known, or that are currently deemed to be immaterial, also may materially adversely affect EME's business, financial condition or future results.

ITEM 6. EXHIBITS

Exhibit No.		Description
3.1		Certificate of Incorporation of Edison Mission Energy, dated August 14, 2001, incorporated by reference to Exhibit 3.1 to Edison Mission Energy's Form 8-K dated August 26, 2001.
3.1.1		Certificate of Amendment to the Certificate of Incorporation of Edison Mission Energy, dated May 4, 2004, incorporated by reference to Exhibit 3.1.1 to Edison Mission Energy's Form 10-Q for the quarter ended March 31, 2004.
3.1.2		Certificate of Amendment to the Certificate of Incorporation of Edison Mission Energy, dated August 8, 2007.
10.1†		Purchase & Reservation Agreement, dated as of June 4, 2007, between Edison Mission Energy and Suzlon Wind Energy Corporation.
10.2		Third Amended and Restated Credit Agreement, dated June 29, 2007, among Midwest Generation, LLC and the Lenders referred to therein and JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders and the Issuing Lenders party thereto, incorporated by reference to Exhibit 10.1 to Midwest Generation, LLC's Form 10-Q for the quarter ended June 30, 2007.
31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
31.2		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
32		Statement Pursuant to 18 U.S.C. Section 1350.

†: Confidential treatment requested.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		EDISON MISSION ENERGY
		By:	/s/ W. JAMES SCILACCI W. James Scilacci Senior Vice President and Chief Financial Officer
		Date:	August 9, 2007

QuickLinks

TABLE OF CONTENTS
GLOSSARY
PART I—FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
EDISON MISSION ENERGY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (LOSS) (In millions, Unaudited)
EDISON MISSION ENERGY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions, Unaudited)
EDISON MISSION ENERGY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions, Unaudited)
EDISON MISSION ENERGY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions, Unaudited)
EDISON MISSION ENERGY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions, Unaudited)
EDISON MISSION ENERGY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2007 (Unaudited)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 4. CONTROLS AND PROCEDURES
PART II—OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS
ITEM 1A. RISK FACTORS
ITEM 6. EXHIBITS
SIGNATURES
EX-3.1.2 2 a2178984zex-3_12.htm EXHIBIT 3.1.2
QuickLinks -- Click here to rapidly navigate through this document

Exhibit 3.1.2

CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
EDISON MISSION ENERGY

Pursuant to Section 242 of the General
Corporation Law of the State of Delaware

Edison Mission Energy, a Delaware corporation (hereinafter called the "Corporation") does hereby certify as follows:

FIRST: Article SIXTH of the Corporation's Certificate of Incorporation is hereby amended to read in its entirety as set forth below:

SIXTH: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

(1) The business and affairs of the Corporation shall be managed by or under the direction of the board of directors of the Corporation (the "Board of Directors").

(2) The directors shall have concurrent power with the stockholders to make, alter, amend, change, add to or repeal the By-Laws of the Corporation.

(3) The number of directors of the Corporation shall be as from time to time fixed by, or in the manner provided in, the By-Laws of the Corporation. Election of directors need not be by written ballot unless the By-Laws so provide.

(4) The liability of the directors of the Corporation for monetary damages shall be eliminated to the fullest extent permissible under Delaware law.

(5) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are herby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the GCL, this Certificate of Incorporation, and any By-Laws adopted by the stockholder; provided, however, that no By-Laws hereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had been adopted.

(6) Shares of the stock of this Corporation owned by its subsidiaries shall not be entitled to vote on any matter at any meeting of stockholders or any adjournment thereof.

SECOND: The foregoing amendment was duly adopted in accordance with Section 242 of the General Corporation Law of the State of Delaware pursuant to an action without meeting of stockholders in accordance with Section 228 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, Edison Mission Energy has caused this Certificate to be duly executed in its corporate name this 8th day of August, 2007.

		EDISON MISSION ENERGY
		By:		/s/ Steven D. Eisenberg
		Name:		Steven D. Eisenberg
		Title:		Vice President and General Counsel

QuickLinks

CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF EDISON MISSION ENERGY
EX-10.1 3 a2178984zex-10_1.htm EXHIBIT 10.1
QuickLinks -- Click here to rapidly navigate through this document

Exhibit 10.1

PURCHASE & RESERVATION AGREEMENT

THIS PURCHASE & RESERVATION AGREEMENT (this "Agreement"), is dated as of June 4, 2007 (the "Effective Date"), by and between Edison Mission Energy, a Delaware corporation, having its principal place of business at 18101 Von Karman Avenue, Suite 1700, Irvine, California 92612 ("Owner"), and Suzlon Wind Energy Corporation, a Delaware corporation, having its principal place of business at 7^th Floor, 8750 West Bryn Mawr Avenue, Chicago, Illinois 60631 ("Suzlon"), sometimes collectively referred to as the "Parties" or singularly as a "Party."

W I T N E S S E T H:

WHEREAS, Suzlon is a manufacturer and supplier of wind turbine generators and related services and equipment;

WHEREAS, Owner desires to purchase and Suzlon agrees to design and manufacture, or cause to be designed and manufactured, and sell to Owner certain WTGs;

WHEREAS, Suzlon shall also deliver and Commission, (and Owner shall purchase) the WTGs in accordance with the terms and provisions of this Agreement; and

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE 1

DEFINITIONS

1.1 Defined Terms. For purposes of this Agreement, the following terms shall have the following definitions:

"2008 Contract Price" has the meaning given in Section 3.1(a) of this Agreement.

"2008 Extended Delivery WTGs" means those 2008 WTGs with a Delivery Deadline occurring in *** of 2008. The Parties acknowledge and agree that the number of 2008 WTGs with a Delivery Deadline occurring in *** of 2008, collectively, shall not exceed *** (***), excluding any WTGs whose Delivery Deadline is deferred to a date in *** of 2008 as a result of Force Majeure, a request by Owner to Deliver such WTGs' components which are manufactured outside the continental United States to an Alternate Port, or any other provision in this Agreement pursuant to which Suzlon is entitled to an adjustment in the Delivery Deadline as to such WTGs. Suzlon acknowledges and agrees that it shall use reasonable efforts to minimize the number of 2008 WTGs that are Extended Delivery WTGs, but Suzlon's failure to reduce the number of 2008 Extended Delivery WTGs below the aforementioned number shall not be

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

deemed a Suzlon Default or a default under this Agreement and Suzlon shall have no liability to Owner for any such failure.

"2008 GL Liquidated Damages" has the meaning given in Section 2.6(b)(i) of this Agreement.

"2008 PTC LD Cap" means an amount equal to *** percent (***%) of the Total 2008 Contract Price.

"2008 WTGs" has the meaning given in Section 2.1(a) of this Agreement.

"2009 Contract Price" has the meaning given in Section 3.1(b) of this Agreement.

"2009 GL Liquidated Damages" has the meaning given in Section 2.6(b)(ii) of this Agreement.

"2009 PTC LD Cap" means an amount equal to *** percent (***%) of the Total 2009 Contract Price.

"2009 WTGs" has the meaning given in Section 2.1(b) of this Agreement.

"Acceptable Replacement Security" means (i) a guarantee of a Person with comparable creditworthiness to Edison Mission Energy as of the Effective Date whereby such Person guarantees the obligations of the Owner under this Agreement (provided such guarantee is in a form substantially similar to the Owner Parent Guarantee), or (ii) other equivalent credit support in form and substance reasonably acceptable to Suzlon.

"Additional TA Fees" has the meaning given in Section 3.1(d) of this Agreement.

"Affiliate" means, as to a specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified.

"Aggregate LD Cap" has the meaning given in Section 5.1(b) of this Agreement.

"Aggregate TA Hours" has the meaning given in Section 3.1(d) of this Agreement.

"Agreement" has, subject to the terms of Section 11.14, the meaning given in the Preamble to this Agreement.

"Alternate Final Milestone" has the meaning given in Section 3.2(a) or Section 4.1(b) of this Agreement, as applicable.

"Alternate Port" means a port (other than a Gulf Port) designated by Owner pursuant to the terms and conditions of this Agreement; provided, however, that such port (a) shall be capable of accepting the delivery of WTG components thereto, which shall include, without limitation having adequate capabilities for receiving Suzlon's shipping vessels and inland transportation vehicles (if applicable) and sufficient berthing, offloading, management and

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

storage capabilities for Suzlon to perform its obligations pursuant to this Agreement, and (b) shall be located in (i) the continental United States (as to Projects located in the continental United States), or (ii) the continental United States or the mainland of Canada (as to Canadian Projects).

"Alternate Power Plant" has the meaning given in Section 2.5(d) of this Agreement.

"Applicable Date" means (x) December 31, 2007, in the event there is an Applicable Wind Farm as of December 1, 2007, or (y) in the event there is not yet an Applicable Wind Farm as of December 1, 2007, the date that is one (1) month after the date there is an Applicable Wind Farm.

"Applicable SC-Power Plant" has the meaning given in Section 2.5(d) of this Agreement.

"Applicable Wind Farm" means any "Project" (as defined in that certain Purchase & Reservation Agreement, by and between Owner and Suzlon, dated as of November 15, 2005, as amended, or any "Definitive Agreement" executed thereunder (as applicable)) that has (i) achieved "Commissioning" of a substantial portion of its (but in no event less than ten (10)) "WTGs" (each as defined in such applicable agreement), (ii) whose "owner" has, no later than ***, (x) requested in writing the SC-Power Plant, and (y) actually paid Suzlon the fee for such SC-Power Plant, and (iii) whose Owner has such "Project" reasonably ready for the installation of the SC-Power Plant.

"Application for Payment" has the meaning given in Section 3.4(a) of this Agreement.

"Available Milestone Amount" means, with respect to each Milestone Payment, an amount equal to (i) the total amount of such Milestone Payment, less (ii) amounts from such Milestone Payment that will be deposited in a Payment Escrow pursuant to Section 11.7(b).

"Availability Warranty" has the meaning given in Exhibit G to this Agreement.

"Balance of Plant" means all equipment and materials and other items and services necessary to complete a Project in accordance with prudent electric industry practices for wind generation projects of a similar nature, except for the corresponding Work. The Balance of Plant includes, but is not limited to, the following items, which, as between Owner and Suzlon, Owner shall provide:

(i): all geotechnical studies, investigations and site and other surveys;
(ii): demolition and/or removal, to the extent necessary, of any existing facilities at a Project Site;
(iii): grading, trenching, excavation and other preparation of a Project Site;
(iv): the civil engineering, construction and testing of all civil works (including that which is related to the WTG foundations);

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

(v): permits (other than those set forth in Section 2.5 of the Definitive Agreements or Section 2.2 of the Modified Obligations (as the case may be));
(vi): design, engineering, procurement, installation, grading and construction of crane pads at the WTG sites, access roads to the WTGs (including, but not limited to, any modifications and/or upgrades to public or other roads which are necessary for the transportation of the WTGs to the Project Site), lay down areas for the WTGs (as well as for storage and tools) and staging areas for delivery;
(vii): FAA warning lights, meteorological stations and foundations (including those for the transformers, met masts and WTGs);
(viii): anchor bolts with nuts and washers, specification of torque settings for foundation bolts and grouting and tensioning of anchor bolts;
(ix): design, engineering, procurement, installation and construction of cable and pipe ducting, all interconnection facilities (including the padmount transformers and the padmount switchgear), the communications system and the communications system cables and interface hardware, the kV electrical collection system and substation, the electrical works (whether above ground or below ground) and the control works (including installation, supply and termination of 600V electrical cables between ground bus panel and pad transformer);
(x): design, installation and termination of grounding system to the towers, switchgear, transformers, pad transformers, grid interconnects and the Project substation;
(xi): supply of met masts required for any power curve testing;
(xii): installation and supply of fiber-optic cabling between the WTGs;
(xiii): high speed internet access;
(xiv): sanitary facilities for Suzlon's non-exclusive use;
(xv): connecting a Project to the transmission grid (including, without limitation, all interconnection facilities);
(xvi): energizing a Project;
(xvii): connecting power to the base bus bar in the control panel;
(xviii): work space in temporary construction trailers, offices or similar facilities for Suzlon's non-exclusive use during Suzlon's Commissioning of the WTGs; and
(xix): all items listed on Exhibit I to this Agreement as being within Owner's scope.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

"Bill of Lading/Ex Works Milestone Payment" has the meaning given in Section 3.2(a) or Section 4.1(b) (as the case may be) of this Agreement.

"Blades" has the meaning given in the definition of the term WTG.

"Business Day" means any day other than a Saturday or Sunday or a day on which commercial banks are closed in the State of Illinois.

"Canadian Project" means a Project located in the mainland of Canada consisting of at least twenty-four (24) WTGs; provided, however, that such Project shall be located (a) in the Canadian provinces of Manitoba or Ontario, or, in the event the PTC Qualification Date is not extended to December 31, 2009 or any date thereafter, the Canadian provinces of Manitoba, Ontario, Alberta or Saskatchewan, and (b) within fifty (50) kilometers of a municipality with a permanent population of greater than ten thousand (10,000). Notwithstanding the foregoing or anything to the contrary contained in this Agreement, Suzlon shall not be responsible for compliance with any Canadian Law requiring that a minimum percentage of content of goods used in a Canadian Project be produced or manufactured in Canada (or any other designated location), and shall have no liability to Owner or any of its Affiliates for the failure of a Canadian Project to comply with the same.

"Cancellation Fee" has the meaning given in Section 8.5(b) of this Agreement.

"Cancelled Amount" has the meaning given in Section 8.5(a) of this Agreement.

"Certificate for Payment" has the meaning given in Section 3.4(b) of this Agreement.

"Certificate of Commissioning" has the meaning given in Section 2.2(i) to this Agreement.

"Certificate of Final Completion" has the meaning given in Section 2.2(l) of this Agreement.

"Certificate of Mechanical Completion" has the meaning given in Exhibit O to this Agreement.

"Change in Law" shall mean and refer to the enactment, adoption, promulgation, amendment, modification, repeal or change in interpretation by a Governmental Authority after the Effective Date of any Law which is applicable to the performance of the Work.

"Climb-Assist Election" has the meaning given in Section 3.2(f) of this Agreement.

"Climb-Assist Election Deadline" means (i) as to the 2008 WTGs, the date that is one (1) month after the Effective Date, and (ii) as to the 2009 WTGs, May 1, 2008.

"Climb-Assist Fee" means *** U.S. Dollars ($***) for each WTG containing the Climb-Assist System; which fee, if applicable, shall be in addition to the Contract Price.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

"Climb-Assist System" means that "climb-lift assist" (Tuf Tug model) system as further described in Exhibit S to this Agreement.

"Commission(ing)" means the start-up and commissioning activities to be performed by Suzlon in accordance with the Commissioning Test and Inspection Procedures, including the production of positive power (unless a WTG is unable to produce positive power as a result of any event, failure or circumstance other than Suzlon's failure to perform its obligations under this Agreement).

"Commissioning Date" means, with respect to each Project, the earlier of (i) the date that the actual physical Commissioning of the first WTG at a Project is complete, or (ii) the date which is sixty (60) days after the date that the first WTG for such Project is Delivered.

"Commissioning Deadline", as to each WTG, means the date which is *** (***) days after the later of (a) the date the Certificate of Mechanical Completion corresponding to such WTG is executed by both Parties, (b) the Deferral Date (but only if a WTG is an Excess WTG), (c) as to any Second Notice WTG, the date which is *** (***) days after the date Owner delivers to Suzlon a Second Expected Mechanical Completion Notice as to such WTG (or, in the event Owner does not deliver to Suzlon a Second Expected Mechanical Completion Notice as to such WTG, the date that is *** (***) days after the date of the Certificate of Mechanical Completion corresponding to such WTG), and (d) *** (in the event such WTG is a 2008 Extended WTG); each as such dates may be extended pursuant to the terms and conditions of this Agreement (including, without limitation, the terms of Section 11.15(a)).

"Commissioning LD Cap" means (i) for a 2008 WTG, an amount equal to *** percent (***%) of its 2008 Contract Price or (ii) for a 2009 WTG, an amount equal to *** percent (***%) of its 2009 Contract Price.

"Commissioning Liquidated Damages" has the meaning given in Section 2.2(h) of this Agreement.

"Commissioning Test and Inspection Procedures" shall mean those tests and procedures as set forth in Schedule C of Exhibit G of this Agreement, which Commissioning Test and Inspection Procedures may be updated from time to time by Suzlon by written notice to Owner, provided that such update may not modify the terms of this Agreement.

"Competitor" means any Person that designs and/or manufactures wind turbine generators.

"Confidential Information" has the meaning given in Section 10.1(a) of this Agreement.

"Contract Price" has the meaning given in Section 3.1(c) of this Agreement.

"Control" means, with respect to a Person, the power, directly or indirectly, to direct, determine, manage, control (or cause the direction of) the management, business, operations, activities, investments or policies of such Person, whether through the ownership of any interest (directly or indirectly) in such Person, by contract or otherwise.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

"Controller" has the meaning given in the definition of the term WTG.

"Day" or "day" shall mean and refer to a calendar day.

"Deadline Dates" shall mean and refer to the Delivery Deadline and the Commissioning Deadline.

"Deferral Date" has the meaning given in Section 2.2(k) of this Agreement.

"Definitive Agreements" means, as the context dictates, either (i) the TSIA and WMSA, or (ii) the TSA and WMSA.

"Deliver", "Delivery" or "Delivered" shall mean that the applicable WTG has been delivered to (or, as applicable, made available "ex works" at) the Initial Delivery Point.

"Delivery Deadline" means (i) as to each 2008 WTG, the last day of the calendar month to which such WTG applies pursuant to the Delivery Schedule, and (ii) as to each 2009 WTG, the last day of the calendar month to which such WTG applies pursuant to the Delivery Schedule (as such deadlines may be adjusted pursuant to the terms and conditions of this Agreement).

"Delivery LD Cap" means (i) for a 2008 WTG, an amount equal to *** percent (***%) of its 2008 Contract Price or (ii) for a 2009 WTG, an amount equal to *** percent (***%) of its 2009 Contract Price.

"Delivery Liquidated Damages" has the meaning given in Section 2.1(f)(i) of this Agreement.

"Delivery Schedule" has the meaning given in Section 2.1(e) of this Agreement.

"Design Materials" has the meaning given in Exhibit G to this Agreement.

"Effective Date" has the meaning given in the Preamble to this Agreement.

"Estimate Notice" means a notice (i) that requests a cost estimate from Suzlon for the Delivery of the WTGs to an Alternate Port in lieu of a Gulf Port (if applicable), delivery of the WTGs from the Initial Delivery Point to a Project Site, installation and achievement of Mechanical Completion of such WTGs at such Project Site, (ii) that includes the following: identification of the Alternate Port (if applicable), the specific Project Site, a proposed project schedule, a site plan that includes the proposed layout/location of the WTGs, identification of all existing and proposed access and service roads, a topographical survey, and identification of all potential physical impediments to the delivery and Mechanical Completion of the WTGs (such as existing overhead lines, difficult terrain, site conditions, etc.), and (iii) that grants Suzlon and its representatives access to a Project Site for inspection of the same.

"Excess WTGs" has the meaning given in the definition of Seven Day Event; provided, however, that a WTG shall cease to be an Excess WTG upon the occurrence of the Deferral Date for such Excess WTG.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

"Expected MC Date" has the meaning given in Section 2.2(c)(ii) of this Agreement.

"Expected Mechanical Completion Notice" has the meaning given in Section 2.2(c)(i) of this Agreement.

"FERC" means the United States Federal Energy Regulatory Commission.

"Final Completion" means, with respect to each Project, Suzlon has performed in accordance with this Agreement with respect to such Project, Commissioning of the WTGs at such Project has been achieved, and all items on the Punch List for such Project have been completed.

"Final Payment" has the meaning given in Section 3.2(a) or Section 4.1(b) of this Agreement, as applicable.

"Force Majeure" means an event or events the cause of which is beyond the control of, and does not in any way result from the fault or negligence of, the Party claiming its performance is affected and which, by the exercise of due diligence and foresight, could not have been avoided including, but not limited to, any acts of war, sabotage, terrorism, rebellion, insurrection, acts of foreign enemies, any Change in Law, military or usurped power or martial law, expropriation or confiscation of facilities or property by order of any Governmental Authority, any act or, failure to act by any Governmental Authority purporting to exercise jurisdiction which prevents or delays performance (other than acts or omissions of the affected Party), fires, floods, explosions, hail, unusually severe ice and ice storms, earthquakes, unforeseeable site conditions, other Acts of God, perils of sea, any strikes, lockouts or other labor disputes affecting such Party or any of its suppliers and subcontractors, winds in excess of ten (10) meters/second during Mechanical Completion, ten (10) meters/second during Commissioning and twenty (20) meters/second during service and maintenance (or such other restriction as may be imposed by applicable Laws), and any delay or interference by the other Party or its contractors or subcontractors. As to Suzlon, the term "Force Majeure" shall also include (a) any delay in performance caused by the failure of the Balance of Plant to be properly and timely installed, and (b) any extension in any Mechanical Completion Deadline pursuant to Section 11.15(b).

"Force Majeure Work" has the meaning given in Exhibit G to this Agreement.

"Fourth 2009 Milestone Payment" has the meaning given in Section 3.2(a) or Section 4.1(b) (as the case may be) of this Agreement.

"Full Power Plant" has the meaning given in Section 2.5(d) of this Agreement.

"Full PP Holdback" has the meaning given in Section 2.5(d) of this Agreement.

"Full PP Test Procedures" means testing protocols to be agreed by the Parties in writing as soon as reasonably possible after the Effective Date, which testing protocols shall detail steps to confirm the Applicable SC-Power Plant's (or, as applicable, Alternate Power Plant's) ability (i) to curtail and regulate the active power output from the wind farm being tested, (ii) to start and stop such wind farm, (iii) to regulate the power factor at the interconnection point according to a received set point, (iv) to monitor, control and receive information for a number of

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

communication interfaces, and (v) to have the full functionality and ability to perform; each in accordance with the applicable portions of the SC-Power Plant specifications attached hereto as Exhibit N. Further, any test of an Applicable SC-Power Plant pursuant to the Full PP Test Procedures shall not be deemed successfully performed if the associated test results indicate that the SC-Power Plant is not capable of being installed and successfully tested at other "Projects" (as defined in that certain Purchase & Reservation Agreement, by and between Owner and Suzlon, dated as of November 15, 2005, as amended, or any "Definitive Agreement" executed thereunder (as applicable)).

"Germanischer Lloyd Type Certificate" means, at Suzlon's option, either (i) a "type certificate" issued by Germanischer Lloyd for the low temperature version of the WTGs, or (ii) a "type certificate" issued by Germanischer Lloyd for the standard temperature version of the WTGs, along with an amendment to such certificate issued by Det Norske Veritas that covers the low temperature aspects of the WTGs, which shall be substantially similar to the applicable form(s) attached hereto as Exhibit R. Upon receipt of an unconditional Germanischer Lloyd Type Certificate, such actual certificate shall automatically replace the forms included as Exhibit R and shall be made a part of this Agreement.

"GL Liquidated Damages" has the meaning given in Section 2.6(b)(ii) of this Agreement.

"Governmental Authority" shall mean and refer to any national, federal, state, county, municipal or local government, agency, authority or court, or any department, board, bureau or instrumentality thereof.

"Gulf Port" means any port selected by Suzlon, in its sole discretion, which is located on or along the Gulf of Mexico in the States of Texas or Louisiana.

"Hub" has the meaning given in the definition of the term WTG.

"IDP Fee" has the meaning given in Section 3.2(d)(ii) of this Agreement.

"Included SCADA" means the "SC-Commander (software)", "SC-SCADA Reporting", and "SC-Turbine", all as more particularly described in the Technical Specifications.

"Initial Delivery Point" means

(a) As to any component of a WTG which is manufactured outside the continental United States, the "clearing" of such component through United States customs at a Gulf Port (or, if applicable, any Alternate Port), and its delivery to the first place of rest at the temporary storage location at such port (or nearby if such location is designated by the port authority to be an area external to the port) where the WTG component will be made available for inland transportation to a Project Site; and

(b) As to any component of a WTG which is manufactured within the continental United States, the availability of such component "ex works" the manufacturer's plant.

"Installation Manual" has the meaning given in Exhibit G to this Agreement.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

"Interest Rate" means an annual interest rate which is the lesser of (i) nine percent (9%), or (ii) the maximum interest rate permitted by law.

"Installation Contractor" means, if any, an Owner's Contractor retained by Owner to perform Owner's obligations relating to installation and achievement of Mechanical Completion of the WTGs.

"IPR Liability" has the meaning given in Section 5.2 of this Agreement.

"Law" means any constitution, charter, statute, treaty, act, law, ordinance, regulation, code, rule, order, decree, permit, judgment, directive, ruling, decision, order, guideline, resolution or declaration of any Governmental Authority, or any interpretation or application thereof by any such Governmental Authority.

"Liability Cap" has the meaning given in Section 5.2 of this Agreement.

"Losses" has the meaning given in Section 5.2 of this Agreement.

"Lost Purchase Price" has the meaning given in Section 8.5(d)(ii) of this Agreement.

"LVRT Fee" has the meaning given in Section 3.2(e) of this Agreement.

"LVRT System" means, with respect to a WTG, a system that allows such WTG, following an electrical transition period, to remain connected to the electrical transmission grid as required under FERC Order No. 661-A.

"Maintenance Work" has the meaning given in Exhibit G to this Agreement.

"Major Components" means the Tower, the Nacelle, the Hub, the Blades, the Controller, and the Turbine Generator of each WTG.

"Measured Average Availability Liquidated Damages" has the meaning given in Exhibit G to this Agreement.

"Mechanical Completion" or "Mechanically Complete" shall be deemed to have occurred as to each WTG when such WTG has been assembled, completely installed and erected in accordance with the Installation Manual and otherwise satisfies the criteria in the Mechanical Completion Checklist.

"Mechanical Completion Checklist" means collectively the "Installation Manual, Check List Mechanical Completion" and the "Check List, Electrical Installation Manual" utilized in relation to determining whether Mechanical Completion of a WTG has been achieved, all as set forth in Exhibit K of this Agreement.

"Mechanical Completion Date" has the meaning given it in Exhibit O.

"Mechanical Completion Deadline" has the meaning given in Section 2.2(c) of this Agreement.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

"Mechanical Completion Notice Deadline" means (i) as to the 2008 WTGs (other than the 2008 Extended Delivery WTGs and 2008 WTGs with a Delivery Deadline in ***), ***, (ii) as to 2008 WTGs with a Delivery Deadline in ***, ***, (iii) as to the 2008 Extended Delivery WTGs, ***, and (iv) as to the 2009 WTGs, ***; provided, however, for any Project consisting of more than sixty (60) WTGs, the Mechanical Completion Notice Deadline for such WTGs shall be "x" days earlier than the date listed in clause (i) or (ii) above (as applicable), with "x" equal to (a) two (2), multiplied by (b) the total number of WTGs at such Project over sixty (60) such WTGs.

"Mechanical Completion Process" means the process utilized in relation to determining whether Mechanical Completion of a WTG has been achieved, all as set forth in Exhibit O of this Agreement.

"Milestone(s)" has the meaning given in Section 3.2(a) of this Agreement.

"Milestone Payment" has the meaning given in Section 3.2(a) of this Agreement.

"Modified Obligations" has the meaning given in Section 4.1 of this Agreement.

"Nacelle" has the meaning given in the definition of the term WTG.

"Notice of Mechanical Completion" has the meaning given in Exhibit O of this Agreement.

"NTP(s)" has the meaning given in Section 2.3(a) of this Agreement.

"Operation Manual" has the meaning given in Exhibit G to this Agreement.

"Optional SCADA" means the SC-Power Plant, "SC-Met Station" and the hardware to run the "SC-Commander (software)" (as more particularly described on Exhibit N hereto), as well as any other changes to the supervisory control and acquisition system agreed upon by the Parties in writing.

"Outside Mechanical Completion Deadline" means, as to each WTG, the date which is the *** (***) anniversary of the date each such WTG has been Delivered.

"Owner" means the named Owner identified in the Preamble to this Agreement and its successors and permitted assigns.

"Owner Default" has the meaning given in Section 8.3 of this Agreement.

"Owner Guarantor" has the meaning given in Section 11.7(c)(i) of this Agreement.

"Owner's L/C" has the meaning given in Section 11.7(c)(ii) of this Agreement.

"Owner Parent Guarantee" has the meaning given in Section 11.7(c)(i) of this Agreement.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

"Owner's Contractor" shall mean any contractor, subcontractor or consultant retained by Owner to perform any of Owner's obligations or responsibilities (including, without limitation, construction of a Project's Balance of Plant).

"Party" or "Parties" has the meaning given in the preamble to this Agreement.

"Payment Escrow" has the meaning given in Section 11.7(b) of this Agreement.

"Performance Holdbacks" means the V3 Holdback, the Preliminary PP Holdback and the Full PP Holdback.

"Performance Side Letter" means that certain Performance Side Letter Agreement by and between Owner and Suzlon, dated as of the date hereof.

"Person" means any individual, corporation (including a business trust), partnership, limited liability company, association, joint stock company, trust, unincorporated organization, joint venture, Governmental Authority, or any other entity.

"Power Curve Guarantee" has the meaning given in Exhibit G to this Agreement.

"Power Curve Liquidated Damages" has the meaning given in Exhibit G to this Agreement.

"Preliminary Power Plant" has the meaning given in Section 2.5(c) of this Agreement.

"Preliminary PP Holdback" has the meaning given in Section 2.5(c) of this Agreement.

"Preliminary PP Test Procedures" means testing protocols to be agreed by the Parties in writing as soon as reasonably possible after the Effective Date, which testing protocols shall detail steps to confirm the Preliminary Power Plant's ability (i) to curtail and regulate the active power output from the wind farm being tested, and (ii) to start and stop such wind farm; each in accordance with the applicable portions of the SC-Power Plant specifications attached hereto as Exhibit N.

"Price Estimate" has the meaning given in Section 2.3(g) of this Agreement.

"Project" means the WTGs and the Balance of Plant for a Project Site.

"Project Site(s)" means the project site(s) described in NTPs issued by Owner (provided, however, if Owner fails to timely issue an NTP as to any WTG(s), the Owner shall in any event notify Suzlon of the project site for such WTG(s) promptly after Owner is aware of the same). All Project Sites must be located in the continental United States or Canada, provided, however, all Projects Sites in Canada must meet the requirements listed in the definition of "Canadian Projects".

"PTCs" means the renewable electricity production credits available under 26 U.S.C. § 45.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

"PTC LD Amount" means (i) an amount equal to *** U.S. Dollars ($***) for each 2008 WTG, and (ii) an amount equal to *** U.S. Dollars ($***) for each 2009 WTG; provided, however, that such amounts shall be equitably adjusted to reflect any modification of, or amendment to, 26 U.S.C. § 45 that occurs after the Effective Date and (a) lengthens or shortens the ten (10) year benefit period provided therein, (b) increases or decreases the base kilowatt-hour rate of $0.015 provided therein, or (c) otherwise materially alters the economic benefit provided by the PTCs.

"PTC Liquidated Damages" has the meaning given in Section 2.2(j) of this Agreement.

"PTC Qualification Date" means the date by which a WTG for a Project must be placed into service, as defined by 26 U.S.C. § 45 as amended from time to time and related regulations, in order to be eligible to receive PTCs. It is acknowledged by the Parties that the PTC Qualification Date as of the Effective Date is December 31, 2008.

"Punch List" means, as to any Project, the comprehensive list mutually prepared by Owner and Suzlon upon Commissioning of the last WTG of such Project, identifying those details of construction and mechanical adjustment with respect to Suzlon's Work which require repair, completion, correction or re-execution by Suzlon.

"Punch List Holdback" has the meaning given in Section 3.4(e) of this Agreement.

"Remarketing Costs" has the meaning given in Section 8.5(d)(ii) of this Agreement.

"Reimbursable Expenses" has the meaning given in Section 3.2(d) of this Agreement.

"Reservation Payment" has the meaning given in Section 3.2(a) of this Agreement.

"Retention" has the meaning given in Section 11.7(b) of this Agreement.

"SC-Power Plant" means the supervisory control and data acquisition system power plant as more particularly described on Exhibit N hereto.

"Scheduled Maintenance" has the meaning given in Exhibit G to this Agreement.

"Second Expected Mechanical Completion Notice" has the meaning given in Section 2.2(c)(ii) of this Agreement.

"Second Notice WTGs" has the meaning given in Section 2.2(c)(ii) of this Agreement.

"Security Milestone Payment" has the meaning given in Section 11.7(b) of this Agreement.

"Seven Day Event" means the achievement during any seven (7) day period of either (a) Mechanical Completion of more than fifteen (15) WTGs, or (b) Mechanical Completion of fifteen (15) or fewer WTGs at more than three (3) Project Sites (provided, however, that solely for the purposes of the calculation in this sub-clause (b) and sub-clause (y) below, Project Sites that are located within a five (5) mile radius of each other shall be considered a single Project

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

Site). For purposes of this Agreement, "Excess WTGs" means (x) those WTGs in excess of fifteen (15) upon the occurrence of the event described in clause (a) of the preceding sentence, or (y) all WTGs in clause (b) of the preceding sentence, excluding those WTGs at the three (3) Project Sites with the greatest number of WTGs which were Mechanically Completed during such seven (7) day period.

"Side Letter Holdback" means a holdback made pursuant to the terms of the Performance Side Letter.

"Sleeping Bear Wind Farm" means the "Project Site" as defined in that certain Turbine Supply Agreement to be entered into by and between Sleeping Bear, LLC and Suzlon.

"Sourcing Determination" has the meaning given in Section 2.1(m) of this Agreement.

"Specified Information" has the meaning given in Section 10.1(b) of this Agreement.

"Standby Fee" has the meaning given in Section 2.2(c)(ii) of this Agreement.

"Successful V3 Test" has the meaning given in Section 2.5(b) of this Agreement.

"Suzlon" means Suzlon Wind Energy Corporation and its successors and permitted assigns.

"Suzlon Default" has the meaning given in Section 8.1 of this Agreement.

"Suzlon Guarantor" has the meaning given in Section 11.7(a) of this Agreement.

"Suzlon L/C" has the meaning given in Section 11.7(b) of this Agreement.

"Suzlon Parent Guarantee" has the meaning given in Section 11.7(a) of this Agreement.

"Suzlon Security" has the meaning given in Section 11.7(b) of this Agreement.

"Suzlon Storage Days" means (x) the number of days a WTG or any WTG component is in storage or is otherwise unable to be transported or installed at a Project Site primarily as a result of Suzlon's need to perform corrective action with respect to a defect or deficiency in the same or (y) if such WTG or WTG component was in storage or is otherwise unable to be transported or installed at a Project Site for reasons other than primarily as a result of Suzlon's need to perform corrective action with respect to a defect or deficiency in the same, but the amount of time such WTGs or WTG components remained in storage or is otherwise unable to be transported or installed at a Project Site was extended primarily as a result of Suzlon's need to perform corrective action with respect to a defect or deficiency in the same, the number of days by which such storage or inability to be transported or installed at a Project Site was extended.

"TA Request" has the meaning given in Section 3.1(d) of this Agreement.

"Taxes" means any and all United States and Canadian federal, state, municipal or local governmental taxes, duties, levies or tariffs related to, or incurred in connection with, the

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

performance of the Work (including, without limitation, all United States and Canadian federal, state, municipal or local governmental sales, use, excise, property and real estate taxes and, for the sake of clarity, Canadian import taxes and import duties in the case of any Canadian Project), but excluding any United States import taxes and import duties.

"Technical Specifications" has the meaning given in Exhibit G to this Agreement.

"Third 2008 Milestone Payment" has the meaning given in Section 3.2(a) or Section 4.1(b) (as the case may be) of this Agreement.

"Third 2009 Milestone Payment" has the meaning given in Section 3.2(a) or Section 4.1(b) (as the case may be) of this Agreement.

"Threshold Date" has the meaning given in Section 2.5(d) of this Agreement.

"Total 2008 Contract Price" has the meaning given in Section 3.1(c) of this Agreement.

"Total 2009 Contract Price" has the meaning given in Section 3.1(c) of this Agreement.

"Tower" has the meaning given in the definition of the term WTG.

"TSA" means Turbine Supply Agreement in the form attached hereto as Exhibit A-1.

"TSIA" means Turbine Supply and Installation Agreement in the form attached hereto as Exhibit A-2.

"Turbine Generator" has the meaning given in the definition of the term WTG.

"V3 Holdback" has the meaning given in Section 2.5(b) of this Agreement.

"V3 Liquidated Damages" has the meaning given in Section 2.5(b) of this Agreement.

"V3 Liquidated Damages Share" has the meaning given in Exhibit G to this Agreement.

"Warranty Service" has the meaning given in Exhibit G to this Agreement.

"WMSA" means the Warranty, Maintenance and Services Agreement in the form attached hereto as Exhibit A-3.

"Work" means all work, services, equipment and items necessary to design, manufacture, deliver and Commission the WTGs in accordance with the terms and provisions of this Agreement, including all items listed on Exhibit I to this Agreement as being within Suzlon's scope.

"WTG(s)" means those certain model number S-88/2.1 MW wind turbine generators, "Low Temperature Version", with a hub height of 79 meters; each of which is comprised of: a complete tower, including internal ladders and platforms (a "Tower"), a turbine generator nacelle (a "Nacelle"), the component at which the rotor blades are attached to the drive shaft of the wind turbine (a "Hub"), a matched set of three (3) separate V3 rotor blades or other comparable blades

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

as Suzlon may then be manufacturing for the S-88 model (each such matched set of three, "Blades"), the control panels (the "Controller") and a turbine generator to be located within the Nacelle (a "Turbine Generator"), all as more particularly described in the Technical Specifications. As used in this Agreement and where the context so requires, the term WTG(s) shall mean the 2008 WTG(s) and/or the 2009 WTG(s).

ARTICLE 2

SALE & PURCHASE OF WTGS

2.1 WTG. (a) In accordance with the terms of this Agreement, Suzlon hereby agrees to design, manufacture, deliver, Commission and sell to Owner, and Owner hereby agrees to purchase from Suzlon, one hundred fifty (150) WTGs for delivery and, subject to the terms of this Agreement, Commissioning, during the calendar year of 2008 (the "2008 WTGs"). The Parties acknowledge and agree that, for purposes of this Agreement (except as otherwise expressly provided in the definition of "Mechanical Completion Notice Deadline" and Sections 2.2(j)(iii), 2.3(a), 2.3(b), and 8.5(b) of this Agreement), the term "2008 WTGs" shall include the 2008 Extended Delivery WTGs notwithstanding the Commissioning of any 2008 Extended Delivery WTGs during the calendar year of 2009.

(b) Additionally, in accordance with the terms of this Agreement, Suzlon hereby agrees to design, manufacture, deliver, Commission and sell to Owner, and Owner hereby agrees to purchase from Suzlon, one hundred fifty (150) WTGs for delivery and, subject to the terms of this Agreement, Commissioning, during the calendar year of 2009 (the "2009 WTGs").

(c) Except as otherwise expressly provided in this Agreement, the Parties' obligations as to the sale, purchase, design, manufacture, delivery and Commissioning of the WTGs shall constitute the legally valid and binding obligations of the parties, on and subject to the terms of this Agreement.

(d) Owner acknowledges and agrees that the WTGs to be supplied under this Agreement, as well as under the Definitive Agreements, shall be "Low Temperature Versions".

(e) Attached hereto as Exhibit B is a schedule ("Delivery Schedule") which identifies the calendar months of 2008 and 2009 during which each WTG shall be Delivered. If, pursuant to the issuance of an NTP, Owner requests that any WTG components which are manufactured outside the continental United States be Delivered to an Alternate Port, the Parties shall promptly thereafter equitably adjust (by amendment to this Agreement) the Delivery Schedule and the Deadline Dates to reflect the schedule impact to Suzlon resulting from such request by Owner. Owner shall be responsible for the increased costs of Delivery to an Alternate Port (in lieu of a Gulf Port, if applicable) as provided in Section 3.2(d)(i).

(f) Suzlon's obligations as to the Delivery Schedule shall be as follows:

(i) Suzlon shall, subject to Force Majeure, Deliver each WTG in accordance with the Delivery Schedule (but in no event later than the applicable Delivery Deadline).

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

If Suzlon (subject to Force Majeure) fails to Deliver all components of a WTG by the applicable Delivery Deadline, then as Owner's sole and exclusive remedy for any such failure (except as otherwise provided in this Section 2.1(f)), Suzlon shall pay Owner as liquidated damages and not as a penalty the following:

•: As to each WTG for which Suzlon (subject to Force Majeure) fails to Deliver all components by the applicable Delivery Deadline, *** U.S. Dollars ($***) for each day after the Delivery Deadline applicable to such WTG (each such date being subject to Force Majeure) until the earlier of (x) the date all components of such WTG are Delivered, and (y) the date Definitive Agreements applicable to such WTG are executed (it being acknowledged that the terms and conditions contained in such Definitive Agreements shall thereafter govern as to Suzlon's schedule obligations). Liquidated damages that are due and payable under this Section 2.1(f), if at all, are hereinafter referred to as "Delivery Liquidated Damages". Such Delivery Liquidated Damages shall be paid by Suzlon to Owner within thirty (30) days of the date accrued.

Notwithstanding the foregoing, Suzlon's aggregate liability for Delivery Liquidated Damages with respect to each WTG shall not exceed the corresponding Delivery LD Cap. If Delivery of the components of a WTG is delayed for a period of time such that the aggregate Delivery Liquidated Damages that have accrued with respect to such WTG are equivalent to the corresponding Delivery LD Cap, and such delay is thereafter continuing, the same shall constitute a Suzlon Default under this Agreement, whereupon Owner may either (i) terminate this Agreement solely as to such delayed WTG pursuant to the terms of Sections 8.1 and 8.2, and seek recovery of actual damages, if any, incurred by Owner as a result of such Suzlon Default (excluding any delay-related damages incurred by Owner as a result of the delay in Delivery of such WTG; it being agreed that Owner's sole and exclusive delay damages for such delay shall be the Delivery Liquidated Damages, subject to the corresponding Delivery LD Cap); or (ii) keep this Agreement in full force and effect as to such delayed WTG, but seek recovery of (x) PTC Liquidated Damages as to such WTG, if ultimately applicable, subject to the 2008 PTC LD Cap or 2009 PTC LD Cap (as applicable), and (y) actual damages, if any, incurred by Owner as a result of such Suzlon Default (excluding any delay-related damages incurred by Owner as a result of the delay in Delivery of the components of such WTG; it being agreed that Owner's sole and exclusive delay damages for such delay shall be (x) the Delivery Liquidated Damages, subject to the corresponding Delivery LD Cap, and (y) the PTC Liquidated Damages as to such WTG, if ultimately applicable, subject to the 2008 PTC LD Cap or 2009 PTC LD Cap (as applicable)). Suzlon's obligation as to the payment of the liquidated damages which have accrued under this Section 2.1(f) shall remain effective and binding upon Suzlon even if Definitive Agreements with respect to the relevant WTGs are executed by the Parties. Finally, if Suzlon is liable for Delivery Liquidated Damages under this Agreement with respect to a WTG, and Definitive Agreements are subsequently executed with respect to such WTG, such Definitive Agreements shall clearly state that Suzlon shall have no further monetary liability for the days of Delivery delay for which it has already paid Delivery Liquidated Damages.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

(ii) The Parties acknowledge and agree that, notwithstanding anything to the contrary contained in this Agreement or any Definitive Agreements, Suzlon shall not charge Owner, and Owner shall have no liability whatsoever for, storage and/or rental costs (including any transportation costs and/or expenses in moving any such WTG components to storage facilities) incurred by Suzlon as a result of Delivery of a WTG prior to its applicable Delivery Deadline (but excluding the IDP Fee, for which Owner shall have obligation to pay to Suzlon as described in Section 3.2(d)(ii)). However, storage and/or rental costs incurred on or after the applicable Delivery Deadline (including, without limitation, any transportation costs and/or expenses in moving any such WTG components to storage facilities, but excluding storage and/or rental costs related to Suzlon Storage Days) shall be at Owner's cost as provided in this Agreement and (as applicable) the Modified Obligations or the Definitive Agreements.

(g) Throughout the duration of this Agreement, the Parties shall communicate and otherwise work with each other to develop definitive schedules for incorporation into the various Definitive Agreements, provided, however, unless the Parties otherwise agree, such schedules must be consistent with the Delivery Schedule, as amended herein.

(h) By ***, Suzlon shall provide Owner with an updated version of the Delivery Schedule, which update shall identify the specific number of 2008 WTGs Suzlon shall be contractually bound to Deliver each calendar month during 2008. In no event may the updated Delivery Schedule materially alter the Delivery Schedule attached hereto. Once mutually agreed between the Parties, such updated Delivery Schedule shall be incorporated into this Agreement by a written amendment.

(i) By ***, Suzlon shall provide Owner with another updated version of the Delivery Schedule, which update shall identify the specific number of 2009 WTGs Suzlon shall be contractually bound to Deliver each calendar month during 2009. In no event may the updated Delivery Schedule materially alter the Delivery Schedule attached hereto. Once mutually agreed between the Parties, such updated Delivery Schedule shall be incorporated into this Agreement by a written amendment.

(j) From time to time after *** (with respect to the 2008 WTGs) and *** (with respect to the 2009 WTGs), Suzlon shall provide Owner, solely for information purposes, schedules identifying the anticipated number of WTGs to be Delivered on a weekly basis. It is acknowledged and agreed by the Parties that any such weekly schedules are solely for informational purposes and create no obligation or liability for Suzlon as to weekly Deliveries.

(k) Sections 2.1(h), (i) and (j) shall apply whether or not any WTGs are then subject to Modified Obligations.

(l) (i) Suzlon shall inform Owner of any material changes to the specifications of the WTGs during the term of this Agreement and provide Owner with a good faith opportunity to secure any such changes for any of the 2008 WTGs and/or 2009 WTGs; provided, however, the Parties shall promptly thereafter equitably adjust (by amendment to this Agreement) Suzlon's Deadline Dates and the Contract Price to reflect the schedule and cost impact to Suzlon resulting from any such changes actually requested by Owner. If Owner does not request any such

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

changes, Suzlon shall not implement any such changes, unless Suzlon does so at its sole cost and expense.

(ii) Notwithstanding the provisions of subsection 2.1(l)(i), if Suzlon, in the ordinary course of its business, implements any upgrades as to the WTGs (and does so without any additional cost to its other customers that are purchasing the same type of WTG), Suzlon shall implement such upgrades for the WTGs to be purchased pursuant to this Agreement at no additional cost to Owner; provided, however, that the foregoing terms shall not apply to any WTG component after manufacturing of the relevant WTG component has commenced.

(iii) Notwithstanding the provisions of subsection 2.1(l)(i), if Suzlon, in the ordinary course of its business, implements any corrective measures to remedy a defect or deficiency in the same type of wind turbine as the WTGs, Suzlon shall implement such corrective measures for the WTGs to be purchased pursuant to this Agreement at no additional cost to Owner (but only if such corrective measures seek to address a defect or deficiency that affects the WTGs to be purchased pursuant to this Agreement). Notwithstanding the foregoing, nothing in this Section 2.1(l) shall affect any guaranty or warranty provided by Suzlon under this Agreement or any Definitive Agreements, as applicable.

(m) The Parties acknowledge and agree that it shall be within Suzlon's sole discretion to determine (i) as to Projects to be located in the continental United States, (1) those WTG components which it intends to procure outside the continental United States and deliver to a Gulf Port, and (2) those WTG components which it intends to procure within the continental United States and make available "ex works" the manufacturer's plant, and (ii) as to Canadian Projects, (1) those WTG components which it intends to procure outside the continental United States and deliver to a Gulf Port, and (2) those WTG components which it intends to procure within the continental United States and make available "ex works" the manufacturer's plant; provided, however, as to Major Components, Suzlon shall provide written notice to Owner indicating its determination as to the aforementioned sourcing no later than *** (for the 2008 WTGs) or *** (for the 2009 WTGs) (each a "Sourcing Determination"). If Owner provides Suzlon with notice of its intended or likely Project Sites in the United States prior to the date Sourcing Determinations are made, Suzlon shall reasonably consider proximity to such Project Sites in making such Sourcing Determinations. At Owner's request, Suzlon and Owner shall discuss in good faith potential changes to the Sourcing Determination of any WTG; provided, however, that Owner shall bear the effect of any cost or schedule impact to Suzlon, if any, due to alterations in the Sourcing Determination requested by Owner. Notwithstanding the foregoing, if Owner fails to timely issue an NTP as provided in Section 2.3 for any reason other than a Suzlon Default, Suzlon shall be entitled in its sole discretion to revise its Sourcing Determination as to those WTGs for which no NTP was timely issued until the date that is five (5) months prior to the Delivery Deadline for such WTGs.

2.2 Mechanical Completion, Commissioning and Final Completion.

(a) The Owner shall bear full responsibility for completing the Balance of Plant at each Project Site (including, without limitation, the assembly, installation and achievement of

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

Mechanical Completion of all WTGs in accordance with Installation Manual provided to Owner by Suzlon). The Owner acknowledges and agrees that Suzlon's obligations to be performed under this Agreement after the achievement of Mechanical Completion of the WTGs (including, without limitation, Suzlon's warranty and guarantee obligations) are expressly conditioned upon Owner's proper assembly, installation and achievement Mechanical Completion of the WTGs in accordance with the Installation Manual.

(b) Subject to the terms of Section 3.1(d), Suzlon shall provide technical advisor assistance to the Owner so as to answer questions the Owner or Owner's Contractors may have during the installation and Mechanical Completion of any WTGs. If the party providing any such technical advisor assistance identifies an irregularity or error in installation, such party shall notify the Owner of the same; provided, however, Suzlon shall not guaranty, warrant or covenant that the installation work of Owner is performed correctly and shall not be responsible for errors or omissions of Owner in the installation process or for the failure of Owner or its contractors to properly install any WTG. In confirmation thereof, the provision of such technical advisor assistance shall not relieve the Owner of the responsibility to ensure that the WTGs are installed and Mechanical Completion is achieved in accordance with the Installation Manual.

(c) (i) On or before the Mechanical Completion Notice Deadline, Owner shall, as to every WTG being purchased by Owner, notify Suzlon in writing of the date Owner expects to achieve Mechanical Completion of the WTG(s) specified in each such notice (each such notice being an "Expected Mechanical Completion Notice"). Both the expected Mechanical Completion date provided in an Expected Mechanical Completion Notice for a WTG, as well as the actual date of Mechanical Completion of any such WTG, shall be no later than the *** (***) day after the date of issuance of the corresponding Expected Mechanical Completion Notice (the "Mechanical Completion Deadline").

(ii) In addition to the Expected Mechanical Completion Notice discussed above, Owner shall notify Suzlon in writing no later than *** (***) days prior to the date (the "Expected MC Date") Owner expects to achieve Mechanical Completion of any Second Notice WTGs (each such notice being an "Second Expected Mechanical Completion Notice"). For purposes of this Agreement, "Second Notice WTGs" shall mean (x) any WTGs which are Mechanically Completed in ***, or (y) any WTGs for which Owner submits any Notice of Mechanical Completion during the months of ***. In the event Owner delivers a Second Expected Mechanical Completion Notice for a Second Notice WTG and the Mechanical Completion Date for such WTG occurs after the Expected MC Date, Owner shall pay to Suzlon an amount equal to the Standby Fee. For purposes of this Agreement, the "Standby Fee" shall mean an amount equal to *** U.S. Dollars ($***) for every seven (7) day period (or fraction thereof) (beginning on the day after the Expected MC Date for a Second Notice WTG and ending upon the earlier of (i) the Mechanical Completion of such WTG or (ii) the date which Owner instructs Suzlon in writing that it is withdrawing its Second Expected Mechanical Completion Notice as to such WTG as described below) for which a Suzlon Commissioning crew (of three (3) individuals) is on standby (i.e., not working on the specific Second Notice WTG(s) referenced in the Second Expected Mechanical Completion Notice) at a Project Site awaiting Mechanical Completion of such WTGs. Notwithstanding the foregoing, if a Suzlon Commissioning crew is on standby for only one (1) or two (2) days in the

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

aggregate, the Standby Fee as to such Commissioning crew may be prorated as to such one (1) or two (2) day period (e.g., if a Second Notice WTG is Mechanically Completed on the second (2^nd) day after the Expected MC Date for such WTG, the Standby Fee for such Commissioning crew shall be *** U.S. Dollars ($***), but if such Second Notice WTG is Mechanically Completed on the ninth (9^th) day after the Expected MC Date for such WTG, the Standby Fee for such Commissioning Crew shall be *** U.S. Dollars ($***)). In the event a Commissioning crew is on standby at a Project Site, the Parties agree to reasonably cooperate as to the future utilization of such Commissioning crew; provided, however, (x) Suzlon shall be under no obligation to utilize such Commissioning crew to Commission any WTG other than the Second Notice WTG for which they are on standby, and (y) Owner shall have the right to withdraw the Second Expected Mechanical Completion Notice as to any Second Notice WTG for which a Suzlon Commissioning crew is or will be on standby,¹ in which case (1) Owner shall resubmit a Second Expected Mechanical Completion Notice for such WTG pursuant to the terms of this Section 2.2(c)(ii), and (2) Suzlon shall have the right to immediately withdraw such Commissioning crew from the Project Site (it being understood that Suzlon may choose to remain at such Project Site pursuant to a mutual agreement of the Parties pursuant to the introductory clause to this sentence). The Standby Fee shall not apply to any WTGs other than Second Notice WTGs. If, after Owner's delivery of a Second Mechanical Completion Notice as to a Second Notice WTG, an event of Force Majeure occurs that adversely affects Owner's ability to Mechanically Complete such Second Notice WTG by the Expected MC Date, Owner shall be entitled to an equitable adjustment in such Expected MC Date reflecting the impact of such event of Force Majeure; provided, however, (x) Owner must request such adjustment in writing to Suzlon as promptly as possible after Owner first becomes aware of such event, and (y) all other terms and provisions of this Section 2.2(c)(ii) shall apply to such newly adjusted Expected MC Date (e.g., for the sake of clarity, if the adjustment delays the Expected MC Date by five (5) days, and Owner does not Mechanically Complete such Second Notice WTG until the third (3^rd) day after such newly adjusted Expected MC Date, Owner shall be liable for a week's worth of Standby Fees for each Commissioning crew on standby at the Project Site). Notwithstanding the foregoing, nothing contained in this Section 2.2(c)(ii) shall alter the Mechanical Completion Deadline as to any WTG.

(d) Mechanical Completion shall be determined in accordance with the Mechanical Completion Process (as the same may be amended from time to time by the Parties) attached hereto as Exhibit O. Suzlon shall work in close cooperation with Owner and Owner's Contractors, including any Installation Contractor, to avoid unnecessary repetitions (where possible) in the Mechanical Completion Process; provided, however, Suzlon shall have no liability for the occurrence of the same.

(e) Suzlon shall promptly commence and diligently pursue Commissioning work as to each WTG to completion prior to the applicable Commissioning Deadline and, as to any WTG

¹ The Parties acknowledge and agree that if such Commissioning crew is mobilized (or has begun mobilizing) in response to such Second Expected Mechanical Completion Notice and has incurred travel expenses in relation thereto, Owner shall reimburse Suzlon for such travel expenses.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

which is Mechanically Completed or for which Owner has submitted any Notice of Mechanical Completion during the *** (***) day period prior to the PTC Qualification Date, Suzlon shall use reasonable efforts to expedite Commissioning of such WTG (including the commencement of such Commissioning); provided, however, Parties acknowledge and agree that, notwithstanding the foregoing and anything to the contrary contained in this Agreement, Suzlon shall be under no obligation (i) to commence Commissioning of a WTG earlier than *** (***) days prior to such WTG's Commissioning Deadline, or (ii) to achieve Commissioning of a WTG prior to its Commissioning Deadline. Promptly after the last WTG for a Project Site is Commissioned, Suzlon and Owner shall mutually prepare a final Punch List.

(f) If Owner has not achieved Mechanical Completion as to a WTG in accordance with this Agreement (including, without limitation, in accordance with the Installation Manual) by the Outside Mechanical Completion Deadline, then all obligations of Suzlon related to such WTG under the Equipment Warranty, the Availability Warranty and the Power Curve Guarantee (as such terms are defined in the Modified Obligations or any Definitive Agreements, as applicable) shall automatically terminate and be of no further force or effect (and termination of such warranties with respect to such WTG shall be Suzlon's sole and exclusive remedy for a failure by Owner to achieve Mechanical Completion of such WTG by the Outside Mechanical Completion Deadline).

(g) In the event the Owner delivers a Notice of Mechanical Completion to Suzlon for any WTG that is not yet connected to the permanent electricity transmission system (i.e., the grid) and energized, the Owner shall provide at its sole cost and expense all necessary transformers, generators and other equipment and resources necessary for Suzlon to begin Commissioning. In such event, the Owner acknowledges and agrees that Suzlon will not be able to complete Commissioning until the Owner has connected the WTG to the permanent electricity transmission system, and the Owner shall give Suzlon no less than ten (10) Business Days' notice of the date on which such connection will occur. The Owner shall bear all of Suzlon's costs associated with any interruption in Suzlon's ability to continue Commissioning due to lack of connection of the WTG to the permanent electricity transmission system (including, without limitation, any reasonable personnel or other costs associated with duplicative or repetitive services provided by Suzlon).

(h) If Suzlon fails to Commission a WTG by the applicable Commissioning Deadline for reasons other than (i) Force Majeure, or (ii) the failure of Owner to timely connect the Project to the permanent electricity transmission system (i.e., the grid) and energize the same, Suzlon shall pay Owner, as Owner's sole and exclusive remedy for any such failure (except as otherwise provided in this Section 2.2(h)), and as liquidated damages and not as a penalty, *** U.S. Dollars ($***) for each day after the Commissioning Deadline applicable to such WTG (each such date being subject to Force Majeure) until the date such WTG is Commissioned. Liquidated damages that are due and payable under this Section 2.2(h), if at all, are hereinafter referred to as "Commissioning Liquidated Damages". Such Commissioning Liquidated Damages shall be paid by Suzlon to Owner within thirty (30) days of the date accrued. Notwithstanding the foregoing, Suzlon's aggregate liability for Commissioning Liquidated Damages with respect to each WTG shall not exceed an amount equal to the Commissioning LD Cap. If Commissioning of a WTG is delayed for a period of time such that the aggregate Commissioning Liquidated Damages that have accrued with respect to such WTG are equivalent to the corresponding Commissioning LD

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

Cap, and such delay is thereafter continuing, the same shall constitute a Suzlon Default under this Agreement, whereupon Owner may either: (i) terminate this Agreement solely as to such delayed WTG pursuant to the terms of Sections 8.1 and 8.2, and seek recovery of actual damages, if any, incurred by Owner as a result of such Suzlon Default (excluding any delay-related damages incurred by Owner as a result of the delay in Commissioning of such WTG; it being agreed that Owner's sole and exclusive delay damages for such delay shall be the Commissioning Liquidated Damages, subject to the corresponding Commissioning LD Cap); or (ii) keep this Agreement in full force and effect as to such delayed WTG, but seek recovery of (x) PTC Liquidated Damages as to such WTG, if ultimately applicable, subject to the 2008 PTC LD Cap or 2009 PTC LD Cap (as applicable), and (y) actual damages, if any, incurred by Owner as a result of such Suzlon Default (excluding any delay-related damages incurred by Owner as a result of the delay in Commissioning of such WTG; it being agreed that Owner's sole and exclusive delay damages for such delay shall be (x) the Commissioning Liquidated Damages, subject to the corresponding Commissioning LD Cap, and (y) the PTC Liquidated Damages, if ultimately applicable, subject to the 2008 PTC LD Cap or 2009 PTC LD Cap (as applicable)). Finally, if Suzlon is liable for Commissioning Liquidated Damages under this Agreement with respect to a WTG, and Definitive Agreements are subsequently executed with respect to such WTG, such Definitive Agreements shall clearly state that Suzlon shall have no further monetary liability for the days of Commissioning delay for which it has already paid Commissioning Liquidated Damages.

(i) When Suzlon believes it has Commissioned a WTG in accordance with the Commissioning Test and Inspection Procedures, it shall promptly notify Owner in writing. Upon receipt of such notice, Owner shall conduct those investigations and inspections it deems necessary or appropriate to determine if Commissioning of such WTG has in fact been achieved. Within two (2) Business Days after the receipt of Suzlon's notice by Owner, the Owner shall either (i) notify Suzlon that Commissioning of the WTG has been achieved, or (ii) notify Suzlon that Commissioning of the WTG has not been achieved and stating the reasons therefor. Should Owner fail to respond to Suzlon's notice within such two (2) Business Day period, the corresponding WTG shall be deemed Commissioned. In the event Owner provides timely written notice that Commissioning of the WTG has not been achieved, Suzlon shall, at its sole cost and expense, immediately correct and/or remedy the defects, deficiencies and other conditions which so prevent Commissioning of the WTG. Upon completion of such corrective and/or remedial actions, Suzlon shall resubmit its notice stating that it believes Commissioning of the WTG has been achieved and the foregoing procedures shall be repeated until Commissioning of the WTG has in fact been achieved. Once a WTG is deemed Commissioned, Suzlon and Owner shall thereafter execute a "Certificate of Commissioning" (in the form attached hereto as Exhibit Q) establishing and identifying the Commissioning date of that particular WTG, which date shall be the date Suzlon sent the last notice to Owner indicating achievement of Commissioning.

(j) (i) The Parties acknowledge and agree that in the event:

(x): Suzlon fails to Deliver a WTG by the date which is *** (***) days prior to the PTC Qualification Date for reasons other than (i) Force Majeure, or (ii) a request by Owner to Deliver such WTG's components which are manufactured outside the continental United States to an Alternate Port; or

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

(y): Suzlon fails to Commission a WTG by the PTC Qualification Date, for reasons other than (i) Force Majeure, (ii) failure of the Owner to submit an Expected Mechanical Completion Notice for such WTG by the Mechanical Completion Notice Deadline, (iii) failure of Owner to properly install and achieve Mechanical Completion of such WTG in accordance with the Installation Manual by the corresponding Mechanical Completion Deadline, (iv) failure of Owner to timely connect the corresponding Project to the permanent electricity transmission system (i.e., the grid) and energize the same, (v) a request by Owner to Deliver such WTG's components which are manufactured outside the continental United States to an Alternate Port, or (vi) the Commissioning Deadline as to such WTG occurring on (or being extended pursuant to the terms and conditions of this Agreement to) a date later than the PTC Qualification Date; and

as a result thereof, the WTG fails to qualify for PTCs in the amount and for the term as anticipated, Suzlon agrees to pay Owner as liquidated damages (and as Owner's sole and exclusive remedy) for such failure, and not as a penalty, an amount equal to the PTC LD Amount for such WTG.

(ii) Liquidated damages that are due and payable under this subsection (j), if at all, are hereinafter referred to as "PTC Liquidated Damages". Such PTC Liquidated Damages shall be paid by Suzlon to Owner within thirty (30) days of the date accrued. If the PTC Qualification Date is extended so as to allow Owner to qualify for the PTCs, or Owner otherwise qualifies for PTCs, Suzlon shall not be liable for PTC Liquidated Damages. If WTGs later qualify for PTCs for which Suzlon has previously paid PTC Liquidated Damages (whether as a result of a change in the PTC Qualification Date or otherwise), Owner shall reimburse Suzlon for any previously paid PTC Liquidated Damages in full (if the Owner qualifies for PTCs in at least the amount and term as in effect on the date hereof) or in part (it being understood and agreed that if the Owner qualifies for PTCs in a lesser amount or shorter term, Owner's reimbursement to Suzlon shall be prorated to reflect the actual PTCs for which Owner then qualifies), and shall do so within 30 days after notice from Suzlon that such payment is due.

(iii) Notwithstanding anything to the contrary contained in this Section 2.2(j), Suzlon shall not be liable for PTC Liquidated Damages (x) with respect to the 2009 WTGs, unless the PTC Qualification Date is extended to December 31, 2009 or any date thereafter, or (y) with respect to the 2008 Extended Delivery WTGs, unless the PTC Qualification Date is extended to June 30, 2009 or any date thereafter.

(iv) Suzlon's obligations as to the payment of the PTC Liquidated Damages which have accrued under this Section 2.2(j) shall remain effective and binding upon Suzlon even if Definitive Agreements with respect to the relevant WTGs are executed by the Parties. The Parties acknowledge that PTC Liquidated Damages, Commissioning Liquidated Damages and Delivery Liquidated Damages are separate and independent remedies and shall not be offset or credited against each other, even though the same delay event may give rise to PTC Liquidated Damages, Commissioning Liquidated Damages and Delivery Liquidated Damages.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

(k) Notwithstanding anything to the contrary contained in this Agreement, upon the occurrence of any Seven Day Event, Suzlon may defer commencement of Commissioning of the corresponding Excess WTGs until the corresponding Deferral Dates. For the purposes of this Section 2.2(k), the "Deferral Date" shall mean the next succeeding date on which, had such Excess WTGs been Mechanically Completed on such date, no Seven Day Event would have otherwise occurred (it being understood that such Excess WTGs shall be included in all such Seven Day Event calculations for the purposes of determining whether there is an occurrence of the same and for purposes of determining the Deferral Date). The Parties acknowledge and agree that, notwithstanding anything to the contrary contained in this Agreement, Suzlon shall have no liability for PTC Liquidated Damages as to a WTG if, such WTG's Commissioning Deadline occurs on (or is extended to pursuant to this Section 2.2(k) to) a date later than the PTC Qualification Date.

(l) When Suzlon believes that it has achieved Final Completion as to a Project, Suzlon shall so notify Owner in writing. Upon receipt of such notice, Owner shall conduct those investigations and inspections as it deems necessary or appropriate to determine if Final Completion as to such Project has in fact been achieved. Within five (5) Business Days after the receipt of Suzlon's notice by Owner, the Owner shall either (i) notify Suzlon that Final Completion as to such Project has been achieved, or (ii) notify Suzlon that Final Completion as to such Project has not been achieved and stating the reasons therefor. Should Owner fail to respond to Suzlon's notice within such five (5) Business Day period, Final Completion as to such Project shall be deemed to have been achieved. In the event Owner provides written notice that Final Completion as to a Project has not been achieved, Suzlon shall, at its sole cost and expense, immediately correct and/or remedy the defects, deficiencies and other conditions which so prevent Final Completion of such Project. Upon completion of such corrective and/or remedial actions, Suzlon shall resubmit its notice stating that it believes Final Completion as to such Project has been achieved and the foregoing procedures shall be repeated until Final Completion as to such Project has in fact been achieved; provided, however, Owner must respond to Suzlon's notice within three (3) Business Days rather than five (5) Business Days. Once Final Completion as to a Project is deemed to have been achieved, Suzlon and Owner shall thereafter execute a "Certificate of Final Completion" (in the form attached hereto as Exhibit L) establishing and identifying the Final Completion Date, which date shall be the date Suzlon sent the last notice to Owner indicating achievement of Final Completion of such Project.

2.3 Issuance of NTPs. (a) Subject to Article 4, no later than ***, Owner shall deliver to Suzlon one or more notices to proceed (each a "NTP" or collectively the "NTPs") with respect to the 2008 WTGs (other than the 2008 Extended Delivery WTGs), specifying (i) the Project Site to which each WTG shall be delivered (subject to Owner's right to redirect delivery as provided in Section 2.3(f)), (ii) the number of WTGs assigned to each Project Site, (iii) the desired delivery dates for such WTGs (which may not in any event be contrary to or inconsistent with the Delivery Schedule), (iv) if applicable, the Alternate Port to which Owner seeks to have the WTG components which are manufactured outside the continental United States Delivered, (v) the options, if any, Owner selects regarding whether Suzlon's scope of services will include delivery of the WTGs from the Initial Delivery Point to the Project Site and/or installation and achievement of Mechanical Completion of the WTGs, (vi) whether the Project is expected to have a power purchase agreement or be a "merchant plant", and (vii) what Optional SCADA Owner is electing as to such Project Site (if any). As to any 2008 WTGs (other than any 2008

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

Extended Delivery WTGs) for which Suzlon does not receive an NTP by ***, to the extent so provided in Section 4.1, the Parties' rights, duties and obligations as to the design, manufacturing, delivery, sale, Commissioning and purchase of such WTGs shall thereupon automatically and immediately be amended to reflect the Modified Obligations (that is, from and after such date, the Parties rights, duties and obligations as to such WTGs shall be only those provided by and pursuant to the Modified Obligations until such time as Definitive Agreements are executed in relation to the same).

(b) Subject to Article 4, no later than ***, Owner shall deliver to Suzlon one or more NTPs with respect to the 2008 Extended Delivery WTGs, specifying (i) the Project Site to which each WTG shall be delivered (subject to Owner's right to redirect delivery as provided in Section 2.3(f)), (ii) the number of WTGs assigned to each Project Site, (iii) the desired delivery dates for such WTGs (which may not in any event be contrary to or inconsistent with the Delivery Schedule), (iv) if applicable, the Alternate Port to which Owner seeks to have the WTG components which are manufactured outside the continental United States Delivered, (v) the options, if any, Owner selects regarding whether Suzlon's scope of services will include delivery of the WTGs from the Initial Delivery Point to the Project Site and/or installation and achievement of Mechanical Completion of the WTGs, (vi) whether the Project is expected to have a power purchase agreement or be a "merchant plant", and (vii) what Optional SCADA Owner is electing as to such Project Site (if any). As to any 2008 Extended Delivery WTGs for which Suzlon does not receive an NTP by ***, to the extent so provided in Section 4.1, the Parties' rights, duties and obligations as to the design, manufacturing, delivery, sale, Commissioning and purchase of such WTGs shall thereupon automatically and immediately be amended to reflect the Modified Obligations (that is, from and after such date, the Parties rights, duties and obligations as to such WTGs shall be only those provided by and pursuant to the Modified Obligations until such time as Definitive Agreements are executed in relation to the same).

(c) Subject to Article 4, no later than ***, Owner shall deliver to Suzlon one or more NTPs with respect to the 2009 WTGs, specifying (i) the Project Site to which each WTG shall be delivered (subject to Owner's right to redirect delivery as provided in Section 2.3(f)), (ii) the number of WTGs assigned to each Project Site, (iii) the desired delivery dates for such WTGs (which may not in any event be contrary to or inconsistent with the Delivery Schedule), (iv) if applicable, the Alternate Port to which Owner seeks to have the WTG components which are manufactured outside the continental United States Delivered, (v) the options, if any, Owner selects regarding whether Suzlon's scope of services will include delivery of the WTGs from the Initial Delivery Point to the Project Site and/or installation and achievement of Mechanical Completion of the WTGs, (vi) whether the Project is expected to have a power purchase agreement or be a "merchant plant", and (vii) what Optional SCADA Owner is electing as to such Project Site (if any). As to any 2009 WTGs for which Suzlon does not receive an NTP by ***, to the extent so provided in Section 4.1, the Parties' rights, duties and obligations as to the design, manufacturing, delivery, sale, Commissioning and purchase of such WTGs shall thereupon automatically and immediately be amended to reflect the Modified Obligations (that is, from and after such date, the Parties rights, duties and obligations as to such WTGs shall be only those provided by and pursuant to the Modified Obligations until such time as Definitive Agreements are executed in relation to the same).

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

(d) Except as provided in this Section 2.3(d), each Project Site must comprised of a minimum of *** (***) WTGs that are located on parcels of real property that are contiguous through Owner's ownership, leasehold and/or easement interests.

(i) If a Project Site is comprised of less than *** (***) WTGs, Suzlon shall have the right to reasonably increase (1) the fee for the Warranty Period, and (2) all costs and fees for operations and maintenance services (including, without limitation, the Warranty Service, Scheduled Maintenance, Maintenance Work, Force Majeure Work and other repair work, in which case the Modified Obligations with respect to such Project and/or any Definitive Agreement executed with respect to such Project shall be amended to reflect such increased fees and costs; provided, however, the adjustments described in this Section 2.3(d)(i) shall not apply if such Project Site is located within 100 miles of another wind project with an aggregate nameplate capacity of twenty (20) MW or greater which, as of the date of the relevant NTP (or the last date upon which Owner was otherwise required to issue an NTP) uses Suzlon warranty and maintenance services pursuant to an agreement with at least two (2) years remaining in such agreement's term, including any extended term which has been exercised by that date. At least thirty (30) days prior to the date of the delivery of an NTP for a Project Site in the continental United States comprised of less than *** (***) WTGs, Owner may request in writing the amount of any reasonable increase in the fees described in this Section 2.3(d)(i) that would apply to the WTGs at such a Project. As promptly as possible (but no later than thirty (30) days) after such notice, Suzlon shall provide Owner the list of such reasonably increased costs and fees that would apply with respect to such Project Site. Following mutual consultation among the Parties regarding such reasonably increased costs and fees, Owner may elect, in its sole discretion, whether or not to issue an NTP with respect to the Project Site. If Owner issues an NTP with respect to such Project Site, the Modified Obligations and/or any Definitive Agreements executed with respect to such Project Site (as applicable) shall be amended to reflect such reasonably increased fees and costs.

(ii) If a Project Site is comprised of less than *** (***) WTGs, the Availability Warranty as to the WTGs purchased for such Project Site shall be amended as provided in Exhibits A or G (as applicable). Notwithstanding anything to the contrary contained herein, a separate Availability Warranty shall be provided for each TSA or TSIA (as applicable) executed pursuant to this Agreement (e.g., if three (3) TSAs are executed which TSAs cover *** (***),*** (***), and *** (***) WTGs, respectively, a separate Availability Warranty shall be provided for each TSA, notwithstanding the fact that, had a single TSA been executed for all such WTGs, a single Availability Warranty would have been provided for all *** (***) WTGs).

(iii) The Parties acknowledge and agree that, in the event of a Canadian Project, Owner shall bear all cost and schedule impacts to Suzlon as a result of the Project Site being located in Canada (which impacts may include, without limitation, those described in Sections 2.3(d)(iv), 2.3(g)(ii), and 3.2(d)(iv)), and which impacts shall be addressed by an amendment to this Agreement reflecting an equitable adjustment in Suzlon's costs and/or Deadline Dates to the extent impacted by the such location.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

(iv) At least ninety (90) days prior to the date of the delivery of an NTP for a Canadian Project, Owner may, at any time, request in writing the amount of any reasonably increased fees for operations and maintenance services that would apply to the WTGs at such Canadian Project (including, without limitation, the increased costs and fees for the Warranty Period, Warranty Service, Scheduled Maintenance, Maintenance Work, Force Majeure Work and other repair work). As promptly as possible (but no later than ninety (90) days) after such notice, Suzlon shall provide Owner the list of such reasonably increased costs and fees that would apply with respect to such Canadian Project. Following mutual consultation among the Parties regarding such reasonably increased costs and fees, Owner may elect, in its sole discretion, whether or not to issue an NTP with respect to the Canadian Project. If Owner issues an NTP with respect to such Canadian Project, the Modified Obligations and/or any Definitive Agreements executed with respect to such Canadian Project (as applicable) shall be amended to reflect such reasonably increased fees and costs.

(e) For purposes of this Agreement, no document issued by Owner which does not contain or otherwise address all of the matters required by the preceding subsections (a) or (b), whichever is applicable, shall be deemed an NTP.

(f) Owner may, at any time and from time to time by written notice to Suzlon, redirect the delivery of one or more of the WTGs to a new or different Project Site. Owner shall (i) be responsible (and shall reimburse Suzlon) for all reasonable increased out-of-pocket third party costs incurred by Suzlon as a result of such redirection (including, without limitation, the reasonable increased out-of-pocket third party costs of actual transportation (including any re-routing), shipping vendor fees and charges, applicable Taxes, insurance, permitting, handling, unloading/loading, storage (whether temporary or permanent), third party logistics management and all other reasonable increased out-of-pocket third party costs and expenses), plus a *** percent (***%) markup on such costs, which markup and reasonable increased out-of-pocket third party costs shall be in addition to the Contract Price, and (ii) shall agree to reasonable changes in the Deadline Dates and any corresponding Project schedule to accommodate such redirection.

(g) (i) If Owner, at least thirty (30) days prior to the date of its delivery of an NTP for a Project in the continental United States, submits in writing an Estimate Notice to Suzlon as to the WTGs to be referenced in such NTP, Suzlon shall (within thirty (30) days thereafter) provide Owner an estimate (a "Price Estimate") for the cost for Delivery of such WTGs to the Alternate Port in lieu of a Gulf Port (if applicable), for delivery of the WTGs from the Initial Delivery Point to the Project Site and/or for the installation and achievement of Mechanical Completion of such WTGs. A Price Estimate shall (i) with respect to delivery services, reflect Suzlon's estimate of actual out-of-pocket third party costs for performing the same (including the actual estimates from Suzlon's vendors, subcontractors, suppliers, and estimates of all transportation vendor fees and charges, applicable Taxes, insurance, permitting, handling costs, unloading/loading costs, storage costs (whether temporary or permanent), third party logistics management costs and other out-of-pocket third party costs and expenses), plus a *** percent (***%) markup on such estimated costs, and (ii) with respect to services related to installation and achievement of Mechanical Completion, reflect Suzlon's estimate of actual costs for performing the same (including the actual estimates from Suzlon's vendors, subcontractors

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

and suppliers, and estimates of all applicable Taxes, insurance, permitting and other out-of-pocket third party costs and expenses), plus a *** percent (***%) markup on such estimated costs (other than such estimated insurance costs, which costs shall have a *** percent (***%) markup). Notwithstanding the foregoing, the Parties acknowledge and agree that, if Owner elects any services described in this Section 2.3(g)(i), such Price Estimate is being provided by Suzlon to Owner solely as an estimate, and Owner shall nevertheless pay all actual and reasonable costs for the Delivery to an Alternate Port (if applicable), for the delivery of such WTGs to the Project Site and/or for the services related to installation and achievement of Mechanical Completion of such WTGs, all as provided in Sections 3.2(d) and 3.3, respectively, of this Agreement.

(ii) If Owner, at least ninety (90) days prior to the date of its delivery of an NTP for a Canadian Project, submits in writing an Estimate Notice to Suzlon as to the WTGs to be referenced in such NTP, Suzlon shall as promptly as possible (but no later than ninety (90) days thereafter) provide Owner a Price Estimate for such Canadian Project as described below. A Price Estimate for a Canadian Project shall (i) with respect to Delivery of such WTGs to an Alternate Port in lieu of a Gulf Port (if applicable) and/or delivery of such WTGs from the Initial Delivery Point to the Project Site, reflect Suzlon's estimate of actual out-of-pocket third party costs for performing the same (including the actual estimates from Suzlon's vendors, subcontractors, suppliers, and estimates of all transportation vendor fees and charges, applicable Taxes, insurance, permitting, handling costs, unloading/loading costs, storage costs (whether temporary or permanent), third party logistics management costs and other out-of-pocket third party costs and expenses), plus a *** percent (***%) markup on such estimated costs, and (ii) with respect to services related to installation and achievement of Mechanical Completion, reflect Suzlon's estimate of actual costs for performing the same (including the actual estimates from Suzlon's vendors, subcontractors and suppliers, and estimates of all applicable Taxes, insurance, permitting and other out-of-pocket third party costs and expenses), plus a *** percent (***%) markup on such estimated costs (other than such estimated insurance costs, which costs shall have a *** percent (***%) markup). Notwithstanding the foregoing, the Parties acknowledge and agree that, if Owner elects any services described in this Section 2.3(g)(ii), such Price Estimate is being provided by Suzlon to Owner solely as an estimate, and Owner shall nevertheless pay all actual and reasonable costs for the Delivery to an Alternate Port (if applicable), for the delivery of such WTGs to the Project Site, and/or for the services related to installation and achievement of Mechanical Completion of such WTGs, all as provided in Sections 3.2(d) and 3.3, respectively, of this Agreement.

(h) Suzlon further agrees to cooperate (at no cost to Suzlon) with Owner and all of Owner's Contractors in a manner reasonably anticipated to further the development of each Project Site.

(i) At any time Owner may submit in writing a notice to Suzlon requesting the number of foundation templates desired for the Project specified in such notice and the requested date of delivery of such foundation templates to such Project Site. The Parties acknowledge and agree that, as to a Project Site, Owner shall be entitled to "X" foundation templates, with "X" being the number equal to (a) the total number of WTGs at such Project Site, divided by (b) fifteen (15) (or the next whole number greater than the product of the foregoing equation if such product renders a fraction of a whole number) (e.g., Owner shall be entitled to two (2) foundation templates for a twenty (20) WTG Project). Suzlon's provision of foundation templates

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

pursuant to this Section 2.3(i) is included in the Contract Price; provided, however, that Owner shall reimburse Suzlon for (a) the reasonable costs of shipping or transporting such foundation templates to the Project Site, and, (b) once Owner has completed its use of such foundation templates, the reasonable costs of shipping or transporting the same from the Project Site to (x) another Project Site designated by Owner in writing pursuant to this Section 2.3(i), or (y) Suzlon's storage facility in the continental United States for such foundation templates (as applicable).

2.4 Execution of Definitive Agreements. (a) Subject to Article 4, within twenty (20) days of Suzlon's receipt of an NTP, Suzlon and an Affiliate of Owner shall prepare, execute and deliver a set of Definitive Agreements for the associated WTGs, as more fully described in Section 2.4(b) below. Except as otherwise expressly provided herein, upon execution of such Definitive Agreements, the terms of this Agreement, as they relate to the WTGs that are addressed in such Definitive Agreements, shall thereupon automatically be deemed terminated, of no further force or effect, and superseded by the terms of the Definitive Agreements. In confirmation and furtherance thereof, the Parties acknowledge and agree that (except as otherwise expressly provided herein) this Agreement shall have no bearing, application or binding effect, whether legal or otherwise, upon any WTGs that are addressed in any executed Definitive Agreements (or with respect to any rights, remedies or obligations of the Parties with respect to such WTGs). As to any WTG for which Definitive Agreements have not been prepared and executed within the foregoing twenty (20) day period (regardless of the reasons therefor), to the extent provided in Section 4.1, the Parties' rights, duties and obligations as to the design, manufacturing, delivery, sale, Commissioning and purchase of such WTGs shall thereupon automatically and immediately be amended to reflect the Modified Obligations (that is, from and after such date, the Parties rights, duties and obligations as to such WTGs shall be only those provided by and pursuant to the Modified Obligations until such time as Definitive Agreements are executed in relation to the same).

(b) The Definitive Agreements shall be in the forms attached to this Agreement as Exhibit A, as modified to reflect the Project Site, the number of relevant WTGs, designation of an Alternate Port (if applicable), and any other applicable terms of this Agreement. If the NTP specifies that Suzlon will install and Mechanically Complete the WTGs, the parties shall use the TSIA form and the WMSA form. If the NTP specifies that someone other than Suzlon will perform the installation services, the parties shall use the TSA form and the WMSA form; provided, however, the parties shall use the TSA form attached hereto as Exhibit A-1 in the event Suzlon delivers the WTGs from the Initial Delivery Point to the Project Site and the TSA form attached hereto as Exhibit A-4 in the event Suzlon only delivers the WTGs to the Initial Delivery Point. In furtherance thereof, upon issuance of an NTP, Suzlon agrees to execute and deliver (and Owner agrees to cause one of its Affiliates to execute and deliver) with respect to the applicable WTGs Definitive Agreements which are in the forms attached hereto as Exhibit A and which, in all material respects, reflect the applicable terms of this Agreement; it being further agreed by the Parties that the execution and delivery of any such Definitive Agreements shall not be unreasonably withheld.

2.5 Certain Performance-Related Issues. (a) Notwithstanding anything to the contrary contained in this Agreement or in any exhibit to this Agreement, the Parties acknowledge and agree that Owner has the right to withhold and/or retain the Performance

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

Holdbacks from certain Milestone Payments due under this Agreement until such time as the conditions described in this Section 2.5 are satisfied. In the event that the total amount needed for any Performance Holdback from any designated Milestone Payment exceeds the applicable Available Milestone Amount, then the portion of any such Performance Holdback not funded from such Milestone Payment shall be "held back" from the next succeeding Milestone Payment. For purposes of this Agreement, any amounts so withheld from a Milestone Payment shall be deemed to not have been due on such date, and such amounts shall only be due when and if Owner is required to pay such amounts pursuant to the terms of this Section 2.5. Owner and Suzlon further agree that any such "holdback" shall not count against the Liability Cap.

(b) Suzlon shall provide to Owner either the results of (i) a Successful V3 Test as to a wind turbine located in Australia on or prior to ***, or (ii) a Successful V3 Test as to a wind turbine located in the United States on or prior to ***, and if Suzlon does not provide at least one such Successful V3 Test by the corresponding deadline, Owner shall be entitled to "holdback" from the Third 2009 Milestone Payment an amount equal to *** percent (*** %) of the Contract Price (the "V3 Holdback"). For the purposes of this Agreement, a "Successful V3 Test" shall mean a power curve test of a wind turbine using the "V3" blade and achieving a *** percent (***%) or better power curve. Owner shall pay the V3 Holdback to Suzlon (and shall not be entitled to any future V3 Holdback) upon the occurrence of the earlier of (x) ten (10) Business Days after the date Suzlon provides results, reasonably acceptable to Owner, of a Successful V3 Test, or (y) the date the Parties enter into an amendment to this Agreement setting forth a corrective plan for Suzlon's failure to provide a Successful V3 Test, which amendment shall be drafted in a manner substantially similar to that certain First Amendment to the Purchase & Reservation Agreement by and between Owner and Suzlon, dated as of July 7, 2006 (a "V3 Amendment"). In the event that (x) Suzlon has not provided results, reasonably acceptable to Owner, of a Successful V3 Test, or (y) the Parties have not entered into a V3 Amendment on or prior to ***, Suzlon agrees that Owner may retain the then-existing V3 Holdback as liquidated damages (and as Owner's sole and exclusive remedy, and not as a penalty) for failure to either deliver a Successful V3 Test or enter into a V3 Amendment (the "V3 Liquidated Damages"). The V3 Liquidated Damages shall constitute Owner's sole and exclusive remedy should Suzlon fail to either provide a Successful V3 Test or enter into a V3 Amendment on or prior to *** (as well as any failure of Suzlon to provide such Successful V3 Test or enter into a V3 Amendment at any time after such date); it being acknowledged and agreed by the Parties that Suzlon's liability, if any, for the V3 Liquidated Damages relates solely to Suzlon's failure to provide a Successful V3 Test or enter into a V3 Amendment on or prior to *** (as well as any failure of Suzlon to provide such Successful V3 Test or enter into a V3 Amendment at any time after such date) and to no other covenant or obligation of Suzlon under this Agreement. Owner acknowledges and agrees that if any V3 Liquidated Damages are payable pursuant to this Agreement and any Power Curve Liquidated Damages are payable at a Project pursuant to this Agreement or any Definitive Agreement, such Power Curve Liquidated Damages shall be offset by an amount equivalent to the V3 Liquidated Damages Share for such Project.

(c) If Suzlon fails to install a Preliminary Power Plant at the Sleeping Bear Wind Farm prior to the Effective Date, Owner shall be entitled to "holdback" from the Third 2008 Milestone Payment an amount equal to *** U.S. Dollars ($***) (the "Preliminary PP Holdback"). For the purposes of this Agreement, a "Preliminary Power Plant" means a preliminary version of a supervisory control and data acquisition system power plant that (i) is

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

capable of meeting the active power regulation specifications of the SC-Power Plant (as indicated on Exhibit N hereto), and (ii) has been installed at the Sleeping Bear Wind Farm and has been successfully tested by Owner to curtail and regulate the active power from such wind farm and start and stop such wind farm in accordance with the Preliminary PP Test Procedures. Owner acknowledges and agrees that such testing of the Preliminary Power Plant by Owner shall be concluded no later than fourteen (14) days following delivery to Owner by Suzlon of a notice that the Preliminary Power Plant has been installed and is ready for testing. Owner shall pay the Preliminary PP Holdback to Suzlon (and shall not be entitled to any future Preliminary PP Holdback) upon (x) Suzlon's installation of a Preliminary Power Plant at the Sleeping Bear Wind Farm that has passed the Preliminary PP Test Procedures, or (y) in the event Suzlon's installation of a Preliminary Power Plant at the Sleeping Bear Wind Farm does not occur by ***, as a result of delay or interference by Owner or "owner" of the Sleeping Bear Wind Farm or their contractors or subcontractors (including, without limitation, delay relating to any communications interface), the earlier of (I) the occurrence of clause (x), and (II) Suzlon's provision of a report reasonably acceptable to Owner (Owner's acceptance not to be unreasonably withheld) demonstrating that Suzlon's preliminary version of a supervisory control and data acquisition system power plant is capable of meeting the active power regulation specifications of the SC-Power Plant (as indicated on Exhibit N hereto) and has the ability to curtail and regulate power of a wind farm and start and stop such wind farm (even though such power plant has not been installed and tested at the Sleeping Bear Wind Farm).

(d) If Suzlon fails to install an Applicable SC-Power Plant at one (1) Applicable Wind Farm on or prior to the Applicable Date, regardless of whether such failure was the result of Force Majeure or any other reason, (i) Owner shall be entitled to "holdback" from the next Milestone Payment occurring after the Applicable Date (the "Next Milestone Payment") an amount equal to *** U.S. Dollars ($***) (the "Full PP Holdback") and (ii) Suzlon shall promptly retain, at Suzlon's sole expense, a nationally recognized, independent expert (mutually agreeable to the Parties) in supervisory control and data acquisition systems and the development thereof, which expert shall, at Suzlon's sole direction and sole expense, either promptly (x) modify or enhance the existing power plant program and devices to achieve the SC-Power Plant specifications (as described on Exhibit N hereto) at such one (1) Applicable Wind Farm, or (y) provide a third-party supervisory data control and acquisition system that provides the equivalent functionality of the SC-Power Plant, install the same at one (1) Applicable Wind Farm, and test the same in accordance with the Full PP Test Procedures (the provision of (x) or (y) being an "Alternate Power Plant"). Suzlon agrees to provide such expert with access to its SC-Power Plant and software codes sufficient to enable such expert to perform the tasks set forth in the preceding sentence. For the purposes of this Agreement, an "Applicable SC-Power Plant" shall mean an SC-Power Plant that has been installed at one (1) Applicable Wind Farm and successfully tested in accordance with the Full PP Test Procedures. Owner acknowledges and agrees that testing of the Applicable SC-Power Plant or Alternate Power Plant (as applicable) by Owner shall be concluded no later than fourteen (14) days following delivery to Owner by Suzlon or the expert (as applicable) of a notice that the Applicable SC-Power Plant or Alternate Power Plant has been installed and is ready for testing. In the event Suzlon has not yet provided to Owner an Applicable SC-Power Plant or an Alternate Power Plant at one (1) Applicable Wind Farm by the later of (x) the date the Fourth 2009 Milestone Payment is due and (y) the date the Next Milestone Payment is due (such later date being the "Threshold Date"), Owner shall additionally be entitled to "holdback" from each Milestone Payment occurring after the

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

Threshold Date an amount equal to *** percent (***%) of each such Milestone Payment (which such amount shall be added to any existing Full PP Holdback). Upon Suzlon's installation of an Applicable SC-Power Plant or Alternate Power Plant at one (1) Applicable Wind Farm, Owner shall pay the Full PP Holdback to Suzlon (and shall not be entitled to any future Full PP Holdback).

(e) The Parties further acknowledge and agree that Owner has the right pursuant to the Performance Side Letter to withhold amounts from certain Milestone Payments due under this Agreement until such time as the conditions described in the Performance Side Letter are satisfied. Any amounts so withheld from a Milestone Payment shall be deemed to not have been due on such date, and such amounts shall only be due when and if Owner is required to make such amounts pursuant to the terms of the Performance Side Letter. Owner and Suzlon further agree that any such Side Letter Holdback shall not count against the Liability Cap. The terms and conditions of the Performance Side Letter are expressly incorporated herein and made a part of this Agreement.

(f) Notwithstanding the foregoing and anything to the contrary contained in this Agreement, Suzlon's failure to perform any obligation set forth in this Section 2.5 or the Performance Side Letter shall not be deemed a Suzlon Default or a default under this Agreement; it being understood and agreed by the Parties that Owner's sole and exclusive recourse for Suzlon's failure to perform any obligation pursuant to this Section 2.5 or the Performance Side Letter shall be to withhold the applicable Performance Holdback and/or Side Letter Holdback until the corresponding obligation is satisfied pursuant to Section 2.5 or the Performance Side Letter, as applicable (or, if applicable, to retain as liquidated damages the V3 Liquidated Damages pursuant to Section 2.5(b)).

(g) If, by reason of the execution of one (1) or more Definitive Agreements, the amount of the Milestone Payments provided under this Agreement are no longer adequate to permit Owner to withhold a Performance Holdback or a Side Letter Holdback, Suzlon shall permit Owner to "hold back" the applicable Performance Holdback(s) and/or Side Letter Holdback(s) from the "milestone payments" next due under any set of Definitive Agreements selected by Owner. Suzlon, Owner and the "owner" under such Definitive Agreements shall enter into a side letter agreement documenting the same.

2.6 Type Certificate. (a) The WTGs to be supplied by Suzlon to the Owner under this Agreement shall be materially consistent with the wind turbine generators for which the Germanischer Lloyd Type Certificate was issued, and will include any modifications or upgrades that were implemented in order to obtain the Germanischer Lloyd Type Certificate.

(b) In the event a Final Payment becomes payable pursuant to this Agreement and Suzlon has not delivered the Germanischer Lloyd Type Certificate to Owner, the Parties acknowledge and agree that the following shall occur:

(i) For Final Payments relating to 2008 WTGs, Owner shall be entitled to "holdback" from such Final Payments an amount equal to *** percent (***%) of the 2008 Contract Price for each such 2008 WTG (collectively, the "2008 GL Holdback"). In the event Suzlon fails to deliver the Germanischer Lloyd Type Certificate to Owner on

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

or prior to ***, Suzlon agrees that Owner may retain the then-existing 2008 GL Holdback, as well as all future 2008 GL Holdback, as liquidated damages (and as Owner's sole and exclusive remedy, and not as a penalty) for failure to deliver the Germanischer Lloyd Type Certificate on or prior to *** (the "2008 GL Liquidated Damages"). Notwithstanding the foregoing, in the event Suzlon delivers the Germanischer Lloyd Type Certificate to Owner on or prior to ***, Owner shall pay to Suzlon any then-existing 2008 GL Holdback and shall not be entitled to any future 2008 GL Holdback with respect to 2008 WTGs. The 2008 GL Liquidated Damages shall constitute Owner's sole and exclusive remedy should Suzlon fail to deliver the Germanischer Lloyd Type Certificate to Owner on or prior to *** (as well as any failure of Suzlon to deliver such certificate at any time after such date); it being acknowledged and agreed by the Parties that Suzlon's liability, if any, for 2008 GL Liquidated Damages relates solely to Suzlon's failure to deliver the Germanischer Lloyd Type Certificate to Owner on or prior to *** (as well as any failure of Suzlon to deliver such certificate at any time after such date) and to no other covenant or obligation of Suzlon under this Agreement.

(ii) For Final Payments relating to 2009 WTGs, Owner shall be entitled to "holdback" from such Final Payments an amount equal to *** percent (***%) of the 2009 Contract Price for each such 2009 WTG (collectively, the "2009 GL Holdback"). In the event Suzlon fails to deliver the Germanischer Lloyd Type Certificate to Owner on or prior to ***, Suzlon agrees that Owner may retain the then-existing 2009 GL Holdback, as well as all future 2009 GL Holdback, as liquidated damages (and as Owner's sole and exclusive remedy, and not as a penalty) for failure to deliver the Germanischer Lloyd Type Certificate to Owner on or prior to *** (the "2009 GL Liquidated Damages", collectively with the 2008 GL Liquidated Damages, the "GL Liquidated Damages"). Notwithstanding the foregoing, in the event Suzlon delivers the Germanischer Lloyd Type Certificate to Owner on or prior to ***, Owner shall pay to Suzlon any then-existing 2009 GL Holdback and shall not be entitled to any future 2009 GL Holdback with respect to 2009 WTGs. The 2009 GL Liquidated Damages shall constitute Owner's sole and exclusive remedy should Suzlon fail to deliver the Germanischer Lloyd Type Certificate to Owner on or prior to *** (as well as any failure of Suzlon to deliver such certificate at any time after such date); it being acknowledged and agreed by the Parties that Suzlon's liability, if any, for 2009 GL Liquidated Damages relates solely to Suzlon's failure to deliver the Germanischer Lloyd Type Certificate to Owner on or prior to *** (as well as any failure of Suzlon to deliver such certificate at any time after such date) and to no other covenant or obligation of Suzlon under this Agreement.

ARTICLE 3

CONTRACT PRICE; PAYMENTS TO SUZLON

3.1 Contract Price. (a) As consideration for the sale of each 2008 WTG by Suzlon, Owner agrees to pay Suzlon the price of *** U.S. Dollars (US $***) for each such WTG (the "2008 Contract Price").

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

(b) As consideration for the sale of each 2009 WTG by Suzlon, Owner agrees to pay Suzlon the price of *** U.S. Dollars (US $***) for each such WTG (the "2009 Contract Price").

(c) For purposes of this Agreement, the "Contract Price" shall be the sum of (i) the 2008 Contract Price multiplied by the total number of 2008 WTGs (the "Total 2008 Contract Price"), and (ii) the 2009 Contract Price multiplied by the total number of 2009 WTGs (the "Total 2009 Contract Price"). The Contract Price is not subject to adjustment for exchange rate fluctuations.

(d) Each 2008 Contract Price for a 2008 WTG and each 2009 Contract Price for a 2009 WTG in this Section 3.1 includes (i) all costs to design and manufacture the WTG or any component thereof (including acquisition of materials for the WTG), (ii) as to those WTG components manufactured outside the continental United States, all costs to ship such WTG components to a Gulf Port, to clear United States customs, and to initially unload the same at the dockside of such port from the ship and, as to those WTG components manufactured within the continental United States, all costs to make such WTG components available for shipment "ex works" a manufacturer's plant in the United States, (iii) except as provided below, technical advisor assistance during Mechanical Completion (if the WTGs are to be Mechanically Completed by Owner), (iv) Commissioning of each WTG, and (v) the Included SCADA.

For purposes of this Agreement, "technical advisor assistance" shall mean the provision of a technical advisor(s) to answer questions posed by Owner during Owner's installation of a WTG; which advisor(s) (a) shall be qualified to perform the tasks for which they are assigned pursuant to this Section 3.1(d), and (b) shall provide, without additional charge and at Owner's direction pursuant to this Section 3.1(d), an aggregate number of man-hours of assistance to Owner equal to (i) twelve (12), multiplied by (ii) the number of WTGs actually purchased by Owner under this Agreement (collectively, the "Aggregate TA Hours"); provided, however, that Suzlon shall provide additional technical advisor assistance to Owner, at no cost to Owner, if such assistance is necessary to cure any defects or deficiencies in the WTGs or related software. The parties further agree that, once the Aggregate TA Hours have been exhausted through Suzlon's performance of the same pursuant to TA Requests, any additional assistance provided by a technical advisor pursuant to TA Requests shall be at Owner's cost, at a rate of *** U.S. Dollars ($***) per day, for each technical advisor (the "Additional TA Fees"). Notwithstanding anything to the contrary contained in this Agreement or any set of Definitive Agreements, Owner may allocate the Aggregate TA Hours among the WTGs actually purchased under this Agreement (including those WTGs then covered by Modified Obligations or Definitive Agreements) in such amounts as the Owner may desire (e.g., ten (10) technical advisor assistance hours for one WTG, thirty (30) technical advisor assistance hours for another WTG, and so on); provided that Owner shall compensate Suzlon for all Additional TA Fees earned once the Aggregate TA Hours have been exhausted (and regardless of whether the Aggregate TA Hours are exhausted in connection with WTGs subject to Modified Obligations and/or Definitive Agreements). In confirmation and furtherance thereof, and notwithstanding anything in this Agreement to the contrary, Owner agrees (i) to pay Suzlon any Additional TA Fees earned by Suzlon as provided above, and (ii) that such payment obligation shall remain binding upon Owner even as to WTGs which are subject to Definitive Agreements. Owner and Suzlon covenant and agree that, as to each Project, they shall work together to forecast when technical advisor assistance shall be needed for such Project, all in accordance with such Project's WTG

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

delivery schedule. Owner covenants and agrees that, as to each Project, Owner shall provide Suzlon with twenty-one (21) days advance written notice of Owner's desire for technical advisor assistance in relation to such Project (along with the estimated aggregate number of desired man-days of technical advisor assistance and the proposed schedule of such assistance) (each, a "TA Request"). To the extent Owner thereafter wishes to amend a TA Request, it shall provide Suzlon with five (5) days advance written notice. Suzlon is under no obligation to implement technical advisor assistance pursuant to a TA Request or modification thereof until the twenty-one (21) day or five (5) day notice period, as applicable, has lapsed (unless said modification reduces the aggregate number of desired man-days), but shall use commercially reasonable efforts to implement such request as soon as reasonably possible. The Owner under this Agreement shall have the right to determine which technical advisor assistance hours are included in the Aggregate TA Hours and shall have the right to determine which, if any, of the Aggregate TA Hours shall be allocated to any "Projects" under any Definitive Agreements. Notwithstanding anything to the contrary contained herein, including the provision of TA Requests by Owner under this Agreement, Suzlon shall receive no credit for, and shall not be entitled to charge Owner for, any technical advisor assistance hours for which a technical advisor is available to a Project, but unable to provide technical advisor assistance due to delays in the Mechanical Completion activities attributable to Suzlon or its contractors or suppliers. Commencing on the date hereof, Suzlon shall provide to Owner monthly reports summarizing the technical advisor assistance hours provided pursuant to TA Requests by Suzlon to Owner under this Agreement or any "owner" under any Definitive Agreement. The provisions of this paragraph shall continue to apply with respect to WTGs covered by Definitive Agreements, notwithstanding Section 2.4(a) of the Agreement

3.2 Milestone Payments. (a) Upon completion of the following "Milestones" with respect to the 2008 WTGs and the 2009 WTGs, the corresponding portion of the Contract Price shall be due and payable to Suzlon (each, a "Milestone Payment"):

Milestone	WTGs to Which Payment Applies	Milestone Payment
Reservation Payment	All WTGs	* U.S. Dollars ($*) (the "Reservation Payment")
Execution of this Agreement	All WTGs	* U.S. Dollars ($), representing percent (* %) of the Total 2008 Contract Price and * percent (* %) of the Total 2009 Contract Price, less the Reservation Payment.
Execution of this Agreement	2008 WTGs	* U.S. Dollars ($), representing percent (* %) of the Total 2008

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

Milestone	WTGs to Which Payment Applies	Milestone Payment
		Contract Price, plus the LVRT Fee for all 2008 WTGs (the "Third 2008 Milestone Payment")
***	2009 WTGs	* U.S. Dollars ($), representing percent (* %) of the Total 2009 Contract Price (the "Third 2009 Milestone Payment")
***	2009 WTGs	* U.S. Dollars ($), representing percent (* %) of the Total 2009 Contract Price, plus the LVRT Fee for all 2009 WTGs and (if applicable) the Climb-Assist Fee for all 2009 WTGs (provided, however, that any Climb-Assist Election issued before this date with respect to the 2009 WTGs must be accompanied by the Climb-Assist Fee for all 2009 WTGs) (the "Fourth 2009 Milestone Payment")
Date that bills of lading have been issued for all Major Components of a WTG (however, as to the Major Components which are manufactured within the continental United States, it shall be the date an "ex works certificate" is issued and not a bill of lading)	All WTGs	* (* %) of the applicable Contract Price for each WTG (i.e., pro rate the payment for each WTG) (the "Bill of Lading/Ex Works Milestone Payment")
Earlier of (i) delivery of all Major Components of a WTG to a Project	All WTGs	* (* %) of the applicable Contract Price

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

Milestone	WTGs to Which Payment Applies	Milestone Payment
Site, or (ii) fourteen (14) days after Delivery of such Major Components²		for each WTG (i.e., pro rate the payment for each WTG)
Completion of Commissioning of each WTG (provided if Mechanical Completion of the WTGs is not part of Suzlon's scope of work, such payment will be the earlier of (i) completion of Commissioning of such WTG, (ii) thirty (30) days after delivery of all Major Components of such WTG to a Project Site (plus any Suzlon Storage Days occurring after delivery to the Project Site), or (iii) sixty (60) days after the later of (x) Delivery of all Major Components of such WTG (plus any Suzlon Storage Days) and (y) the Delivery Deadline of such WTG	All WTGs	* percent (*%) of the applicable Contract Price (i.e., pro rate the payment for each WTG)
Final Completion with respect to a Project (provided if Mechanical Completion of the WTGs is not part of Suzlon's scope of work, such payment will be the earlier of (i) Final Completion with respect to a Project, (ii) ninety (90) days after delivery of all Major Components of all WTGs to a Project Site (plus any Suzlon Storage Days occurring after delivery of all WTGs to the Project Site), or (iii) one hundred twenty (120) days after the later of (x) Delivery of all Major Components of all WTGs (plus any Suzlon Storage Days) and (y) the	All WTGs	* percent (*%) of the applicable Contract Price (prorated for each Project Site, which is determined on the basis of the number of WTGs at each such Project Site) (the "Final Payment"); provided in the event of an Alternate Final Milestone, such Milestone Payment shall be the Final Payment minus the Punch List Holdback applicable to

² NOTE: If this Milestone occurs prior to the first day of the month immediately preceding the month in which the Delivery Deadline for such WTG occurs, then this Milestone Payment shall be payable on the later of (x) such first day of the month immediately preceding the month in which the Delivery Deadline for such WTG occurs or (y) the date specified in Section 3.4(c) as to the Application for Payment for such Milestone.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

Milestone	WTGs to Which Payment Applies	Milestone Payment
last Delivery Deadline of any WTG (the achievement of such Milestone under either clause (ii) or clause (iii) being an "Alternate Final Milestone")		such Project, as further described in Section 3.4(e)).
Final Completion with respect to a Project	All WTGs	Punch List Holdback applicable to such Project Site

(b) The Parties acknowledge and agree that Owner has previously paid the Reservation Payment of *** U.S. Dollars ($***) and that Owner shall make the remaining Milestone Payments as to all WTGs as required by the terms of this Article 3; provided, however, (i) as to those WTGs for which Definitive Agreements have been executed, all subsequent Milestone Payments for such WTGs shall be made pursuant to the terms of such Definitive Agreements (the executed version of which shall reflect the Milestone Payment schedule in Section 3.2(a)), and (ii) as to those WTGs for which the Modified Obligations are effective, all subsequent Milestone Payments for such WTGs shall be made in accordance with the Modified Obligations.

(c) For purposes of this Agreement, a "bill of lading" shall mean a bill of lading for the relevant Major Component that has been provided by a shipper from outside the continental United States and an "ex works certificate" shall mean a certificate issued by Suzlon indicating that the relevant Major Component that was manufactured within the continental United States is available for shipment "ex works" the manufacturer's plant.

(d) Owner shall reimburse Suzlon for the following actual and reasonable costs (and associated markups, where applicable), which costs and markups shall be in addition to the Contract Price (the "Reimbursable Expenses"):

(i) In the event Owner requests Suzlon to Deliver any WTG components which are manufactured outside the continental United States, including any WTGs subject to Modified Obligations, to an Alternate Port, the actual and reasonable increased out-of-pocket third party costs incurred by Suzlon in Delivering the components to such Alternate Port in lieu of a Gulf Port (including, without limitation, the reasonable increased out-of-pocket third party costs of actual transportation (including any re-routing), shipping vendor fees and charges, applicable Taxes, insurance, permitting, handling, unloading/loading costs, storage costs (whether temporary or permanent), third party logistics management costs and all other reasonable increased out-of-pocket third party costs and expenses), plus a *** percent (***%) markup on the lower of: (x) the Price Estimate as to such costs and (y) the actual and reasonable out-of-pocket third party costs, which costs and markup shall be in addition to the Contract Price (or, in the event

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

there is no Price Estimate as to such costs, a *** (***%) markup on such actual and reasonable out-of-pocket third party costs);

(ii) An amount equal to *** U.S. Dollars ($***) per WTG (the "IDP Fee") for (w) transporting any WTG's components which are manufactured outside the continental United States from the initial unloading point dockside at a Gulf Port to the first place of rest at the temporary storage location at such port (or nearby if such location is designated by the port authority to be an area external to the port where the WTG component will be made available for inland transportation to a Project Site) (i.e., the location described in subsection (a) of the definition of Initial Delivery Point); provided, however, Owner shall bear any additional cost impacts to Suzlon's performance of the same at an Alternate Port (which impact shall be addressed by an amendment to this Agreement reflecting an equitable adjustment, if any, in the IDP Fee), (x) the packing of any WTG's components in a condition ready for inland transportation by truck from the Initial Delivery Point in accordance with applicable federal, state, municipal and local law (including, without limitation, any restrictions on "divisible loads") (y) the covering, prior to their inland transportation from the Initial Delivery Point to a Project Site, of the rotor shaft opening of such WTG's Nacelle and the open ends of such WTG's Tower sections in protective tarps to prevent dirt from entering such openings; provided, however, the IDP Fee as to such WTG shall be adjusted downward by *** U.S. Dollars ($***) for every Tower section and/or Nacelle that requires deep cleaning or power washing to its internal surfaces upon arrival at the Project Site as a result the failure of Suzlon to properly tarp the aforementioned openings; it being acknowledged and agreed by the Parties that the foregoing downward adjustment shall be Owner's sole and exclusive remedy for such failure, and (z) loading of the WTG components at the Initial Delivery Point onto the inland transportation vehicles for delivery to the Project Site or vehicles to transport the WTG components to storage, it being understood and agreed that:

(1) if WTG components are Delivered before the Delivery Deadline, and after such one-time loading, are placed into storage as a result of such early Delivery, the cost of the subsequent loading of such components at the storage location for transportation to the Project Site shall be borne by Suzlon (unless such components remain in storage beyond the Pick-Up Deadline (as defined in the Modified Obligations)) (or, in the event (x) Owner requests delivery of the WTG components to the Project Site, (y) WTG components are Delivered before the Delivery Deadline and, (z) after such one-time loading, such WTG components are placed into storage as a result of such early Delivery, the cost of the subsequent loading of such WTG components at the storage location for transportation to the Project Site shall be borne by Suzlon (unless such WTG components remain in storage at Owner's direction beyond the date that Suzlon would otherwise have removed such WTG from storage for inland transportation to the Project Site);

(2) if WTG components are Delivered before the Delivery Deadline, and after such one-time loading, are placed into storage as a result of such early Delivery and remain in storage beyond the Pick-Up Deadline (as defined in the

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

Modified Obligations), the cost of the subsequent loading of such components at the storage location for transportation to the Project Site shall be borne by Owner (or, in the event (x) Owner requests delivery of the WTG components to the Project Site, (y) WTG components are Delivered before the Delivery Deadline and, (z) after such one-time loading, such WTG components are placed into storage as a result of such early Delivery but remain in storage at Owner's direction beyond the date that Suzlon would otherwise have removed such WTG components from storage for inland transportation to the Project Site, the cost of the subsequent loading of such WTG components at the storage location for transportation to the Project Site shall be borne by Owner); and

(3) if WTG components are Delivered on or after the Delivery Deadline, and after such one-time loading, are placed into storage, the cost of the subsequent loading of such components at the storage location for transportation to the Project Site shall be borne by Owner (or, in the event (x) Owner requests delivery of the WTG components to the Project Site, (y) WTG components are Delivered on or after the Delivery Deadline, and (z) after such one-time loading are (1) placed into storage at Owner's direction, or (2) are placed into storage by Suzlon but remain in storage at Owner's direction beyond the date that Suzlon would otherwise have removed such WTG components from storage for inland transportation to the Project Site, the cost of the subsequent loading of such WTG components at the storage location for transportation to the Project Site shall be borne by Owner).

Any subsequent loading of the WTG components at the storage location as provided above shall be performed by Owner (unless Owner requests delivery of the WTG components to the Project Site, in which case such subsequent loading shall be Suzlon's obligation), but the cost of performing such loading shall be borne by the Party responsible for such cost as provided in the preceding Clauses (1) through (3). Notwithstanding anything to the contrary contained in this Agreement, under all circumstances Owner shall pay Suzlon the IDP Fee, and Suzlon shall perform the services identified in this Subsection 3.2(d)(ii) for which the IDP Fee is payable, and regardless of whether the WTG components are Delivered before, on or after the Delivery Deadline;

(iii) In the event Owner requests Suzlon to deliver the WTGs to a Project Site in the continental United States, the actual and reasonable out-of-pocket third party costs incurred by Suzlon after Delivery of the WTG components in relation to the delivery of such WTG components to the Project Site (including, without limitation, the reasonable out-of-pocket third party costs of actual transportation from the Initial Delivery Point to a Project Site (including any re-routing), transportation vendor fees and charges, applicable Taxes, insurance, permitting, handling costs, unloading/loading costs, storage costs (whether temporary or permanent and whether at the Initial Delivery Point or elsewhere), third party logistics management costs and all other reasonable out-of-pocket third party costs and expenses), plus a *** percent (***%) markup on the lower of: (x) the Price Estimate as to such costs and (y) the actual and reasonable out-of-pocket third party costs, which costs and markup shall be in addition to the Contract Price (or, in the event

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

there is no Price Estimate as to such costs, a *** (***%) markup on such actual and reasonable out-of-pocket third party costs);

(iv) In the event Owner requests Suzlon to deliver the WTGs to the Project Site for a Canadian Project, the actual and reasonable out-of-pocket third party costs incurred by Suzlon after Delivery of the WTG components in relation to the delivery of such WTG components to the Project Site (including, without limitation, the reasonable out-of-pocket third party costs of actual transportation from the Initial Delivery Point to a Project Site (including any re-routing), shipping vendor fees and charges, applicable Taxes (whether United States or Canadian, including, without limitation and for the sake of clarity, Canadian import duties and tariffs), insurance, permitting, handling costs, unloading/loading costs, storage costs (whether temporary or permanent and whether at the Initial Delivery Point or elsewhere), third party logistics management costs and all other reasonable out-of-pocket third party costs and expenses), plus a *** percent (***%) markup on the lower of: (x) the Price Estimate as to such costs and (y) the actual and reasonable out-of-pocket third party costs, which costs and markup shall be in addition to the Contract Price (or, in the event there is no Price Estimate as to such costs, a *** (***%) markup on such actual and reasonable out-of-pocket third party costs);

(v) All fees for technical advisor assistance as described in Section 3.1(d)

(vi) All reasonable installation and Mechanical Completion costs described in Section 3.3;

(vii) All redirection costs (plus markup) as described in Section 2.3(f);

(viii) Subject to Section 2.1(f)(ii), all storage or rental costs (including, without limitation, those described in Section 9.3 and 11.2 of Exhibit G attached hereto);

(ix) All reasonable shipping and transportation costs for the foundation templates as described in Section 2.3(i);

(x) All Optional SCADA costs as described in Section 3.2(g); and

(xi) Any other costs and expenses that Owner shall reimburse to Suzlon pursuant to the terms and conditions of this Agreement.

(e) The Parties acknowledge and agree that Owner has selected the LVRT System for the WTGs. Owner shall include in each of the Third 2008 Milestone Payment and the Fourth 2009 Milestone Payment an amount equal to *** U.S. Dollars ($***) (representing *** U.S. Dollars ($***) per WTG; with the aggregate amount being the "LVRT Fee"), which LVRT Fee shall be in addition to the Contract Price. The Parties acknowledge and agree that any monetary or schedule impact to Suzlon as a result of FERC making the requirements for LVRT Systems more stringent subsequent to the Effective Date shall be borne by Owner alone (and shall be implemented by an amendment to this Agreement reflecting an equitable adjustment in Suzlon's costs and/or Deadline Dates as a result of the same); provided, however, that Suzlon shall credit owner for any actual savings (if applicable) to Suzlon as a result of the same.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

(f) If Owner elects to order the Climb-Assist System for the 2008 WTGs and/or the 2009 WTGs, Owner shall deliver written notice of such election (accompanied by the applicable Climb-Assist Fee) to Suzlon no later than the applicable Climb-Assist Election Deadline (the "Climb-Assist Election"); it being understood and agreed by the Parties that Owner's Climb-Assist Election must be an election for all 2008 WTGs and/or all 2009 WTGs (as applicable) and shall in no event be a partial election of the Climb-Assist System for less than the full number of such 2008 WTGs and/or 2009 WTGs. For purposes of this Agreement, no document issued by Owner shall be deemed to be a Climb-Assist Election unless it is accompanied by the corresponding Climb-Assist Fee. In the event Owner fails to deliver a Climb-Assist Election by the applicable Climb-Assist Election Deadline, the parties acknowledge and agree that Suzlon shall have no obligation to provide such Climb-Assist System for those WTGs for which such deadline has passed.

(g) If Owner elects to order any of the Optional SCADA as to a Project Site, Owner shall deliver written notice of such election in the NTP for such Project Site as described in Section 2.3. At least thirty (30) days prior to the date of the delivery of an NTP for such Project Site, Owner may, at any time, request in writing the cost of including any of the Optional SCADA at such Project Site (other than the cost for SC-Power Plant, which the Parties hereby acknowledge and agree shall be (x) *** U.S. Dollars ($***) for Projects consisting of one hundred (100) or fewer WTGs, and (y) *** U.S. Dollars ($***) for Projects consisting of greater than one hundred (100) WTGs). As promptly as possible (but no later than thirty (30) days) after such notice, Suzlon shall provide Owner with a quote of such cost(s), which quote shall remain effective for fifteen (15) days. If Owner issues an NTP electing any Optional SCADA with respect to such Project Site, the Modified Obligations and/or any Definitive Agreements executed with respect to such Project Site (as applicable) shall be amended to reflect such quoted costs, which costs shall be in addition to the Contract Price. Notwithstanding a failure by Owner to timely request a quote as to any Optional SCADA or Suzlon's quote no longer remaining effective pursuant to this Section 3.2(g), Owner may still obtain such Optional SCADA, but shall pay Suzlon all actual and reasonable costs incurred by Suzlon in providing such Optional SCADA (other than the costs for SC-Power Plant, which shall be as described above), which costs shall be in addition to the Contract Price.

3.3 Mechanical Completion Costs. If Owner requests Suzlon's installation and Mechanical Completion services, in addition to all other payments due to Suzlon as described in this Article 3 (including, in addition to the Contract Price), Owner shall also reimburse Suzlon for Suzlon's actual and reasonable costs for the installation and Mechanical Completion of the WTGs (including, without limitation, the actual and reasonable costs from Suzlon's vendors, subcontractors and suppliers, all applicable Taxes, insurance, permitting and other out-of-pocket third party costs and expenses), plus a markup of *** percent (***%) (other than such insurance costs, which shall have a *** percent (***%) markup) on the lower of: (x) the Price Estimate as to such costs and (y) the actual costs (or, in the event there is no Price Estimate as to such costs, the applicable markup shall be taken on such actual costs). Further, if Owner requests Suzlon to install and Mechanically Complete any WTGs, Owner must also elect to have Suzlon deliver such WTGs to the corresponding Project Site.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

3.4 Payment for the Achievement of Milestones and Reimbursable Expenses. Except as described in Section 3.4(d) below, Owner shall pay to Suzlon the Milestone Payments and Reimbursable Expenses in the following manner:

(a) Suzlon shall, no more frequently than twice a month, prepare and submit to Owner an application for payment specifying 1) each Milestone which has been completed and/or Reimbursable Expenses which have been incurred (including a description of the WTGs to which they apply) and for which payment is then being requested, 2) the aggregate amount of the payment then being requested, and 3) any applicable bills of lading or "ex works certificates" and/or the documentation (which shall include for "technical advisor assistance", timesheets executed by Owner's project manager) supporting the Reimbursable Expenses (each, an "Application for Payment").

(b) Within ten (10) Business Days after the receipt of each Application for Payment, Owner shall (A) review the Application for Payment to certify completion of the relevant Milestone(s) and/or the documentation supporting the Reimbursable Expenses, and (B) issue to Suzlon a written "Certificate for Payment" for such amount as Owner determines is properly due to Suzlon. If the amount so determined by Owner is less than the amount requested by Suzlon in the Application for Payment, Owner's Certificate for Payment shall indicate the specific reasons for so withholding all or a portion of the Milestone Payment and/or Reimbursable Expenses. If Owner determines that a portion of the Milestone Payment and/or Reimbursable Expenses is not due, Owner shall nevertheless approve payment for the remaining portion of the Application for Payment. If Owner fails to issue a Certificate for Payment within fifteen (15) Business Days after receipt of the corresponding Application for Payment, the entire amount provided in such Application for Payment shall nevertheless be paid by the date specified in Section 3.4(c); provided however, that such payment shall be without prejudice to any other rights to remedies Owner may have under this Agreement.

(c) Except as otherwise expressly provided in Footnotes 2 and 3 to this Agreement, within fifteen (15) Business Days after receipt of each Application for Payment, Owner shall pay directly to the account of Suzlon, as identified in Exhibit C of this Agreement, the amount due with respect to each such Application for Payment.

(d) Owner acknowledges and agrees that the above procedures do not apply to the Third 2008 Milestone Payment, the Third 2009 Milestone Payment or the Fourth 2009 Milestone Payment, which payments shall be due on the dates described in Section 3.2(a) without an Application for Payment.

(e) In the event the Final Payment is payable as to a Project as a result of the occurrence of an Alternate Final Milestone, Owner shall be entitled to "holdback" from the Final Payment (the "Punch List Holdback") an amount determined as follows:

(i) In the event there is a Punch List for such Project as of the date of such Alternate Final Milestone, an amount equal to the lesser of (I) (x) *** U.S. Dollars ($***) multiplied by (y), the number of WTGs at such Project, or (II) the dollar amount, if any, that has been mutually assigned by the Parties to complete such Punch List; or

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

(ii) In the event there is no Punch List for such Project as of the date of such Alternate Final Milestone, an amount equal to (x) *** U.S. Dollars ($***) multiplied by (y), the number of WTGs at such Project.

Upon achievement of Final Completion as to such Project, Owner shall pay Suzlon the Punch List Holdback, if any.

3.5 Ability to Stop Work for Failure to Pay. Should Owner fail to pay any amount to Suzlon when the same is due (including, without limitation, the Third 2008 Milestone Payment, the Third 2009 Milestone Payment or the Fourth 2009 Milestone Payment), Suzlon may, without prejudice to any other rights to remedies it may have under this Agreement, stop its performance of the Work until payment of the amount owing has been received by Suzlon. Any monetary or schedule impact to Suzlon as a result of any such work stoppage shall be borne by Owner alone (and shall be implemented by an amendment to this Agreement reflecting Suzlon's reasonable costs incurred as a result of such stoppage and any reasonable modifications to the relevant schedules as a result of the stoppage). The terms of this Section 3.5, however, shall not apply to any amount which has not been paid to Suzlon by reason of a dispute raised by Owner in good faith as to such amount; provided, however, that Owner's dispute of such amount shall not be deemed raised in good faith if, inter alia, Owner fails to provide a written report to Suzlon (a) within fifteen (15) Business Days after Owner's receipt of the Application for Payment (or, as applicable, the Suzlon invoice) relating to such amount, and (b) detailing the reasons for Owner's dispute of such amount.

3.6 Interest on Late Payments. Payments due under this Agreement, but which remain unpaid past the date due for payment (including any amounts withheld which are later determined to have been improperly withheld), shall bear interest from the date due until paid at the Interest Rate.

3.7 Taxes. Suzlon shall be responsible for paying all non-United States and non-Canadian taxes, all United States import taxes and duties, and all of Suzlon's income taxes incurred in connection with Suzlon's performance of the Work or Delivery of the WTGs. All other Taxes incurred in relation to the Work, any Project, and/or the performance of the parties' duties and obligations under this Agreement (whether in the nature of sales, excise, use or otherwise) shall be borne and paid by Owner.

ARTICLE 4

MODIFIED OBLIGATIONS

4.1 Scope of the Modified Obligations. (a) In the event (i) Owner fails to timely issue an NTP as provided in Section 2.3 for any reason other than a Suzlon Default or (ii) Definitive Agreements are not executed within the twenty (20) day period referenced in Section 2.4(a) for any reason other than a Suzlon Default, the Parties' rights, duties and obligations under this Agreement with respect to the corresponding WTGs shall thereupon automatically and immediately be amended to reflect the following terms and provisions: notwithstanding anything to the contrary contained in this Agreement, Suzlon's scope of Work for such WTGs shall be limited to the design and manufacturing of such WTGs, the Delivery of such WTGs (provided,

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

however, the WTG components manufactured outside the continental United States shall be only Delivered to a Gulf Port), and the Commissioning of such WTGs, all in accordance with the terms and provisions of this Agreement (including, without limitation, the terms and provisions of Exhibit G attached hereto); provided, however, the Milestone payment schedule for such WTGs shall be that set forth in the following Section 4.1(b) in lieu of the Milestone payment schedule provided in Section 3.2(a), (collectively, the "Modified Obligations").

(b) Under the Modified Obligations, Owner shall remain responsible for payment of the full Contract Price as described in Article 3 hereof; provided, however, that the Milestones and the corresponding Milestone Payments shall be deemed revised to reflect the following:

Milestone	WTGs to Which Payment Applies	Milestone Payment
Execution of this Agreement	2008 WTGs	* U.S. Dollars ($), representing percent (* %) of the Total 2008 Contract Price, plus the LVRT Fee for all 2008 WTGs (the "Third 2008 Milestone Payment")
***	2009 WTGs	* U.S. Dollars ($), representing percent (* %) of the Total 2009 Contract Price (the "Third 2009 Milestone Payment")
***	2009 WTGs	* U.S. Dollars ($), representing percent (%) of the Total 2009 Contract Price, plus* the LVRT Fee for all 2009 WTGs and (if applicable) the Climb-Assist Fee for all 2009 WTGs (provided, however, that any Climb-Assist Election issued before this date with respect to 2009 WTGs must be accompanied by the Climb-Assist Fee for all the 2009 WTGs) (the "Fourth 2009 Milestone Payment")
Date that bills of lading have been issued for all Major Components of a WTG (however, as to the Major Components which are	All WTGs	* percent *%) of the applicable Contract Price for each WTG (i.e., pro rate the payment for each WTG) (the "Bill of Lading/Ex Works

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

Milestone	WTGs to Which Payment Applies	Milestone Payment
manufactured within the continental United States, it shall be the date an "ex works certificate" is issued and not a bill of lading)		Milestone Payment")
Earlier of (i) delivery of all Major Components of a WTG to a Project Site, or (ii) fourteen (14) days after Delivery of such Major Components³	All WTGs	* percent (*%) of the applicable Contract Price for each WTG (i.e., pro rate the payment for each WTG)
Earlier of (i) completion of Commissioning of such WTG, or (ii) sixty (60) days after the later of (x) Delivery of all Major Components of such WTG (plus any Suzlon Storage Days) and (y) the Delivery Deadline of such WTG	All WTGs	* percent (*%) of the applicable Contract Price (i.e., pro rate the payment for each WTG)
Earlier of (i) Final Completion with respect to a Project, or (ii) one hundred twenty (120) days after the later of (x) Delivery of all Major Components of all WTGs which will comprise a Project (plus any Suzlon Storage Days) and (y) the last Delivery Deadline of any WTG which will comprise a Project (the achievement of such Milestone under clause (ii) being an "Alternate Final Milestone")	All WTGs	* percent (*%) of the applicable Contract Price (prorated for each Project Site, which is determined on the basis of the number of WTGs at each such Project Site) (the "Final Payment"); provided in the event of an Alternate Final Milestone, such Milestone Payment shall be the Final Payment minus the Punch List Holdback applicable to such Project, as further described in Section 3.4(e))
Final Completion with respect to a Project	All WTGs	Punch List Holdback applicable to such Project Site

³ NOTE: If this Milestone occurs prior to the first day of the month immediately preceding the month in which the Delivery Deadline for such WTG occurs, then this Milestone Payment shall be payable on the later of (x) such first day of the month immediately preceding the month in which the Delivery Deadline for such WTG occurs or (y) the date specified in Section 3.4(c) as to the Application for Payment for such Milestone.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

4.2 Continuing Attempts as to Definitive Agreements. Even though WTGs may be subject to the Modified Obligations, the Parties shall nevertheless exert their respective best good faith efforts to prepare, execute and deliver (or arrange for the execution and delivery) of Definitive Agreements with respect to such WTGs (the preparation of which shall be in accordance with the terms of Section 2.4 of this Agreement using the form of Definitive Agreements attached hereto). Except as otherwise expressly provided herein, upon execution of such Definitive Agreements, the terms of this Agreement, as they relate to the WTGs that are addressed in such Definitive Agreements, shall thereupon automatically be deemed terminated, of no further force or effect, and superseded by the terms of the Definitive Agreements. In confirmation and furtherance thereof, the Parties acknowledge and agree that (except as otherwise expressly provided herein) this Agreement shall have no bearing, application or binding effect, whether legal or otherwise, upon any WTGs that are addressed in any executed Definitive Agreements (or with respect to any rights, remedies or obligations of the Parties with respect to such WTGs).

ARTICLE 5

LIMITATION OF LIABILITY

5.1 Aggregate Liquidated Damages Cap. (a) Notwithstanding anything to the contrary contained in this Agreement:

(i) Suzlon's aggregate liability for all Delivery Liquidated Damages and Commissioning Liquidated Damages for any individual WTG shall be limited to a maximum of (x) *** percent (***%) of the 2008 Contract Price (as to any individual 2008 WTG), or (y) *** percent (***%) of the 2009 Contract Price (as to any individual 2009 WTG);

(ii) Suzlon's aggregate liability for PTC Liquidated Damages for all 2008 WTGs shall not exceed the 2008 PTC LD Cap; and

(iii) Suzlon's aggregate liability for PTC Liquidated Damages for all 2009 WTGs shall not exceed the 2009 PTC LD Cap.

(b) Notwithstanding the foregoing or anything to the contrary contained in this Agreement, Suzlon's aggregate liability for any and all Delivery Liquidated Damages, Commissioning Liquidated Damages, PTC Liquidated Damages, V3 Liquidated Damages, GL Liquidated Damages, Power Curve Liquidated Damages and Measured Average Availability Liquidated Damages for all WTGs shall not exceed an amount equal to fifty percent (50%) of the Contract Price (the "Aggregate LD Cap").

(i) the 2008 PTC LD Cap and/or the 2009 PTC LD Cap (as applicable) shall thereupon automatically be deemed reduced by the amount specified in each such TSA or TSIA as the "PTC LD Cap" thereunder; and

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

(ii) the Aggregate LD Cap shall thereupon automatically be deemed reduced by the amount specified in each such TSA or TSIA as the "Aggregate LD Cap" thereunder.

5.2 Overall Limitation of Liability. (a) Notwithstanding anything to the contrary contained in this Agreement, in no event shall Suzlon, its parent company or Affiliates, be liable, alone or in the aggregate, to Owner for any damages, claims, demands, suits, causes of action, losses, costs, expenses and/or liabilities related in any manner to this Agreement (collectively, "Losses") in excess of an amount equal to *** percent (***%) of the Liability Cap, regardless of whether such liability arises out of breach of contract, guarantee or warranty, tort, product liability, indemnity, contribution, strict liability or any other legal theory; provided, however:

(i) the Liability Cap shall not apply to, and no credit shall be issued against the Liability Cap for Suzlon's indemnity obligations set forth in Article 6 below solely as they relate to claims by third parties for bodily injury or property damage; and

(ii) the liability of Suzlon, its parent company and their Affiliates for Losses related solely to Suzlon's indemnity obligations under Article 7 (the "IPR Liability") shall not be subject to the aforementioned Liability Cap, but such IPR Liability shall in no event be in excess of an amount equal to (x) *** percent (***%) of the Liability Cap, minus (y) the aggregate amount of all Losses for which Suzlon, its parent company and their Affiliates are liable (other than pursuant to the terms of Article 7).

For purposes of this Agreement, the "Liability Cap" means an amount equal to the sum of (x) the Contract Price, (y) the LVRT Fee for all WTGs, and (z) the Climb-Assist Fee for all WTGs for which the Climb-Assist System has been included; provided such amount shall be reduced: (1) by the portion of the Contract Price applicable to the WTG purchases cancelled pursuant to Section 8.5, and (2) by any amount paid by any contractor, subcontractor, consultant, vendor, supplier or agent of Suzlon to Owner by reason of any claim made by Owner against any such parties in relation to this Agreement or the work or services provided (or to be provided) by any such parties in relation to this Agreement. In addition, notwithstanding the foregoing, upon execution of each set of Definitive Agreements, the Liability Cap hereunder shall thereupon automatically be deemed reduced by the amounts specified in each TSA or TSIA as the (x) "contract price" thereunder, (y) the LVRT Fee for all WTGs thereunder, and (z) the Climb-Assist Fee for all WTGs thereunder for which the Climb-Assist System has been included. For the sake of clarity, any liability of Suzlon which accrues under any executed Definitive Agreements shall not apply against the Liability Cap.

(b) Notwithstanding the foregoing or anything to the contrary contained in this Agreement, to the extent Suzlon is liable for Delivery Liquidated Damages, Commissioning Liquidated Damages, PTC Liquidated Damages, V3 Liquidated Damages, GL Liquidated Damages, Power Curve Liquidated Damages and/or Measured Average Availability Liquidated Damages pursuant to this Agreement, as to each set of executed Definitive Agreements (if and when executed), that portion of such liquidated damages which is equivalent to the Liquidated Damages Share corresponding to each such set of Definitive Agreements (i) shall be subject to the "liability caps" under each such set of Definitive Agreements once executed, and (ii) shall not apply to or be credited against the Liability Cap provided in this Agreement after execution

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

of such corresponding set of Definitive Agreements (i.e., for the sake of clarity, if Suzlon is liable for liquidated damages under this Agreement, the "limitations of liability" under each such set of executed Definitive Agreements and not those in this Agreement (such as the Liability Cap), shall apply to the Liquidated Damages Share applicable to each such set of Definitive Agreements). For the purposes of this Amendment, the term "Liquidated Damages Share" means, as to any executed set of Definitive Agreements, an amount equal to the sum of:

(i) The Delivery Liquidated Damages, Commissioning Liquidated Damages, PTC Liquidated Damages, Power Curve Liquidated Damages and/or Measured Average Availability Liquidated Damages, if any, that have accrued as to WTGs covered by such executed set of Definitive Agreements;

(ii) The V3 Liquidated Damages, if any, divided by the number of WTGs actually purchased pursuant to this Agreement, multiplied by the number of WTGs addressed in such executed set of Definitive Agreements; and

(iii) The GL Liquidated Damages, if any, divided by the number of WTGs actually purchased pursuant to this Agreement, multiplied by the number of WTGs addressed in such executed set of Definitive Agreements

5.3 Consequential Damages. Notwithstanding anything to the contrary contained in this Agreement (other than the last sentence of this Section), Owner and Suzlon waive all claims arising in connection with this Agreement against each other (and against each other's parent company, Affiliates, contractors, subcontractors, consultants, vendors, suppliers and agents) for any consequential, incidental, indirect, special, exemplary or punitive damages (including, but not limited to, loss of actual or anticipated profits, revenues or product; revenue loss by reason of shutdown or non-operation; increased expense of borrowing or financing; or loss of use or productivity), and regardless of whether any such claim arises out of breach of contract or warranty, tort, product liability, indemnity, contribution, strict liability or any other legal theory. Any consequential, incidental, indirect, special, exemplary or punitive damages incurred by Suzlon or Owner in relation to a third party in connection with this Agreement shall, for all purposes of this Agreement, be deemed consequential, incidental, indirect, special, exemplary or punitive damages in relation to any claim brought by Suzlon or Owner against the other Party to this Agreement. Nothing in this Section 5.3 shall be deemed to apply to any Delivery Liquidated Damages, Commissioning Liquidated Damages, PTC Liquidated Damages, V3 Liquidated Damages, GL Liquidated Damages, Power Curve Liquidated Damages or Measured Average Availability Liquidated Damages.

5.4 Effect of Definitive Agreements. Nothing in this Article 5 or in Section 11.10 is intended to limit or supersede any liability, remedy or recourse provided for or existing under any executed Definitive Agreements; it being agreed that this Agreement and all executed Definitive Agreements shall be deemed and treated as separate and distinct agreements.

5.5 Releases Valid in All Events. Releases, disclaimers, and limitations on liability expressed in this Agreement shall apply even in the event of the negligence, strict liability, fault, or breach of contract (including other legal bases of responsibility such as fundamental breach) of the Party whose liability is released, disclaimed, or limited.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

ARTICLE 6

MUTUAL INDEMNITY

6.1 Mutual Indemnity. Owner, as one Party, and Suzlon, as the other Party, agree to defend, indemnify and hold each other, and each other's lenders, parent company, Affiliates, officers, directors, agents and employees, harmless from and against any claims, losses, damages or liabilities (including, but not limited to, reasonable attorneys' fees and court costs) on account of any claim by a third party (including contractors, subcontractors, consultants, vendors, suppliers and agents of a Party) for bodily injury or property damage against the indemnified Party caused by the negligent act or omission, or willful misconduct, of the indemnifying Party or the indemnifying Party's employees, contractors, subcontractors or agents, in connection with the performance of their respective obligations under this Agreement. These indemnification obligations shall survive the termination or expiration of this Agreement. Notwithstanding the foregoing, the defense, indemnity and hold harmless obligations in this Section 6.1 shall not apply to damage or loss to any property which is part of a Project (or is to be incorporated into a Project).

6.2 Indemnification Rights Not Abridged. The indemnification obligations contained in Section 6.1 shall not be construed so as to negate, abridge, or reduce other rights or obligations of indemnity that would otherwise exist as to an indemnified Party hereunder. In claims against a Party which are indemnified pursuant to the indemnifications contained in Section 6.1 and which are brought by an employee of the indemnifying Party, a subcontractor of the indemnifying Party, or anyone employed by them, the indemnification contained in Section 6.1 shall not be limited (i) by a limitation on the amount or type of damages, compensation, or benefits payable by or for the indemnifying Party, or a subcontractor of the indemnifying Party, under workers' or workmen's compensation acts, disability benefit acts, or other employee benefit acts, or (ii) pursuant to any common law or case law.

ARTICLE 7

INTELLECTUAL PROPERTY

7.1 Indemnity Against Infringement. Suzlon shall indemnify and keep indemnified and hold harmless Owner and its lenders, parent company, Affiliates, officers, directors, agents and employees, from and against all claims, liabilities, losses and damages asserted by any third party person, together with all costs and expenses relating thereto (including reasonable legal fees), based upon any claim of infringement or misappropriation of any patent or other license or right to intellectual property (whether by way of patent, copyright, mask work right, trade secret, trademark or otherwise) resulting from the manufacture, offer for sale, sale, supply, or importation of the WTGs, or any part or component thereof, or their use by Owner as set forth in this Agreement or any Definitive Agreements; provided, however, that Suzlon shall not be obligated to provide an indemnity against infringement or misappropriation resulting from the use of the WTGs, or any part, component or process thereof, by Owner as set forth in this Agreement or any Definitive Agreements to the extent such infringement or misappropriation arose or resulted from Owner's failure to erect, Mechanically Complete (unless erection and/or Mechanical Completion services were provided by Suzlon pursuant to this Agreement), operate,

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

or maintain (unless the applicable maintenance services were provided by Suzlon pursuant to this Agreement) such WTGs in accordance with the Installation Manual, Operation Manual and Service Manual. Each Party agrees to notify the other as soon as possible of any material matters with respect to which the foregoing indemnity may apply and of which the notifying Party has knowledge. Subject to the preceding terms, if notified in writing of any action or claim for which Suzlon is to provide an indemnity under this Section 7.1, Suzlon shall, without limitation, defend such action or claim at its expense and pay the cost and damages and attorneys' fees awarded against Owner in such action or claim; provided, that Suzlon shall have the right to control the defense (including selection of defense counsel) and settlement of all such actions or claims.

7.2 Treatment of Infringing Equipment. If an order by any court of competent jurisdiction shall be obtained against the sale or delivery to Owner, or Owner's use or operation of, the WTGs or any part or component thereof or process used therein by reason of Suzlon's alleged infringement of any intellectual property right of any party (whether by reason of a patent, copyright, mask work right, trade secret, trademark or other license or right), Suzlon shall first be afforded a reasonable opportunity, at its expense but without limiting its indemnification obligations under Section 7.1, to diligently seek the discharge of any such order as aforesaid, and at Suzlon's election to forthwith:

(i): at a commercially reasonably time (taking into consideration Owner's operation of any applicable WTG), modify the WTGs so that they become non-infringing;
(ii): procure for Owner the right to use, or continue to use, the WTGs and the infringing equipment, component or process; or
(iii): substitute for any infringing equipment, component or process, other non-infringing equipment, component or process having the capabilities, quality, utility and workmanship which otherwise satisfy Suzlon's obligations under this Agreement;

except to the extent such alleged infringement arose or resulted from Owner's failure to erect, Mechanically Complete (unless erection and/or Mechanical Completion services were provided by Suzlon pursuant to this Agreement), operate, or maintain (unless the applicable maintenance services were provided by Suzlon pursuant to this Agreement) such WTGs in accordance with the Installation Manual, Operation Manual and Service Manual. Suzlon's replacement or modification of infringing equipment, parts, components or processes pursuant to this Section 7.2 must conform to the Technical Specifications, and may not reduce the power rating of the WTGs or materially increase the operating costs of the WTGs.

ARTICLE 8

DEFAULT AND REMEDIES AND TERMINATION

8.1 Termination by Owner for Cause. The occurrence of any one or more of the following matters constitutes a default by Suzlon under this Agreement (a "Suzlon Default"):

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

(a) Suzlon becomes insolvent or generally fails to pay, or admits in writing its inability or unwillingness to pay, its debts as they become due;

(b) Suzlon makes a general assignment for the benefit of its creditors;

(c) Suzlon shall commence or consent to any case, proceeding or other action (a) seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of Suzlon or of Suzlon's debts under any Law relating to bankruptcy, insolvency, reorganization or relief of debts, or (b) seeking appointment of a receiver, trustee or similar official for Suzlon or for all or any part of Suzlon's property;

(d) any case, proceeding or other action against Suzlon shall be commenced (a) seeking to have an order for relief entered against Suzlon as debtor, (b) seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of Suzlon or Suzlon's debts under any Law relating to bankruptcy, insolvency, reorganization or relief of debtors, or (c) seeking appointment of a receiver, trustee, or similar official for Suzlon or for all or any part of Suzlon's property; and such case, proceeding or action is not dismissed within sixty (60) days thereafter;

(e) the material breach of any representation or warranty made by Suzlon herein which prevents Suzlon from performing hereunder;

(f) Suzlon attempts to assign, convey or transfer this Agreement or any interest herein without Owner's prior written consent;

(g) Suzlon fails to make any payment to Owner when due pursuant to the terms of this Agreement, and such failure continues for five (5) Business Days following Suzlon's receipt of written notice from Owner to cure such failure (provided, however, the terms of this Section 8.1(g) shall not apply to any amount which has not been paid to Owner by reason of a dispute raised by Suzlon in good faith as to such amount);

(h) the Delivery Liquidated Damages that have accrued with respect to a WTG are equivalent to the corresponding Delivery LD Cap, and the Delivery delay with respect to such WTG is thereafter continuing;

(i) the Commissioning Liquidated Damages that have accrued with respect to a WTG are equivalent to the corresponding Commissioning LD Cap, and the Commissioning delay with respect to such WTG is thereafter continuing;

(j) Suzlon fails to observe or perform in any material respect any other material covenant, agreement, obligation, duty or provision of this Agreement, and such failure continues for thirty (30) days after Suzlon's receipt of written notice thereof from Owner; provided, however, if such failure cannot with due diligence be remedied by Suzlon within such thirty (30) day period, and Suzlon shall have diligently prosecuted the remedying of such failure within such thirty (30) days, such period shall be extended by such additional time period as may be reasonably required by Suzlon to cure such failure;

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

(k) (a) one or more defaults by Suzlon have occurred under two or more sets of executed Definitive Agreements for different Projects (i.e., in each instance, there has been a breach by Suzlon under such Definitive Agreements and the applicable cure period under the corresponding Definitive Agreements has lapsed), (b) such default(s) relate(s) to twenty (20) or more WTGs, and (c) after the occurrence or lapse of the circumstances described in the preceding clauses (a) and (b), Suzlon fails to cure such default(s) within ten (10) Business Days after receipt of written notice from Owner specifying that Owner will declare a default under this Section 8.1(k) unless the default(s) under the Definitive Agreements are cured within such ten (10) day time period; or

(l) the Suzlon Guarantor has breached the terms of the Suzlon Parent Guarantee.

8.2 Remedies Upon Suzlon Default. Upon the occurrence of a Suzlon Default, Owner may, without prejudice to any other right or remedy Owner may have under this Agreement or at law and/or in equity, terminate this Agreement (but, in reference to a Suzlon Default specified under Section 8.1(h) or 8.1(i), only as to the WTG(s) to which such default applies) and, subject to Article 5 of this Agreement, seek recovery of any damages resulting therefrom.

8.3 Termination by Suzlon for Cause. The occurrence of any one or more of the following matters shall constitute a default by Owner under this Agreement (an "Owner Default"):

(a) Owner becomes insolvent or generally fails to pay, or admits in writing its inability or unwillingness to pay, its debts as they become due;

(b) Owner makes a general assignment for the benefit of its creditors;

(c) Owner shall commence or consent to any case, proceeding or other action (a) seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of Owner or of Owner's debts under any Law relating to bankruptcy, insolvency, reorganization or relief of debts, or (b) seeking appointment of a receiver, trustee or similar official for Owner or for all or any part of Owner's property;

(d) any case, proceeding or other action against Owner shall be commenced (a) seeking to have an order for relief entered against Owner as debtor, (b) seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of Owner or Owner's debts under any Law relating to bankruptcy, insolvency, reorganization or relief of debtors, or (c) seeking appointment of a receiver, trustee, or similar official for Owner or for all or any part of Owner's property; and such case, proceeding or other action is not dismissed within sixty (60) days thereafter;

(e) the material breach of any representation or warranty made by Owner herein which prevents Suzlon from performing hereunder;

(f) Owner attempts to assign, convey or transfer this Agreement or any interest herein contrary to or in violation of the terms of Section 11.2;

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

(g) Owner fails to make any payment to Suzlon when due pursuant to the terms of this Agreement, and such failure continues for five (5) Business Days following Owner's receipt of written notice from Suzlon to cure such failure (provided, however, the terms of this Section 8.3(g) shall not apply to any amount which has not been paid to Suzlon by reason of a dispute raised by Owner in good faith as to such amount; provided, however, that Owner's dispute of such amount shall not be deemed raised in good faith if, inter alia, Owner fails to provide a written report to Suzlon (a) within fifteen (15) Business Days after Owner's receipt of the Application for Payment (or, as applicable, the Suzlon invoice) relating to such amount, and (b) detailing the reasons for Owner's dispute of such amount);

(h) Owner fails to observe or perform in any material respect any material covenant, agreement, obligation, duty or provision of this Agreement (excluding payment obligations, which are addressed in the preceding subsection (g)), and such failure continues for thirty (30) days after Owner's receipt of written notice thereof from Suzlon; provided, however, if such failure cannot with due diligence be remedied by Owner within such thirty (30) day period, and Owner shall have diligently prosecuted the remedying of such failure within such thirty (30) days, such period shall be extended by such additional time period as may be reasonably required by Owner to cure such failure; or

(i) the Owner Guarantor has breached the terms of the Owner Parent Guarantee.

8.4 Remedies Upon Owner Default. Upon the occurrence of an Owner Default, Suzlon may, without prejudice to any other right or remedy Suzlon may have under this Agreement or at law and/or in equity, terminate this Agreement and, subject to Article 5 of this Agreement, seek recovery of any damages resulting therefrom.

8.5 Termination for Convenience by Owner. (a)Owner may terminate this Agreement for convenience as to any WTG by providing Suzlon written notice of such desire on or before the date that is *** months prior to the Delivery Deadline applicable to any such WTG. To be effective, any such notice by Owner shall (as to each cancelled WTG) be accompanied by an amount equal to (i) the Cancellation Fee, less (ii) all amounts paid by Owner prior to such date with respect to such WTG (such net amount to be paid to Suzlon as to each cancelled WTG being the "Cancelled Amount"). In the event of any such termination, Suzlon shall exercise commercially reasonable efforts to resell such WTGs to third parties during the 365 day period after receipt of any such notice from Owner.

(b) For the purposes of this Section 8.5, the "Cancellation Fee" for each WTG shall be as follows:

Date of Suzlon's receipt of notice of WTG cancellation		Cancellation Fee for each WTG
On or prior to *** for 2008 Extended Delivery WTGs and 2009 WTGs:		* percent (*%) of the 2008 Contract Price or 2009 Contract Price, as applicable.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

Between and including * and * for 2008 Extended Delivery WTGs and 2009 WTGs:		* percent (*%) of the 2008 Contract Price or 2009 Contract Price, as applicable.
Between and including the Effective Date and the date which is *** months prior to the Delivery Deadline of the applicable 2008 WTGs (other than 2008 Extended Delivery WTGs):		* percent (*%) of the 2008 Contract Price.
Between and including * and the date which is * months prior to the Delivery Deadline of the applicable 2008 Extended Delivery WTGs and 2009 WTGs:		* percent (*%) of the 2008 Contract Price or 2009 Contract Price, as applicable.

(c) As to any WTGs Suzlon is unable to resell during such 365 day period, Suzlon shall be entitled to retain the applicable Cancelled Amount.

(d) As to those WTGs, if any, Suzlon does in fact resell (i.e., Suzlon receives a fully binding purchase commitment from a bona-fide purchaser) during the 365 day period following receipt of the notice of termination for convenience, the following shall occur:

(i): Suzlon shall reimburse Owner for each such resold WTG an amount equal to (x) the applicable Cancelled Amount, less (y) Remarketing Costs and the Lost Purchase Price. However, if the amount calculated pursuant to clause (y) exceeds the applicable Cancelled Amount, Owner shall promptly pay such excess to Suzlon.
(ii): "Remarketing Costs" shall mean all reasonable costs incurred by Suzlon in reselling a WTG for which Owner has cancelled its purchase, including, without limitation, extra handling, storage, reselling, marketing and legal costs. "Lost Purchase Price" shall be the amount, if any, by which the applicable Contract Price to have been paid by Owner for a cancelled WTG exceeds the purchase price for which a bona-fide purchaser buys such WTG.

Owner may propose potential purchasers for any cancelled WTGs, which purchasers Suzlon shall consider in good faith (but with whom Suzlon shall not be obligated to contract).

In confirmation of the preceding terms of this Section, this Agreement shall remain in full force and effect as to any WTG for which Suzlon has not received Owner's written notice to Suzlon by the date that is *** prior to the Delivery Deadline of such WTG.

8.6 Actions Upon Termination. Upon termination of this Agreement, Suzlon will (a) cease operations as directed by Owner, (b) take all actions necessary for the protection and preservation of all equipment, materials, parts, supplies and the Work (in whatever stage of completion), and (c) cease entering into subcontracts and purchase orders.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

ARTICLE 9

REPRESENTATIONS AND WARRANTIES

9.1 Owner Representations and Warranties. Owner represents and warrants to Suzlon as follows:

(a) Due Organization; Good Standing; Qualified to Do Business. Owner is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

(b) Due Authorization. The execution, delivery and performance of this Agreement by Owner have been duly authorized by all necessary corporate action on the part of Owner and do not and will not require the consent of any trustee or holder of any indebtedness or other obligation of Owner or any other party to any other agreement with Owner.

(c) Execution and Delivery. This Agreement has been duly executed and delivered by Owner. This Agreement constitutes the legal, valid, binding and enforceable obligation of Owner, except to the extent that its enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally or by principles of equity.

(d) Governmental Approvals. No governmental authorization, approval, order, license, permit, franchise or consent, and no registration, declaration or filing with any Governmental Authority is required on the part of Owner in connection with the execution, delivery and performance of this Agreement, except those which have already been obtained or which Owner anticipates will be timely obtained in the ordinary course of performance of this Agreement.

9.2 Suzlon Representations and Warranties. Suzlon hereby represents and warrants to Owner as follows:

(a) Due Organization; Good Standing. Suzlon is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

(b) Due Authorization. The execution, delivery and performance of this Agreement by Suzlon have been duly authorized by all necessary corporate action on the part of Suzlon and do not and will not require the consent of any trustee or holder of any indebtedness or other obligation of Suzlon or any other party to any other agreement with Suzlon.

(c) Execution and Delivery. This Agreement has been duly executed and delivered by Suzlon. This Agreement constitutes the legal, valid, binding and enforceable obligation of Suzlon, except to the extent that its enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally or by principles of equity.

(d) Governmental Approvals. No governmental authorization, approval, order, license, permit, franchise or consent, and no registration, declaration or filing with any

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

Governmental Authority is required on the part of Suzlon in connection with the execution, delivery and performance of this Agreement, except those which have already been obtained or which Suzlon anticipates will be timely obtained in the ordinary course of performance of this Agreement.

(e) Patents, Licenses, Franchises. (i) Suzlon is the holder of all patents, trademarks, service marks, trade names, copyrights, franchises, governmental consents, licenses, permits or other authorizations required in Suzlon's name to permit it to perform the Work, and operate or conduct its business, as contemplated by this Agreement or any Definitive Agreements; (ii) Suzlon has and will continue to have all intellectual property rights necessary to allow Owner and its subcontractors to assemble, use, operate, service, maintain and repair the WTGs (and each component, part and process thereof) without restriction or additional charge (excluding those restrictions and charges set forth elsewhere in this Agreement and (as applicable) the Modified Obligations or the Definitive Agreements); except to the extent such intellectual property rights are impaired or otherwise adversely affected by reason of Owner's failure to erect, Mechanically Complete (unless erection and/or Mechanical Completion services were provided by Suzlon pursuant to this Agreement), operate, or maintain (unless the applicable maintenance services were provided by Suzlon pursuant to this Agreement) such WTGs in accordance with the Installation Manual, Operation Manual and Service Manual; and (iii) to Suzlon's actual knowledge, neither the WTGs, including any component or part thereof or the processes used herein, nor the process used to manufacture the WTGs, or any component or part thereof, infringe or misappropriate any patent, copyright, mask work right, trade secret or other intellectual property and/or proprietary right of any third party.

ARTICLE 10

CONFIDENTIALITY

10.1 Confidentiality. (a) Owner and Suzlon each agree to keep confidential, and shall not disclose, the terms and provisions of this Agreement, the Design Materials and, upon receipt from the other Party, any documentation or information (i) which is marked as "proprietary" or "confidential", (ii) which is supplied orally with a contemporaneous confidential designation, or (iii) which is known by the receiving Party to be confidential or proprietary information or documentation of the disclosing Party (collectively, the "Confidential Information"). The Parties will grant access to the Confidential Information only to (a) their respective Affiliates, and to its and their respective employees and authorized contractors, subcontractors, representatives and agents whose access is necessary to fulfill the terms of this Agreement or the Definitive Agreements executed in connection herewith, and (b) potential investors, lenders and developers in or of a proposed Project, in each case, who shall be bound by the terms and provisions of this Section; provided that (i) any such access shall be limited to such Confidential Information as any such employee, authorized contractor, subcontractor, representative or agent requires in order to fulfill the terms of this Agreement or the Definitive Agreements, (ii) any such access shall in no event include any pricing information with respect to this Agreement unless (x) as to Owner's provision of such access, such access is to Owner's Affiliates, potential investors in or lenders of Owner or potential investors, lenders or developers in or of a proposed Project, and their respective employees or authorized representatives or agents or (y) as to Suzlon's provision of such access, such access is to Suzlon's Affiliates,

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

potential investors in or lenders of Suzlon, and their respective employees or authorized representatives or agents and (iii) the Party granting such access makes any third party with which such Confidential Information is shared subject to a written confidentiality agreement with terms substantially similar to those set forth in this Section, unless such third party has Control over such Party. Notwithstanding the foregoing, Owner, or any Affiliate or other entity which owns a Project, may also use Confidential Information (excluding pricing information) of Suzlon for the operation, maintenance and servicing of the WTGs, provided that Owner makes any third party with which such Confidential Information is shared subject to a written confidentiality agreement with terms substantially similar to those set forth in this Section. Each Party shall be liable for the disclosure of Confidential Information by any of its respective Affiliates, employees, contractors, subcontractors, representatives or agents. In addition, the Parties shall have no obligation with respect to any Confidential Information which (i) is or becomes publicly known through no act of the receiving Party, (ii) is approved for release by written authorization of the disclosing Party, (iii) is required to be disclosed by the receiving Party pursuant to legal requirements applicable to it (e.g., SEC disclosure obligations) or a legal process (so long as the receiving Party uses commercially reasonable efforts to avoid disclosure of such Confidential Information, and prior to furnishing such Confidential Information, the receiving Party notifies the disclosing Party and gives the disclosing Party the opportunity to object to the disclosure and/or to seek a protective order), or (iv) has been rightfully furnished to the receiving Party without any restriction on use or disclosure and not in violation of the rights of the other Party.

(b) Notwithstanding anything to the contrary in this Agreement, if Owner sells all or substantially all of its ownership interests, or all or substantially all of its assets, to a Competitor or an Affiliate of a Competitor, Owner shall keep confidential the Specified Information of Suzlon vis-a-vis any such Competitor and shall not disclose any such Specified Information to such Competitor. For purposes of this Agreement, "Specified Information" shall mean the Design Materials, and for a period of two (2) years from the Effective Date, all pricing information in this Agreement or in any Definitive Agreement.

(c) Nothing in this Agreement shall bar the right of either Party to seek and obtain from any court injunctive relief against conduct or threatened conduct which violates this Section.

ARTICLE 11

MISCELLANEOUS PROVISIONS

11.1 Waiver. No delay or omission by the Parties hereto in exercising any right or remedy provided for herein shall constitute a waiver of such right or remedy, nor shall it be construed as a bar to or waiver of any such right or remedy on any future occasion.

11.2 Successors and Assigns. (a) This Agreement shall be binding upon and shall inure to the benefit of the successors and permitted assigns of Suzlon and Owner. Neither Suzlon nor Owner may assign, convey or transfer this Agreement, in whole or in part, except upon the prior written consent of the other Party hereto, which consent shall not be unreasonably withheld or delayed (provided, however, Suzlon acknowledges and agrees that Edison Mission Energy (as Owner under this Agreement) may assign, convey or transfer this Agreement, in

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

whole or in part, to any Affiliate of Edison Mission Energy without Suzlon's prior written consent). Notwithstanding the foregoing, and except as otherwise expressly approved in writing by Suzlon, no assignment, conveyance or transfer of this Agreement, in whole or in part, by Edison Mission Energy shall be effective or otherwise binding unless and until Edison Mission Energy executes and delivers to Suzlon a guaranty in the form attached hereto as Exhibit E guaranteeing the obligations of the Owner under this Agreement.

(b) If Owner sells all or substantially all of its assets, it shall simultaneously therewith provide Suzlon with Acceptable Replacement Security unless the purchaser of such assets, on the date of such sale (i) assumes all of the rights and obligations of the Owner under this Agreement and (ii) has comparable creditworthiness of Edison Mission Energy as of the Effective Date.

11.3 Notices. Any notice required or authorized to be given hereunder or any other communications between the Parties provided for under the terms of this Agreement shall be in writing (unless otherwise provided) and shall be served personally or by reputable express courier service or by facsimile transmission addressed to the relevant Party at the address stated below or at any other address notified by that Party to the other as its address for service. Any notice so given personally or by express courier service shall be deemed to have been served and received upon delivery, or attempted delivery, and any notice so given by facsimile transmission shall be deemed to have been served and received on dispatch. As proof of such service and receipt, it shall be sufficient to produce a receipt showing delivery, or attempted delivery, by personal service or by express courier service, or an activity report of the sender's facsimile machine showing the correct facsimile number of the Party to whom notice is served and the correct number of pages transmitted.

The Parties' addresses for service are:

		To Owner:		Edison Mission Energy 18101 Von Karman Avenue, Suite 1700 Irvine, California 92612-1046 Attn: Investment Director Facsimile: (949) 757-4888 Telephone: (949) 757-2404
		with a copy to:		Edison Mission Energy 18101 Von Karman Avenue, Suite 1700 Irvine, California 92612-1046 Attn: General Counsel Facsimile: (949) 757-4787 Telephone: (949) 757-2411

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

		To Suzlon:		Suzlon Wind Energy Corporation 8750 West Bryn Mawr Avenue Suite 720 Chicago, Illinois 60631 Attn: Chief Executive Officer Facsimile: (773) 444-0588 Telephone: (773) 328-5077
		with a copy to:		Mayer, Brown, Rowe & Maw LLP 71 South Wacker Drive Chicago, Illinois 60606 Attn: Tim Callahan Facsimile: (312) 706-9131 Telephone: (312) 701-7204

11.4 Governing Law. This Agreement and all matters arising hereunder or in connection herewith shall be governed by and construed in accordance with the laws of the State of Illinois, without regard to conflicts of law principles.

11.5 Amendments. This Agreement may be modified or amended only by an instrument in writing signed by the Parties hereto.

11.6 Attachments Incorporated. The recitals on the first few pages of this Agreement, and the Exhibits attached hereto, are hereby incorporated into and made a part of this Agreement.

11.7 Performance Security. (a) As a material inducement to Owner to enter into this Agreement, (i) Suzlon Energy A/S (the "Suzlon Guarantor") shall guarantee the payment and performance obligations of Suzlon under this Agreement by executing and delivering, upon execution and delivery of this Agreement, a Guaranty in the form attached hereto as Exhibit D (the "Suzlon Parent Guarantee"), and (ii) Suzlon Energy A/S shall guarantee the payment and performance obligations of Suzlon under each set of executed Definitive Agreements by executing and delivering, along with the execution of each set of Definitive Agreements, a Guaranty in the form attached as Exhibit D.

(b) As a further material inducement to Owner to enter into this Agreement, Suzlon shall provide Owner with additional security for the performance of Suzlon's obligations under this Agreement and the Definitive Agreements, which additional security shall be provided (or increased, as applicable) when Owner pays Suzlon the Third 2008 Milestone Payment, the Fourth 2009 Milestone Payment and any Bill of Lading/Ex Works Milestone Payment (each a "Security Milestone Payment"). When each Security Milestone Payment is made by Owner to Suzlon, *** percent (***%) of such payment shall, in accordance with the following provisions, be deposited in the following Payment Escrow and/or addressed in the form of the following Suzlon L/C (as the case may be), or a combination thereof, at Suzlon's discretion (the security so selected by Suzlon, including any combination thereof, being the "Suzlon Security", and the aggregate amount of the Suzlon Security being the "Retention"):

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

•: An escrow (the "Payment Escrow") established pursuant to an escrow agreement in the form attached hereto as Exhibit M with an escrowee mutually acceptable to the Parties. The funds deposited in the Payment Escrow shall be invested in a manner directed by Suzlon, and all interest thereon shall accrue solely for the benefit of Suzlon. The cost of establishing and maintaining the Payment Escrow shall be borne and paid by Suzlon.

and/or

•: One or more irrevocable letters of credit (i) established at least three (3) Business Days prior to the dates each Security Milestone Payment is due from Owner to Suzlon (i) in a form attached hereto as Exhibit F, (ii) issued by a financial institution with an S&P rating of "A-" or better or a Moody's rating of "A-" or better, and (iii) naming the Owner as beneficiary (the "Suzlon L/C"). If Suzlon seeks to increase the face amount of the Suzlon L/C as a result of any upcoming Security Milestone Payment, at least three (3) Business Days prior to such Security Milestone Payment, Suzlon shall issue replacements or modifications of the Suzlon L/C, which such replacements or modifications shall increase the face amount of the Suzlon L/C by the amount so desired by Suzlon (which increase, in combination with amounts deposited or to be deposited in the Payment Escrow shall equal ***percent (***%) of such Security Milestone Payment). Such letters of credit shall have an expiry date no sooner than twelve (12) calendar months after issuance and Suzlon shall furnish extensions or replacements of the Letter of Credit ten (10) days prior to the expiration thereof from time to time until all of the Retention is to be returned to Suzlon as provided in this Section 11.7(b). Owner shall have the right to draw against the Suzlon L/C upon the failure or refusal of Suzlon to deliver any applicable extension or replacement of the Suzlon L/C as provided above. Notwithstanding the foregoing, Owner acknowledges and agrees that Suzlon has the right (in its sole discretion) to provide the required Retention through any combination of the Payment Escrow and/or the Suzlon L/C, and Owner shall not have the right to draw against the Suzlon L/C for the failure or refusal of Suzlon to deliver any applicable extension or replacement of the same to the extent Suzlon is providing the then-required amount of Retention through some combination of the Payment Escrow and/or the Suzlon L/C. In the event of a draw due to the failure or refusal of Suzlon to deliver any applicable extension or replacement of the applicable Suzlon L/C, Owner shall place and hold the proceeds of such draw in (i) the Payment Escrow or (ii) in the event the Payment Escrow is not yet established, in an escrow account until such time as (x) the Payment Escrow is established, (y) Owner is entitled to draw upon such funds as provided herein or (z) Owner is obligated to return to Suzlon the amount of any such draw upon receipt of an extension or replacement of the applicable Suzlon L/C. Any draw made by Owner under a Suzlon L/C shall not relieve Suzlon of any liabilities, deficiencies, costs, expenses or damages beyond what is drawn under the applicable Suzlon L/C. The cost of establishing and maintaining the Suzlon L/C shall be borne and paid by Suzlon.

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

The Parties acknowledge and agree that the Suzlon Security is intended to act as security for Suzlon's obligations under this Agreement and all executed Definitive Agreements. Upon Delivery of all Major Components of a WTG, the Retention applicable to such WTG shall be released to Suzlon (through automatic withdrawals from the Payment Escrow and/or a reduction in the Suzlon L/C) in an amount equal to such WTG's pro rata share of the Retention (which pro rata share shall be determined based on the number of WTGs actually purchased pursuant to this Agreement and taking into account those WTGs whose pro rata share has already been released from the Retention), and shall apply whether the Delivery occurs pursuant to this Agreement or any executed Definitive Agreements. Suzlon shall, in its discretion, have the right to determine whether the reduction in the Retention upon Delivery shall occur by means of a withdrawal from the Payment Escrow or a reduction in the Suzlon L/C. Notwithstanding the foregoing, in the event of a Suzlon Default, Owner shall be entitled to draw upon the Retention for actual damages incurred by Owner as a result of such Suzlon Default, including any amount that constitutes liquidated damages hereunder where Suzlon has not paid such liquidated damages within the time required by this Agreement and such failure to pay has become a Suzlon Default. Any draw made by Owner upon the Retention shall in no way relieve Suzlon of any of its duties or obligations under this Agreement or any Definitive Agreements (other than the duties and obligations for which such draw was made). Each Payment Escrow and Suzlon L/C shall contain terms providing for the withdrawal from such Payment Escrow and/or the draw upon or reduction in such Suzlon L/C (as applicable) in the manner described in this Section 11.7(b). In addition, the Parties acknowledge and agree that, concurrently with the execution of each set of Definitive Agreements, the Parties will enter into an agreement with the "owner" under such set of Definitive Agreements which details the terms and conditions upon which such "owner" may draw upon the Suzlon Security as described in this Section 11.7(b).

(c) As a material inducement to Suzlon to enter into this Agreement and each set of Definitive Agreements, Edison Mission Energy or an Affiliate of Edison Mission Energy with comparable creditworthiness to Edison Mission Energy as of the Effective Date shall guarantee the payment obligations of the "owner" under each set of executed Definitive Agreements by delivering one of the following along with the execution and delivery of each set of Definitive Agreements:

(i) A guaranty executed by Edison Mission Energy or an Affiliate of Edison Mission Energy with comparable creditworthiness to Edison Mission Energy as of the Effective Date (an "Owner Guarantor") in the form attached hereto as Exhibit E (an "Owner Parent Guarantee"); or

(ii) An irrevocable letter of credit (a) in the form attached hereto as Exhibit H, (b) issued by a financial institution with an S&P rating of "A-" or better or a Moody's rating of "A-" or better, (c) naming Suzlon as beneficiary, and (d) in a face amount equal to the balance of the "contract price" under the corresponding TSA or TSIA (the "Owner's L/C"). The required amount of an Owner's L/C shall be reduced upon the payment by "owner" under such Definitive Agreement to Suzlon of the applicable Milestone Payments set forth in such Definitive Agreements, such that at any given time, the required face amount of the Owner's L/C shall equal the balance of the "contract price" under the corresponding TSA or TSIA. Owner covenants and agrees that an Owner's L/C (x) shall permit partial draws, and (y) shall have an expiry date no sooner

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

than twelve (12) calendar months after issuance (and Owner shall furnish extensions or replacements of such letter of credit ten (10) days prior to the expiration thereof from time to time prior to payment of the Milestone Payment to be made by "owner" under such Definitive Agreement upon the Final Completion of the applicable Project). Upon payment of the Milestone Payment to be made by "owner" under a Definitive Agreement upon the Final Completion of the applicable Project, the applicable Owner's L/C shall be returned to Owner.

An Owner's L/C shall secure the payment obligations of "owner" under each such set of executed Definitive Agreements. Suzlon shall have the right to draw against an Owner's L/C upon: (i) the failure of "owner" under a Definitive Agreement to make a Milestone Payment when due under such set of Definitive Agreements or (ii) the failure or refusal of Owner to deliver any applicable extension or replacement of the applicable Owner's L/C as provided above. In the event of a draw due to the failure of "owner" under a Definitive Agreement to make a Milestone Payment when due, the proceeds of the draw shall be applied against the applicable Milestone Payment and any costs, expenses and damages incurred by Suzlon as a result of the failure of the "owner" under such Definitive Agreement to make the applicable Milestone Payment. In the event of a draw due to the failure or refusal of Owner to deliver any applicable extension or replacement of the applicable Owner's L/C, Suzlon shall place and hold the proceeds of such draw in an escrow account and shall draw upon them as provided herein or return to Owner the amount of any such draw upon receipt of an extension or replacement of the applicable Owner's L/C or payment of any applicable Milestone Payments. Any draw made by Suzlon under an Owner's L/C shall not relieve "owner" under such Definitive Agreement of any liabilities, deficiencies, costs, expenses or damages beyond what is drawn under the applicable Owner's L/C.

11.8 Entire Agreement. The terms and conditions set forth herein and in the Performance Side Letter, together with those set forth on all Exhibits attached hereto, constitute the complete statement of the agreement between Owner and Suzlon relating to the subject matter hereof. No prior statement or correspondence shall modify or affect the terms and conditions hereof. Prior representations, promises, warranties or statements by Suzlon or Owner, or by any agent or employee of Suzlon or Owner, that differ in any way from the terms and conditions hereof shall be given no effect.

11.9 Counterparts. This Agreement may be executed by the Parties in one or more counterparts, all of which taken together, shall constitute one and the same instrument.

11.10 NO IMPLIED WARRANTIES. ANY GUARANTIES AND WARRANTIES SET FORTH IN THIS AGREEMENT ARE SUZLON'S SOLE AND EXCLUSIVE GUARANTIES AND WARRANTIES. SUZLON MAKES NO OTHER GUARANTIES OR WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS, IMPLIED, ORAL, WRITTEN OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF NON-INFRINGEMENT, TITLE, PATENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR WARRANTIES ARISING BY CUSTOM, TRADE USAGE, PROMISE, EXAMPLE OR DESCRIPTION, ALL OF WHICH GUARANTIES

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

AND WARRANTIES ARE EXPRESSLY DISCLAIMED BY SUZLON AND WAIVED BY OWNER.

11.11 Severability. In case any provision in this Agreement is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be affected.

11.12 Headings. The headings and captions used in this Agreement are inserted for reference and convenience only and the same shall not limit or construe the sections, articles or paragraphs to which they apply or otherwise affect the interpretation thereof.

11.13 Signatures. The exchange of copies of this Agreement and of signature pages by facsimile or other electronic transmission shall constitute effective execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes. Signatures of the Parties transmitted by facsimile or other electronic means shall be deemed to be their original signatures for all purposes.

11.14 Interpretation. (a)The Parties acknowledge and agree that the Definitive Agreements (attached hereto as Exhibit A) are incorporated into this Agreement solely for reference and convenience purposes and shall have no effectiveness unless and until such documents are executed and delivered by the appropriate parties (at which point, such executed documents shall constitute agreements separate and distinct from this Agreement).

(b) Except as otherwise provided in Section 11.14(c), in the event of any conflict or inconsistency between the terms set forth in the body of this Agreement and the terms of any Exhibit attached hereto (other than Exhibit G), the terms of the body of this Agreement shall govern and take precedence; provided, however, with respect to any WTG that is subject to the Modified Obligations, in the event of any conflict or inconsistency between the terms set forth in the body of this document and the terms of Exhibit G, the terms of Exhibit G shall govern and take precedence.

(c) Notwithstanding anything to the contrary contained herein, the term "Agreement" shall, solely with respect to any WTG that is subject to the Modified Obligations, mean the body of this document and all Exhibits attached hereto (including, without limitation, Exhibit G). In all other cases, the term "Agreement" shall mean the body of this document and all Exhibits attached hereto (other than Exhibit G).

(d) To the maximum extent possible, the terms of this Agreement and the terms of the Performance Side Letter shall be interpreted to be consistent with each other, and if necessary interpreted together to determine the outcome of a matter affected by both this Agreement and the Performance Side Letter; provided, however, notwithstanding anything to the contrary contained in this Agreement, in the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Performance Side Letter as to the subject matter reflected in the Performance Side Letter, the terms and provisions of the Performance Side Letter shall govern and control.

11.15 Force Majeure. (a) If an event of Force Majeure or Owner Default occurs that adversely affects Suzlon's performance under the Agreement (including, without limitation,

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

Suzlon's cost of performing its obligations under the Agreement), Suzlon shall be entitled to an equitable adjustment in the Contract Price, the fees payable pursuant to this Agreement and/or the schedules for the performance of the Work (including, without limitation, the Deadline Dates) reflecting the impact of such event of Force Majeure or Owner Default, which adjustment shall be reflected in an amendment to this Agreement. Notwithstanding the foregoing, if Owner and Suzlon reasonably believe that the then current schedules for Suzlon's performance of the Work may be preserved, then Owner shall have the option of so increasing the Contract Price (and/or implementing such other mutually acceptable measures at the Owner's sole cost) to preserve the then current schedules for Suzlon's performance of the Work. If Suzlon requests such amendment as a result of an event of Force Majeure, Suzlon must do so in writing within fifteen (15) Business Days after Suzlon first becomes aware of such event.

(b) If an event of Force Majeure or Suzlon Default occurs that adversely affects Owner's ability to meet any Mechanical Completion Deadline or its Expected MC Date, Owner shall be entitled to an equitable adjustment in such Mechanical Completion Deadline or such Expected MC Date reflecting the impact of such event of Force Majeure or Suzlon Default, which adjustment shall be reflected in an amendment to this Agreement, provided (x) if Owner requests an amendment as to such Mechanical Completion Deadline as a result of an event of Force Majeure, Owner must do so in writing within fifteen (15) Business Days after Owner first becomes aware of such event, and (y) if Owner requests an amendment as to such Expected MC Date, Owner must comply with the terms and provisions of Section 2.2(c)(ii).

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the date and year first above written.

		EDISON MISSION ENERGY
		By:		/s/ Gerard P. Loughman
				Name: Gerard P. Loughman
		SUZLON WIND ENERGY CORPORATION
		By:		/s/ Andris Cukurs
				Name: Andris Cukurs
				Title: Chief Executive Officer

[***] Confidential portions of this document have been redacted and filed separately with the Commission.

QuickLinks

PURCHASE & RESERVATION AGREEMENT
ARTICLE 3 CONTRACT PRICE; PAYMENTS TO SUZLON
EX-31.1 4 a2178984zex-31_1.htm EXHIBIT 31.1

Exhibit 31.1

CERTIFICATIONS

I, Theodore F. Craver, Jr., certify that:
1.	I have reviewed this quarterly report on Form 10-Q of Edison Mission Energy (the "quarterly report");
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
	(b)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
	(c)	Disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date:	August 9, 2007		/s/ Theodore F. Craver, Jr. Theodore F. Craver, Jr. Chairman of the Board, President and Chief Executive Officer

EX-31.2 5 a2178984zex-31_2.htm EXHIBIT 31.2

Exhibit 31.2

CERTIFICATIONS

I, W. James Scilacci, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of Edison Mission Energy (the "quarterly report");
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
	(b)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
	(c)	Disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date:	August 9, 2007		/s/ W. James Scilacci W. James Scilacci Senior Vice President and Chief Financial Officer

EX-32 6 a2178984zex-32.htm EXHIBIT 32

Exhibit 32

STATEMENT PURSUANT TO 18 U.S.C. SECTION 1350,
AS ENACTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 (the "Quarterly Report") of Edison Mission Energy (the "Company"), and pursuant to 18 U.S.C. Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned certifies, to the best of his knowledge and belief, that:

1.: The Quarterly Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
2.: The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ Theodore F. Craver, Jr. Theodore F. Craver, Jr. Chief Executive Officer Edison Mission Energy
	/s/ W. James Scilacci W. James Scilacci Chief Financial Officer Edison Mission Energy

This statement accompanies the Quarterly Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to Edison Mission Energy and will be retained by Edison Mission Energy and furnished to the Securities and Exchange Commission or its staff upon request.

-----END PRIVACY-ENHANCED MESSAGE-----