Exhibit 10.35

POWER PURCHASE AND SALE AGREEMENTbetweenEME Homer City Generation L.P.andEdison Mission Marketing & Trading, Inc.

Sales
by Edison Mission Marketing & Trading, Inc. will be pursuant to:

Edison
Mission Marketing & Trading, Inc.'s Rate Schedule
FERC No. 1 (Docket No. ER99-852, dated February 5, 1999)

Sales
by EME Homer City Generation L.P. will be pursuant to:

EME
Homer City Generation L.P.'s Rate Schedule
FERC No. 1 (Docket No. ER99-6661, dated February 24, 1999)

---

TABLE OF CONTENTS

|Article 1.  |  | Definitions                                       |  | 1                                   
|----------- |  | ------------------------------------------------- |  | ------------------------------------
|Article 2.  |  | Transactions and Commitments of the Parties       |  | 4                                   
|            |  | 2.1                                               |  | Form of Contract                    
|            |  | 2.2                                               |  | Non-Firm Transactions               
|            |  | 2.3                                               |  | Firm Transactions                   
|Article 3.  |  | Quantity and Interruptions of Firm Transactions   |  | 5                                   
|            |  | 3.1                                               |  | Quantity                            
|            |  | 3.2                                               |  | Interruptions of Firm Transactions  
|Article 4.  |  | Delivery Points and Reliability Guidelines        |  | 7                                   
|            |  | 4.1                                               |  | Delivery Point                      
|            |  | 4.2                                               |  | Reliability Guidelines              
|Article 5.  |  | Price                                             |  | 7                                   
|Article 6.  |  | Term                                              |  | 7                                   
|Article 7.  |  | Records and Billing                               |  | 7                                   
|            |  | 7.1                                               |  | Accounting Period                   
|            |  | 7.2                                               |  | Late Payments                       
|            |  | 7.3                                               |  | Billing                             
|            |  | 7.4                                               |  | Records                             
|            |  | 7.5                                               |  | Termination                         
|Article 8.  |  | Limitation of Liability                           |  | 8                                   
|            |  | 8.1                                               |  | Title Transfer                      
|            |  | 8.2                                               |  | Responsibilities and Liabilities    
|            |  | 8.3                                               |  | Remedies                            
|            |  | 8.4                                               |  | Limitation of Liability             
|Article 9.  |  | Assignment and Succession                         |  | 9                                   
|Article 10. |  | Force Majeure and General Limitation of Liability |  | 9                                   
|            |  | 10.1                                              |  | Effect of Force Majeure             
|            |  | 10.2                                              |  | Force Majeure                       
|            |  | 10.3                                              |  | Good Electric Operating Practice    
|            |  | 10.4                                              |  | Interruption by Transmitting Utility
|Article 11. |  | Taxes                                             |  | 10                                  
|            |  | 11.1                                              |  | Allocation of an Indemnity of Taxes 
|            |  | 11.2                                              |  | Cooperation                         
|Article 12. |  | Arbitration                                       |  | 10                                  
|Article 13. |  | Events of Default                                 |  | 10                                  
|            |  | 13.1                                              |  | Event of Default                    
|            |  | 13.2                                              |  | Rights Under Agreement              
|            |  | 13.3                                              |  | Termination Upon Default            

i

---

|Article 14. |  | Miscellaneous                                           |  | 11                                                
|----------- |  | ------------------------------------------------------- |  | --------------------------------------------------
|            |  | 14.1                                                    |  | Regulatory                                        
|            |  | 14.2                                                    |  | Authorizations                                    
|            |  | 14.3                                                    |  | Notices                                           
|            |  | 14.4                                                    |  | Costs                                             
|            |  | 14.5                                                    |  | Expenses                                          
|            |  | 14.6                                                    |  | Consent to Recording                              
|            |  | 14.7                                                    |  | Entirety                                          
|            |  | 14.8                                                    |  | Governing Law                                     
|            |  | 14.9                                                    |  | Non-Waiver                                        
|            |  | 14.10                                                   |  | UCC Applicability                                 
|            |  | 14.11                                                   |  | Severability                                      
|            |  | 14.12                                                   |  | Security                                          
|            |  | 14.13                                                   |  | Set-Off                                           
|            |  | 14.14                                                   |  | Headings                                          
|            |  | 14.15                                                   |  | Confidentiality                                   
|            |  | 14.16                                                   |  | Forward Contract                                  
|            |  | 14.17                                                   |  | Energy Sales Agreement                            
|            |  | 14.18                                                   |  | Rights of EMMT Subject to Certain Other Agreements
|            |  | 14.19                                                   |  | Special Termination Event                         
|            |  | 14.20                                                   |  | Risk Management Guidelines                        
|Exhibit A   |  | Form of Transaction Summary                             |  | 16                                                
|Exhibit B   |  | EMMT's FERC Rate Schedule No. 1                         |  | 18                                                
|Exhibit C   |  | EME Homer City Generation L.P.'s FERC Rate Schedule No. |  | 19                                                

ii

---



POWER PURCHASE AND SALE AGREEMENT

THIS POWER PURCHASE AND SALE AGREEMENT (the "Agreement") is made and entered into this 31st day of October, 2002, by and between EME Homer City
Generation L.P., a Pennsylvania limited partnership, hereinafter referred to as "Homer City" or the "Counterparty", and Edison Mission Marketing & Trading, Inc., a California
corporation, hereinafter referred to as "EMMT" (each a "Party" and collectively, the "Parties").

WITNESSETH:

WHEREAS, EMMT and Counterparty are not end users of Power, and the Power purchased and sold hereunder will not be used for Buyer's consumption; and

WHEREAS,
EMMT and Counterparty may from time to time request of the other to either Purchase and/or Sell Power and enter into Power Purchase and Sale Transactions pursuant to which Power
is delivered and received at one or more mutually agreeable Delivery Points; and

WHEREAS,
the Parties desire to set forth certain terms and conditions applicable to any such Power Purchase and Sale Transaction;

NOW,
THEREFORE, in consideration of the mutual agreements, covenants and conditions herein contained, EMMT and Counterparty hereby agree as follows:

ARTICLE 1.  DEFINITIONS

In addition to terms defined elsewhere in this Agreement, the following definitions shall apply hereunder:



1

---



2

---



3

---



ARTICLE 2.  TRANSACTIONS AND COMMITMENTS OF THE PARTIES

2.1Form of Contract.The specific terms of individual Transactions for the sale and delivery, purchase and
receipt, and transmission of Power hereunder shall be determined by EMMT at the time of the Transaction and shall be confirmed by the Parties in the manner set forth in this Article 2.1. The
specific terms shall include at a minimum (i) the Period of Delivery, (ii) the Contract Price, (iii) the Delivery Point(s), (iv) the Contract Quantity, (v) the
Nature of Transaction, (vi) for a Transaction involving an option, the Premium, Strike Price, and Expiration Date, and (vii) such other terms as agreed or such other terms contained in a
Transaction Summary. Such terms are collectively referred to herein as the "Economic Terms." The Economic Terms of individual Transactions shall be confirmed in accordance with the following:



4

---



Each
Transaction, and the documentation of such Transaction, shall constitute an integral part of this Agreement and shall be read and construed as one with this Agreement.

2.2Non-Firm Transactions.For purposes of this Agreement, "Non-Firm" means, with
respect to a Transaction, that delivery or receipt of Power may be interrupted for any reason, or for no reason, without liability on the part of either Party, except and to the extent a Party fails
to give to the other Party timely notice of interruption.

Either
Party may, at its sole discretion and without liability (except for failure to provide notice of interruption within the time specified for such notice in the documentation of the
Transaction or this Agreement), interrupt, in whole or in part, the Scheduling of Power at any time for any reason, provided that notice of interruption shall be given to the other Party, and that no
such interruption shall be retroactive to any time prior to giving of notice of interruption. In the event the interrupting Party fails to give timely notice of interruption, the interrupting Party
shall be liable only for direct actual damages resulting from the failure to timely notify and shall only be liable in the event the non-interrupting Party has exercised all reasonable
efforts to minimize and avoid such damages.

The
Parties hereby agree that such actual direct damages shall be computed in the same manner as liquidated damages for the interruption of firm transactions as set forth in
Article 3 hereof, with respect to volumes of Power not scheduled or delivered/received prior to notice of interruption and that such damages shall be the sole and exclusive remedy for such
event. Both Parties hereby stipulate that such liquidated damages are reasonable in light of the anticipated harm and the difficulty of estimation or calculation of actual damages, and each Party
hereby waives the right to contest such damages as an unreasonable penalty.

2.3Firm Transactions.For purposes of this Agreement, a Transaction shall be deemed firm to the extent as
specified in the terms in the documentation of the Transaction. "Firm" means, with respect to a Transaction, that either Party shall be relieved of its obligations to schedule or deliver/receive
without liability only to the extent that, and for the period during which, such performance is prevented by Force Majeure. In the absence of Force Majeure, the interrupting Party shall have the
obligations set forth in Article 3.2 of this Agreement.

ARTICLE 3  QUANTITY AND INTERRUPTIONS OF FIRM TRANSACTIONS

3.1Quantity.The quantity of Power to be Scheduled for delivery and receipt, subject to the other provisions of
the Agreement and in each Transaction hereunder, shall be the Contract Quantity. The Seller shall be responsible for any transmission losses and loss charges relating to the transmission of Power to
the Delivery Point.

3.2Interruptions of Firm Transactions.If the Transaction is a firm Transaction, then with respect to the
unauthorized failure to Schedule, deliver, and/or receive in whole or in part the Contract Quantity in accordance with this Agreement or a Transaction:



5

---



6

---



ARTICLE 4.  DELIVERY POINTS AND RELIABILITY GUIDELINES

4.1Delivery Point(s).Seller shall deliver the Power to Buyer at the Delivery Point(s).

4.2Reliability Guidelines.Each Party agrees to adhere to accepted electric industry practice and specifically
adhere to the applicable operating policies, criteria and/or guidelines of the North American Electric Reliability Council ("NERC") and any regional or subregional requirement.

ARTICLE 5  PRICE

Buyer agrees to pay Seller the Contract Price for Power. The Contract Price will be the total consideration paid by Buyer to Seller for Power Scheduled hereunder
subject to Article 11.

ARTICLE 6  TERM

Subject to the other provisions of this Agreement, the term of this Agreement shall commence on the date first stated above and shall remain in effect for an
initial period of one year. This Agreement shall thereafter be in effect from month to month, until terminated by either Party upon 30 days prior written notice; provided, however, no such
termination notice shall be effective as to any ongoing Transaction hereunder until both Parties have fulfilled all their obligations hereunder with respect to such Transaction.

ARTICLE 7.  RECORDS AND BILLING

7.1Accounting Period.The accounting period shall be one (1) calendar month. For each calendar month
during the term of this Agreement, EMMT shall render to Counterparty (by regular mail, facsimile or other acceptable means pursuant to Article 14.3), on or before the fifth (5th) day of the
following calendar month, a statement setting forth (i) the amount of Power received by the Buyer from the Seller for each Transaction, and (ii) the Contract Price for such Power. The
Parties hereby agree that they shall discharge mutual debts and payment obligations due and owing to each other on the same date pursuant to all Transactions through netting, in which case all amounts
owed by each Party to the other Party hereunder, including any related damages, interest, and payment or credits, shall be netted so that only the excess amount remaining due shall be paid by the
Party who owes it. On or before thirty (30) days after sending such statement to Counterparty, or if such day is not a business day, the immediately following business day, the Party owing
payment shall render, by wire transfer or other method as agreed upon by the Parties, the total amount to be paid by such Party to the other Party for
the Transactions set forth therein pursuant to Article 14.3. If Counterparty, in good faith, disputes a statement, Counterparty shall provide a written explanation of the basis for the dispute.

7.2Late Payments.Late payments shall be payable with interest accrued daily at the lesser of the Prime Rate of
interest for commercial loans per annum established by Citibank, New York, New York or its successor, plus one (1%) percent or the highest lawful rate.

7.3Billing.



7

---





7.4Records.Each Party, or any third party representative of a Party, shall keep complete and accurate records
and memoranda of its operations hereunder, and shall maintain such data as may be necessary for the purpose of ascertaining the reasonableness and accuracy of all relevant data, estimates, or
statements of charges submitted hereunder for a period of two (2) years from the date of a Transaction. Furthermore, within the stated period of two (2) years from the date of a
Transaction, each Party may request in writing copies of the records of the other Party to the extent reasonably necessary to verify the accuracy of any statement, charge or computation made pursuant
to the provisions of this Agreement.

7.5Termination.Article 7 of this Agreement will survive any termination of the Agreement for the
purpose of such billing and payment objections.

ARTICLE 8  LIMITATION OF LIABILITY

8.1Title Transfer.Title to Power Scheduled hereunder shall transfer from Seller to Buyer at the Delivery
Point.

8.2Responsibilities and Liabilities.The Seller's responsibilities and liabilities extend to the Delivery
Point. The Buyer's responsibilities and liabilities originate at and from the Delivery Point.

8.3Remedies.Except for non-payment, the penalties herein are the sole remedies, either at law or
in equity, for either Party arising from the performance or non-performance of this Agreement.

8.4Limitation of Liability.FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS
PROVIDED IN THIS AGREEMENT, THE LIABILITY OF THE DEFAULTING PARTY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER DAMAGES OR REMEDIES HEREBY ARE WAIVED. IF NO REMEDY OR MEASURE OF
DAMAGES IS EXPRESSLY PROVIDED, THE LIABILITY OF THE DEFAULTING PARTY SHALL BE LIMITED TO DIRECT DAMAGES ONLY, AND ALL OTHER DAMAGES AND REMEDIES, EITHER AT LAW OR IN EQUITY, ARE WAIVED. IN NO EVENT
SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES IN TORT, FOR CONTRACT OR OTHERWISE, EITHER AT LAW OR IN EQUITY.

ARTICLE 9  ASSIGNMENT AND SUCCESSION

Except for assignments to the Collateral Agent executed on or before the date hereof, neither Party shall assign this Agreement or its rights hereunder without
the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed. Upon any assignment made in compliance with this Article 9, this Agreement shall inure
to and be binding upon the successors and assigns of the assigning Parties. Notwithstanding the foregoing, either Party may, without the need for consent from the other Party, (i) transfer,
pledge, or assign this Agreement as security for any financing with financial institutions; (ii) transfer or assign this Agreement to an Affiliate of such Party, provided that all the persons
obligated to fulfill the assigning Party's obligations under the Agreement after the assignment have substantially equivalent financial capability to that of all the persons obligated to fulfill

8

---

the assigning Party's obligations under the Agreement before the assignment, or (iii) transfer or assign this Agreement to any person or entity succeeding to all or substantially all of the
assets of such Party; provided, however, that any such assignee shall agree to be bound by the terms and conditions hereof.

ARTICLE 10.  FORCE MAJEURE

10.1Effect of Force Majeure.In the event either Party is rendered unable by an event of Force Majeure to carry
out wholly or in part its obligations under a Transaction, if such Party gives notice and full particulars of such event of Force Majeure to the other Party as soon as practicable after the
occurrence of the event relied on, then the obligations of the Party affected by such event of Force Majeure pursuant to such Transaction, other than the obligation to make payments then due or
becoming due hereunder, shall be suspended from the inception and throughout the period of continuance of any such inability so caused, but for no longer period, and such event of Force Majeure shall,
so far as practicable, be remedied with all reasonable dispatch; provided, however, that no provision of this Agreement shall be interpreted to require Seller to deliver, or Buyer to receive, Power at
points other than the Delivery Point(s).

10.2Force Majeure.The term "Force Majeure" means an event or circumstance which prevents one Party from
performing its obligations under one or more Transactions, which event or circumstance was not anticipated as of the date the Transaction was agreed to, which is not within the reasonable control of,
or the result of the negligence of, the Party claiming the Force Majeure, and which, by the exercise of due diligence, the Party claiming the Force Majeure is unable to overcome or avoid or cause to
be avoided. Force Majeure shall not be based on (i) the loss of Buyer's markets; (ii) Buyer's inability economically to use or resell the Product purchased hereunder; (iii) the
loss or failure of Seller's supply; or (iv) Seller's ability to sell the Product at a price greater than the Contract Price. Neither Party may raise a claim of Force Majeure based in whole or
in part on curtailment by a transmission provider unless (i) such Party has contracted for firm transmission with a transmission provider for the Product to be delivered to or received at the
Delivery Point and (ii) such curtailment is due to "force majeure" or "uncontrollable force" or a similar term as defined under the transmission provider's tariff; provided, however, that
existence of the foregoing factors shall not be sufficient to conclusively or presumptively prove the existence of a Force Majeure absent a showing of other facts and circumstances which in the
aggregate with such factors establish that a Force Majeure as defined in the first sentence hereof has occurred.

10.3Good Electric Operating Practice."Good Electric Operating Practice" means the practices, methods and acts
engaged in or approved by a significant portion of the electric power industry during the relevant time period, or the practices, methods and acts which, in the exercise of reasonable judgment in
light of the facts known at the time the decision was made, could have been expected to accomplish the desired result consistent with reliability, safety, expedition, the requirements of governmental
agencies having jurisdiction and, if appropriate or relevant under the Transaction in question, at the lowest reasonable cost; such term is not intended to be limited to the optimum practice, method
or act to the exclusion of all others, but rather to constitute a spectrum of acceptable practices, methods or acts.

10.4Interruption by Transmitting Utility.In a firm Transaction pursuant to Article 2.3, interruption by
a Transmitting Utility shall not be deemed to be Force Majeure unless (i) the Party contracting with such Transmitting Utility shall have made arrangements with such Transmitting Utility for
the firm transmission, as defined under the Transmitting Utility's tariff, of the Power to be Scheduled hereunder and (ii) such interruption is due to a Force Majeure as defined under the
Transmitting Utility's tariff.

9

---

ARTICLE 11  TAXES

11.1Allocation of and Indemnity for Taxes.The Contract Price paid hereunder includes full reimbursement for
and Seller is liable for and shall pay or cause to be paid, or reimburse Buyer if Buyer shall have paid, all Taxes applicable to the Power sold hereunder prior to the Delivery Point(s) which are in
effect and at the rates that are in effect on the date that a Transaction is entered into ("Seller's Taxes"). In the event Buyer is required to remit any of Seller's Taxes, the amount thereof shall be
deducted from any sums becoming due to Seller hereunder. Seller shall indemnify, defend and hold Buyer harmless from any liability against all Seller's Taxes. The Contract Price does not include
reimbursement for and Buyer is liable for and shall pay or cause to be paid, or reimburse Seller if Seller shall have paid, all Taxes applicable to the Power sold hereunder at and after the Delivery
Point including Taxes imposed by a taxing authority with jurisdiction over Buyer which are in effect and at the rates that are in effect on the date that a Transaction is entered into ("Buyer's
Taxes"). Buyer shall indemnify, defend and hold Seller harmless from any liability against all Buyer's Taxes.

11.2Cooperation.Both Parties shall use reasonable efforts to administer this Agreement and implement the
provisions in accordance with their intent to minimize Taxes.

ARTICLE 12  ARBITRATION

Any dispute or need of interpretation arising out of this Agreement shall be submitted to binding arbitration by one arbitrator qualified by education, experience
or training to render a decision upon the issues in dispute and who has not previously been employed by either Party, and does not have a direct or indirect interest in either Party or the subject
matter of the arbitration.

Such
arbitrator shall either be mutually agreed by the Parties within thirty (30) days after written notice from either Party requesting arbitration, or failing agreement, the
arbitration shall be conducted by a panel of three arbitrators having the qualifications set forth in the preceding sentence, one to be selected by each Party and the third arbitrator to be selected
by the two arbitrators selected by the Parties. If either Party fails to notify the other Party of the arbitrator selected by it within ten (10) days after receiving notice of the other Party's
arbitrator, or if the two arbitrators selected fail to select a third arbitrator within ten (10) days after notice is given of the selection of the second arbitrator, then such arbitrator shall
be selected under the expedited rules of the American Arbitration Association (the "AAA").

Such
arbitration shall be held in New York, New York. Each Party shall divide equally the cost of the hearing, and each shall be responsible for their own expenses and those of their
counsel or other representative. The commercial arbitration rules of the AAA shall apply to the extent not inconsistent with the rules specified above.

ARTICLE 13  EVENTS OF DEFAULT

13.1Event of Default."Event of Default" means the occurrence of any of the following events with respect to a
Party (the "Defaulting Party", the other Party being the "Non-Defaulting Party"):



10

---



13.2Rights Under Agreement.Except as otherwise provided herein, each Party reserves to itself all rights,
counterclaims, set-offs, and other defenses which it is or may be entitled to arising from or out of the Agreement.

13.3Termination Upon Default.Upon the occurrence of an Event of Default, the Non-Defaulting Party
shall have the right to terminate any Transaction upon written notice to the Defaulting Party in addition to any other right or remedy the Non-Defaulting Party may have under this
Agreement or at law, except as otherwise limited by this Agreement.

ARTICLE 14  MISCELLANEOUS

14.1Regulatory.It is understood by the Parties that this Agreement and performance hereunder is subject to all
present and future valid and applicable laws, orders, statutes, and regulations of courts

11

---

or regulatory bodies (state or federal) having jurisdiction over EMMT, Counterparty, or any Transaction hereunder. The rights of the Parties hereunder to Schedule the purchase and sale of Power shall
not be effective until all Regulatory Approvals have been obtained;provided, however, that if Regulatory Approvals are not issued by applicable
governmental authorities by such Transaction, either Party may terminate such Transaction without further obligation or liability to the other Party.

14.2Authorizations.The Parties hereto represent that they have (or will have at the time of documentation of
any Transaction and at the time of delivery and receipt of Power thereunder) all requisite legal, corporate and governmental authorizations necessary or proper to consummate such Transactions and to
consummate this Agreement, and that the persons signing this Agreement and consummating Transactions hereunder have been duly authorized to do so.

14.3Notices.Except as otherwise provided for in this Agreement, any notice (except of an operational nature),
request, demand, statement, or payment provided for in this Agreement shall be confirmed in writing and shall be made as specified below; provided, however, that notices of interruption may be
provided verbally, effective immediately and, upon request, confirmed in writing. A notice sent by facsimile transmission shall be deemed received by the close of the Business Day on which such notice
was transmitted or such earlier time as confirmed by the receiving Party, and notice by overnight mail or courier shall be deemed to have been received two (2) Business Days after it was sent
or such earlier time as is confirmed by the receiving Party unless it confirms a prior verbal communication in which case any such notice shall be deemed received on the day sent. The addresses of the
Parties are as follows:

NOTICES & CORRESPONDENCE:Edison Mission Marketing & Trading, Inc.
160 Federal Street
Boston, MA 02110
Attn: Counsel, Electricity Trading
Telephone: (617) 912-6000
Facsimile: (617) 912-6001

EME Homer City Generation L.P.
440 South Lasalle, Suite 3500
Chicago, IL 60605
Attn: General Counsel/Vice President of
Business Management
Telephone: (312) 583-6000
Facsimile: (312) 583-4946INVOICES:Edison Mission Marketing & Trading, Inc.
160 Federal Street
Boston, MA 02110
Attn: Accounting
Facsimile: (617) 912-5702

EME Homer City Generation L.P.
400 Soute Lasalle, Suite 3500
Chicago, IL 60605
Attn: Controller
Telephone: (312) 583-6000
Facsimile: (312) 583-4946PAYMENTS:Fleet Bank
1 Federal St., Boston, MA 02210
ABA Routing No.: 011-500-010
Account Number: 056-225-6897
Account of: Edison Mission Marketing &
Trading, Inc.Trade Account
Verification: Accounting
Facsimile: (617) 912-5702

United States Trust Company of New York
114 West 47th St., 25th Floor, New York, NY 10036
ABA Routing No.: 021001318
Account Number: 09039700
Account of: EME Homer City Generation,
L.P. Revenue Fund Account
Verification:
Facsimile:


or
to such other address as EMMT or Counterparty shall from time to time designate by letter properly addressed.

14.4Costs.The prices stated herein include any and all costs incurred by the Seller related to the electric
energy transaction pursuant to this Agreement including, but not limited to, Seller's

12

---

transmission costs to the Delivery Point, Seller's fuel costs, Seller's out-of-pocket costs (variable O&M), Seller's emission allowance costs, and new and existing taxes of
any nature imposed on the Seller up to and prior to the Delivery Point.

14.5Expenses.Buyer is responsible for all expenses at and extending from the Delivery Point.

14.6Consent to Recording.The Parties, and their respective employees involved in such recordings, agree that
each may electronically record all telephonic conversations between them and that any such recordings may be submitted in evidence to any court or in any proceedings for the purpose of establishing
any matters pertinent to any Transaction(s).

14.7Entirety.This Agreement, the Exhibits hereto, and the documentation of each Transaction hereunder pursuant
to Article 2.1 constitute the entire Agreement between the Parties hereto. There are no prior or contemporaneous agreements or representations affecting the same subject matter other than those
herein expressed. Except for those matters which, in accordance with Article 2.1 of this Agreement, may be resolved by verbal agreement between the Parties and documented, it is further agreed
that no amendment, modification or change herein shall be enforceable, except as specifically provided for in this Agreement, unless reduced to writing and executed by both Parties.

14.8GOVERNING LAW.INCLUDING ANY COUNTERCLAIMS AND CROSS CLAIMS ASSERTED IN SUCH ACTION, THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF NEW YORK, WITHOUT REGARD TO THE LAW OF SUCH STATE REQUIRING THE APPLICATION OF THE LAW OF ANOTHER STATE.

14.9Non-Waiver.No waiver by either Party hereto of any one or more defaults by the other in the
performance of any of the provisions of this Agreement, shall be construed as a waiver of any other default or defaults whether of a like kind or different nature.

14.10UCC Applicability.Except as otherwise provided for herein, the provisions of the Uniform Commercial Code
("UCC") of the state whose laws shall govern this Agreement shall be deemed to apply to all transactions and electric power (both energy and capacity) shall be deemed to be "goods" for purposes of the
UCC. EXCEPT AS EXPRESSLY SET FORTH HEREIN, SELLER EXPRESSLY NEGATES ANY OTHER REPRESENTATION OR WARRANTY, WRITTEN OR ORAL, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR
WARRANTY WITH RESPECT TO THE MERCHANTABILITY OR FITNESS OF ELECTRIC POWER SOLD FOR ANY PARTICULAR PURPOSE.

14.11Severability.Except as otherwise stated herein, any provision, article or section declared or rendered
unlawful by a court of law or regulatory agency with jurisdiction over the Parties, or deemed unlawful because of a statutory change, will not otherwise affect the lawful obligations that arise under
this Agreement.

14.12Security.Should either Party's creditworthiness or financial responsibility become unsatisfactory to the
other in its reasonably exercised discretion at any time during which this Agreement is in effect, the dissatisfied Party may require at its option either (i) the posting of a letter of credit
or (ii) cash prepayments or (iii) other security in a form acceptable to it. If the Party in question fails to provide satisfactory assurances, the dissatisfied Party shall have the
right, with two (2) days written notice, to (i) suspend performance until such assurances are made, and/or (ii) exercise any remedy available at law or in equity (including,
without limit, termination of any Transaction or this Agreement).

14.13Set-off.Each Party reserves to itself all rights, set-offs, counterclaims and
other remedies and/or defenses to which it is or may be entitled arising from or out of this Agreement as a result of default by the other Party. In the event of a default, all outstanding
Transactions and the obligations to

13

---

make payment in connection therewith, under this Agreement may be offset against each other, set-off or recouped therefrom.

14.14Headings.The headings used for the Articles herein are for convenience and reference purposes only and
shall in no way affect the meaning or interpretation of the provisions of this Agreement.

14.15Confidentiality.The Parties shall keep the terms of this Agreement and any Transaction confidential,
except to the extent such information must be disclosed for the purpose of effectuating any Transactions or as may be required to be disclosed by regulatory bodies or to vested interest owners or
pursuant to the Homer City Financing Documents.

14.16Forward Contract.The Parties acknowledge and agree that all Transactions constitute "forward contracts"
and that the Parties are "forward contract merchants," as those terms are used in the United States Bankruptcy Code, and that all Transactions hereunder, together with this Agreement, form a
single, integrated agreement.

14.17.Energy Sales Agreement.The Parties acknowledge that they are also parties to the Energy Sales Agreement,
and that all transactions between them regarding electric energy and capacity not explicitly
covered by a confirmation in accordance with this Agreement are subject to the terms and conditions of the Energy Sales Agreement and the netback terms contained therein; provided, however, that the
transactions embodied in four (4) confirmations dated September 24, 2001, the two (2) confirmations dated November 28, 2001, the three (3) confirmations dated
April 15, 2002, the confirmation dated April 19, 2002, the confirmation dated May 1, 2002, and the confirmation dated June 1, 2002, related to transactions between the
Parties which contemplated, in Special Conditions (1) the execution between the Parties of a "Master (Umbrella) Agreement," shall be governed by this Agreement.

14.18Rights of EMMT Subject to Certain Other Agreements.

(a)  Any
provision in this Agreement which, on its face, would create a default for Homer City under the Homer City Financing Documents, shall be void ab initio, provided that the remaining terms and conditions
of this Agreement shall remain in full force and effect. No Transaction shall be consummated
hereunder unless such Transaction would be permitted pursuant to the Homer City Financing Documents.

(b)  Prior
to the date which is six (6) years and one (1) day after the later of (i) the termination of the last of the Facility Leases in accordance
with its terms and (ii) the payment in full of all outstanding Rent (including without limitation, Basic Lease Rent, Renewal Rent, Supplemental Rent and Termination Value), EMMT will not (and
will not permit any of its Subsidiaries to) voluntarily (x) commence against, or join with any other Person in commencing against, Homer City or any of its limited partners or general partners
any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States, any state of the United States or the District of
Columbia (collectively, "Insolvency Proceedings"), (y) cause Homer City or any of its limited partners or general partners to commence any
Insolvency Proceedings with respect to Homer City or any of its limited partners or general partners nor (z) consent to, or facilitate, assist, encourage, support or take any other action in
furtherance of or for the purpose of effecting, any of the foregoing;

(c)  In
the event of any dissolution, winding up, liquidation, arrangement, reorganization, adjustment, protection, relief or composition of Homer City or its debts, whether
voluntary or involuntary, in any bankruptcy, insolvency, arrangement, reorganization, receivership, relief or other similar case or proceeding under any federal or state bankruptcy or similar law or
upon an assignment for the benefit of creditors or any other marshaling of the assets and liabilities of Homer City or otherwise, the Owner Lessors and each other Lease Financing Party shall be
entitled to receive indefeasible payment in full of the Rent (including without limitation, Basic Rent, Termination Value

14

---

and Supplemental Rent) and all other amounts under any of the Operative Documents, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise,
including without limitation all fees, expenses, indemnities, expense reimbursement obligations and all other obligations and liabilities of Homer City under the Operative Documents (such obligations
being, collectively, the "Senior Debt") before EMMT is entitled to receive (by way of payment, offset or otherwise) all or any portion of any indebtedness and other liabilities (including without
limitation any claims for liquidated damages or breach of contract) of Homer City now or hereafter owing to EMMT (collectively, the "Subordinated Debt") and any payment or distribution of any kind
(whether in cash,
property or securities) that otherwise would be payable or deliverable upon or with respect to such Subordinated Debt in any such case, proceeding, assignment, marshaling or otherwise (including any
payment that may be payable by reason of any other indebtedness of Homer City being subordinated to payment of the Subordinated Debt) shall be paid or delivered directly to the Collateral Agent (for
deposit into the Revenue Accounts under each Participation Agreement (in each case, in an amount equal to such Owner Lessor's Percentage thereof)) for application (in the case of cash) to, or as
collateral (in the case of non-cash property or securities) for, the payment or prepayment of the applicable Senior Debt until such Senior Debt shall have been indefeasibly paid in full in
cash.

14.19Special Termination Event.This Agreement shall terminate at such time as EMMT ceases to be an Affiliate
of Homer City or upon the exercise of remedies following the occurrence of a Lease Event of Default; provided, that no Transaction under this Agreement shall be terminated upon the exercise of
remedies to the extent (but only to the extent) that EMMT has, in reliance on this Agreement and prior to the Owner Participant giving notice to Homer City of the occurrence of a Lease Event of
Default (which notice shall not be given prior to the occurrence of a Lease Event of Default or continue to be effective following the cure by Homer City of such Lease Event of Default), entered into
a Transaction with an unrelated third party pursuant to which EMMT has agreed to sell to, or acquire from, such third party the Product which EMMT had contracted to acquire from, or sell to, Homer
City pursuant to this Agreement (or which EMMT, promptly after entering into such Transaction with such unrelated third party, contracts to acquire from, or sell to, Homer City pursuant to this
Agreement).

14.20Risk Management Guidelines.The Transactions will be entered into according to the guidelines established
and amended from time to time (the "Risk Management Guidelines") by the Americas Operating, Commercial, Risk Management Committee, which includes senior officers and representatives of both EMMT and
Homer City. EMMT shall be required to use commercially reasonable care in developing and executing Transactions so as to comply with the Risk Management Guidelines.

IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement in duplicate originals to be effective as of the day and year first written above.

|EME Homer City Generation L.P. | Edison Mission Marketing & Trading, Inc.         
|------------------------------ | -------------------------------------------------
|By:                            | MISSION ENERGY WESTSIDE, INC.,
As General Partner
|By:                            | /s/JOHN FINNERANJohn Finneran                    
|                               | Title:                                           

15

---



EXHIBIT A

[LOGO]

Fax
Date:

|To:                                                                                                         |  |                                
|----------------------------------------------------------------------------------------------------------- |  | -------------------------------
|                                                                                                            |  | EME Homer City
Generation, L.P.
|Attn:                                         
                                         
              Fax:

---

TRANSACTION SUMMARY

Subject to Master Agreement Between the Companies

The following memorializes the terms of a transaction agreed to byEMMT Trader Name, Edison Mission
Marketing & Trading, Inc. ("EMMT"), and [N/A] EME Homer City Generation L.P. ("Homer City") onTrade Date.

Seller:Buyer:Agree Date:
Trade DateEMMT Ref. No.:Term:
Flow Date StartFlow Date EndType:


Schedule, Quantity, and Price

|Term                          |  | Quantity (MW) |  | Price (US$) |  | Deliver To
|----------------------------- |  | ------------- |  | ----------- |  | ----------
|Flow Date StartFlow Date End |  | Quantity MW   |  |             |  |           

Additional Terms

Damages

Damages for Non-Performance



16

---



Delivery Point

[Point of Delivery}

Schedule Requirements

Parties to preschedule according to their respective scheduling obligations.

Consent

The Parties agree that each may electronically record all telephonic conversations between them and that any such recordings may be submitted in evidence to any
court or in any proceedings for the purpose of establishing any matters pertinent to any Transaction.

Payments to be made in funds that are available by the Due Date.

Regards,



If you do not agree with the above, please contact [Allison Sutcliffe, Operations Analyst, at (617) 912-5943 by voice, or
(617) 912-5701] by fax.

17

---



EXHIBIT B

EDISON MISSION MARKETING & TRADING, INC.        FERC RATE SCHEDULE NO. 1

1.Availability:Edison Mission Marketing & Trading, Inc. ("EMMT" or "Seller") makes electric
energy and capacity available under this rate schedule to any purchaser for resale, except as prohibited by paragraph 5 below. Seller also makes available ancillary services that have been sold
to Seller at market-based rates pursuant to a rate schedule that has been accepted for filing by the Federal Energy Regulatory Commission, to any purchaser except as prohibited by paragraph 5
below.

2.Applicability:This schedule is applicable to all sales of energy or capacity and all sales of ancillary
services by Seller not otherwise subject to a particular rate schedule of Seller.

3.Rates:All sales shall be made at rates established by agreement between Seller and the purchaser.

4.Other Terms and Conditions:All other terms and conditions shall be established by agreement between Seller
and the purchaser.

5.Affiliate Sales Prohibited:No sale may be made pursuant to this rate schedule to Southern California Edison
Company or any other franchised electric utility affiliate of Seller, except for such sales as may be made through a power exchange, through a bid price market coordinated by an independent system
operator, or unknowingly through an unaffiliated third party; and no energy, capacity, or ancillary services purchased from such a franchised electric utility affiliate may be sold under this rate
schedule, except for such energy, capacity, or services as may be purchased through a power exchange, through a bid price market coordinated by an independent system operator, or unknowingly through
an unaffiliated third party.

6.Reassignment of Transmission:EMMT may reassign transmission capacity that it has reserved for its own use at
a price not to exceed the highest of: (1) the original transmission rate paid by EMMT; (2) the applicable transmission provider's maximum stated firm transmission rate on file at the
time of the transmission reassignment; or (3) EMMT's opportunity costs, capped at the applicable transmission provider's cost of expansion at the time of the sale to the eligible customer. EMMT
will not recover opportunity costs in connection with reassignments without making a separate filing under section 205 of the Federal Power Act. Except for the price, the terms and conditions
under which the reassignment is made shall be the terms and conditions governing the original grant by the transmission provider. Transmission capacity may only be reassigned to a customer eligible to
take service under the transmission provider's open access transmission tariff or other transmission rate schedules. EMMT will report the name of the assignee in its quarterly reports.

7.Effective Date:This rate schedule is effective on and after the earlier of either the date of acceptance for
filing by the Federal Energy Regulatory Commission or February 5, 1999.

18

---



EXHIBIT C

EME HOMER CITY GENERATION L.P.        FERC RATE SCHEDULE NO. 1

1.Availability:EME Homer City Generation, L.P. ("EMEHCG") will make wholesale capacity, energy, and ancillary
services from the Homer City Electric Generating Station available under this rate Schedule as follows:



2.Applicability:This schedule is applicable to all wholesale sales of Electric Capacity, Energy, Spinning
Reserve, 10-minute Non-Spinning Reserve, 30-Minute Reserve, and/or Regulation by EMEHCG from the Homer City Electric Generating Station not otherwise subject to a
particular rate schedule of EMEHCG.

3.Rates:all sales shall be made at rates established by agreement between the purchaser and EMEHCG. EMEHCG may
agree to have its rates determined by competitive bidding.

4.Other Terms and Conditions:All other terms and conditions shall be established by agreement between the
purchaser and EMEHCG.

5.Franchised Utility Affiliate Sales Prohibited:No sales may be made pursuant to this Rate Schedule to a
public utility with a franchised electric service area that is owned or controlled by, under common ownership or control with, or that controls or owns EMEHCG except pursuant to a separate filing
under Section 205 of the Federal Power Act.

6.Effective Date:This Rate Schedule shall be effective on the date specified by the Federal Energy Regulatory
Commission.

19

---

QuickLinks