UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

Commission File Number 333-59348

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Midwest Generation, LLC(Exact name of registrant as specified in its charter)

|Delaware                                                                   |  | 33-0868558                          
|-------------------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation
or organization)             |  | (I.R.S. Employer Identification No.)
|One Financial Place
440 South LaSalle Street, Suite 3500
Chicago, Illinois |  | 60605                               
|(Address of principal executive offices)                                   |  | (Zip Code)                          

Registrant's telephone number, including area code:(312) 583-6000

Securities registered pursuant to Section 12(b) of the Act:

|None             |  | Not Applicable                             
|---------------- |  | -------------------------------------------
|(Title of Class) |  | (Name of each exchange on which registered)

Securities
registered pursuant to Section 12(g) of the Act:

| |  | None             |  | 
| |  | ---------------- |  | 
| |  | (Title of Class) |  | 

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Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. YES o NO ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. YES o NO ý

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K ý

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

Aggregate market value of the registrant's Membership Interests held by non-affiliates of the registrant as of June 30, 2005: $0. Number of
units outstanding of the registrant's Membership Interests as of February 28, 2006: 100 units (all units held by an affiliate of the registrant).



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DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents listed below have been incorporated by reference into the parts of this report so indicated.

|(1) | Designated portions of Edison Mission Energy's Amendment to Form 10-K for the year ended December 31, 2005        |  | Part III
|--- | ----------------------------------------------------------------------------------------------------------------- |  | --------
|(2) | Designated portions of the Proxy Statement relating to Edison International's 2006 Annual Meeting of Shareholders |  | Part III

Each of Midwest Generation, LLC and Edison Mission Energy is an indirect wholly owned subsidiary of Edison International. Although Edison
International is a large accelerated filer as defined under Exchange Act Rule 12b-2, Midwest Generation and Edison Mission Energy are non-accelerated filers. Midwest
Generation and Edison Mission Energy are filing their respective annual reports on Form 10-K concurrently with Edison International's filing of its annual report on
Form 10-K. Midwest Generation and Edison Mission Energy have been advised by Edison International that, prior to March 31, 2006, Edison International will file with the
Securities and Exchange Commission a definitive proxy statement containing information relating to executive compensation. Edison Mission Energy will file an amendment to its
Form 10-K relating to the compensation of Edison Mission Energy's executive officers concurrently with Edison International's filing of its definitive proxy statement. The amendment
will include some of the executive compensation information included in Edison International's definitive proxy statement as such information pertains to Edison Mission Energy's executive officers.

Because
Midwest Generation officers receive compensation from Edison Mission Energy or Edison International and receive no compensation from Midwest Generation, the above-mentioned
portions of Edison Mission Energy's amendment to its Form 10-K for the year ended December 31, 2005 and Proxy Statement relating to Edison International 2006 Annual Meeting
of Shareholders, when filed, will become incorporated by reference into parts of this annual report.

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TABLE OF CONTENTS

|         |  |                                                                                       |  | Page
|-------- |  | ------------------------------------------------------------------------------------- |  | ----
|PART I  
|Item 1.  |  | Business                                                                              |  | 1   
|Item 1A. |  | Risk Factors                                                                          |  | 14  
|Item 1B. |  | Unresolved Staff Comments                                                             |  | 19  
|Item 2.  |  | Properties                                                                            |  | 19  
|Item 3.  |  | Legal Proceedings                                                                     |  | 21  
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  | 21  
|         |  | Executive Officers of the Registrant                                                  |  | 22  
|PART II 
|Item 5.  |  | Market for Registrant's Common Equity and Related Stockholder Matters                 |  | 24  
|Item 6.  |  | Selected Financial Data                                                               |  | 25  
|Item 7.  |  | Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 26  
|Item 7A. |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 60  
|Item 8.  |  | Financial Statements and Supplementary Data                                           |  | 61  
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  | 61  
|Item 9A. |  | Controls and Procedures                                                               |  | 61  
|Item 9B. |  | Other Information                                                                     |  | 61  
|PART III
|Item 10. |  | Managers and Executive Officers of the Registrant                                     |  | 100 
|Item 11. |  | Executive Compensation                                                                |  | 101 
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 101 
|Item 13. |  | Certain Relationships and Related Transactions                                        |  | 102 
|Item 14. |  | Principal Accounting Fees and Services                                                |  | 102 
|PART IV 
|Item 15. |  | Exhibits and Financial Statement Schedules                                            |  | 103 
|         |  | Signatures                                                                            |  | 109 

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PART I

ITEM 1.    BUSINESS

The Company

Midwest Generation, LLC, which is referred to as Midwest Generation in this annual report, was formed on July 12, 1999 as a Delaware limited liability
company with Edison Mission Midwest Holdings Co. as the sole owner. Edison Mission Midwest Holdings is a wholly owned subsidiary of Midwest Generation EME, LLC, which is in turn a wholly owned
subsidiary of Edison Mission Energy, which is referred to as EME in this annual report. EME is a wholly owned subsidiary of Mission Energy Holding Company and is an indirect wholly owned subsidiary of
Edison International. Midwest Generation was formed for the purpose of owning or leasing, making improvements to, and operating and selling the capacity and energy of, the power generation assets it
purchased from Commonwealth Edison Company (Commonwealth Edison), which are referred to as the Illinois Plants. Midwest Generation acquired the Illinois Plants on December 15, 1999 for a
purchase price of approximately $4.9 billion, with adjustments for changes in the book value of inventories and pro-rations related to specific items, including but not limited to
taxes, rents and fees.

Concurrent
with the acquisition of the Illinois Plants, Midwest Generation assigned its right to purchase the Collins Station, a 2,698 megawatts (MW) gas and oil-fired
generating station located in Illinois, to four third-party entities. After this assignment, and the purchase of the facility by the third parties, an affiliate of Midwest Generation leased and
Midwest Generation subleased the Collins Station. Each of the leases and subleases had an initial term of 33.75 years. In April 2004, Midwest Generation
terminated the Collins Station lease through a negotiated transaction with the lease equity investor and received title to the Collins Station as part of the transaction. Following the lease
termination, Midwest Generation permanently ceased operations at the Collins Station, effective September 30, 2004, and decommissioned the plant by December 31, 2004, and all units were
permanently retired from service, disconnected from the grid, and rendered inoperable, with all operating permits surrendered.

As
of December 31, 2005, Midwest Generation owned or leased 5,876 MW of operating power plants consisting of the following:

Midwest
Generation has a contract with Edison Mission Marketing & Trading, Inc. (EMMT), an affiliate of Midwest Generation engaged in the power marketing and trading
business, to sell energy and capacity into the wholesale market, to engage in hedging activities and to provide scheduling and other services. Midwest Generation has a revolving credit agreement with
EMMT in order to make revolving loans to, or have letters of credit issued on behalf of, EMMT, to provide credit support for forward contracts. EMMT also purchases natural gas and has the ability to
enter into fuel hedging arrangements on Midwest Generation's behalf. Midwest Generation also has an agreement with another affiliate, Edison Mission Energy Services, Inc., to provide fuel and
transportation services related to coal and fuel oil.

In
August 2000, Midwest Generation completed a sale-leaseback transaction with respect to the Powerton and Joliet power facilities to third-party lessors for an
aggregate purchase price of

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$1.367 billion.
In connection with this transaction, Midwest Generation facilitated the issuance of $333.5 million 8.30% Series A Pass-Through Certificates due 2009
and $813.5 million 8.56% Series B Pass-Through Certificates due 2016 through a private placement. In 2001, these certificates were subsequently exchanged for certificates
identical in all material respects, which were registered with the Securities and Exchange Commission.

EME,
Mission Energy Holding Company and Edison International are each registered with the Securities and Exchange Commission and have financial statements that are filed in accordance
with rules enacted
by the Securities and Exchange Commission. For more information regarding each of these companies, see their respective annual reports on Form 10-K for the year ended
December 31, 2005.

Midwest
Generation's principal executive offices are located at One Financial Place, 440 South LaSalle Street, Suite 3500, Chicago, Illinois 60605, and its telephone number is
(312) 583-6000.

Midwest
Generation's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to
those reports, are electronically filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and are available on the Securities and Exchange Commission's
internet web site at http://www.sec.gov.

Forward-Looking Statements

This annual report on Form 10-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of
1995. These statements reflect Midwest Generation's current expectations and projections about future events based on Midwest Generation'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 Midwest Generation that is incorporated in this annual
report, or that refers to or incorporates this annual report, may also contain forward-looking statements. In this annual report and elsewhere, 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 Midwest Generation, include but are not limited to:

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Certain
of the risk factors listed above are discussed in more detail in "Item 1A. Risk Factors" below and in "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of OperationsMarket Risk Exposures." Additional information about the risk factors listed above and other risks and uncertainties is contained throughout this annual
report. Readers are urged to read this entire annual report, including the information incorporated by reference, and carefully consider the risks, uncertainties and other factors that affect Midwest
Generation's business. Forward-looking statements speak only as of the date they are made, and Midwest Generation is not obligated to publicly update or revise forward-looking statements. Readers
should review future reports filed by Midwest Generation with the Securities and Exchange Commission.

Description of the Industry

Industry Overview

The United States electric industry, including companies engaged in providing generation, transmission, distribution and ancillary services, has undergone
significant deregulation, which has led to increased competition. Until the enactment of the Public Utility Regulatory Policies Act of 1978, referred to as PURPA in this annual report, utilities and
government-owned power agencies were the only producers of bulk electric power intended for sale to third parties in the United States. PURPA encouraged the development of independent power by
removing regulatory constraints relating to the production and sale of electric energy by certain non-utilities and requiring electric utilities to buy electricity from specified types of
non-utility power producers, known as qualifying facilities, under specified conditions. The passage of the Energy Policy Act of 1992 further encouraged the development of independent
power by significantly expanding the options available to independent power producers with respect to their regulatory status and by liberalizing transmission access. In addition, in the Energy Policy
Act of 2005, referred to as EPAct 2005 in this annual report, Congress made several changes to PURPA and other statutory provisions recognizing that a significant market for electric power produced by
independent power producers, such as Midwest Generation, has developed in the United States and indicating that competitive wholesale electricity markets have become accepted as a fundamental aspect
of the electricity industry.

As
part of the regulatory developments discussed above, the Federal Energy Regulatory Commission, referred to as the FERC in this annual report, encouraged the formation of independent
system operators (ISOs) and regional transmission organizations (RTOs). In those areas where ISOs and RTOs have been formed, market participants have expanded access to transmission service. ISOs and
RTOs may also

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operate
real-time and day-ahead energy and ancillary service markets, which are governed by FERC-approved tariffs and market rules. The development of such organized markets
into which independent power producers are able to sell has reduced their dependence on bilateral contracts with electric utilities. See further discussion of regulations under "Regulatory
MattersU.S. Federal Energy Regulation."

Power Markets

The Illinois Plants sell power into PJM Interconnection, LLC, commonly referred to as PJM. PJM operates a wholesale spot energy market and determines the
market-clearing price for each hour based on bids submitted by participating generators which indicate the minimum prices a bidder is willing to accept to be dispatched at various incremental
generation levels. PJM conducts both day-ahead and real-time energy markets. PJM's energy markets are based on locational marginal pricing, which establishes hourly prices at
specific locations throughout PJM. Locational marginal pricing is determined by considering a number of factors, including generator bids, load requirements, transmission congestion and transmission
losses. PJM requires all load serving entities to maintain prescribed levels of capacity, including a reserve margin, to ensure system reliability. PJM also determines the amount of capacity available
from each specific generator and operates capacity markets. PJM's capacity markets have a single market-clearing price. Load serving entities and generators, such as Midwest Generation, may
participate in PJM's capacity markets or transact capacity sales on a bilateral basis.

All
the energy and capacity from the Illinois Plants is now sold under terms, including price and quantity, negotiated by EMMT with customers through a combination of bilateral
agreements, forward energy sales and spot market sales. Thus, Midwest Generation is subject to market risks related to the price of energy and capacity from the Illinois Plants. Capacity prices for
merchant energy sales within PJM are, and are expected in the near term, to remain, at a level unlikely to generate significant revenue for Midwest Generation.

On
April 1, 2005, the Midwest Independent Transmission System Operator (MISO) commenced operation, linking portions of Illinois, Wisconsin, Indiana, Michigan, and Ohio, as well as
other states in the region, in the MISO, where there is a bilateral market and day-ahead and real-time markets based on locational marginal pricing similar to that of PJM. While Midwest Generation
does not own generating facilities within MISO, its opening has further facilitated transparency of prices and provided liquidity to support risk management strategies.

For
a discussion of the risks related to Midwest Generation's sale of electricity, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of
OperationsMarket Risk Exposures."

Competition

Midwest Generation is subject to intense competition from energy marketers, industrial companies and other independent power producers. For a number of years
until the recent upturn in its price, natural gas has been the fuel of choice for new power generation facilities for economic, operational and environmental reasons. While natural gas-fired
facilities will continue to be an important part of the nation's generation portfolio, some regulated utilities are now constructing clean coal units and units powered by renewable resources, often
with subsidies or under legislative mandate. These utilities enjoy a lower cost of capital than most independent power producers and often are able to recover fixed costs through rate base mechanisms,
allowing them to build, buy and upgrade generation without relying exclusively on market clearing prices to recover their investments.

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Where
Midwest Generation sells power from the Illinois Plants, it is subject to market fluctuations in prices based on a number of factors, including the amount of capacity available to
meet demand, the price and availability of fuel and the presence of transmission constraints. Some of Midwest Generation's competitors, such as electric utilities and distribution companies, have
their own generation capacity, including nuclear generation. These companies, generally larger than Midwest Generation, have a lower cost of capital and may have competitive advantages as a result of
their scale and location of their generation facilities.

Facilities Overview

The Crawford Station

The Crawford Station is a 542 MW coal-fired power plant located in Cook County, Illinois, and is within the city limits of Chicago. The
Crawford Station occupies approximately 72 acres, inclusive of the switchyard. The operating units are referred to as Units 7 and 8 and began operations in 1958 and 1961, respectively.

Southern
Powder River Basin coal is loaded into barges at the Will County Station and delivered by barge primarily on a "just-in-time" basis supported by
Crawford's on-site storage. Natural gas is used for ignition and combustion support and for full boiler operation, when economical. Peoples Energy Corporation delivers natural gas under a
delivery contract that includes balancing storage, which is also shared by the Fisk Station.

The Fisk Station

The Fisk Station is a 326 MW coal-fired power plant located in Cook County, Illinois, and is within the city limits of Chicago. The Fisk
Station is located on approximately 44 acres, inclusive of the switchyard. The operating unit comprising the Fisk Station is referred to as Unit 19 and began operations in 1959.

Southern
Powder River Basin coal is loaded into barges at the Will County Station, delivered by barge on a "just-in-time" basis. Natural gas is used for ignition
and combustion support and for full boiler operation, when economical. Peoples Gas delivers natural gas under a delivery contract that includes balancing storage, which is shared by the Crawford
Station.

The Joliet Station

The Joliet Station is located in Joliet, Will County, Illinois, approximately 40 miles southwest of Chicago on an approximately 467-acre site. The
operating units comprising the Joliet Station are referred to as Units 6, 7 and 8. Only Units 7 and 8 are subject to the leveraged lease transaction described in this annual report. The
operation of Units 6, 7 and 8 began in 1959, 1965 and 1966, respectively. Joliet Unit 6 is a 290 MW coal-fired unit located adjacent to, but across the Des Plaines
River from, Joliet Units 7 and 8. Joliet Units 7 and 8 are coal-fired and have a combined capacity of 1,044 MW.

The
Joliet Station burns Southern Powder River Basin coal which is shipped by rail. With the completion of a new rail spur in early 2003, direct deliveries are received from the Union
Pacific Railroad. Natural gas is delivered for the boilers as a startup and stabilizing fuel by Nicor Gas Company under a delivery contract.

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The Powerton Station

The Powerton Station is a 1,538 MW coal-fired station located in Pekin, Tazwell County, Illinois, approximately 16 miles southwest of Peoria or
166 miles from Chicago on an approximately 568-acre site. The Powerton Station is subject to the leveraged lease transaction described in this annual report. The site also includes
an approximately 1,440-acre lake. The operating units comprising the Powerton Station are referred to as Units 5 and 6 and began operations in 1972 and 1975, respectively.

The
Powerton Station burns Southern Powder River Basin coal which is shipped by rail by the Illinois and Midland Railroad Company from interchange points with the Union Pacific Railroad.

The Waukegan Station

The Waukegan Station is a 789 MW coal-fired power plant located in Waukegan, Lake County, Illinois, on Lake Michigan. The Waukegan Station
occupies approximately 194 acres, inclusive of the switchyard. The operating units comprising the Waukegan Station are referred to as Units 6, 7 and 8 and began operations in 1952, 1958 and
1962, respectively.

Unit 6
utilizes oil for ignition and startup, while Unit 7 utilizes oil or natural gas and Unit 8 utilizes natural gas for ignition and startup. The Waukegan Station
burns Southern Powder River Basin coal, which is shipped by rail by the Union Pacific Railroad.

The Will County Station

The Will County Station is a 1,092 MW coal-fired power plant located in Romeoville, Will County, Illinois. The Will County Station is located
on approximately 215 acres, inclusive of the switchyard. The operating units comprising the Will County Station are referred to as Units 1, 2, 3 and 4 and began operations between 1955 and
1963. Beginning in January 2003, operations at Units 1 and 2, representing 310 MW of capacity, were suspended pending improvement in market conditions. In late 2004, both units
were returned to service.

The
Will County Station burns Southern Powder River Basin coal, which is shipped by rail by the Elgin, Joliet & Eastern Railway Company from interchange points with the Union
Pacific Railroad. The Will County Station uses No. 2 fuel oil for ignition and combustion support, which is delivered by tanker truck to a 100,000 gallon on-site storage tank.

The Collins Station

On September 30, 2004, Midwest Generation permanently ceased operations at the Collins Station and all units were decommissioned by December 31,
2004. The Collins Station was a 2,698 MW gas and oil-fired power plant located in Grundy County, near Morris, Illinois.

On-Site and Off-Site Peaking Facilities

The on-site peaking units of Joliet and the off-site peaking units of Calumet, Electric Junction, Lombard and Sabrooke ceased operations
as of December 31, 2004 following a management analysis of the future competitiveness of eight of Midwest Generation's small peaking units in the expanded PJM marketplace in
September 2004. In addition, the on-site peaking units of Crawford ceased operations as of April 21, 2005 as a result of the same management analysis. The remaining
on-site peaking units consist of Fisk and Waukegan, which were commissioned in 1968.

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The
Fisk and Waukegan peaking units burn No. 1 fuel oil (jet fuel). Natural gas is used by the Fisk peaking unit for ignition. Natural gas is purchased in the monthly and daily
spot markets and is shipped
at the seller's risk to Chicago. Peoples Gas provides delivery services, including balancing storage, to the site under tariffs approved by the Illinois Commerce Commission. Midwest Generation
purchases No. 1 fuel oil and No. 2 fuel oil from bids taken annually. The oil price is tied to the Oil Price Information Service posted price (the market price) on the date of delivery.
Shipments to the various sites are in tanker trucks and inventory is replenished as needed by the site. Truck delivery charges are at fixed agreed-upon prices.

Transmission

Station units at Will County, Crawford, Waukegan, and Joliet Unit 6 are connected to Commonwealth Edison's 138 kilovolt (kV) transmission system. The Fisk
Station is connected via various circuit breakers and transformers to transmission substations. The Joliet Units 7 and 8, subject to the leveraged lease transactions, and the two Powerton units
deliver their power into Commonwealth Edison's 345kV transmission system.

Prior
to May 1, 2004, sales of power produced by Midwest Generation required using transmission that had to be obtained from Commonwealth Edison. As discussed previously, the
Illinois Plants are now dispatched into the broader PJM market. In addition, a number of other utilities in the region participate in the MISO, where there is a single rate for transmission within the
MISO.

On
November 18, 2004, the FERC issued an order eliminating regional through and out transmission rates in the region encompassed by PJM and the MISO. The effect of this order was
to eliminate so-called rate pancaking between PJM and the MISO on a prospective basis. Rate pancaking occurs when energy must move through multiple, separately priced transmission systems
to travel from its point of production to its point of delivery, and each transmission owner along the line charges separately for the use of its system. At the same time, the FERC also imposed a
transitional revenue recovery mechanism which has created controversy and some continuing uncertainty as to its impact on transactions in the region. The mechanism required the filing of tariffs by
PJM and the MISO imposing a "Seams Elimination Cost Adjustment" (SECA) to be in effect until May 1, 2006, to compensate the "new PJM companies"AEP, Commonwealth Edison and Dayton
Power & Light, among othersfor lost revenues attributable to the elimination. On November 30, 2004, the FERC clarified that SECAs can be recovered for lost revenues
associated with elimination of intra-RTO pancaked rates.

The
response to the November 18 and November 30 orders from the parties potentially liable for the SECAs was strongly negative. Rehearings were sought by a broad range of
interests that are opposed to the imposition of SECAs. Although both PJM and the MISO have made tariff filings with the FERC that purport to comply with the orders and eliminate through and out
transmission rates as of December 1, 2004, numerous protests to such filings have been made, challenging SECAs on legal and equitable grounds and demanding evidentiary hearings by the FERC.
Pending further orders of the FERC and/or the outcome of future hearings, under the provisions of the PJM tariff as filed, Midwest Generation is currently not subject to SECAs with respect to its
sales of power within PJM. It is not possible, however,
to predict the outcome of the hearings or to rule out the possibility that Midwest Generation could be ordered in the future to pay SECAs with respect to sales within PJM after December 1,
2004.

For
further discussion of the market risks related to Midwest Generation's transmission service, see "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of OperationsMarket Risk Exposures."

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Significant Customer

In the past two fiscal years, Midwest Generation derived a significant source of its operating revenues from electric power sold into the PJM market by EMMT.
Sales into the PJM pool accounted for approximately 75% and 14% of Midwest Generation's consolidated operating revenues for the years ended December 31, 2005 and 2004, respectively.

In
2004 and 2003, Midwest Generation also derived a significant source of its operating revenues from the sale of energy and capacity to Exelon Generation primarily under three power
purchase agreements. These power purchase agreements had all expired by the end of 2004. Exelon Generation accounted for approximately 54% and 67% of Midwest Generation's consolidated operating
revenues for the years ended December 31, 2004 and 2003, respectively.

Fuel Supply

Coal is used to fuel 5,621 MW of Midwest Generation's generating capacity. The coal is purchased from several suppliers that operate mines in the Southern
Powder River Basin of Wyoming. The total volume of coal consumed annually is largely dependent on the amount of generation and ranges between 16 million to 20 million tons.

All
coal is transported under long-term transportation agreements with the Union Pacific Railroad and various delivering carriers. As of December 31, 2005, Midwest
Generation leased approximately 4,400 railcars to transport the coal from the mines to the generating stations and the leases have remaining terms that range from as short as 2 months up to
15 years, with options to extend the leases or purchase some railcars at the end of the lease terms. The coal is transported nearly 1,200 miles from the mines to the Illinois Plants.

Coal
for the Fisk and Crawford Stations is first shipped by rail to the Will County Station where it is transferred from the railcars, blended as necessary to meet station
specifications, and loaded into river barges. These barges are towed to the stations by an independent contractor under a transportation agreement with Midwest Generation.

Midwest
Generation has approximately 255 MW of peaking capacity in the form of simple cycle combustion turbines at the Fisk and Waukegan Stations. These units are fueled with
distillate fuel oils.

During
2005, the rail lines that bring coal from the Powder River Basin to the Illinois Plants were damaged from derailments caused by heavy rains. The railroads are in the process of
making repairs to these rail lines. During 2005, Midwest Generation received sufficient quantities to meet generation requirements. Rail line maintenance is expected to continue in 2006. Based on
communication with the transportation provider, Midwest Generation expects to continue receiving a sufficient amount of coal to generate power at historical levels while these repairs are being
completed.

See
"Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital ResourcesContractual Obligations,
Commitments and Contingencies," for additional discussion of contractual commitments related to Midwest Generation's fuel supply and coal transportation contracts.

Emission Allowances

Certain state and federal environmental laws require power plant operators to hold or obtain emission allowances equal, on an annual basis, to their plants'
emissions of nitrogen oxide or sulfur dioxide.

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Emission
allowances were acquired as part of the acquisition of the Illinois Plants. Additional allowances are purchased by Midwest Generation when operations make this necessary and are sold by
Midwest Generation when it has more than needed for planned levels of operation.

See
"Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital ResourcesEnvironmental Matters
and Regulations" for a discussion of environmental regulations related to emissions.

Insurance

Midwest Generation maintains insurance policies consistent with those normally carried by companies engaged in similar business and owning similar properties.
Midwest Generation's insurance program includes all-risk property insurance, including business interruption, covering real and personal property, including losses from boilers, machinery
breakdowns, and the perils of earthquake and flood, subject to specific sublimits. Midwest Generation also carries general liability insurance covering liabilities to third parties for bodily injury
or property damage resulting from operations, automobile liability insurance and excess liability insurance. Limits and deductibles in respect of these insurance policies are comparable to those
carried by other electric generating facilities of similar size. However, no assurance can be given that Midwest Generation's insurance will be adequate to cover all losses.

Seasonality

Due to higher electric demand resulting from warmer weather during the summer months, electric revenues are generally higher during the third quarter of each
year. However, as a result of recent increases in market prices for power, driven in part by higher natural gas and oil prices, this historical trend may not be applicable to quarterly revenue in the
future. Prior to 2005, Midwest Generation's electric revenues were substantially higher during the June through September months because Midwest Generation received significantly higher capacity
payments during those months under the terms of the power purchase agreements with Exelon Generation.

Regulatory Matters

General

Midwest Generation's operations are subject to extensive regulation by government agencies. Federal laws and regulations govern, among other things, transactions
by and with purchasers of power, including utility companies, the operations of a power plant and the ownership of a power plant. Under limited circumstances where exclusive federal jurisdiction is
not applicable or specific exemptions or waivers from state or federal laws or regulations are otherwise unavailable, federal and/or state utility regulatory commissions may have broad jurisdiction
over non-utility owned electric power plants. Energy-producing projects are also subject to federal, state and local laws and regulations that govern the geographical location, zoning,
land use and operation of a project. Federal, state and local environmental requirements generally require that a wide variety of permits and other approvals be obtained before the
commencement of construction or operation of an energy-producing facility and that the facility then operate in compliance with these permits and approvals.

Midwest
Generation is subject to a varied and complex body of laws and regulations that are in a state of flux. Intricate and changing environmental and other regulatory requirements
could necessitate substantial expenditures and could create a significant risk of expensive delays or significant loss of value in a power plant if Midwest Generation were to become unable to function
as planned due to changing requirements or local opposition.

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U.S. Federal Energy Regulation

The FERC has ratemaking jurisdiction and other authority with respect to interstate wholesale sales and transmission of electric energy (other than transmission
that is "bundled" with retail sales) under the Federal Power Act and with respect to certain interstate sales, transportation and storage of natural gas under the Natural Gas Act of 1938. Prior to
February 8, 2006, the Securities and Exchange Commission had regulatory powers with respect to upstream owners of electric and natural gas utilities under the Public Utility Holding Company Act
of 1935, or PUHCA 1935, which was repealed as of that date by EPAct 2005. The enactment of PURPA and the adoption of regulations under PURPA by the FERC provided incentives for the development of
cogeneration facilities and small power production facilities using alternative or renewable fuels by establishing certain exemptions from the Federal Power Act and PUHCA 1935 for the owners of
qualifying facilities. The passage of the Energy Policy Act in 1992 further encouraged independent power production by providing additional exemptions from PUHCA 1935 for exempt wholesale generators,
or EWGs, such as Midwest Generation.

The Energy Policy Act of 2005

A comprehensive energy bill was passed by the U.S. House and Senate in July 2005 and was signed by President Bush on August 8, 2005. Known as "EPAct
2005," this comprehensive legislation includes provisions for the repeal of PUHCA 1935 and amendments to PURPA, for merger review reform, for the introduction of new regulations regarding
"Transmission Operation Improvements," for transmission rate reform, for incentives for various generation technologies and for the extension through December 31, 2007 of production tax credits
for wind and other specified types of generation.

The
FERC has finalized rules to implement the Congressionally mandated repeal of PUHCA 1935, effective February 8, 2006, and enactment of the Public Utility Holding Company Act of
2005 (PUHCA
2005). The repeal of PUHCA 1935 and its replacement by PUHCA 2005 effectively eliminates many of the restrictions on outside investment in the electricity industry, investment by and transactions
between utilities, and geographic constraints on utility systems. PUHCA 1935 repeal is expected to enable investment in utility systems by private equity funds, financial institutions, foreign utility
companies, and other non-utility companies without the burden of registration as a "public utility holding company." It also eliminates limits on investment in non-utility
operations companies that were registered holding companies under PUHCA 1935, subject to other applicable regulatory limitations, as well as geographic limits on potential utility combinations. PUHCA
2005 is primarily a "books and records access" statute and does not give the FERC any new substantive authority under the Federal Power Act or Natural Gas Act. The FERC has also issued final rules to
implement the electric company merger and acquisition provisions of EPAct 2005.

Under
both PUHCA 1935 and PUHCA 2005, a company engaged exclusively in the business of owning and/or operating a facility used for the generation of electric energy exclusively for sale
at wholesale may be exempted from regulation as an EWG. On November 9, 1999, the FERC issued an order determining that, based on the facts stated in Midwest Generation's application, Midwest
Generation is an EWG. If Midwest Generation were to lose its EWG status, defaults under the covenants in Midwest Generation's agreements could be triggered.

Federal Power Act

The Federal Power Act grants the FERC exclusive jurisdiction over the rates, terms and conditions of wholesale sales of electricity and transmission services in
interstate commerce (other than transmission that is "bundled" with retail sales), including ongoing, as well as initial, rate jurisdiction. This

10

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jurisdiction
allows the FERC to revoke or modify previously approved rates after notice and opportunity for hearing. These rates may be based on a cost-of-service approach or,
in geographic and product markets determined by the FERC to be workably competitive, may be market based. Exempt wholesale generators and other non-qualifying facility independent power
projects are subject to the Federal Power Act and to the FERC's ratemaking jurisdiction thereunder, but the FERC typically grants exempt wholesale generators the authority to charge market-based rates
to purchasers which are not affiliated electric utility companies as long as the absence of market power is shown. In addition, the Federal Power Act grants the FERC jurisdiction over the sale or
transfer of jurisdictional facilities, including wholesale power sales contracts and, after EPAct 2005, generation facilities, and in some cases, jurisdiction over the issuance of securities or the
assumption of specified liabilities and some interlocking directorates. In granting authority to make sales at market-based rates, the FERC typically also grants blanket approval for the issuance of
securities and partial waiver of the restrictions on interlocking directorates.

Midwest
Generation is subject to the FERC ratemaking regulation under the Federal Power Act. In addition, the FERC's order, as is customary with market-based rate schedules, reserved the
right to revoke Midwest Generation's market-based rate authority on a prospective basis if it is subsequently determined that Midwest Generation or any of its affiliates possess excessive market
power. If the FERC were to revoke Midwest Generation's market-based rate authority, it would be necessary for Midwest Generation to file, and obtain the FERC's acceptance of, its rate schedule as a
cost-of-service rate schedule. In addition, the loss of market-based rate authority would subject Midwest Generation to the accounting, record keeping and reporting
requirements that are imposed on utilities with cost-based rate schedules.

Natural Gas Act

Midwest Generation's peaking units have the dual capability of burning natural gas or oil. Under the Natural Gas Act, the FERC has jurisdiction over certain sales
of natural gas and over transportation and storage of natural gas in interstate commerce. The FERC has granted blanket authority to all persons to make sales of natural gas without restriction but
continues to exercise significant oversight with respect to transportation and storage of natural gas services in interstate commerce.

State Energy Regulation

The Illinois Commerce Commission does not have jurisdiction over Midwest Generation. Midwest Generation is not considered a public utility for purposes of
Illinois state law, nor is Midwest Generation certified by the Illinois Commerce Commission as an alternative retail electric supplier.

Some
states that have restructured their electric industries require generators to register to provide electric service to customers. Many states are currently undergoing significant
changes in their electric statutory and regulatory frameworks that result from restructuring the electric industries that may affect generators in those states. Although the FERC generally has
exclusive jurisdiction over the rates charged by a non-qualifying facility independent power project to its wholesale customers, a state's public utility commission has the ability, in
practice, to influence the establishment of these rates by asserting jurisdiction over a purchasing utility's ability to pass the resulting cost of purchased power through to its retail customers. In
addition, states may assert jurisdiction over the siting and construction of independent power projects and, among other things, the issuance of securities, related party transactions and the sale or
other transfer of assets by these facilities. The actual scope of jurisdiction over independent power projects by state public utility commissions varies from state to state. See "Midwest Deregulation
Status" below.

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Although state public utility commissions do not have jurisdiction to modify the terms of wholesale power sales, Midwest Generation cannot provide assurance that its power sales
contracts will not be subject to adverse consequences as a result of regulatory actions by a state commission even though it sells power exclusively at wholesale.

Midwest Deregulation Status

Illinois Restructuring

In December 1997, the Governor of Illinois signed into law the Electric Service Customer Choice and Rate Relief Law of 1997. Midwest Generation refers to
this law as the Illinois Electric Law. The Illinois Electric Law required electric utilities to file delivery services implementation plans for non-residential retail customers no later
than March 1, 1999 and for residential customers no later than August 1, 2001 and allowed utilities to recover the costs associated with the provision of delivery services. The Illinois
Electric Law also required the Illinois Commerce Commission to adopt reliability rules for the transmission and distribution systems of Illinois utilities. These rules have been adopted and include
reporting and penalty provisions that apply to Commonwealth Edison.

Illinois'
transition to retail electric competition was conducted in phases with approximately one-third of non-residential customers having had the opportunity
to purchase electricity from alternative retail electric suppliers or electric utilities serving retail customers outside their service areas, effective October 1, 1999. Choice of suppliers is
now available to all non-residential customers, and the retail market for residential electric customers was opened to competition on May 1, 2002. Currently, there are no
alternative retail electric suppliers certified to sell electricity to residential customers in Illinois. Alternative retail electric suppliers include any person or company, other than an Illinois
electric utility, that sells electricity to one or more retail electric customers in Illinois.

During
the transition period that runs until the end of 2006, customers that switch to alternative retail electric suppliers or electric utilities serving retail customers outside their
service areas may be required to pay transition charges, also known as "stranded cost" charges, to compensate the utilities that previously supplied these customers for past investments, including
investments in generating plants. The Illinois Electric Law calls for these transition charges to end no later than December 31, 2006.

In
February 2005, Commonwealth Edison and the Ameren Illinois utilities filed tariffs at the Illinois Commerce Commission. The tariffs propose the adoption of what is known as a
New Jersey style full requirement auction process for the procurement of power for the utilities' bundled customers beginning January 1, 2007. The proposed process could potentially allow
Midwest Generation to secure multi-year power supply contracts through a competitive transparent process. The Illinois Commerce Commission unanimously approved the competitive auction
process on January 24, 2006.

Transmission of Wholesale Power

Midwest Generation utilizes power lines owned by others for the transmission of electricity. The prices and other terms and conditions of transmission contracts
are regulated by the FERC when the entity providing the transmission service is a jurisdictional public utility under the Federal Power Act, Order No. 2000, and subsequent orders.

The
Energy Policy Act of 1992 laid the groundwork for a competitive wholesale market for electricity by, among other things, expanding the FERC's authority to order electric utilities to
transmit third-party electricity over their transmission lines, thus allowing qualifying facilities under PURPA, power marketers and those qualifying as exempt wholesale generators under PUHCA 1935,
such as

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Midwest
Generation, to more effectively compete in the wholesale market. See "Regulatory MattersU.S. Federal Energy Regulation" for further detail on legislative developments.

In
1996, the FERC issued Order No. 888, also known as the Open Access Rules, which required utilities to offer eligible wholesale transmission customers open access on utility
transmission lines on a comparable basis to the utilities' own use of the lines and directed jurisdictional public utilities that control a substantial portion of the nation's electric transmission
networks to file uniform, non-discriminatory open access tariffs containing the terms and conditions under which they would provide such open access transmission service. The FERC
subsequently issued Order Nos. 888-A, 888-B and 888-C to clarify the terms that jurisdictional transmitting utilities are required to include in their open access
transmission tariffs, and also issued Order No. 889, which required those transmitting utilities to abide by specified standards of
conduct when using their own transmission systems to make wholesale sales of power, and to post specified transmission information, including information about transmission requests and availability,
on a publicly available computer bulletin board.

On
September 16, 2005, the FERC issued a Notice of Inquiry, inviting comments on (1) whether reforms are needed to the Order No. 888 pro forma open access
transmission tariff and the open access transmission tariffs of public utilities to ensure that services thereunder are just, reasonable and not unduly discriminatory or preferential; (2) the
implementation of the newly established section 211A of the Federal Power Act concerning the provision of open access transmission service by unregulated transmitting utilities; and
(3) section 1233 of EPAct 2005, which defines the native load service obligation.

Environmental Matters and Regulations

See the discussion on environmental matters and regulations in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of
OperationsLiquidity and Capital ResourcesEnvironmental Matters and Regulations."

Employees

At December 31, 2005, Midwest Generation employed 983 employees, approximately 752 of whom were covered by a collective bargaining agreement with the
International Brotherhood of Electrical Workers, Local 15, AFL-CIO (Local 15), governing wages, certain benefits and working conditions. This agreement expired on
December 31, 2005. A new agreement was reached with Local 15 with an expiration date of December 31, 2009. Midwest Generation also has a separate collective bargaining agreement
governing retirement, health care, disability and insurance benefits that expires on June 15, 2006.

On
June 28, 2001, following unsuccessful negotiations over a new collective bargaining agreement, Local 15 commenced a strike at all the Illinois Plants. With the exception of
eight employees who continued working, the entire bargaining unit of approximately 1,150 employees joined the strike. During the course of the strike, fifty-three additional employees, known as
crossover employees, abandoned the strike and returned to work. In late August 2001, Local 15 offered to end the strike, but the offer was not accompanied by an agreement to accept Midwest
Generation's collective bargaining offer. Midwest Generation rejected Local 15's offer and instituted a partial "lockout" of striking employees only. Midwest Generation advised Local 15 that those
employees who had abandoned the strike earlier in the summer would be allowed to continue working. Local 15 filed an unfair labor practice charge with the National Labor Relations Board (NLRB) and the
NLRB issued a complaint which alleged that Midwest

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Generation's
partial lockout constituted an unlawful act because it did not extend to crossover employees and those employees who did not strike in the first instance.

On
September 30, 2004, the NLRB dismissed Local 15's complaint. Local 15 appealed the NLRB's ruling to the United States Court of Appeals for the Seventh Circuit. On
October 31, 2005, the Seventh Circuit reversed the NLRB's decision and ordered that the case be sent back to the NLRB with instructions to find the partial lockout an unfair labor practice, and
further ordered the NLRB to consider whether the partial lockout coerced employees into accepting Midwest Generation's contract offer. Midwest Generation and the NLRB sought and were denied rehearing
of the October 31 order. Midwest Generation is evaluating its options, which include seeking review by the United States Supreme Court and pursuing relief before the NLRB. The remedies in
unfair labor practice proceedings traditionally include a posting notifying employees of the unfair labor practice, a cease and desist order and, where appropriate, back pay. Given the unique facts
and procedures of this case, Midwest Generation cannot predict with certainty the remedy that the NLRB might fashion.

ITEM 1A.    RISK FACTORS

Midwest Generation's operations are subject to market risks related to wholesale energy prices.

Midwest Generation no longer sells power pursuant to long-term power purchase agreements with Exelon Generation. Thus, Midwest Generation is subject
to market risks related to the price of energy, capacity, and ancillary services. The factors that influence the market prices for these products in PJM include:

In
addition, unlike most other commodities, electric power can only be stored on a very limited basis and generally must be produced concurrently with its use. As a result, the wholesale
power markets are subject to significant and unpredictable price fluctuations over relatively short periods of time.

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There
is no assurance that Midwest Generation will be successful in selling energy and capacity into the markets or that the prices received for the energy and capacity will generate
positive cash flow. Due to the volatility of market prices in PJM for energy and capacity during the past several years, Midwest Generation cannot predict whether sales of energy and capacity to other
customers or the market will be at prices sufficient to generate cash flow necessary to meet Midwest Generation's obligations. If Midwest Generation's operations do not meet these objectives, Midwest
Generation may not be able to generate enough cash to service its own debt and lease obligations, which would have a material adverse effect on Midwest Generation. See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of OperationsMarket Risk Exposures."

Midwest Generation's financial results can be affected by changes in fuel prices, fuel transportation cost increases, and interruptions in fuel supply.

Midwest Generation's business is subject to changes in fuel costs, which may negatively affect its financial results and financial position by increasing the cost
of producing power. The fuel markets can be volatile, and actual fuel prices can differ from Midwest Generation's expectations.

Although
Midwest Generation attempts to purchase fuel based on its known fuel requirements, it is still subject to the risks of supply interruptions, transportation cost increases, and
fuel price volatility. In addition, fuel deliveries may not exactly match energy sales, due in part to the need to purchase fuel inventories in advance for reliability and dispatch requirements. The
price at which Midwest Generation can sell its energy may not rise or fall at the same rate as a corresponding rise or fall in fuel costs. See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of OperationsMarket Risk ExposuresCommodity Price Risk."

Midwest Generation may not be able to hedge market risks effectively.

Midwest Generation is exposed to market risks through its ownership and operation of the Illinois Plants. These market risks include, among others, volatility
arising from the timing differences associated with buying fuel, converting fuel into energy and delivering energy to a buyer. Through EMMT, Midwest
Generation uses forward contracts and derivative financial instruments, such as futures contracts and options, to manage market risks and exposure to fluctuating electricity and fuel prices. These
activities, although intended to mitigate Midwest Generation's exposure, expose Midwest Generation to other risks.

EME,
directly and through a subsidiary, has historically provided credit support to its subsidiaries, including EMMT, which markets the energy and capacity from the Illinois Plants.
Midwest Generation is permitted to use its working capital facility and cash on hand to provide credit support (either through loans or letters of credit) for forward contracts with third-party
counterparties entered into by EMMT for capacity and energy generated by Midwest Generation. Although EME may provide credit support from time to time, Midwest Generation intends to use its working
capital facility instead of relying on credit support from EME. Utilization of this credit facility in support of such forward contracts provides additional liquidity support for implementation of
Midwest Generation's contracting strategy for the Illinois Plants. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsResults of
OperationsRelated Party TransactionsEMMT Agreements."

The
effectiveness of Midwest Generation's hedging activities may depend on the amount of working capital available to post as collateral in support of these transactions, either in
support of performance guarantees or as a cash margin. The amount of credit support that must be provided typically is based on the difference between the price of the commodity in a given contract
and the market price of the commodity. Significant movements in market prices can result in a requirement to provide cash collateral

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and
letters of credit in very large amounts. Without adequate liquidity to meet margin and collateral requirements, Midwest Generation could be exposed to the following:

As
a result of these and other factors, Midwest Generation cannot predict with precision the effect that risk management decisions may have on its businesses, operating results or
financial position.

Midwest Generation is exposed to credit and performance risk from third parties under supply and transportation contracts.

The Illinois Plants rely on contracts for the supply and transportation of fuel and other services required for their operation. Midwest Generation's operations
are exposed to the risk that counterparties will not perform their obligations. If a counterparty failed to perform under a contract, Midwest Generation would need to obtain alternate suppliers for
its requirements of fuel or other services, which could result in higher costs or disruptions in its operations. Furthermore, Midwest Generation is exposed to credit risk because damages related to a
breach of contract may not be recoverable. Accordingly, the failure of a supplier to fulfill its contractual obligations could have a material adverse effect on Midwest Generation's financial results.

Midwest Generation is subject to extensive energy industry regulation.

Midwest Generation's operations are subject to extensive regulation by governmental agencies. Federal laws and regulations govern, among other things,
transactions by and with purchasers of power, including utility companies, the development and construction of a power plant, the ownership and operations of a power plant, and access to transmission.
Under limited circumstances where exclusive federal jurisdiction is not applicable or specific exemptions or waivers from state or federal laws or regulations are otherwise unavailable, federal and/or
state utility regulatory commissions may have broad jurisdiction over non-utility owned electric power plants such as the Illinois Plants. Generation facilities are also subject to
federal, state and local laws and regulations that govern, among other things, the geographical location, zoning, land use and operation of a project. For more information, see "Item 1.
BusinessRegulatory Matters."

In
addition to its exposure to government regulation affecting all electric power suppliers and generating companies on a national level, Midwest Generation is especially susceptible to
regulatory actions and litigation outcomes that are specific to the geographic power market in which the Illinois Plants are located.

There
is no assurance that new laws or other future regulatory developments will not have a material adverse effect on Midwest Generation's business, results of operations or financial
condition, nor can Midwest Generation provide assurance that it will be able to obtain and comply with all necessary licenses, permits and approvals for its plants. If Midwest Generation cannot comply
with all applicable regulations, its business, results of operations and financial condition could be adversely affected.

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Midwest Generation is subject to extensive environmental regulation and permitting requirements that may involve significant and increasing costs.

Midwest Generation's operations are subject to extensive environmental regulation. Midwest Generation is required to obtain and comply with conditions established
by licenses, permits and other approvals in order to construct, operate or modify its facilities. Failure to comply with these requirements could subject Midwest Generation to civil or criminal
liability, the imposition of liens or fines, or actions by regulatory agencies seeking to curtail Midwest Generation's operations. Midwest Generation may also be exposed to risks arising from past,
current or future contamination at its former or existing facilities or with respect to off-site waste disposal sites that have been used in its operations.

Midwest
Generation devotes significant resources to environmental monitoring, pollution control equipment and emission allowances to comply with environmental regulatory requirements.
Midwest Generation believes that it is in substantial compliance with environmental regulatory requirements and that maintaining compliance with current requirements will not materially affect its
financial position or results of operations. However, the current trend is toward more stringent standards, stricter regulation, and more expansive application of environmental regulations. Future
environmental laws and regulations, and future enforcement proceedings that may be taken by environmental authorities could affect the costs and the manner in which Midwest Generation conducts its
business and could cause it to make substantial additional capital expenditures. There is no assurance that Midwest Generation would be able to recover these increased costs from its customers or that
its business, financial condition and results of operations would not be materially adversely affected.

Environmental
advocacy groups and regulatory agencies in the United States have been focusing considerable attention on carbon dioxide emissions from coal-fired power plants
and their potential role in climate change. The adoption of laws and regulations to implement carbon dioxide controls could adversely affect Midwest Generation's coal-fired plants. Also,
coal plant emissions of nitrogen oxides and sulfur oxides, mercury and particulates are subject to increased controls and mitigation expenses. Additionally, the State of Illinois is contemplating air
pollution control regulations that are more stringent than existing and proposed federal regulations. Changing environmental regulations could require Midwest Generation to purchase additional
emission allowances or install additional pollution control technology, and could make some units uneconomical to maintain or operate. If Midwest Generation cannot comply with all applicable
regulations, it could be required to retire or suspend operations at its facilities, or restrict or modify the operations of its facilities, and its business, results of operations and financial
condition could be adversely affected. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital
ResourcesEnvironmental Matters and Regulations."

Typically,
environmental laws 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. Midwest Generation cannot provide assurance that it will be able to obtain and comply with all necessary licenses, permits and approvals for its plants.

Midwest Generation has a substantial amount of indebtedness, including long-term lease obligations.

As of December 31, 2005, Midwest Generation had $1.5 billion of long-term debt and $1.2 billion in lease financings. See
"Item 8. Financial Statements and Supplementary DataNotes to Consolidated

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Financial
StatementsNote 7. Long-Term Debt" and "Item 8. Financial Statements and Supplementary DataNotes to Consolidated Financial
StatementsNote 12. Lease Commitments."

Midwest
Generation's substantial amount of debt and financial obligations presents the risk that Midwest Generation might not have sufficient cash to service its indebtedness or
long-term lease obligations and could limit the ability of Midwest Generation to grow its business, to compete effectively or to operate successfully under adverse economic conditions.

Midwest Generation's ability to meet its obligations under its long-term leases is dependent on payment of interest and principal on its
notes receivable from EME.

During 2000, Midwest Generation loaned $1.367 billion to EME from the proceeds of the sale-leaseback of the Powerton and Joliet plants. The
debt service payments made by EME on the intercompany notes evidencing this loan are used by Midwest Generation to make the lease payments under the Powerton and Joliet leases. Midwest Generation's
ability to meet its obligations under the leases is partially dependent on receiving payment on these intercompany notes. There is no assurance that EME will have sufficient cash flow to meet its
obligations under the intercompany notes or make payments on the EME guarantees of the Powerton and Joliet leases. A default by EME in the payment of these intercompany notes would result in a
shortfall of cash available to Midwest Generation to meet its lease and debt obligations. A default by Midwest Generation in meeting its lease obligations could give rise to various remedies,
including the right to terminate the Powerton and Joliet leases, which would result in the loss of revenues from the Powerton and Joliet power plants and would have a material adverse effect on
Midwest Generation's business, results of operations and financial condition.

Competition could adversely affect Midwest Generation's business.

The independent power industry is characterized by numerous capable competitors, some of whom may have more extensive operating experience in the acquisition and
development of power projects, larger staffs, and greater financial resources than Midwest Generation does. Further, in recent years some power markets, including PJM, have been characterized by
strong and increasing competition as a result of regulatory changes and other factors which can contribute to a reduction in market prices for power from time to time. These regulatory and other
changes may increase competitive pressures in this market.

Newer
plants owned by Midwest Generation's competitors are often more efficient than Midwest Generation's facilities. This may put some of Midwest Generation's facilities at a
competitive disadvantage to the extent that its competitors are able to produce more power from each increment of fuel than Midwest Generation's facilities are capable of producing.

Several
participants in the wholesale markets, including many regulated utilities, have a lower cost of capital than most merchant generators and often are able to recover fixed costs
through rate base mechanisms, allowing them to build, buy and upgrade generation assets without relying exclusively on market clearing prices to recover their investments. This could affect Midwest
Generation's ability to compete effectively in the markets in which those entities operate.

Restrictions in the financing documents binding on Midwest Generation and its affiliates limit the ability of Midwest Generation to enter into specified
transactions that it otherwise might enter into.

EME and Mission Energy Holding Company have entered into debt agreements that contain restrictive covenants that are applicable to their subsidiaries, including
Midwest Generation. Midwest Generation has not guaranteed these obligations. However, these financing documents contain restrictions on the ability of Midwest Generation to enter into specified
transactions or engage in specified business activities, including, in some instances, a requirement that EME obtain the approval of Mission Energy

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Holding
Company's board of directors. The instruments governing Midwest Generation's indebtedness also contain financial and investment covenants. These restrictions may significantly impede the
ability of Midwest Generation to take advantage of business opportunities as they arise, to grow its business or compete effectively, or to develop and implement any refinancing plans in respect of
its indebtedness. See "Midwest Generation has a substantial amount of indebtedness, including long-term lease obligations" for further discussion.

In
addition, in connection with the entry by Midwest Generation or its affiliates into new financings or amendments to existing financing arrangements, Midwest Generation's financial and
operational flexibility may be further reduced as a result of more restrictive covenants, requirements for security and other terms that are often imposed on sub-investment grade entities.

The Illinois Plants may be affected by general operating risks and hazards customary to the power generation industry. Midwest Generation may not have
adequate insurance to cover all these hazards.

The operation of power generation facilities involves many operating risks, including:

These
and other hazards can cause significant personal injury or loss of life, severe damage to and destruction of property, plant and equipment, contamination of or damage to the
environment, and suspension of operations. The occurrence of one or more of the events listed above could decrease or eliminate revenues generated by the Illinois Plants or significantly increase the
costs of operating them, and could also result in Midwest Generation's being named as a defendant in lawsuits asserting claims for substantial damages, potentially including environmental cleanup
costs, personal injury, property damage, fines and penalties. Equipment and plant warranties and insurance may not be sufficient or effective under all circumstances to cover lost revenues or
increased expenses. A decrease or elimination in revenues generated by the facilities or an increase in the costs of operating them could decrease or eliminate funds available to meet Midwest
Generation's obligations as they become due and could have a material adverse effect on Midwest Generation.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

Inapplicable.

ITEM 2.    PROPERTIES

As of December 31, 2005, Midwest Generation owned a fee interest in the Illinois Plants, with the exception of the Powerton Station and the Joliet Units 7
and 8, as more particularly described below.

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Midwest
Generation purchased all the properties, with the exception of the Collins Station, from Commonwealth Edison in December 1999. Midwest Generation assigned the right to
purchase the Collins Station to third parties, who purchased the Collins Station, and entered into leases with an affiliate of Midwest Generation, who in turn subleased the plant to Midwest
Generation. In April 2004, Midwest Generation terminated the Collins Station lease through a negotiated transaction with the lease equity investor and received title to the Collins Station as
part of the transaction. On September 30, 2004, Midwest Generation permanently ceased operations at the Collins Station and decommissioned the plant by December 31, 2004. In
December 1999, Commonwealth Edison sold only a portion of its then owned
properties related to the Illinois Plants to Midwest Generation and retained the remaining portions of the properties for its own uses. Midwest Generation and Commonwealth Edison have various
reciprocal permanent and temporary easements over Midwest Generation's respective parcels for the location, use, maintenance and repair of those facilities and equipment that are used in connection
with the operations of Midwest Generation and Commonwealth Edison. On December 30, 2004, Midwest Generation acquired additional property adjacent to the Collins Station from Commonwealth Edison
in exchange for easements Midwest Generation granted to Commonwealth Edison at the Will County, Joliet and Powerton Stations.

In
conjunction with the sale-leaseback of the Powerton Station and Joliet Units 7 and 8 in August 2000, Midwest Generation leased substantially all the property on
which the generating units are located to the owner trusts under site leases, and the owner trusts in turn subleased their undivided ground interest in the property back to Midwest Generation under
site subleases. The terms of the site subleases are 33.75 years for the Powerton property and 30 years for the Joliet property, with renewal options. Rent is paid on each
January 2 and July 2.

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Description of Properties

Operating Plant or Site

Location

Leased/
Owned

Fuel

MegawattsElectric Generating FacilitiesCrawford Station

Chicago, Illinois

owned

coal

542Fisk Station

Chicago, Illinois

owned

coal

326Joliet Unit 6

Joliet, Illinois

owned

coal

290Joliet Units 7 and 8

Joliet, Illinois

leased

coal

1,044Powerton Station

Pekin, Illinois

leased

coal

1,538Waukegan Station

Waukegan, Illinois

owned

coal

789Will County Station

Romeoville, Illinois

owned

coal

1,092
(1)Peaking UnitsFisk

Chicago, Illinois

owned

oil/gas

163Waukegan

Waukegan, Illinois

owned

oil/gas

92Total







5,876Other Plant or SiteCollins Station(2)

Grundy County, Illinois

ownedCrawford peaker(3)

Chicago, Illinois

ownedJoliet peaker(4)

Joliet, Illinois

ownedCalumet peaker(4)

Chicago, Illinois

ownedBloom peaker(5)

Chicago Heights, Illinois

ownedElectric Junction peaker(4)

Aurora, Illinois

ownedLombard peaker(4)

Lombard, Illinois

ownedSabrooke peaker(4)

Rockford, Illinois

owned


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ITEM 3.    LEGAL PROCEEDINGS

No material legal proceedings are presently pending against Midwest Generation.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Inapplicable.

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Pursuant to Form 10-K's General Instruction G(3), the following information is included as an additional item in Part I of this annual
report:

EXECUTIVE OFFICERS OF THE REGISTRANT

Listed below are Midwest Generation's current executive officers and their ages and positions as of December 31, 2005.

Name, Position and Age

Position Held
Continuously
SinceGuy F. Gorney, 51
President

2005John P. Finneran, Jr., 46
Vice President

1999W. James Scilacci, 50
Vice President

2005Deborah A. Golden(1), 51
Vice President and General Counsel

2004Fred W. McCluskey, 46
Vice President

1999


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Business Experience

Described below are the principal occupations and business activities of Midwest Generation's executive officers for the past five years in addition to their
positions indicated above.

Mr. Gorneyhas been vice president of Edison Mission Energy since August 2000, and president of Midwest Generation EME, LLC
since June 2005. Mr. Gorney was vice president of Operations, Maintenance & Fuels for the Americas Region from January 2002 to January 2005, vice president of
Operations Planning from August 2000 to January 2002 and regional vice president of Operations Planning from December 1999 to August 2000.

Mr. Finneranhas been vice president of Business Management for Edison Mission Energy since April 2005. Mr. Finneran
was vice president of Edison Mission Energy and vice president Finance, Americas from July 2002 to April 2005. Mr. Finneran was vice president of Edison Mission Energy and
regional vice president of Finance, Americas Region from September 1999 to July 2002.

Mr. Scilaccihas been vice president of Midwest Generation EME, LLC since April 2005 and senior vice president and chief
financial officer of Edison Mission Energy since March 2005. Mr. Scilacci was senior vice president and chief financial officer of Southern California Edison Company from
January 2003 to March 2005 and vice president and chief financial officer of Southern California Edison Company from January 2000 to December 2002.

Ms. Goldenwas vice president of Edison Mission Energy and vice president and general counsel of Midwest Generation EME, LLC from
August 2004 to January 2006. Prior to joining Edison Mission

22

---



Energy,
Ms. Golden served as deputy general counsel to the governor of Illinois from January 2003 until July 2004, and served as assistant general counsel, State Regulatory Legal
Affairs for SBC from 1999 to 2001.

Mr. McCluskeyhas been vice president of Technical Services of Edison Mission Energy since April 2005. From
January 2003 to April 2005, Mr. McCluskey was vice president of Technical Services and Partnership Management. From August 2000 to January 2003, Mr. McCluskey
was vice president of Business Management. From November 1998 to August 2000, Mr. McCluskey was regional vice president of Business Development.

23

---



PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

All the outstanding membership interest of Midwest Generation is, as of the date hereof, owned by Edison Mission Midwest Holdings Co., which is an indirect wholly
owned subsidiary of Edison International. There is no market for Midwest Generation's membership interest.

Distributions
on the membership interest will be paid when declared by Midwest Generation's board of managers. Midwest Generation paid cash distributions to Edison Mission Midwest
Holdings totaling $330 million in 2005 and $88 million in 2004.

24

---



ITEM 6. SELECTED FINANCIAL DATA

The selected financial data was derived from Midwest Generation's audited financial statements and is qualified in its entirety by the
more detailed information and financial statements, including the notes to the financial statements, included in this annual report.

|                                                      |                                                                              | Years Ended December 31, |        
|----------------------------------------------------- | ---------------------------------------------------------------------------- | ------------------------ | -------
|
|
|INCOME STATEMENT DATA                                 |                                                                              |                          |        
|Operating revenues                                    |                                                                              | $                        | 1,429.4
|Operating expenses                                    |                                                                              |                          |        
|                                                      | Fuel and plant operations                                                    |                          |        
|                                                      | Loss on lease termination, asset impairment and other charges and credits(1) |                          |        
|                                                      | Depreciation and amortization                                                |                          |        
|                                                      | Administrative and general                                                   |                          |        
|                                                      |                                                                              |                          |        
|                                                      |                                                                              |                          | 840.1  
|                                                      |                                                                              |                          |        
|Operating income (loss)                               |                                                                              |                          | 589.3  
|Interest and other expense                            |                                                                              |                          | (90.1  
|                                                      |                                                                              |                          |        
|Income (loss) before income taxes                     |                                                                              |                          | 499.2  
|Provision (benefit) for income taxes                  |                                                                              |                          | 196.8  
|                                                      |                                                                              |                          |        
|Income (loss) before accounting change                |                                                                              |                          | 302.4  
|Cumulative effect of change in accounting, net of tax |                                                                              |                          | (1.2   
|                                                      |                                                                              |                          |        
|Net income (loss)                                     |                                                                              | $                        | 301.2  
|                                                      |                                                                              |                          |        

---

|                            |  | As of December 31,
|--------------------------- |  | ------------------
|
|
|BALANCE SHEET DATA          |  |                   
|Assets                      |  | $                 
|Current liabilities         |  |                   
|Long-term debt              |  |                   
|Lease financing             |  |                   
|Other long-term obligations |  |                   
|Member's equity             |  |                   

|                                                |  | Years Ended December 31, |       
|----------------------------------------------- |  | ------------------------ | ------
|
|
|CASH FLOW DATA                                  |  |                          |       
|Cash provided by (used in) operating activities |  | $                        | 145.3 
|Cash provided by (used in) financing activities |  |                          | (256.3
|Cash provided by (used in) investing activities |  |                          | 78.9  

25

---





ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect Midwest Generation's current expectations and projections about future events based on Midwest
Generation'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 Midwest Generation that is incorporated in this MD&A, or that refers to or incorporates this MD&A, may also contain forward-looking statements in this MD&A and elsewhere. In this MD&A
and elsewhere, 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. See "Item 1. BusinessForward-Looking Statements" and "Item 1A. Risk Factors" for a discussion of some of the risks,
uncertainties and other important factors that could cause results to differ, or otherwise could impact Midwest Generation. Additional information about risks and uncertainties is contained throughout
this MD&A. Readers are urged to read this entire annual report, including the information incorporated by reference, and carefully consider the risks, uncertainties and other factors that affect
Midwest Generation's business. Forward-looking statements speak only as of the date they are made, and Midwest Generation is not obligated to publicly update or revise forward-looking statements.
Readers should review future reports filed by Midwest Generation with the Securities and Exchange Commission.

This
MD&A presents a discussion of Midwest Generation's financial results and analysis of its financial condition. It is presented in four sections:

PageManagement's Overview; Critical Accounting Estimates

26Results of Operations

31Liquidity and Capital Resources

39Market Risk Exposures

53


MANAGEMENT'S OVERVIEW; CRITICAL ACCOUNTING ESTIMATES

Management's Overview

Introduction

Midwest Generation is a Delaware limited liability company formed on July 12, 1999 for the purpose of owning or leasing, making improvements to, and
operating and selling the capacity and energy of, the power generation assets it purchased from Commonwealth Edison, which are referred to as the Illinois Plants. Midwest Generation does not have any
plans to purchase or develop new power plants at this time.

Midwest
Generation plans to operate 5,876 MW of power plants in 2006 consisting of:

26

---



Midwest
Generation's power plants are located in the control area managed by PJM. For further discussion, see "Item 1. BusinessDescription of the
IndustryPower Markets," "Transmission," and "Regulatory Matters."

The
energy and capacity from the Illinois Plants are sold under terms, including price and quantity, negotiated by EMMT, on behalf of Midwest Generation, to customers through a
combination of bilateral agreements, forward energy sales and spot market sales. See "Market Risk Exposures" for further discussion of forward market prices.

Midwest
Generation's operating income increased substantially during 2005 due to higher wholesale energy prices driven largely by increases in the market price of natural gas and oil.
The average market price during 2005 at the Northern Illinois Hub increased to $46.39 per MWh, compared to the average market price of $29.52 per MWh during 2004 at "Into ComEd" and at the Northern
Illinois Hub. Prior to 2005, Midwest Generation derived a substantial amount of its revenues under power purchase agreements with Exelon Generation, all of which had expired by the end of 2004.

Overview of Midwest Generation's Operating Performance

Midwest Generation's net income (loss) was $301.2 million, ($78.6) million and ($688.7) million in 2005, 2004 and 2003, respectively. The 2005 increase in
earnings was primarily attributable to:

27

---





Obligations of Indirect Parent Companies of Midwest Generation

In July 2001, Mission Energy Holding Company, the parent company of EME and indirect parent of Midwest Generation, issued $800 million of notes due
2008. The financing documents entered into by Mission Energy Holding Company contain financial and investment covenants restricting EME and its subsidiaries. The instruments governing Midwest
Generation's indebtedness also contain financial and investment covenants. Restrictions contained in these documents could affect, and in some cases, significantly limit or prohibit Midwest
Generation's ability to, among other things, incur, refinance and prepay debt, make capital expenditures, make distributions, make investments, create liens, sell assets, enter into sale and leaseback
transactions, issue equity interests, enter into transactions with affiliates, create restrictions on the ability to make distributions, engage in mergers and consolidations, make capital
expenditures, or engage in speculative transactions. See "Item 1A. Risk FactorsRestrictions in the financing documents binding on Midwest Generation and its affiliates limit the
ability of Midwest Generation to enter into specified transactions that it otherwise might enter into" for further discussion.

Critical Accounting Estimates

Introduction

The accounting policies described below are viewed by management as "critical" because their correct application requires the use of material judgments and
estimates, and they have a material impact on Midwest Generation's results of operations and financial position.

Derivative Financial Instruments and Hedging Activities

Midwest Generation uses derivative financial instruments for price risk management activities for non-trading purposes. Derivative financial
instruments are mainly utilized to manage exposure from changes in electricity and fuel prices. Midwest Generation follows Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS No. 133), which requires derivative financial instruments to be recorded at their fair value unless an exception applies. SFAS
No. 133 also requires that changes in a derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. For derivatives that qualify for hedge
accounting, depending on the nature of the hedge, changes in fair value are either offset by changes in the fair value of the hedged assets, liabilities or firm commitments through earnings, or
recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value is immediately recognized in earnings.

Management's
judgment is required to determine if a transaction meets the definition of a derivative and, if it does, whether the normal sales and purchases exception applies or whether
individual transactions qualify for hedge accounting treatment. The majority of Midwest Generation's long-term power sales and fuel supply agreements related to its generation activities
either: (1) do not meet the

28

---



definition
of a derivative, or (2) qualify as normal purchases and sales and are, therefore, recorded on an accrual basis. Determining the fair value of derivatives under SFAS No. 133 is
a critical accounting estimate because the fair value of a derivative is susceptible to significant change resulting from a number of factors, including: volatility of energy prices, credit risks,
market liquidity and discount rates. See "Market Risk Exposures" for a description of risk management activities and sensitivities to change in market prices.

Impairment of Long-Lived Assets

Midwest Generation follows Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" (SFAS No. 144). Midwest Generation evaluates long-lived assets whenever indicators of impairment exist. This accounting standard requires that if the undiscounted expected
future cash flow from a company's assets or group of assets (without interest charges) is less than its carrying value, asset impairment must be recognized in the financial statements. The amount of
impairment is determined by the difference between the carrying amount and fair value of the asset.

The
assessment of impairment is a critical accounting estimate because significant management judgment is required to determine: (1) if an indicator of impairment has occurred,
(2) how assets should be grouped, (3) the forecast of undiscounted expected future cash flow over the asset's estimated useful life to determine if an impairment exists, and
(4) if an impairment exists, the fair value of the asset or asset group. Factors that Midwest Generation considers important, which could trigger an impairment, include operating losses from a
project, projected future operating losses, the financial condition of counterparties, or significant negative industry or economic trends. At December 31, 2005, the expected undiscounted
future cash flow from long-lived assets exceeded the carrying value of those assets. During 2004 and 2003, Midwest Generation recorded impairment charges of $39.1 million and
$1.025 billion, respectively, related to specific assets. See "Results of OperationsOperating Expenses" for additional discussion.

Contract Indemnity

Midwest Generation has agreed to reimburse Commonwealth Edison and Exelon Generation for 50% of specific existing asbestos claims and 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 a supplemental agreement. See "Liquidity and Capital
ResourcesContractual Obligations, Commitments and ContingenciesContingenciesIndemnity Provided as Part of the Acquisition from Commonwealth Edison." Midwest
Generation engaged an independent actuary during 2004 with extensive experience in performing asbestos studies to estimate future losses based on its claims experience and other available information.
In calculating future losses, the actuary made various assumptions, including but not limited to, the settlement of future claims under the supplemental agreement with Commonwealth Edison as described
above, the distribution of exposure sites, and that the filing date of asbestos claims will not be after 2045. At December 31, 2005, Midwest Generation recorded a liability related to this
contract indemnity of $67.4 million.

Income Taxes

Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109), requires the asset and liability approach for
financial accounting and reporting for deferred income taxes. Midwest Generation uses the asset and liability method of accounting for deferred income taxes and provides deferred income taxes for all
significant income tax temporary differences. See

29

---



"Item 8.
Financial Statements and Supplementary DataNotes to Consolidated Financial StatementsNote 9. Income Taxes" for additional details.

As
part of the process of preparing its consolidated financial statements, Midwest Generation is required to estimate its income taxes in each jurisdiction in which it operates. This
process involves estimating actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as depreciation, for tax and accounting
purposes. These differences result in deferred tax assets and liabilities, which are included within Midwest Generation's balance sheet. At December 31, 2005, Midwest Generation had net federal
and California state deferred tax assets of $275.8 million. The deferred tax assets primarily relate to net operating loss carryforwards that are available to reduce future taxable income. The
net operating losses primarily relate to tax deductions from the termination of the Collins Station lease and subsequent decommissioning of the power plant. In assessing the realization of Midwest
Generation's deferred tax assets, management considered whether it is more likely than not the deferred tax assets will be realized. The ultimate realization of Midwest Generation's deferred income
tax assets depends upon its ability to generate taxable income in the future (which under Midwest Generation's tax-allocation agreement is not subject to a net operating loss carryforward
period). On a quarterly basis, management evaluates the recoverability of its deferred tax assets based upon forecasted taxable income to ensure there is adequate support for the realization of the
deferred tax assets. While management has considered future taxable income in assessing the need for a valuation allowance, in the event management were to determine that Midwest Generation would not
be able to realize all or part of its net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged as a reduction to income in the period such determination was
made. Although realization is not assured, management believes it is more likely than not that the net deferred tax asset balance as of December 31, 2005 will be realized.

For
additional information regarding Midwest Generation's accounting policies, see "Item 8. Financial Statements and Supplementary DataNotes to Consolidated Financial
StatementsNote 2. Summary of Significant Accounting Policies."

30

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RESULTS OF OPERATIONS

Summary

The table below summarizes total revenues as well as key performance measures related to coal-fired generation, which represents the majority of
Midwest Generation's operations.

Years Ended December 31,2005

2004

2003Operating Revenues (in millions)Energy revenues

$
1,445

$
758

$
667Capacity revenues


27


289


380Other revenues


10


15


8Loss from price risk management


(53
)

(4
)

(3
)Total operating revenues

$
1,429

$
1,058

$
1,052StatisticsCoal-Fired GenerationGeneration (in GWh):Merchant


30,953


17,133


13,561Power purchase agreement





13,435


13,949Total coal-fired generation


30,953


30,568


27,510Equivalent availability(1)


79.6%


84.4%


82.7%Forced outage rate(2)


7.8%


5.4%


7.7%Average energy price/MWh:Merchant

$
46.68

$
31.11

$
26.57Power purchase agreement

$


$
17.46

$
18.08Total coal-fired generation(3)

$
46.68

$
24.84

$
22.27Average fuel costs/MWh

$
12.40

$
11.60

$
11.28


---

Operating Revenues

Operating revenues increased $371.6 million in 2005 compared to 2004 and $5.5 million in 2004 compared to 2003. The 2005 increase was primarily due
to higher average energy prices. The increase in average energy prices was driven largely by higher natural gas prices and the elimination of sales to Exelon Generation under power purchase agreements
with lower contract energy prices. The 2004 increase was primarily due to higher energy revenues of $89.9 million from increased merchant generation and higher merchant energy prices, offset by
a $91.1 million decrease in capacity revenue

31

---



resulting
from the reduction in megawatts contracted under the power purchase agreements with Exelon Generation. Midwest Generation currently earns minimal capacity revenues from its merchant
activities.

During
2003 and 2004, one unit at the Collins Station was available for sale into the wholesale power market. Due to the substantial increase in natural gas prices in 2003 and 2004, the
marginal cost of generation generally exceeded the spot price for energy. As a result, merchant sales from the Collins Station were minimal during 2003 and 2004. Midwest Generation permanently ceased
operations at all Collins Station units on September 30, 2004 after termination of the Collins Station lease.

Losses
from price risk management were $53.3 million, $3.6 million and $3.1 million in 2005, 2004 and 2003, respectively. The 2005 increase was primarily due to
significant price increases in 2005 on power contracts that did not qualify for hedge accounting under SFAS No. 133 resulting in losses. These energy contracts were entered into to hedge the
price risk related to projected sales of power through 2007 (sometimes referred to as economic hedges). The 2005 losses included $30.2 million related to 2005 hedge contracts, which related to
activities reported as energy revenues and $23.1 million unrealized losses related to 2006 and 2007 hedge contracts. See "Market Risk ExposuresCommodity Price Risk" for more
information regarding forward market prices.

The
2004 losses were primarily related to power contracts that did not qualify for hedge accounting under SFAS No. 133. The 2003 losses primarily reflect a
mark-to-market adjustment of $2.7 million related to an option under which Midwest Generation had to purchase energy from Calumet Energy Team LLC, which is accounted for
as a derivative under SFAS No. 133.

Due
to higher electric demand resulting from warmer weather during the summer months, electric revenues are generally higher during the third quarter of each year. However, as a result
of recent increases in market prices for power, driven in part by higher natural gas and oil prices, this historical trend may not be applicable to quarterly revenue in the future.

Operating Expenses

Operating expenses decreased $215.9 million in 2005 compared to 2004 and $888.4 million in 2004 compared to 2003. Operating expenses consist of
fuel, sale of emission allowances, plant operations, loss on lease termination, asset impairment and other charges, depreciation and amortization and administrative and general expenses. The change in
the components of operating expenses is discussed below.

Fuel
expenses decreased $23.5 million in 2005 compared to 2004, and increased $6.1 million in 2004 compared to 2003. The 2005 decrease was primarily attributable to a
reduction of $42.7 million in the costs for natural gas and fuel oil related to the cessation of operations at the Collins Station, partially offset by an increase of $27.6 million in
coal costs primarily due to higher coal prices from price escalation under coal and transportation agreements. The 2004 increase was primarily due to higher fuel costs at the coal plants resulting
from increased generation, partially offset by lower fuel costs at the Collins Station and peaking units.

Sale
of emission allowances income increased $36.4 million in 2005 compared to 2004, and $15.3 million in 2004 compared to 2003. Midwest Generation sold excess sulfur
dioxide (SO2) emission allowances primarily to affiliates in all three years. The 2005 and 2004 increases are due to an increase in the market price of SO2 emission allowances.

Plant
operations expenses decreased $27.8 million in 2005 compared to 2004, and increased $45.5 million in 2004 compared to 2003. The 2005 decrease was primarily due to a
$56 million charge

32

---



recorded
during the fourth quarter of 2004 related to an estimate of possible future payments related to asbestos claims with respect to activities at the Illinois Plants prior to their acquisition in
1999. There was no similar charge recorded in 2005. Partially offsetting this decrease in 2005 were higher plant overhaul expenses. The 2004 increase was due to the asbestos claims charge explained
above partially offset by lower property taxes at the Collins Station, lower plant overhaul expenses and lower railcar lease costs. See "Liquidity and Capital ResourcesContractual
Obligations, Commitments and ContingenciesContingenciesGuarantees and IndemnitiesIndemnity Provided as Part of the Acquisition from Commonwealth Edison" for a
discussion of the contract indemnity agreement with Commonwealth Edison.

Asset
impairment charges for 2005 consisted of $7.0 million primarily associated with a redefined capital program related to coal dust mitigation.

Loss
on lease termination, asset impairment and other charges in 2004 consisted of $60.9 million related to the loss on termination of the Collins Station lease,
$10.3 million of impairment charges related to the termination of the power purchase agreement for the remaining two units at the Collins Station, a $4.6 million inventory reserve for
excess spare parts and fuel oil inventory at the Collins Station, and $28.8 million related to the impairment of the small peaking units.

Asset
impairment charges for 2003 consisted of a $1.025 billion impairment charge that resulted from a revised long-term outlook for capacity revenues from the Collins
Station and eight small peaking units. The lower capacity revenue outlook was the result of a number of factors, including higher long-term natural gas prices and the current oversupply of
generation. The book value of capitalized assets related to the Collins Station was written down from $858 million to a then estimated fair market value of $78 million, and the book
value of the eight small peaking units was also written down from $286 million to a then estimated fair market value of $41 million.

Depreciation
and amortization expense decreased $28.8 million in 2005 compared to 2004 and $1.8 million in 2004 compared to 2003. The 2005 decrease was primarily
attributable to the elimination of depreciation on the Collins Station since September 30, 2004 and the peaking units since June 30,
2004, as a result of impairments and decommissioning. The decrease in 2004 and 2003 was primarily due to the elimination of depreciation and amortization on the portion of the Collins Station and
eight peaking units as a result of the impairment charges taken in 2004 and 2003. The amortization expense relates to the Powerton-Joliet facilities sale-leaseback which is being amortized
over the term of the lease and the Collins Station lease through its termination in April 2004.

Other Income (Expense)

Years Ended December 31,2005

2004

2003(in thousands)Interest income and other expense

$
848

$
(551
)
$
(490
)Interest income from affiliate


113,084


113,229


113,354Gain on disposal of assets


3,226


(1,042
)

Interest expense


(207,271
)

(184,016
)

(124,391
)Interest expense to affiliate





(66,148
)

(221,845
)Total other expense

$
(90,113
)
$
(138,528
)
$
(233,372
)


33

---



In 2005, Midwest Generation recorded gains on asset disposal primarily related to the sale of Collins Station equipment. In 2004, Midwest
Generation recorded a loss on asset disposal related to various station equipment.

Interest
expense increased $23.3 million in 2005 compared to 2004 and $59.6 million in 2004 compared to 2003. The 2005 increase was primarily due to a full year of interest
in 2005 versus approximately eight months of interest in 2004 on Midwest Generation's 8.75% second priority senior secured notes, first priority secured institutional term loan and working capital
facilities. The increase was partially offset by lower lease financing interest from the termination of the Collins Station lease. Interest expense in 2004 relates to $1.74 billion in new debt
entered into by Midwest Generation in April 2004 in addition to the lease financings of the Powerton and Joliet Stations and the Collins Station through April 27, 2004. Interest expense
in 2003 relates to the lease financings of the Collins, Powerton and Joliet Stations. All debt in 2003 related to affiliates.

Interest
expense to affiliate was zero in 2005 and decreased $155.7 million in 2004 compared to 2003. Interest expense to affiliate in 2004 and 2003 related to borrowings from
Edison Mission Overseas Co., a wholly owned subsidiary of Midwest Generation's parent, under subordinated loan agreements that were settled and terminated in April 2004.

Provision (Benefit) For Income Taxes

Midwest Generation had effective income tax provision (benefit) rates of 39.4%, (42.5)% and (38.8)% in 2005, 2004 and 2003, respectively. The effective tax rates
were different from the federal statutory rate of 35% due to state income taxes. The income tax benefit results from the tax-allocation agreement with Midwest Generation's parent, Edison
Mission Midwest Holdings.

Cumulative Effect of Change in Accounting Principle

Statement of Financial Accounting Standard Interpretation No. 47

Effective December 31, 2005, Midwest Generation adopted Financial Accounting Standard Interpretation No. 47, "Accounting for Conditional Asset
Retirement Obligations" (FIN 47). For further discussion of FIN 47 refer to "New Accounting Pronouncements." Midwest Generation recorded a $1.2 million, after tax, decrease to net income as the
cumulative effect of the adoption of FIN 47.

Statement of Financial Accounting Standards No. 143

Effective January 1, 2003, Midwest Generation adopted Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations." SFAS No. 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially
recorded, the entity capitalizes the cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is increased to its present value each period, and the
capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss
upon settlement. On January 1, 2003, Midwest Generation recorded a $74,000, after tax, decrease to net income as the cumulative effect of the adoption of SFAS No. 143.

34

---



Related Party Transactions

EMMT Agreements

Midwest Generation entered into a revolving credit agreement with EMMT, dated as of April 27, 2004, pursuant to which Midwest Generation can, from time to
time, make revolving loans to, and have letters of credit issued on behalf of, EMMT. The loans and letters of credit provide credit support for forward contracts entered into by EMMT related to the
Illinois Plants. Midwest Generation had provided $328.1 million and $9.8 million to EMMT as of December 31, 2005 and 2004, respectively, which EMMT used to provide credit support
for forward contracts. Loans provided under this revolving credit agreement are repaid by EMMT upon the return of the funds under the terms of the related forward contract. The amount repaid includes
interest earned, if any, under margining agreements supporting such contracts. The maximum amount of available credit under the agreement is $500 million.

Midwest
Generation has entered into a master purchase, sale and services agreement with EMMT, pursuant to which EMMT arranges for purchases and sales of the following products, including
related services: (i) energy and capacity; (ii) natural gas; (iii) fuel oil; and (iv) emission allowances.

Midwest
Generation compensates EMMT in accordance with the following table with respect to these transactions, and reimburses EMMT for brokers' fees, taxes, and other reasonably incurred
direct out-of-pocket expenses. Payment for these services is due within 30 days of billing.

Service

CompensationEnergy

$.02/MWhCapacity

$.02/MW-dayNatural gas

$.02/MMBtuFuel oil

$.05/bblEmission allowances

$.25/SO2 allowance; and $25/NOx allowance


The net fees earned by EMMT were $1.5 million, $1.8 million and $1.1 million for the years ended December 31, 2005,
2004 and 2003, respectively. Midwest Generation had receivables due from EMMT of $203.6 million and $51.8 million at December 31, 2005 and 2004, respectively. The increase in
receivable balance in 2005 is due to higher sales of power and emissions by Midwest Generation through EMMT in the month of December 2005 as compared to the month of December 2004.

Midwest
Generation entered into several transactions through EMMT to sell surplus or purchase SO2 and NOx allowances to or from other EME affiliates. All transactions were completed at
market price on the date of the transaction. Net consideration received by Midwest Generation was $54.7 million, $26.1 million and $10.3 million during 2005, 2004 and 2003,
respectively.

Fuel Services Agreement

Midwest Generation has entered into an agreement with Edison Mission Energy Services, Inc. to provide fuel and transportation services related to coal and
fuel oil. Under the terms of this agreement, Midwest Generation pays a service fee of $.06 for each ton of coal delivered and $.05 for each barrel of fuel oil delivered, plus the actual cost of the
commodities. The amount billable under this agreement for the service fee for each of the years ended December 31, 2005, 2004 and 2003 was $1.1 million.

35

---



Notes Receivable from EME

The proceeds received by Midwest Generation from the Powerton-Joliet sale-leaseback transaction were loaned to EME. The loan is evidenced by four
intercompany notes amounting to $1.367 billion. EME is obligated to repay the principal on the notes in a series of installments on the dates and in the amounts set forth on a schedule to each
note. EME has paid and is required to pay interest on the notes on each January 2 and July 2 at an 8.30% fixed interest rate. All amounts due under the notes are due to be repaid in full
by January 2, 2016. Midwest Generation earned interest income of $113.1 million, $113.2 million and $113.4 million during 2005, 2004 and 2003, respectively.

Loan Agreements with Edison Mission Overseas Co.

Edison Mission Midwest Holdings used the proceeds of the loan under the credit agreement that it entered into in December 1999 (a total of approximately
$1.8 billion) to make an equity investment in its wholly owned subsidiary, Edison Mission Overseas Co., which in turn loaned the money to Midwest Generation. Edison Mission Overseas and Midwest
Generation entered into a subordinated loan agreement with terms matching the terms of Edison Mission Midwest Holdings' credit agreement. Under the terms of the subordinated loan agreement, Midwest
Generation was required to make payments to Edison Mission Overseas similar to those payments made by Edison Mission Midwest Holdings under its credit agreement. The obligations of Edison Mission
Midwest Holdings were guaranteed by Midwest Generation. In April 2004, Midwest Generation refinanced the borrowings of approximately $693 million (plus accrued interest and fees) under
the subordinated loan agreement with proceeds of its $1.7 billion notes issuance and term loan. Midwest Generation then also settled the outstanding balance on the subordinated revolving loan
agreement with Edison Mission Overseas with an equity contribution of approximately $2.2 billion from Edison Mission Midwest Holdings.

Tax-Allocation Agreements

Midwest Generation is included in the consolidated federal and state income tax returns of Edison International and is party to a tax-allocation
agreement with its parent, Edison Mission Midwest Holdings. As long as Edison International continues to own, directly or indirectly, at least 80% of the voting power of the stock of EME and its
existing subsidiaries and at least 80% of the value of such stock, Midwest Generation will be included in the consolidated federal and state income tax returns of Edison International. In accordance
with the agreement and the tax-allocation procedures that have been in effect since Midwest Generation's formation, its current tax liability or benefit is generally determined on a
separate return basis, except for calculating consolidated state income taxes, for which Midwest Generation uses the long-term state tax apportionment factors of the Edison International
group. Also, while Midwest Generation is generally subject to separate return limitations for net losses, under the tax-allocation agreement it is permitted to transfer to Edison Mission
Midwest Holdings, or its subsidiaries, net operating loss benefits which would not yet be realized in a separate return in exchange for a reduction in Midwest Generation's intercompany account
balances (including subordinated loans).

Amounts
included in due from affiliates on the balance sheet associated with this tax-allocation agreement totaled $13.0 million at December 31, 2005.

Services Agreements with EME and Edison International

Certain administrative services, such as payroll, employee benefit programs, insurance and information technology are shared among all affiliates of Edison
International, and the costs of these corporate support services are allocated to all affiliates. The cost of services provided by Edison

36

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International
and EME, including those related to Midwest Generation, are allocated based on one of the following formulas: percentage of the time worked, equity in investment and advances, number of
employees, or multi-factor (operating revenues, operating expenses, total assets and total employees). Midwest Generation participates in a common payroll and benefit program with all Edison
International employees. In addition, Midwest Generation is billed for any direct labor and out-of-pocket expenses for services directly requested for its benefit. Midwest
Generation believes the allocation methodologies are reasonable. Costs incurred for these programs, payroll funding, and other services during the years ended December 31, 2005, 2004 and 2003
were $125.7 million, $138.1 million and $134.2 million, respectively. Midwest Generation had a $0.9 million net receivable due from Edison International at
December 31, 2005 and a $4.9 million net payable due to Edison International at December 31, 2004 related to these programs.

Midwest
Generation participates in the insurance program of Edison International, including property, general liability, workers compensation and various other specialty policies.
Midwest Generation's insurance premiums are generally based on its share of risk related to each policy. In connection with the property insurance program, a portion of the risk is reinsured by a
captive insurance subsidiary of Edison International.

Agreements with Midwest Generation EME, LLC

Contribution of Services/Management and Administration Agreement

Midwest Generation EME, LLC is Midwest Generation's indirect parent and provided executive management, legal, human resources, accounting and other administrative
services in Chicago on Midwest Generation's behalf without charge through March 2004. In connection with regulations of the Securities and Exchange Commission, the costs of these services must
be recorded as part of Midwest Generation's financial results, although Midwest Generation does not have a cash obligation to pay for these activities. The costs of these services, after tax, were
$2.5 million and $10.6 million for the first
quarter of 2004 and the year ended December 31, 2003, respectively. Midwest Generation has reflected these activities as a non-cash contribution of services by its parent in the
accompanying consolidated financial statements. In April 2004, Midwest Generation EME and Midwest Generation entered into a new management and administration agreement pursuant to which Midwest
Generation EME began charging Midwest Generation for management and administrative services. Actual costs billable under this agreement for the years ended December 31, 2005 and 2004 were
$13.1 million and $15.7 million, respectively.

Support Services Agreement

Midwest Generation has entered into an agreement with Midwest Generation EME for support services, including construction and construction management, operations
and maintenance management, technical services and training, environmental, health and safety services, administrative and IT support, and other managerial and technical services needed to operate and
maintain electric power facilities. Under the terms of the agreement, Midwest Generation reimburses Midwest Generation EME for actual costs incurred by functional area in providing support services,
or in the case of specific tasks requested by Midwest Generation, the amount negotiated for the task. Actual costs billable under this agreement for the years ended December 31, 2005, 2004 and
2003 were $6.9 million, $6.1 million and $6.3 million, respectively.

Midwest
Generation had payables of $1.5 million and $2.6 million due to Midwest Generation EME at December 31, 2005 and 2004, respectively, related to these
agreements.

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New Accounting Pronouncements

In November 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 151, "Inventory Costs." SFAS No. 151 requires that abnormal
amounts of idle facility expense, freight, handling costs and spoilage be recognized as current-period charges. Further, SFAS No. 151 requires the allocation of fixed production overheads to
inventory based on the normal capacity of the production facilities. Unallocated overheads must be recognized as an expense in the period in which they are incurred. SFAS No. 151 is effective
for inventory costs incurred beginning in the first quarter of 2006. Midwest Generation does not expect the adoption of this standard to have a material impact on Midwest Generation's consolidated
financial statements.

In
March 2005, the FASB issued FIN 47, Accounting for Conditional Asset Retirement Obligations (AROs), an interpretation of SFAS 143. This interpretation clarifies that an
entity is required to recognize a liability for the fair value of a conditional ARO if the fair value can be reasonably estimated, even though uncertainty exists about the timing and/or method of
settlement. This interpretation became effective as of December 31, 2005 for Midwest Generation. Midwest Generation identified conditional AROs related to asbestos removal and disposal costs at
its owned buildings and power plant facilities and at retired structures leased at the Powerton Station. Midwest Generation recorded a $1.2 million, after tax, charge as a cumulative effect
adjustment for asbestos removal and disposal activities associated with retired Powerton structures that are currently scheduled for demolition in 2007. Midwest Generation has not recorded a liability
related to the owned structures because it cannot reasonably estimate fair value of the obligation at this time. The range of time over which Midwest Generation may settle this obligation in the
future (demolition or other method) is sufficiently large to not allow for the use of expected present value techniques.

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LIQUIDITY AND CAPITAL RESOURCES

Introduction

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

PageFinancing Developments

39Consolidated Cash Flow

39Capital Expenditures

40Credit Facility and Indenture Covenants

40Powerton-Joliet Lease Payments

42Credit Ratings

42Contractual Obligations, Commitments and Contingencies

43Off-Balance Sheet Transactions

46Environmental Matters and Regulations

46


Financing Developments

On December 15, 2005, Midwest Generation completed a refinancing of indebtedness. The refinancing was effected through the amendment and restatement of
Midwest Generation's existing credit facility, previously amended and restated on April 18, 2005. The credit facility, as previously amended and restated, provided for approximately
$343 million of first priority secured institutional term loans due in 2011 and $500 million of first priority secured revolving credit, working capital facilities, $200 million
due in 2009 and $300 million due in 2011, with a lender option to require prepayment in 2010.

The
refinancing consisted of, among other things, a reduction in the interest rate applicable to the term loan and the working capital facilities, and a modification of financial
covenants. After giving effect to the refinancing, all the facilities carry a lower interest rate of LIBOR + 1.75%. The maturity date of the repriced term loan remains 2011. The
previously existing working capital facilities were combined into one $500 million facility, maturing in 2011, with a lender option to require prepayment in 2010. Also, as part of the
refinancing, Midwest Generation's financial covenants were modified, with its consolidated interest coverage ratio for the immediately preceding four consecutive fiscal quarters required to be at
least 1.40 to 1 (increased from 1.25 to 1), and its secured leverage ratio for the 12-month period ended on the last day of the immediately preceding fiscal quarter required to be no
greater than 7.25 to 1 (reduced from 8.75 to 1).

As
of December 31, 2005, Midwest Generation had $333 million outstanding under its term loan and a $500 million working capital facility available for working
capital requirements, including credit support for hedging activities. As of December 31, 2005, approximately $175 million was utilized under the working capital facility.

Consolidated Cash Flow

At December 31, 2005, Midwest Generation had cash and cash equivalents of $124.1 million, compared to $156.2 million at December 31,
2004. Net working capital at December 31, 2005 was $395.4 million, compared to $159.6 million at December 31, 2004. The increase in working capital was primarily the result
of $328.1 million in loans receivable from EMMT, which loans were made by Midwest Generation, to fund collateral under margining agreements, a $151.8 million increase in receivables from
EMMT related to power sales and emission sales, partially offset by a $180.6 million

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increase
in net liabilities under price risk management related to electricity contracts and financial instruments and a $49.0 million increase in the current portion due from lease financings.

Net
cash provided by operating activities totaled $145.3 million, $190.5 million and $97.2 million in 2005, 2004 and 2003, respectively. Midwest Generation's
significant profits in 2005 contributed to net cash provided by operating activities, partially offset by the timing of cash receipts and disbursements related to working capital items, as described
above.

Net
cash used in financing activities totaled $256.3 million, $37.8 million and $94.8 million in 2005, 2004 and 2003, respectively. In 2005, Midwest Generation paid
a $330.2 million distribution to its parent, repaid $493.0 million of long-term debt, received a $300 million capital contribution from its parent and borrowed
$328.4 million of long-term debt. In 2004, Midwest Generation refinanced all its affiliate debt by completing a $1 billion private offering of secured notes and borrowing
$700 million under a new term loan facility. Midwest Generation used these proceeds primarily to pay off the $692.7 million of debt that was due to its affiliate in December 2004
and to make the approximately $960 million termination payment under the Collins Station lease. Midwest Generation settled the remaining balance of its affiliate debt by receiving a
$2.2 billion non-cash equity contribution from its parent. Midwest Generation also entered into a new $200 million working capital facility that replaced a prior facility, of
which $40 million had been drawn during 2004 and subsequently paid off by December 31, 2004. In 2004, Midwest Generation generated excess cash flow as defined in its new credit agreement
which allowed Midwest Generation to make an $87.9 million cash distribution to its parent.

Net
cash provided by (used in) investing activities totaled $78.9 million, $(33.0) million and $(40.6) million in 2005, 2004 and 2003, respectively. The 2005 increase in cash
provided by investing activities was primarily due to an increase in the proceeds received from the sale of excess S02 allowances, proceeds received from the sale of Collins Station assets and the
sale of $20.0 million of auction rate security investments. The 2004 decrease in cash used in investing activities was attributable to higher proceeds received from the sale of excess S02
allowances and lower capital expenditures, partially offset by net purchases of auction rate securities of $20 million and a $9.8 million net loan advance to EMMT under its revolving
credit agreement.

Midwest
Generation's principal sources of liquidity are cash on hand, $500 million of available credit under its working capital facility, payments by EME under the intercompany
notes issued in connection with the Powerton-Joliet facilities sale-leaseback and future cash flow from operations.

Capital Expenditures

Midwest Generation plans to spend $49.9 million, $35.4 million and $18.3 million in 2006, 2007 and 2008, respectively, for capital
expenditures. These expenditures will primarily be for non-environmental related projects such as upgrades to dust collection/mitigation systems and various other projects. Included in the
planned spending above is $2.7 million, $3.1 million and $6.3 million related to environmental improvements. Midwest Generation plans to finance these capital expenditures by cash
generated from operations.

Credit Facility and Indenture Covenants

Midwest Generation is bound by the covenants in its credit agreement and indenture as well as certain covenants under the Powerton-Joliet lease documents with
respect to Midwest Generation making payments under the leases. These covenants include restrictions on the ability to, among other things, incur debt, create liens on its property, merge or
consolidate, sell assets, make investments, engage in

40

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transactions
with affiliates, make distributions, make capital expenditures, enter into agreements restricting its ability to make distributions, engage in other lines of business or engage in
transactions for any speculative purpose. In addition, the credit agreement contains financial covenants binding on Midwest Generation.

Covenants in Credit Agreement

In order for Midwest Generation to make a distribution, it must be in compliance with the covenants specified under its credit agreement, including maintaining
the following two financial performance requirements:

In
addition, Midwest Generation's distributions are limited in amount. Under the terms of Midwest Generation's credit agreement, Midwest Generation is permitted to distribute 75% of its
excess cash flow (as defined in the credit agreement). In addition, if equity is contributed to Midwest Generation, Midwest Generation is permitted to distribute 100% of excess cash flow until the
aggregate portion of distributions that Midwest Generation attributed to the equity contribution equals the amount of the equity contribution. Because EME made a $300 million equity
contribution to Midwest Generation on April 19, 2005, Midwest Generation is permitted to distribute 100% of excess cash flow until the aggregate portion of such distributions attributed to that
equity contribution equals $300 million. After taking into account Midwest Generation's most recent distribution in January 2006, $177 million of the equity contribution is still
available for this purpose. To the extent Midwest Generation makes a distribution which is not fully attributed to an equity contribution, Midwest Generation is required to make concurrently with such
distribution an offer to repay debt in an amount equal to the excess, if any, of one-third of such distribution over the amount attributed to the equity contribution.

In
January 2005, Midwest Generation made a distribution of $61 million and, as required under its credit agreement, Midwest Generation offered to prepay $20 million
of the term loan, of which $5 million was accepted by certain lenders and repaid on January 24, 2005. Midwest Generation subsequently made a voluntary prepayment, as provided under the
credit agreement, of $15 million on January 28, 2005. In April 2005 and October 2005, Midwest Generation made additional distributions of $109 million and
$160 million, respectively. On January 24, 2006, Midwest Generation made a distribution of $185 million to Edison Mission Midwest Holdings.

Covenants in Indenture

Midwest Generation's indenture contains restrictions on its ability to make a distribution substantially similar to those in the credit agreement. Failure to
achieve the conditions required for distributions will

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not
result in a default under the indenture, nor does the indenture contain any other financial performance requirements.

Powerton-Joliet Lease Payments

As part of the sale-leaseback of the Powerton and Joliet Stations, Midwest Generation loaned the proceeds (in the original amount of
$1.367 billion) to EME in exchange for promissory notes in the same aggregate amount. EME's obligations under the promissory notes payable to Midwest Generation are general corporate
obligations of EME and are not contingent upon receiving distributions from its subsidiaries. There is no assurance that EME will have sufficient cash flow to meet these obligations. For additional
discussion, see "Results of OperationsRelated Party TransactionsNotes Receivable from EME." Furthermore, EME has guaranteed Midwest Generation's lease obligations under these
leases. If EME fails to pay under its guarantee, including payments due under the Powerton-Joliet leases in the event that Midwest Generation could not make such payments, this would result in an
event of default under the Powerton and Joliet leases. This event would have a material adverse effect on Midwest Generation.

Credit Ratings

Overview

The credit ratings for EME, Midwest Generation and EMMT are as follows:

Moody's Rating

S&P RatingEME

B1

B+Midwest Generation:First priority senior secured rating

Ba3

BB-Second priority senior secured rating

B1

BEMMT

Not Rated

B+


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

Credit Rating of EMMT

Midwest Generation sells merchant energy and capacity and purchases its natural gas through EMMT, which currently has a below investment grade credit rating. In
order to support Midwest Generation's forward sales and hedging, historically, EME (which also has a below investment grade credit rating) provided collateral in the form of cash and letters of credit
for the benefit of EMMT's counterparties. Currently, Midwest Generation provides credit support for forward contracts entered into by EMMT related to the Illinois Plants. Midwest Generation is
expected to have cash on hand and has a $500 million working capital facility that can be used to provide the necessary credit support. As of December 31, 2005, approximately
$175 million was utilized under this facility.

As
of December 31, 2005, Midwest Generation had $328.1 million in loans receivable from EMMT. EMMT borrows under its revolving credit agreement with Midwest Generation to
provide credit support for futures and forward contracts. Loans provided under this revolving credit agreement are repaid by

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EMMT
upon the return of the funds under the terms of the related forward contracts. The amount repaid includes interest earned, if any, under margining agreements supporting such contracts.

Midwest
Generation anticipates that sales of its power through EMMT may require additional credit support, depending upon market conditions and the strategies adopted for the sale of
this power. Changes in forward market prices and margining requirements and increases in merchant sales could further increase the need for credit support related to price risk management activities.
Midwest Generation is able to provide collateral to support bilateral contracts for power and fuel to the extent that any such transactions relate to its merchant energy operations. Depending on
market conditions and the volume and duration of forward sales, there is no assurance that Midwest Generation will be able to provide sufficient credit support to EMMT.

Contractual Obligations, Commitments and Contingencies

Contractual Obligations

The following table summarizes Midwest Generation's significant contractual obligations as of December 31, 2005.

Payments Due by Period (in millions)Contractual Obligations

Total

Less than
1 year

1 to 3
years

3 to 5
years

More than
5 yearsLong-term debt(1)

$
2,411.4

$
120.8

$
242.9

$
242.1

$
1,805.6Lease financing


1,851.3


184.9


369.9


354.9


941.6Operating lease obligations


144.3


19.4


33.0


24.5


67.4Purchase obligations:Capital improvements


7.1


7.1








Calumet Energy Team contract


20.5


3.8


7.9


8.4


0.4Fuel supply contracts


494.2


152.9


196.5


125.6


19.2Coal transportation


653.3


219.8


280.5


153.0


Employee benefit plan contribution(2)


7.9


7.9








Total Contractual Obligations

$
5,590.0

$
716.6

$
1,130.7

$
908.5

$
2,834.2


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Lease Financing

In August 2000, Midwest Generation entered into a sale-leaseback transaction with respect to the Powerton-Joliet power facilities to
third-party lessors for an aggregate purchase price of $1.367 billion. Midwest Generation loaned the proceeds from the sale of the facilities to EME. Under the terms of the leases
(33.75 years for Powerton and 30 years for Joliet), Midwest Generation makes semi-annual lease payments on each January 2 and July 2, which began
January 2, 2001. EME guarantees Midwest Generation's payments under the leases. If a lessor intends to sell its interest in the Powerton or Joliet power facility, Midwest Generation has a right
of first refusal to acquire the interest at fair market value. Under the terms of each lease, Midwest Generation may request a lessor, at its option, to refinance the

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lessor
debt, which, if completed, would affect the base lease rent. Midwest Generation can make lease payments from the principal and interest payments it receives from EME under the intercompany
notes as well as Midwest Generation's cash flow from operating activities. However, in certain situations, the Powerton-Joliet lease documentation restricts the ability of Midwest Generation to use
cash flow from its operating activities to make lease payments. Midwest Generation is also required to pay operating expenses and other expenses, including interest and principal on its debt. The gain
on the sale of the power facilities has been deferred and is being amortized over the term of the leases. For more information on Midwest Generation's loans to EME, see "Item 1A. Risk Factors."

In
the event of a default under the leases, each lessor can exercise all its rights under the applicable lease, including repossessing the power plant and seeking monetary damages. Each
lease sets forth a termination value payable upon termination for default and in certain other circumstances, which generally declines over time and in the case of default may be reduced by the
proceeds arising from the sale of the repossessed power plant. A default under the terms of a lease could result in a loss of Midwest Generation's ability to use the power plant subject to that lease,
and would have a material adverse effect on Midwest Generation's results of operations and financial position.

Calumet Energy Team Contract

At December 31, 2005, Midwest Generation was party to a long-term power purchase contract with Calumet Energy Team LLC entered into as part of
the settlement agreement with Commonwealth Edison, which terminated Midwest Generation's obligation to build additional gas-fired generation in the Chicago area. The contract requires
Midwest Generation to pay a monthly capacity payment and gives Midwest Generation an option to purchase energy from Calumet Energy Team at prices based primarily on operations and maintenance and fuel
costs.

Fuel Supply Contracts

At December 31, 2005, Midwest Generation had fuel purchase commitments with various third-party suppliers for the purchase of coal. The remaining
contracts' lengths range from one year to seven years. The minimum commitments are based on the contract provisions, which consist of fixed prices, subject to adjustment clauses.

Coal Transportation Agreements

At December 31, 2005, Midwest Generation had contractual commitments for the transport of coal to its facilities, with remaining contract lengths that
range from two years to six years. The primary contract is with Union Pacific Railroad (and various delivering carriers) which extends through 2011. Midwest Generation commitments under this agreement
are based on actual coal purchases from the Powder River Basin. Accordingly, Midwest Generation's contractual obligations for transportation are based on coal volumes set forth in its fuel supply
contracts.

Commitments

Interconnection Agreement

Midwest Generation has entered into interconnection agreements with Commonwealth Edison to provide interconnection services necessary to connect the Illinois
Plants with its transmission systems. Unless terminated earlier in accordance with their terms, the interconnection agreements will terminate on a date mutually agreed to by both parties. Midwest
Generation is required to compensate Commonwealth Edison for all reasonable costs associated with any modifications, additions or

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replacements
made to the interconnection facilities or transmission systems in connection with any modification, addition or upgrade to the Illinois Plants.

Contingencies

Guarantees and Indemnities

Tax
Indemnity Agreement

In
connection with the sale-leaseback transactions related to the Powerton and Joliet Stations and previously the Collins Station, EME, Midwest Generation and another wholly
owned subsidiary of EME 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 the tax indemnity agreement, including specified defaults under the respective leases. The potential indemnity
obligation under these tax indemnity agreements could be significant. Due to the nature of these obligations, Midwest Generation cannot determine a maximum potential liability which would be triggered
by a valid claim from the lessors. Midwest Generation 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.

Indemnity
Provided as Part of the Acquisition from Commonwealth Edison

In
connection with the acquisition of the Illinois Plants, Midwest Generation 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 take 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, Midwest Generation
has not recorded a liability related to this indemnity.

Midwest
Generation entered into a supplemental agreement with Commonwealth Edison and Exelon Generation Company 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 existing asbestos claims and 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 between 185 and 195 cases for which Midwest Generation was
potentially liable and that had not been settled and dismissed at December 31, 2005. Midwest Generation had recorded a $67.4 million liability at December 31, 2005 related to this
matter.

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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.

Tax Matters

Midwest Generation is, and may in the future be, under examination by tax authorities with respect to positions it takes in connection with the filing of its tax
returns. Matters raised upon tax audit may involve substantial amounts, which, if resolved unfavorably, could possibly be material, though Midwest Generation does not believe such an unfavorable
resolution is likely to occur. In Midwest Generation's opinion, it is unlikely that the resolution of any such tax audit matters will have a material adverse effect upon Midwest Generation's financial
condition or results of operations.

Off-Balance Sheet Transactions

Midwest Generation has off-balance sheet activities related to operating leases in place for equipment, primarily leased barges and railcars that have
terms which range from as short as 2 months to
15 years. See "Contractual Obligations, Commitments and Contingencies" for Midwest Generation's minimum operating lease obligations.

Environmental Matters and Regulations

Introduction

Midwest Generation is subject to environmental regulation by federal, state and local authorities in the United States. Midwest Generation believes that it is in
substantial compliance with environmental regulatory requirements and that maintaining compliance with current requirements will not materially affect its financial position or results of operations.
However, possible future developments, such as the promulgation of more stringent environmental laws and regulations, future proceedings that may be initiated by environmental authorities, and
settlements agreed to by other companies could affect the costs and the manner in which Midwest Generation conducts its business, and may also cause it to make substantial additional capital
expenditures. There is no assurance that Midwest Generation would be able to recover these increased costs from its customers or that Midwest Generation's financial position and results of operations
would not be materially adversely affected as a result.

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 Midwest Generation fails to comply with applicable environmental laws, it may be subject to injunctive relief or penalties and fines
imposed by regulatory authorities.

FederalUnited States of America

Clean Air Act

Clean
Air Interstate Rule

On
May 12, 2005, the Clean Air Interstate Rule (CAIR) was published in the Federal Register. The CAIR requires 28 eastern states and the District of Columbia to address ozone
attainment issues by

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reducing
regional nitrogen oxide (NOx) and sulfur dioxide (SO2) emissions. The CAIR reduces the current Clean Air Act Title IV Phase II SO2 emissions allowance cap for 2010 and 2015 by 50% and 65%,
respectively. The CAIR also reduces regional NOx emissions in 2009 and 2015 by 53% and 61%, respectively, from 2003 levels. The CAIR has been challenged in court by state, environmental and industry
groups, which may result in changes to the substance of the rule and to the timetables for implementation.

Midwest
Generation expects that compliance with the CAIR and the regulations and revised state implementation plans developed as a consequence of the CAIR will result in increased
capital expenditures and operating expenses. Given the uncertainty of the requirements that will need to be implemented and the options available to meet the NOx and SO2 reductions fleetwide, Midwest
Generation at this time cannot accurately estimate the cost to meet these obligations. Midwest Generation's approach to meeting these obligations will consist of a blending of capital expenditure and
emission allowance purchases that will be based on an ongoing assessment of the dynamics of its market conditions.

Mercury
Regulation

The
Clean Air Mercury Rule (CAMR), published in the Federal Register on May 18, 2005, creates a market-based cap-and-trade program to reduce nationwide
utility emissions of mercury in two distinct phases. In the first phase of the program, which will come into effect in 2010, the annual nationwide cap will be 38 tons. Emissions of mercury are to be
reduced primarily by taking advantage of mercury reductions achieved by reducing SO2 and NOx emissions under the CAIR. In the second phase, which is to take effect in 2018, coal-fired
power plants will be subject to a lower annual cap, which will reduce emissions nationwide to 15 tons. States may join the trading program by adopting the CAMR model trading rule in state regulations,
or they may adopt regulations that mirror the necessary components of the model trading rule. States are not required to adopt a cap-and-trade program and may promulgate
alternative regulations, such as command and control regulations, that are equivalent to or more stringent than the CAMR's suggested cap-and-trade program. Any program adopted
by a state must be approved by the United States Environmental Protection Agency (US EPA).

Contemporaneous
with the adoption of the CAMR, the US EPA rescinded its previous finding that mercury emissions from coal-fired power plants had to be regulated as a
hazardous air pollutant pursuant to Section 112 of the federal Clean Air Act, which would have imposed technology-based standards. Litigation has been filed challenging the US EPA's rescission
action and claiming that the agency should have imposed technology-based limitations on mercury emissions instead of adopting a market-based program. Litigation was also filed to challenge the CAMR.
As a result of these challenges, the CAMR rules may change.

If
Illinois implements the CAMR by adopting a cap-and-trade program for achieving reductions in mercury emissions, Midwest Generation may have the option to
purchase mercury emission allowances, to install pollution control equipment, to otherwise alter its operations to reduce mercury emissions, or to implement some combination thereof. Because the
mercury state implementation plans are not due until the fourth quarter of 2006 and such plans may not adopt the CAMR's cap-and-trade program, and because Midwest Generation
cannot predict the outcome of the legal challenge to the CAMR and the US EPA's decision not to regulate mercury emissions pursuant to Section 112 of the federal Clean Air Act, the full impact
of this regulation currently cannot be assessed. Additional capital costs, particularly for the Illinois coal units, related to these regulations could be required in the future and they could be
material. Midwest Generation's approach to meeting these obligations will continue to be based upon an ongoing assessment of applicable legal requirements and market conditions.

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National
Ambient Air Quality Standards

Ambient
air quality standards for ozone and fine particulate matter were adopted by the US EPA in July 1997. These standards were challenged in the courts, and on March 26,
2002, the United States Court of Appeals for the District of Columbia Circuit upheld the US EPA's revised ozone and fine particulate matter ambient air quality standards.

The
US EPA designated non-attainment areas for the 8-hour standard on April 30, 2004, and for the fine particulate standard on January 5, 2005.
Almost all of Midwest Generation's facilities are located in counties that have been identified as being in non-attainment with both standards. States are required to revise their
implementation plans for the ozone and particulate matter standards within three years of the effective date of the respective non-attainment designations. The revised state implementation
plans are likely to require additional emission reductions from facilities that are significant emitters of ozone precursors and particulates. Any additional obligations on Midwest Generation's
facilities to further reduce their emissions of SO2, NOx and fine particulates to address local non-attainment with the 8-hour ozone and fine particulate matter standards will
not be known until the states
revise their implementation plans. Depending upon the final standards that are adopted, Midwest Generation may incur substantial costs or experience other financial impacts resulting from required
capital improvements or operational changes.

On
January 17, 2006, the US EPA proposed revisions to its fine particulate standard. Under the proposal, the annual standard would remain the same but the 24-hour fine
particulate standard would be significantly lowered. The US EPA is under court order to issue a final rule in December 2006. If the US EPA retains its proposed new 24-hour standard
or lowers the annual standard, states may be required to impose further emission reductions beyond what would be necessary to meet the existing standards. Although Midwest Generation may incur
substantial costs or experience financial impacts as a result of any new standards, the uncertainties associated with this ongoing rulemaking at this time render Midwest Generation unable to
accurately estimate the costs to meet any such obligation. Midwest Generation anticipates, however, that any such further emission reduction obligations would not be imposed until 2010 at the
earliest.

Regional
Haze

The
goal of the 1999 regional haze regulations is to restore visibility in mandatory federal Class I areas, such as national parks and wilderness areas, to natural background
conditions in 60 years. Sources such as power plants that are reasonably anticipated to contribute to visibility impairment in Class I areas may be required to install Best Available
Retrofit Technology (BART) or implement other control strategies to meet regional haze control requirements. States are required to revise their state implementation plans to demonstrate reasonable
further progress towards meeting regional haze goals. Emission reductions that are achieved through other ongoing control programs may be sufficient to demonstrate reasonable progress toward the
long-term goal, particularly for the first 10 to 15 year phase of the program. States must develop implementation plans by December 2007. It is possible that sources that are
subject to the CAIR will be able to satisfy their obligations under the regional haze regulations through compliance with the more stringent CAIR. However, until the state implementation plans are
revised, Midwest Generation cannot predict whether it will be required to install BART or implement other control strategies, and cannot identify the financial impacts of any additional control
requirements.

New
Source Review Requirements

Since
1999, the US EPA has pursued a coordinated compliance and enforcement strategy to address Clean Air Act New Source Review (NSR) compliance issues at the nation's
coal-fired power plants. The

48

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NSR
regulations impose certain requirements on facilities, such as electric generating stations, in the event that modifications are made to air emissions sources at a facility. The US EPA's strategy
included both the filing of a number of suits against power plant owners, and the issuance of a number of administrative notices of violation to power plant owners alleging NSR violations. Midwest
Generation has not been named as a defendant in these lawsuits and has not received any administrative Notices of Violation alleging NSR violations at any of its facilities.

In
response to conflicting court decisions concerning the applicable emissions test used to determine whether an operational or physical change at an electric generating station would
require the plant to install additional pollution controls, the US EPA, on October 13, 2005, proposed a change to the NSR program. The proposal put forth several options for a new emissions
test based on the impact of a facility modification on a facility's maximum hourly emissions or its emissions per unit of energy produced. The existing NSR emissions test is based on the impact of a
modification on a generating station's net annual emissions.

In
October 2005, the US EPA announced a revised NSR strategy to take account of recent US EPA rulemakings, such as the CAIR and regional haze rules, affecting
coal-fired power plants. Under the revised strategy, while the US EPA will continue to pursue filed cases and cases in active negotiation, it intends to shift its future enforcement focus
from coal-fired power plants to other sectors where compliance assurance activities have the potential to produce significant environmental benefits.

On
February 21, 2003, Midwest Generation received a request for information under Section 114 regarding past operations, maintenance and physical changes at the Illinois
coal plants from the US EPA. This request was part of the US EPA's industry-wide investigation of compliance by coal-fired plants with the Clean Air Act NSR requirements. On
July 28, 2003, Commonwealth Edison received a substantially similar request for information from the US EPA related to these same plants. Under date of February 1, 2005, the US EPA
submitted a request for additional information to Midwest Generation. Midwest Generation has provided responses to these requests. Other than these requests for information, no NSR enforcement-related
proceedings have been initiated by the US EPA with respect to Midwest Generation's facilities. See also "StateIllinoisAir Quality."

Developments
with respect to changes to the NSR program and NSR enforcement will continue to be monitored by Midwest Generation to assess what implications, if any, they will have on the
operation of its power plants or on Midwest Generation's results of operations or financial condition.

Clean Water ActCooling Water Intake Structures

On July 9, 2004, the US EPA published the final Phase II rule implementing Section 316(b) of the Clean Water Act establishing standards for cooling
water intake structures at existing electrical generating stations that withdraw more than 50 million gallons of water per day and use more than 25% of that water for cooling purposes. The
purpose of the regulation is to reduce substantially the number of aquatic organisms that are pinned against cooling water intake structures or drawn into cooling water systems. Pursuant to the
regulation, a demonstration study must be conducted when applying for a new or renewed National Pollutant Discharge Elimination System (NPDES) wastewater discharge permit. If one can demonstrate that
the costs of meeting the presumptive standards set forth in the regulation are significantly greater than the costs that the US EPA assumed in its rule making or are significantly disproportionate to
the expected environmental benefits, a site-specific analysis may be performed to establish alternative standards. Depending on the findings of the demonstration studies, cooling towers
and/or other mechanical means of reducing impingement/ entrainment may be required. Midwest Generation has begun to collect impingement and entrainment data at its potentially affected Illinois Plants
to begin the process of determining what corrective actions may need to be taken.

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After
the final promulgation of the Phase II cooling water intake structure regulation, legal challenges were filed by environmental groups, the Attorneys General for six states, a
utility trade association and several individual electric power generating companies. These cases have been consolidated and transferred to the United States Court of Appeals for the Second Circuit. A
briefing schedule has been established for the case and a decision is not expected until sometime in 2006. The final requirements of the Phase II rule will not be fully known until these appeals are
resolved and, if necessary, the regulation is revised by the US EPA. Although the Phase II rule could have a material impact on Midwest Generation's operations, Midwest Generation cannot reasonably
determine the financial impact on it at this time because it is in the beginning stages of collecting the data required by the regulation and due to the legal challenges mentioned above which may
affect the obligations imposed by the rule.

Federal Legislative Initiatives

There have been a number of bills introduced in Congress that would amend the Clean Air Act to specifically target emissions of specific pollutants from electric
utility generating stations. These bills would mandate reductions in emissions of NOx, SO2 and mercury. Some bills would also impose limitations on carbon dioxide emissions. The various proposals
differ in many details, including the timing of any required reductions; the extent of required reductions; and the relationship of any new obligations that would be imposed by these bills with
existing legal requirements. There is significant uncertainty as to whether any of the proposed legislative initiatives will pass in its current form or whether any compromise can be reached that
would facilitate passage of legislation. Accordingly, Midwest Generation is not able to evaluate the potential impact of these proposals at this time.

Environmental Remediation

Under various federal, state and local environmental laws and regulations, a current or previous owner or operator of any facility, including an electric
generating facility, may be required to investigate and remediate releases or threatened releases of hazardous or toxic substances or petroleum products located at that facility, and may be held
liable to a governmental entity or to third parties for property damage, personal injury, natural resource damages, and investigation and remediation costs incurred by these parties in connection with
these releases or threatened releases. In addition, persons who arrange for the disposal or treatment of hazardous or toxic substances at a disposal or treatment facility may be liable for the costs
to remediate releases of hazardous substances from such facilities even where the disposal of such wastes was undertaken in compliance with applicable laws. Many of these laws, including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, commonly referred to as CERCLA, as amended by the Superfund Amendments and Reauthorization Act of 1986, impose liability
without regard to whether the owner knew of or caused the presence of the hazardous substances, and courts have interpreted liability under these laws to be strict and joint and several.

With
respect to Midwest Generation's potential liabilities arising under CERCLA or similar laws for the investigation and remediation of contaminated property, Midwest Generation accrues
a liability to the extent the costs are probable and can be reasonably estimated. Midwest Generation has accrued approximately $2 million at December 31, 2005 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

50

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that
requires remediation. Given the prior history of the operations at its facilities, Midwest Generation 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 Midwest Generation's financial position.

Federal,
state and local laws, regulations and ordinances also govern the removal, encapsulation or disturbance of asbestos-containing materials when these materials are in poor
condition or in the event of construction, remodeling, renovation or demolition of a building. Those laws and regulations may impose liability for release of asbestos-containing materials and may
provide for the ability of third parties to seek recovery from owners or operators of these properties for personal injury associated with asbestos-containing materials. In connection with the
ownership and operation of its facilities, Midwest Generation may be liable for these costs. Midwest Generation has agreed to indemnify Commonwealth Edison for specified environmental liabilities. See
"Contractual Obligations, Commitments and ContingenciesContingenciesGuarantees and Indemnities" for a discussion of this indemnity agreement.

StateIllinois

Air Quality

Beginning with the 2003 ozone season (May 1 through September 30), Midwest Generation has been required to comply with an average NOx emission rate
of 0.25 lb NOx/mmBtu of heat input. This limitation is commonly referred to as the East St. Louis State Implementation Plan. This regulation is a State of Illinois requirement. Each of the Illinois
Plants complied with this standard in 2004. Beginning with the 2004 ozone season, the Illinois Plants became subject to the federally mandated "NOx SIP
Call" regulation that provided ozone-season NOx emission allowances to a 19-state region east of the Mississippi. This program provides for NOx allowance trading similar to the SO2 (acid
rain) trading program already in effect. Midwest Generation has qualified for early reduction allowances by reducing NOx emissions at various plants ahead of the imposed deadline. Additionally, the
installation of emission control technology at certain plants has demonstrated over-compliance at those individual plants with the pending NOx emission limitations. Finally, NOx emission
trading will be utilized, as needed, to comply with any shortfall at plants where installation of emission control technology has demonstrated reductions at levels short of the NOx limitations.

During
2004, the Illinois Plants stayed within their NOx allocations by augmenting their allocation with early reduction credits generated within the fleet. In 2005, the Illinois Plants
used banked allowances, along with some purchased allowances, to stay within their NOx allocations. After 2005, Midwest Generation plans to continue to purchase allowances while evaluating the cost
and benefits of various technologies to determine whether any additional pollution controls should be installed at the Illinois Plants.

On
January 5, 2006, Illinois Governor Rod Blagojevich announced that he was directing the Illinois Environmental Protection Agency to draft rules that would impose state limits on
mercury emissions from coal-fired power plants which would be more stringent than the US EPA's CAMR issued in May 2005. Illinois is required to submit a state implementation plan
(SIP) for CAMR to the US EPA by November 17, 2006. The Governor or his spokespersons have said that rules to be submitted to the Illinois Pollution Control Board will require a 90% reduction in
mercury emissions averaged across company-owned Illinois generators and a minimum reduction of 75% for individual generating units by June 30, 2009. A 90% reduction at each generating unit
would be required by 2013. Buying or selling of

51

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emission
allowances under the CAMR federal cap and trade program would be prohibited. The Pollution Control Board must act on proposed rules submitted by the Illinois EPA after evidentiary hearings,
including the presentation and cross-examination of expert testimony. After the Pollution Control Board adopts rules, they must be submitted to the General Assembly's Joint Committee on Administrative
Rules for notice, hearing, and adoption, rejection or modification. Rules adopted through such state proceedings are also subject to court appeal. Midwest Generation is not able at this time to
predict the final form of these rules or provide an estimate of their financial impact.

During
2006, the Illinois EPA is expected to begin the process of developing a SIP to implement the federal CAIR which requires reductions in NOx and SO2. This SIP is to be submitted to
the US EPA by September 11, 2006. The Illinois EPA has also begun to develop SIPs to meet National Ambient Air Quality Standards for 8-hour ozone and fine particulates. These SIPs
will be developed with the intent of bringing non-attainment areas, such as Chicago, into attainment. They are expected to deal with all emission sources, not just power generators, and to
address emissions of NOx, SO2, and Volatile Organic Carbon. These SIPs are to be submitted to the US EPA by June 15, 2007 for 8-hour ozone, and by April 5, 2008 for fine
particulates. Midwest Generation is not able at this time to predict the final form of the SIPs or to estimate their financial impact.

Water Quality

The Illinois EPA is reviewing the water quality standards for the Des Plaines River adjacent to the Joliet Station and immediately downstream of the Will County
Station to determine if the use classification should be upgraded. An upgraded use classification could result in more stringent limits being applied to wastewater discharges to the river from these
plants. If the existing use classification is changed, the limits on the temperature of the discharges from the Joliet and Will County plants may be made more stringent. The Illinois EPA has also
begun a review of the water quality standards for the Chicago River and Chicago Sanitary and Ship Canal which are adjacent to the Fisk and Crawford Stations. Proposed changes to the existing standards
are still being developed. Accordingly, Midwest Generation is not able to estimate the financial impact of potential changes to the water quality standards. However, the cost of additional cooling
water treatment, if required, could be substantial.

Climate Change

The Kyoto Protocol on climate change officially came into effect on February 16, 2005. Under the Kyoto Protocol, the United States would have been
required, by 2008-2012, to reduce its greenhouse gas emissions, such as carbon dioxide, by 7% from 1990 levels. Under the Bush administration, however, the United States has chosen not to
pursue ratification of the Kyoto Protocol. Instead, the Bush administration has proposed several alternatives to mandatory reductions of greenhouse gases.

There
have been petitions from states and other parties to compel the US EPA to regulate greenhouse gases under the Clean Air Act. Also, in 2004, several states and environmental
organizations brought a complaint in federal court in New York, alleging that several electric utility corporations are jointly and severally liable under a theory of public nuisance for damages
caused by their alleged contribution to global warming resulting from carbon dioxide emissions from coal-fired power plants owned and operated by these companies or their subsidiaries.
Midwest Generation was not named as a defendant in the complaint. The case was dismissed and is currently on appeal with the United States Court of Appeals for the Second Circuit.

The
ultimate outcome of the climate change debate could have a significant economic effect on Midwest Generation. Any legal obligation that would require Midwest Generation to reduce
substantially its emissions of carbon dioxide would likely require extensive mitigation efforts and would raise considerable uncertainty about the future viability of fossil fuels, particularly coal,
as an energy source for new and existing electric generating facilities.

52

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MARKET RISK EXPOSURES

Introduction

Midwest Generation sells all its energy into wholesale power markets. Midwest Generation's primary market risk exposures arise from fluctuations in electricity,
capacity and fuel prices, emission allowances, and transmission rights. Additionally, Midwest Generation's financial results can be affected by fluctuations in interest rates. Midwest Generation
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:

PageCommodity Price Risk

53Derivative Financial Instruments

59Credit Risk

59Interest Rate Risk

60


Commodity Price Risk

Overview

Midwest Generation'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 PJM. Among the factors that influence the price of energy, capacity and ancillary
services in PJM are:

A
discussion of commodity price risk for the Illinois Plants is set forth below.

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Introduction

Midwest Generation sells all its energy and capacity into wholesale power markets through EMMT. EMMT enters into forward contracts for Midwest Generation's
electric output in order to provide more predictable earnings and cash flow. When appropriate, EMMT manages the spread between electric prices and fuel prices through the use of forward contracts,
swaps, futures, or options contracts. There is no assurance that contracts to hedge changes in market prices will be effective.

Midwest
Generation's 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 Midwest Generation's risk management policies through EMMT. 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 a 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, Midwest Generation'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 from unit to unit.

EMMT
uses "value at risk" to identify, measure, monitor and control Midwest Generation's overall market risk exposure. The use of value at risk allows management to aggregate overall
commodity risk, compare risk on a consistent basis and identify 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, EMMT 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, Midwest Generation hedges a portion of its merchant portfolio risk through EMMT. To the extent that Midwest Generation 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. Hedge transactions are also entered into as forward sales to utilities and power marketing companies.

The
extent to which Midwest Generation hedges its market price risk depends on several factors. First, Midwest Generation 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, Midwest Generation's ability to
enter into hedging transactions depends upon its and EMMT's credit capacity and upon the forward sales markets having sufficient liquidity to enable Midwest Generation to identify appropriate
counterparties for hedging transactions.

Midwest
Generation is permitted to use its working capital facility and cash on hand to provide credit support for hedging transactions related to the Illinois Plants entered into by
EMMT. Utilization of this credit facility in support of these hedging transactions provides additional liquidity support for

54

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implementation
of Midwest Generation's contracting strategy for the Illinois Plants. See "Credit Risk," below.

Energy Price Risk

All the energy and capacity from the Illinois Plants is sold under terms, including price and quantity, negotiated by EMMT, an EME subsidiary engaged in the power
marketing and trading business, with customers through a combination of bilateral agreements, forward energy sales and spot market sales. As discussed further below, power generated at the Illinois
Plants has generally been sold into the PJM market. Capacity prices for merchant energy sales within PJM are, and are expected in the near term to remain, substantially lower than those Midwest
Generation received under the power purchase agreements with Exelon Generation.

Prior
to May 1, 2004, the primary markets available to Midwest Generation for wholesale sales of electricity from the Illinois Plants were direct "wholesale customers" and broker
arranged "over-the-counter customers." Effective May 1, 2004, the transmission system of Commonwealth Edison was placed under the control of PJM as the Northern Illinois
control area, and on October 1, 2004, the transmission system of AEP was integrated into PJM, linking eastern PJM and the Northern Illinois control areas of the PJM system and allowing the
Illinois Plants to be dispatched into the broader PJM market. Further, on April 1, 2005, MISO commenced operation, linking portions of Illinois, Wisconsin, Indiana, Michigan, and Ohio, as well
as other states in the area, in the MISO, where there is a bilateral market and day-ahead and real-time markets based on locational marginal pricing similar to that of PJM.

Midwest
Generation sells its power into PJM at spot prices based upon locational marginal pricing and is no longer required to arrange and pay separately for transmission when making
sales to wholesale buyers within the PJM system. Hedging transactions related to the generation of the Illinois units are entered into at the Northern Illinois Hub in PJM, the AEP/Dayton Hub in PJM
and, with the advent of MISO, at the Cinergy Hub in MISO. Because of proximity, the Illinois Plants are primarily hedged with transactions at the Northern Illinois Hub, but from time to time may be
hedged in limited amounts at the AEP/Dayton Hub and the Cinergy Hub. These trading hubs have been the most liquid locations for these 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.

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

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The
following table depicts the average historical market prices for energy per megawatt-hour during 2005 and 2004.

2005(1)

2004January

$
38.36

$
27.88
(2)February


34.92


29.98
(2)March


45.75


30.66
(2)April


38.98


27.88
(2)May


33.60


34.05
(1)June


42.45


28.58
(1)July


50.87


30.92
(1)August


60.09


26.31
(1)September


53.30


27.98
(1)October


49.39


30.93
(1)November


44.03


29.15
(1)December


64.99


29.90
(1)Yearly Average

$
46.39

$
29.52


---

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.

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The
following table sets forth the forward month-end market prices for energy per megawatt-hour for the calendar year 2006 and calendar year 2007 "strips," which
are defined as energy purchases for the entire calendar year, as quoted for sales into the Northern Illinois Hub during 2005:

24-Hour Northern Illinois Hub
Forward Energy Prices*2006

2007January 31, 2005

$
34.67

$
33.85February 28, 2005


36.52


35.61March 31, 2005


41.49


40.49April 29, 2005


41.52


39.73May 31, 2005


40.15


39.45June 30, 2005


42.73


42.17July 29, 2005


44.66


43.17August 31, 2005


51.29


46.79September 30, 2005


52.74


47.61October 31, 2005


49.52


43.38November 30, 2005


53.75


47.73December 30, 2005


53.08


46.66


---

The following table summarizes Midwest Generation's hedge position (primarily based on prices at the Northern Illinois Hub) at December 31,
2005:

2006

2007Megawatt hours


15,047,414


11,004,000Average price/MWh(1)

$
44.29

$
48.04


---

Basis Risk

Sales made from the Illinois Plants in the real-time or day-ahead market receive the actual spot prices 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, Midwest Generation 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 known as the Northern Illinois Hub. Midwest Generation's price risk management activities use this settlement point (and, to a lesser extent, other
similar trading hubs) to enter into hedging contracts. Midwest Generation's revenues with respect to such forward contracts include:

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Under
the PJM market design, locational marginal pricing, which establishes hourly 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 by Midwest Generation as "basis risk." During 2005, the prices at the Northern Illinois Hub were
substantially the same as those at the individual busbars of the Illinois Plants.

Coal Price and Transportation Risk

The Illinois Plants use approximately 18 million to 20 million tons of coal annually, primarily obtained from the Southern Powder River Basin of
Wyoming. Coal purchases are made under a variety of supply agreements with terms ranging from three years to eight years. The following table summarizes the percent of expected coal requirements for
the next five years that were under contract at December 31, 2005.

2006

2007

2008

2009

2010Percent of coal requirements under contract

100%

91%

32%

32%

33%


Midwest Generation is subject to price risk for purchases of coal that are not under contract. Prices of Powder River Basin (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, significantly increased in 2005 due to the curtailment of coal shipments during
2005 due to increased PRB coal demand from other regions (east), rail constraints (discussed below), higher oil and natural gas prices and higher prices for SO2 allowances. On December 30,
2005, the Energy Information Administration reported the price of coal to be $18.48 per ton, which compares to 2004 prices of generally below $7 per ton.

During
2005, the rail lines that bring coal from the PRB to the Illinois Plants were damaged from derailments caused by heavy rains. The railroads are in the process of making repairs to
these rail lines. During 2005, Midwest Generation received sufficient quantities to meet generation requirements. Rail line maintenance is expected to continue in 2006. Based on communication with the
transportation provider, Midwest Generation expects to continue receiving a sufficient amount of coal to generate power at historical levels while these repairs are being completed.

58

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Derivative Financial Instruments

The following table summarizes the fair values for outstanding financial instruments used for price risk management activities. The change in fair value of
electricity contracts in 2005 as compared to 2004 is attributable to the increase in average market prices for power as compared to contracted prices at December 31, 2005, which is the
valuation date, causing the fair value of the contracts to become liabilities instead of assets.

December 31, 2005

December 31, 2004(in thousands)Commodity price:Electricity contracts

$
(203,882
)
$
4,150


In assessing the fair value of Midwest Generation's derivative financial instruments, EMMT 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. A 10% change in the market price at December 31, 2005 would increase or decrease the fair value of outstanding derivative
commodity price contracts by $142.3 million. The following table summarizes the maturities and the related fair value, based on actively traded prices, of Midwest Generation's commodity price
risk management assets and liabilities as of December 31, 2005 (in thousands):

Total Fair
Value

Maturity
<1 year

Maturity
1 to 3 years

Maturity
4 to 5 years

Maturity
>5 yearsPrices actively quoted

$
(203,882
)
$
(176,490
)
$
(27,392
)
$


$



Credit Risk

In conducting Midwest Generation's price risk management activities, EMMT 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, Midwest Generation 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
Midwest Generation. Midwest Generation's agreement with EMMT transfers the risk of non-payment of accounts receivable from counterparties to EMMT. Notwithstanding the foregoing, Midwest
Generation will not be in default under the senior secured notes and credit agreement if it fails to enforce payment from EMMT in the case of nonpayment of an account receivable from a counterparty,
so long as the counterparty is rated investment grade.

The
obligations of Midwest Generation under the senior secured notes and credit agreement are secured by, among other things, an account of EMMT in which EMMT will deposit funds received
from third-party counterparties for sales of energy and capacity from the Illinois Plants. See "Results of OperationsRelated Party TransactionsEMMT Agreements."

To
manage credit risk, EMMT 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. EMMT measures, monitors and mitigates credit risk to the extent possible. To mitigate credit risk from counterparties, master netting agreements
are used whenever possible and

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counterparties
may be required to pledge collateral when deemed necessary. EMMT also takes other appropriate steps to limit or lower credit exposure. Processes have also been established to determine
and monitor the creditworthiness of counterparties. EMMT 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 EMMT'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.

In
addition, coal for the Illinois Plants is purchased from suppliers under contracts which may be for multiple years. A number of the coal suppliers to the Illinois Plants do not
currently have an investment grade credit rating and, accordingly, Midwest Generation may have limited recourse to collect damages in the event of default by a supplier. Midwest Generation 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.

Midwest
Generation derived a significant source of its operating revenues from electric power sold into the PJM market by EMMT. Sales into the PJM pool accounted for approximately 75% of
Midwest Generation's consolidated operating revenues for the year ended December 31, 2005. Moody's Investor Service rates PJM's senior unsecured debt Aa3. PJM, an independent system operator
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 is
shared by all members based upon a predetermined formula.

Interest Rate Risk

Interest rate changes affect the cost of capital needed to operate the facilities. Midwest Generation has a $333 million variable rate term loan facility
due in 2011 and a $500 million working capital facility, maturing in 2011, which exposes Midwest Generation to the risk of earnings loss resulting from changes in interest rates. Based on the
amount of variable rate debt outstanding on December 31, 2005, a 100 basis point change in interest rates at December 31, 2005 would increase or decrease Midwest Generation's 2006 annual
income before taxes by approximately $5.0 million.

Midwest
Generation also has $1 billion of 8.75% second priority senior secured notes due 2034. The fair market value of this fixed interest rate obligation is also subject to
interest rate risk. The fair market value of Midwest Generation's total long-term obligations (including current portion) was $1.6 billion at December 31, 2005, compared to
the carrying value of $1.5 billion. A 10% increase in market interest rates at December 31, 2005 would result in a decrease in the fair value of Midwest Generation's total
long-term obligations by approximately $87.7 million. A 10% decrease in market interest rates at December 31, 2005 would result in an increase in the fair value of Midwest
Generation's total long-term obligations by approximately $101 million.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information responding to Item 7A is filed with this report under "Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations."

60

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

|Financial Statements: |                                                                                                             | 
|--------------------- | ----------------------------------------------------------------------------------------------------------- | 
|                      | Report of Independent Registered Public Accounting Firm                                                     | 
|                      | Consolidated Statements of Income (Loss) for the years ended December 31, 2005, 2004 and 2003               | 
|                      | Consolidated Balance Sheets at December 31, 2005 and 2004                                                   | 
|                      | Consolidated Statements of Member's Equity for the years ended December 31, 2005, 2004 and 2003             | 
|                      | Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2005, 2004 and 2003 | 
|                      | Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003                  | 
|                      | Notes to Consolidated Financial Statements                                                                  | 

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.    CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Midwest Generation's management, with the participation of the company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of
Midwest Generation'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, Midwest Generation's disclosure controls and procedures are effective.

Internal Control over Financial Reporting

There were no changes in Midwest Generation'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 fourth fiscal quarter of 2005 that have materially affected, or are reasonably likely to materially affect, Midwest Generation's internal
control over financial reporting.

ITEM 9B.    OTHER INFORMATION

None.

61

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MIDWEST GENERATION, LLC
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Member and Board of Managers of Midwest Generation, LLC

In
our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Midwest Generation, LLC and its
subsidiary at December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005 in conformity with
accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2)
presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial
statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.
We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

As
discussed in Note 3 to the consolidated financial statements, the Company changed the manner in which it accounts for asset retirement costs as of January 1, 2003 and
December 31, 2005.

PricewaterhouseCoopers
LLP
Los Angeles, California
March 6, 2006

62

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MIDWEST GENERATION, LLC
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands)

|                                                               |                                                               | Years Ended December 31, |        
|-------------------------------------------------------------- | ------------------------------------------------------------- | ------------------------ | -------
|
|Operating Revenues                                             |                                                               |                          |        
|                                                               | Energy and capacity revenues from marketing affiliate         |                          | $      
|                                                               | Energy revenues                                               |                          |        
|                                                               | Capacity revenues                                             |                          |        
|                                                               | Other revenues                                                |                          |        
|                                                               | Loss from price risk management                               |                          |        
|                                                               |                                                               |                          |        
|                                                               |                                                               | Total operating revenues |        
|                                                               |                                                               |                          |        
|Operating Expenses                                             |                                                               |                          |        
|                                                               | Fuel                                                          |                          |        
|                                                               | Sale of emission allowances                                   |                          |        
|                                                               | Plant operations                                              |                          |        
|                                                               | Loss on lease termination, asset impairment and other charges |                          |        
|                                                               | Depreciation and amortization                                 |                          |        
|                                                               | Administrative and general                                    |                          |        
|                                                               |                                                               |                          |        
|                                                               |                                                               | Total operating expenses |        
|                                                               |                                                               |                          |        
|                                                               | Operating income (loss)                                       |                          |        
|                                                               |                                                               |                          |        
|Other Income (Expense)                                         |                                                               |                          |        
|                                                               | Interest and other income                                     |                          |        
|                                                               | Gain on disposal of assets                                    |                          |        
|                                                               | Interest expense                                              |                          |        
|                                                               |                                                               |                          |        
|                                                               |                                                               | Total other expense      |        
|                                                               |                                                               |                          |        
|Income (loss) before income taxes                              |                                                               |                          | 499,148
|Provision (benefit) for income taxes                           |                                                               |                          | 196,814
|                                                               |                                                               |                          |        
|Income (Loss) Before Accounting Change                         |                                                               |                          | 302,334
|Cumulative effect of change in accounting, net of tax (Note 3) |                                                               |                          | (1,159 
|                                                               |                                                               |                          |        
|Net Income (Loss)                                              |                                                               | $                        | 301,175
|                                                               |                                                               |                          |        

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

63

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MIDWEST GENERATION, LLC
CONSOLIDATED BALANCE SHEETS
(In thousands)

|                                                  |                                                                                           | December 31,                      |          
|------------------------------------------------- | ----------------------------------------------------------------------------------------- | --------------------------------- | ---------
|
|Assets                                            |                                                                                           |                                   |          
|Current Assets                                    |                                                                                           |                                   |          
|                                                  | Cash and cash equivalents                                                                 |                                   | $        
|                                                  | Short-term investments                                                                    |                                   |          
|                                                  | Accounts receivable                                                                       |                                   |          
|                                                  | Due from affiliates                                                                       |                                   |          
|                                                  | Fuel inventory                                                                            |                                   |          
|                                                  | Spare parts inventory                                                                     |                                   |          
|                                                  | Loans to affiliate for margin deposits                                                    |                                   |          
|                                                  | Interest receivable from affiliate                                                        |                                   |          
|                                                  | Assets under price risk management                                                        |                                   |          
|                                                  | Deferred taxes                                                                            |                                   |          
|                                                  | Other current assets                                                                      |                                   |          
|                                                  |                                                                                           |                                   |          
|                                                  |                                                                                           | Total current assets              |          
|                                                  |                                                                                           |                                   |          
|Property, Plant and Equipment                     |                                                                                           |                                   | 4,198,503
|                                                  | Less accumulated depreciation                                                             |                                   |          
|                                                  |                                                                                           |                                   |          
|                                                  |                                                                                           | Net property, plant and equipment |          
|                                                  |                                                                                           |                                   |          
|Notes receivable from affiliate                   |                                                                                           |                                   | 1,362,017
|Deferred taxes                                    |                                                                                           |                                   | 205,067  
|Long-term assets under price risk management      |                                                                                           |                                   | 737      
|Other assets                                      |                                                                                           |                                   | 46,052   
|                                                  |                                                                                           |                                   |          
|Total Assets                                      |                                                                                           | $                                 | 5,802,277
|                                                  |                                                                                           |                                   |          
|Liabilities and Member's Equity                   |                                                                                           |                                   |          
|Current Liabilities                               |                                                                                           |                                   |          
|                                                  | Accounts payable                                                                          |                                   | $        
|                                                  | Accrued liabilities                                                                       |                                   |          
|                                                  | Due to affiliates                                                                         |                                   |          
|                                                  | Interest payable                                                                          |                                   |          
|                                                  | Liabilities under price risk management                                                   |                                   |          
|                                                  | Current maturities of long-term obligations                                               |                                   |          
|                                                  | Current portion of lease financing                                                        |                                   |          
|                                                  |                                                                                           |                                   |          
|                                                  |                                                                                           | Total current liabilities         |          
|                                                  |                                                                                           |                                   |          
|Lease financing, net of current portion           |                                                                                           |                                   | 1,140,760
|Long-term obligations                             |                                                                                           |                                   | 1,499,546
|Long-term liabilities under price risk management |                                                                                           |                                   | 28,129   
|Benefit plans and other long-term liabilities     |                                                                                           |                                   | 169,756  
|                                                  |                                                                                           |                                   |          
|Total Liabilities                                 |                                                                                           |                                   | 3,284,620
|                                                  |                                                                                           |                                   |          
|Commitments and Contingencies(Notes 11 and 12)    |                                                                                           |                                   |          
|Member's Equity                                   |                                                                                           |                                   |          
|                                                  | Membership interests, no par value; 100 units authorized, issued and outstanding (Note 1) |                                   |          
|                                                  | Additional paid-in capital                                                                |                                   |          
|                                                  | Accumulated deficit                                                                       |                                   |          
|                                                  | Accumulated other comprehensive income (loss)                                             |                                   |          
|                                                  |                                                                                           |                                   |          
|Total Member's Equity                             |                                                                                           |                                   | 2,517,657
|                                                  |                                                                                           |                                   |          
|Total Liabilities and Member's Equity             |                                                                                           | $                                 | 5,802,277
|                                                  |                                                                                           |                                   |          

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

64

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MIDWEST GENERATION, LLC
CONSOLIDATED STATEMENTS OF MEMBER'S EQUITY
(In thousands)

|                             |                                   | Membership
Interests |   | Additional
Paid-In Capital |   | Accumulated
Deficit |           | Accumulated
Other
Comprehensive
Income (Loss) |            | Member's
Equity |  
|---------------------------- | --------------------------------- | -------------------- | - | -------------------------- | - | ------------------- | --------- | --------------------------------------------- | ---------- | --------------- | -
|Balance at December 31, 2002 |                                   | $                    |  |                            | $ | 680,515             |           | $                                             | (222,225   | )               | $
|                             | Contributions                     |                      |   |                           |   |                     | 550,000   |                                               |            |                |  
|                             | Non-cash contribution of services |                      |   |                           |   |                     | 10,618    |                                               |            |                |  
|                             | Net loss                          |                      |   |                           |   |                     |          |                                               |            | (688,741        | )
|                             | Other comprehensive income        |                      |   |                           |   |                     |          |                                               |            |                |  
|                             |                                   |                      |   |                            |   |                     |           |                                               |            |                 |  
|Balance at December 31, 2003 |                                   |                      |  |                            |   | 1,241,133           |           |                                               | (910,966   | )               |  
|                             |                                   |                      |   |                            |   |                     |           |                                               |            |                 |  
|                             | Non-cash equity contribution      |                      |   |                           |   |                     | 2,190,902 |                                               |            |                |  
|                             | Non-cash contribution of services |                      |   |                           |   |                     | 2,453     |                                               |            |                |  
|                             | Net loss                          |                      |   |                           |   |                     |          |                                               |            | (78,615         | )
|                             | Other comprehensive income        |                      |   |                           |   |                     |          |                                               |            |                |  
|                             | Cash distribution to parent       |                      |   |                           |   |                     |          |                                               |            | (87,926         | )
|                             |                                   |                      |   |                            |   |                     |           |                                               |            |                 |  
|Balance at December 31, 2004 |                                   |                      |  |                            |   | 3,434,488           |           |                                               | (1,077,507 | )               |  
|                             |                                   |                      |   |                            |   |                     |           |                                               |            |                 |  
|                             | Equity contribution               |                      |   |                           |   |                     | 300,000   |                                               |            |                |  
|                             | Net income                        |                      |   |                           |   |                     |          |                                               |            | 301,175         |  
|                             | Other comprehensive loss          |                      |   |                           |   |                     |          |                                               |            |                |  
|                             | Cash distribution to parent       |                      |   |                           |   |                     | (330,209  | )                                             |            |                |  
|                             |                                   |                      |   |                            |   |                     |           |                                               |            |                 |  
|Balance at December 31, 2005 |                                   | $                    |  |                            | $ | 3,404,279           |           | $                                             | (776,332   | )               | $
|                             |                                   |                      |   |                            |   |                     |           |                                               |            |                 |  

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

65

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MIDWEST GENERATION, LLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)

|                                               |                                                                         | Years Ended December 31,                                                                                                                                                 |         
|---------------------------------------------- | ----------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------
|
|Net Income (Loss)                              |                                                                         | $                                                                                                                                                                        | 301,175 
|Other comprehensive income (loss), net of tax: |                                                                         |                                                                                                                                                                          |         
|                                               | Unrealized gains (losses) on derivatives qualified as cash flow hedges: |                                                                                                                                                                          |         
|                                               |                                                                         | Other unrealized holding losses arising during period, net of income tax benefit of $17,051, $21,653 and $6,219 for 2005, 2004 and 2003, respectively                    |         
|                                               |                                                                         | Reclassification adjustments included in net income (loss), net of income tax expense (benefit) of $56,907, $(23,915) and $(8,073) for 2005, 2004 and 2003, respectively |         
|                                               |                                                                         |                                                                                                                                                                          |         
|Other comprehensive income (loss)              |                                                                         |                                                                                                                                                                          | (115,731
|                                               |                                                                         |                                                                                                                                                                          |         
|Comprehensive Income (Loss)                    |                                                                         | $                                                                                                                                                                        | 185,444 
|                                               |                                                                         |                                                                                                                                                                          |         

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

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MIDWEST GENERATION, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

|                                                     |                                                                                      | Years Ended December 31,                                      |        
|---------------------------------------------------- | ------------------------------------------------------------------------------------ | ------------------------------------------------------------- | -------
|
|Cash Flows From Operating Activities                 |                                                                                      |                                                               |        
|                                                     | Income (loss) after accounting change, net                                           |                                                               | $      
|                                                     | Adjustments to reconcile income (loss) to net cash provided by operating activities: |                                                               |        
|                                                     |                                                                                      | Depreciation and amortization                                 |        
|                                                     |                                                                                      | Non-cash contribution of services                             |        
|                                                     |                                                                                      | (Gain) loss on disposal of assets                             |        
|                                                     |                                                                                      | Gain on sale of emission allowances                           |        
|                                                     |                                                                                      | Loss on lease termination, asset impairment and other charges |        
|                                                     |                                                                                      | Deferred taxes                                                |        
|                                                     |                                                                                      | Cumulative effect of change in accounting, net of tax         |        
|                                                     | Decrease in accounts receivable                                                      |                                                               |        
|                                                     | Increase in due to/from affiliates                                                   |                                                               |        
|                                                     | Decrease (increase) in inventory                                                     |                                                               |        
|                                                     | Increase in loans to affiliate for margin deposits                                   |                                                               |        
|                                                     | Decrease in interest receivable from affiliate                                       |                                                               |        
|                                                     | Decrease (increase) in other current assets                                          |                                                               |        
|                                                     | Decrease in accounts payable                                                         |                                                               |        
|                                                     | Increase (decrease) in accrued liabilities                                           |                                                               |        
|                                                     | Increase (decrease) in interest payable                                              |                                                               |        
|                                                     | Increase (decrease) in other liabilities                                             |                                                               |        
|                                                     | Increase in net liabilities under price risk management                              |                                                               |        
|                                                     |                                                                                      |                                                               |        
|                                                     |                                                                                      | Net cash provided by operating activities                     |        
|                                                     |                                                                                      |                                                               |        
|Cash Flows From Financing Activities                 |                                                                                      |                                                               |        
|                                                     | Borrowings from subordinated long-term debt with affiliate                           |                                                               |        
|                                                     | Repayments of subordinated long-term debt with affiliate                             |                                                               |        
|                                                     | Borrowings from credit revolver                                                      |                                                               |        
|                                                     | Repayments of credit revolver                                                        |                                                               |        
|                                                     | Issuance of long-term debt                                                           |                                                               |        
|                                                     | Repayment of long-term debt                                                          |                                                               |        
|                                                     | Capital contributions from parent                                                    |                                                               |        
|                                                     | Cash distribution to parent                                                          |                                                               |        
|                                                     | Repayment of capital lease obligation                                                |                                                               |        
|                                                     | Financing costs                                                                      |                                                               |        
|                                                     |                                                                                      |                                                               |        
|                                                     |                                                                                      | Net cash used in financing activities                         |        
|                                                     |                                                                                      |                                                               |        
|Cash Flows From Investing Activities                 |                                                                                      |                                                               |        
|                                                     | Capital expenditures                                                                 |                                                               |        
|                                                     | Proceeds from sale of assets                                                         |                                                               |        
|                                                     | Proceeds from sale of emission allowances                                            |                                                               |        
|                                                     | Decrease (increase) in restricted cash                                               |                                                               |        
|                                                     | Sale of short-term investments                                                       |                                                               |        
|                                                     | Purchase of short-term investments                                                   |                                                               |        
|                                                     | Loan to affiliates                                                                   |                                                               |        
|                                                     | Repayment of loan to affiliates                                                      |                                                               |        
|                                                     |                                                                                      |                                                               |        
|                                                     |                                                                                      | Net cash provided by (used in) investing activities           |        
|                                                     |                                                                                      |                                                               |        
|Net increase (decrease) in cash and cash equivalents |                                                                                      |                                                               | (32,036
|Cash and cash equivalents at beginning of period     |                                                                                      |                                                               | 156,154
|                                                     |                                                                                      |                                                               |        
|Cash and cash equivalents at end of period           |                                                                                      | $                                                             | 124,118
|                                                     |                                                                                      |                                                               |        

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

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MIDWEST GENERATION, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. General

Midwest Generation, LLC, which is referred to as Midwest Generation, is a wholly owned subsidiary of Edison Mission Midwest Holdings Co., which is an indirect
wholly owned subsidiary of EME. EME is a wholly owned subsidiary of Mission Energy Holding Company and is an indirect wholly owned subsidiary of Edison International. Midwest Generation is a Delaware
limited liability company formed on July 12, 1999 by the issuance of 100% of its membership interests to Edison Mission Midwest Holdings Co. for one hundred dollars. No additional interests
have been issued. Subsequent capital contributions received from Edison Mission Midwest Holdings Co. have been recorded as additional paid-in capital. The amount outstanding for the
membership interests is not reflected on the face of the Balance Sheet due to rounding to the nearest thousand. Midwest Generation was formed for the purpose of obtaining financing and acquiring,
owning and operating multiple fossil-fuel electric generating units located within the state of Illinois, which are referred to as the Illinois Plants, for the purpose of producing
electric energy.

Midwest
Finance Corp., formed as a Delaware corporation on April 22, 2004, is Midwest Generation's wholly owned subsidiary. Therefore, Midwest Generation now reports on a
consolidated basis. Midwest Finance has no material assets, operations or revenues. Midwest Finance was formed in April 2004 solely to serve as a co-issuer of Midwest Generation's
second priority senior secured notes in order to facilitate the offering of these notes. For further discussion, see Note 7Long Term Debt.

On
December 15, 1999, Midwest Generation completed its acquisition of 100% of the ownership interests in the Illinois Plants and assumed specified liabilities from Commonwealth
Edison. The accompanying consolidated financial statements reflect the operations of the Illinois Plants commencing from the date of acquisition. The acquisition has been accounted for utilizing the
purchase method. The purchase price was allocated to the assets acquired and liabilities assumed based upon their respective fair market
values. The acquisition was financed through a capital contribution by Edison Mission Midwest Holdings of approximately $650 million and subordinated debt from another subsidiary of Edison
Mission Midwest Holdings of approximately $3.4 billion.

Concurrent
with the acquisition of the Illinois Plants, Midwest Generation assigned its right to purchase the Collins Station, a 2,698 MW gas and oil-fired generating station
located in Illinois, to four third-party entities. After this assignment, and the purchase of the facility by the third parties, an affiliate of Midwest Generation leased and Midwest Generation
subleased the Collins Station. Each of the leases and subleases had an initial term of 33.75 years. In April 2004, Midwest Generation terminated the Collins Station lease through a
negotiated transaction with the lease equity investor and received title to the Collins Station as part of the transaction. On September 30, 2004, Midwest Generation permanently ceased
operations at the Collins Station and decommissioned the plant by December 31, 2004. For further discussion, see Note 4Loss on Lease Termination, Asset Impairment and Other
Charges.

As
of December 31, 2005, Midwest Generation owned or leased 5,876 megawatts (MW) of operating power plants consisting of the following:

68

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In
connection with the acquisition of the Illinois Plants, Midwest Generation entered into three separate five-year power purchase agreements for the coal-fired
stations, the Collins Station and the peaker stations with Commonwealth Edison, which were subsequently assigned to its affiliate, Exelon Generation. The Collins Station power purchase agreement was
terminated on September 30, 2004 and the other power purchase agreements expired on December 31, 2004. For the year ended December 31, 2003, Exelon Generation accounted for
approximately 67% of Midwest Generation's consolidated operating revenue, 65% of which came from the power purchase agreements. For the year ended December 31, 2004, Exelon Generation accounted
for approximately 54% of Midwest Generation's operating revenue, 52% of which came from the power purchase agreements. As each of the power purchase agreements has expired, Midwest Generation now
sells all its energy and capacity into the wholesale power markets.

Midwest
Generation has entered into a contract with Edison Mission Marketing & Trading, Inc. (EMMT), a marketing affiliate, to sell energy and capacity into the wholesale
market, to engage in hedging activities and to provide scheduling and other services. In April 2004, Midwest Generation entered into a revolving credit agreement with EMMT in order to make
revolving loans to, or have letters of credit issued on behalf of, EMMT, in order to provide credit support for forward contracts. EMMT also purchases natural gas and has the ability to enter into
fuel hedging arrangements on Midwest Generation's behalf. Midwest Generation has also entered into an agreement with another affiliate, Edison Mission Energy Services, Inc., to provide fuel and
transportation services related to coal and fuel oil.

Note 2. Summary of Significant Accounting Policies

Reclassifications

Certain prior year reclassifications have been made to conform to the current year financial statement presentation.

Management's Use of Estimates in Financial Statements

The preparation of financial statements in conformity with generally accepted accounting principles requires Midwest Generation to make estimates and assumptions
that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Cash Equivalents

Cash equivalents include time deposits and other investments totaling $124 million and $154 million at December 31, 2005 and 2004,
respectively, with maturities of three months or less.

Short-term Investments

Short-term investments consist of marketable securities that are categorized as available-for-sale under Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." At December 31, 2004, the fair value of short-term investments was
approximately $20 million, and consisted of auction rate securities rated AAA or Aaa by S&P or Moody's, respectively, with interest rate reset dates of less than thirty days. Midwest Generation
sold all $20 million of its investment in auction rate securities and had no purchases in 2005. At December 31, 2005, Midwest Generation had no short-term investments.

69

---



Inventory

Inventory consists of spare parts, natural gas, coal and fuel oil and is stated at the lower of weighted average cost or market.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation and amortization are computed by using the straight-line method over the following
estimated useful lives:

Power plant facilities

3  34.5 yearsEmission allowances

25  34.5 yearsEquipment, furniture and fixtures

3  7 yearsPlant and equipment under lease financing

30  33.75 years


As part of the acquisition of the Illinois Plants, Midwest Generation acquired emission allowances under the United States Environmental
Protection Agency's Acid Rain Program. Although the emission allowances granted under this program are freely transferable, Midwest Generation intends to use substantially all the emission allowances
in the normal course of its business to generate electricity. Accordingly, Midwest Generation has classified emission allowances expected to be used to generate power as part of property, plant and
equipment. Acquired emission allowances are amortized over the estimated lives of the Illinois Plants on a straight-line basis.

Impairment of Long-Lived Assets

Midwest Generation periodically evaluates the potential impairment of its long-lived assets based on a review of estimated future cash flows expected
to be generated. If the carrying amount of the asset exceeds the amount of the expected future cash flows, undiscounted and without interest charges, then an impairment loss for its
long-lived assets is recognized in accordance with Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets."

Repairs and Maintenance

Certain major pieces of Midwest Generation's equipment require repairs and maintenance on a periodic basis. These costs, including major maintenance costs, are
expensed as incurred.

Revenue Recognition

Midwest Generation records revenue and related costs as electricity is generated or services are provided unless Midwest Generation is subject to Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS No. 133) and does not qualify for the normal sales and purchases exception.
Midwest Generation enters into power and fuel hedging and optimization transactions under a contract with EMMT. These transactions are executed primarily through the use of physical forward commodity
purchases and sales and financial commodity swaps and options. With respect to its physical forward contracts, Midwest Generation generally takes title to the commodities, and assumes the risks and
rewards of ownership. Therefore, Midwest Generation records settlement of non-trading physical forward contracts on a gross basis. Financial swap and option transactions are settled net
and, accordingly, Midwest Generation does not take title to the underlying commodity. Therefore, gains and losses from settlement of financial swaps and options are recorded net. Managed risks
typically include commodity price risk associated with fuel purchases and power sales.

70

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Deferred Financing Costs

Bank, legal and other direct costs incurred in connection with obtaining financing are deferred and amortized as interest expense on a basis which approximates
the effective interest rate method over the term of the related debt. Accumulated amortization of these costs amounted to $7.6 million in 2005 and $2.8 million in 2004.

Derivative Instruments

SFAS No. 133 as amended and interpreted by other related accounting literature, establishes accounting and reporting standards for derivative instruments
(including certain derivative instruments embedded in other contracts). SFAS No. 133 requires companies to record derivatives on their balance sheets as either assets or liabilities measured at
their fair value unless exempted from derivative treatment as a normal sale and purchase. The coal contracts either do not qualify as derivatives under SFAS No. 133 or meet the normal sales and
purchases exception. All changes in the fair value of derivatives are recognized currently in earnings unless specific hedge criteria are met, which requires that a company must formally document,
designate, and assess the effectiveness of transactions that receive hedge accounting.

SFAS
No. 133 sets forth the accounting requirements for cash flow hedges. SFAS No. 133 provides that the effective portion of the gain or loss on a derivative instrument
designated and qualifying as a cash flow hedging instrument be reported as a component of other comprehensive income and be reclassified into earnings in the same period during which the hedged
forecasted transaction affects earnings. The remaining gain or loss on the derivative instrument, if any, must be recognized currently in earnings.

Income Taxes

Midwest Generation is included in the consolidated federal and state income tax returns of Edison International and is party to a tax allocation agreement with
its parent Edison Mission Midwest Holdings. As long as Edison International continues to own, directly or indirectly, at least 80% of the voting power of the stock of EME and its existing subsidiaries
and at least 80% of the value of such stock, Midwest Generation will be included in the consolidated federal and state income tax returns of Edison International. In accordance with the agreement and
the tax-allocation procedures that have been in effect since Midwest Generation's formation, its current tax liability or benefit is generally determined on a separate return basis, except
for calculating consolidated state income taxes, for which Midwest Generation uses the long-term state tax apportionment factors of the Edison International group. Also, while Midwest
Generation is generally subject to separate return limitations for net losses, under the tax-allocation agreement it is permitted to transfer to Edison Mission Midwest Holdings, or its
subsidiaries, net operating loss benefits which would not yet be realized in a separate return in exchange for a reduction in Midwest Generation's intercompany account balances (including subordinated
loans).

The
amount included in due from affiliates on the balance sheet associated with this tax-allocation agreement totaled $13.0 million at December 31, 2005.

Midwest
Generation 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.

71

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New Accounting Pronouncements

Statement of Financial Accounting Standards No. 151

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs." SFAS No. 151 requires that abnormal amounts of idle facility expense,
freight, handling costs and spoilage be recognized as current-period charges. Further, SFAS No. 151 requires the allocation of fixed production overheads to inventory based on the normal
capacity of the production facilities. Unallocated overheads must be recognized as an expense in the period in which they are incurred. SFAS No. 151 is effective for inventory costs incurred
beginning in the first quarter of 2006. Midwest Generation does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

Note 3. Asset Retirement Obligations

Effective January 1, 2003, Midwest Generation adopted Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations." SFAS No. 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially
recorded, the entity capitalizes the cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is increased to its present value each period, and the
capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss
upon settlement. The adoption of SFAS No. 143 did not have a material impact on Midwest Generation's financial statements ($74,000, after tax, decrease to net income as the cumulative effect of
adoption of SFAS No. 143).

In
March 2005, the FASB issued FIN 47, Accounting for Conditional Asset Retirement Obligations (AROs), an interpretation of SFAS 143. This interpretation clarifies that an
entity is required to recognize a liability for the fair value of a conditional ARO if the fair value can be reasonably estimated, even though uncertainty exists about the timing and/or method of
settlement. This interpretation became effective as of December 31, 2005 for Midwest Generation. Midwest Generation identified conditional AROs related to asbestos removal and disposal costs at
its owned buildings and power plant facilities and at retired structures leased at the Powerton Station. Midwest Generation recorded a $1.2 million, after tax, charge as a cumulative effect
adjustment for asbestos removal and disposal activities associated with retired Powerton structures that are currently scheduled for demolition in 2007. Midwest Generation has not recorded a liability
related to the owned structures because it cannot reasonably estimate fair value of the obligation at this time. The range of time over which Midwest Generation may settle this obligation in the
future (demolition or other method) is sufficiently large to not allow for the use of expected present value techniques.

Midwest
Generation recorded a liability representing expected future costs associated with site reclamation, facilities dismantlement and removal of environmental hazards as follows:

2005

2004

2003(in thousands)Beginning balance

$
291

$
265

$
241Cumulative effect of accounting change


1,900





Accretion expense


29


26


24Ending balance

$
2,220

$
291

$
265


72

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The pro forma net income effect of adopting FIN 47 is not shown due to its immaterial impact on Midwest Generation's results of operations. The
pro forma liability for conditional AROs is not shown due to the immaterial impact on Midwest Generation's consolidated balance sheet.

Note 4. Loss on Lease Termination, Asset Impairment and Other Charges

During 2004, Midwest Generation recorded loss on lease termination, asset impairment and other charges of $104.7 million. On April 27, 2004, Midwest
Generation terminated the Collins Station lease through a negotiated transaction with the lease equity investor. Midwest Generation made a lease termination payment of approximately
$960 million. This amount represented the $774 million of lease debt outstanding, plus accrued interest, and the amount owed to the lease equity investor for early termination of the
lease. Midwest Generation received title to the Collins Station as part of the transaction. Midwest
Generation recorded a pre-tax loss of approximately $65.5 million (approximately $40.2 million after tax) due to termination of the lease and the planned decommissioning of
the asset. Included in the pre-tax loss is a $2.7 million inventory reserve for excess spare parts at the Collins Station and $1.9 million pre-tax loss for fuel
oil inventory.

Following
the termination of the Collins Station lease, Midwest Generation announced plans on May 28, 2004 to permanently cease operations at the Collins Station by
December 31, 2004 and decommission the plant. By the fourth quarter of 2004, the Collins Station was decommissioned and all units were permanently retired from service, disconnected from the
grid and rendered inoperable with all operating permits surrendered. In September 2004, Midwest Generation recorded a pre-tax impairment charge of $10.3 million resulting
from the termination of the power purchase agreement effective September 30, 2004 for the two units at the Collins Station that remained under contract. In addition, Midwest Generation
recognized a $4.5 million pre-tax charge for exit costs related to reducing the workforce in Illinois during the fourth quarter of 2004.

In
September 2004, management completed an analysis of future competitiveness in the expanded PJM Interconnection, LLC (PJM) marketplace of its eight remaining small peaking
units. Based on this analysis, management decided to decommission six of the eight small peaking units. As a result of the decision to decommission the units, projected future cash flows associated
with the peaking units were less than the book value of the units resulting in an impairment under Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or the
Disposal of Long-Lived Assets." During the third quarter of 2004, Midwest Generation recorded a pre-tax impairment charge of $28.8 million (approximately
$17.7 million after tax).

During
the second quarter of 2003, Midwest Generation recorded an asset impairment charge of $1.025 billion ($625 million after tax) that resulted from a revised
long-term outlook for capacity revenues from the Collins Station and eight small peaking plants. The lower capacity revenue outlook was the result of a number of factors, including higher
long-term natural gas prices and the current generation overcapacity in the MAIN region market. The book value of capitalized assets related to the Collins Station was written down from
$858 million to an estimated fair market value of $78 million, and the book value of the eight small peaking plants was written down from $286 million to an estimated fair market
value of $41 million. The estimated fair value was determined based on discounting estimated future pretax cash flows using a 17.5% discount rate.

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Note 5. Accumulated Other Comprehensive Income (Loss)

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

Unrealized Gains (Losses)
on Cash
Flow Hedges

Accumulated Other
Comprehensive
Income (Loss)(in thousands)Balance at December 31, 2003

$
1,906

$
1,906Change for 2004


3,535


3,535Balance at December 31, 2004


5,441


5,441Change for 2005


(115,731
)

(115,731
)Balance at December 31, 2005

$
(110,290
)
$
(110,290
)


Unrealized losses on cash flow hedges, net of tax, at December 31, 2005, include unrealized losses on commodity hedges primarily related to
futures and forward energy sales contracts that qualify for hedge accounting. These losses arise because current forecasts of future electricity prices are greater than Midwest Generation's contract
prices. The increase in the unrealized losses during 2005 resulted from a combination of new hedges for 2006 and 2007 and an increase in market prices for power driven largely by higher natural gas
and oil prices.

As
Midwest Generation's hedged positions are realized, $93.4 million, after tax, of the net unrealized losses on cash flow hedges at December 31, 2005 are expected to be
reclassified into earnings during the next twelve months. Management expects that reclassification of net unrealized losses will offset energy revenue recognized at market prices. Actual amounts
ultimately reclassified to earnings over the next twelve 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, 2007.

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. Midwest Generation recorded net gains (losses) of $(2.5) million, $0.5 million and $(0.4) million during the years ended December 31,
2005, 2004 and 2003, respectively, representing the amount of cash flow hedges' ineffectiveness, reflected in income (loss) from price risk management in the consolidated income statements.

74

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Note 6. Property, Plant and Equipment

At December 31, 2005 and 2004, property, plant and equipment consisted of the following:

2005

2004(in thousands)Land

$
33,209

$
33,209Power plant facilities


1,929,889


1,942,636Emission allowances


834,203


834,203Construction in progress


25,118


29,176Equipment, furniture and fixtures


10,410


10,794Plant and equipment under lease financing


1,365,674


1,366,4464,198,503


4,216,464Less accumulated depreciation


851,917


747,952Property, plant and equipment, net

$
3,346,586

$
3,468,512


In connection with Midwest Generation's financing activities, Midwest Generation has given first and second priority security interests in
substantially all the coal-fired generating plants owned by Midwest Generation and the assets relating to those plants, the receivables of EMMT directly related to Midwest Generation's
hedge activities, and the pledge of the intercompany notes from EME (approximately $1.4 billion at December 31, 2005). The amount of assets pledged or mortgaged totals approximately
$2.9 billion at December 31, 2005. In addition to these assets, Midwest Generation's membership interests and the capital stock of Edison Mission Midwest Holdings were pledged. Emission
allowances have not been pledged.

Property,
plant and equipment includes assets which are capitalized under lease financing. Midwest Generation recorded amortization expense related to the leased facilities of
$42.6 million, $43.0 million and $55.8 million for 2005, 2004 and 2003, respectively. Accumulated amortization related to the leased facilities was $228.0 million,
$185.6 million and $147.6 million at December 31, 2005, 2004 and 2003, respectively.

Note 7. Long-Term Debt

On April 27, 2004, Midwest Generation completed a private offering of $1 billion aggregate principal amount of 8.75% second priority senior secured
notes due 2034. The notes were co-issued by a newly formed wholly owned subsidiary, Midwest Finance Corp. Holders of the notes may require Midwest Generation to repurchase, or Midwest
Generation may elect to repay, the notes on May 1, 2014 and on each one-year anniversary thereafter at 100% of their principal amount, plus accrued and unpaid interest. At
December 31, 2005 and 2004, $1 billion remained outstanding. Concurrent with the issuance of the notes, Midwest Generation entered into a term loan and working capital facility, which
terms have been amended as discussed below.

On
December 15, 2005, Midwest Generation completed a refinancing of indebtedness. The refinancing was effected through the amendment and restatement of Midwest Generation's
existing credit facility previously amended and restated on April 18, 2005. The credit facility, as previously amended and restated, provided for approximately $343 million of first
priority secured institutional term loans due in 2011 and $500 million of first priority secured revolving credit, working capital facilities, $200 million due in 2009 and
$300 million due in 2011, with a lender option to require prepayment in 2010.

75

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The
refinancing consisted of, among other things, a reduction in the interest rate applicable to the term loan and the working capital facilities, and a modification of financial
covenants. After giving effect to the refinancing, all the facilities carry a lower interest rate of LIBOR + 1.75% (5.913% at December 31, 2005). The maturity date of the repriced
term loan remains 2011. The previously existing working capital facilities were combined into one $500 million facility, maturing in 2011, with a lender option to require prepayment in 2010.
Also, as part of the refinancing, Midwest Generation's financial covenants were modified, with its consolidated interest coverage ratio for the immediately preceding four consecutive fiscal quarters
required to be at least 1.40 to 1 (increased from 1.25 to 1), and its secured leverage ratio for the 12-month period ended on the last day of the immediately preceding fiscal quarter
required to be no greater than 7.25 to 1 (reduced from 8.75 to 1).

Midwest
Generation is permitted to use its working capital facility and cash on hand to provide credit support for forward contracts with third-party counterparties entered into by EMMT
for capacity and energy generated by Midwest Generation. Utilization of this credit facility in support of such forward contracts is expected to provide additional liquidity support for implementation
of Midwest Generation's contracting strategy for the Illinois Plants.

As
of December 31, 2005, Midwest Generation had $333 million outstanding under its term loan and a $500 million working capital facility available for working
capital requirements, including credit support for hedging activities. As of December 31, 2005, approximately $175 million was utilized under the working capital facility.

The
term loan and working capital facility share a first priority lien and the senior secured notes have a second priority lien in a collateral package which consists of, among other
things, substantially all the coal-fired generating plants owned by Midwest Generation and the assets relating to those plants, as well as the equity interests of Midwest Generation and
its parent company, the intercompany notes entered into by EME and Midwest Generation in connection with the Powerton-Joliet sale-leaseback transaction, and the receivables of EMMT
directly related to Midwest Generation's hedge activities.

Annual Maturities on Long-Term Debt

Annual maturities on long-term debt at December 31, 2005 for the next five years, 2006 through 2010, are $3.5 million each year.

Midwest Generation Credit Agreement and Indenture Covenants

Midwest Generation is bound by the covenants in its credit agreement and indenture as well as certain covenants under the Powerton-Joliet lease documents with
respect to Midwest Generation making payments under the leases. These covenants include restrictions on the ability to, among other things, incur debt, create liens on its property, merge or
consolidate, sell assets, make investments, engage in transactions with affiliates, make distributions, make capital expenditures, enter into agreements restricting its ability to make distributions,
engage in other lines of business or engage in transactions for any speculative purpose. In addition, the credit agreement contains financial covenants binding on Midwest Generation.

76

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Covenants in Credit Agreement

In order for Midwest Generation to make a distribution, it must be in compliance with covenants specified under its credit agreement. Compliance with the
covenants in its credit agreement includes maintaining the following two financial performance requirements:

In
addition, Midwest Generation's distributions are limited in amount. Under the terms of Midwest Generation's credit agreement, Midwest Generation is permitted to distribute 75% of its
excess cash flow (as defined in the credit agreement). In addition, if equity is contributed to Midwest Generation, Midwest Generation is permitted to distribute 100% of excess cash flow until the
aggregate portion of distributions that Midwest Generation attributed to the equity contribution equals the amount of the equity contribution. Because EME made a $300 million equity
contribution to Midwest Generation on April 19, 2005, Midwest Generation is permitted to distribute 100% of excess cash flow until the aggregate portion of such distributions attributed to that
equity contribution equals $300 million. After taking into account Midwest Generation's most recent distribution in January 2006, $177 million of the equity contribution is still
available for this purpose. To the extent Midwest Generation makes a distribution which is not fully attributed to an equity contribution, Midwest Generation is required to make concurrently with such
distribution an offer to repay debt in an amount equal to the excess, if any, of one-third of such distribution over the amount attributed to the equity contribution.

Covenants in Indenture

Midwest Generation's indenture contains restrictions on its ability to make a distribution substantially similar to those in the credit agreement. Failure to
achieve the conditions required for distributions will not result in a default under the indenture, nor does the indenture contain any other financial performance requirements.

Loan Agreement with EMMT

Midwest Generation entered into a revolving credit agreement with EMMT, dated as of April 27, 2004, pursuant to which Midwest Generation will, from time to
time, make revolving loans to, and have letters of credit issued on behalf of, EMMT. The loans and letters of credit provide credit support for forward contracts entered into by EMMT related to the
Illinois Plants. As of December 31, 2005, Midwest Generation has provided EMMT $328.1 million, which EMMT has used to provide credit support for forward contracts. Loans provided under
this revolving credit agreement are repaid by EMMT upon the return of the funds under the terms of the related forward contract. The amount repaid

77

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includes
interest earned, if any, under margining agreements supporting such contracts. The maximum amount of available credit under the agreement is $500 million.

Restricted Cash

Several cash balances are restricted primarily to provide collateral for trading activities and fuel suppliers. The total restricted cash included in Midwest
Generation's consolidated balance sheet was $6.3 million at December 31, 2005 and $14.3 million at December 31, 2004. Included in restricted cash are collateral reserves of
$6.3 million and $14.3 million at December 31, 2005 and 2004, respectively.

Fair Values of Non-Derivative Financial Instruments

The carrying amount of cash and cash equivalents, accounts receivables and payables contained in Midwest Generation's consolidated balance sheet approximates fair
value. The following table summarizes the carrying amounts and fair values for outstanding non-derivative financial instruments:

December 31, 2005

December 31, 2004Carrying
Amount

Fair Value

Carrying
Amount

Fair Value(in thousands)InstrumentsNon-derivatives:Long-term obligations

$
1,502,996

$
1,629,984

$
1,667,518

$
1,824,759


In assessing the fair value of Midwest Generation's financial instruments, Midwest Generation uses a variety of methods and assumptions that are
based on market conditions and risks existing at each balance sheet date. Quoted market prices for the same or similar instruments are used for long-term obligations.

Note 8. Price Risk Management Activities

Commodity Price Risk Management

Midwest Generation's risk management policy allows for the use of derivative financial instruments through EMMT to limit financial exposure to electricity,
capacity, fuel prices, emission allowances and transmission rights for non-trading purposes. Use of these instruments exposes Midwest Generation to commodity price risk, which represent
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
Midwest Generation's risk management policies through EMMT. 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 a risk management committee. Despite this, there can be no assurance that all risks have been accurately identified, measured and/or mitigated. EMMT uses "value at
risk" to identify, measure, monitor and control Midwest Generation's overall market risk exposure. The use of value at risk allows management to aggregate overall commodity risk, compare risk on a
consistent basis and identify 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, EMMT 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.

78

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The
following table summarizes the carrying amounts and fair values for outstanding financial instruments used for price risk management activities. The change in fair value of
electricity contracts in 2005 as compared to 2004 is attributable to the increase in average market prices for power as compared to contracted prices at December 31, 2005, which is the
valuation date, causing the fair value of the contracts to become liabilities instead of assets.

December 31, 2005

December 31, 2004Carrying
Amount

Fair Value

Carrying
Amount

Fair Value(in thousands)Commodity price:Electricity contracts

$
(203,882
)
$
(203,882
)
$
4,150

$
4,150


In assessing the fair value of Midwest Generation's electricity contracts, Midwest Generation uses a variety of methods and assumptions based on
market conditions and associated risks existing at each balance sheet date. The fair value of the electricity contracts takes into account quoted market prices, time value of money, volatility of the
underlying commodities and other factors.

Credit Risk

In conducting price risk management activities, EMMT 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, Midwest Generation 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 Midwest
Generation under the intercompany energy services agreement. Midwest Generation's agreement with EMMT transfers the risk of non-payment of accounts receivable from counterparties to EMMT.
Notwithstanding the foregoing, Midwest Generation will not be in default under the senior secured notes and credit agreement if it fails to enforce payment from EMMT in the case of nonpayment of an
account receivable from a counterparty, so long as the counterparty is rated investment grade.

The
obligations of Midwest Generation under the senior secured notes and credit agreement are secured by, among other things, an account of EMMT in which EMMT will deposit funds received
from third-party counterparties for sales of energy and capacity from the Illinois Plants. See "Note 7Long-term Debt" and "Note 13Related Party
TransactionsEMMT Agreements."

To
manage credit risk, EMMT 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. EMMT 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. EMMT also takes other appropriate steps to limit or lower credit exposure. Processes have also
been established to determine and monitor the creditworthiness of counterparties. EMMT 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 EMMT'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.

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In
addition, coal for the Illinois Plants is purchased from suppliers under contracts which may be for multiple years. A number of the coal suppliers to the Illinois Plants do not
currently have an investment grade credit rating and, accordingly, Midwest Generation may have limited recourse to collect damages in the event of default by a supplier. Midwest Generation 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.

Midwest
Generation derived a significant source of its operating revenues from electric power sold into the PJM market by EMMT. Sales into the PJM pool accounted for approximately 75%
and 14% of Midwest Generation's consolidated operating revenues for the years ended December 31, 2005 and 2004, respectively. Moody's Investor Service rates PJM's senior unsecured debt Aa3.
PJM, an independent system operator 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 is shared by all members based upon a predetermined formula.

Note 9. Income Taxes

Income tax provision (benefit) includes the current tax provision (benefit) from operating income (loss) and the change in deferred income taxes during the year.
The components of the net accumulated deferred income tax asset were:

Years Ended December 31,2005

2004(in thousands)Deferred tax assetsLease financing

$
27,227

$
23,831Price risk management


84,490


3,416Accrued expenses


5,870


3,789Credit carryforward


12,265


Net operating loss carryforward


191,488


393,868Total

$
321,340

$
424,904Deferred tax liabilitiesProperty, plant and equipmentbasis differences

$
(41,905
)
$
(6,039
)Employee benefits


(9,738
)

(13,929
)State taxes


10,141


(17,873
)Other


(4,037
)

(2,738
)Total


(45,539
)

(40,579
)Deferred tax asset, net

$
275,801

$
384,325Classification of accumulated deferred income taxes:Included in current assets

$
70,734

$
Included in non-current assets

$
205,067

$
384,325


Midwest Generation has $465 million and $961 million of federal net operating losses at December 31, 2005 and
December 31, 2004, respectively, which expire beginning in 2024. Midwest Generation has $297 million and $584 million of California net operating losses at December 31,
2005 and December 31, 2004, respectively, which expire beginning in 2014. In addition, Midwest Generation has $57 million and $125 million of Illinois net operating losses at
December 31, 2005 and

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December 31,
2004, respectively, which expire beginning in 2015. The provision (benefit) for income taxes is comprised of the following:

Years Ended December 31,2005

2004

2003(in thousands)CurrentFederal

$
11,414

$


$
(30,159
)State


2,149





(2,472
)Total current

$
13,563

$


$
(32,631
)DeferredFederal

$
152,239

$
(47,805
)
$
(341,610
)State


31,012


(10,394
)

(62,704
)Total deferred


183,251


(58,199
)

(404,314
)Provision (benefit) for income taxes

$
196,814

$
(58,199
)
$
(436,945
)


Variations from the 35% federal statutory rate are as follows:

Years Ended December 31,2005

2004

2003(in thousands)Expected benefit for federal income taxes

$
174,702

$
(47,885
)
$
(393,964
)Increase in benefit resulting from:State tax benefit, net of federal taxes


21,554


(480
)

(42,981
)Reversal of valuation allowance





(9,655
)

Other


558


(179
)

Provision (benefit) for income taxes

$
196,814

$
(58,199
)
$
(436,945
)Effective provision (benefit) rate


39.4%


(42.5
)%

(38.8
)%


Midwest Generation is, and may in the future be, under examination by tax authorities with respect to positions it takes in connection with the
filing of its tax returns. In Midwest Generation's opinion, it is unlikely that the resolution of any such tax audit matters will have a material adverse effect upon Midwest Generation's financial
condition or results of operations.

Note 10. Employee Benefit Plans

Employees of Midwest Generation are eligible for various benefit plans of Edison International.

Pension Plans

Midwest Generation maintains a pension plan specifically for the benefit of its union employees. A portion of Midwest Generation's non-union employees
participate in the Edison International pension plan. Eligibility depends on a number of factors, including the employee's hire date. Both plans are noncontributory, defined benefit pension plans and
cover employees who fulfill minimum service requirements. The Edison International plan has a cash balance feature.

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The
expected contributions (all by employer) for the plans are approximately $7.5 million for the year ended December 31, 2006. The amount is subject to change based on,
among other things, the limits established for federal tax deductibility.

Midwest
Generation uses a December 31 measurement date for all its plans. The fair value of plan assets is determined by market value.

Information
on plan assets and benefit obligations is shown below:

Years Ended December 31,2005

2004(in thousands)Change in projected benefit obligationProjected benefit obligation at beginning of year

$
71,122

$
49,390Service cost


12,143


11,796Interest cost


3,746


3,013Actuarial loss (gain)


(2,595
)

6,269Benefits paid


(1,034
)

654Projected benefit obligation at end of year

$
83,382

$
71,122Accumulated benefit obligation at end of year

$
65,632

$
55,029Change in plan assetsFair value of plan assets at beginning of year

$
38,043

$
25,192Actual return on plan assets


5,040


2,711Employer contributions


7,589


9,486Benefits paid


(1,034
)

654Fair value of plan assets at end of year

$
49,638

$
38,043Funded status

$
(33,744
)
$
(33,079
)Unrecognized net loss


7,530


12,439Unrecognized prior service cost


2,304


2,535Recorded liability

$
(23,910
)
$
(18,105
)Additional detail of amounts recognized in balance sheets:Intangible asset





Accumulated other comprehensive income





Weighted-average assumptions at end of year:Discount rate


5.50%


5.50%Rate of compensation increase


5.00%


5.00%


82

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Components of pension expense are:

Years Ended December 31,2005

2004

2003(in thousands)Service cost

$
12,143

$
11,796

$
10,185Interest cost


3,746


3,013


2,251Expected return on plan assets


(3,002
)

(2,148
)

(1,376
)Net amortization and deferral


507


395


463Total expense recognized

$
13,394

$
13,056

$
11,523Change in accumulated other comprehensive income








Weighted-average assumptions:Discount rate


5.50%


6.00%


6.50%Rate of compensation increase


5.00%


5.00%


5.00%Expected return on plan assets


7.50%


7.50%


8.50%


Asset allocations for plans are:

|                         |  |     |  | December 31,
|------------------------ |  | --- |  | ------------
|
|
|United States equity     |  | 45% |  | 47%         
|Non-United States equity |  | 25% |  | 26%         
|Private equity           |  | 4%  |  | 2%          
|Fixed income             |  | 26% |  | 25%         

Postretirement Benefits Other Than Pensions

A portion of Midwest Generation's non-union employees retiring at or after age 55 with at least ten years of service are eligible for postretirement
health care, dental, life insurance and other benefits paid in part by Midwest Generation. Eligibility depends on a number of factors, including the employee's hire date.

On
December 8, 2003, President Bush signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003. The Act authorized a federal subsidy to be provided to plan
sponsors for certain prescription drug benefits under Medicare. Midwest Generation adopted FASB Staff Position FAS 106-2, "Accounting and Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of 2003," for the effects of the Act, effective July 1, 2004, which reduced Midwest Generation's accumulated benefits obligation by
$813,000 upon adoption.

The
expected contributions (all by the employer) for the postretirement benefits other than pensions plan are $359,000 for the year ended December 31, 2006. This amount is subject
to change based on, among other things, the Act referenced above and the impact of any benefit plan amendments.

Midwest
Generation uses a December 31 measurement date.

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Information
on non-union plan assets and benefit obligations is shown below:

Years Ended December 31,2005

2004(in thousands)Change in benefit obligationBenefit obligation at beginning of year

$
19,534

$
18,605Service cost


582


608Interest cost


1,288


1,046Actuarial loss (gain)


4,082


(1,179
)Amendments





466Benefits paid


(324
)

(12
)Benefit obligation at end of year

$
25,162

$
19,534Change in plan assetsFair value of plan assets at beginning of year

$


$
Employer contributions


324


12Benefits paid


(324
)

(12
)Fair value of plan assets at end of year

$


$
Funded status

$
(25,162
)
$
(19,534
)Unrecognized net loss


9,742


6,312Unrecognized prior service cost


(3,943
)

(4,658
)Recorded liability

$
(19,363
)
$
(17,880
)Assumed health care cost trend rates:Rate assumed for following year


10.25%


10.00%Ultimate rate


5.00%


5.00%Year ultimate rate reached


2011


2010Weighted-average assumptions at end of year:Discount rate


5.50%


5.75%


Expense components of postretirement benefits are:

Years Ended December 31,2005

2004

2003(in thousands)Service cost

$
582

$
608

$
576Interest cost


1,288


1,046


1,029Net amortization and deferral


(63
)

(435
)

(290
)Total expense

$
1,807

$
1,219

$
1,315Assumed health care cost trend rates:Current year


10.00%


12.00%


9.75%Ultimate rate


5.00%


5.00%


5.00%Year ultimate rate reached


2010


2010


2008Weighted-average assumptions:Discount rate


5.75%


6.25%


6.40%


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Increasing the health care cost trend rate by one percentage point would increase the accumulated obligation as of December 31, 2005 by
$4.4 million and annual aggregate service and interest costs by $352,000. Decreasing the health care cost trend rate by one percentage point would decrease the accumulated obligation as of
December 31, 2005 by $3.7 million and annual aggregate service and interest costs by $296,000.

Discount Rate

The discount rate enables Midwest Generation to state expected future cash flows at a present value on the measurement date. Midwest Generation selects its
discount rate by performing a yield curve analysis. This analysis determines the equivalent discount rate on projected cash flows, matching the timing and amount of expected benefit payments. Three
yield curves were considered: two corporate yield curves
(Citigroup and AON) and a curve based on treasury rates (plus 90 basis points). Midwest Generation also compared the yield curve analysis against the Moody's AA Corporate bond rate. At the December
31, 2005 measurement date, Midwest Generation used a discount rate of 5.5% for both pensions and postretirement benefits other than pensions.

Description of Investment Strategies

The investment of plan assets is overseen by a fiduciary investment committee. Plan assets are invested using a combination of asset classes, and may have active
and passive investment strategies within asset classes. Midwest Generation employs multiple investment management firms. Investment managers within each asset class cover a range of investment styles
and approaches. Risk is controlled through diversification among multiple asset classes, managers, styles, and securities. Plan, asset class and individual manager performance is measured against
targets. Midwest Generation also monitors the stability of its investments managers' organizations.

Allowable
investment types include:

Permitted
ranges around asset class portfolio weights are plus or minus 5%. Where approved by the fiduciary investment committee, futures contracts are used for portfolio rebalancing and
to approach fully invested portfolio positions. Where authorized, a few of the plan's investment managers employ limited use of derivatives, including futures contracts, options, options on futures
and interest rate swaps in place of direct investment in securities to gain efficient exposure to markets. Derivatives are not used to leverage the plans or any portfolios.

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Determination of the Expected Long-Term Rate of Return on Assets for United States Plans

The overall expected long term rate of return on assets assumption is based on the target asset allocation for plan assets, capital markets return forecasts for
asset classes employed, and active management excess return expectations.

Capital Markets Return Forecasts

The estimated total return for fixed income is based on an equilibrium yield for intermediate United States government bonds plus a premium for exposure to
non-government bonds in the broad fixed income market. The equilibrium yield is based on analysis of historic data and is consistent with experience over various economic environments. The
premium of the broad market over United States government bonds is a historic average premium. The estimated rate of return for equity is estimated to be a 3% premium over the estimated total return
of intermediate United States government bonds. This value is determined by combining estimates of real earnings growth, dividend yields and inflation, each of which is determined using historical
analysis. The rate of return for private equity is estimated to be a 5% premium over public equity, reflecting a premium for higher volatility and illiquidity.

Active Management Excess Return Expectations

For asset classes that are actively managed, an excess return premium is added to the capital market return forecasts discussed above.

Estimated Future Benefits Payable

Estimated future benefits payable under the pension and other postretirement benefits as of December 31, 2005 are as follows:

Other Postretirement BenefitsYears Ended December 31,

Pension Plans

Before Subsidy

Net(in thousands)2006

$
1,303

$
359

$
3592007


1,709


445


4452008


2,218


529


5292009


2,971


652


6512010


3,965


799


7982011-2015


42,105


6,746


6,690


Employee Stock Plans

A 401(k) plan is maintained to supplement eligible employees' retirement income. Midwest Generation matches 100% of non-union employee contributions,
up to 6% of such employees' base annual compensation. Midwest Generation also matches 75% of contributions made by union employees, up to 6% of base annual compensation. Employer contributions vest
20% per year. Contribution expense for the years ended December 31, 2005, 2004 and 2003 was $2.6 million, $2.5 million and $2.7 million, respectively.

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Note 11. Commitments and Contingencies

Capital Improvements

At December 31, 2005, Midwest Generation had firm commitments to spend approximately $7.1 million on capital expenditures in 2006 primarily for dust
collection and mitigation system and various other projects. These capital expenditures are planned to be financed by cash generated from operations.

Calumet Energy Team LLC Power Purchase Contract

At December 31, 2005, Midwest Generation was party to a long-term power purchase contract with Calumet Energy Team LLC entered into as part of
the settlement agreement with Commonwealth Edison, which terminated Midwest Generation's obligation to build additional gas-fired generation in the Chicago area. The contract requires
Midwest Generation to pay a monthly capacity payment and gives Midwest Generation an option to purchase energy from Calumet Energy Team at prices based primarily on operations and maintenance and fuel
costs. These minimum commitments are currently estimated to aggregate $20.1 million in the next five years, summarized as
follows: 2006$3.8 million; 2007$3.9 million; 2008$4.0 million; 2009$4.1 million; and
2010$4.3 million.

Fuel Supply Contracts

At December 31, 2005, Midwest Generation had fuel purchase commitments with various third-party suppliers for the purchase of coal. The remaining
contracts' lengths range from one year to seven years. Based on the contract provisions, which consist of fixed prices subject to adjustment clauses, these minimum commitments are currently estimated
to aggregate $475.0 million in the next five years, summarized as follows: 2006$152.9 million; 2007$140.0 million; 2008$56.5 million;
2009$61.5 million; and 2010$64.1 million.

Coal Transportation Agreements

At December 31, 2005, Midwest Generation had contractual commitments for the transport of coal to its facilities, with remaining contract lengths that
range from two years to six years. The primary contract is with Union Pacific Railroad (and various delivering carriers) which extends through 2011. Midwest Generation commitments under this agreement
are based on actual coal purchases from the Powder River Basin. Accordingly, Midwest Generation's contractual obligations for transportation are based on coal volumes set forth in its fuel supply
contracts. Based on the committed coal volumes in the fuel supply contracts described above, these minimum commitments are currently estimated to aggregate $653.3 million in the next five
years, summarized as follows: 2006$219.8 million; 2007$206.3 million; 2008$74.3 million; 2009$75.7 million; and
2010$77.2 million.

Interconnection Agreement

Midwest Generation has entered into interconnection agreements with Commonwealth Edison to provide interconnection services necessary to connect the Illinois
Plants with its transmission systems. Unless terminated earlier in accordance with their terms, the interconnection agreements will terminate on a date mutually agreed to by both parties. Midwest
Generation is required to compensate Commonwealth Edison for all reasonable costs associated with any modifications, additions or replacements made to the interconnection facilities or transmission
systems in connection with any modification, addition or upgrade to the Illinois Plants.

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Guarantees and Indemnities

Tax Indemnity Agreement

In connection with the sale-leaseback transactions related to the Powerton and Joliet Stations and previously the Collins Station, EME, Midwest
Generation and another wholly owned subsidiary of EME 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 the tax indemnity agreement, including specified defaults under the
respective leases. The potential indemnity obligation under these tax indemnity agreements could be significant. Due to the nature of these obligations, Midwest Generation cannot determine a maximum
potential liability which would be triggered by a valid claim from the lessors. Midwest Generation 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.

Indemnity Provided as Part of the Acquisition from Commonwealth Edison

In connection with the acquisition of the Illinois Plants, Midwest Generation 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 take 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, Midwest Generation has not recorded a
liability related to this indemnity.

Midwest
Generation entered into a supplemental agreement with Commonwealth Edison and Exelon Generation Company 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 existing asbestos claims and 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 between 185 and 195 cases for which Midwest Generation was
potentially liable and that had not been settled and dismissed at December 31, 2005. Midwest Generation had recorded a $67.4 million liability at December 31, 2005 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.

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Environmental Matters and Regulations

Introduction

Midwest Generation is subject to environmental regulation by federal, state and local authorities in the United States. Midwest Generation believes that it is in
substantial compliance with environmental regulatory requirements and that maintaining compliance with current requirements will not materially affect its financial position or results of operations.
However, possible future developments, such as the promulgation of more stringent environmental laws and regulations, future proceedings that may be initiated by environmental authorities, and
settlements agreed to by other companies could affect the costs and the manner in which Midwest Generation conducts its business, and may also cause it to make substantial additional capital
expenditures. There is no assurance that Midwest Generation would be able to recover these increased costs from its customers or that Midwest Generation's financial position and results of operations
would not be materially adversely affected as a result.

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 Midwest Generation fails to comply with applicable environmental laws, it may be subject to injunctive relief or penalties and fines
imposed by regulatory authorities.

FederalUnited States of America

Clean Air Act

Clean
Air Interstate Rule

On
May 12, 2005, the Clean Air Interstate Rule (CAIR) was published in the Federal Register. The CAIR requires 28 eastern states and the District of Columbia to address ozone
attainment issues by reducing regional nitrogen oxide (NOx) and sulfur dioxide (SO2) emissions. The CAIR reduces the current Clean Air Act Title IV Phase II SO2 emissions allowance cap for 2010 and
2015 by 50% and 65%, respectively. The CAIR also reduces regional NOx emissions in 2009 and 2015 by 53% and 61%, respectively, from 2003 levels. The CAIR has been challenged in court by state,
environmental and
industry groups, which may result in changes to the substance of the rule and to the timetables for implementation.

Midwest
Generation expects that compliance with the CAIR and the regulations and revised state implementation plans developed as a consequence of the CAIR will result in increased
capital expenditures and operating expenses. Given the uncertainty of the requirements that will need to be implemented and the options available to meet the NOx and SO2 reductions fleetwide, Midwest
Generation at this time cannot accurately estimate the cost to meet these obligations. Midwest Generation's approach to meeting these obligations will consist of a blending of capital expenditure and
emission allowance purchases that will be based on an ongoing assessment of the dynamics of its market conditions.

Mercury
Regulation

The
Clean Air Mercury Rule (CAMR), published in the Federal Register on May 18, 2005, creates a market-based cap-and-trade program to reduce nationwide
utility emissions of mercury in two distinct phases. In the first phase of the program, which will come into effect in 2010, the annual nationwide cap

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will
be 38 tons. Emissions of mercury are to be reduced primarily by taking advantage of mercury reductions achieved by reducing SO2 and NOx emissions under the CAIR. In the second phase, which is to
take effect in 2018, coal-fired power plants will be subject to a lower annual cap, which will reduce emissions nationwide to 15 tons. States may join the trading program by adopting the
CAMR model trading rule in state regulations, or they may adopt regulations that mirror the necessary components of the model trading rule. States are not required to adopt a
cap-and-trade program and may promulgate alternative regulations, such as command and control regulations, that are equivalent to or more stringent than the CAMR's suggested
cap-and-trade program. Any program adopted by a state must be approved by the United States Environmental Protection Agency (US EPA).

Contemporaneous
with the adoption of the CAMR, the US EPA rescinded its previous finding that mercury emissions from coal-fired power plants had to be regulated as a
hazardous air pollutant pursuant to Section 112 of the federal Clean Air Act, which would have imposed technology-based standards. Litigation has been filed challenging the US EPA's rescission
action and claiming that the agency should have imposed technology-based limitations on mercury emissions instead of adopting a market-based program. Litigation was also filed to challenge the CAMR.
As a result of these challenges, the CAMR rules may change.

If
Illinois implements the CAMR by adopting a cap-and-trade program for achieving reductions in mercury emissions, Midwest Generation may have the option to
purchase mercury emission allowances, to install pollution control equipment, to otherwise alter its operations to reduce mercury emissions, or to implement some combination thereof. Because the
mercury state implementation plans are not due until the fourth quarter of 2006 and such plans may not adopt the CAMR's cap-and-trade program, and because Midwest Generation
cannot predict the outcome of the legal challenge to the CAMR and the US EPA's decision not to regulate mercury emissions pursuant to Section 112 of the federal Clean Air Act, the full impact
of this regulation currently cannot be assessed. Additional capital costs, particularly for the Illinois coal units, related to these regulations could be required in the future and they could be
material. Midwest Generation's approach to meeting these obligations will continue to be based upon an ongoing assessment of applicable legal requirements and market conditions.

National
Ambient Air Quality Standards

Ambient
air quality standards for ozone and fine particulate matter were adopted by the US EPA in July 1997. These standards were challenged in the courts, and on March 26,
2002, the United States Court of Appeals for the District of Columbia Circuit upheld the US EPA's revised ozone and fine particulate matter ambient air quality standards.

The
US EPA designated non-attainment areas for the 8-hour standard on April 30, 2004, and for the fine particulate standard on January 5, 2005.
Almost all of Midwest Generation's facilities are located in counties that have been identified as being in non-attainment with both standards. States are required to revise their
implementation plans for the ozone and particulate matter standards within three years of the effective date of the respective non-attainment designations. The revised state implementation
plans are likely to require additional emission reductions from facilities that are significant emitters of ozone precursors and particulates. Any additional obligations on Midwest Generation's
facilities to further reduce their emissions of SO2, NOx and fine particulates to address local non-attainment with the 8-hour ozone and fine particulate matter standards will
not be known until the states revise their implementation plans. Depending upon the final standards that are adopted, Midwest Generation may incur substantial costs or experience other financial
impacts resulting from required capital improvements or operational changes.

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On
January 17, 2006, the US EPA proposed revisions to its fine particulate standard. Under the proposal, the annual standard would remain the same but the 24-hour fine
particulate standard would be significantly lowered. The US EPA is under court order to issue a final rule in December 2006. If the US EPA retains its proposed new 24-hour standard
or lowers the annual standard, states may be required to impose further emission reductions beyond what would be necessary to meet the existing standards. Although Midwest Generation may incur
substantial costs or experience financial
impacts as a result of any new standards, the uncertainties associated with this ongoing rulemaking at this time render Midwest Generation unable to accurately estimate the costs to meet any such
obligation. Midwest Generation anticipates, however, that any such further emission reduction obligations would not be imposed until 2010 at the earliest.

Regional
Haze

The
goal of the 1999 regional haze regulations is to restore visibility in mandatory federal Class I areas, such as national parks and wilderness areas, to natural background
conditions in 60 years. Sources such as power plants that are reasonably anticipated to contribute to visibility impairment in Class I areas may be required to install Best Available
Retrofit Technology (BART) or implement other control strategies to meet regional haze control requirements. States are required to revise their state implementation plans to demonstrate reasonable
further progress towards meeting regional haze goals. Emission reductions that are achieved through other ongoing control programs may be sufficient to demonstrate reasonable progress toward the
long-term goal, particularly for the first 10 to 15 year phase of the program. States must develop implementation plans by December 2007. It is possible that sources that are
subject to the CAIR will be able to satisfy their obligations under the regional haze regulations through compliance with the more stringent CAIR. However, until the state implementation plans are
revised, Midwest Generation cannot predict whether it will be required to install BART or implement other control strategies, and cannot identify the financial impacts of any additional control
requirements.

New
Source Review Requirements

Since
1999, the US EPA has pursued a coordinated compliance and enforcement strategy to address Clean Air Act New Source Review (NSR) compliance issues at the nation's
coal-fired power plants. The NSR regulations impose certain requirements on facilities, such as electric generating stations, in the event that modifications are made to air emissions
sources at a facility. The US EPA's strategy included both the filing of a number of suits against power plant owners, and the issuance of a number of administrative notices of violation to power
plant owners alleging NSR violations. Midwest Generation has not been named as a defendant in these lawsuits and has not received any administrative Notices of Violation alleging NSR violations at any
of its facilities.

In
response to conflicting court decisions concerning the applicable emissions test used to determine whether an operational or physical change at an electric generating station would
require the plant to install additional pollution controls, the US EPA, on October 13, 2005, proposed a change to the NSR program. The proposal put forth several options for a new emissions
test based on the impact of a facility modification on a facility's maximum hourly emissions or its emissions per unit of energy produced. The existing NSR emissions test is based on the impact of a
modification on a generating station's net annual emissions.

In
October 2005, the US EPA announced a revised NSR strategy to take account of recent US EPA rulemakings, such as the CAIR and regional haze rules, affecting
coal-fired power plants. Under the revised strategy, while the US EPA will continue to pursue filed cases and cases in active negotiation, it

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intends
to shift its future enforcement focus from coal-fired power plants to other sectors where compliance assurance activities have the potential to produce significant environmental
benefits.

On
February 21, 2003, Midwest Generation received a request for information under Section 114 regarding past operations, maintenance and physical changes at the Illinois
coal plants from the US EPA. This request was part of the US EPA's industry-wide investigation of compliance by coal-fired plants with the Clean Air Act NSR requirements. On
July 28, 2003, Commonwealth Edison received a substantially similar request for information from the US EPA related to these same plants. Under date of February 1, 2005, the US EPA
submitted a request for additional information to Midwest Generation. Midwest Generation has provided responses to these requests. Other than these requests for information, no NSR enforcement-related
proceedings have been initiated by the US EPA with respect to Midwest Generation's facilities. See also "StateIllinoisAir Quality."

Developments
with respect to changes to the NSR program and NSR enforcement will continue to be monitored by Midwest Generation to assess what implications, if any, they will have on the
operation of its power plants or on Midwest Generation's results of operations or financial condition.

Clean Water ActCooling Water Intake Structures

On July 9, 2004, the US EPA published the final Phase II rule implementing Section 316(b) of the Clean Water Act establishing standards for cooling
water intake structures at existing electrical generating stations that withdraw more than 50 million gallons of water per day and use more than 25% of that water for cooling purposes. The
purpose of the regulation is to reduce substantially the number of aquatic organisms that are pinned against cooling water intake structures or drawn into cooling water systems. Pursuant to the
regulation, a demonstration study must be conducted when applying for a new or renewed National Pollutant Discharge Elimination System (NPDES) wastewater discharge permit. If one can demonstrate that
the costs of meeting the presumptive standards set forth in the regulation are significantly greater than the costs that the US EPA assumed in its rule making or are significantly disproportionate to
the expected environmental benefits, a site-specific analysis may be performed to establish alternative standards. Depending on the findings of the demonstration studies, cooling towers
and/or other mechanical means of reducing impingement/ entrainment may be required. Midwest Generation has begun to collect impingement and entrainment data at its potentially affected Illinois Plants
to begin the process of determining what corrective actions may need to be taken.

After
the final promulgation of the Phase II cooling water intake structure regulation, legal challenges were filed by environmental groups, the Attorneys General for six states, a
utility trade association and several individual electric power generating companies. These cases have been consolidated and transferred to the United States Court of Appeals for the Second Circuit. A
briefing schedule has been established for the case and a decision is not expected until sometime in 2006. The final requirements of the Phase II rule will not be fully known until these appeals are
resolved and, if necessary, the regulation is revised by the US EPA. Although the Phase II rule could have a material impact on Midwest Generation's operations, Midwest Generation cannot reasonably
determine the financial impact on it at this time because it is in the beginning stages of collecting the data required by the regulation and due to the legal challenges mentioned above which may
affect the obligations imposed by the rule.

Federal Legislative Initiatives

There have been a number of bills introduced in Congress that would amend the Clean Air Act to specifically target emissions of specific pollutants from electric
utility generating stations. These bills

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would
mandate reductions in emissions of NOx, SO2 and mercury. Some bills would also impose limitations on carbon dioxide emissions. The various proposals differ in many details, including the timing
of any required reductions; the extent of required reductions; and the relationship of any new obligations that would be imposed by these bills with existing legal requirements. There is significant
uncertainty as to whether any of the proposed legislative initiatives will pass in its current form or whether any compromise can be reached that would facilitate passage of legislation. Accordingly,
Midwest Generation is not able to evaluate the potential impact of these proposals at this time.

Environmental Remediation

Under various federal, state and local environmental laws and regulations, a current or previous owner or operator of any facility, including an electric
generating facility, may be required to investigate and remediate releases or threatened releases of hazardous or toxic substances or petroleum products located at that facility, and may be held
liable to a governmental entity or to third parties for property damage, personal injury, natural resource damages, and investigation and remediation costs incurred by these parties in connection with
these releases or threatened releases. In addition, persons who arrange for the disposal or treatment of hazardous or toxic substances at a disposal or treatment facility may be liable for the costs
to remediate releases of hazardous substances from such facilities even where the disposal of such wastes was undertaken in compliance with applicable laws. Many of these laws, including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, commonly referred to as CERCLA, as amended by the Superfund Amendments and Reauthorization Act of 1986, impose
liability without regard to whether the owner knew of or caused the presence of the hazardous substances, and courts have interpreted liability under these laws to be strict and joint and several.

With
respect to Midwest Generation's potential liabilities arising under CERCLA or similar laws for the investigation and remediation of contaminated property, Midwest Generation accrues
a liability to the extent the costs are probable and can be reasonably estimated. Midwest Generation has accrued approximately $2 million at December 31, 2005 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, Midwest Generation 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 Midwest Generation's financial
position.

Federal,
state and local laws, regulations and ordinances also govern the removal, encapsulation or disturbance of asbestos-containing materials when these materials are in poor
condition or in the event of construction, remodeling, renovation or demolition of a building. Those laws and regulations may impose liability for release of asbestos-containing materials and may
provide for the ability of third parties to seek recovery from owners or operators of these properties for personal injury associated with asbestos-containing materials. In connection with the
ownership and operation of its facilities, Midwest Generation may be liable for these costs. Midwest Generation has agreed to indemnify Commonwealth Edison for specified environmental liabilities. See
"Guarantees and Indemnities" for a discussion of this indemnity agreement.

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StateIllinois

Air Quality

Beginning with the 2003 ozone season (May 1 through September 30), Midwest Generation has been required to comply with an average NOx emission rate
of 0.25 lb NOx/mmBtu of heat input. This
limitation is commonly referred to as the East St. Louis State Implementation Plan. This regulation is a State of Illinois requirement. Each of the Illinois Plants complied with this standard in 2004.
Beginning with the 2004 ozone season, the Illinois Plants became subject to the federally mandated "NOx SIP Call" regulation that provided ozone-season NOx emission allowances to a
19-state region east of the Mississippi. This program provides for NOx allowance trading similar to the SO2 (acid rain) trading program already in effect. Midwest Generation has qualified
for early reduction allowances by reducing NOx emissions at various plants ahead of the imposed deadline. Additionally, the installation of emission control technology at certain plants has
demonstrated over-compliance at those individual plants with the pending NOx emission limitations. Finally, NOx emission trading will be utilized, as needed, to comply with any shortfall
at plants where installation of emission control technology has demonstrated reductions at levels short of the NOx limitations.

During
2004, the Illinois Plants stayed within their NOx allocations by augmenting their allocation with early reduction credits generated within the fleet. In 2005, the Illinois Plants
used banked allowances, along with some purchased allowances, to stay within their NOx allocations. After 2005, Midwest Generation plans to continue to purchase allowances while evaluating the cost
and benefits of various technologies to determine whether any additional pollution controls should be installed at the Illinois Plants.

On
January 5, 2006, Illinois Governor Rod Blagojevich announced that he was directing the Illinois Environmental Protection Agency to draft rules that would impose state limits on
mercury emissions from coal-fired power plants which would be more stringent than the US EPA's CAMR issued in May 2005. Illinois is required to submit a state implementation plan
(SIP) for CAMR to the US EPA by November 17, 2006. The Governor or his spokespersons have said that rules to be submitted to the Illinois Pollution Control Board will require a 90% reduction in
mercury emissions averaged across company-owned Illinois generators and a minimum reduction of 75% for individual generating units by June 30, 2009. A 90% reduction at each generating unit
would be required by 2013. Buying or selling of emission allowances under the CAMR federal cap and trade program would be prohibited. The Pollution Control Board must act on proposed rules submitted
by the Illinois EPA after evidentiary hearings, including the presentation and cross-examination of expert testimony. After the Pollution Control Board adopts rules, they must be submitted to the
General Assembly's Joint Committee on Administrative Rules for notice, hearing, and adoption, rejection or modification. Rules adopted through such state proceedings are also subject to court appeal.
Midwest Generation is not able at this time to predict the final form of these rules or provide an estimate of their financial impact.

During
2006, the Illinois EPA is expected to begin the process of developing a SIP to implement the federal CAIR which requires reductions in NOx and SO2. This SIP is to be submitted to
the US EPA by September 11, 2006. The Illinois EPA has also begun to develop SIPs to meet National Ambient Air Quality Standards for 8-hour ozone and fine particulates. These SIPs
will be developed with the intent of bringing non-attainment areas, such as Chicago, into attainment. They are expected to deal with all emission sources, not just power generators, and to
address emissions of NOx, SO2, and Volatile Organic Carbon. These SIPs are to be submitted to the US EPA by June 15, 2007 for 8-hour ozone, and by April 5, 2008 for fine
particulates. Midwest Generation is not able at this time to predict the final form of the SIPs or to estimate their financial impact.

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Water Quality

The Illinois EPA is reviewing the water quality standards for the Des Plaines River adjacent to the Joliet Station and immediately downstream of the Will County
Station to determine if the use classification should be upgraded. An upgraded use classification could result in more stringent limits being applied to wastewater discharges to the river from these
plants. If the existing use classification is changed, the limits on the temperature of the discharges from the Joliet and Will County plants may be made more stringent. The Illinois EPA has also
begun a review of the water quality standards for the Chicago River and Chicago Sanitary and Ship Canal which are adjacent to the Fisk and Crawford Stations. Proposed changes to the existing standards
are still being developed. Accordingly, Midwest Generation is not able to estimate the financial impact of potential changes to the water quality standards. However, the cost of additional cooling
water treatment, if required, could be substantial.

Climate Change

The Kyoto Protocol on climate change officially came into effect on February 16, 2005. Under the Kyoto Protocol, the United States would have been
required, by 2008-2012, to reduce its greenhouse gas emissions, such as carbon dioxide, by 7% from 1990 levels. Under the Bush administration, however, the United States has chosen not to
pursue ratification of the Kyoto Protocol. Instead, the Bush administration has proposed several alternatives to mandatory reductions of greenhouse gases.

There
have been petitions from states and other parties to compel the US EPA to regulate greenhouse gases under the Clean Air Act. Also, in 2004, several states and environmental
organizations brought a complaint in federal court in New York, alleging that several electric utility corporations are jointly and severally liable under a theory of public nuisance for damages
caused by their alleged contribution to global warming resulting from carbon dioxide emissions from coal-fired power plants owned and operated by these companies or their subsidiaries.
Midwest Generation was not named as a defendant in the complaint. The case was dismissed and is currently on appeal with United States Court of Appeals for the Second Circuit.

The
ultimate outcome of the climate change debate could have a significant economic effect on Midwest Generation. Any legal obligation that would require Midwest Generation to reduce
substantially its emissions of carbon dioxide would likely require extensive mitigation efforts and would raise considerable uncertainty about the future viability of fossil fuels, particularly coal,
as an energy source for new and existing electric generating facilities.

Note 12. Lease Commitments

Midwest Generation has lease financings with respect to its Powerton-Joliet Stations, which are described in more detail below. Midwest Generation also has
operating leases in place with respect to equipment, primarily leased barges and railcars that have remaining terms which range from as short as 2 months to 15 years.

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At
December 31, 2005, the future operating and lease financing commitments were as follows:

Years Ending December 31,

Operating Leases

Lease Financing(in thousands)2006

$
19,408

$
184,9402007


17,909


184,9422008


15,041


184,9302009


12,377


184,9412010


12,172


169,973Thereafter


67,395


941,624Total future commitments

$
144,302

$
1,851,350Amount representing interest





(606,662
)Net commitments




$
1,244,688


Operating lease expense amounted to $18.0 million, $17.0 million and $19.1 million in 2005, 2004 and 2003, respectively.

Powerton-Joliet Facilities Sale-Leaseback

On August 24, 2000, Midwest Generation entered into a sale-leaseback transaction with respect to the Powerton and Joliet power facilities
located in Illinois to third-party lessors for an aggregate purchase price of $1.367 billion. Under the terms of the leases (33.75 years for Powerton and 30 years for Joliet),
Midwest Generation makes semi-annual lease payments on each January 2 and July 2, beginning January 2, 2001. If a lessor intends to sell its interest in the Powerton
or Joliet power facility, Midwest Generation has a first right of refusal to acquire the interest at fair market value. Under the terms of each lease, Midwest Generation may request a lessor, at its
option, to refinance the lessor debt, which if completed would affect the base lease rent. The lessor debt of $1.147 billion was obtained from the issuance pursuant to two
pass-through trust agreements between Midwest Generation and pass-through trustees of Pass-Through Certificates with terms ranging from nine to sixteen years with
fixed interest rates ranging from 8.30% to 8.56%. The gain on the sale of the power facilities has been deferred and is being amortized over the term of the leases.

Note 13. Related Party Transactions

EMMT Agreements

Midwest Generation entered into a revolving credit agreement with EMMT, dated as of April 27, 2004, pursuant to which Midwest Generation can, from time to
time, make revolving loans to, and have letters of credit issued on behalf of, EMMT. The loans and letters of credit provide credit support for forward contracts entered into by EMMT related to the
Illinois Plants. Midwest Generation had provided $328.1 million and $9.8 million to EMMT as of December 31, 2005 and 2004, respectively, which EMMT has used to provide credit
support for forward contracts. Loans provided under this revolving credit agreement are repaid by EMMT upon the return of the funds under the terms of the related forward contract. The amount repaid
includes interest earned, if any, under margining agreements supporting such contracts. The maximum amount of available credit under the agreement is $500 million.

Midwest
Generation has entered into a master purchase, sale and services agreement with EMMT, pursuant to which EMMT arranges for purchases and sales of the following products, including
related services: (i) energy and capacity; (ii) natural gas; (iii) fuel oil; and (iv) emission allowances.

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Midwest
Generation compensates EMMT in accordance with the following table with respect to these transactions, and reimburses EMMT for brokers' fees, taxes, and other reasonably incurred
direct out-of-pocket expenses. Payment for these services is due within 30 days of billing.

Service

CompensationEnergy

$.02/MWhCapacity

$.02/MW-dayNatural gas

$.02/MMBtuFuel oil

$.05/bblEmission allowances

$.25/SO2 allowance; and $25/NOx allowance


The net fees earned by EMMT were $1.5 million, $1.8 million and $1.1 million for the years ended December 31, 2005,
2004 and 2003, respectively. Midwest Generation had receivables due from EMMT of $203.6 million and $51.8 million at December 31, 2005 and 2004, respectively. The increase in
receivable balance in 2005 is due to higher sales of power and emissions by Midwest Generation through EMMT in the month of December 2005 as compared to the month of December 2004.

Midwest
Generation also entered into several transactions through EMMT to sell surplus or purchase SO2 and NOx allowances to or from other EME affiliates. All transactions were completed
at market price on the date of the transaction. Net consideration received by Midwest Generation was $54.7 million, $26.1 million and $10.3 million during 2005, 2004 and 2003,
respectively.

Fuel Services Agreement

Midwest Generation has entered into an agreement with Edison Mission Energy Services, Inc. to provide fuel and transportation services related to coal and
fuel oil. Under the terms of this agreement, Midwest Generation pays a service fee of $.06 for each ton of coal delivered and $.05 for each barrel of fuel oil delivered, plus the actual cost of the
commodities. The amount billable under this agreement for the service fee for each of the years ended December 31, 2005, 2004 and 2003 was $1.1 million.

Notes Receivable from EME

The proceeds received by Midwest Generation from the Powerton-Joliet sale-leaseback transaction were loaned to EME. The loan is evidenced by four
intercompany notes amounting to $1.367 billion. EME is obligated to repay the principal on the notes in a series of installments on the dates and in the amounts set forth on a schedule to each
note. EME has paid and is required to pay interest on the notes on each January 2 and July 2 at an 8.30% fixed interest rate. All amounts due under the notes are due to be repaid in full
by January 2, 2016. Midwest Generation earned interest income of $113.1 million, $113.2 million and $113.4 million during 2005, 2004 and 2003, respectively.

Services Agreements with EME and Edison International

Certain administrative services, such as payroll, employee benefit programs, insurance and information technology are shared among all affiliates of Edison
International, and the costs of these corporate support services are allocated to all affiliates. The cost of services provided by Edison International and EME, including those related to Midwest
Generation, are allocated based on one of the following formulas: percentage of the time worked, equity in investment and advances, number of employees, or multi-factor (operating revenues, operating
expenses, total assets and total employees). Midwest Generation participates in a common payroll and benefit program with all Edison International employees. In addition, Midwest Generation is billed
for any direct labor and out-of-pocket expenses for

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services
directly requested for its benefit. Midwest Generation believes the allocation methodologies are reasonable. Costs incurred for these programs, payroll funding, and other services during the
years ended December 31, 2005, 2004 and 2003 were $125.7 million, $138.1 million and $134.2 million, respectively. Midwest Generation had a $0.9 million net
receivable due from Edison International at December 31, 2005 and a $4.9 million net payable due to Edison International at December 31, 2004 related to these programs.

Midwest
Generation participates in the insurance program of Edison International, including property, general liability, workers compensation and various other specialty policies.
Midwest Generation's insurance premiums are generally based on its share of risk related to each policy. In connection with the property insurance program, a portion of the risk is reinsured by a
captive insurance subsidiary of Edison International.

Agreements with Midwest Generation EME, LLC

Contribution of Services/Management and Administration Agreement

Midwest Generation EME, LLC is Midwest Generation's indirect parent and provided executive management, legal, human resources, accounting and other administrative
services in Chicago on Midwest Generation's behalf without charge through March 2004. In connection with regulations of the Securities and Exchange Commission, the costs of these services must
be recorded as part of Midwest Generation's financial results, although Midwest Generation does not have a cash obligation to pay for these activities. The costs of these services, after tax, were
$2.5 million and $10.6 million for the first quarter of 2004 and the year ended December 31, 2003, respectively. Midwest Generation has reflected these activities as a
non-cash contribution of services by its parent in the accompanying consolidated financial statements. In April 2004, Midwest Generation EME and Midwest Generation entered into a
new management and administration agreement pursuant to which Midwest Generation EME began charging Midwest Generation for management and administrative services. Actual costs billable under this
agreement for the years ended December 31, 2005 and 2004 were $13.1 million and $15.7 million, respectively.

Support Services Agreement

Midwest Generation has entered into an agreement with Midwest Generation EME for support services, including construction and construction management, operations
and maintenance management, technical services and training, environmental, health and safety services, administrative and IT support, and other managerial and technical services needed to operate and
maintain electric power facilities. Under the terms of the agreement, Midwest Generation reimburses Midwest Generation EME for actual costs incurred by functional area in providing support services,
or in the case of specific tasks requested by Midwest Generation, the amount negotiated for the task. Actual costs billable under this agreement for the years ended December 31, 2005, 2004 and
2003 were $6.9 million, $6.1 million and $6.3 million, respectively.

Midwest
Generation had payables of $1.5 million and $2.6 million due to Midwest Generation EME at December 31, 2005 and 2004, respectively, related to these
agreements.

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Note 14. Supplemental Statements of Cash Flows Information

Years Ended December 31,2005

2004

2003(in thousands)Cash paid:Interest

$
206,893

$
261,057

$
305,816Non-cash financing activities:Reduction in affiliate debt due to tax-allocation agreement offset

$


$
25,966

$
Reduction in affiliate debt and affiliate interest due to equity contribution as part of refinancing

$


$
2,190,902

$



Note 15. Quarterly Financial Data (unaudited)

|2005                                 |  | First |         | Second |   | Third   |         | Fourth |         | Total |  
|------------------------------------ |  | ----- | ------- | ------ | - | ------- | ------- | ------ | ------- | ----- | -
|
|Operating revenues                   |  | $     | 324,924 |        | $ | 252,655 |         | $      | 417,858 |       | $
|Operating income                     |  |       | 104,135 |        |   | 25,457  |         |        | 198,271 |       |  
|Provision for income taxes           |  |       | 31,077  |        |   | 1,556   |         |        | 68,669  |       |  
|Income before accounting change      |  |       | 48,158  |        |   | 2,227   |         |        | 107,085 |       |  
|Net income                           |  |       | 48,158  |        |   | 2,227   |         |        | 107,085 |       |  
|
|Operating revenues                   |  | $     | 233,257 |        | $ | 224,143 |         | $      | 367,777 |       | $
|Operating income (loss)              |  |       | 1,127   |        |   | (69,421 | )  (ii) |        | 91,633  | (iii) |  
|Provision (benefit) for income taxes |  |       | (20,019 | )      |   | (39,631 | )  (ii) |        | 25,653  | (iii) |  
|Net income (loss)                    |  |       | (31,874 | )      |   | (63,160 | )  (ii) |        | 40,870  | (iii) |  

---

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PART III

ITEM 10.    MANAGERS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Midwest Generation's members elect the Board of Managers. The Board of Managers may appoint officers as Midwest Generation's business may require. Information
concerning executive officers of Midwest Generation is set forth in Part I in accordance with General Instruction G(3), pursuant to Instruction 3 to Item 401(b) of
Regulation S-K. Other information responding to Item 10 is set forth below.

Managers

Name and Age

Manager
Continuously
SinceGuy F. Gorney, 51

2005W. James Scilacci, 50

2005Raymond W. Vickers, 63

1999


Business Experience

Below is a description of the principal business experience during the past five years of each of the managers named above.

Refer
to "Executive Officers of the Registrant" set forth in Part I for Messrs. Gorney and Scilacci's business experience.

Mr. Vickershas been senior vice president and general counsel of Edison Mission Energy since March 1999.

Audit Committee Financial Expert

The Board of Managers has determined that Midwest Generation has at least one audit committee financial expert (as defined in rules of the Securities and Exchange
Commission) serving on its audit committee. The name of the audit committee financial expert is W. James Scilacci, who is not an independent manager.

Ethics and Compliance Code for Principal Officers

Midwest Generation has adopted a Ethics and Compliance Code that applies to its principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions. The Ethics and Compliance Code is posted on the Internet website maintained by Midwest Generation's ultimate parent, Edison
International, at www.edisonethics.com. Any amendment to or waiver from a provision of the Ethics and Compliance Code that must be disclosed under rules and forms of the Securities and Exchange
Commission will be disclosed at the same Internet website address within four business days following the date of the amendment or waiver.

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ITEM 11.    EXECUTIVE COMPENSATION

Midwest Generation managers and officers receive compensation from EME or Edison International and receive no compensation from Midwest Generation. For
information concerning the chief executive officer and four most highly paid executive officers, other than the chief executive officer, of EME and Edison International, see Item 11 of EME's
Amendment to Form 10-K for the year ended December 31, 2005 and the Summary Compensation Table in the Executive Compensation section of Edison International's definitive
proxy statement relating to its 2006 Annual Meeting of Shareholders, respectively, which will be incorporated herein by reference when filed. EME's Amendment to Form 10-K for the
year ended December 31, 2005 will be filed with the Securities and Exchange Commission concurrently with Edison International's filing of its definitive proxy statement.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Certain Beneficial Owners

Set forth below is certain information regarding each person who is known by Midwest Generation to be a beneficial owner.

|Title of Class       |  | Name and Address
of Beneficial Owner                                                                                 |  | Amount and Nature
of Beneficial Owner                                  |  | Percent of Class |  
|-------------------- |  | -------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------- |  | ---------------- | -
|Membership interests |  | Edison Mission Midwest Holdings Co.
One Financial Place
440 South LaSalle Street, Suite 3500
Chicago, Illinois 60605 |  | 100 units held directly and
with exclusive voting and
investment power |  | 100              | %

For information concerning the number of equity securities of Edison International beneficially owned by all directors and executive officers of
EME and Edison International, individually and as a group, see Item 12 of EME's Amendment to Form 10-K for the year ended December 31, 2005 and the table entitled
"Stock Ownership of Directors, Director Nominee, and Executive Officers" of Edison International's definitive proxy statement relating to its 2006 Annual Meeting of Shareholders, respectively, which
will be incorporated herein by reference when filed. EME's Amendment to Form 10-K for the year ended December 31, 2005 will be filed with the Securities and Exchange
Commission concurrently with Edison International's filing of its definitive proxy statement.

Changes in Control

On April 27, 2004, EME entered into a $98 million secured corporate credit agreement. The secured credit agreement matures on April 27, 2007.
As security for its obligations under this credit agreement, EME pledged, among other things, its ownership interest in Midwest Generation EME, LLC, an indirect parent of Midwest Generation. In
addition, Midwest Generation EME, LLC pledged its interest in Edison Mission Midwest Holdings Co., Midwest Generation's parent, and Edison Mission Midwest Holdings Co. in turn pledged its ownership
interest in Midwest Generation. During 2001, Mission Energy Holding Company issued $800 million of senior secured notes, which are secured by a security interest in EME's common stock. Any
foreclosure on any of these pledges would result in a change in control of Midwest Generation.

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Equity Compensation Plans

Item 201(d) of Regulation S-K, "Securities Authorized For Issuance Under Equity Compensation Plans," is not applicable because Midwest Generation
has no compensation plans under which equity securities of Midwest Generation are authorized for issuance.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

For information concerning transactions between Midwest Generation and specified security holders, see "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of OperationsRelated Party TransactionsNotes Receivable from EME," "Tax-Allocation Agreements," "Services
Agreements with EME and Edison International," and "Agreements with Midwest Generation EME, LLC."

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

INDEPENDENT ACCOUNTANT FEES

The following table sets forth the aggregate fees billed to Midwest Generation (consolidated total including Midwest Generation and its subsidiaries), for the
fiscal years ended December 31, 2005 and December 31, 2004, by PricewaterhouseCoopers LLP:

Midwest Generation
and Subsidiaries
($000)2005

2004Audit Fees

$
749

$
368Audit Related Fees





Tax Fee





All Other Fees








The Edison International Audit Committee reviews with management and pre-approves all audit services to be performed by the
independent accountants and all non-audit services that are not prohibited and that require pre-approval under the Securities Exchange Act. The Edison International Audit
Committee's pre-approval responsibilities may be delegated
to one or more Edison International Audit Committee members, provided that such delegate(s) presents any pre-approval decisions to the Edison International Audit Committee at its next
meeting. The independent auditors must assure that all audit and non-audit services provided to Midwest Generation, LLC and its subsidiaries have been approved by the Edison International
Audit Committee.

During
the fiscal year ended December 31, 2005, all services performed by the independent accountants were pre-approved by the Edison International Audit Committee,
regardless of whether the services required pre-approval under the Securities Exchange Act.

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PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

| |  | (a) |  | (1) |  | List of Financial Statements                                                                                                                                                    
| |  | --- |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |     |  |     |  | See Index to Consolidated Financial Statements at Item 8 of this report.                                                                                                        
| |  |     |  | (2) |  | List of Financial Statement Schedules                                                                                                                                           
| |  |     |  |     |  | Schedule IIValuation and Qualifying Accounts                                                                                                                                   
| |  |     |  |     |  | All other schedules have been omitted because they are not applicable or because the required information is included in the consolidated financial statements or notes thereto.
| |  |     |  | (3) |  | List of Exhibits                                                                                                                                                                

|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1         |  | Asset Sale Agreement, dated March 22, 1999, between Commonwealth Edison Company and Edison Mission Energy as to the Fossil Generating Assets, incorporated by reference to Exhibit 2.5 to Edison Mission Energy's
Form 10-K for the year ended December 31, 1998.                                                                                                                                                                                                                                                           
|3.1         |  | Limited Liability Company Agreement of Midwest Generation, LLC effective as of July 12, 1999, incorporated by reference to Exhibit 3.3 to Edison Mission Energy's and Midwest Generation LLC's Registration Statement on Form S-4 to the
Securities and Exchange Commission on April 20, 2001.                                                                                                                                                                                                                              
|3.2         |  | Certificate of Formation of Midwest Generation, LLC, dated as of July 9, 1999, incorporated by reference to Exhibit 3.4 to Edison Mission Energy's and Midwest Generation LLC's Registration Statement on Form S-4 to the Securities and
Exchange Commission on April 20, 2001.                                                                                                                                                                                                                                             
|4.1         |  | Pass-Through Trust Agreement A, dated as of August 17, 2000, between Midwest Generation, LLC and United States Trust Company of New York, as Pass-Through Trustee, made with respect to the formation of the Midwest Generation Series A
Pass-Through Trust, and the issuance of 8.30% Pass-Through Certificates, Series A, incorporated by reference to Exhibit 4.1 to Edison Mission Energy's and Midwest Generation LLC's Registration Statement on Form S-4 to the Securities
and Exchange Commission on April 20, 2001.
|4.2         |  | Pass-Through Trust Agreement B, dated as of August 17, 2000, between Midwest Generation, LLC and United States Trust Company of New York, as Pass-Through Trustee, made with respect to the formation of the Midwest Generation Series B
Pass-Through Trust, and the issuance of 8.56% Pass-Through Certificates, Series B, incorporated by reference to Exhibit 4.2 to Edison Mission Energy's and Midwest Generation LLC's Registration Statement on Form S-4 to the Securities
and Exchange Commission on April 20, 2001.
|4.3         |  | Form of 8.30% Pass-Through Certificate, Series A (included in Exhibit 4.1), incorporated by reference to Exhibit 4.3 to Edison Mission Energy's and Midwest Generation LLC's Registration Statement on Form S-4 to the Securities and
Exchange Commission on April 20, 2001.                                                                                                                                                                                                                                                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

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|4.4   |  | Form of 8.56% Pass-Through Certificate, Series B (included in Exhibit 4.2), incorporated by reference to Exhibit 4.4 to Edison Mission Energy's and Midwest Generation LLC's Registration Statement on Form S-4 to the Securities and
Exchange Commission on April 20, 2001.                                                                                                             
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.5   |  | Indenture of Trust, Mortgage and Security Agreement (T1), dated as of August 17, 2000, between Powerton Trust I and United States Trust Company of New York, as Lease Indenture Trustee, incorporated by reference to Exhibit 4.5 to Edison
Mission Energy's and Midwest Generation LLC's Registration Statement on Form S-4 to the Securities and Exchange Commission on April 20, 2001.
|4.5.1 |  | Schedule identifying substantially identical agreement to Indenture of Trust, Mortgage and Security Agreement constituting Exhibit 4.5 hereto, incorporated by reference to Exhibit 4.5.1 to Edison Mission Energy's and Midwest Generation
LLC's Registration Statement on Form S-4 to the Securities and Exchange Commission on April 20, 2001.                                        
|4.6   |  | Indenture of Trust, Mortgage and Security Agreement (T1), dated as of August 17, 2000, between Joliet Trust I and United States Trust Company of New York, as Lease Indenture Trustee, incorporated by reference to Exhibit 4.6 to Edison
Mission Energy's and Midwest Generation LLC's Registration Statement on Form S-4 to the Securities and Exchange Commission on April 20, 2001.  
|4.6.1 |  | Schedule identifying substantially identical agreement to Indenture of Trust, Mortgage and Security Agreement constituting Exhibit 4.6 hereto, incorporated by reference to Exhibit 4.6.1 to Edison Mission Energy's and Midwest Generation
LLC's Registration Statement on Form S-4 to the Securities and Exchange Commission on April 20, 2001.                                        
|4.7   |  | Facility Lease Agreement (T1), dated as of August 17, 2000, by and between Powerton Trust I, as Owner Lessor, and Midwest Generation, LLC, as Facility Lessee, incorporated by reference to Exhibit 4.7 to Edison Mission Energy's and Midwest
Generation LLC's Registration Statement on Form S-4 to the Securities and Exchange Commission on April 20, 2001.                          
|4.7.1 |  | Schedule identifying substantially identical agreement to Facility Lease Agreement constituting Exhibit 4.7 hereto, incorporated by reference to Exhibit 4.7.1 to Edison Mission Energy's and Midwest Generation LLC's Registration Statement on
Form S-4 to the Securities and Exchange Commission on April 20, 2001.                                                                   
|4.8   |  | Facility Lease Agreement (T1), dated as of August 17, 2000, by and between, Joliet Trust I, as Owner Lessor, and Midwest Generation, LLC, as Facility Lessee, incorporated by reference to Exhibit 4.8 to Edison Mission Energy's and Midwest
Generation LLC's Registration Statement on Form S-4 to the Securities and Exchange Commission on April 20, 2001.                           
|4.8.1 |  | Schedule identifying substantially identical agreement to Facility Lease Agreement constituting Exhibit 4.8 hereto, incorporated by reference to Exhibit 4.8.1 to Edison Mission Energy's and Midwest Generation LLC's Registration Statement on
Form S-4 to the Securities and Exchange Commission on April 20, 2001.                                                                   
|4.9   |  | Guarantee, dated as of August 17, 2000, made by Edison Mission Energy, as Guarantor in favor of Powerton Trust I, as Owner Lessor, incorporated by reference to Exhibit 4.9 to Edison Mission Energy's and Midwest Generation LLC's Registration
Statement on Form S-4 to the Securities and Exchange Commission on April 20, 2001.                                                      
|      |  |                                                                                                                                                                                                                                                                                                                                                                                          

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|4.9.1  |  | Schedule identifying substantially identical agreement to Guarantee constituting Exhibit 4.9 hereto, incorporated by reference to Exhibit 4.9.1 to Edison Mission Energy's and Midwest Generation LLC's Registration Statement on Form S-4
to the Securities and Exchange Commission on April 20, 2001.                                                                                                                                                                                                                                                                                                                    
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.10   |  | Guarantee, dated as of August 17, 2000, made by Edison Mission Energy, as Guarantor in favor of Joliet Trust I, as Owner Lessor, incorporated by reference to Exhibit 4.10 to Edison Mission Energy's and Midwest Generation LLC's Registration
Statement on Form S-4 to the Securities and Exchange Commission on April 20, 2001.                                                                                                                                                                                                                                                                                         
|4.10.1 |  | Schedule identifying substantially identical agreement to Guarantee constituting Exhibit 4.10 hereto, incorporated by reference to Exhibit 4.10.1 to Edison Mission Energy's and Midwest Generation LLC's Registration Statement on
Form S-4 to the Securities and Exchange Commission on April 20, 2001.                                                                                                                                                                                                                                                                                                                  
|4.11   |  | Registration Rights Agreement, dated as of August 17, 2000, among Edison Mission Energy, Midwest Generation, LLC and Credit Suisse First Boston Corporation and Lehman Brothers Inc., as representatives of the Initial Purchasers, incorporated by
reference to Exhibit 4.11 to Edison Mission Energy's and Midwest Generation LLC's Registration Statement on Form S-4 to the Securities and Exchange Commission on April 20, 2001.                                                                                                                                                                                      
|4.12   |  | Participation Agreement (T1), dated as of August 17, 2000, by and among, Midwest Generation, LLC, Powerton Trust I, as the Owner Lessor, Wilmington Trust Company, as the Owner Trustee, Powerton Generation I, LLC, as the Owner Participant, Edison
Mission Energy, United States Trust Company of New York, as the Lease Indenture Trustee, and United States Trust Company of New York, as the Pass Through Trustees, incorporated by reference to Exhibit 4.12 to Edison Mission Energy's and Midwest
Generation LLC's Registration Statement on Form S-4 to the Securities and Exchange Commission on April 20, 2001.
|4.12.1 |  | Schedule identifying substantially identical agreement to Participation Agreement constituting Exhibit 4.12 hereto, incorporated by reference to Exhibit 4.12.1 to Edison Mission Energy's and Midwest Generation LLC's Registration Statement
on Form S-4 to the Securities and Exchange Commission on April 20, 2001.                                                                                                                                                                                                                                                                                                    
|4.13   |  | Participation Agreement (T1), dated as of August 17, 2000, by and among, Midwest Generation, LLC, Joliet Trust I, as the Owner Lessor, Wilmington Trust Company, as the Owner Trustee, Joliet Generation I, LLC, as the Owner Participant, Edison
Mission Energy, United States Trust Company of New York, as the Lease Indenture Trustee and United States Trust Company of New York, as the Pass Through Trustees, incorporated by reference to Exhibit 4.13 to Edison Mission Energy's and Midwest
Generation LLC's Registration Statement on Form S-4 to the Securities and Exchange Commission on April 20, 2001.     
|4.13.1 |  | Schedule identifying substantially identical agreement to Participation Agreement constituting Exhibit 4.13 hereto, incorporated by reference to Exhibit 4.13.1 to Edison Mission Energy's and Midwest Generation LLC's Registration Statement
on Form S-4 to the Securities and Exchange Commission on April 20, 2001.                                                                                                                                                                                                                                                                                                    
|4.14   |  | Promissory Note ($499,450,800), dated as of August 24, 2000, by Edison Mission Energy in favor of Midwest Generation, LLC, incorporated by reference to Exhibit 4.5 to Edison Mission Energy's Form 10-K for the year ended
December 31, 2000.                                                                                                                                                                                                                                                                                                                                                                             
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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|4.14.1  |  | Schedule identifying substantially identical agreements to Promissory Note constituting Exhibit 4.14 hereto, incorporated by reference to Exhibit 4.5.1 to Edison Mission Energy's Form 10-K for the year ended December 31,
2000.                                                                                                                                                                                                                      
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1    |  | Reimbursement Agreement, dated as of October 26, 2001, between Edison Mission Energy and Midwest Generation, LLC, incorporated by reference to Exhibit 10.15 to Edison Mission Energy's Form 10-Q for the quarter ended March 31,
2004.                                                                                                                                                                                                                 
|10.2    |  | Instrument of Assumption, dated as of December 15, 1999, by Midwest Generation, LLC in favor of Commonwealth Edison Company and Unicom Investment Inc., incorporated by reference to Exhibit 10.91 to Edison Mission Energy's and Midwest
Generation LLC's Registration Statement on Form S-4 to the Securities and Exchange Commission on April 20, 2001.                                                                                              
|10.3    |  | Pledge Agreement, dated as of August 17, 2000, between Midwest Generation, LLC and Citibank, N.A., incorporated by reference to Exhibit 10.105 to Edison Mission Energy's and Midwest Generation LLC's Registration Statement on Form S-4
to the Securities and Exchange Commission on April 20, 2001.                                                                                                                                                  
|10.3.1  |  | Schedule identifying substantially identical agreements to the Pledge Agreement constituting Exhibit 10.3 hereto, incorporated by reference to Exhibit 10.105.1 to Edison Mission Energy's and Midwest Generation LLC's Registration Statement
on Form S-4 to the Securities and Exchange Commission on April 20, 2001.                                                                                                                                 
|10.4    |  | Indenture, dated as of April 27, 2004, among Midwest Generation, LLC, Midwest Finance Corp. and The Bank of New York, as Trustee incorporated by reference to Exhibit 4.1 to Midwest Generation, LLC's Form 10-Q for the quarter ended
March 31, 2004.                                                                                                                                                                                                  
|10.5    |  | Registration Rights Agreement, dated April 27, 2004, among Midwest Generation, LLC, Midwest Finance Corp. and Credit Suisse First Boston LLC, as Representative of the Initial Purchasers incorporated by reference to Exhibit 4.2 to Midwest
Generation, LLC's Form 10-Q for the quarter ended March 31, 2004.                                                                                                                                         
|10.6    |  | Credit Agreement, dated as of April 27, 2004 among Midwest Generation, LLC, the Lenders referred to therein, the Issuing Lenders referred to therein and Citicorp North America, Inc., as Administrative Agent for the Lenders and the Issuing
Lenders party thereto incorporated by reference to Exhibit 4.3 to Midwest Generation, LLC's Form 10-Q for the quarter ended March 31, 2004.                                                              
|10.6.1  |  | First Amended and Restated Credit Agreement (amending and restating the Credit Agreement listed as Exhibit 10.6 herein) dated as of April 18, 2005 among Midwest Generation, LLC, the Lenders referred to therein the Citicorp North America,
Inc., 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 March 31, 2005.
|10.6.2* |  | Second Amended and Restated Credit Agreement (amending and restating the Credit Agreement listed as Exhibit 10.6.1 herein) dated as of December 15, 2005, among Midwest Generation, LLC, the Lenders referred to therein and Citicorp North
America, Inc. as Administrative Agent for the Lenders and the Issuing Lenders party thereto.                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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|10.7    |  | Accession Agreement dated as of April 18, 2005, among Midwest Generation, LLC, the Lenders referred to therein and Citicorp North America, Inc., as Administrative Agent for the Lenders and the Issuing Lenders party thereto incorporated by
referenced to Exhibit 10.2 to Midwest Generation, LLC's Form 10-Q for the quarter ended March 31, 2005.                                                 
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.7.1* |  | Accession Agreement dated as of December 15, 2005, among Midwest Generation LLC, the Lenders referred to therein and the Issuing Lenders party thereto.                                                                                                                                                                                                                                                
|10.8    |  | Collateral Trust Agreement, dated as of April 27, 2004, among Midwest Generation, LLC, the Pledgors from time to time party thereto, Citicorp North America, Inc., as Administrative Agent, The Bank of New York, as Trustee, and Wilmington Trust
Company, as Collateral Trustee incorporated by reference to Exhibit 4.4 to Midwest Generation, LLC's Form 10-Q for the quarter ended March 31, 2004.
|10.9    |  | Security Agreement, dated as of April 27, 2004, between Midwest Generation, LLC and Wilmington Trust Company, as Collateral Trustee incorporated by reference to Exhibit 4.5 to Midwest Generation, LLC's Form 10-Q for the quarter ended
March 31, 2004.                                                                                                                                              
|10.10   |  | Pledge Agreement, dated as of April 27, 2004, between Midwest Generation EME, LLC and Wilmington Trust Company, as Collateral Trustee incorporated by reference to Exhibit 4.6 to Midwest Generation, LLC's Form 10-Q for the quarter ended
March 31, 2004.                                                                                                                                            
|10.11   |  | Pledge Agreement, dated as of April 27, 2004, between Edison Mission Midwest Holdings Co. and Wilmington Trust Company, as Collateral Trustee incorporated by reference to Exhibit 4.7 to Midwest Generation, LLC's Form 10-Q for the
quarter ended March 31, 2004.                                                                                                                                    
|10.12   |  | Security Agreement, dated as of April 27, 2004, between Edison Mission Marketing & Trading, Inc. and Wilmington Trust Company, as Collateral Trustee incorporated by reference to Exhibit 4.8 to Midwest Generation, LLC's Form 10-Q
for the quarter ended March 31, 2004.                                                                                                                             
|10.13   |  | Mortgage, Assignment of Rents and Leases, Fixture Filing, Financing Statement and Security Agreement, dated as of April 27, 2004 from Midwest Generation, LLC to Wilmington Trust Company, as Collateral Trustee (Joliet No. 9  Station No. 6 and
Joliet Peaking Unit) incorporated by reference to Exhibit 4.9 to Midwest Generation, LLC's Form 10-Q for the quarter ended March 31, 2004.          
|10.14   |  | Mortgage, Assignment of Rents and Leases, Fixture Filing, Financing Statement and Security Agreement, dated as of April 27, 2004 from Midwest Generation, LLC and Chicago Title Land Trust Company to Wilmington Trust Company, as Collateral Trustee
(Will County Facility) incorporated by reference to Exhibit 4.10 to Midwest Generation, LLC's Form 10-Q for the quarter ended March 31, 2004.    
|10.15   |  | Mortgage, Assignment of Rents and Leases, Fixture Filing, Financing Statement and Security Agreement, dated as of April 27, 2004 from Midwest Generation, LLC to Wilmington Trust Company, as Collateral Trustee (Calumet Facility) incorporated by
reference to Exhibit 4.11 to Midwest Generation, LLC's Form 10-Q for the quarter ended March 31, 2004.                                             
|10.15.1 |  | Schedule identifying substantially identical agreements to Mortgage, Assignment of Rents and Leases, Fixture Filing, Financing Statement and Security Agreement constituting Exhibit 10.15 hereto incorporated by reference to Exhibit 4.11.1 to
Midwest Generation, LLC's Form 10-Q for the quarter ended March 31, 2004.                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                        

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|10.16   |  | Tax-Allocation Agreement, effective January 1, 2002, by and between Midwest Generation, LLC and Edison Mission Midwest Holdings Co., incorporated by reference to Exhibit 10.25 to Midwest Generation, LLC's Form 10-Q for the quarter
ended September 30, 2002.                                             
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.17   |  | Amended and Restated Master Purchase, Sale and Services Agreement, entered into on April 27, 2004, between Midwest Generation, LLC and Edison Mission Marketing & Trading, Inc incorporated by reference to Exhibit 10.2 to Midwest
Generation, LLC's Form 10-Q for the quarter ended March 31, 2004.        
|10.18   |  | Support Services Agreement, dated as of August 7, 2000, between Midwest Generation, LLC and Midwest Generation EME, LLC incorporated by reference to Exhibit 10.4 to Midwest Generation, LLC's Form 10-Q for the quarter ended
March 31, 2004.                                                               
|10.19   |  | Management and Administration Agreement, effective as of April 27, 2004, between Midwest Generation, LLC and Midwest Generation EME, LLC incorporated by reference to Exhibit 10.1 to Midwest Generation, LLC's Form 10-Q for the quarter
ended March 31, 2004.                                              
|10.20   |  | Revolving Credit Agreement, dated as of April 27, 2004, between Edison Mission Marketing & Trading, Inc. as Borrower and Midwest Generation, LLC, as Lender incorporated by reference to Exhibit 10.5 to Midwest Generation, LLC's
Form 10-Q for the quarter ended March 31, 2004.                           
|10.20.1 |  | Amendment One to Revolving Credit Agreement, dated as of August 30, 2005 by and between Edison Mission Marketing & Trading, Inc. as Borrower and Midwest Generation, LLC as Lender incorporated by reference to Exhibit 10.1 to Midwest
Generation, LLC's Form 10-Q for the quarter ended September 31, 2005.
|21*     |  | List of Subsidiaries of Midwest Generation, LLC.                                                                                                                                                                                                                                                             
|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.                                                                                                                                                                                                                                                                

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

| |  | MIDWEST GENERATION, LLC(REGISTRANT)
| |  | -----------------------------------
| |  | By:                                
| |  | Date:                              

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

|Signature                                |  | Title                                                                      |  | Date         
|---------------------------------------- |  | -------------------------------------------------------------------------- |  | -------------
|                                         |  |                                                                            |  |              
|/s/ Guy F. GorneyGuy F. Gorney           |  | Manager and President
(Principal Executive Officer)                        |  | March 6, 2006
|/s/ W. James ScilacciW. James Scilacci   |  | Manager and Vice President
(Principal Financial Officer)                   |  | March 6, 2006
|/s/ Mark C. ClarkeMark C. Clarke         |  | Vice President and Controller
(Controller or Principal Accounting Officer) |  | March 6, 2006
|/s/ Raymond W. VickersRaymond W. Vickers |  | Manager                                                                    |  | March 6, 2006

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SCHEDULE II

MIDWEST GENERATION, LLC
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)

|                             |                                 |  |   | Additions |  |   |  |  
|---------------------------- | ------------------------------- |  | - | --------- |  | - |  | -
|
|Year Ended December 31, 2005 |                                 |  |   |           |  |   |  |  
|                             | Allowance for doubtful accounts |  | $ |          |  |  |  | 
|Year Ended December 31, 2004 |                                 |  |   |           |  |   |  |  
|                             | Allowance for doubtful accounts |  | $ |          |  |  |  | 
|Year Ended December 31, 2003 |                                 |  |   |           |  |   |  |  
|                             | Allowance for doubtful accounts |  | $ | 4,269     |  |  |  | 

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