##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from _____ to _____
 Commission File Number: (Under the Securities Act of 1933) 33-37977
 MIDLAND COGENERATION VENTURE LIMITED PARTNERSHIP
  MICHIGAN
    
    38-2726166(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)100 PROGRESS PLACE, MIDLAND, MICHIGAN
    
    48640(Address of principal executive offices)
    
    (Zip Code)
 (989) 839-6000
 þ o
 12b-2
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##### 



PagePART I
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)
    
    
    2Balance Sheets
    
    
    2Statements of Operations
    
    
    3Statements of Partners Equity and Comprehensive Income (Loss)
    
    
    4Statements of Cash Flows
    
    
    5Condensed Notes to Unaudited Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A)
    
    
    16Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    22Item 4.
    
    Controls and Procedures
    
    
    24PART II
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    25Item 1A.
    
    Risk Factors
    
    
    26Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 3.
    
    Defaults Upon Senior Securities
    
    
    26Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    26Item 5.
    
    Other Information
    
    
    26Item 6.
    
    Exhibits
    
    
    26Signatures
    
    
    27Exhibit Index
    
    
    28Certifications
    
    
    29Certification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to Section 906Certification Pursuant to Section 906
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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements (Unaudited)
  
 
 June 30,
    
    
    December 31,2006
    
    
    2005ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    265,173
    
    
    $
    360,562Accounts and notes receivable  related parties
    
    
    43,886
    
    
    
    30,514Accounts receivable
    
    
    48,226
    
    
    
    108,393Gas inventory
    
    
    23,941
    
    
    
    16,138Unamortized property taxes
    
    
    35,277
    
    
    
    18,238Derivative assets
    
    
    93,875
    
    
    
    241,135Broker margin accounts and prepaid expenses
    
    
    40,816
    
    
    
    20,294Total current assets
    
    
    551,194
    
    
    
    795,274PROPERTY, PLANT AND EQUIPMENT:Property, plant and equipment
    
    
    2,480,678
    
    
    
    2,479,071Pipeline
    
    
    21,432
    
    
    
    21,432Total property, plant and equipment
    
    
    2,502,110
    
    
    
    2,500,503Accumulated depreciation (Note 3)
    
    
    (2,280,002
    )
    
    
    (2,276,089
    )Net property, plant and equipment
    
    
    222,108
    
    
    
    224,414OTHER ASSETS:Restricted investment securities held-to-maturity
    
    
    90,773
    
    
    
    90,915Derivative assets, non-current
    
    
    86,271
    
    
    
    186,336Deferred financing costs, net of accumulated amortization of
$20,104 and $19,580, respectively
    
    
    4,861
    
    
    
    5,385Prepaid gas costs, spare parts deposit, materials and supplies
    
    
    15,780
    
    
    
    15,554Total other assets
    
    
    197,685
    
    
    
    298,190TOTAL ASSETS
    
    $
    970,987
    
    
    $
    1,317,878LIABILITIES AND PARTNERS EQUITYCURRENT LIABILITIES:Accounts payable and accrued liabilities  related parties
    
    $
    14,006
    
    
    $
    16,651Accounts payable and accrued liabilities
    
    
    81,958
    
    
    
    118,663Gas supplier funds on deposit  related parties
    
    
    23,827
    
    
    
    44,353Gas supplier funds on deposit
    
    
    69,162
    
    
    
    148,650Interest payable
    
    
    80,760
    
    
    
    45,057Current portion of long-term debt
    
    
    63,459
    
    
    
    63,459Total current liabilities
    
    
    333,172
    
    
    
    436,833NON-CURRENT LIABILITIES:Long-term debt
    
    
    878,638
    
    
    
    878,638Other
    
    
    930
    
    
    
    805Total non-current liabilities
    
    
    879,568
    
    
    
    879,443COMMITMENTS AND CONTINGENCIES (Note 9)TOTAL LIABILITIES
    
    
    1,212,740
    
    
    
    1,316,276PARTNERS EQUITY (DEFICIT)
    
    
    (241,753
    )
    
    
    1,602TOTAL LIABILITIES AND PARTNERS EQUITY
    
    $
    970,987
    
    
    $
    1,317,878
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Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005OPERATING REVENUES:Capacity
    
    $
    100,505
    
    
    $
    100,671
    
    
    $
    198,245
    
    
    $
    200,193Electric
    
    
    46,675
    
    
    
    37,633
    
    
    
    86,047
    
    
    
    82,143Steam
    
    
    5,390
    
    
    
    4,622
    
    
    
    10,949
    
    
    
    10,649Total operating revenues
    
    
    152,570
    
    
    
    142,926
    
    
    
    295,241
    
    
    
    292,985OPERATING EXPENSES:Fuel costs (Note 2)
    
    
    135,805
    
    
    
    119,899
    
    
    
    404,392
    
    
    
    (25
    )Depreciation
    
    
    7,074
    
    
    
    22,647
    
    
    
    13,952
    
    
    
    44,759Operations
    
    
    4,174
    
    
    
    3,851
    
    
    
    8,364
    
    
    
    8,227Maintenance
    
    
    2,186
    
    
    
    2,083
    
    
    
    4,476
    
    
    
    4,319Property and single business taxes
    
    
    7,448
    
    
    
    7,336
    
    
    
    14,875
    
    
    
    14,673Administrative, selling and general
    
    
    3,040
    
    
    
    2,380
    
    
    
    5,956
    
    
    
    5,180Total operating expenses
    
    
    159,727
    
    
    
    158,196
    
    
    
    452,015
    
    
    
    77,133OPERATING INCOME (LOSS)
    
    
    (7,157
    )
    
    
    (15,270
    )
    
    
    (156,774
    )
    
    
    215,852OTHER INCOME (EXPENSE):Interest and other income
    
    
    10,063
    
    
    
    3,955
    
    
    
    13,750
    
    
    
    6,091Interest expense
    
    
    (24,350
    )
    
    
    (25,706
    )
    
    
    (48,130
    )
    
    
    (50,819
    )Total other income (expense), net
    
    
    (14,287
    )
    
    
    (21,751
    )
    
    
    (34,380
    )
    
    
    (44,728
    )NET INCOME (LOSS)
    
    $
    (21,444
    )
    
    $
    (37,021
    )
    
    $
    (191,154
    )
    
    $
    171,124
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Three Months EndedJune 30,2006
    
    
    2005General
    
    
    Limited
    
    
    
    
    
    
    General
    
    
    LimitedPartners
    
    
    Partners
    
    
    Total
    
    
    Partners
    
    
    Partners
    
    
    TotalBALANCE, BEGINNING OF PERIOD
    
    $
    (188,997
    )
    
    $
    (15,030
    )
    
    $
    (204,027
    )
    
    $
    890,680
    
    
    $
    145,403
    
    
    $
    1,036,083Comprehensive Income (Loss):Net income (loss) (Note 2)
    
    
    (18,670
    )
    
    
    (2,774
    )
    
    
    (21,444
    )
    
    
    (32,231
    )
    
    
    (4,790
    )
    
    
    (37,021
    )Other Comprehensive Income (Loss):Unrealized gain (loss) on
hedging activities since
beginning of period
    
    
    (11,122
    )
    
    
    (1,653
    )
    
    
    (12,775
    )
    
    
    17,815
    
    
    
    2,648
    
    
    
    20,463Reclassification adjustments
recognized in net income
(loss) above
    
    
    (3,054
    )
    
    
    (453
    )
    
    
    (3,507
    )
    
    
    (2,874
    )
    
    
    (428
    )
    
    
    (3,302
    )Total other comprehensive
income (loss)
    
    
    (14,176
    )
    
    
    (2,106
    )
    
    
    (16,282
    )
    
    
    14,941
    
    
    
    2,220
    
    
    
    17,161Total Comprehensive Income (Loss)
    
    
    (32,846
    )
    
    
    (4,880
    )
    
    
    (37,726
    )
    
    
    (17,290
    )
    
    
    (2,570
    )
    
    
    (19,860
    )BALANCE, END OF PERIOD
    
    $
    (221,843
    )
    
    $
    (19,910
    )
    
    $
    (241,753
    )
    
    $
    873,390
    
    
    $
    142,833
    
    
    $
    1,016,223
 Six Months EndedJune 30,2006
    
    
    2005General
    
    
    Limited
    
    
    
    
    
    
    General
    
    
    LimitedPartners
    
    
    Partners
    
    
    Total
    
    
    Partners
    
    
    Partners
    
    
    TotalBALANCE, BEGINNING OF PERIOD
    
    $
    (9,970
    )
    
    $
    11,572
    
    
    $
    1,602
    
    
    $
    693,824
    
    
    $
    116,152
    
    
    $
    809,976Comprehensive Income (Loss):Net income (loss) (Note 2)
    
    
    (166,425
    )
    
    
    (24,729
    )
    
    
    (191,154
    )
    
    
    148,986
    
    
    
    22,138
    
    
    
    171,124Other Comprehensive Income (Loss):Unrealized gain (loss) on
hedging activities since
beginning of period
    
    
    (37,007
    )
    
    
    (5,499
    )
    
    
    (42,506
    )
    
    
    62,231
    
    
    
    9,247
    
    
    
    71,478Reclassification adjustments
recognized in net income
(loss) above
    
    
    (8,441
    )
    
    
    (1,254
    )
    
    
    (9,695
    )
    
    
    (6,142
    )
    
    
    (913
    )
    
    
    (7,055
    )Dedesignated cash flow hedges
(Note 2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,509
    )
    
    
    (3,791
    )
    
    
    (29,300
    )Total other comprehensive
income (loss)
    
    
    (45,448
    )
    
    
    (6,753
    )
    
    
    (52,201
    )
    
    
    30,580
    
    
    
    4,543
    
    
    
    35,123Total Comprehensive Income (Loss)
    
    
    (211,873
    )
    
    
    (31,482
    )
    
    
    (243,355
    )
    
    
    179,566
    
    
    
    26,681
    
    
    
    206,247BALANCE, END OF PERIOD
    
    $
    (221,843
    )
    
    $
    (19,910
    )
    
    $
    (241,753
    )
    
    $
    873,390
    
    
    $
    142,833
    
    
    $
    1,016,223
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Six Months EndedJune 30,2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (191,154
    )
    
    $
    171,124Adjustments to reconcile net income (loss) to net cash (used
in) provided by operating activities:Depreciation and amortization
    
    
    14,476
    
    
    
    45,331Decrease (increase) in derivative assets
    
    
    195,124
    
    
    
    (171,102
    )Decrease in accounts receivable
    
    
    46,795
    
    
    
    10,472(Increase) decrease in gas inventory
    
    
    (7,803
    )
    
    
    3,558Increase in unamortized property taxes
    
    
    (17,039
    )
    
    
    (14,838
    )Increase in broker margin accounts and prepaid expenses
    
    
    (20,522
    )
    
    
    (404
    )(Increase) decrease in prepaid gas costs, spare parts deposit,
materials and supplies
    
    
    (226
    )
    
    
    1,134(Decrease) increase in accounts payable and accrued liabilities
    
    
    (39,350
    )
    
    
    17,852(Decrease) increase in gas supplier funds on deposit
    
    
    (100,014
    )
    
    
    4,292Increase in interest payable
    
    
    35,703
    
    
    
    31,207Increase (decrease) in other non-current liabilities
    
    
    125
    
    
    
    (250
    )Net cash (used in) provided by operating activities
    
    
    (83,885
    )
    
    
    98,376CASH FLOWS FROM INVESTING ACTIVITIES:Plant modifications and purchases of plant equipment
    
    
    (11,646
    )
    
    
    (14,859
    )Maturity of restricted investment securities held-to-maturity
    
    
    117,870
    
    
    
    222,070Purchase of restricted investment securities held-to-maturity
    
    
    (117,728
    )
    
    
    (222,643
    )Net cash used in investing activities
    
    
    (11,504
    )
    
    
    (15,432
    )NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (95,389
    )
    
    
    82,944CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    360,562
    
    
    
    125,781CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    265,173
    
    
    $
    208,725
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THE PARTNERSHIP AND ASSOCIATED RISKS
      - 6 -




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RISK MANAGEMENT ACTIVITIES AND DERIVATIVE TRANSACTIONS
 Fair Value of Financial Instruments
  Accounting for Derivative Instruments and Hedging Activities
  Electric Sales Agreements
  Natural Gas Supply Contracts
  Mark-to-Market Activity
  - 8 -




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Natural Gas Supply Futures and Options Which Qualify for Hedge Accounting
     - 9 -




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ASSET IMPAIRMENT
    - 10 -




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RESTRICTED INVESTMENT SECURITIES HELD-TO-MATURITY
  June 30,
    
    
    December 31,2006
    
    
    2005Funds restricted for rental payments pursuant to the
Overall Lease Transaction
    
    $
    89,843
    
    
    $
    90,111Funds restricted for management non-qualified plans
    
    
    930
    
    
    
    804Total
    
    $
    90,773
    
    
    $
    90,915
 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
  June 30,
    
    
    December 31,2006
    
    
    2005Accounts payable  related parties
    
    $
    14,006
    
    
    $
    16,651Accounts payable  non-relatedTrade creditors
    
    $
    48,040
    
    
    $
    100,956Property and single business taxes
    
    
    32,338
    
    
    
    11,088Other
    
    
    1,580
    
    
    
    6,619Total accounts payable  non-related
    
    $
    81,958
    
    
    $
    118,663
 GAS SUPPLIER FUNDS ON DEPOSIT
  June 30,
    
    December 31,2006
    
    2005Cash or letters of credit supplied by MCV to others:Cash paid, recorded in Broker margin accounts and
prepaid expenses
    
    $
    38,924
    
    
    $
    16,520Letters of credit provided to others
    
    
    2,430
    
    
    
    2,430Cash or letters of credit supplied to MCV by others:Cash received, recorded in Gas supplier funds on deposit
    
    
    69,162
    
    
    
    148,650Cash received by El Paso (a related party), recorded in
Gas supplier funds on deposit  related parties
    
    
    23,827
    
    
    
    44,353Letters of credit provided to MCV from non-related parties
    
    
    
    
    
    
    21,700Letters of credit provided to MCV by El Paso (a related
party)
    
    
    287,200
    
    
    
    385,700
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LONG-TERM DEBT
  June 30,
    
    
    December 31,2006
    
    
    2005Financing obligation,
maturing through 2015,
payable in semi-annual
installments of
principal and
interest,
collateralized by
property, plant and
equipment
    
    $
    942,097
    
    
    $
    942,097Less current portion
    
    
    (63,459
    )
    
    
    (63,459
    )Total long-term debt
    
    $
    878,638
    
    
    $
    878,638
 Financing Obligation
    ACCUMULATED OTHER COMPREHENSIVE INCOME
  2006
    
    
    2005Beginning Accumulated Other Comprehensive Income
    
    $
    174,844
    
    
    $
    65,774Unrealized gain (loss) on hedging activities
    
    
    (42,506
    )
    
    
    71,478Reclassification adjustments recognized in net loss
    
    
    (9,695
    )
    
    
    (7,055
    )Dedesignated cash flow hedges
    
    
    
    
    
    
    (29,300
    )Ending Accumulated Other Comprehensive Income
    
    $
    122,643
    
    
    $
    100,897
 COMMITMENTS AND CONTINGENCIES
 Property Taxes
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NOx Allowances
  Environmental Issues
   - 13 -




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Dow Corning Contract Termination
  RETIREMENT BENEFITS
 Postretirement Health Care Plans
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Components of net periodic benefit cots:Service cost
    
    $
    81.2
    
    
    $
    77.9
    
    
    $
    162.5
    
    
    $
    155.8Interest cost
    
    
    61.6
    
    
    
    57.5
    
    
    
    123.2
    
    
    
    115.0Expected return on Plan assets
    
    
    (58.9
    )
    
    
    (46.9
    )
    
    
    (117.9
    )
    
    
    (93.8
    )Amortization of unrecognized net loss
    
    
    19.3
    
    
    
    21.4
    
    
    
    38.7
    
    
    
    42.8Net periodic benefit cost
    
    $
    103.2
    
    
    $
    109.9
    
    
    $
    206.5
    
    
    $
    219.8
 Contributions
  Supplemental Retirement Benefits
  - 14 -




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PARTNERS EQUITY AND RELATED PARTY TRANSACTIONS
  Beneficial Owner, Equity Partner,
    
    EquityType of Partner and Nature of Related Party
    
    Interest
    
    
    Interest
    
    
    Related Party Transactions and Agreements
    
    2006
    
    
    2005CMS Energy CompanyCMS Midland, Inc.
    
    $
    (118,460
    )
    
    
    49.0
    %
    
    Power purchase agreements
    
    $
    202,219
    
    
    $
    215,793General
Partner; wholly-owned subsidiary of Consumers Energy Company
    
    
    
    
    
    
    
    
    
    Purchases under gas transportation
agreements
    
    
    4,640
    
    
    
    4,633Gas storage agreement
    
    
    1,282
    
    
    
    1,282Land lease/easement agreements
    
    
    300
    
    
    
    300Accounts receivable
    
    
    39,487
    
    
    
    34,630Accounts payable
    
    
    2,473
    
    
    
    4,787El Paso Corporation (1)El Paso Midland, Inc.
    
    
    
    
    
    
    
    
    
    Purchase under gas transportation agreements
    
    
    5,219
    
    
    
    6,605A General and Limited Partner;
    
    
    
    
    
    
    
    
    
    Purchases under gas supply agreement
    
    
    70,905
    
    
    
    56,397General Partnership Interest
    
    $
    (103,383
    )
    
    
    38.1
    %
    
    Gas agency agreement
    
    
    67
    
    
    
    67Limited Partnership Interest
    
    
    (14,767
    )
    
    
    5.4
    
    
    Accounts payable
    
    
    10,962
    
    
    
    10,042Deferred reservation charges under gas purchase agreement
    
    
    794
    
    
    
    2,370Gas supplier funds on deposit
    
    
    23,827
    
    
    
    Total El Paso Corporation
    
    $
    (118,150
    )
    
    
    43.5
    %
    
    Letter of credit provided to MCV
    
    
    287,200
    
    
    
    282,000The Dow Chemical CompanyThe Dow Chemical Company
    
    $
    (5,144
    )
    
    
    7.5
    %
    
    Steam and electric power agreement
    
    
    22,363
    
    
    
    20,899Limited Partner
    
    
    
    
    
    
    
    
    
    Steam purchase agreement - Dow Corning Corp (affiliate)
    
    
    2,310
    
    
    
    2,313Purchases under demineralized water supply agreement
    
    
    3,482
    
    
    
    3,391Accounts receivable
    
    
    4,398
    
    
    
    3,791Accounts payable
    
    
    571
    
    
    
    496Standby and backup fees
    
    
    443
    
    
    
    403Alanna CorporationAlanna Corporation
    
    $
    1
    (2)
    
    
    .00001
    %
    
    Note receivable
    
    
    1
    
    
    
    1Limited Partner; wholly-owned subsidiary
of Alanna Holdings CorporationTOTAL PARTNERS EQUITY (DEFICIT)
    
    $
    (241,753
    )
    
    
    100.0
    %
 Footnotes to Partners Equity and Related Party Transactions
 
 (1)
    
    Effective March 1, 2006, El Paso Corporation transferred the general and limited partnership
interests of Source Midland Limited Partnership, MEI Limited
Partnership and Micogen Limited Partnership to the wholly-owned subsidiary El Paso Midland,
Inc.(2)
    
    Alannas capital stock is pledged to secure MCVs obligation under the lease and other overall
lease transaction documents. - 15 -




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Item 2. Managements Discussion and Analysis of Financial Condition  and Results of Operations (MD&A)
   RESULTS OF OPERATIONS
 Forward-Looking Statements and Information
 Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995.
  Outlook
  Operating Outlook.
 Energy Rates and Cost of Production.
 - 16 -




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Capacity and Energy Payments Under the PPA.
 - 17 -




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##### Table of Contents



Michigan Electric Industry Restructuring.
   Federal Electric Industry Restructuring
  - 18 -




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##### Table of Contents



Operating Revenue Statistics
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2006
    
    2005
    
    2006
    
    2005Operating Revenues
    
    $
    152,570
    
    
    $
    142,926
    
    
    $
    295,241
    
    
    $
    292,985Capacity Revenue
    
    $
    100,505
    
    
    $
    100,671
    
    
    $
    198,245
    
    
    $
    200,193PPA Contract Capacity (MW)
    
    
    1,240
    
    
    
    1,240
    
    
    
    1,240
    
    
    
    1,240Billed PPA Availability
    
    
    98.5
    %
    
    
    98.5
    %
    
    
    97.6
    %
    
    
    98.5
    %Electric Revenue
    
    $
    46,675
    
    
    $
    37,633
    
    
    $
    86,047
    
    
    $
    82,143PPA Delivery as Percentage of Contract
Capacity
    
    
    49.2
    %
    
    
    45.5
    %
    
    
    47.5
    %
    
    
    56.1
    %PPA, SEPA and Other Electric Deliveries (MWh)
    
    
    1,454,785
    
    
    
    1,357,985
    
    
    
    2,800,438
    
    
    
    3,271,017Average PPA Variable Energy Rate ($/MWh)
    
    $
    21.67
    
    
    $
    17.93
    
    
    $
    21.13
    
    
    $
    17.20Average PPA Fixed Energy Rate ($/MWh)
    
    $
    4.69
    
    
    $
    4.29
    
    
    $
    4.50
    
    
    $
    4.14Steam Revenue
    
    $
    5,390
    
    
    $
    4,622
    
    
    $
    10,949
    
    
    $
    10,649Steam Deliveries (Mlbs)
    
    
    1,221,720
    
    
    
    1,248,360
    
    
    
    2,846,580
    
    
    
    2,976,320
 Comparison of the Three Months ended June 30, 2006 and 2005
 Overview
  Operating Revenues
  Operating Expenses
  - 19 -




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##### Table of Contents



Other Income (Expense)
  Comparison of the Six Months ended June 30, 2006 and 2005
 Overview
  Operating Revenues
  Operating Expenses
  - 20 -




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##### Table of Contents



Other Income (Expense)
  LIQUIDITY AND CAPITAL RESOURCES
    - 21 -




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DISCLOSURE ABOUT CONTRACTUAL OBLIGATIONS
  Payments Due by Period (1) (In Millions)Less Than
    
    One to
    
    Three to
    
    More ThanContractual Obligations
    
    Total
    
    One Year
    
    Three Years
    
    Five Years
    
    Five YearsLong-term Debt (2)
    
    $
    1,335.1
    
    
    $
    144.2
    
    
    $
    301.8
    
    
    $
    280.1
    
    
    $
    609.0Unconditional Purchase Obligations(3)
    
    $
    2,933.1
    
    
    $
    238.5
    
    
    $
    1,187.3
    
    
    $
    903.6
    
    
    $
    603.7Other Long-term Obligations (4)
    
    
    182.8
    
    
    
    12.5
    
    
    
    24.4
    
    
    
    29.8
    
    
    
    116.1Total Contractual Cash Obligations
    
    $
    3,115.9
    
    
    $
    251.0
    
    
    $
    1,211.7
    
    
    $
    933.4
    
    
    $
    719.8
 Amount of Commitment Expiration Per PeriodLess Than
    
    One to
    
    Three to
    
    More ThanCommercial Commitments
    
    Total
    
    One Year
    
    Three Years
    
    Five Years
    
    Five YearsWorking Capital Facility
    
    $
    50.0
    
    
    $
    50.0
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Payment periods represent calendar years beginning with January 1, 2006.(2)
    
    Represents expected cash payments, including interest.(3)
    
    Represents estimated minimum commitments under current long-term natural gas
contracts, natural gas transportation reservation charges, GTG compressor parts and the ground
lease agreement.(4)
    
    Represents the cost of current Facility maintenance service agreements, spare parts
and DCC termination payment.(5)
    
    No amounts have been included for early termination fees under the PPA or SEPA. OFF-BALANCE SHEET ARRANGEMENTS
  CRITICAL ACCOUNTING POLICIES
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  - 22 -




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Interest Rate Risk.
   Expected Maturity In
    
Fair Value2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    Thereafter
    
    TotalDebt:Long-term Debt FixedRate ($US in millions)
    
    $
    144.2
    
    
    $
    150.9
    
    
    $
    150.9
    
    
    $
    147.1
    
    
    $
    133.0
    
    
    $
    609.0
    
    
    $
    1,335.1
    
    
    
    N/AAvg. Interest Rate
    
    
    9.4
    %
    
    
    9.4
    %
    
    
    9.4
    %
    
    
    9.4
    %
    
    
    9.4
    %
    
    
    9.4
    %
    
    
    9.4
    %
 Commodity Risk.
  Expected Maturity in 2006/2007
    
    Fair ValueFutures Contracts:Contract Volumes (10,000 MMBtu) Long/Buy
    
    
    1,095
    
    
    
    Weighted Average Price Long (per 10,000 MMBtu)
    
    $
    6.075
    
    
    $
    8.051Contract Amount ($US in Millions)
    
    $
    66.522
    
    
    $
    88.157
 Expected Maturity in 2006/2009
    
    Fair ValueNYMEX Commodity Swap Contracts:Contract Volumes (10,000 MMBtu) Long/Buy
    
    
    2,910
    
    
    
    Weighted Average Price Long (per 10,000 MMBtu)
    
    $
    4.653
    
    
    $
    8.164Contract Amount ($US in Millions)
    
    $
    135.4
    
    
    $
    237.6
 Expected Maturity in 2006
    
    Fair ValueOption Contracts:Contract Volumes (10,000 MMBtu) Long/Buy
    
    
    380
    
    
    
    Contract Volumes (10,000 MMBtu) Short/Sell
    
    
    760
    
    
    
    Weighted Average Price Long (per 10,000 MMBtu)
    
    $
    1.729
    
    
    $
    1.010Weighted Average Price Short (per 10,000 MMBtu)
    
    $
    0.858
    
    
    $
    0.884Contract Amount ($US in Millions)
    
    $
    (0.052
    )
    
    $
    (2.850
    )
 - 23 -




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##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  - 24 -




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
 Property Taxes
  NOx Allowances
  Michigan Department of Environmental Quality Enforcement Action
   - 25 -




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##### Table of Contents



Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 31.1
    
    
    
    Certification of President and Chief Executive Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.31.2
    
    
    
    Certification of Chief Financial Officer, Vice President and Controller Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    Certification of President and Chief Executive Officer Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.32.2
    
    
    
    Certification of Chief Financial Officer, Vice President and Controller Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
 - 26 -




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##### Table of Contents



SIGNATURES
  MIDLAND COGENERATION VENTURE
LIMITED PARTNERSHIP
(Registrant)Dated: August 3, 2006
    /s/Joseph L. Roberts, Jr.Joseph L. Roberts, Jr.President and Chief Executive OfficerDated: August 3, 2006
    /s/James M. RajewskiJames M. RajewskiChief Financial Officer,

Vice President and Controller - 27 -




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Exhibit Index
 Exhibit No.
    
    
    
    Description31.1
    
    
    
    Certification of President and Chief Executive Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.31.2
    
    
    
    Certification of Chief Financial Officer, Vice President and Controller Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    Certification of President and Chief Executive Officer Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.32.2
    
    
    
    Certification of Chief Financial Officer, Vice President and Controller Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
 - 28 -