Document:

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                                                                     Exhibit 4.6

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                          LEASE SUBORDINATION AGREEMENT

                          dated as of December __, 2001

                                  by and among

                              [HOMER CITY OL1 LLC],
                              as the Owner Lessor,

            [GE CAPITAL OWNER PARTICIPANT] [FULL SERVICE LEASE CORP.
                              OWNER PARTICIPANT],
                            as the Owner Participant,

                        EME HOMER CITY GENERATION, L.P.,
                             as the Facility Lessee

                                       AND

                              THE BANK OF NEW YORK

                                 as successor to

                    UNITED STATES TRUST COMPANY OF NEW YORK,
                              as the Security Agent

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                             SUBORDINATION AGREEMENT

            This SUBORDINATION AGREEMENT, dated as of December __, 2001 (this
"AGREEMENT"), is by and among [HOMER CITY OL1 LLC], as the Owner Lessor under
the Facility Lease referred to below, [GE CAPITAL OWNER PARTICIPANT], as the
Owner Participant under the Participation Agreement referred to below, and
[UNITED STATES TRUST COMPANY OF NEW YORK], not in its individual capacity but
solely as the Security Agent under the Lease Indenture ( as defined in the
Participation Agreement referred to below).

                                    RECITALS

            WHEREAS, the holders of the Initial Lessor Notes (as such term is
defined in the Participation Agreement) have purchased the Initial Lessor Notes
from the Owner Lessor and have been granted a security interest in the Facility
Lease as collateral for the Initial Lessor Notes;

            WHEREAS, contemporaneously herewith EME Homer City Generation,
L.P. ("HOMER CITY" or the "FACILITY LESSEE"), a wholly owned subsidiary of
Edison Mission Midwest Holdings Co. ("HOLDINGS"), will enter into a
transaction pursuant to the Participation Agreement by and among Homer City,
the Owner Lessor, Wells Fargo Bank Northwest, National Association, not in
its individual capacity but solely as Owner Manager, the Owner Participant,
Homer City Funding LLC, as Lender, the Security Agent and United States Trust
Company of New York, not in its individual capacity but solely as Bondholder
Trustee (as amended, modified and supplemented and in effect from time to
time, the "PARTICIPATION Agreement") whereby Homer City would sell certain of
its generating assets to the Owner Lessor and the Owner Lessor would lease
such generating assets to Homer City under the Facility Lease;

            WHEREAS, in connection with the transactions contemplated by the
Participation Agreement, the parties hereto will agree to subordinate certain
claims against Homer City under the Participation Agreement and the other
Operative Documents to the rights of holders of the Initial Lessor Notes (as
defined in the Participation Agreement as of the date hereof and as such term
may hereafter be modified with the consent of the Security Agent); and

            WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the effectiveness of the Participation Agreement.

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                                    AGREEMENT

            NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:

                                   ARTICLE I
                     DEFINITIONS; PRINCIPLES OF CONSTRUCTION

            SECTION 1.1 DEFINITIONS.

                  (a) PARTICIPATION AGREEMENT. Unless otherwise expressly
provided herein, capitalized terms used but not defined in this Agreement shall
have the meanings given to such terms in Appendix A to the Participation
Agreement.

                  (b) OTHER DEFINED TERMS. The following terms, when used
herein, shall have the following meanings:

                  "SUBORDINATED LEVERAGED LEASE OBLIGATIONS" shall mean, the
      Component A of Basic Lease Rent, the Component A of Termination Value and
      any Supplemental Rent constituting Excepted Payments now or hereafter owed
      by Homer City to the Owner Participant or the Owner Lessor under the
      Operative Documents; provided, however, that the following items shall be
      excluded from the Subordinated Leveraged Lease Obligations: (a) any
      Excepted Payments owing to the Owner Lessor on account of fees and
      indemnities owed to the Owner Manager; and (b) Rent paid from the Reserve
      Account.

                  "PROCEEDING" shall have the meaning given to such term in
      SECTION 3.2.

                  "SENIOR CLAIMS" shall have the meaning given to such term in
      SECTION 2.1(a).

                  "SENIOR LEVERAGED LEASE OBLIGATIONS" shall mean Basic Lease
      Rent (other than the Component A of Basic Lease Rent), Termination Value
      (other than the Component A of Termination Value), any Supplemental Rent
      not constituting Subordinated Leveraged Lease Obligations (whether for
      indemnities, costs, expenses or otherwise) now or hereafter owed by Homer
      City to the Owner Lessor, the Security Agent, the Lease Indenture Trustee,

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      the Lender or the Bondholder Trustee under the Operative Documents and any
      other sum now or hereafter owed with respect to the Initial Lessor Notes
      (whether for principal thereof, interest thereon, or make-whole payments
      thereof or otherwise).

                  "SUBORDINATED CLAIMS" shall mean, as at any date of
      determination, the aggregate amount of all Subordinated Leveraged Lease
      Obligations for all Fiscal Quarters ending on or immediately prior to such
      date to the extent not discharged prior to such date pursuant to and in
      compliance with the provisions of Section 6.9 of the Participation
      Agreement.

                  "SUBORDINATED PARTIES" shall mean the Owner Lessor and the
      Owner Participant in their capacity as holders of the Subordinated Claims.

                  SECTION 1.2 PRINCIPLES OF CONSTRUCTION. Unless otherwise
expressly provided herein, the principles of construction set forth in the
Participation Agreement shall apply to this Agreement.

                                   ARTICLE II
                            SUBORDINATION PROVISIONS

            SECTION 2.1 SUBORDINATION OF CLAIMS. Until all Senior Leveraged
Lease Obligations shall have been paid in full:

                  (a) the Subordinated Claims shall be subordinate, to the
extent and in the manner hereinafter set forth, to the prior payment of, and
junior in right of payment to, any and all Senior Leveraged Lease Obligations
whether now existing or hereafter incurred or created (collectively, the "SENIOR
CLAIMS");

                  (b) Homer City shall not, directly or indirectly, except with
respect to withdrawals from the Equity Account pursuant to Section 4.6(b) of the
Amended Security Desposit Agreement and Section 17.1(g) of the Facility Lease,
make any payment on account of, or transfer any collateral for any part of, any
Subordinated Claims; PROVIDED, HOWEVER, that, as long as no Lease Event of
Default (other than a Rent Default Event) has occurred and is continuing under
the Facility Lease and subject to Section 6.9 of the Participation Agreement and
the applicable provisions of the Amended Security Deposit Agreement, Homer City
may make payments of Subordinated Claims consisting of Basic Lease Rent,
Supplemental Rent and Renewal Lease Rent; and

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                  (c) without the consent of the Lease Indenture Trustee, the
Subordinated Parties shall not demand, sue for or accept (other than with
respect to withdrawals from the Equity Account pursuant to Section 4.6(a)(i) and
Section 4.6(b) of the Amended Security Deposit Agreement and Section 17.1(g) of
the Facility Lease and withdrawals from the Reserve Account pursuant to Section
4.4 of the Amended Security Deposit Agreement) from Homer City any payment or
collateral in respect of any Subordinated Claims, or take any other action to
enforce its rights or exercise any remedies in respect of any Subordinated
Claims (whether upon the occurrence or during the continuation of a Lease Event
of Default under the Facility Lease).

                  (d) Neither Homer City nor the Subordinated Parties shall
otherwise take any action prejudicial to or inconsistent with the priority
position of the Secured Parties over the Subordinated Parties created by this
Section 2.1.

            SECTION 2.2 RELIANCE. All Senior Claims shall conclusively be deemed
to have been created, contracted or incurred in reliance on the subordination
provisions contained in this Agreement and all dealings between Homer City, the
Subordinated Parties and each of the holders of Senior Claims shall be deemed to
have been consummated in reliance upon the subordination provisions contained
herein.

            SECTION 2.3 OTHER HOLDERS. The subordination provisions set forth in
this Agreement shall be binding upon transferees or assignees of each of the
Subordinated Parties and upon each other holder of Subordinated Claims and shall
inure to the benefit of transferees or assignees of every holder of the Initial
Lessor Notes.

                                  ARTICLE III
                              WRONGFUL COLLECTIONS

            SECTION 3.1 TURNOVER. Should any payment on account of, or any
collateral for any part of, any Subordinated Claims be received by the
Subordinated Party in violation of this Agreement or the provisions of SECTION
6.9 of the Participation Agreement, such payment or collateral shall be
delivered forthwith to the Security Agent in the same form as so received (with
any necessary endorsement). Until so delivered, any such payment or collateral
shall be held by such Subordinated Party in trust for the holders of the Senior
Claims and shall not be commingled with other funds or property of such
Subordinated Party. The Security Agent is hereby irrevocably authorized to
supply any endorsement or assignment

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which may have been omitted which the Security Agent may reasonably deem
necessary or advisable to enforce its rights under this Agreement, including,
without limitation, authority to receive, endorse and collect all instruments
made payable to any Subordinated Party representing any distribution, interest
payment or other payments in respect of the Subordinated Claims.

            SECTION 3.2 SURVIVAL OF OBLIGATION. The obligation of the
Subordinated Party to deliver to the Security Agent any payment or collateral
received in connection with any Subordinated Claims, as set forth in SECTION
3.1, shall survive and shall not be in any way affected by the result of any (a)
insolvency, bankruptcy, receivership, liquidation, reorganization, readjustment,
composition or other similar proceeding relating to Homer City, its property or
its creditors as such, (b) proceeding for any liquidation, dissolution or other
winding-up of Homer City, voluntary or involuntary, whether or not involving
insolvency or bankruptcy proceedings, (c) assignment for the benefit of
creditors, (d) other marshalling of the assets of Homer City or (e) general
meeting of creditors of Homer City, in each case, under the laws of the United
States or any other jurisdiction (any such event, a "PROCEEDING").

                                   ARTICLE IV
                                   PROCEEDINGS

            SECTION 4.1 COMMENCEMENT OF PROCEEDINGS. Except to the extent
otherwise provided herein, no Subordinated Party shall commence, or join with
any other creditor or creditors of Homer City in commencing, any Proceeding
against Homer City without the consent of the Lease Indenture Trustee.

            SECTION 4.2 PAYMENTS AND DISTRIBUTIONS. In the event of any
Proceeding, until all Senior Leveraged Lease Obligations shall have been paid in
full, any payment or distribution of any kind or character on account of a
Subordinated Claim, whether in cash, property or securities, which, but for the
subordination provisions of this Agreement would otherwise be payable or
deliverable upon or in respect of Subordinated Claims, shall instead be paid
over or delivered to the Security Agent and no holder of Subordinated Claims
shall be entitled to receive any such payment or distribution or any benefit
therefrom.

            SECTION 4.3 ENFORCEMENT OF SUBORDINATED CLAIMS.

                  (a) COOPERATION. The Subordinated Parties shall cooperate
fully with the Security Agent and perform all acts reasonably requested by the

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Security Agent to enable the Security Agent to enforce any Subordinated Claims,
including, without limitation, filing appropriate proofs of claim and executing
and delivering all necessary powers of attorney, assignments or other
instruments.

                  (b) ENFORCEMENT BY THE SUBORDINATED PARTY. After the
commencement of any Proceeding, the requesting Subordinated Party may (but shall
not be required to) proceed to file a proof of claim, enter appearances and file
affirmative or responsive pleadings with respect to such Subordinated Claims and
take such further steps with respect thereto, not inconsistent with this
Agreement, as the requesting Subordinated Party may deem proper.

                  (c) SUBROGATION. The Subordinated Parties shall not have any
subrogation or other rights as a holder of Senior Claims, and each Subordinated
Party hereby irrevocably waives all such rights of subrogation and all rights of
reimbursement or indemnity whatsoever and all rights of recourse to any security
for any Senior Claims, until such time as all Senior Leveraged Lease Obligations
shall have been paid in full. Subject to and from and after the payment in full
of all Senior Leveraged Lease Obligations, each Subordinated Party shall be
subrogated to any rights of the holders of Senior Claims to receive payments or
distributions of cash, property or securities of Homer City applicable to any
Subordinated Claims until all amounts owing on such Subordinated Claims shall be
paid in full.

            (a)   ENFORCEMENT BY THE HOLDERS OF THE SENIOR CLAIMS. At any
Proceeding, until all Obligations shall have been paid in full, the holders of
the Senior Claims are hereby irrevocably authorized (but not required) to:

                  (i) enforce claims comprising Subordinated Claims in the name
            of the Subordinated Party by proof of debt, proof of claim, suit or
            otherwise;

                  (ii) collect any assets of any Owner Lessor distributed,
            divided or applied by way of dividend or payment, and any securities
            issued, in each case, on account of Subordinated Claims and apply
            the same, or the proceeds of any realization upon the same that the
            Indenture Estate in their discretion elect to effect, to Senior
            Claims until all Obligations shall have been paid in full; provided,
            however, that the Lease Indenture Estate shall render any surplus to
            the Subordinated Party or its affiliates, as their interests appear,
            or interplead such surplus with a court of competent jurisdiction;

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                  (iii) vote claims comprising Subordinated Claims to accept or
            reject any plan of partial or complete liquidation, reorganization,
            arrangement, composition or extension; and

                  (iv) take generally any action in connection with any such
            Proceeding which the Subordinated Party might otherwise take.

                                   ARTICLE V
                              LIMITATION ON ACTIONS

            SECTION 5.1 ACTIONS PROHIBITED. Until all Senior Leveraged Lease
Obligations shall have been paid in full, except as otherwise expressly provided
herein or in the other Operative Documents, the Subordinated Parties shall not,
without the prior written consent of the Security Agent:

                  (a) take, obtain or hold (or permit anyone acting on its
behalf to take, obtain or hold) any assets of Homer City (other than Homer
City's interest in the Facility and the Facility Site), whether as a result of
any administrative, legal or equitable action, or otherwise, in violation of the
subordination provisions contained in this Agreement;

                  (b) commence, prosecute or participate in (i) any
administrative, legal or equitable action against or involving Homer City
relating to the payment or collection of any Subordinated Claims, including,
without limitation, any Proceeding, or (ii) any administrative, legal or
equitable action to (a) enforce or collect any judgment obtained in respect of
any Subordinated Claims, (b) enforce or exercise remedies seeking to collect or
enforce payment of any Subordinated Claims or (c) enforce or exercise remedies
under or pursuant to any lien or other security interest securing any
Subordinated Claims; or

                  (c) exercise any other rights or remedies to enforce the
payment or collection of any Subordinated Claims or any collateral security
provided with respect to such Subordinated Claims.

            SECTION 5.2 DEFENSE IN ACTION. If the Subordinated Party, in
violation of the provisions herein set forth, shall commence, prosecute or
participate in any suit, action, case or Proceeding referred to in Section 5.1,
the Owner Lessor may interpose as a defense or plea the provisions set forth
herein, and any holder of any Senior Claims may intervene and interpose such
defense or plea in its own name or in the name of the Owner Lessor, and shall,
in any event, be entitled to restrain the

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enforcement of the provisions of any Subordinated Claims in its own name or in
the name of the Owner Lessor, as the case may be, in the same suit, action, case
or Proceeding or in any independent suit, action, case or Proceeding.

                                   ARTICLE VI
                             SUBORDINATION ABSOLUTE

            SECTION 6.1 SURVIVAL OF RIGHTS. The rights under this Agreement of
the holders of Senior Claims as against the Subordinated Parties shall remain in
full force and effect without regard to, and shall not be impaired or affected
by:

                  (a) any act or failure to act on the part of Homer City;

                  (b) any extension or indulgence in respect of any payment or
prepayment of any Senior Claims or any part thereof or in respect of any other
amount payable to any holder of any Senior Claims;

                  (c) any amendment, modification or waiver of, or addition or
supplement to, or deletion from, or compromise, release, consent or other action
in respect of, any of the terms of any Senior Claims;

                  (d) (i) any exercise or non-exercise by the holder of any
Senior Claims of any right, power, privilege or remedy under or in respect of
such Senior Claims or the subordination provisions contained herein, (ii) any
waiver by the holder of any Senior Claims of any right, power, privilege or
remedy or of any default in respect of such Senior Claims or the subordination
provisions contained herein or (iii) any receipt by the holder of any Senior
Claims or any failure by such holder to perfect a security interest in, or any
release by such holder of, any security for the payment of such Senior Claims;

                  (e) any merger or consolidation of Homer City or any of its
subsidiaries into or with other Person, or any sale, lease or transfer of any or
all of the assets of Homer City or any of its subsidiaries to any other Person,
PROVIDED that such merger or consolidation is effected in compliance with the
relevant provisions of the Participation Agreement;

                  (f) any payment or other distribution to any holder of any
Senior Claims in any Proceeding;

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                  (g) absence of any notice to, or knowledge by, the
Subordinated Parties of the existence or occurrence of any of the matters or
events set forth in the foregoing clauses (a) through (f); or

                  (h) any other circumstance.

            The provisions of this SECTION 6.1 are not in derogation of, and are
not intended to affect in any way, any rights or remedies of, or available to,
the Subordinated Parties that may arise under the other Operative Documents
directly or indirectly as a consequences of acts, events or circumstances set
forth above.

            Section 6.2 Waivers.

                  (a) WAIVER OF DEFENSES. Each Subordinated Party hereby
irrevocably waives, in any proceeding by the holders of Senior Claims to enforce
their rights under this Agreement, any defense based on the adequacy of a remedy
at law which might be asserted as a bar to the remedy of specific performance of
this Agreement.

                  (b) OTHER WAIVERS. Each Subordinated Party hereby irrevocably
waives (i) notice of any of the matters referred to in SECTION 6.1, (ii) all
notices which may be required, whether by statute, rule of law or otherwise, to
preserve intact any rights of any holder of any Senior Claims against Homer
City, including, without limitation, any demand, presentment and protest, or any
proof of notice of nonpayment under any document evidencing such Senior Claims,
(iii) notice of the acceptance of or reliance on this Agreement by the holders
of Senior Claims, (iv) notice of any renewal, extension or accrual of any Senior
Claims, or any loans made or other action taken in reliance on this Agreement,
(v) any right to the enforcement, assertion or exercise by any holder of any
Senior Claims of any right, power, privilege or remedy conferred in any document
evidencing such Senior Claims, or otherwise, (vi) any requirement of diligence
on the part of any holder of any Senior Claims, (vii) any requirement on the
part of any holder of any Senior Claims to mitigate damages resulting from any
default under any documents evidencing such Senior Claims and (viii) any notice
of any sale, transfer or other disposition of any Senior Claims by any holder
thereof.

            SECTION 6.3 ASSENT. Each Subordinated Party hereby irrevocably
assents to (a) any renewal, extension or postponement of the time of payment of
any Initial Lessor Notes or any other indulgence with respect thereto, (b) any
increase in the amount of any Initial Lessor Notes, subject to the provisions of
the Operative

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Documents, (c) any substitution, exchange or release of collateral for any
Initial Lessor Notes, (d) the addition or release of any Person primarily or
secondarily liable for any Initial Lessor Notes and (e) the provisions of any
instrument, security or other writing evidencing any Initial Lessor Notes.

                                  ARTICLE VII
                             HOMER CITY OBLIGATIONS

            The provisions of this Agreement are intended solely for the purpose
of defining the relative rights and obligations of the Subordinated Parties and
the holders of Senior Claims. Nothing contained herein is intended to affect the
relative rights of the Subordinated Parties and creditors of Homer City other
than the holders of Senior Claims.

                                  ARTICLE VIII
                               OPINION OF COUNSEL

            Each Subordinated Party shall deliver to the Security Agent an
opinion of counsel in form and substance satisfactory to the Security Agent, as
to the enforceability of this Agreement against such Subordinated Party.

                                   ARTICLE IX
                  RIGHTS OF OWNER LESSOR AND OWNER PARTICIPANT

            Neither this Agreement not the provisions herein shall prevent the
Owner Participant or the Owner Lessor, as the case may be, from exercising its
Section 9.1 Rights, other than the rights to demand and receive payments on
account of Subordinated Claims.

                                    ARTICLE X
                                   TERMINATION

            This Agreement shall terminate when all Senior Leveraged Lease
Obligations with respect to the Initial Lessor Notes shall have been paid in
full.

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                                   ARTICLE XI
                            MISCELLANEOUS PROVISIONS

            SECTION 11.1 WAIVERS, AMENDMENTS.

                  (a) The provisions of this Agreement may from time to time be
amended, modified or waived, if such amendment, modification or waiver is in
writing and consented to by the Security Agent, the Owner Manager and each other
party hereto except that such consent of the Security Agent will be required
only if such amendment, modification or waiver increases the obligations of the
Security Agent hereunder or adversely affects the rights of the Security Agent
hereunder.

                  (b) No failure or delay in exercising any power or right under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to or
demand on any party in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval under this Agreement
shall, except as may be otherwise stated in such waiver or approval, be
applicable to subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter to be granted
hereunder.

            SECTION 11.2 NOTICES. All notices and other communications provided
to any party hereto under this Agreement shall be in writing or by facsimile and
addressed, delivered or transmitted to such party at its address or facsimile
number set forth below or at such other address or facsimile number as may be
designated by such party in a written notice to the other parties:

Owner Lessor:

             Homer City OL[1]LLC
             Wells Fargo Bank Minnesota, N.A.
             c/o Corporate Trustee Services
             MAC; N2691-090
             213 Court Street
             Middletown, CT 06457

             With a copy to:
             ---------------

             Wells Fargo Bank Northwest, N.A.
             Corporate Trust Services
             MAC; U1254-031
             Salt Lake City, UT 84111

Owner Participant:

[General Electric Capital Corporation][Full Service Leasing Corp.]
[120][260] Long Ridge Road
Stamford, CT 06927

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WITH A COPY TO:

Attention: [        ][       ]
Facsimile: [        ][       ]

Security Agent:
The Bank of New York
114 West 47th Street
25th Floor
New York, New York  10036
Attention:  Corporate Trust Division
Facsimile:  212-852-1625

Homer City:
18101 Von Karman Avenue
Suite 1700
Irvine, CA  92612-1046
Attention:  Treasurer
Facsimile:  949-752-5624

Any notice, if mailed and properly addressed with postage prepaid shall be
effective five (5) Business Days after being sent or if properly addressed and
sent by pre-paid courier service, shall be deemed given when received; any
notice, if transmitted by facsimile, shall be deemed given when transmitted (if
confirmed).

            SECTION 11.3 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.

            SECTION 11.4 HEADINGS. The various headings of this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement or any provisions hereof or thereof.

            SECTION 11.5 EXECUTION IN COUNTERPARTS, EFFECTIVENESS. This
Agreement may be executed by the parties hereto in several counterparts, each of

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which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.

            SECTION 11.6 GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT SHALL
BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK. This Agreement constitutes the entire understanding among the parties
hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto.

            SECTION 11.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns.

            SECTION 11.8 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. EACH PARTY HERETO
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION. EACH PARTY HERETO FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT
THAT ANY PARTY HERETO HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR

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FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR
ITS PROPERTY, SUCH PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF
ITS OBLIGATIONS UNDER THIS AGREEMENT.

            SECTION 11.9 WAIVER OF JURY TRIAL. EACH PARTY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. EACH
PARTY ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE OTHER PARTIES ENTERING INTO THIS AGREEMENT.

            SECTION 11.10 LIMITATIONS OF LIABILITY OF THE INDEPENDENT MANAGER.
It is expressly understood and agreed by the parties hereto that this Agreement
is executed by Wells Fargo, not individually or personally, but solely as
Independent Manager under the Lessor LLC Agreement in the exercise of the power
and authority conferred and vested in it as such Independent Manager, that each
and all of the representations, undertakings and agreements herein made on the
part of the Independent Manager or the Owner Lessor are intended not as
personal representations, undertakings and agreements by Wells Fargo, or for
the purpose or with the intention of binding Wells Fargo, personally, but are
made and intended for the purpose of binding only the Lease Indenture Estate,
that nothing herein contained shall be construed as creating any liability of
Wells Fargo, or any incorporator or any past, present or future subscriber to
the capital stock of, or stockholder, officer or director of Wells Fargo, to
perform any covenant either express or implied contained herein or in the other
Operative Documents to which the Independent Manager or the Owner Lessor is
a party, and that so far as Wells Fargo is concerned, any Person shall look
solely to the Lease Indenture Estate for the performance of any obligation
hereunder or thereunder or under any of the instruments referred to herein or
therein; PROVIDED, that nothing contained in this SECTION shall be construed to
limit in scope or substance any general corporate

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liability of the _________ Trust Company as expressly provided in the Lessor LLC
Agreement or in the Participation Agreement.

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            IN WITNESS WHEREOF, the parties hereto have caused this
Subordination Agreement to be executed by their respective officers as of the
days and year first above written.

                              HOMER CITY OL1

                              By: Wells Fargo Bank Northwest,
                                  National Association, not in its
                                  individual capacity, but solely as
                                  Owner Manager under the Lessor LLC Agreement

                              By:
                                    --------------------------
                                    Name:
                                    Title:

                              GE CAPITAL OWNER PARTICIPANT

                              By:
                                    --------------------------
                                    Name:
                                    Title:

                              EME Homer City Generation, L.P.

                              By:

                              By:
                                    --------------------------
                                    Name:
                                    Title:

<Page>

                              THE BANK OF NEW YORK, AS
                              SUCCESSOR TO THE UNITED STATES
                              TRUST COMPANY,
                              not in its individual capacity, except to the
                              extent provided herein, but solely as Security
                              Agent under the Lease Indenture

                              By:    _________________________________
                                     Name:
                                     Title:
                                     Date:<Page>
                                                                     EXHIBIT 4.8

                       ASSUMPTION AND RELEASE AGREEMENT

         ASSUMPTION AND RELEASE AGREEMENT, dated as of December [ ], 2001
(this "Agreement"), made by Edison Mission Holdings Co., a California
corporation ("Holdings"), Edison Mission FinanceCo., a California corporation
("Financ Co"), The Bank of New York, as successor in interest to United
States Trust Company of New York, as Bondholder Trustee under the Indenture
(as defined below), The Bank of New York as successor in interest to United
States Trust Company of New York, as Collateral Agent under the Guarantee and
Collateral Agreement (as defined below) and EME Homer City Generation L.P., a
Pennsylvania limited partnership ("EME Homer City").

                                    RECITALS

         WHEREAS, Edison Mission Holdings Co. ("Holdings") entered into the
Indenture, dated as of May 27, 1999, between Holdings and the Bondholder Trustee
(as amended from time to time, the "Indenture") pursuant to which Holdings
issued $300,000,000 principal amount of 8.137% Senior Secured Bonds due 2019
and $530,000,000 principal amount of 8.734% Senior Secured Bonds due 2026
which it subsequently exchanged for a like amount of substantially similar
bonds that had been registered under the Securities Act of 1933
(collectively, the "Bonds").

         WHEREAS, the direct and indirect subsidiaries of Holdings, including
EME Homer City (collectively, the "Subsidiary Guarantors") entered into the
Guarantee and Collateral Agreement, dated as of March 18, 1999, among Holdings,
each Subsidiary Guarantor and the Collateral Agent (as amended from time to
time, the "Guarantee and Collateral Agreement") pursuant to which each
Subsidiary Guarantor unconditionally guaranteed the obligations of Holdings
under the Indenture and the Bonds.

         WHEREAS, Holdings and FinanceCo entered into the Subordinated Loan
Agreement, dated as of March 18, 1999 (the "Holdings Loan Facility"),
pursuant to which Holdings loaned the proceeds of the issuance of the Bonds to
FinanceCo.

         WHEREAS, FinanceCo and EME Homer City entered into The Subordinated
Loan Agreement, dated as of March 18, 1999 (the "FinanceCo Loan Facility"),
pursuant to which FinanceCo loaned the proceeds of the loan under The
Holdings Loan Facility to EME Homer City.

         WHEREAS, EME Homer City used the proceeds of the loan under The
FinanceCo Loan Facility to purchase (the "Purchase") certain coal-fired
power generation and related assets (the "Facilities").

         WHEREAS, pursuant to its Consent Solicitation Statement, dated
November [  ], 2001, as may be amended and supplemented prior to the
expiration date of the Consent Solicitation described therein (the "Consent
Solicitation Statement"), Holdings is soliciting consents of the holders of
the Bonds to certain Proposals (as defined in the Consent Solicitation
Statement), including the release of each Subsidiary Guarantor from its
respective obligations under the Guarantee and Collateral Agreement and the
amendment of and waiver to certain provisions of the Indenture, in order to
effectuate a sale-leaseback transaction of the Facilities (the
"Sale-Leaseback").

         WHEREAS, the requisite number of consents to the Proposals has been
received by the Bondholder Trustee in the Consent Solicitation.

         WHEREAS, FinanceCo desires to expressly assume all obligations of
Holdings under the Indenture and the Bonds, and Holdings desires to be released
from all obligations under the Indenture and the Bonds.

         WHEREAS, EME Homer City desires to expressly assume all obligations of
FinanceCo under the Indenture and the Bonds, and FinanceCo desires to be
released from all obligations under the Indenture and the Bonds.

         NOW THEREFORE, for and in consideration of the mutual promises and
covenants set forth herein:

<Page>

         1. ASSUMPTION OF OBLIGATIONS: Releases.

         (a)      FinanceCo hereby unconditionally and irrevocably assumes all
                  obligations of Holdings under the Indenture and the Bonds.

         (b)      After giving effect to the assumption set forth in clause (a)
                  of this Section 1, EME Homer City hereby unconditionally and
                  irrevocably assumes all obligations of FinanceCo under the
                  Indenture and the Bonds.

         (c)      After giving effect to the assumption set forth in clause (b)
                  of this Section 1, Holdings and FinanceCo are hereby released
                  from their respective obligations under the Indenture and the
                  Bonds.

         2. ACCEPTANCE.

         (a)      Holdings hereby accepts this assumption of all its obligations
                  under the Indenture and the Bonds pursuant to Section 1(a).

         (b)      FinanceCo hereby accepts the assumption of all its
                  obligations under the Indenture and the Bonds pursuant to
                  Section 1(b).

         3. ACKNOWLEDGMENTS.

         (a)      The Bondholder Trustee acknowledges that, as a consequence of
                  and after giving effect to the assignments and assumptions
                  contained herein, each of Holdings and FinanceCo does
                  not have any liability under the Indenture and the Bonds and
                  the Bondholder Trustee agrees, and by its acceptance, each
                  holder of a Bond agrees, that it will not look to Holdings or
                  FinanceCo for payments of any amounts owed in respect of the
                  Indenture or the Bonds.

         (b)      The Collateral Agent acknowledges that the Subsidiary
                  Guarantors have been released from their obligations under the
                  Guarantee and Collateral Agreement pursuant to the terms
                  thereof.

         4. EFFECTIVENESS. The Agreement shall only become effective on the date
of the consummation of the transactions contemplated by the Consent Solicitation
Statement.

         5. BINDING OBLIGATION. Each of Holdings, EME Homer City, FinanceCo,
the Bondholder Trustee and the Collateral Agent hereby represents that its
respective obligations under this Agreement constitute its legal, valid and
binding obligations, enforceable in accordance with their respective terms.

         6. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon Holdings, EME Homer City, FinanceCo, the Bondholder Trustee
and the Collateral Agent and their respective heirs, successors and assigns
as permitted under the Indenture.

         7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.

         8. GOVERNING LAW. This Agreement shall be governed by, and construed
and interpreted in accordance with, the laws of the State of New York.

                                       2
<Page>

         IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
as of the date first written above.

                                           EME HOMER CITY GENERATION L.P.

                                           By: MISSION ENERGY WESTSIDE INC.,
                                               as General Partner

                                           By:
                                               ---------------------------------
                                               Name:
                                               Title:

                                           EDISON MISSION HOLDINGS CO.

                                           By:
                                               ---------------------------------
                                               Name:
                                               Title:

                                           EDISON MISSION FINANCECO

                                           By:
                                               ---------------------------------
                                               Name:
                                               Title:

                                           THE BANK OF NEW YORK,
                                           As Bondholder Trustee

                                           By:
                                               ---------------------------------
                                               Name:
                                               Title:

                                           THE BANK OF NEW YORK,
                                           As Collateral Agent

                                           By:
                                               ---------------------------------
                                               Name:
                                               Title:

                                       3

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