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Edison Mission Energy – ‘10-Q’ for 6/30/99

On: Friday, 8/13/99 · For: 6/30/99 · Accession #: 1017062-99-1438 · File #: 0-24890

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/13/99  Edison Mission Energy             10-Q        6/30/99    3:300K                                   Donnelley R R & S… 11/FA

Quarterly Report — Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report Dated 6/30/1999                      28    105K 
 2: EX-10.63    Indenture & First Supplemental                        67    350K 
 3: EX-27       Financial Data Schedule                                2      7K

10-Q — Quarterly Report Dated 6/30/1999
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Exhibits and Reports on Form 8-K Management's Discussion and Analysis of Financial Condition and Results of Operations Signatures
1	1st Page - Filing Submission
16	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
27	Item 6. Exhibits and Reports on Form 8-K
28	Signatures

10-Q 1st Page of 28 TOC ↑Top Previous Next ↓Bottom Just 1st
 
SECURITIES AND EXCHANGE COMMISSION  
Washington, D.C. 20549  

Form 10-Q 

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES         
EXCHANGE ACT OF 1934                                                  

For the quarterly period ended      June 30, 1999                     
               -----------------------

or  

[_]  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 1-13434  

Edison Mission Energy 
(Exact name of registrant as specified in its charter)  

 California                                 95-4031807
    (State or other jurisdiction of         (I.R.S. Employer Identification No.)
incorporation or organization)                                        

18101 Von Karman Avenue                                         
Irvine, California                                  92612       
(Address of principal executive offices)                  (Zip Code)            

Registrant's telephone number, including area code:  (949) 752-5588   

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

    Number of shares outstanding of the registrant's Common Stock as of August
   13, 1999: 100 shares (all shares held by an affiliate of the registrant).

10-Q 2nd Page of 28 TOC 1st Previous Next ↓Bottom Just 2nd
TABLE OF CONTENTS 

Item                                                                      Page  
----                                                                      ----  

PART I - Financial Information

1.  Financial Statements.................................................    1  

2.  Management's Discussion and Analysis of Financial Condition and             
  Results of Operations................................................   14

PART II - Other Information 

5.  Other Information....................................................   25  

6.  Exhibits and Reports on Form 8-K.....................................   25  

PART III  

  Signatures...........................................................   26

10-Q 3rd Page of 28 TOC 1st Previous Next ↓Bottom Just 3rd
PART I - FINANCIAL INFORMATION                                                  
ITEM 1. FINANCIAL STATEMENTS                                                    

EDISON MISSION ENERGY AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME 
(In thousands)

                                                        [Enlarge/Download Table]

                                                    (Unaudited)             (Unaudited)       
                                                Three Months Ended        Six Months Ended    
                                                      June 30,                June 30,        
                                               ---------------------   -----------------------
                                                  1999        1998        1999         1998   
                                               ----------   --------   ----------   ----------
                                                                                              
Operating Revenues                                                                            
   Electric revenues                            $218,672    $144,402    $ 415,525    $343,199 
   Equity in income from energy projects          35,254      48,225       95,999      65,792 
   Equity in income from oil and gas               6,118       4,962        9,760      10,427 
   Operation and maintenance services              9,328       9,725       17,844      19,802 
                                                --------    --------    ---------    -------- 
       Total operating revenues                  269,372     207,314      539,128     439,220 
                                                --------    --------    ---------    -------- 
Operating Expenses                                                                            
   Fuel                                           73,572      41,075      127,647      89,712 
   Plant operations                               47,018      32,871       81,389      62,469 
   Operation and maintenance services              7,543       6,888       14,013      14,279 
   Depreciation and amortization                  35,597      22,378       59,743      45,160 
   Administrative and general                     32,567      32,990       69,064      57,162 
                                                --------    --------    ---------    -------- 
       Total operating expenses                  196,297     136,202      351,856     268,782 
                                                --------    --------    ---------    -------- 
   Income from operations                         73,075      71,112      187,272     170,438 
                                                --------    --------    ---------    -------- 
Other Income (Expense)                                                                        
   Interest and other income                      12,792       8,995       20,584      22,771 
   Interest expense                              (78,873)    (45,160)    (123,392)    (90,885)
   Dividends on preferred securities              (4,145)     (3,304)      (7,378)     (6,601)
                                                --------    --------    ---------    -------- 
       Total other income (expense)              (70,226)    (39,469)    (110,186)    (74,715)
                                                --------    --------    ---------    -------- 
   Income before income taxes                      2,849      31,643       77,086      95,723 
   Provision (benefit) for income taxes           (2,626)     13,055       13,675      39,435 
                                                --------    --------    ---------    -------- 
Income before change in accounting principle    $  5,475    $ 18,588    $  63,411    $ 56,288 
Cumulative effect on prior years of change in                                                 
accounting for start-up costs                         --          --      (13,840)         -- 
                                                --------    --------    ---------    -------- 
Net Income                                      $  5,475    $ 18,588    $  49,571    $ 56,288 
                                                ========    ========    =========    ======== 

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

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EDISON MISSION ENERGY AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 
(In thousands)  

                                                        [Enlarge/Download Table]

                                                (Unaudited)            (Unaudited)     
                                             Three Months Ended      Six Months Ended  
                                                  June 30,               June 30,      
                                           ----------------------  --------------------
                                              1999        1998       1999        1998  
                                           ----------   ---------  ---------   --------

                                                                                       
Net Income                                  $  5,475     $18,588   $ 49,571     $56,288
Other comprehensive income (expense), net                                              
of tax:                                                                                
   Foreign currency translation                                                        
   adjustments, net of income tax                                                      
   benefit (expense) of $1,416 and $199                                                
   for the three months and $2,794 and                                                 
   $(900) for the six months ended                                                     
   June 30, 1999 and 1998, respectively      (29,032)     (7,577)   (41,657)        738
                                            --------     -------   --------     -------
Comprehensive Income (Loss)                 $(23,557)    $11,011   $  7,914     $57,026
                                            ========     =======   ========     =======

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

2 

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EDISON MISSION ENERGY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS 
(In thousands)

                                                                [Download Table]

                                                    (Unaudited)                
                                                      June 30,     December 31,
                                                        1999           1998    
                                                    -----------    ------------
                                                                               
Assets                                                                         

Current Assets                                                                 
   Cash and cash equivalents                         $  808,280     $  459,178 
   Accounts receivable - trade                           98,770         74,403 
   Accounts receivable - affiliates                      29,193         13,871 
   Inventory                                             61,395         13,000 
   Prepaid expenses and other                            41,656         46,864 
                                                     ----------     ---------- 
       Total current assets                           1,039,294        607,316 
                                                     ----------     ---------- 
Investments                                                                    
 Energy projects                                      1,887,859      1,163,597 
 Oil and gas                                             68,987         62,949 
                                                     ----------     ---------- 
       Total investments                              1,956,846      1,226,546 
                                                     ----------     ---------- 
Property, Plant and Equipment                         5,016,679      3,125,747 
   Less accumulated depreciation and amortization       300,609        250,934 
                                                     ----------     ---------- 
       Net property, plant and equipment              4,716,070      2,874,813 
                                                     ----------     ---------- 
Other Assets                                                                   
   Goodwill                                             288,090        308,051 
   Restricted cash and other                            157,891        141,390 
                                                     ----------     ---------- 
       Total other assets                               445,981        449,441 
                                                     ----------     ---------- 
Total Assets                                         $8,158,191     $5,158,116 
                                                     ==========     ========== 

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

3 

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EDISON MISSION ENERGY AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS 
(In thousands)  

                                                                [Download Table]

                                                      (Unaudited)               
                                                        June 30,    December 31,
                                                          1999          1998    
                                                      -----------   ------------
                                                                                
Liabilities and Shareholder's Equity                                            

Current Liabilities                                                             
   Accounts payable - affiliates                       $    8,489    $    8,339 
   Accounts payable and accrued liabilities               140,994        99,062 
   Accrued incentive compensation                         135,852       112,652 
   Interest payable                                        62,995        56,708 
   Short-term obligations                                 701,899            -- 
   Current maturities of long-term obligations            101,552       194,586 
                                                       ----------    ---------- 
       Total current liabilities                        1,151,781       471,347 
                                                       ----------    ---------- 
Long-Term Obligations Net of Current Maturities         4,161,114     2,396,360 
                                                       ----------    ---------- 
Long-Term Deferred Liabilities                                                  
   Deferred taxes and tax credits                         612,630       613,009 
   Deferred revenue                                       525,418       490,471 
   Other                                                   89,717        79,369 
                                                       ----------    ---------- 
       Total long-term deferred liabilities             1,227,765     1,182,849 
                                                       ----------    ---------- 
Total Liabilities                                       6,540,660     4,050,556 
                                                       ----------    ---------- 
Preferred Securities of Subsidiaries:                                           
   Company-obligated mandatorily redeemable security                            
     of partnership holding solely parent debentures      150,000       150,000 
                                                       ----------    ---------- 
   Subject to mandatory redemption                         84,032            -- 
                                                       ----------    ---------- 
   Not subject to mandatory redemption                    118,103            -- 
                                                       ----------    ---------- 
Commitments and Contingencies (Note 5)                                          

Shareholder's Equity                                                            
   Common stock, no par value; 10,000 shares                                    
     authorized; 100 shares issued and outstanding         64,130        64,130 
   Additional paid-in capital                             929,406       629,406 
   Retained earnings                                      283,838       234,345 
   Accumulated other comprehensive income (loss)          (11,978)       29,679 
                                                       ----------    ---------- 
Total Shareholder's Equity                              1,265,396       957,560 
                                                       ----------    ---------- 
Total Liabilities and Shareholder's Equity             $8,158,191    $5,158,116 
                                                       ==========    ========== 

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

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EDISON MISSION ENERGY AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(In thousands)  

                                                                [Download Table]

                                                              (Unaudited)       
                                                            Six Months Ended    
                                                                June 30,        
                                                       -------------------------
                                                           1999          1998   
                                                       -----------    ----------
                                                                                
Cash Flows From Operating Activities                                            
   Net income                                          $    49,571     $ 56,288 
   Adjustments to reconcile net income to net cash                              
     provided by operating activities                                           
       Equity in income from energy projects               (95,999)     (65,792)
       Equity in income from oil and gas                    (9,760)     (10,427)
       Distributions from energy projects                   55,861       51,222 
       Distributions from oil and gas                          400       19,112 
       Depreciation and amortization                        59,743       45,160 
       Deferred taxes and tax credits                       16,937       37,194 
       Cumulative effect on prior years of change                               
         in accounting for start-up costs                   13,840           -- 
   (Increase) decrease in accounts receivable              (40,189)       5,895 
   Decrease in prepaid expenses and other                      393        4,236 
   Increase (decrease) in accounts payable and                                  
     accrued liabilities                                     6,287      (17,076)
   Increase in interest payable                             51,961        9,739 
   Other, net                                              (10,760)     (11,915)
                                                       -----------     -------- 
       Net cash provided by operating activities            98,285      123,636 
                                                       -----------     -------- 
Cash Flows From Financing Activities                                            
   Borrowings on long-term obligations                   1,810,518       57,541 
   Payments on long-term obligations                      (154,658)     (45,424)
   Short-term financing, net                               703,499           -- 
   Capital contribution from parent                        300,000           -- 
   Issuance of preferred securities                        202,212           -- 
                                                       -----------     -------- 
       Net cash provided by financing activities         2,861,571       12,117 
                                                       -----------     -------- 
Cash Flows From Investing Activities                                            
   Investments in energy projects                          (20,153)      (5,381)
   Loans to energy projects                                (26,101)     (22,937)
   Purchase of generating station                       (1,800,355)          -- 
   Purchase of common stock of acquired companies         (648,246)      (4,109)
   Capital expenditures                                    (70,113)     (53,342)
   (Increase) decrease in restricted cash                   (6,163)      32,093 
   Other, net                                              (30,254)         133 
                                                       -----------     -------- 
       Net cash used in investing activities            (2,601,385)     (53,543)
                                                       -----------     -------- 
Effect of exchange rate changes on cash                     (9,369)      (1,498)
                                                       -----------     -------- 
Net increase in cash and cash equivalents                  349,102       80,712 
Cash and cash equivalents at beginning of period           459,178      585,883 
                                                       -----------     -------- 
Cash and cash equivalents at end of period             $   808,280     $666,595 
                                                       ===========     ======== 

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

5 

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EDISON MISSION ENERGY AND SUBSIDIARIES  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1999 

NOTE 1. GENERAL                                                                 

All adjustments, including recurring accruals, have been made that are
necessary to present fairly the consolidated financial position and results of  
operations for the periods covered by this report. The results of operations for
the six months ended June 30, 1999, are not necessarily indicative of the       
operating results for the full year.                                            

     Edison Mission Energy's (EME) significant accounting policies are described
in Note 2 to EME's Consolidated Financial Statements as of December 31, 1998 and
1997, included in its 1998 Annual Report on Form 10-K filed with the Securities 
and Exchange Commission on March 31, 1999. EME follows the same accounting      
policies for interim reporting purposes, with the exception of the American     
Institute of Certified Public Accountants Statement of Position (SOP) 98-5,     
"Reporting on the Costs of Start-Up Activities", which became effective in      
January 1999. SOP 98-5 requires that certain costs related to start-up          
activities be expensed as incurred and that certain previously capitalized costs
be expensed and reported as a cumulative change in accounting principle. This   
quarterly report should be read in connection with such financial statements.   

Certain prior period amounts have been reclassified to conform to the 
current period financial statement presentation.                                

NOTE 2. INVESTMENTS                                                             

The following table presents summarized financial information of the  
investments in energy projects and oil and gas accounted for by the equity      
method:                                                                         

                                                                [Download Table]

                                    (In thousands)               
                            (Unaudited)           (Unaudited)    
                        Three Months Ended      Six Months Ended 
                              June 30,              June 30,     
                        -------------------   -------------------
                          1999       1998       1999       1998  
                        --------   --------   --------   --------
                                                                 
Energy Projects                                                  
Operating Revenues      $319,747   $379,045   $762,591   $722,102
Income from Operations    69,855     94,844    242,101    154,775
Net Income                57,552     66,693    198,503    103,014

Oil and Gas                                                      
Operating Revenues      $ 50,370   $ 48,483   $ 93,537   $105,948
Income from Operations    15,115     12,994     23,287     28,682
Net Income                11,970      8,626     19,244     21,106

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NOTE 3.  ACQUISITIONS                                                           

In March 1999, EME Homer City Generation L.P. (EME Homer City), an    
indirect, wholly owned affiliate of EME, completed a transaction with GPU, Inc.,
New York State Electric & Gas Corporation and their respective affiliates to    
acquire the 1,884-megawatt (MW) Homer City Electric Generating Station and      
certain facilities and other assets associated therewith (collectively, Homer   
City).                                                                          

   Consideration for Homer City consisted of a cash payment of approximately
$1.8 billion, which was partially financed by $1.5 billion of new loans (see    
Note 4).                                                                        

 In May 1999, Edison Mission Energy Taupo Ltd. (EME Taupo), an indirect,
wholly owned affiliate of EME, completed a transaction with the New Zealand     
government to acquire 40% of the shares of Contact Energy Ltd. (Contact).       
Contact owns and operates hydroelectric, geothermal and natural gas-fired power 
generating plants in New Zealand with a total generating capacity of 2,371 MW.  
Contact also supplies gas and electricity to customers in New Zealand and has   
minority interests in two power projects in Australia.                          

     Consideration for Contact consisted of a cash payment of approximately $648
million (1.2 billion New Zealand dollars). Financing of the acquisition is      
discussed in Note 4.                                                            

   Both acquisitions were accounted for utilizing the purchase method. EME's
consolidated statement of income for the three and six months ended June 30,    
1999 reflects the operations of Homer City beginning on March 18, 1999 and      
Contact beginning May 1, 1999.                                                  

NOTE 4.  FINANCIAL INSTRUMENTS                                                  

     In March 1999, Edison Mission Holdings Co. (EM Holdings), parent company of
EME Homer City, closed a $1.1 billion financing and EME closed a $700 million   
financing. The EM Holdings financing consists of (1) an $800 million, 364-day   
interest only term loan, (2) a $250 million, five-year interest only            
construction term loan and (3) a $50 million, five-year interest only revolving 
loan. These loans are structured on a limited-recourse basis, in which the      
lenders look primarily to the cash generated by EM Holdings and its subsidiaries
to repay the debt and have taken a security interest in the assets of EM        
Holdings and its subsidiaries. The EME financing consists of a $700 million,    
364-day interest only revolving credit facility, structured on a recourse,      
unsecured basis. The proceeds of EM Holdings' $800 million loan and EME's $700  
million loan, combined with cash and corporate revolver borrowings totaling     
approximately $300 million were used to finance the acquisition of Homer City.  

In May 1999, EM Holdings completed an $830 million bond financing. The
financing consists of (1) $300 million, 8.137% Senior Secured Bonds due 2019 and
(2) $530 million, 8.734% Senior Secured Bonds due 2026. These bonds are non-    
recourse to                                                                     

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EME. The proceeds of the $830 million bonds were used primarily to repay EM     
Holdings' $800 million, 364-day interest only term loan.                        

  In May 1999, Edison Mission Energy Global Management, Inc. issued $120 million
of Flexible Money Market Cumulative Preferred Stock.  The stock issuance        
consists of (1) 600 Series A Shares and (2) 600 Series B Shares, both with      
liquidation preference of $100,000 per share and a dividend rate of 5.74% until 
May 2004. In May 1999 EME Taupo issued a $214 million (400 million New Zealand  
dollars) credit facility. The proceeds from the $120 million stock and $214     
million credit facility, combined with an equity contribution from Edison       
International of $300 million and cash were used to finance the acquisition of  
Contact.  In June 1999, EME Taupo issued $84 million (160 million New Zealand   
dollars) of Retail Redeemable Preference Shares, the proceeds of which were used
to repay a portion of the EME Taupo $214 million credit facility.               

  In June 1999, EME issued $600 million, 7.73% Senior Notes due 2009.  The Notes
are senior unsecured obligations of EME, which will be used for general         
corporate purposes.                                                             

NOTE 5. COMMITMENTS AND CONTINGENCIES                                           

Firm Commitments for Asset Purchases                                            

                                                                [Download Table]

Projects                                                   U.S. ($ in millions)
--------                                                   --------------------
                                                                               
Commonwealth Edison Co. (i)                                      $ 5,000       

(i)   A wholly owned subsidiary of EME executed an Asset Sale Agreement to      
  purchase the fossil-fuel generating assets of Commonwealth Edison Co.,
     totaling 9,621 MW located in the midwestern United States. The closing of
the transaction is subject to receipt of various state and federal  
  regulatory approvals and is expected to be completed by year end 1999.

Firm Commitments to Contribute Project Equity                                   

                                                                [Download Table]

Projects                 Local Currency                    U.S. ($ in millions)
--------                 --------------                    --------------------
                                                                               
ISAB (i)                 244 billion Italian Lira                 $130         
EcoElectrica (ii)                                                   34         
Tri Energy (iii)                                                    25         
Paiton (iv)                                                         17         

(i)   ISAB is a 512-MW integrated gasification combined cycle power plant under 
     construction near Siracusa in Sicily, Italy. A wholly owned subsidiary of
EME owns a 49% interest. Equity will be contributed at commercial   
operation, which is currently scheduled for late 1999.              

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(ii)  EcoElectrica is a 540-MW liquefied natural gas combined-cycle cogeneration
facility under construction in Penuelas, Puerto Rico. A wholly owned
subsidiary of EME owns a 50% interest. Equity will be contributed at
commercial operation, which is currently scheduled for late 1999.   

(iii) Tri Energy is a 700-MW gas-fired power plant under construction in the    
      Ratchaburi Province, Thailand. A wholly owned subsidiary of EME owns a 25%
  interest. Equity will be contributed at commercial operation, which is
currently scheduled for mid-2000.                                   

(iv)  Paiton is a 1,230-MW coal-fired power plant in operation in East Java,    
   Indonesia. A wholly owned subsidiary of EME owns a 40% interest. Equity
contributions continue to be made.                                  

Firm commitments to contribute project equity could be accelerated due to   
certain events of default as defined in the non-recourse project financing      
facilities.  Management has no reason to believe that these events of default   
will occur to require acceleration of the firm commitments.                     

Contingent Obligations to Contribute Project Equity                             

                                                                [Download Table]

Projects                                                   U.S. ($ in millions)
--------                                                   --------------------
                                                                               
Paiton (i)                                                        $141         
Tri Energy (ii)                                                     20         
Doga (ii)                                                           14         
All Other                                                           19         

(i)   Contingent obligations to contribute additional project equity (Contingent
Equity) would be based on events principally related to capital cost
  overruns during the plant construction, certain partner obligations or
   events of default. These contingent obligations are to be cancelled (if
     unused) as of the date of term financing by the Export-Import Bank of the
 United States. Term financing by the Export-Import Bank of the United
States is the subject of a comprehensive set of conditions. Based on
present projections, the Project does not expect to complete these  
      conditions at the time contemplated in the loan documentation (October 15,
      1999), and is seeking an extension of the time to achieve term completion.
  The Project is also negotiating an understanding with its Lenders with
      regard to the amounts and uses of the Contingent Equity during the time of
this extension. As of the date hereof, the Project does not have any
   commitment from the Lenders as to the extension. In addition, a dispute
 involving a slope adjacent to the Paiton site will require Contingent
    Equity to be contributed for amounts not otherwise covered by insurance.
The Contractor has initiated a Phase II arbitration on the amount of
      compensation due as a result of the slope failure, and Paiton Energy is in
   discussions with its insurance companies on payment under its policies.
     EME's share of the total costs related to the slope failure are currently
 estimated to be between $16 and $44 million. Further, because of some
     delays in the completion of the construction, the Project expects certain
other cost                                                          

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10-Q 12th Page of 28 TOC 1st Previous Next ↓Bottom Just 12th
     overruns. The EME share of these overruns is estimated to be between $10-
15 million.                                                         

(ii)  Contingent obligations to contribute additional equity to the project     
 would be based on events principally related to capital cost overruns
      during plant construction, certain EME or partner obligations or events of
default.                                                            

  Other than as noted above, management is not aware, at this time, of any other
contingent obligations or obligations to contribute project equity.             

Other Commitments and Contingencies                                             

 Certain of EME's subsidiaries entered into indemnification agreements whereby
the subsidiaries agreed to repay capacity payments to the projects' power       
purchasers, in the event the projects unilaterally terminate their performance  
or reduce their electric power producing capability during the term of the power
contract.  Obligations under these indemnification agreements as of June 30,    
1999, if payment were required, would be $243 million.  Management has no reason
to believe that the projects will either terminate their performance or reduce  
their electric power producing capability during the term of the power          
contracts.                                                                      

Paiton is a 1,230-MW coal-fired power plant in operation in East Java,      
Indonesia.  A wholly owned subsidiary of EME owns a 40% interest and has a $370 
million investment at June 30, 1999. The tariff is higher in the early years and
steps down over time.  The tariff for the Paiton project includes infrastructure
to be used in common by other units at the Paiton complex. The plant's output is
fully contracted with the state-owned electricity company, PT Perusahaan Listrik
Negara (PLN).  Payments are in Indonesian Rupiah, with the portion of such      
payments intended to cover non-Rupiah project costs (including returns to       
investors) indexed to the Indonesian Rupiah/U.S. dollar exchange rate           
established at the time of the Power Purchase Agreement (PPA) in February 1994. 
PLN's payment obligations are supported by the Government of Indonesia.  The    
projected rate of growth of the Indonesian economy and the exchange rate of     
Indonesian Rupiah into U.S. dollars have deteriorated significantly since the   
Paiton project was contracted, approved and financed.  The project received     
substantial finance and insurance support from the Export-Import Bank of the    
United States, The Export-Import Bank of Japan, the U.S. Overseas Private       
Investment Corporation and the Ministry of International Trade and Industry of  
Japan.  The Paiton project's senior debt ratings have been reduced from         
investment grade to speculative grade based on the rating agencies' perceived   
increased risk that PLN might not be able to honor the electricity sales        
contract with Paiton.  The Government of Indonesia has arranged to reschedule   
sovereign debt owed to foreign governments and has entered into discussions     
about rescheduling sovereign debt owed to private lenders.  PLN has announced   
its intentions to commence discussions with independent power producers to      
renegotiate the power supply contracts, which discussions have commenced on an  
initial basis, however it is not yet known what form the renegotiation may take.
Any material modifications of the contract could also require a renegotiation of
the Paiton project's debt agreement.  Certain events (including                 

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the shortfall in payment discussed in the paragraph below) which, with the      
passage of time or upon notice, may mature into defaults of the Project's debt  
agreement have occurred and may require the grant of waivers or renegotiation of
the relevant agreements. Waivers of potential defaults have been received       
previously from the Project's creditors. The impact of any such renegotiations  
with PLN, the Government of Indonesia or the project's creditors on EME's       
expected return on its investment in Paiton is uncertain at this time, however, 
management believes that it will ultimately recover its investment in the       
project.                                                                        

 Paiton notified PLN that Unit 7 of Paiton achieved Commercial Operation under
terms of the PPA on May 1999 and that Unit 8 of Paiton achieved Commercial      
Operation under the terms of the PPA on July 1999.  Because of the economic     
downturn, PLN is experiencing low electricity demand and PLN has therefore      
dispatched the Paiton plant to zero;  however, under the terms of the PPA, PLN  
is required to continue to pay for capacity and fixed operating costs once each 
unit and the Plant achieve Commercial Operation. An invoice for these charges   
for May in the amount of $7.8 million was submitted to PLN.  The project and PLN
met to review the invoice and a partial payment of $2.5 million was subsequently
received.  The primary reason for the payment shortage was the use of an        
arbitrary Indonesian Rupiah/U.S. dollar exchange rate of 2,450 Indonesian Rupiah
to one U.S. dollar by PLN.  The use of this exchange rate is not in agreement   
with the Power Purchase Agreement, but is the exchange rate on which PLN        
payments to other independent power producers in Indonesia have been based.     

  Brooklyn Navy Yard is a 286-MW gas-fired cogeneration power plant in Brooklyn,
New York.  A wholly owned subsidiary of EME owns 50% of the project.  In        
February 1997, the construction contractor asserted general monetary claims     
under the turnkey agreement against Brooklyn Navy Yard Cogeneration Partners,   
L.P. (BNY) for damages in the amount of $136.8 million.  BNY has asserted       
general monetary claims against the contractor.  In connection with a $407      
million non-recourse project refinancing in 1997, EME agreed to indemnify BNY   
and its partner from all claims and costs arising from or in connection with the
contractor litigation, which indemnity has been assigned to the lenders.  EME   
believes that the outcome of this litigation will not have a material adverse   
effect on its financial position or results of operations.                      

Litigation                                                                      

EME is routinely involved in litigation arising in the normal course of     
business.  While the results of such litigation cannot be predicted with        
certainty, management, based on advice of counsel, does not believe that the    
final outcome of any pending litigation will have a material adverse effect on  
EME's financial position or results of operations.                              

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Environmental Matters                                                           

EME is subject to environmental regulation by federal, state and local
authorities in the U.S. and foreign regulatory authorities with jurisdiction    
over projects located outside the U.S. EME 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.                                              

  EME completed a partial review of its sites in 1995 and does not believe
that a material liability exists as of June 30, 1999. The implementation of     
Clean Air Act Amendments is expected to result in increased operating expenses; 
however, these expenses are not expected to have a material impact on EME's     
financial position or results of operations.                                    

NOTE 6. BUSINESS SEGMENTS                                                       

EME operates predominately in one line of business, electric power    
generation, with reportable segments organized by geographic region: Americas,  
Asia Pacific and Europe, Central Asia, Middle East and Africa. EME's plants are 
located in different geographic areas, which mitigates the effects of regional  
markets, economic downturns or unusual weather conditions. These regions take   
advantage of the increasing globalization of the independent power market.      
Intercompany transactions have been eliminated in the following segment         
information.                                                                    

                                                                [Download Table]

                                                  Europe,                          
         (In millions)                         Central Asia,                       
      Three Months Ended             Asia       Middle East   Corporate/           
         June 30, 1999    Americas  Pacific      and Africa   Other(/i/)    Total  
         -------------    --------  -------    -------------  ----------   --------
                                                                                   
Operating revenues        $  122.6  $   56.1        $   90.7     $    --   $  269.4
Net income (loss)             21.0      (4.4)            1.7       (12.8)       5.5
Total assets               3,504.6   2,486.8         2,166.8          --    8,158.2

         June 30, 1998                                                             
         -------------                                                             
Operating revenues        $   58.9  $   53.2        $   95.2     $    --   $  207.3
Net income (loss)             22.1      (3.4)            6.0        (6.1)      18.6
Total assets                 913.8   1,686.6         2,428.9          --    5,029.3

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                                                                [Download Table]

                                                 Europe,                           
         (In millions)                        Central Asia,                        
      Six  Months Ended            Asia       Middle East    Corporate/            
         June 30, 1999   Americas  Pacific     and Africa     Other(/i/)    Total  
         -------------   --------  -------    -------------   ----------   --------
                                                                                   
Operating revenues       $  207.2  $  106.3        $  225.6      $    --   $  539.1
Net income (loss)            51.0     (14.4)           28.9        (15.9)      49.6
Total assets              3,504.6   2,486.8         2,166.8           --    8,158.2

         June 30, 1998                                                             
         -------------                                                             
Operating revenues       $   88.3  $  107.3        $  243.6      $    --   $  439.2
Net income (loss)            32.3      (3.6)           39.0        (11.4)      56.3
Total assets                913.8   1,686.6         2,428.9           --    5,029.3

(i) Includes corporate net interest expense                                     

NOTE 7. SUBSEQUENT EVENTS                                                       

 In July 1999, Edison First Power Limited, a wholly owned subsidiary of EME, a
wholly owned, non-utility subsidiary of Edison International, completed a       
transaction with PowerGen UK plc, to acquire the Ferrybridge and Fiddler's Ferry
coal-fired electric generating plants located in the United Kingdom.            
Ferrybridge, located in West Yorkshire, and Fiddler's Ferry, located in         
Warrington, each have a generating capacity of approximately 2,000 megawatts.   

 Consideration for Ferrybridge and Fiddler's Ferry consisted of a cash payment
of approximately $2.0 billion (1.3 billion pounds Sterling) for the two plants. 
The acquisition was funded primarily with a combination of net proceeds from the
Edison First Power Limited Guaranteed Secured Variable Rate Bonds issued on July
19, 1999 and due 2019, and equity from Edison International.                    

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

This Quarterly Report on Form 10-Q includes certain forward-looking         
statements, the realization of which may be affected by certain important       
factors discussed in "Management's Discussion and Analysis of Financial         
Condition and Results of Operations" thereunder and elsewhere herein.           

GENERAL                                                                         
-------                                                                         

Edison Mission Energy (EME) is a leading global power producer.  Through its
subsidiaries, EME is engaged in the business of developing, acquiring, owning   
and operating electric power generation facilities worldwide.  EME's current    
investments include 65 projects totaling 19,397 megawatts (MW) of generation    
capacity, of which 16,922 are in operation and 2,475 are under construction.  In
addition, 12 operating projects totaling 9,621 MW of generating capacity are    
pending acquisition.                                                            

EME's operating revenues are derived primarily from electric revenues and   
equity in income from energy projects.  Operating revenues also include equity  
in income from oil and gas investments and revenue attributable to operation and
maintenance services.                                                           

Electric revenues are derived from consolidated results of operations of one
domestic and several international entities.  Equity in income from energy      
projects relates to EME's ownership interest of 50% or less voting stock in     
projects.  The equity method of accounting is generally used to account for the 
operating results of entities over which EME has a significant influence but in 
which it does not have a controlling interest.  With respect to entities        
accounted for under the equity method, EME recognizes its proportional share of 
the income or loss of such entities.                                            

ACQUISITIONS                                                                    
------------                                                                    

In March 1999, EME Homer City Generation L.P. (EME Homer City), an indirect,
wholly owned affiliate of EME, completed a transaction with GPU, Inc., New York 
State Electric & Gas Corporation and their respective affiliates to acquire the 
1,884-MW Homer City Electric Generating Station and certain facilities and other
assets associated therewith (collectively, Homer City).                         

  Consideration for Homer City consisted of a cash payment of approximately $1.8
billion, which was partially financed by $1.5 billion of new loans, combined    
with corporate revolver borrowings and cash.                                    

  In May 1999, Edison Mission Energy Taupo Ltd. (EME Taupo), an indirect, wholly
owned affiliate of EME, completed a transaction with the New Zealand government 
to acquire 40% of the shares of Contact Energy Ltd. (Contact).  Contact owns and
operates hydroelectric, geothermal and natural gas-fired power generating plants
in New Zealand with a total generating capacity of 2,371 MW.  Contact also      
supplies gas and electricity                                                    

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to customers in New Zealand and has minority interests in two power projects in 
Australia.                                                                      

Consideration for Contact consisted of a cash payment of approximately $648 
million (1.2 billion New Zealand dollars), which was financed by $120 million of
preferred stock issued by Edison Mission Energy Global Management, Inc., a $214 
million (400 million New Zealand dollars) credit facility issued by EME Taupo, a
$300 million equity contribution from Edison International and cash.            

 In July 1999, Edison First Power Limited, a wholly owned subsidiary of EME, a
wholly owned, non-utility subsidiary of Edison International, completed a       
transaction with PowerGen UK plc, to acquire the Ferrybridge and Fiddler's Ferry
coal-fired electric generating plants located in the United Kingdom.            
Ferrybridge, located in West Yorkshire, and Fiddler's Ferry, located in         
Warrington, each have a generating capacity of approximately 2,000 megawatts.   

 Consideration for Ferrybridge and Fiddler's Ferry consisted of a cash payment
of approximately $2.0 billion (1.3 billion pounds Sterling) for the two plants. 
The acquisition was funded primarily with a combination of net proceeds from the
Edison First Power Limited Guaranteed Secured Variable Rate Bonds issued on July
19, 1999 and due 2019, and equity from Edison International.                    

These acquisitions were accounted for utilizing the purchase method.  EME's 
consolidated statement of income for the three and six months ended June 30,    
1999 reflects the operations of Homer City beginning on March 18, 1999 and      
Contact beginning May 1, 1999.  The consolidated statements of income, balance  
sheets and cash flows do not reflect the Ferrybridge and Fiddler's Ferry        
generating plants acquired in July 1999.                                        

RESULTS OF OPERATIONS                                                           
---------------------                                                           

OPERATING REVENUES  Operating revenues increased $62.1 million and $99.9 million
for the second quarter and six months ended June 30, 1999, respectively,        
compared with the corresponding periods of 1998, resulting primarily from       
increases in electric revenues and equity in income from energy projects.       
Electric revenues increased $74.3 million and $72.3 million for the second      
quarter and six months ended June 30, 1999, respectively, compared with the     
corresponding periods of 1998, primarily due to revenues from Homer City        
acquired in March 1999.    Equity in income from energy projects decreased $13  
million and increased $30.2 million during the second quarter and six months    
ended June 30, 1999, respectively, compared with the corresponding periods of   
1998.  The second quarter decrease was principally due to a geothermal project  
that was sold in 1998 which recorded earnings in 1998 that had been deferred in 
previous years.  The increase for the six month period was primarily the result 
of higher revenues from several cogeneration projects due to a final settlement 
on energy pricing for prior years.                                              

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OPERATING EXPENSES  Operating expenses increased $60.1 million and $83.1 million
for the second quarter and six months ended June 30, 1999, respectively,        
compared with the same prior year periods. These increases are due to higher    
fuel, plant operations, depreciation and amortization and administrative and    
general expenses. The increases in fuel expense, plant operations and           
depreciation and amortization are primarily the result of expenses at Homer City
acquired in March 1999.  The administrative and general expense increase is     
primarily related to increased project development/acquisition costs.           

OTHER INCOME (EXPENSE)  Interest expense increased $33.7 million and $32.5      
million for the second quarter and six months ended June 30, 1999, respectively,
compared with the same prior year periods.  The increase was primarily the      
result of additional debt financing of the Homer City acquisition.              

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE In April 1998, the American 
Institute of Certified Public Accountants issued Statement of Position (SOP) 98-
5, "Reporting on the Costs of Start-Up Activities", which became effective in   
January 1999.  The Statement requires that certain costs related to start-up    
activities be expensed as incurred and that certain previously capitalized costs
be expensed and reported as a cumulative change in accounting principle.  The   
impact of adopting SOP 98-5 on EME's net income was $13.8 million, after-tax.   

PROVISION FOR INCOME TAXES  EME recorded an effective tax provision rate of 18% 
for the six months ended June 30, 1999, compared with a 41% rate for the same   
prior year period.  The decrease in the 1999 effective tax rate was primarily   
due to lower foreign income taxes that result from the permanent reinvestment of
earnings from foreign affiliates located in different foreign tax jurisdictions.

LIQUIDITY AND CAPITAL RESOURCES  For the six months ended June 30, 1999, net    
cash provided by operating activities decreased to $98.3 million from $123.6    
million for the same period in 1998.  The 1999 decrease primarily reflects lower
distributions from oil and gas projects and increased working capital           
requirements associated with the acquisition of Homer City.                     

 Net cash provided by financing activities totaled $2,861.6 million during the
first six months of 1999, compared to $12.1 million in 1998 for the same prior  
year period. The 1999 increase is primarily due to the Edison Mission Holding   
Co., parent company of EME Homer City, $830 million senior secured bonds, EME   
financing of $700 million, EME Senior Notes of $600 million, Edison Mission     
Energy Taupo Limited (EME Taupo) $214 million credit facility, Edison Mission   
Energy Global Management, Inc. $120 million Flexible Money Market Cumulative    
Preferred Stock, EME Taupo $84 million Retail Redeemable Preference Shares and  
borrowing on the corporate revolver of $335 million, the proceeds of which were 
used to purchase Homer City and Contact.                                        

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Net cash used in investing activities increased to $2,601.4 million for the 
six months ended June 30, 1999 from $53.5 million for the six months ended June 
30, 1998.  The increase is primarily due to the purchase of Homer City and      
Contact.                                                                        

 At June 30, 1999, EME had cash and cash equivalents of $808.3 million and had
available $107 million of borrowing capacity under a $500 million revolving     
credit facility that expires in 2001 and $125 million of borrowing capacity     
under a $700 million commercial paper facility that expires in 2000.  This      
borrowing capacity under the revolving credit facility may be reduced by        
borrowings for firm commitments to contribute project equity and to fund capital
expenditures and construction costs of its project facilities.                  

In July 1999, Edison First Power Limited, completed a transaction with      
PowerGen UK plc, to acquire the Ferrybridge and Fiddler's Ferry coal-fired      
electric generating plants located in the United Kingdom. Consideration for     
Ferrybridge and Fiddler's Ferry consisted of a cash payment of approximately    
$2.0 billion (1.3 billion pounds Sterling) for the two plants.  The acquisition 
was funded primarily with a combination of net proceeds from the Edison First   
Power Limited Guaranteed Secured Variable Rate Bonds issued on July 19, 1999 and
due 2019, and equity from Edison International.                                 

Firm Commitments for Asset Purchases                                            

                                                                [Download Table]

Projects                                                   U.S. ($ in millions)
--------                                                   --------------------
                                                                               
Commonwealth Edison Co. (i)                                      $ 5,000       

(i) A wholly owned subsidiary of EME executed an Asset Sale Agreement to        
purchase the fossil-fuel generating assets of Commonwealth Edison Co.,  
  totaling 9,621 MW located in the midwestern United States.  The closing of
the transaction is subject to receipt of various state and federal      
regulatory approvals and is expected to be completed by year end 1999.  

Firm Commitments to Contribute Project Equity                                   

                                                                [Download Table]

Projects                  Local Currency                   U.S. ($ in millions)
--------                  --------------                   --------------------
                                                                               
ISAB (i)                  244 billion Italian Lira               $130          
EcoElectrica (ii)                                                  34          
Tri Energy (iii)                                                   25          
Paiton (iv)                                                        17          

(i)  ISAB is a 512-MW integrated gasification combined cycle power plant under  
    construction near Siracusa in Sicily, Italy.  A wholly owned subsidiary of
EME owns a 49% interest.  Equity will be contributed at commercial    
operation, which is currently scheduled for late 1999.                

(ii) EcoElectrica is a 540-MW liquefied natural gas combined-cycle cogeneration 
facility under construction in Penuelas, Puerto Rico.  A wholly owned 
subsidiary of                                                         

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EME owns a 50% interest.  Equity will be contributed at             
commercial operation, which is currently scheduled for late 1999.   

(iii) Tri Energy is a 700-MW gas-fired power plant under construction in the    
      Ratchaburi Province, Thailand. A wholly owned subsidiary of EME owns a 25%
  interest. Equity will be contributed at commercial operation, which is
currently scheduled for mid-2000.                                   

(iv)  Paiton is a 1,230-MW coal-fired power plant in operation in East Java,    
     Indonesia.  A wholly owned subsidiary of EME owns a 40% interest.  Equity
contributions continue to be made.                                  

Firm commitments to contribute project equity could be accelerated due to   
certain events of default as defined in the non-recourse project financing      
facilities.  Management has no reason to believe that these events of default   
will occur to require acceleration of the firm commitments.                     

Contingent Obligations to Contribute Project Equity                             

                                                                [Download Table]

Projects                                                   U.S. ($ in millions)
--------                                                   --------------------
                                                                               
Paiton (i)                                                        $141         
Tri Energy (ii)                                                     20         
Doga (ii)                                                           14         
All Other                                                           19         

(i) Contingent obligations to contribute additional project equity (Contingent  
Equity) would be based on events principally related to capital cost    
overruns during the plant construction, certain partner obligations or  
events of default.  These contingent obligations are to be cancelled (if
 unused) as of the date of term financing by the Export-Import Bank of the
United States.  Term financing by the Export-Import Bank of the United  
    States is the subject of a comprehensive set of conditions. Based on present
    projections, the Project does not expect to complete these conditions at the
time contemplated in the loan documentation (October 15, 1999), and is  
    seeking an extension of the time to achieve term completion.  The Project is
also negotiating an understanding with its Lenders with regard to the   
    amounts and uses of the Contingent Equity during the time of this extension.
As of the date hereof, the Project does not have any commitment from the
Lenders as to the extension.  In addition, a dispute involving a slope  
    adjacent to the Paiton site will require Contingent Equity to be contributed
    for amounts not otherwise covered by insurance. The Contractor has initiated
   a Phase II arbitration on the amount of compensation due as a result of the
slope failure, and Paiton Energy is in discussions with its insurance   
companies on payment under its policies.  EME's share of the total costs
  related to the slope failure are currently estimated to be between $16 and
$44 million. Further, because of some delays in the completion of the   
construction, the Project expects certain other cost overruns.  The EME 
share of these overruns is estimated to be between $10-15 million.      

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(ii) Contingent obligations to contribute additional equity to the project would
be based on events principally related to capital cost overruns during
plant construction, certain EME or partner obligations or events of   
default.                                                              

  Other than as noted above, management is not aware, at this time, of any other
contingent obligations or obligations to contribute project equity.             

Other Commitments and Contingencies                                             

 Certain of EME's subsidiaries entered into indemnification agreements whereby
the subsidiaries agreed to repay capacity payments to the projects' power       
purchasers, in the event the projects unilaterally terminate their performance  
or reduce their electric power producing capability during the term of the power
contract. Obligations under these indemnification agreements as of June 30,     
1999, if payment were required, would be $243 million. Management has no reason 
to believe that the projects will either terminate their performance or reduce  
their electric power producing capability during the term of the power          
contracts.                                                                      

Paiton is a 1,230-MW coal-fired power plant in operation in East Java,      
Indonesia.  A wholly owned subsidiary of EME owns a 40% interest and has a $370 
million investment at June 30, 1999. The tariff is higher in the early years and
steps down over time.  The tariff for the Paiton project includes infrastructure
to be used in common by other units at the Paiton complex. The plant's output is
fully contracted with the state-owned electricity company, PT Perusahaan Listrik
Negara (PLN).  Payments are in Indonesian Rupiah, with the portion of such      
payments intended to cover non-Rupiah project costs (including returns to       
investors) indexed to the Indonesian Rupiah/U.S. dollar exchange rate           
established at the time of the Power Purchase Agreement (PPA) in February 1994. 
PLN's payment obligations are supported by the Government of Indonesia.  The    
projected rate of growth of the Indonesian economy and the exchange rate of     
Indonesian Rupiah into U.S. dollars have deteriorated significantly since the   
Paiton project was contracted, approved and financed.  The project received     
substantial finance and insurance support from the Export-Import Bank of the    
United States, The Export-Import Bank of Japan, the U.S. Overseas Private       
Investment Corporation and the Ministry of International Trade and Industry of  
Japan.  The Paiton project's senior debt ratings have been reduced from         
investment grade to speculative grade based on the rating agencies' perceived   
increased risk that PLN might not be able to honor the electricity sales        
contract with Paiton.  The Government of Indonesia has arranged to reschedule   
sovereign debt owed to foreign governments and has entered into discussions     
about rescheduling sovereign debt owed to private lenders.  PLN has announced   
its intentions to commence discussions with independent power producers to      
renegotiate the power supply contracts, which discussions have commenced on an  
initial basis, however it is not yet known what form the renegotiation may take.
Any material modifications of the contract could also require a renegotiation of
the Paiton project's debt agreement.  Certain events (including the shortfall in
payment discussed in the paragraph below) which, with the passage of time or    
upon notice, may mature into defaults of the Project's debt agreement have      

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occurred and may require the grant of waivers or renegotiation of the relevant  
agreements.  Waivers of potential defaults have been received previously from   
the Project's creditors.  The impact of any such renegotiations with PLN, the   
Government of Indonesia or the project's creditors on EME's expected return on  
its investment in Paiton is uncertain at this time, however, management believes
that it will ultimately recover its investment in the project.                  

 Paiton notified PLN that Unit 7 of Paiton achieved Commercial Operation under
terms of the PPA on May 1999 and that Unit 8 of Paiton achieved Commercial      
Operation under the terms of the PPA on July 1999.  Because of the economic     
downturn, PLN is experiencing low electricity demand and PLN has therefore      
dispatched the Paiton plant to zero;  however, under the terms of the PPA, PLN  
is required to continue to pay for capacity and fixed operating costs once each 
unit and the Plant achieve Commercial Operation. An invoice for these charges   
for May in the amount of $7.8 million was submitted to PLN.  The project and PLN
met to review the invoice and a partial payment of $2.5 million was subsequently
received.  The primary reason for the payment shortage was the use of an        
arbitrary Indonesian Rupiah/U.S. dollar exchange rate of 2,450 Indonesian Rupiah
to one U.S. dollar by PLN.  The use of this exchange rate is not in agreement   
with the Power Purchase Agreement, but is the exchange rate on which PLN        
payments to other independent power producers in Indonesia have been based.     

  Brooklyn Navy Yard is a 286-MW gas-fired cogeneration power plant in Brooklyn,
New York.  A wholly owned subsidiary of EME owns 50% of the project.  In        
February 1997, the construction contractor asserted general monetary claims     
under the turnkey agreement against Brooklyn Navy Yard Cogeneration Partners,   
L.P. (BNY) for damages in the amount of $136.8 million.  BNY has asserted       
general monetary claims against the contractor.  In connection with a $407      
million non-recourse project refinancing in 1997, EME agreed to indemnify BNY   
and its partner from all claims and costs arising from or in connection with the
contractor litigation, which indemnity has been assigned to the lenders.  EME   
believes that the outcome of this litigation will not have a material adverse   
effect on its financial position or results of operations.                      

EME and its subsidiaries may incur additional obligations to make equity and
other contributions to projects in the future.  EME believes that it will have  
sufficient liquidity on both a short- and long-term basis to fund pre-financing 
project development costs, make equity contributions to partnerships, pay       
corporate debt obligations and pay other administrative and general expenses as 
they are incurred from (1) distributions from energy projects and dividends from
investments in oil and gas, (2) proceeds from the repayment of loans to energy  
projects and (3) funds available from EME's revolving credit facility.          

CHANGES IN INTEREST RATES, CHANGES IN ELECTRICITY POOL PRICING, FOREIGN CURRENCY
FLUCTUATIONS AND OTHER CONTRACTUAL OBLIGATIONS    Changes in interest rates,    
changes in electricity pool pricing and fluctuations in foreign currency        
exchange rates can have a significant impact on EME's                           

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results of operations. Interest rate changes affect the cost of capital needed  
to construct and finance projects. EME has mitigated a portion of the risk of   
interest rate fluctuations by arranging for fixed rate financing or variable    
rate financing with interest rate swaps or other hedging mechanisms for the     
majority of its project financing. Interest expense included $12.5 million and  
$11.9 million for the six months ended June 30, 1999, and 1998, respectively, as
a result of interest rate swap and collar agreements. EME has entered into      
several interest rate swap and collar agreements whereby the maturity date of   
the swaps and collars occurs prior to the final maturity of the underlying debt.
EME does not believe that interest rate fluctuations will have a material       
adverse effect on its financial position or results of operations.              

Projects in the U.K. sell their electric energy and capacity through a
centralized electricity pool, which establishes a half-hourly clearing price    
(also referred to as the "pool price") for electric energy.  The pool price is  
extremely volatile and can vary by as much as a factor of ten or more over the  
course of a few hours, due to the large differentials in demand according to the
time of day.  First Hydro mitigates a portion of the market risk of the pool by 
entering into contracts for differences (electricity rate swap agreements),     
related to either the selling or purchasing price of power, whereby a contract  
specifies a price at which the electricity will be traded, and the parties to   
the agreement make payments, calculated based on the difference between the     
price in the contract and the pool price for the element of power under         
contract.  These contracts are sold in various structures.  These contracts act 
as a means of stabilizing production revenues or purchasing costs by removing an
element of First Hydro's net exposure to pool price volatility.  On July 29,    
1998, the Director General of Electricity Supply proposed to the Minister for   
Science, Energy and Industry that the current structure of contracts-for-       
differences and compulsory trading via the pool at half-hourly clearing prices  
bid a day ahead be abolished.  He proposed in its place, among other things, the
establishment of voluntary forwards and futures markets, organized by           
independent market operators and evolving in response to demand; a short-term   
bilateral market operating from 24 to 4-hours before a trading period; a        
balancing market to enable the system operator to balance generation and demand 
and resolve any transmission constraints; a settlement process for recovering   
imbalances between contracted and metered volumes with stronger incentives for  
being in balance; and a Balancing and Settlement Code Panel to oversee          
governance of the short-term bilateral and balancing markets.  The Minister for 
Science, Energy and Industry has recommended that the proposal be implemented by
April 2000.  Further definition of the proposal will be required before the     
effects of the changes can be evaluated.  Implementation of the proposal may    
also require legislation.                                                       

Loy Yang B sells its electric energy through a centralized electricity
pool (the National Electricity Market) which provides for a system of generator 
bidding, central dispatch and a settlements system based on a clearing market   
for each half-hour of every day.  The Victorian Power Exchange, operator and    
administrator of the pool, determines a system marginal price each half-hour.   
To mitigate exposure to price volatility of the electricity traded into the     
pool, Loy Yang B has entered into a number of financial hedges.  From May 8,    
1997 to December 31, 2000, approximately 53% to 64% of the plant output sold is 
hedged under "Vesting Contracts" with the remainder of the plant                

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capacity hedged under the "State Hedge" described below. Vesting Contracts were 
put into place by the State Government of Victoria, Australia (State), between  
each generator and each distributor, prior to the privatization of electric     
power distributors in order to provide more predictable pricing for those       
electricity customers that were unable to choose their electricity retailer.    
Vesting Contracts set base strike prices at which the electricity will be       
traded, and the parties to the agreement make payments, calculated based on the 
difference between the price in the contract and the half-hourly pool clearing  
price for the element of power under contract. These contracts are sold in      
various structures. These contracts are accounted for as electricity rate swap  
agreements. The State Hedge is a long-term contractual arrangement based upon a 
fixed price commencing May 8, 1997, and terminating October 31, 2016. The State 
guarantees SECV's obligations under the State Hedge.                            

     Electric power generated at Homer City is sold under bilateral arrangements
with domestic utilities and power marketers under short-term contracts (two     
years or less) or to the Pennsylvania-New Jersey-Maryland Power Interconnection 
(PJM) or the New York Power Pool (NYPP).  The PJM pool has a market which       
establishes an hourly clearing price.  Homer City is situated in the PJM Control
Area and is physically connected to high-voltage transmission lines serving both
the PJM and NYPP markets.  Power can also be transmitted to the midwestern      
United States.  EME has developed risk management policies and procedures which,
among other matters, address credit risk.  It is EME's policy to sell to        
investment grade counterparties or counterparties that have an investment grade 
guarantor.  EME intends on hedging a portion of the electric output of the plant
in order to lock in desirable outcomes.  It plans to manage the "spark spread"  
or margin, that is the spread between electric prices and fuel prices when      
deemed appropriate.  It plans to use forward contracts, swaps, futures, or      
options contracts to achieve those objectives.                                  

   EME's electric revenues were increased by $20.1 million and $70.1 million
for the six-month periods ended June 30, 1999, and 1998, respectively, as a     
result of electricity rate swap agreements and other hedging activities.        

The electric power generated by EME's domestic operating projects,    
excluding Homer City, is generally sold to electric utilities pursuant to long- 
term (typically, 15 to 30-year) power sales contracts and is expected to result 
in consistent cash flow under a wide range of economic and operating            
circumstances. To accomplish this, EME structured its power sales contracts so  
that fluctuations in fuel costs would produce similar fluctuations in electric  
and/or steam revenues and entered into long-term fuel supply and transportation 
agreements.                                                                     

Fluctuations in foreign currency exchange rates can affect, on a U.S. 
dollar equivalent basis, the amount of EME's equity contributions to, and       
distributions from, its foreign projects. As EME continues to expand into       
foreign markets, fluctuations in foreign currency exchange rates can be expected
to have a greater impact on EME's results of operations in the future. At times,
EME has hedged a portion of its current exposure to fluctuations in foreign     
exchange rates where it deems appropriate through financial                     

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derivatives, offsetting obligations denominated in foreign currencies and       
indexing underlying project agreements to U.S. dollars or other indices         
reasonably expected to correlate with foreign exchange movements. In addition,  
EME has used statistical forecasting techniques to help assess foreign exchange 
risk and the probabilities of various outcomes. There can be no assurance,      
however, that fluctuations in exchange rates will be fully offset by hedges or  
that currency movements and the relationship between certain macro economic     
variables will behave in a manner consistent with historical or forecasted      
relationships.                                                                  

ENVIRONMENTAL MATTERS  EME is subject to environmental regulation by federal,   
state and local authorities in the U.S. and foreign regulatory authorities with 
jurisdiction over projects located outside the U.S.  EME 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.                                    

  EME completed a partial review of its sites in 1995 and does not believe
that a material liability exists as of June 30, 1999. The implementation of     
Clean Air Act Amendments is expected to result in increased operating expenses; 
however, these expenses are not expected to have a material impact on EME's     
financial position or results of operations.                                    

YEAR 2000 ISSUE  EME has a comprehensive program in place to remediate potential
Year 2000 impacts from critical systems.  EME divided its Year 2000 Issue       
activities into five phases:  inventory, impact assessment, remediation,        
documentation and certification. A critical system was defined as those         
applications and systems, including embedded processor technology, which if not 
appropriately remediated might have had a significant impact on customers, the  
revenue stream, regulatory compliance, or the health and safety of personnel.   
With respect to critical systems, EME has achieved Year 2000 readiness as of    
July 1999.                                                                      

   Assurances from third party operated plants have been received indicating
aggressive Year 2000 remediation programs.  Monitoring of these efforts is      
ongoing.  Plants under construction have obtained assurances from new           
construction and development contractors, who have been requested to ensure this
is part of their goals.  General warranty of plants would likely include any    
equipment issues that may arise regarding Year 2000 in the current year.        

     The other essential component of the EME Year 2000 readiness program was to
identify and assess vendor products and business partners for Year 2000         
readiness.  EME put a process in place to identify and contact vendors and      
business partners to determine their Year 2000 status, and has evaluated the    
responses.  EME's general policy requires that all newly purchased products be  
Year 2000 ready or otherwise designed to allow EME to determine whether such    
products present Year 2000 issues.                                              

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Plant contingency plans have been developed and reviewed for any      
significant issues and to schedule appropriate testing and/or training. Such    
contingency plans include developing strategies for dealing with Year 2000-     
related processing failures or malfunctions due to EME's internal systems or    
from external parties. EME's contingency plans evaluate reasonably likely worst 
case scenarios or conditions. EME does not expect the Year 2000 issue to have a 
material adverse effect on its results of operations or financial position.     
However, if not effectively remediated, negative effects from Year 2000 issues, 
including those related to external systems, vendors, business partners, the    
independent system operator, the power exchange or customers, could cause       
results to differ.                                                              

STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 133  In June 1998, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards   
No. 133, "Accounting for Derivative Instruments and Hedging Activities", which, 
as amended, will be effective in January 2001.  The Statement establishes       
accounting and reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability measured at its   
fair value.  The Statement requires that changes in the derivative's fair value 
be recognized currently in earnings unless specific hedge accounting criteria   
are met.  A derivative's gains and losses for qualifying hedges offset related  
results on the hedged item in the income statement and a company must formally  
document, designate and assess the effectiveness of transactions that receive   
hedge accounting.  The impact of adopting Statement 133 on EME's financial      
statements has not been quantified at this time.                                

ACQUISITIONS PENDING  In March 1999, EME entered into agreements to acquire the 
fossil-fuel generating assets of Commonwealth Edison Co. (ComEd), totaling 9,621
MW.  EME will operate the plants, which are located in the midwestern United    
States.  The closing of the transaction is subject to various state and federal 
regulatory approvals and is expected to be completed by year end 1999.  EME     
plans to finance the approximately $5 billion acquisition with a combination of 
debt secured by the project, corporate debt, cash and funding from Edison       
International.  The acquisition is expected to have an immaterial effect on     
earnings in 1999, 2000 and 2001 as a result of transition contracts whereby     
ComEd will retain power purchase agreements with EME, enabling ComEd access to  
certain amounts of plant output for the next five years to serve its customers. 

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PART II - OTHER INFORMATION                                                     

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                       

(a) Exhibits                                                                    

Exhibit No.    Description                                              
-----------    -----------                                              

      10.63    Indenture and the First Supplemental Indenture dated as of June
           28, 1999, between EME and The Bank of New York, as Trustee,
7.73% Senior Notes Due June 15, 2009.           

27       Financial Data Schedule                                  

(b) Reports on Form 8-K                                                         

 The registrant filed the following reports on Form 8-K during the quarter
ended June 30, 1999.                                                    

                                                                [Download Table]


Date of Report          Date Filed     Item Reported
--------------          ----------     -------------
                                                    
March 18, 1999          April 2, 1999        2      
July 19, 1999           August 2, 1999       2      

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SIGNATURES

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

             Edison Mission Energy
             ---------------------
              (Registrant)

Date: August 12, 1999               /s/ THOMAS E. LEGRO                         
---------------------               -------------------                         
               THOMAS E. LEGRO
                  Vice President and
                Controller

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-Q’ Filing	Date	First	Last	Other Filings

	10/31/16	24
	6/15/09	27
	12/31/00	23		10-K
	10/15/99	11	20
Filed on:	8/13/99	1
	8/12/99	28
	7/19/99	15	27	8-K/A
For Period End:	6/30/99	1	27
	6/28/99	27
	5/1/99	9	17
	3/31/99	8		10-K, 10-Q
	3/18/99	9	27	8-K
	12/31/98	8		10-K
	7/29/98	23
	6/30/98	4	24	10-Q
	12/31/97	8		10-K
	5/8/97	23	24
				List all Filings

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Edison Mission Energy – ‘10-Q’ for 6/30/99

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Quarterly Report — Form 10-QFiling Table of Contents

10-Q — Quarterly Report Dated 6/30/1999Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Quarterly Report — Form 10-Q
Filing Table of Contents

10-Q — Quarterly Report Dated 6/30/1999
Document Table of Contents