MIDWEST GENERATION EME, LLC

Petitioner,

V .

CH2\ 1863995 .1

ILLINOIS ENVIRONMENTAL

PROTECTION AGENCY,

Respondent .

Dated: May 29, 2007

Schiff Hardin LLP

6600 Sears Tower

Chicago, IL 60606

(312) 258-5687

ILLINOIS POLLUTION CONTROL BOARD

NOTICE OF FILING

To:

Bradley P

. Halloran

Hearing Officer

Illinois Pollution Control Board

James R

. Thompson Center, Suite 11-500

100 W

. Randolph Street

Chicago, IL 60601

Lisa Madigan

Matthew Dunn

Ann Alexander

Paula Becker Wheeler

Office of the Attorney General

188 West Randolph Street, Suite 2000

Chicago, Illinois 60601

PLEASE TAKE NOTICE that I have today filed with the Office of the Clerk of the Pollution

Control Board Midwest Generation EME, LLC's Amended Petition for Review, a copy of which

is herewith served upon you .

-~ AAnd w . Sawula

RECEIVED

CLERKS OFFICE

MAY 2 0 2007

PCB 04-185

Pollution

STATE OF

Control

ILLINOISBoard

(Trade Secret Appeal)

---

RECEIVED

ILLINOIS POLLUTION CONTROL BOARD

CLERK'S OFFICE

MAY 2 9 2007

MIDWEST GENERATION EME, LLC

Pollution

STATE OF

Control

ILLINOIS

Board

)

Petitioner,

)

PCB 04-185

(Trade Secret Appeal)

V.

)

ILLINOIS ENVIRONMENTAL

)

PROTECTION AGENCY,

)

Respondent .

)

MIDWEST GENERATION EME, LLC'S

AMENDED PETITION FOR REVIEW

Pursuant to the Illinois Pollution Control Board Order of April 19, 2007, Midwest

Generation EME, LLC ("Midwest Generation") hereby responds to the Illinois Environmental

Protection Agency's ("IEPA's") November 30, 2004 Supplemental Trade Secret Determination

(Attachment 1) as amended by the April 19, 2007 Board Order and hereby amends its

Petition

for Review in this matter .

1 .

As set forth in numerous pleadings

in this matter, this appeal concerns

information Midwest Generation originally submitted

to the United States Environmental

Protection Agency ("USEPA") in response to an Information Request under §114 of the

Clean

Air Act ("USEPA Information Request") covering Midwest Generation's

six coal-fired

generating stations in Illinois (the "Generating Stations")

. At the suggestion of USEPA,

Midwest Generation provided a courtesy copy of its Response

to the USEPA Information

Request to IEPA . The information at issue falls into two categories

: first, information Midwest

Generation compiled concerning capital projects at each of the generating stations

(the "Project

Chart") and second, information Midwest Generation compiled regarding generation,

heat rate,

---

and coal characteristics of the Generating Stations (the "Generation Chart")

. Collectively, this

confidential business information will be referred to herein as the "CBI

."

2 .

For the reasons set forth below, IEPA's denial of trade secret information

is

arbitrary and capricious, lacks support and is otherwise improper

.

The regulations governing the

identification and protection of trade secrets provide

that an article will be determined to

represent a trade secret if the owner has complied with the procedures for making

a claim and

justification

; if the information sought to be protected has not been published,

disseminated, or

otherwise become a matter of general public knowledge

; and the article has competitive

value .

See 35 Ill . Adm. Code 130.208(a)

. IEPA does not dispute that Midwest

Generation properly

complied with the procedures for making a claim and justification,

but IEPA claims the

information has been publicly disseminated and that release of the information

will not cause

Midwest Generation competitive harm

.

IEPA also maintains that the information constitutes

emission data .

I.

THE CBI HAS NOT BEEN PUBLISHED, DISSEMINATED, OR OTHERWISE

BECOME A MATTER OF GENERAL PUBLIC KNOWLEDGE

.

A.

IEPA Improperly Concluded That The Project Chart Was A Matter

Of

General Public Knowledge

.

3 .

Midwest Generation spent over eight months and considerable expense compiling

the Project Chart in order to respond to the USEPA Information Request

. Numerous engineering

and accounting employees at each of the generating

stations were involved in gathering,

assessing and describing the information contained in the Project Chart

.

Information in the chart

describes every capital project that cost over $100,000 undertaken or planned to be undertaken

at

the coal-fired units at the Generating Stations by Midwest Generation as of February

13, 2003,

identifies the work order number for each such project, identifies

the date each project was

undertaken or was planned to be undertaken, and states the cost of each project

. The Project

-2-

---

Chart was compiled solely to respond to the USEPA Information Request and, as set forth in

Midwest Generation's original Statement of Justification, the confidentiality of the Project Chart

has been maintained . This information, compiled in this format, exists only in the submittals

made to USEPA and copied to IEPA .

4.

IEPA asserts that the information in the Project Chart could be found in publicly

available permits or permit applications . But a review of those documents indicates that, while a

terse description of a few of the projects, are mentioned, most are not . None of the other

information on the Project Chart, including the cost or the timing of the projects is available in

permits or permit applications, or are otherwise available to the public . Thus, contrary to the

conclusion the IEPA may have reached, this information, and certainly this compilation, is not

publicly available . The fact that certain terse descriptions of approximately 5% of the projects

are available in permits is not a reasonable justification for releasing the entire Project Chart to

the public .

5 .

IEPA also states its belief that similar details are found in "submissions made to

other government entities, including, for example, the Illinois Commerce Commission" but,

IEPA has identified no such instance . IEPA's unfounded belief is in fact mistaken

. Midwest

Generation is an Independent Power Producer (IPP), not a regulated utility

. As an IPP, Midwest

Generation does not have rate cases before the Illinois Commerce Commission and, therefore,

does not file information about capital projects with the Illinois Commerce Commission

. IEPA

has acted arbitrarily in finding that the Project Chart is publicly available .

B.

IEPA Improperly Concluded That The Generation Chart Was A Matter Of

General Public Knowledge .

6 .

Similarly, Midwest Generation compiled the Generation Chart from numerous

sources. It contains monthly and annual gross and net generation, average coal heat content and

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---

gross and net heat rate for each of the Generating Stations for the period January 2000 through

December 2002. Midwest Generation compiled this information into the Generation Chart

solely for the purpose of responding to the USEPA Information Request . As set forth in

Midwest Generation's Statement of Justification, Midwest Generation has not made this

compilation available to the public .

7.

In its Supplemental Determination, IEPA faults Midwest Generation's Statement

of Justification for failing to address the submittal of generation data to "governmental

authorities that regulate the generation of electricity . Supplemental Determination at 4. But,

IEPA again failed to identify any governmental agency to which Midwest Generation submits

any of the data on the Generation Chart . Even after the Board ordered IEPA to identify where it

was able to locate this information, IEPA did not . See November 4, 2004 Board Order at 30 .

8 .

If IEPA believes Midwest Generation submits this information to the National

Electric Reliability Council ("NERC"), IEPA is mistaken; Midwest Generation did not submit

any information to NERC for the time period covered in the chart .

9. As a member of certain private exchange energy markets operated by Regional

Transmission Organizations and Independent System Operators, Midwest Generation is required

to submit certain operating data, including heat rate, for its units

. Pursuant to the governing

operating agreements of these organization, this data is designated as confidential and is not

disclosed to other operators

. See Attachment 2, Affidavit of Michael King at 4 . Given that this

information is required to be submitted to these organizations and is submitted confidentially, it

can not be said to be "publicly available."

10.

Midwest Generation submits certain information regarding monthly net

generation and coal heat content, as required, to the Department of Energy ("DOE")

.

The DOE,

-4-

---

however, does not maintain this information in a simple chart format ; rather, the DOE maintains

pieces of this information in numerous coded spreadsheets on the DOE website

. The

information is deeply embedded, difficult to access and is in numerous locations requiring the

pursuit of multiple links

. Sophisticated technical and substantive knowledge would be necessary

to even attempt to replicate this data . Generally, the information on the DOE website is

aggregated on a plant level and is not available for individual units . If a competitor could obtain

unit net generation and coal heat content information on the Generation Chart, which was

compiled solely to comply with the USEPA Information Request, simply by filing a FOIA

request rather than piecing it together from various hard to obtain sources, competitors would

gain an improper windfall .

Worthington Compressors v . Castle, 662 F.2d 45 (D.C. Cir. 1981).

Monthly net heat rate is not available on the DOE website

. For the purpose of the USEPA

Information Request, Midwest Generation calculated each unit's monthly net heat rate from the

coal consumption data, coal heat content data and generation data . The results of this calculation

are not publicly available nor could they be determined from publicly available sources .

11 .

Finally, regardless of whether the individual pieces of information in the Project

Chart and Generation Chart are independently available from public sources, the compilation is

not . See also, Section ILC below .

12. IEPA acted arbitrarily and improperly in denying Midwest Generation's trade

secret claims to these compilations on the suspicion that a portion of the information was

"publicly available."

---

C

.

Midwest Generation Is Entitled To The Presumption That The CBI Has Not

Become A Matter Of General Public Knowledge

13

. Pursuant to IEPA's trade secret regulations, Midwest Generation is entitled to

a

rebuttable presumption that an article has not been published, disseminated, or otherwise become

a matter of general public knowledge, if:

1)

The owner has taken reasonable measures to prevent the

article from becoming available to persons other than those

selected by the owner to have access to the article for limited

purposes ; and

2)

The statement of justification contains a certification that

the owner has no knowledge that the

article has ever been

published, disseminated, or otherwise become a matter of general

public knowledge .

35 IL Admin

. Code 130 .208(b)

. Midwest Generation's Statement of Justification contained the

Company's extensive Confidentiality Procedures

; IEPA no where contends that these procedures

are inadequate

. Further, the Statement of Justification includes the requisite

certification from

Midwest Generation .

Despite the Board's November 4, 2004 order, IEPA has proffered no

evidence to rebut the presumption to which Midwest Generation is entitled

. IEPA has, therefore,

acted improperly in finding the CBI has been publicly disseminated

.

II.

IEPA IMPROPERLY CONCLUDED THAT THE

RELEASE OF THE CBI

WOULD NOT CAUSE MIDWEST GENERATION COMPETITIVE HARM

14.

In its Statement of Justification, Midwest Generation described why

the CBI

constitutes trade secret information

.

In the Supplemental Determination, IEPA seems to assert

that the description is not convincing

.

But the November 4, 2004 Board, required IEPA to

provide the reason why it believes Midwest Generation

failed to show that the CBI has

competitive value .

Board Order at 30.

As set forth below, the information clearly has

competitive value to Midwest Generation

.

---

A.

Midwest Generation Competes With Other Power Producers .

15. Midwest Generation is an independent power producer whose primary business is

generating electricity for sale in the competitive wholesale market . In simplest terms, Midwest

Generation sells its power either by executing bilateral or forward contracts, or by offering to sell

electricity into an exchange energy market . While all three types of transactions involve heated

competition, the CBI is particularly sensitive with respect to Midwest Generation's competition

with other power producers to enter into bilateral contracts and to sell electricity into exchange

energy markets

. hi essence, companies offer to enter into bilateral contracts or bid electricity

into exchange energy markets based, in part, on the operating costs of their units . In order to

determine how high above their operating costs to bid their units (i.e., their profit margin),

companies attempt to predict other companies' bids by discerning the operating costs of those

other companies' units . If Midwest Generation's competitors outbid Midwest Generation, then

Midwest Generation does not sell as much (or, possibly, any) power, or the price it receives may

be less than it would otherwise receive . Clearly, Midwest Generation is in "actual competition"

with other power producers, including over 400 other power producers that, like Midwest

Generation, are members of the PJM Interconnection regional transmission organization

. See

generally, Affidavit of King, attached hereto as Attachment 2 .

B.

Disclosure Of The CBI Would Likely Cause Midwest Generation Substantial

Competitive Injury .

16 .

Disclosure of the CBI would likely cause Midwest Generation substantial

competitive injury. As a general matter, disclosure of information could help Midwest

Generation's competitors compete with Midwest Generation for bilateral contracts and to sell

electricity into exchange energy markets if the information could help a competitor (1) estimate

the current or future operating costs of Midwest Generation's units, (2) predict the availability or

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capacity of Midwest Generation's units to produce power (a) on a given date in the short term

(relevant to energy exchange markets) or (b) in the long term (relevant to bilateral contracts), or

(3) lower the operating costs of its (the competitor's) own units . In addition, such disclosure

could help Midwest Generation's competitors compete with Midwest

Generation for bilateral

contracts and to sell electricity into exchange markets if the information could have the effect of

increasing the operating costs of Midwest Generation's units .

17. First, if a competitor could predict or approximate the operating costs of Midwest

Generation's units, then it could set its own price at a level to cut Midwest Generation out of the

market, while maximizing its own profit margin

. Cf., Braintree Elec

. Light Dep't v

. Dept of

Energy, 494 F. Supp. 287, 290 (D.C . Cir. 1980) (In the wholesale oil market, "[i]f one

wholesaler is able to discern the financial condition of a competitor,

it can then underbid that

competitor. Here, all information concerning a competitor's pricing mechanism becomes

helpful .") . See also, Broston v. Warmann, 190 Ill. App. 2d 87, 546 N .E.2d 3 (3d Dist . 1989) .

18 .

Second, by knowing when Midwest Generation's units will be available and

knowing Midwest Generation's capacity, a competitor could know when to plan its own outages

and could take advantage of periods during which Midwest Generation is not available in order

to set its bid higher. Third, a competitor could use the CBI to help determine how to

target its

plant maintenance practices to better compete with Midwest Generation . Fourth, some standard

power products in the power markets explicitly consider availability of generating units . To the

extent that competitors of Midwest

Generation obtain access to Midwest Generation's

confidential information on the availability of its generating units, those competitors will

be able

to structure offers to the market that they otherwise would not be able to, with

the result that

Midwest Generation will be at a disadvantage to those entities .

-8-

---

19. As articulated below, disclosure of the CBI would likely cause Midwest

Generation substantial competitive injury. The discussion first addresses the CBI according to

categories of information and then addresses the CBI according to categories of documents

.

The

affidavit of Mike King, attached hereto as Attachment 2, provides a more detailed explanation of

the competitive process and how disclosure of the CBI would likely cause Midwest Generation

substantial competitive injury.

Performance Data

20 . The CBI includes various measures of a unit's performance, including,

but not

limited to, (a) heat rate, (b) generation, (c) coal heat content, (d) outage events

(i.e., maintenance

projects undertaken), and (e) outage dates (dates the unit was taken offline for maintenance) .

Individually and collectively, this data will be referred to as "Performance Data ."

In his

affidavit, Mike King explains in detail how disclosure of the Performance

Data would help

Midwest Generation's competitors estimate the Company's

operating costs, predict the

availability and capacity of Midwest Generation's units to produce power,

or otherwise help

them compete with Midwest Generation .

21

. In addition to helping a competitor estimate Midwest Generation's operating

costs, much of the Performance Data (e .g., heat rate, generation, coal heat content, etc.)

describes

the input or output rates of the units . USEPA has specifically identified "operating costs," "input

and output rates, and similar information" as examples of information encompassed by the

term

"trade secrets" under Section 114(c) of the Clean Air Act .

Public Information, 40 Fed . Reg.

21987, 21990 (May 20, 1975)

.

22 .

Thus, disclosure of Midwest Generation's Performance Data would likely cause

Midwest Generation competitive injury.

---

Financial Data

23 .

The CBI includes specific cost information on dollars

spent on maintenance

projects (the "Financial Data")

. Disclosure of the Financial Data could help competitors estimate

the operating costs of Midwest Generation's units

.

By estimating Midwest Generation's

operating costs, Midwest Generation's

competitors would be able to

anticipate Midwest

Generation's costs and fees and, thus, underbid Midwest Generation in future bidding contests

.

24.

Disclosure of the Financial Data could also increase the

operating costs of

Midwest Generation's units by helping

the Company's vendors bargain with Midwest

Generation .

If the Project Chart is released, vendors will be able to

determine how much

Midwest Generation paid for common maintenance projects

. If Midwest Generation has been

paying one vendor more than another, the vendors who

are receiving less could use this

information to negotiate an increase of their rates

.

Moreover, vendors who bid to supply similar

services in the future may be able to negotiate better rates with Midwest Generation

than they

would otherwise have been able to negotiate

.

Such disclosure, further, could help Midwest

Generation's competitors lower the operating costs of their own units, placing them

in an even

better position to underbid Midwest Generation

.

For example, if a competitor learns what

Midwest Generation has paid for certain maintenance projects,

the competitor could better

negotiate its own contracts for the same type of maintenance project

. Shermco

Indus., Inc. v.

Sec'y of the Air Force,

613 F.2d

1314, 1317-18 (5`h Cir

. 1980) (holding that pricing information

by a contract bidder constitutes confidential and proprietary information under Exemption

4 of

the Freedom of Information Act) .

25 .

Thus, disclosure of Midwest Generation's Financial Data would

likely cause

Midwest Generation substantial competitive injury

.

---

Maintenance Details

26.

The CBI includes details about maintenance performed at the Generating Stations

including identification of the maintenance, the cost of the maintenance, and the date the

maintenance took place . (This information is collectively referred to as the Maintenance

Details .)

27. Disclosure of the Maintenance Details would help Midwest Generation's

competitors estimate the current and future operating costs of Midwest Generation's units and

predict the availability and capacity of Midwest Generation's units to produce power several

years into the future

. By knowing the Maintenance Details, a competitor could better estimate

the current and future operating costs of Midwest Generation's units

. A competitor could

estimate roughly how much money Midwest Generation spent on the maintenance and discern

Midwest Generation's philosophy toward maintenance at each unit ; that is, the competitor could

learn what level of investment Midwest Generation is making to maintain the performance of the

unit. The competitor would be enabled to better evaluate the condition of Midwest Generation's

units and the level of investment in the units that Midwest Generation will need to make to

maintain the performance levels of the units

. In other words, the competitor would be better able

to estimate Midwest Generation's current and future operating costs, as well as evaluate whether

Midwest Generation's units will be available to produce power in the future at their current

capacity .

28 .

Thus, disclosure of Midwest Generation's Engineering Details would likely cause

Midwest Generation substantial competitive injury

.

---

C.

Release Of Compiled Data Will

Cause Midwest Generation Competitive

Harm.

29 .

As described above, Midwest Generation expended considerable resources to

compile the Generation Charts and the Project Chart .

IEPA does not contest the fact that

Midwest Generation has maintained the confidentiality of these compilations, rather IEPA

contends the compilations are not protectable

as a trade secrets because portions of the

information are publicly available . Midwest Generation disagrees

.

30.

Under Illinois law, a trade secret includes a compilation that

:

(1) is sufficiently secret to derive economic value, actual or

potential, not from being generally known to other persons who

can obtain economic value from its disclosure or use

; and

(2)

is the subject of efforts that are reasonable under the

circumstances to maintain its secrecy or confidentiality

.

765 ILCS 1065/2(d).

The effort of compiling useful information is,

of itself, entitled to

protection even if the information is otherwise generally known

. ISC v. Altech,

765 F. Supp .

1310, 1321 (N.D

. Ill. 1990). Under Illinois law, trade secrets may exist in combination of a

number of elements of information, even if discrete elements may be found in the public domain

.

Nilssen v . Motorola, Inc .,

963 F. Supp. 664 (N.D. Ill. 1997 .) Worthington,

662 F.2d at 51 ; ISC-

Bunker Ramo Corp . v. Altech, Inc.,

765 F. Supp. 1310, 1321-22 (N.D. Ill. 1990)

("[T]he effort of

compiling useful information is, of itself, entitled to protection

even if the information is

otherwise generally known.").

If a competitor can recreate a compilation, but only at a

considerable cost, then it would gain an improper "windfall" if it could, instead, obtain that

compilation through a FOIA request .

Worthington, 662 F .2d at 51 .

That windfall, in turn,

"could easily have competitive consequences not contemplated as part of FOIA's principal

aim

of promoting openness in government ."

Id.

---

III

. THE PROJECT CHART IS NOT EXCLUDED FROM

TRADE SECRET

PROTECTION AS EMISSION DATA .

31 . In its Supplemental Determination, IEPA maintains that the Project Chart

constitutes "emission data" and is therefore excluded from trade secret protection . IEPA further

asserts that Midwest Generation had the obligation to demonstrate the Project Chart was not

emission data in its Statement of Justification . But, as explained below, the Project Chart cannot

properly be considered emission data under the Illinois Environmental Protection Act . Further,

the regulations implementing the trade secret provisions of the Illinois Environmental Protection

Act do not require an owner to demonstrate in the Statement of Justification that exceptions to

the regulations are inapplicable .

A.

The Project Chart Is Not Emission Data Under Applicable Illinois Law

32 .

The trade secret provisions of the Illinois Environmental Protection Act provide

[A]II emission data reported to or otherwise obtained by the

Agency, the Board or the Department in connection with any

examination, inspection or proceeding under this Act shall be

available to the public to the extent required by the federal Clean

Air Act, as amended .

415 ILCS 5/7(c) . The Project Chart does not fall within this definition because (1) it is not

emission data, (2) it was not obtained by IEPA "in connection with any examination, inspection

or proceeding under" the Illinois Environmental Protection Act and 3) the federal Clean Air Act

does not require the public release of the Project Chart .

1 .

The Project Chart does not contain emission data .

33 .

The implementing regulations of the trade secret provisions of the Illinois

Environmental Act define the term "emission data" as :

The identity, amount, frequency, concentration, or other

characteristics (related to air quality) of any contaminant that :

A)

Has been emitted from an emission unit;

B)

Results from any emission by the emission unit;

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C)

Under an applicable standard or limitation, the emission

unit was authorized to emit ; or

D)

Is a combination of any of the

items described in

subsection (b)(1)(A), (B),

or (C) of this Section

.

35 Ill . Adm

. Code 130 .110(b) .

Further, information represents emission data to the extent it is

"necessary to determine or calculate

emission data, including rate of operation,

rate of

production, rate of raw material usage, or material balance."

35 Ill. Adm. Code 130 .110(c)

.

Accordingly, "emission data" is information about pollutants

. None of the information contained

in the Project Chart contains information about pollutants

. The Project Chart merely lists

information about capital projects undertaken at the Generating Stations, it contains no

information about pollutants .

34.

IEPA has taken the position that emission data is any information relevant

to

determining how much a particular facility is "authorized to emit

."

This position contravenes the

plain meaning of the regulations

.

The regulations provide that emission data is the data

concerning the identity, amount, frequency, concentration or other characteristics

of a source's

emissions

. The regulation says "under an applicable standard," it does not say "to determine

what the applicable standard is

." The regulation presumes knowledge of the applicable standard

;

"emission data" is the information used to determine compliance with the

standard

- with the

authorization -

not the information used to determine what the standard or authorization is

. Even

if the Project Chart could somehow aid in determining "what the facility is authorized to

emit,"

that is determining what regulatory limits may apply, but is not, itself, "emission

data." As set

forth in Attachment 3, the affidavit of Scott Miller, Midwest Generation

has submitted all

"emission data" as required by its air permits and applicable regulations

;

these submittals are

available to the public .

---

2.

IEPA did not obtain the Project Chart in connection with an

inspection under the Illinois Environmental Protection Act .

35. The Project Chart was neither submitted to IEPA nor obtained in a proceeding

under the Act ; rather, IEPA was provided a copy of the Project Chart after Midwest Generation

submitted the document in response to the USEPA's investigation under the federal Clean Air

Act. IEPA never sought this information from Midwest Generation, nor has IEPA asserted it

obtained this information in connection with an investigation under the Illinois Environmental

Protection Act

. Accordingly, even if the Project Chart can somehow be considered "emission

data," the trade secret provisions of the Environmental Protection Act do not exclude the Project

Chart from trade secret protection .

3.

The Clean Air Act does not require the public release of Project

Chart .

36.

IEPA takes the position that all information submitted under a Section 114

Information Request would likely constitute emission data

. Supplemental Determination at 3 .

This position ignores Section 114(c) of the Clean Air Act and its implementing regulations .

Indeed, IEPA's interpretation of the term "emission data" would mean that virtually no data

submitted to IEPA under its Air program would be considered trade secret . Section 114(c) of the

Clean Air Act provides that trade secret information obtain in inspections under Section 114,

such as the USEPA Information Request, shall be afforded protection from disclosure

. 42

U.S.C. §114(c) . Section 114(c) excludes emission data from this protection

; but, as USEPA has

observed, Section 114 clearly contemplates that some information obtained pursuant to Section

114 information requests will be entitled to confidentiality

. See, e.g., Public Information, 40

Fed. Reg. at 21990 . It follows that not all information submitted in response to a Section 114

request can constitute emission data

.

---

37.

The relevant federal regulation defining

emission data for purposes of the

exception, which is substantially similar to the Illinois regulation, provides :

Emission data means, with reference to any source of emission of any substance into the

air -

(A) Information necessary to determine the identify, amount,

frequency, concentration or other characteristics (to the extent

related to air quality) of any emission which has been emitted by

the source (or of any pollutant resulting from any emission by the

source), or any combination of the foregoing;

(B) Information necessary to

determine the identity, amount,

frequency, concentration or other characteristics (to the extent

related to air quality) of the emissions which, under an applicable

standard or limitation, the source was authorized to emit

(including, to the extent necessary for such purposes, a description

of the manner or rate of operation of the source) . . . .

40 C .F.R

. §2.301(a)(2)(i)(A) and (B). Substantial case law supports the proposition that the

"emission data" exception is narrow . Courts have cautioned that "a strict interpretation of the

`necessary to determine' requirement is warranted in order to ensure that the exception

does not

swallow the rule ." Natural Resources Defense Council v.

Leavitt, No . Civ . A. 04-01295 HHK,

2006 WL 667327, at *4 (D.D.C. March 14, 2006) (citing RSR Corp. v

. Environmental Protection

Agency, 588 F . Supp . 1251 (N.D. Tex. 1984)

; and Ruling on Petroleum Information Requested to

be Held as Confidential, Op . Att'y Gen. (Inf.)

507, 1991 WL 541991, (Alaska A .G. Dec. 4,

1991)).

Potentially confidential information is only "necessary to determine"

emissions or a

source if use of that information is the "only practical way" to

determine the emissions or

identify the source . RSR, 588 F

. Supp

. at 1255 .

See also, Ruling on Petroleum Information,

1991 WL 541991, at *3 (applying RSR

standard to State law, held throughput data not

"necessary" for calculating quantity of emissions where State agency previously calculated

quantity of emissions and disclosed results of those calculations)

.

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---

38. The RSR decision is particularly instructive . In that case, RSR Corporation

challenged a decision by USEPA to release certain documents, pursuant to a FOIA request,

that

the Agency determined constituted emission data . Id

.

at 1253-55

. The documents in question

contained information that could be used to perform a material balance calculation to determine

the emissions of RSR's smelter . Id

.

at 1255 . Because emissions from RSR's smelter were "not

continuously sampled," USEPA concluded that any information that could be used in a material

balance calculation was necessary to determine the smelter's emissions . Id.

USEPA reasoned

that calculations such as material balance calculations "are often the only means of determining

the amount of pollutants emitted by a source ." Id. The court held that USEPA's analysis of

whether these documents constitute emission data under Section 2 .301(a)(2)(1) was arbitrary and

capricious. Id. at 1255-56 . The court explained that USEPA's record contained only the

Agency's "bare conclusion that the only practical way to determine emissions

is by a material

balance calculation ." Id. at 1256. For example, the record did not include "a discussion of

alternative methods of identifying or measuring pollutants, with a comparison

of their

capabilities, advantages and disadvantages ." Id.

Such a discussion would have been particularly

relevant because the Agency "[i]ndirectly" admitted that, "at least in

some circumstances," it

could have used other means to determine the level of emissions

. Id. Because USEPA's record

did not demonstrate that the Agency "(1)

considered and examined all relevant factors and

alternatives or (2) adequately explained the evidence regarding these relevant factors and

alternatives," the court held that the Agency's determination was arbitrary and capricious

. Id.

39.

None of information on the Project Chart is emission data under 40 C .F.R.

§2.301(a)(2)(1)(A),

because none of the information "necessary to

determine the identity,

amount, frequency, concentration, or other characteristics (to the extent related to

air quality)" of

-17-

---

emissions.

As IEPA is aware, Midwest Generation and has submitted years of emission data to

IEPA and USEPA without a claim of confidentiality, including the identity,

amount, frequency,

concentration and, to the extent related to air quality, other characteristics of emissions

from the

Power Stations .

See Affidavit of Miller, ¶¶3-6 for a list of data reported

. Because IEPA and

USEPA already possess these data, the information in the CBI is not "necessary to

determine"

the data. See RSR, 588 F

. Supp . at 1255 . See also, NRDC v

. Leavitt, 2006 WL 667327, at *4

;

Ruling on Petroleum Information, 1991 WL 541991, at *3

.

40.

Further, none of the information on the project Chart is emission data as defined

by Section 2.301(a)(2)(i)(B)

because none of the information is "necessary to determine the

identity, amount, frequency, concentration, or other characteristics (to the extent related to air

quality) of the emissions which, under an applicable standard

or limitation, the source was

authorized to emit ." 40 C.F .R

. § 2.301(a)(2)(i)(B)

. The purpose of this provision is to ensure

that the public can know "not only the actual emission figures, but also the emissions

allowable

under applicable standards and limitations

." Request for Information

; Confidentiality of

Business Information, 41 Fed

. Reg. 36902, 36922 (Sept .

1, 1976) . For example, emissions

limitations for some sources may be expressed in terms of units of pollution per unit

of raw

material processed . Id.

In such a case, knowing the units of raw material processed during the

term would be necessary to determine the emissions a source was authorized to emit

. Id. But no

information on the Project Chart is necessary to determine applicable and limitations

.

41 .

IEPA and USEPA already possesses sufficient information that is not subject to a

claim of confidentiality to determine the emissions that the units at the Generating Stations were

authorized to emit under the applicable standards and limitations

. See

Affidavit of Miller, ¶¶3, 5,

7 .

-18-

---

B. IEPA Improperly Concluded That Midwest Generation Was Obligated To

Make An Affirmative Showing In The Statement Of Justification That The

Project Chart Was Not Emission data

42. Contrary to IEPA's assertion, the trade secret regulations do not require an

affirmative showing that the exclusions from trade secret protection are not applicable . See 35

Ill. Adm . Code 130 .203 The regulations require an owner to address whether the article has to

be publicly disclosed and the competitive value of the article, but the regulation does not create

an obligation that the owner address exclusions . Further, in its January 5, 2004 letter to Midwest

Generation requesting a Statement of Justification, IEPA specifically asked Midwest Generation

to address the competitive value and the confidential nature of the CBI, but was silent as to the

emission data exclusion . See Attachment 4 . Given that the Project Chart contains no

information relevant to Midwest Generation's actual emissions ; Midwest Generation had no

reason to anticipate that IEPA would consider the Project Chart emission data .

IV. THIS MATTER MUST BE REMANDED TO IEPA

TO MAKE A

DETERMINATION AS

TO THE CONFIDENTIALITY OF THE CBI UNDER

THE ILLINOIS ENVIRONMENTAL PROTECTION ACT AND THE ILLINOIS

FREEDOM OF INFORMATION ACT

43 . IEPA's Trade Secret Determination and Supplemental Determination concern

only whether the Project Chart and Generation Chart constitute trade secrets . Under the

Provisions of the Illinois Environmental Protection Act, 415 ILCS 5/7(a)(iv), and the Illinois

Freedom of Information Act, 5 ILCS 140/7(9), Midwest Generation's confidential information is

also entitled to protection from disclosure

. Midwest Generation considers the CBI confidential

data protected from disclosure under these provisions

. IEPA has improperly failed to make a

determination under these provisions .

44

.

If the Board were to decide that IEPA properly determined that the information

did not constitute trade secrets under Section

7(a)(i) of the Illinois Environmental Protection Act,

-19-

---

the Board should remand this matter to IEPA to require IEPA to comply with 415 ILCS

5/7(a)(iv) and 5 ILCS 140/7(9) before the Project Chart and the Generation Charts are released to

the public .

Dated: May 29, 2007

Respectfully submitted,

MIDWEST GENERATION EME, LLC

CH2\ 1857583 .2

By:

heldon A . Zabe

Mary Ann Mullin

Andrew N

. Sawula

SCHIFF HARDIN LLP

6600 Sears Tower

Chicago, Illinois 60606

(847) 295-4318

Attorneys for

MIDWEST GENERATION EME,

LLC

---

ATTACHMENT 1

---

Lisa Madigan

ATTORNEY GENERAL

217/782-5544

217/782-9143(TDD)

November 30, 2004

Mary Ann Mullen, esq .

Schiff Harden & Waite

6600 Sears Tower

Chicago, Illinois 60606-6360

OFFICE OF THE ATTORNEY GENERAL

STATE OF ILLINOIS

CLE

Pv'up

'Y ~

20,64

Pollution

S, -1-f= c

Con'ir

- i

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;a

Re

: Midwest Generation EME, L.L.C . - Clarification of Trade Secret Determination

Dear Ms . Mullen:

INTRODUCTION

On January 26, 2004, at its request, the Illinois EPA received a statement of justification for a

claim of trade secret from Midwest Generation EME, LLC ("Midwest") . On March 10, 2004,

the Illinois EPA issued its determination on the claim . By this document, the Illinois EPA is

issuing a clarification of its trade secret determination pursuant to the Pollution Control Board

("Board") order issued earlier this month (PCB 04-185, November 4, 2004) . More specifically,

the Illinois Environmental Protection Agency is clarifying the reasoning behind its denial of

certain information claimed trade secret by Midwest .

This matter involves the denial of trade secret protection to information provided to the Illinois

EPA in conjunction with Midwest's response to the United States Environmental Protection

Agency's (USEPA) § 114 request for information ("USEPA information request") . The two

categories of information at issue are the capital projects list for each of Midwest's coal-fired

500 South Second Street, Springfield, Illinois 62706 •- (217) 782-1090 • TTY: (217) 785-2771

•

Fax

: (217) 782-7046

100 West Randolph Street, Chicago, Illinois 60601 •

(312) 814-3000

• TTY: (312) 814-3374 • Fax: (312) 814-3806

1001 F,a Man (larhnndalx. Illinnis 62901 • (618) 529-6400 • TTY: (618) 529-6403 • Fax : (618) 529-6416

•®

---

electric generating units ("capital project list") t and information identifying the monthly net and

annual net generation, the monthly and annual coal heat content, and the monthly and annual net

heat rate for each of Midwest's coal-fired units ("generation data!

).2

Midwest submitted these

two categories of information in response to Request Two and Request Three of the USEPA

information request.

GENERAL DISCUSSION

The Illinois EPA's denial is made on multiple bases, consistent with the applicable laws and

rules that govern protection of information that is claimed to constitute a trade secret . First, for

certain of the information claimed trade secret by Midwest, information existed indicating that it

was a matter of public knowledge ; or lacked competitive value or both . Second, claimed

information constituted emission data . Third, for certain of the information, Midwest's

statement of justification was deficient, failing to demonstrate that all of the information

submitted was entitled to trade secret protection . 3

In making its determination that Midwest had not met its burden of demonstrating that the

information is not publicly available, the Illinois EPA did not, nor is it required to, search

exhaustively for all information claimed trade secret by Midwest to confirm whether the material

is publicly available. Rather, Midwest was required -

and failed --

to demonstrate the lack of

public availability . The fact that the Illinois EPA was able locate at least some of the specific

information that Midwest claimed to be a trade secret not only required rejection of the claim

with respect to that particular information, but also cast sufficient doubt on the balance of

Midwest's trade claim secret claim so as

to warrant a blanket denial

.

Indeed, prior to making its trade secret determination, the Illinois EPA informed Midwest of its

failure to account for the complete dissemination of all information claimed to be a trade secret .

Specifically, the Illinois EPA called to Midwest's attention, in telephone conversations prior to

issuance of the Agency's formal decision, Midwest's apparent failure to follow its own

procedures for ensuring protection of trade secret information . At a minimum, it was pointed out

in these discussions, Midwest had failed to address the complete chain of custody for the

information in dispute

. It was also pointed out,

as noted above, that Midwest did not account for

all public entities to which it is required to submit the type of data for which it claims protection,

and the record keeping policies at such entities . Despite these pre-decisional discussions,

Midwest failed to address the Illinois EPA's concerns in a supplemental statement of

justification prior to the Agency's trade secret determination .

' This information was submitted in response to information request number three . Information request number

three states "For all currently active coal-fired generating units provide a list of all capital projects, of an amount

greater than $100,000, approved or completed between January 1, 1975 and the date of this request For each such

capital project identify the work performed, the date completed or projected to be completed, the project work order

number and the dollar amount approved and/or expended."

'This information was submitted in response to information request number two . Information request number two

states "For all currently active coal-fired generating units provide monthly and annual total gross and net generation

(MW-hr), monthly, and annual average heat rate (BTU/Kw-br) and monthly and annual average coal heat content

(BTU/1b) and percent sulfur for all years from 1975 through 2002 .

s 35 Ill. Adm . Code 130 .203

---

Finally, pursuant to state and federal law, emission data cannot be accorded trade secret status.

In its statement of justification, Midwest completely failed to address the nature of submitted

information as it might be considered to constitute an article containing emission data . As

information was being submitted in response to a USEPA request for information under § 114 of

the CAA, it was both reasonable and appropriate for Midwest to address the status of the

submitted information, as it would likely be considered to contain emission data .' Under 35 Ill .

Adm. Code 130 .203(e), Midwest was under a specific obligation to do so, as in a statement of

justification "any other information that will support the claim ." Midwest failed to satisfy its

obligation under 35 Ill . Adm. Code 130 .230(e).

In this regard, emission data includes information on the amount of emissions of various

pollutants that an emission unit is authorized to emit under applicable standards and limitations

. It also includes any related information that is necessary to determine emission data, including

data related to authorized or allowable emissions6 The New Source Review (NSR) programs

established by the CAA and incorporated into the Environmental Protection Act are

appropriately considered standards and limitations for the purpose of defining emission data as

these programs establish legal restrictions on emissions . In particular, these programs establish

limitations on the emissions of new or modified emission units, as distinguished from existing

unmodified units, which are not subject to such limitations . The purpose of the information

solicited by the USEPA information request was to determine whether Midwest's units have

been modified so as to be subject to limitations under one or more of the NSR programs

. As

such, submitted information should generally be expected to constitute emission data .

The two categories of information that are in dispute are directly relevant to the applicability of

NSR. They relate to the two tests that must be met for a modification, or major modification to

have occurred. The first test is that a physical change or change in method of operation has been

accompanied by an actual or potential increase in emissions . The generation data that is the

subject of dispute generally constitutes emission data as it relates to increases in emissions that

have occurred at units . The capital project list generally constitutes emission data as it identifies

activities that have been performed on units, some or all of which may entail physical changes to

or changes in the method of operation of such units . Considered together, these two categories

of information are needed to determine whether units have been modified, and thus should be

subjected to standards and limitations for modified units set by NSR .

' Section 114(c) of the Clean,Air Act specifically provides that submitted data that constitutes emission data must be

available to the public .

6

35111 . Adm. Code 230 .110(b)(1)(C)

6 35 Ill

. Adm

. Code 230.110(c)

'These programs include New Source Performance Standards (NSPS), 40 C .F .R. Part 60, Prevention of Significant

Deterioration of Air Quality (PSD), 40 C .F .R. 52.21, and non-attainment New Source Review (NA NSR), 35111 .

Adm. Code Part 203 .

---

GENERATION DATA

The generation data is contained in pages MWG0024 through MWG000056 of Midwest's

information response . The Illinois EPA determined that certain generation data (i.e. information

regarding gross generation (Mwhr) and gross heat rate (BTU/GKwhr)) constituted confidential

business or trade secret information

. The Illinois EPA denied trade secret protection to the

information regarding net generation rate (Mwhr), net heat rate (BTU/NKwhr), and average coal

heat content (BTU/lb)

. The following is a discussion of the general rationale for denial and the

specific rationale for each category of data.

Within the statement ofjustification, the claimant must provide a detailed statement identifying

_the persons or class of persons to whom the article has been disclosed . 8 Midwest's "detailed"

statement for generation data consisting of the following two sentences : "Midwest Generation

only provides this information [net generation, etc .], as needed, to its senior management and to

personnel in the following departments : market and trade, finance, operations and risk

management. Midwest Generation also provides this information, to the extent required, to

lenders and rating agencies ."

These cursory statements fail to address, inter alia, Midwest's submittal of the type of

information at issue to governmental authorities that regulate the generation of electricity. Thus,

Midwest's certification within the statement of justification was, at minimum, misleading,

erroneous, and insufficient . Additionally, the certification specifically states that "[u]pon

information and belief, the Confidential Information has not been published or disseminated, and

has not otherwise become a matter of general public knowledge ." Midwest's certification fails

to acknowledge that information substantially identical to the information contained in the

subject documents had in fact been published or disseminated and become a matter of public

knowledge. Once again, the certification was, at minimum, misleading, erroneous, and

insufficient

.

Regarding the competitive value of generation data, under 35 111. Adm. Code 130.203(d),

Midwest must provide a detailed discussion concerning the competitive value of information

claimed trade secret . For generation data, Midwest states "[t]his information defines Midwest

Generation's competitive position in the marketplace and, thus, possesses competitive value ."9

An article is considered trade secret if the statement of justification demonstrates (italics added)

that the article has competitive value . 10 A single sentence assertion of competitive value can

hardly be construed as a demonstration. Midwest does not explain the competitive value of net

generation rate, net heat rate, or average coal heat content individually, but rather makes a

blanket assertion. As discussed below, to the extent the information is publicly available, it

cannot by definition have competitive value as confidential information .

8 35 Ill. Adm Code 130.203(b)

9 Part II .A of Midwest's statement of justification dated January 23, 2004

10 35 Ill

. Adm Code 130 .208(aX2)(B)

i

---

Net Generation Rate

The Illinois EPA denied trade secret protection to the net generation rate data on the grounds that

the information is a matter of public knowledge, and as such has no competitive value . The

Illinois EPA's position is supported by the fact it was able to locate the net generation

information for each of Midwest's coal-fired generating units on a publicly accessible federal

government website

. n

Additionally, the Illinois EPA also considers the information emission data as it indirectly relates

to emissions from each unit. In particular, an increase in generation would reflect an increase in

operation of a unit and its accompanying emissions . As such, generation data constitutes data

that is relevant to determining whether the second test for a modification has been satisfied, i .e.,

an increase in emissions. In this regard, as generation data is provided on an annual basis, it is

relevant to the occurrence of a major modification, pursuant to PSD or non-attainment NSR .

Net Heat Rate

Regarding net heat rate, the Illinois EPA denied trade secret protection as, the information is a

matter of public knowledge . Net heat rate can be derived by information available to the public .

Information that is available to the public includes, but is not limited to, information reported to

the federal government, information reported to the Illinois EPA, and information contained in

Midwest's various construction and operating permits . The Illinois EPA maintains that such

information cannot be of competitive value if it is discemable through simple calculations .

Additionally, the information is considered emission data . In particular, an improvement in heat

rate of a unit indicates that change has occurred at the unit that has reduced the amount of fuel

consumed per unit of electricity generated

. This is indicative of a possible physical change or

change in the manner of operation of a unit

. It is also indicative of a possible increase in

emissions as a unit that operates more efficiently may be utilized more, compared to other units

that are less efficient .

Average Coal Heat Content

"

In fact, contrary to Midwest's assertion in its July 1, 2004 motion to partially reconsider the Board's May 6, 2004

order, counsel for the petitioner was put on notice of the website

. The Illinois EPA also discussed with counsel,

prior to issuing its trade secret determination, the sufficiency of its claim .

---

As with the net generation rate and net heat rate data, average coal heat content data is also

publicly available information. Through applicable federal and state reporting requirements,

Midwest is required to submit information regarding the average coal heat content .

Furthermore, average coal heat content is considered emission data as it indirectly relates to the

rate of pollutants emitted at each of Midwest's coal-fired generating units . In particular, this

information is needed to determine the amount of coal burned in a boiler from data heat input to

a unit or a unit's heat rate .

CAPITAL PROJECT LIST

The Illinois EPA denied trade secret protection to all information contained in the capital project

list submitted by Midwest in response to USEPA's information request, except for the work

order numbers

.

2

The Illinois EPA denied trade secret protection to information contained in the

capital project list, as some of the information is publicly available, Midwest failed to

demonstrate that any of the information is of competitive value, and much of the information is

emission data as it is necessary to determine compliance .

Specifically, as evidenced in the record filed in this matter by the Illinois EPA, a number of the

projects identified in the capital project list that are claimed trade secret are subject to permitting

requirements

. For these projects, project details are found in the publicly available applications

for state construction permits or the construction permits or subsequently issued operating

permits themselves contained in the Illinois EPA's files ; and similar details are found in

submissions made to other government entities, including, for example, the Illinois Commerce

Commission . The competitive value of the information in the project list is cast in serious doubt

not only by the public availability of the particular information at issue in government filings, but

also by the ready availability of similar information to the public in ongoing NSRJPSD

enforcement cases and like matters .

Midwest contends that information contained in the capital project list possesses competitive

value as, if disclosed, competitors could determine its environmental control strategies and assess

whether the projects would shift its cost position in the marketplace . Furthermore, Midwest

suggests that the information would allow competitors to predict future maintenance costs giving

them a competitive advantage . Lastly, Midwest suggests that competitors could use the

information regarding costs of certain equipment to negotiate more favorable prices with

vendors, resulting in harm to its competitive position . Midwest failed to articulate and expound

upon the aforementioned blanket statements thereby failing to make a sufficient demonstration of

competitive value. The discussion of competitive value is not correlated with any particular

project or information rather the discussion applies generally to all of the information in the

capital project list .

I

r

Column 2 contains the work order number, which the Illinois EPA determined is confidential business

information

. Specifically, the work order number does not constitute emissions data and is not necessary to

determine the source's compliance status (e .g ., NSR/PSD applicability) . Rather, the work order number assigned by

Midwest could be used solely for internal purposes .

---

Moreover, the capital project list generally contains emission data . Operational changes at a

facility constitute emission data as such activities may be physical or operational changes to

emission units, and meet the first test for determining whether modifications under NSR have

occurred . The capital projects list also contains information describing projects that is relevant

(although not sufficiently presented) to determining whether physical changes or changes in the

method of operation.

13

Chris Pressnall

Assistant Counsel

Division of Legal Counsel

Illinois EPA

Cc: Fred W . McCluskey, Vice-President, Midwest Generation EME, LLC

is

Wisconsin Electric Power Co . v, Reilly, Nos . 88-3264 and 89-1339, United States Court of Appeals fox the

Seventh Circuit (1990) .

---

Subscribed and Sworn before me this

30`h

day of November, 2004 .

N tary I*IItCIAL SEAL

PHYLLIS DUNTON

NOTARY PUBLIC, STATE OF ILLINOIS

MY COMMISSION EXPIRES 12

.7.2004

CERTIFICATE OF SERVICE

I, TERRY COTTON, an employee of the Illinois Attorney General's Office,

hereby certify that I caused to be served this 30`

h day of November 2004, the foregoing

Midwest Generation EME, LLC Clarification of Trade Secret Determination upon the

persons listed on said Notice by personal service on or before 5

:30 p .m.

TERRY COTTON

---

ATTACHMENT 2

---

DECLARATION OF MICHAEL J

. KING

May 25, 2007

---

Being duly sworn I

hereby state :

I .

QUALIFICTIONS AND BACKGROUND

1 .

My name is Michael J . King

. I am a Senior Vice President, NERA Economic

Consulting ("NERA")

. My business address is 370 Interlocken Boulevard, Broomfield

Colorado, 80021

. NERA is an economic consulting company engaged in providing economic

consulting services in support of litigation matters and advice to clients

. My work focuses on the

power generation sector and the regulation of utilities

. I have been employed by NERA since

2003

. Prior to my affiliation with NERA, I was a managing partner of PA Consulting Group,

Inc

. (PA) and head of the Wholesale Energy Market practice

. The Wholesale Energy Markets

practice focused on

: valuation of energy facilities in a changing environment, finance of

generation assets, divestiture, energy trading strategy and analytics, and performance based

regulation

. My experience in electric wholesale markets includes extensive demand forecasting

and production cost modeling

. My professional experience and qualifications are summarized in

my resume, which is included as Exhibit 1 to this affidavit

. I am familiar with many of the types

of information collected and maintained by electric utilities in the course of their business and

the competitive importance of that information

.

2 .

I have reviewed the documents marked "confidential business information" that

have been provided by Midwest Generation EME, LLC ("Midwest Generation") to the Illinois

EPA. (See Exhibit 2 for a list of documents reviewed)

. These documents pertain to the

Crawford, Joliet, Will County, Waukegan, Fisk and Powerton Generating Stations currently (the

"Power Stations") and include various charts compiled by Midwest Generation for the U

.S . EPA .

The purpose of my review was to assess the potential for adverse competitive harm to Midwest

Generation if the documents were released publicly

. My conclusion, discussed more fully

below, is that release of this information would likely cause Midwest Generation substantial

competitive injury.

NERA Economic Consulting

t

---

II .

RELEASING THIS INFORMATION TO THE PUBLIC COULD

DISADVANGTAGE MIDWEST GENERATION IN WHOLESALE

MARKET TRANSACTIONS

A

. Description of Midwest Generation's Wholesale Market Transactions

3 .

Midwest Generation is an Independent Power Producer (IPP), or non-utility

generator

. Unlike a regulated utility, which has an obligation to serve the demand of customers

of a designated franchised service area, Midwest Generation's primary business is generating

electricity for sale in the competitive wholesale market

. Thus, Midwest Generation has no end-

use or retail customers, but sells electricity to a variety of intermediaries in the wholesale market

such as regulated utilities, cooperatives, municipalities, retail suppliers or aggregators

- all of

whom sell power they make or purchase from entities like Midwest Generation to consumers -

and power marketers, traders, or brokers who buy and sell power in the wholesale power market

.

In simplest terms, Midwest Generation sells their power either by offering to sell electricity into

an exchange energy market or by executing bilateral or forward contracts

. Sales of electricity to

an exchange energy market are governed by the prevailing market rules

. Energy exchanges

aggregate buyers' (utilities, load serving entities, retailers) load and match supply offered by

generators

. The price of electricity paid to Midwest Generation

-

if their offer is accepted -

is

set by the market clearing price that is established according to the rules of the exchange

.

Bilateral contracts and their terms and conditions, including the price of electricity paid to

Midwest Generation, are negotiated between Midwest Generation and a counterparty

. Forward

contracts are a standardized product with industry specified terms and conditions for the sale of

electricity at a future time and are often priced at market indices

.

1

. Exchange Energy Markets

4.

The exchange energy markets are operated by Regional Transmission

Organizations, or RTOs, and/or Independent System Operators, or ISOs

. RTOs/ISOs are

independent market operators of the transmission system and some perform the centralized

dispatch of generators for large regions of the country

. They also generally organize a short-term

energy market where physical power flows are coordinated and imbalances (mismatches

between supply and demand, or between scheduled and delivered) are priced and cleared (or

NERA Economic Consulting

2

---

eliminated) . Midwest Generation is a member of the PJM RTO and Midwest ISO ("MISO")

I

and

all of Midwest Generation's transactions, either contracts or exchange market transactions, are

scheduled through the appropriate RTO/ISO

. In order to become a member of PJM or MISO,

Midwest Generation signed the respective Operating Agreements and provided specific design

and operating data describing each of their generating facilities

. Per the Operating Agreements,

the data provided to the market operator are designated confidential and are not disclosed to

other members .2 The data provided include the efficiency, or heat rate, of the unit at various

levels of MW output, the ability of the unit to start and stop

(e.g.

the number of hours necessary

for the unit to start up to produce a given level of output and/or the length of time the unit must

keep running after it has been started up), the quantity of fuel required to start the unit, and

various other operational characteristics such as the generating unit's ability to provide ancillary

services. These data are important to the RTO/ISO in fulfilling its role to balance supply of

generation with load on a second to second basis . Without detailed data on the operational

characteristics, flexibility, and constraints of the various generation units, the market operator

(RTO/ISO) would not have some of the crucial information on how to adjust supply to meet the

variations in load or (most importantly) system emergencies, such as loss of generation or

transmission equipment.

5 .

In competitive markets such as PJM and MISO, exchange energy market clearing

prices are set based on the bids or offers to sell electricity submitted by participating generators,

or market sellers

. For each hour of each day, the market clearing price, which is the price paid

to all generators who operate in a given hour, is set based on an economic ordering of the

generating units' bids

. In order to determine the market clearing price, the market operator

employs very sophisticated software which uses the detailed operating characteristics provided

by the owners of the generating units to determine the least cost ordering of units feasible to

follow load or to meet the second-by-second demands of the electrical system

4

In simple terms,

Midwest Generation's affiliate, Edison Mission Marketing and Trading,

is an IPP/EWG member of the Midwest

ISO .

z Amended and Restated Operating Agreement of PJM Interconnection, LLC as

approved by FERC through May

23, 2007 . Relevant pages are attached hereto as Exhibit 3 .

3

Ancillary services include spinning and operating reserves and regulation

.

° Different generation units may have similar bids, but different ability to change

their output. For example, one unit

may be able to increase its output ("ramp up") more rapidly than another

. Because load cycles up during the day

NERA Economic Consulting

3

---

based on the expected customer demand in each hour, the bids are stacked up in ascending order

until supply equals demand (along with some reserve for unforeseen events such as increases in

load or loss of generating or transmission equipment) . The hourly market clearing price is set

equal to the bid of the last generator needed to supply the customer demand

. Bids are generally

based on the average or marginal operating cost of the specific unit, i .e. the efficiency of the unit,

or the heat rate, multiplied by the cost of fuel plus an adder for variable operations and

maintenance costs.

6.

Similar to the operating characteristics of the units, actual bids submitted to the

market operator are kept highly confidential

. In most markets, bid data are made available in the

public domain with a several month lag (e .g.

6 months) and the market operators go to great

lengths to disguise the bid data so that market participants (and other interested parties) are

unable to determine what bids belong to specific generators . With a 6-month lag, PJM posts to its

website files that provide the date and time of bids and the bid points (a $/MWh price for a

specific MW level) . The identity of the generating unit and the company are disguised by codes .

The statement on the PJM website reads, "The identity of each generator and company is market

sensitive information which cannot be revealed by PJM ."

2. Bilateral Contracts

7.

Bilateral contracts (also known as over the counter, or OTC, contracts because

they are not traded on an organized exchange) comprise several types of arrangements with

unique terms and conditions including amount (MWh and/or MW), price ($/MWH and/or $/kW),

length of service, periods of service (on-peak, off-peak, or round the clock), and level of

"firmness" of the power being delivered

. There are several types of bilateral contracts which I

will broadly categorize as 1) purchase power agreements including unit contingent contracts,

firm power contracts, non-firm power contracts and 2) tolling agreements . The counterparty in a

bilateral contract could be a regulated utility, a cooperative utility, a municipal utility, a retail

supplier or aggregator, or another wholesale market participant

. A brief description of each

contract type is provided below :

and down overnight, the market operator must ensure that enough generators with sufficient flexibility to change

their output are online and able to adjust to follow load .

NERA Economic Consulting

4

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•

Unit contingent contracts or unit power sales agreements involve the sale of power from

an identified generating unit

. The counterparty to this agreement or contract would be

purchasing an agreed upon amount of capacity from a specific generating unit for an

agreed upon term and price

. The IPP or power producer is responsible for all aspects of

producing and delivering the power, but is only obligated to provide power when the

generating unit is available .

•

A firm power contract is an agreement to provide firm power without identifying a

specific source for an agreed upon amount of time and at an agreed upon price

. If the

seller fails to deliver the power, there usually is some sort of liquidated damages

provision - hence, the term "firm" power

. Because the obligation to supply power is

firm, these arrangements trade at a premium to unit contingent contracts

. An IPP

providing firm power may source power from its units, but will generally source the

power from multiple units or "firm" the power from a single unit with a financial product

to hedge the risk that a specific generating unit becomes unavailable

.

•

Tolling agreements are different from purchase power agreements in that the

counterparty is responsible for the fuel supply

. In effect, a counterparty in a tolling

agreement buys the service of converting fuel into electricity

. The generating unit owner

charges the purchaser a "toll" or fee for converting the purchaser's fuel through the

owner's project -

often, the tolling fee is designed to cover the variable cost of

operations, absent the cost of fuel

. The generating unit owner does not bear the risk of

fuel price, fuel availability, or fuel transportation

.

8.

Bilateral contracts can either be the result of negotiations between two parties or

the result of trading (buyer and seller contact each other with a request offer and bid to transact),

a competitive bidding process, or a Request for Proposal (RFP) process

. In a competitive

bidding or RFP process, the IPP or generation owner prepares and submits a bid for the

requested service and is the selected provider based on the results of the process

. In most of

these processes, price is the key metric used in selecting a winning bidder, although non-price

factors can also play a role, such as availability guarantees in tolling arrangements

.

3.

Forward Contracts

9.

As mentioned above, a forward contract is a standardized product that conforms

to generally accepted product definitions (amount of power and timing of its delivery) and

generally uses a standardized set of contract terms (covering a variety of factors, such as force

majeure, collateral requirements, settlement, delivery, arbitration, etc

.). Sometimes these

contracts are priced on published market price indices, but more often the price is negotiated

NERA Economic Consulting

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between the buyer and the seller .

Buyers of forward contracts include trading organizations,

power marketers and brokers, utilities, and other wholesale market participants

.

B

. The Costs of Power Production

; Variable vs

. Fixed Operating Costs

10.

The costs incurred to produce power are usually differentiated by fixed

versus

variable operating costs

. Fixed operating costs are those costs that you incur regardless

of

whether the generating unit produces power and include staffing costs, equipment costs, property

taxes, etc

. Variable operating costs are directly related to the amount of power production

at the

generating unit and include fuel, some portion of maintenance costs,

and any other variable

commodity such as chemicals used in the power production process

. In order to have a

profitable business, IPPs need to recover both their fixed and variable operating costs

as well as

earn a margin on the power sold .

11 .

After fuel costs, the maintenance of the power plant and the resulting costs are a

significant portion of the total costs of power production

.

C .

Factors Power Producers Consider in Formulating Bids or Setting Price in

Contracts

1. Variable Operating Costs ($IMWh)

12 .

Transactions in the exchange markets are by definition short-term transactions,

given that the exchange markets are Day-Ahead or Real-Time markets

.

As the name suggests, in

Day-Ahead markets, bids are submitted the day ahead for delivery of power the

.next day. In

real-time markets, prices for delivery of power on either an hourly

or sub-hourly basis are

determined on the basis of bids that may be submitted as

far as a day in advance

. Bid

formulation is unique to each bidder, but is likely to bear some resemblance to the marginal

operating cost of the generating unit (or the cost of producing additional power from the unit)

. In

formulating a bid, power producers may consider their heat rate, fuel cost, and variable operation

and maintenance costs as well as the cost to start the unit and/or the cost of shutting

down the

unit in the event their bid is not accepted .

In order to prepare a "competitive" bid, power

producers may also consider the likely bids of similar units, or competitors, in order to

submit a

bid that is likely to be accepted by the market operator

.

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2. Fixed Operating Costs

($/kW)

13 .

When preparing bids or offers for longer-term transactions, the power producer is

likely to consider the variable operating costs of the unit as well as the fixed costs

of the unit.

Power producers often recover the fixed costs of operating the generating unit through a capacity

charge specified in $/kW

. Capital, or fixed costs, can be recovered through bidding and selling

capacity into the exchange markets or by a negotiated rate in bilateral contracts . In determining

an appropriate level of fixed cost recovery, the power

producer assesses staffing costs,

maintenance costs, and other costs specific to the generating unit

.

14

.

Similar to bids in short-term transactions, power producers try to assess the fixed

costs of their competitors so that they can prepare a competitive bid or offer

.

3. Availability and Reliability

15 .

In addition to the variable and fixed costs, the reliability or availability

of the

generating unit may also be a critical factor underlying some of the key terms and conditions

of

the bid or offer.

The availability factor of a unit describes the percentage of time the unit will

likely be available to produce electricity over a given period of time

(e.g. monthly or yearly) . In

some contracting arrangements (particularly bilateral contracts

for unit contingent power and

tolling arrangements), the minimum availability of the unit may be specified

with a penalty

clause if the actual availability falls below the threshold

. Sellers of power with availability

clauses compete not only on the basis of price, but also on the "firmness"

of the power as

represented by the availability guarantees

. Further, sellers of firm power may also look to their

competitors for the likely availability of their generating units to understand how much it may

cost them to firm their physical power supplies .

D

. How a Competitor May Use Midwest Generation's Information

1. Exchange Energy Markets

16 .

If a competitor has access to Midwest Generation's (or other generating units')

performance data, or detailed unit characteristics, they can use this information when formulating

their own bids

. If a competitor has access to the actual heat rate of a generating unit,

its likely

fuel costs, its operation and maintenance costs,

and the expected availability of Midwest

Generation's generating units, they can use this information to their competitive

advantage. In

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the exchange energy markets, a competitor could use this information to set their bid slightly

lower than what they expect Midwest Generation's unit to bid, resulting in their unit being

selected to run

. If they are successful, Midwest Generation might not be selected to produce

electricity and therefore would not produce revenue

. Even if Midwest Generation is selected to

run, if Midwest Generation's unit is the last unit selected, they may not produce all of the

electricity they otherwise would have produced, again losing revenue

.

17.

In addition to potentially losing money as a result of competitors using detailed

unit characteristics data that generally would not be known, the fact that Midwest Generation

would not have similar data on competitors creates an un-level playing field

. A fundamental

concept of competitive markets is a level playing field for all participants

. Having highly

confidential operational characteristics of a competitor's generating unit does not make for a

level playing field

.

18 .

The revenue impact will be different depending on the type of generating unit

.

Midwest Generation owns and operates all types of units including base-load, intermediate, and

peaking units

. For base-load units such as large coal plants that are required to run in most hours

of the year, the bidding strategy of the generator or the underlying unit characteristics may not be

as valuable to a competitor, although there are occasions when the unit is backed-down from full

capacity due to low demand levels (such as in the middle of the night in the Fall or Spring when

there is not much air conditioning or heating load)

. During these few hours, a competitor could

use the operational characteristics of a Midwest Generation unit to "estimate" Midwest

Generation's bid in order to formulate bids for their unit that would allow them to be selected to

continue running their unit(s) at full load while Midwest Generation has to back down their units

resulting in lost revenue for Midwest Generation

. Availability data on base-load units, however,

would be of use to competitors as the competitor would have more information on the costs of

Midwest Generation to assemble a firm power product with specific generators based on their

likely unavailability .

19.

For intermediate units (units that run on average 30-60% of the time), there is a

much larger percentage of time when similar units are competing to operate and based on their

respective bids some will be selected and some will not

. If a competitor has the advantage of

knowing Midwest Generation's operational characteristics this situation could result in the

NERA Economic Consulting

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competitor under bidding Midwest Generation, resulting in Midwest Generation's bid not being

accepted and a loss of revenue .

2. Bilateral Contracts

20.

In longer-term transactions such as bilateral or OTC contracts, Midwest

Generation is either "competitively" bidding for a contract or negotiating directly with a

counterparty

. In the competitive bidding process, a competitor may use both the performance, or

operational characteristics, of Midwest Generation's units and/or the cost profile of Midwest

Generation's units to formulate a bid at a lower price than what they believe Midwest Generation

will submit

. Because most competitive procurement processes use price as the main metric to

select the winning bidder, the result could be a loss of the contract for Midwest Generation,

which depending on the term of the contract, could be a significant loss of revenue

.

21 .

In negotiating directly with a counterparty, if the counterparty has access to

Midwest Generation's confidential information, Midwest Generation will be competitively

harmed

. If the counterparty has access to the availability data of the unit or the fleet of units, it

may negatively impact Midwest Generation's negotiating ability and result in less desirable

terms and conditions in the contract as well as a lower price for the products described in the

contract.

III.

THE DOCUMENTS CONTAIN SENSITIVE AND PROPIETARY

CONFIDENTIAL BUSINESS INFORMATION .

22 .

As set forth in Exhibit 2, I have reviewed the documents submitted to Illinois

EPA; these documents contain the competitively sensitive information described above

.

Examples of the data and the documents containing this data are summarized below

.

1

. Performance Data or Operational Characteristics

23 .

These data include net generation, gross generation, heat rate (the ratio of Btus of

fuel consumed to MWhs produced, gross or net), sulfur content of coal and coal heat content

.

These data, especially if compiled in one source, could provide competitors with detailed

performance or operational data that is not available in the public domain

. The data elements

together provide a detailed look at the operation of a specific generating unit, the fuel used and

quality of the fuel, as well as the efficiency of the unit

(i.e. heat rate)

. Heat rate data, gross and

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net generation, and fuel characteristics are the key components in deriving a generating unit's

variable operating cost in $/MWh

. The variable operating cost of the unit is the basis for both

bids into an energy exchange and energy prices offered in contracting arrangements

. The

availability of this type of data would allow a competitor to estimate Midwest Generation's

variable operating cost, and as discussed above could be used to undercut Midwest Generation's

bids in both the exchange markets and competitive bidding processes

. Similar categories of data

are reported to NERC-GADS (National Electric Reliability Council

-

Generating Availability

Data System) and the market operators, but in both cases this data is only released to other

parties with the approval of the owner of the generating unit

. The market operators consider this

data highly confidential and market sensitive

.

24.

Midwest Generation's Generation Charts (MWG0024 through MWG0055)

provide monthly and annual detail on the performance of Midwest Generation's generating units

.

This data includes gross generation, net generation, gross heat rate, average heat content of the

coal, and % of sulfur of the coal .

25

. Some of this performance data is available in the public domain but it is generally

aggregated, i .e

. at the plant not unit level, or provided as annual, not monthly data

. For example,

monthly fuel used and fuel quality data is available from FERC Form 423

. Unlike the

documents cited, the FERC Form 423 data is aggregated to the plant level making it quite

difficult to assess the fuel characteristics of a specific generating unit

. Generator ratings are

available in EIA Form 411 and EIA Form 860 but are provided as seasonal ratings, not monthly,

and are net ratings only (not gross)

. 5

The publicly available data merged with the release of

Midwest Generation's confidential data could be quite valuable not only to Midwest

Generation's competitors but also to others such as consultants and analysts who prepare

assessments of the competitive markets and trading organizations who transact in the markets

.

2 . Event or Outage Data

26.

Event data includes outage start and end times, outage types, outage causes,

components repaired and any other information related to an outage

. Similar to performance

data, this type of data is reported to NERC-GADS and is protected as confidential information by

'

EIA data can be found at the EIA website,

www.eia.doe .gov.

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Consulting

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NERC.

These data would provide a competitor with detailed information regarding the

availability of the generating unit

. These types of data provide a detailed look into the

maintenance schedules and outages experienced by the unit and could provide insight into future

availability of the unit .

27. Midwest Generation's Outage Chart (example

: MW00060-0068) provide work

order numbers, outage end dates, descriptions of the repairs and replacements performed during

the outage, and dollars expended on the repair

.

3.

Fixed Costs such as Maintenance and Equipment Replacement Costs

28.

The Outage Charts provide maintenance and repair costs and the timing of

outages

. This information could be used by competitors to understand the level of maintenance

required of the generating unit, the level of maintenance performed (which may reveal the

Company's operational goals), and the timing of the maintenance outages

. This information

could be used by the competitor to optimize their own maintenance plans as well as to ascertain

the Company's operational objectives and the costs to meet those objectives

. Release of this

type of information allows the competitor to assess the fixed costs incurred by the generating

unit for maintenance and equipment repair and replacement and could be used by a competitor to

assess the total cost profile of Midwest Generation's generating units

.

4. Availability Data and Projections

29.

Both the Generation Charts and the Outage Charts provide information describing

the historical availability of a specific generating unit and information that could be used to

derive estimates of the future availability of the unit .

NERA Economic Consulting

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I declare that the foregoing is true and correct

.

Executed on thisd"day of May, 2007

.

Michael J. King

Sworn and subscribed before me this thentay of May, 2007

.

State of~County

Qcc~ o

Subsoil.

ged ~Ad swo

me on

CH2\ 1857854.2

NERA Economic Consulting

My Commission -E'~tiin"

DECEMBER )3

; 2002

Notary Public

12

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EXHIBIT 1

---

NERA

Economic Consulting

MICHAEL KING

SENIOR VICE PRESIDENT

Mike King is an economist and management consultant with extensive experience in electric

wholesale markets, electric utility restructuring, strategy,a nd regulation . Mr. King's recent work

has focused on the merchant generation sector, where he hasp rovided strategy and valuation

advice on mergers and acquisitions the financing of merchant energy companies, and the

financial restructuring ofd istressed companies

. He has also appeared asa n expert witness in

litigation related to the generation sector.

Mr

. King's work int he merchant energy sector has focused ona cquisitions of generating

facilities and their finance. Mr. King has provided valuation services to acquirers, assisting them

in acquiring more than 21,000 MW of generation in North America, Europe, and Asia-Pacific .

He also has been one of the leading authorities on markets for wholesale energy, supervising the

preparation of independent markete xpert's report's that supported financing for merchant energy

companies, including most of the major financing's in North America (NRG's Northeast

portfolio in the syndicated loan and capitalm arkets, US Generating's New England assets in the

syndicated loan and capital markets, Orion Power's assets in New York, Edison Mission

Energy's Homer City and Midwest Generation assets in the syndicated loan and capital markets,

M cant's US portfolio in the syndicated loan and capital markets, Reliant's Northeast portfolio in

the syndicated loan market, Entergy's letter of credit to support the Northeast nuclear

acquisition, the Lake Road facility, the FPL Rise facility, Exelon's merchant power credit

ratings, AEP's merchantc reditr atings, etc.).

Mr

. King has appeared as an expert witness in a New Source Review case and in a commercial

damages case relating to M&A activity in the energy sector . The alledged breach concerned the

wrongful acquisition of a power plant, and required Mr . King to assess the value of the facility .

The plaintiff asserted a damages claim that was in excess of $500 million . He has appeared as a

witness in a new source review case . He appeared as an expert witness in a resource

procurement proceeding . He has appeared as an expert witness on integrated resource planning

issues .

And he has appeared as an expert witness on the design and implementation of

performance based and incentive regualtory schemes . Mr. King led the development of the

performance-based regulation scheme for theP rovince of Ontario, includingt he design and

executiono f the stakeholder involvement process for over 270 utilities int he province in

0

Michael King

Senior Vice President

National Economic Research Associates, Inc

.

370 Interlocken Boulevard, 4th Floor

Broomrield,C olorado 80021

+1 303 327 1467 Fax +1 303 327 1499

Direct dial : +1 303 327 1466

mike.kingenera .cnm

www

n era .co m

14

Marsh & McLennan Companies

---

NERA Economic Consulting

Michael King

addition to consumer groups, the government, and the regulator . Finally Mr

. King has appeared

as an expert witness on the issue of resource procurementa nd prudence

.

Mr

. King has not only assessed the impacts of regulatory barriers in the restructuring energy

markets, he hasl ed the efforts to start new companies in these markets

. For an integrated gas

company, he developed the business plan for a retailing subsidiary that combined existing and

acquired gas marketing, cogeneration development, and performance contracting businesses into

a single entity

. Upon approval of the business plan, Mr . King served

as the interim senior vice

president of marketing for the reformed company . Mr

. King subsequently led the initial launch

efforts to form a power marketing joint venture of three large public power agencies

. Most

recently, he has been focused on the development of a structured logistical power marketing

firm, where he has ledt he use and development of option pricing methods in the product

development area

.

Prior to joining NERA, Mr

. King spent eight years with PA Consulting (formerly PHB Hagler

Bailly), most recently as a managing partner, deputy group head of the Energy Group, and Head

oft he Global Wholesale Energy Markets practice

. In that capacity he served on the extended

management committee of PA Consulting, had profit and loss responsibility for his practice, and

led many strategy, merger and acquisition, and financing projects

.

Education

MA Economics,U niversity of Wyoming, 1980

BA Economics, University of Wyoming, 1979

Professional Experience

National Economic Research Associates

2004-

Senior Vice President

2003

Vice President

PA Consulting Group

2000-2002

Managing Partner

Head, PA Americas

Head, Wholesale Energy Markets Practice

Deputy Group Head, Energy Group

Member, Extended Management Committee

PHB Hagler Bailly

1995-2000

Senior Vice President

Member of the Hagler Bailly Management Committee

Synergic Resources Corporation

1985-2000

Senior Vice President

Member of the Management Committee

2

---

Michael King

Experience

Areas of Qualification

Assetv aluation, market restructuring, pricing and contracting practices, strategy, trading, energy

retailing and utility planning

Employment History

Senior Vice President (2004-), National Economic Research Associates, Denver and Washington

DC

Vice President(2003), National Economic Research Associates, Denver and Washington DC

Managing Partner (2001-2002), PA Consulting Group, Boulder Colorado .

Associate Partner (2000-2001), PA Consulting Group, Boulder Colorado

Senior Vice President (1999-2000), Vice President( 1997-1999), Principal (1995-1997), PHB

Hagler Bailly, Boulder, CO

Senior Vice President, Synergic Resources Corporation, Oakland, CA, 1992-1995

Vice President, Synergic Resources Corporation, Oakland, CA, 1988-1992

Director, Pacific Northwest Division,S ynergic Resources Corporation, Seattle, WA, 1985-1987

Group Leader, Utility Economics, Battelle Pacific Northwest Laboratories, Richland, WA, 1980-

1985

Rate Analyst, Mountain Bell, Cheyenne, WY, 1979-1980

Professional Experience

Mr, King is an economist and management consultant with extensive experience in the electric

power and electric utility sectors . His current areas of focus are valuation of energy facilities in a

changing environment, finance of generation assets, financial restructuring of distressed energy

merchant companies, corporate strategy, energy trading strategy and analytics, and performance

based regulation.

Prior to joining NERA, Mr. King was responsible for PA's market assessment work in support of

generation asset£inance . He led the firm's work on many major financings in the syndicated loan

and capitalm arkets, including the U .S . Generating financing of the NEES assets and Lake Road

generation project, Southern Energy North America Generating's financing of its US power

plant portfolio, Edison Mission Energy's financing of Homer City Station and the

Commonwealth Edison assets, NRG Energy's financing ofi is Northeast portfolio, West Coast

Power's financing of its California assets, Southern Energy's financing of its U.S. generation

portfolio, PP&L Global's financing of the Montana Power assets, Orion Power's financing of its

Northeast Portfolio, PSEG Power's financing of the transfer of assets from PSE&G andi s

currently leading work obtaining debt ratings for the to-be-formed unregulated generation

company of AEP as well as the financing of the La Rosita power plant in Mexico . In addition,

Mr

. King has assisted bidders in many of the generation asset auction in the U.S ., and has

supported several bidders successful bids for generation assets. He has also supported bidders in

NERA Economic Consulting

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Michael King

direct M&A activity of publicly traded companies. Virtually all of this work involved

forecasting future operations of generating facilities .

Mr. King has also been a pioneer in the development and application off inancial engineering

methods in the energy and power industries . He developed a methodology to value the real

option value of power plants as well as a method to value the development options associated

with existing sites . He applied these methods not only in the acquisition of power plants, but

also in securing debt financing and rating the debt of new debt offerings

.

Mr. King has also appeared as an expert witness in a number of issues . He appeared as an expert

witness in the Dynegy Midwest Generating/Illinois Power Company New Source Review

litigation

. He was an expert on damages associated with an alleged wrongful acquisition ofa

power plant in New York testifying on the value of the plant and the damages incurred . He has

also appeared as an expert witness on incentive rate-making issues in administrative law

proceedings

.

Mr

. King has not only assessed the impacts of regulatory barriers in the restructuring energy

markets, he basil

ed the efforts to start new companies in these markets

. For an integrated gas

company, he developed the business plan for a retailing subsidiary that combined existing and

acquired gas marketing, cogeneration development, and performance contracting businesses into

a single entity . Upon approval of the business plan, Mr . King served as the interim senior vice

president of Marketing fort he reformed company . Mr. King subsequently led the initial launch

efforts to form a power marketing joint venture of three large public power agencies . Most

recently, he has been focused on the development of a structured logistical power marketing

firm, where he has ledt he use and development of option pricing methods in the product

development area .

Expert Testimony

Mr

. King prepared an expert report and testified in Federal DistrictC ourt for the Southern

District of Ohio in the United States of America v . American Electric Power Service Corp .;

Indiana Michigan Power Co ., d/b/a American Electric Power ; Ohio Power Company, d/b/a

American Electric Power; Appalachian Power Company, d/b/a American Electric Power ;

Cardinal Operating Company ; and Central Operating Company New Source Review case . Mr .

King's report and testimony addressed whether or not the AEP Companies should have expected

that a series of activities would reasonably have been expected to cause an increase in emissions

under the 1992 NSR regulations

.

Mr

. King testified in Federal District Court for the Southern District of Illinois in the Dynegy

Midwest Generating, LLC/Illinois Power Company New Source Review case on the issue of

whether Illinois Power Company should have anticipated that a series of projects at the Baldwin

Power Station would cause a significant increase in emissions .

Mr

. King has prepared two expert reports and is scheduled to appear as an expertw itness in an

arbitration involving a construction dispute over an industrial energy facility . Mr. King's reports

NERA Economic Consuling

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and testimony address what the reasonable expectations would have been for the future

operations of the facility and the damages suffered by the owner of the facility .

Mr

. King has testified before regulatoryc ommissions in Montana, Ontario, California and

Hawaii. His expert testimony includes the following :

•

On behalf of PPL Montana on the issue of resource procurement and the reasonableness

of the Basin Creek power project

•

On behalf of PPL Montana on the issue of the reasonableness of the Judith Gap power

project

•

On behalf of the Staff of the Ontario Energy Board on the issues of performance-based

regulation and the Staff's proposed distribution rate handbook

•

On behalf of Hawaiian Electric Company on the issue of externalities in gas and electric

integrated resource planning .

•

On behalf of Hawaiian Electric Company on the issues of environmental externalities,

DSM shareholder incentives,D SM programs, and fuel substitution in HECO's IRP

.

•

On behalf of Maui Electric Company on the issues of DSM shareholder incentives,

DSM programs, and fuel substitution in MECO's IRP .

•

On behalf of Hawaii Electric Light Company on the issues of DSM shareholder

incentives, DSM programs, and fuel substitution in HELCO's IRP .

•

On behalf of Hawaiian Electric Company on the issues of appropriate levels of DSM

shareholder incentives, measurement and evaluation of DSM programs, and

administrative procedures in HECO's planned commercial and industrial DSM program .

•

On behalf of Hawaiian Electric Company on the issues of appropriate levels of DSM

shareholder incentives, measurement and evaluation of DSM programs, and

administrative procedures in HECO's planned residential DSM programs .

•

On behalf of Hawaiian Electric Company on the appropriateness of customer incentives

and cost recovery for fuel substitution programs .

•

On behalf of Southern California Edison Company on methods for integrating demand

and supply resources before the California Energy Commission.

Market Assessment in Support of Financing

Mr

. King has led a number of market assessments to support both bank syndication and capital

markets transactions. Some of these deals include :

•

U.S . Generation -

Financing of the NEPGEN assets (bank deal and 144(A))

•

Edison Mission Energy - Financing of Homer City Station (bank deal and 144(A))

•

PPL Global -

Financing of the Montana Power assets [144(A)]

•

NRG Energy

- Financing of Northeast Portfolio (bank deal - 144(A))

•

Southern Energy - Financing of US Portfolio (bank deal and 144(A))

Michael King

NERA Economic Consulting

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Michael King

• WestC oast Power -

Financing of California Assets (bank deal)

•

Orion Power Holdings - Financing of Northeast Power Portfolio [144(A)]

•

Edison Mission Energy -

Financing of Commonwealth Edison assets

•

PG&E Generation-Financing of the Lake Road project( bank deal)

•

PSEG Global -

Financing transfer of generation assets from PSE&G (capital markets

deal)

•

AEP Resources - Credit ratings of unregulated generating assets of AEP

•

Exelon

- Credit ratings of merchant generating assets

Mr

. King has worked with over 40 lending and financial institutions in the role of independent

market expert for securing electric generation plant financing, including both lead and supporting

institutions involved in the syndication

. These include :

•

Lehman Brothers

•

JP Morgan/Chase Securities

•

Salomon Smith Barney

•

Warburg Dillon Read LLC

•

Credit Suisse First Boston

•

Societe Generale

•

Citibank

•

Bank of America

•

Union Bank

•

BNP-Paribas

•

CIT.

Several of these projects had numerous banks involved in the syndication

. Homer City project in

PJM has 18 supporting financial institutions most of which we have spoke with over the last few

months

. The project work in New York and NEPOOL also had numerous financial institutions

supporting the syndication (between 15 and 20)

. The financial institutions listed above have been

the lead financial institutions and, in many cases, were the direct client for the work

.

NEi A Economic

consulting

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Asset Valuation

Mr

. King led an independent valuation effort of the NEES generation assets

. This work,

conducted for the CFO and CEO of the client, was performed to provide independent checks on

the client's bid price

. Mr

. King led a large group of analysts in this effort in constructing a

valuation model and supervising components of due diligence

. The analysis included the

identification and valuation of embedded options (such as

plant expansion opportunities) that

were valued using option pricing techniques

. In addition, Mr.K ing assisted the client in the

development of their bidding strategy .

Mr

. King led separate analyses for clients involved in the Boston Edison, CentralM aine Power,

NYSEG, GPU, Homer City, Commonwealth Edison, Consolidated Edison, Niagara Mohawk,

Southern California Edison, and EUA auctions

. In these cases, Mr. King managed the

development of forward price analyses projecting energy and capacity prices in the restructured

market.

Mr

. King has also led efforts to develop state-of-the-art models to support decision-making

. He

led the development of two Cournot game theory models to support a client interested in market

strategies in Europe

. He also led a team in using a Cournot model to assess a bid for control of a

publicly-traded company

.

Corporate Strategy

Mr

. King has also led several significant strategy engagements

. He assisted a leading public

powere ntity develop theirc orporate strategy. In addition, Mr

. King played an important role in

the forming the corporate concept for a startup powerm arketing firm targeting the Northeastern

United States

. He led a strategy development effort for the retail sector for an integrated gas

company, then served as the interim Senior Vice President of Marketing during the launch and

integration of several acquisitions of the client before turning over the company

.

Pricing and Rate Design

Mr

. King led a two year-long effort to develop a performance based regulation (PBR) scheme for

electric distribution utilities inO ntario

. He led this process for the Ontario EnergyB card,

including development of key PBR concepts, formulation and leadership of the consultation

process (with 270 distribution utilities as well as numerous other stakeholders), and drafting of

the PBR strawman proposal .

Mr

. King has provided or directedr ate designa nda nalysis services for numerous clients,

including Southern California Edison (time-of-use pricing), Bonneville Power Administration

(projections of economy sales and prices), Pacific Gas and Electric (low-income rate design, rate

design assessment model), Hawaiian Electric (time-of-use and interruptible rate design), Green

Michael King

NERA Economic consulting

7

---

NERA Economic Consulting

Michael King

Mountain Power (time-of-use rate design), US West (measured service telephone rates), and

Puget Power (rate simulation and analysis software)

.

Mr

. King also led a team for Vattenfall in the design of the price andm arketing study, a

significant undertaking intended to resolve the extent to which price-induced management of

demand would be sufficient to dealw ith the phase-out of nuclearg eneration in Sweden (which

accounts for 50% of the installed generation base)

. He conducted the review of response to time-

differentiated rates conducted as parto f that study as well as a later undertaking to identify how

consumers in the United States had responded to very large (>I 00%) price changes

.

Utility Management Consulting

Mr

. King has undertaken several assignments related to strategy and business operations

. Most

of his work in this area has to do with either regulatory restructuring of the industry and its

implications for utility operations or startup of new businesses

. Some of his most relevant

experience includes the following

:

•

Business plan development fora n energy service company

. This study, undertaken fora

utility, examined entering the energy service industry

. Mr. King was responsible for

assessing the market, identifying how to build a sustainable competitive advantage,

preparing the marketing strategy, and developing pro forma financial statements for the

startup

. Mr

. King also presented the business plan to the management committee of the

utility

. The utility has since obtained board approval for the startup

.

•

Broadband network assessment

. For a holding company, Mr

. King managed a project

team that built estimates of the revenue that could be obtained from the regulated utility

for broadband network services

. The project team assisted in the negotiations with

potential joint venture partners in building a business case for broadband network

services to residentialc ustomers

. In addition, Mr

. King provided regulatory assistance in

assessing the regulatory risks and obstacles in moving forward with full-scale

deployment

.

•

Worldwide market assessment for distributed generation

. For a Fortune 50 firm, Mr.

King directed a market assessment fordistributed generationa s part of the business

assessmento f the manufacturer in entering the distributed generation market

.

•

Regulatory strategy for packet radio network roll-out

. For Southern California Edison,

Mr

. King assisted in

the development of a regulatory strategy for roll-out of Netcomm, a

packet radio network capable of two-way communications with customers

.

•

Advised a California utility on restructuring initiatives

. This project examined the

internationale xperience in electric power restructuring, and developed recommendations

fort he client on how to reposition theirp roduct and service line given several scenarios

of how restructuring initiatives launched by the "Blue Book" might play out

.

8

---

NERA Economic consulting

9

Michael King

• Described alternative regulatory frameworks that might evolve over the next few years

for a large utility

. This included assessing status quo regulation and the risks it might

entail

. Three alternative regulatory frameworks were assessed for their potential risk to

the client

. Recommendations were made onh ow to affect the course of regulatory

restructuring

.

•

Managed a major international research project for the International Energy Agency

. This

project, undertaken as part of the LEA's International Agreement on DSM, examined

improved methods for incorporating DSM into resource planning and government policy

.

The project was the largest project in the agreement with 13 countries participating in the

research

. The project focused considerable energy on restructuring of the power industry

and the incentives for encouraging DSM in these restructured environments

.

•

Assisted a major utility in realigning their energy service offerings to an energy service

company basis

. The strategy includes the investment of shareholder funds on a below line

profit basis

.

•

Developed market segment strategies for the new construction and transportation

equipment market segments for PG&E

. This project included a market assessment,

competitive scan, customer needs assessment, and development of specific marketing

strategies for these market segments

.

•

Developed a new loads program for PG&E

. This project examined customer satisfaction

in the commercial buildings

segment with PG&E's services,

then developed

recommendations for how service and load could be increased .

•

Developed cost recovery, shareholder incentives, and lost margin mechanisms for

Hawaiian Electric Company, Maui Electric, and Hawaii Electric Light Company

. This

project includedt he identification of possible strategies, development of a company

position, including estimating the financial impacts of the alternative strategies on the

company and ratepayers, and negotiations with a group of intervenors, including the

Consumer Advocate

.

•

Assessed the financiali mpacts of alternative demand-side strategies for one of the largest

utilities in the United States

. This project assessed the impacts on earnings, share price,

capitalization, and liabilities of alternate energy efficiency (sales reduction) and

marketing (sales growth) strategies

. The analysis was used to determine the scope and

nature of the utility's demand-side management strategy

.

•

Conducted policy option assessment of options to reduce CO2 emissions for a major

Japanese utility

.

•

Assessed the roles of utilities and energy service companies in development of DSM

programs for a multiclientc onsortium of seven major utilities

.

9

---

0

0

Michael King

Utility Planning

•

Determined the impacts of early refill of Ross Lake on power production, recreation,

fisheries, and the value of power for FERC relicensing of the Skagit hydropower plant

.

This project involved modifying a hydroelectric reservoir model to be consistent with the

rules of the Pacific Northwest Coordination Agreement and to simulate the operation of

the Ross Lake system over 60 years of hydrological conditions

.

•

Built an optimization model to determine the value of energy to the Northwest and

Southwest for the Bonneville Power Administration

. This model included the cost of

production ofe nergy in the Northwest system, and simulated the trade prices at which

energy could be sold to the Southwest

. The resulting framework allowed determination of

the value of additionalc onservation investments in terms of "freed" energy that could be

subsequently sold to the Southwest

.

•

Assessed options to defray or avoid expansion of transmission capability for the

Bonneville Power Administration

. In this major program for Bonneville, a framework

was developed for determining the ability and cost-effectiveness of conservationt o

defray transmission projects in the Northwest

.

•

Designedi ntegrated planning strategies for Southern California Edison for the DSM

Integration Pilot in the Biennial Resource Plan Update proceeding

. Mr. King examined

them ethods that could be used to integrate demand and supply-side resources in the

capacity expansion process, and contributed to the testimony of SCE on these subjects

.

•

Conducted DSM analysis for PG&E and SCE in the DSM IntegrationP ilot int he

Biennial Resource Plan Update proceeding

. This work had to do with how to treat DSM

in integration

. Issues included bundling of DSM programs into resource blocks for

testing,t iming of DSM impacts, and treatment of flexibility

.

Market Research

•

Directed many survey data collection projects fort he Bonneville PowerA dministration,

Seattle Water Department, Pacific Gas and Electric, Southern California Gas, and

Lansing Board of Water and Power, among others

.

•

Constructed the Residential Appliance Saturation Survey (RASS) graphical analysis

system for PG&E

.

•

Constructed the Load Shape Analysis System for SCE .

•

Analyzed the EIA NBECS data for the Energy Information Administration to support

end-use demand forecasting .

NERA Economic Consulting

10

---

Demand Forecasting

0

•

Implemented HELM for Tokyo Electric Power .

•

Managed development of RELOAD, a system for forecasting load shape impacts

resulting from DSM programs for the Electric Power Research Institute

.

•

Reviewed techniques for forecasting peak demand and developed recommended peak

demand forecasting strategies for the Canadian Electric Association

.

•

Directed the development of the Electric Power Research Institute's INDEPTH

econometric models for providing forecasts of electricity demand in the industrial sector .

•

Built an end-use/econometric forecasting model for the assessment of generation

alternatives in the Railbelt Region of Alaska .

•

Built and implemented an end-use forecasting model for 34 members of the

Massachusetts Municipal Wholesale Electric Company

.

•

Modified Northeast Utilities' commercial sector electricity demand forecasting modelt o

conduct uncertainty analysis

.

•

Developed enhanced end-use forecasting algorithms in the ORNL commercialm odel for

the U .S

. Department of Energy.

•

Managed development of end-use data for Southern California Edison's residential and

commercial end-use forecasting models .

NERA Economic consulting

Michael King

2/5/066

11

---

EXHIBIT 2

---

EXHIBIT 2

Documents Considered

1 .

Midwest Generation Response to Request No

. 2 for Annual Data, MWG 0024-0029

2.

Midwest Generation Response to Request No. 2 for Monthly Data, MWG 0030-0056

3 .

Midwest Generation Response to Request No . 3, Capital Project List, MWG 000058-

000068

CH2\ 1868353 .1

---

EXHIBIT 3

---

PJM Interconnection,, L

.L.C.

Third Revised Rate Schedule FERC No . 24

AMENDED AND RESTATED

OPERATING AGREEMENT

OF

PJM INTERCONNECTION, L.L.C

.

The following sheets reflect all revisions approved by FERC in orders issued through April 26,

2006, and all revisions from compliance filings submitted through April 26, 2006, as well as

clean up revisions to

: (1) incorporate language accepted by FERC in prior versions of the

Operating Agreement, but not previously integrated into the current effective pages

; and (2)

correct minor typographical and formatting errors

.

K

:\pjm\Current Effective Agreements\Stripped Current Effectives\PJM Operating Agreement 4-262006.doc

---

PJM Interconnection, L .L.C .

Fifth Revised Sheet No

. 43

Third Revised Rate Schedule FERC No . 24

Superseding Fourth Revised Sheet No

. 43

11.3

Member Responsibilities .

11 .3.1 General.

To facilitate and provide for the work of the Office of the Interconnection and of the

several committees appointed by the Members Committee, each Member shall, to the extent applicable

;

(a)

Maintain adequate records and, subject to the provisions of this Agreement for

the protection of the confidentiality of proprietary or commercially sensitive information, provide data

required for (i) coordination of operations, (ii) accounting for all interchange transactions, (iii)

preparation of required reports, (iv) coordination of planning, including those data required for capacity

accounting under the Reliability Assurance Agreement and Reliability Assurance Agreement-West, and

Reliability Assurance Agreement-South

; (v) preparation of maintenance schedules, (vi) analysis of

system disturbances, and (vii) such other purposes, including those set forth in Schedule 2, as will

contribute to the reliable and economic operation of the PJM Region

;

(b)

Provide such recording, telemetering, revenue quality metering, communication

and control facilities as are required for the coordination of its operations with the Office of the

Interconnection and those of the other Members and to enable the Office of the Interconnection to

operate the PJM Region and otherwise implement and administer this Agreement, including equipment

required in normal and Emergency operations and for the recording and analysis of system disturbances

;

(c)

Provide adequate and properly trained personnel to (i) permit participation in the

coordinated operation of the PJM Region, (ii) meet its obligation on a timely basis for supply of records

and data, (iii) serve on committees and participate in their investigations, and (iv) share in the

representation of the Interconnection in inter-regional and national reliability activities

. Minimum

training for Members that operate Market Operations Centers and local control centers shall include

compliance with the applicable training standards and requirements in PJM Manual 01, Conrtol Center

Requirements, including the PJM System Operator Training Requirements in Attachmetn C ;

(d)

Share in the costs of committee activities and investigations (including costs of

consultants, computer time and other appropriate items), communication facilities used by all the

Members (in addition to those provided in the Office of the Interconnection), and such other expenses as

are approved for payment by the PJM Board, such costs to be recovered as provided in Schedule 3

;

(e)

Comply with the requirements of the PJM Manuals and all directives of the

Office of the Interconnection to take any action for the purpose of managing, alleviating or ending

an

Emergency, and authorize the Office of the Interconnection to direct the transfer or interruption of the

delivery of energy on their behalf to meet an Emergency and to implement agreements with other

Control Areas interconnected with the PJM Region for the mutual provision of service to meet

an

Emergency, and be subject to the emergency procedure charges specified in Schedule 9 of this

Agreement for any failure to follow the Emergency instructions of the Office of the Interconnection

. In

addressing any Emergency, the Office of the Interconnection shall comply with the terms of any reserve

sharing agreements in effect for any part of the PJM Region .

11.3.2

Facilities Planning and Operation.

Consistent with and subject to the requirements of this Agreement, the PJM

Tariff, the governing agreements of the Applicable Regional Reliability Councils, the Reliability

Assurance Agreement, the Reliability Assurance Agreement-West, the Reliability Assurance Agreement-

South, the West Transmission Owners Agreement, the East Transmission Owners Agreement, the South

Transmission

Owner Agreement, and the PJM

Manuals, each Member shall

Issued By

:

Craig Glazer

Effective : January 2, 2006

Vice President, Federal Government Policy

Issued On:

November 2, 2005

---

PJM Interconnection, L

.L.C.

Fifth Revised Sheet No

. 44

Third Revised Rate Schedule FERC No . 24

Superseding Third Revised Sheet No

. 44

cooperate with the other Members in the coordinated planning and operation of the facilities of its

System within the PJM Region so as to obtain the greatest practicable degree of reliability, compatible

economy and other advantages from such coordinated planning and operation . In furtherance of such

cooperation each Member shall, as applicable :

(a)

Consult with the other Members and the Office of the Interconnection,

and

coordinate the installation of its electric generation and Transmission Facilities with those of such other

Members so as to maintain reliable service in the PJM Region ;

(b)

Coordinate with the other Members, the Office of the Interconnection and with

others in the planning and operation of the regional facilities to secure a high level of reliability and

continuity of service and other advantages ;

(c)

Cooperate with the other Members and the Office of the Interconnection in the

implementation of all policies and procedures established pursuant to this Agreement for dealing with

Emergencies, including but not limited to policies and procedures

for maintaining or arranging for a

portion of a Member's Capacity Resources, at least equal to the applicable levels

established from time to

time by the Office of the Interconnection, to have the ability to go from a shutdown condition to an

operating condition and start delivering power without assistance from the power system

;

(d)

Cooperate with the members of the Applicable Regional Reliability Councils to

augment the reliability of the bulk power supply facilities of the region and comply with Applicable

Regional Reliability Councils and NERC operating and planning standards, principles and guidelines and

the PJM Manuals implementing such standards, principles and guidelines ;

(e)

Obtain or arrange for transmission service as appropriate to carry out this

Agreement;

(f)

Cooperate with the Office of the Interconnection's coordination of the operating

and maintenance schedules of the Member's generating and Transmission Facilities with the facilities of

other Members to maintain reliable service to its own customers and those of the other Members and to

obtain economic efficiencies consistent therewith ;

(g)

Cooperate with the other Members and the Office of the Interconnection in the

analysis, formulation and implementation of plans to prevent or eliminate conditions that impair the

reliability of the PJM Region

; and

(h)

Adopt and apply standards adopted pursuant to this Agreement and conforming

to NERC, and Applicable Regional Reliability Council standards, principles and guidelines and the PJM

Manuals, for system design, equipment ratings, operating practices and maintenance practices .

11.3.3 Electric Distributors .

In addition to any of the foregoing responsibilities that may be applicable, each

Member

that is an Electric Distributor, whether or not that Member votes in the Members Committee in the

Electric Distributor sector or meets the eligibility requirements for any other sector of the Members

Committee, shall

:

Issued By :

Craig Glazer

Effective: May 1, 2005

Vice President, Government Policy

Issued On:

November 4, 2004

Filed to comply with order of the Federal Energy Regulatory Commission, Docket Nos . ER04-829,

et al.,

issued October 5, 2004, 109 FERC ¶ 61,012 .

---

PJM Interconnection, L

.L.C

.

Fifth Revised Sheet No

. 45

Third Revised Rate Schedule FERC No . 24

Superseding Fourth Revised Sheet No

. 45

(a)

Accept, comply with or be compatible with all standards applicable within the

PJM Region with respect to system design, equipment ratings, operating practices and maintenance

practices as set forth in the PJM Manuals, or be subject to an interconnected Member's requirements

relating to the foregoing, so that sufficient electrical

equipment, control capability, information and

communication are available to the Office of the Interconnection for planning and operation of the PJM

Region;

(b) Assure the continued compatibility of its local system energy management

system monitoring and telecommunications systems to satisfy the technical

requirements of interacting

automatically or manually with the Office of the Interconnection as

it directs the operation of the PJM

Region;

(c)

Maintain or arrange for a portion of its connected load to be subject to control by

automatic underfrequency, under-voltage, or other load-shedding

devices at least equal to the levels

established pursuant to the Reliability Assurance Agreement, Reliability Assurance Agreement-West,

and Reliability Assurance Agreement-South, as applicable, or be subject to another Member's

control for

these purposes

;

(d)

Provide or arrange for sufficient reactive capability and voltage control

facilities

to conform to Good Utility Practice and (i) to meet the reactive requirements of its system and customers

and (ii) to maintain adequate voltage levels and the stability required by the bulk

power supply facilities

of the PJM Region

;

(e)

Shed connected load, share Capacity Resources, initiate active load management

programs, and take such other coordination actions as may be necessary in accordance with

the directions

of the Office of the Interconnection in Emergencies ;

(f)

Maintain or arrange for a portion of its Capacity Resources at least equal

to the

level established pursuant to the Reliability Assurance Agreement to have the ability to go from a

shutdown condition to an operating condition and start delivering power without assistance from the

power system

;

(g)

Provide or arrange through another Member for the services of a 24-hour local

control center to coordinate with the Office of the Interconnection, each such control center to be

furnished with appropriate telemetry equipment as specified in the PJM Manuals,

and to be staffed by

system operators trained and delegated sufficient authority to take any action necessary

to assure that the

system for which the operator is responsible is operated in a stable and reliable manner

. In addition to

meeting any training standards and requirements specified in this Agreement,

local control center staff

shall be required to meet applicable training standards and requirements in PJM Manual 01, Conrtol

Center Requirements, including the PJM System Operator Training Requirements in Attachmetn C

;

(h)

Provide to the Office of the Interconnection all System, accounting,

customer

tracking, load forecasting (including all load to be served from its

System) and other data necessary or

appropriate to implement or administer this Agreement, the Reliability Assurance Agreement, the

Reliability Assurance Agreement-West and the Reliability Assurance Agreement-South

; and

(i)

Comply with the underfrequency relay obligations and charges specified in

Schedule 7 of this Agreement

.

Issued By :

Craig Glazer

Effective: January 2, 2006

Vice President, Federal Government Policy

Issued On :

November 2, 2005

---

PJM Interconnection, L.L.C

.

Third Revised Sheet No

. 46

Third Revised Rate Schedule FERC No . 24

Superseding Original Sheet No

. 46

11.3.4 Reports to the Office of the Interconnection.

Each Member shall report as promptly as possible to the Office of the Interconnection

any changes in its operating practices and procedures relating to the reliability

of the bulk power supply

facilities of the PJM Region.

The Office of the Interconnection shall review such reports, and

if any

change in

an

operating practice or procedure of the Member is not in accord

with the established

operating principles, practices and procedures for the PJM Region and

such change adversely affects

such region and regional reliability, it shall so inform such Member, and the other Members

through their

representative on the Operating Committee, and shall direct that such change be

modified to conform to

the established operating principles, practices and procedures .

11.4

Regional

Transmission Expansion Planning Protocol.

The Members shall participate in regional transmission expansion planning

in accordance with

the Regional Transmission Expansion Planning Protocol set forth in Schedule 6 to this

Agreement .

11.5

Member Right to Petition.

(a)

Nothing herein shall deprive any Member of the right to petition FERC to modify

any

provision of this Agreement or any Schedule or practice hereunder that the petitioning

Member believes

to be unjust, unreasonable, or unduly discriminatory under section 206 of the Federal

Power Act, subject

to the right of any other Member (a) to oppose said proposal, or (b) to withdraw from

the LLC pursuant

to Section 4.1 .

(b)

Nothing herein shall be construed as affecting in any way the

right of the Members,

acting pursuant to a vote of the Members Committee as specified in Section

8.4, unilaterally to make an

application to FERC for a change in any rate, charge, classification,

tariff or service, or any rule or

regulation related thereto, under section 205 of the Federal Power Act

and pursuant to the rules and

regulations promulgated by FERC thereunder, subject to the right of any Member that voted

against such

change in any rate, charge, classification, tariff or service, or any

rule or regulation related thereto, in

intervene in opposition to any such application

.

11.6

Membership Requirements

.

(a)

To qualify as

a Member, an entity shall:

i)

Be a Transmission Owner a Generation Owner, an

Other Supplier, an

Electric Distributor, or

an End-Use Customer ; and

ii)

Accept the obligations set forth in this Agreement

.

(b)

Certain Members that are Load Serving Entities are parties to the Reliability Assurance

Agreement, Reliability Assurance Agreement-West, or Reliability Assurance Agreement-South

. Upon

becoming a Member, any entity that is a Load Serving Entity in the MAAC

Control Zone and that

wishes to become a Market Buyer shall

also simultaneously execute the Reliability

Assurance

Agreement

. Any entity that is a

Issued By :

Craig Glazer

Effective: May 1, 2005

Vice President, Government Policy

Issued On:

May 11, 2004

---

PJM Interconnection, L .L.C.

Fourth Revised Sheet No

. 47

Third Revised Rate Schedule FERC No

. 24

Superseding Original Sheet No

. 47

Load Serving Entity in the PJM West Region and that wishes to become

a Market Buyer shall also

simultaneously execute the Reliability Assurance Agreement-West. Any entity that is a Load Serving

Entity in the PJM South Region and that wishes to become a Market Buyer shall

also simultaneously

execute the Reliability Assurance Agreement-South .

(c)

An entity that wishes to become a party to this Agreement shall apply, in writing, to

the

President setting forth its request, its qualifications for

membership, its agreement to supply data as

specified in this Agreement, its agreement to pay all costs and expenses in accordance with Schedule 3,

and providing all information specified pursuant to the Schedules to this Agreement for entities that wish

to become Market Participants

. Any such application that meets all applicable requirements shall

be

approved by the President within sixty (60) days .

(d)

Nothing in this Section 11 is intended to remove,

in any respect, the choice of

participation by other utility companies or organizations in the operation

of the PJM Region through

inclusion in the System of a Member .

(e)

An entity whose application

is accepted by the President pursuant to Section

11

.6(c) shall execute a supplement to this Agreement in substantially the form prescribed in Schedule 4,

which supplement shall be countersigned by the President.

The entity shall become a Member effective

on the date the supplement is countersigned by the President

.

(f)

Entities whose applications contemplate expansion or rearrangement of the PJM Region

may become Members promptly as described in Sections 11 .6(c) and

11 .6(e) above, but the integration

of the applicant's system into all of the operation and accounting provisions

of this Agreement and the

Reliability Assurance Agreement, or, as applicable, the Reliability Assurance Agreement-West or the

Reliability Assurance Agreement-South, shall occur only after completion of all required installations

and modifications of metering, communications,

computer programming, and other necessary and

appropriate facilities and procedures, as determined by the Office of the Interconnection .

The Office of

the Interconnection shall notify the other Members when such integration has occurred

.

(g)

Entities that become Members will be listed in Schedule 12 of this Agreement

.

(h)

In accordance with the MAAC Agreement, a Member serving

load in the MAAC

Control Zone shall be a member of MAAC and any other Member may be a member of MAAC

.

12.

TRANSFERS OF MEMBERSHIP INTEREST

The rights and obligations created by this Agreement shall inure to and bind the

successors and

assigns of such Member

; provided, however, that the rights and obligations

of any Member hereunder

shall not be assigned without the approval of the Members

Committee except as to a successor in

operation of a Member's electric operating properties by

reason of a merger, consolidation,

reorganization, sale, spin-off, or foreclosure, as a result of which substantially

all such electric operating

properties are acquired by such a successor, and such successor becomes a Member

.

13.

INTERCHANGE

13.1

Interchange Arrangements with Non-Members

.

Any Member may enter into interchange arrangements with others that are

not Members with

respect to the delivery or receipt of capacity and energy to fulfill

its obligations hereunder or for any

other purpose, subject to the standards and requirements established in or pursuant to

this Agreement .

Issued By :

Craig Glazer

Effective

: May 1, 2005

Vice President, Government Policy

Issued On :

May 11, 2004

---

PJM Interconnection, L

.L.C.

First Revised Sheet No . 59

Third Revised Rate Schedule FERC No . 24

Superseding Original Sheet No. 59

Members attending .

The Office of the Interconnection shall reimburse all Board Members

for their

reasonable costs of attending meetings .

18.14

Notice.

(a)

Except as otherwise expressly provided herein, notices required

under this Agreement

shall be in writing and shall be sent to a Member by overnight courier, hand delivery,

telecopier or other

reliable electronic means to the representative on the Members Committee of such Member

at the address

for such Member previously provided by such Member to the Office of the Interconnection

.

Any such

notice so sent shall be deemed to have been given (i) upon delivery if given by overnight

couriers or hand

delivery, or (ii) upon confirmation if given by telecopier or other reliable electronic means

. Notices of

meetings of the Members Committee or committees, subcommittees, task forces, working groups and

other bodies under its auspices may be given as provided in the Members Committee by-laws

.

(b)

Notices, as well as copies of the agenda and minutes of all meetings

of committees,

subcommittees, task forces, working groups, User Groups, or other bodies formed

under this Agreement,

shall be posted in a timely fashion on and made available for downloading from the PJM website

.

18.15

Headings .

The section headings used in this Agreement are for convenience only and shall

not affect the

construction or interpretation of any of the provisions of this Agreement

.

18.16

No Third-Party Beneficiaries

.

This Agreement is intended to be solely for the benefit of the Members

and their respective

successors and permitted assigns and, unless expressly stated herein,

is not intended to and shall not

confer any rights or benefits on any third party (other than successors

and permitted assigns) not a

signatory hereto

.

18.17

Confidentiality.

18.17.1

Party Access .

(a)

No Member shall have a right hereunder to receive or review any documents,

data or other information of another Member, including documents, data or other information provided to

the Office of the Interconnection, to the extent such documents, data or information have

been designated

as confidential pursuant to the procedures adopted by the Office of the Interconnection

or to the extent

that they have been designated as confidential by such other Member

; provided, however, a Member

may receive and review any composite documents, data and other information that

may be developed

based on such confidential documents, data or information

if the composite does not disclose any

individual Member's confidential data or information

.

(b)

Except as may be provided in this Agreement or in the PJM Open

Access

Transmission Tariff, the Office of the Interconnection shall not disclose to its Members

or to third parties,

any documents, data, or other information of a Member or entity applying for Membership,

to the extent

such documents, data, or other information has been designated confidential

pursuant to the procedures

adopted by

the Office of the

Interconnection or by such

Member or entity

Issued By :

Craig Glazer

Effective

: October 1, 2003

Vice President, Governmental Policy

Issued On

:

July 31, 2003

---

PJM Interconnection, L

.L.C

.

Second Revised Sheet No. 60

Third Revised Rate Schedule FERC No . 24

Superseding First Revised Sheet No . 60

applying for membership; provided that nothing contained herein shall prohibit the Office of the

Interconnection from providing any such confidential information to its agents, representatives, or

contractors to the extent that such person or entity is bound by

an

obligation to maintain such

confidentiality ; provided further that nothing contained herein shall prohibit the Office of the

Interconnection from providing Member confidential information to the North American Electric

Reliability Council or any of its regional reliability councils, or to any reliability

coordinator, to the extent

that (i) the Office of the Interconnection determines in its reasonable discretion that the exchange of such

information is required to enhance and/or maintain reliability within the Members' Applicable Regional

Reliability Councils and their neighboring reliability councils, or within the region of any reliability

coordinator, (ii) such entity is bound by a written agreement to maintain such confidentiality, and (iii) the

Office of the Interconnection has notified the affected party of its intention to release such information no

less than five business days prior to the release . The Office of the Interconnection shall collect and use

confidential information only in connection with its authority under this Agreement and the Open Access

Transmission Tariff and the retention of such information shall be in accordance with PJM's data

retention policies .

(c)

Nothing contained herein shall prevent the Office of the Interconnection from

releasing a Member's confidential data or information to a third party provided that the Member has

delivered to the Office of the Interconnection specific, written authorization for such release setting forth

the data or information to be released, to whom such release is authorized, and the period of time for

which such release shall be authorized. The Office of the Interconnection shall limit the release of a

Member's confidential data or information to that specific authorization received from the Member .

Nothing herein shall prohibit a Member from withdrawing such authorization upon written notice to the

Office of the Interconnection who shall cease such release as soon as practicable after receipt of such

withdrawal notice

.

18.17.2 Required Disclosure .

(a)

Notwithstanding anything in the foregoing Section to the contrary, and subject to

the provisions of Section 18 .17.3, if a Member or the Office of the Interconnection is required by

applicable law, or in the course of administrative or judicial proceedings other than FERC proceedings or

investigations, to disclose to third parties other than the FERC or its staff, information that is otherwise

required to be maintained in confidence pursuant to this Agreement, that Member or the Office of the

Interconnection may make disclosure of such information ; provided, however, that

as

soon as

the

Member or the Office of the Interconnection learns of the disclosure requirement and prior to making

disclosure, that Member or the Office of the Interconnection shall notify the affected Member or

Members of the requirement and the terms thereof and the affected Member or Members may direct, at

their sole discretion and cost, any challenge to or defense against the disclosure requirement . The

disclosing Member and the Office of the Interconnection shall cooperate with such affected Members to

the maximum extent practicable to minimize the disclosure of the information consistent with applicable

law. Each Member and the Office of the Interconnection shall cooperate with the

affected Members to

obtain proprietary or confidential treatment of such information by the person to whom such information

is disclosed prior to any such disclosure .

(b)

Nothing in this Section 18 .17 shall prohibit or otherwise limit the Office of the

Interconnection's use of information covered herein if such information was : (i) previously

Issued By :

Craig Glazer

Effective : August 1, 2005

Vice President, Federal Government Policy

Issued On :

May 31, 2005

---

PJM Interconnection, L

.L.C.

Substitute First Revised Sheet No . 61

Third Revised Rate Schedule FERC No

. 24 Superseding First Revised Sheet No . 61

known to the Office of the Interconnection without an obligation of confidentiality ; (ii) independently

developed by or for the Office of the Interconnection using nonconfidential information

; (iii) acquired by

the Office of the Interconnection from a third party which is not, to the Office of the Interconnection's

knowledge, under an obligation of confidence with respect to such information ; (iv) which is or becomes

publicly available other than through a manner inconsistent with this Section 18 .17.

(c)

The Office of the Interconnection shall impose on any contractors retained to

provide technical support or otherwise to assist with the implementation or administration of this

Agreement or of the Open Access Transmission Tariff a contractual duty of confidentiality consistent

with this Agreement

. A Member shall not be obligated to provide confidential or proprietary information

to any contractor that does not assume such a duty of confidentiality, and the Office of the

Interconnection shall not provide any such information to any such contractor without the express written

permission of the Member providing the information

.

(d)

Section 18.17.2(a)

does not apply to disclosure of information to the FERC or its

staff.

18.17.3

Disclosure to FERC.

Notwithstanding anything in this Section to the contrary, if the FERC or its staff, during

the course of an investigation or otherwise, requests information from the Office of the Interconnection

that is otherwise required to be maintained in confidence pursuant to this Agreement, the Office of the

Interconnection shall provide the requested information to the FERC or its staff, within the time provided

for in the request for information. In providing the information to the FERC or its staff, the Office of the

Interconnection may, consistent with 18 C

.F.R. § 388.112, request that the information be treated as

confidential and non-public by the FERC and its staff and that the information be withheld from public

disclosure

. The Office of the Interconnection shall notify any affected Member(s) when it is notified by

FERC or its staff, that a request for disclosure of, or decision to disclose, confidential information has

been received, at which time the Office of Interconnection and the affected Member may respond before

such information would be made public, pursuant to 18 C .F.R

. § 388 .112.

18.17.4

Disclosure to Authorized Persons

(a)

Notwithstanding anything in this section to the contrary, the Office of the

Interconnection and/or the PJM Market Monitor shall disclose confidential information, otherwise

required to be maintained in confidence pursuant to this Agreement, to an Authorized Person under

the following conditions

:

i)

The Authorized Person has executed a Non-Disclosure Agreement

with the Office of the Interconnection, representing and warranting

that he or she: (i) is an Authorized Person

; (ii) is duly authorized to

enter into and perform the obligations of the Non-Disclosure

Agreement ;

(iii) has adequate procedures to protect against the

release of any confidential information received, (iv) is familiar with,

and will comply with any applicable procedures of the Authorized

Commission which the Authorized Person represents, (v) covenants

and agrees on behalf of himself or herself to deny any Third Party

Requests and defend against any legal process which seeks the release

of any

confidential information that would

be released in

contravention of the

Issued By

:

Craig Glazer

Effective : June 29, 2004

Vice President, Government Policy

Issued On :

July 28, 2004

Filed to comply with order of the Federal Energy Regulatory Commission, Docket No

. ER04-776-

000, issued June 28, 2004, 107 FERC 161,322 .

---

PJM Interconnection, L

.L.C.

Original Sheet No. 61A

Third Revised Rate Schedule FERC No . 24

terms of the Non-Disclosure Agreement, and (vi) is not in breach of

any Non-Disclosure Agreement entered into with the Office of the

Interconnection .

ii)

The Authorized Commission employing or retaining the Authorized

Person has provided the Office of the Interconnection with : (a) a final

order of FERC prohibiting the release by the Authorized Person or the

Authorized Commission of confidential information in accordance

with the terms of this Agreement and the Non-Disclosure Agreement

;

and (b) either an order of such Authorized Commission or a

certification from counsel to

such Authorized Commission,

confirming that the Authorized Commission (i) has statutory authority

to protect the confidentiality of any confidential information received

from public release or disclosure and from release or disclosure to any

other entity, (ii) will defend against any disclosure of Confidential

Information pursuant to any Third Party Request through all available

legal process, including, but not limited to, obtaining any necessary

protective orders, (iii) will provide the Office of the Interconnection

with prompt notice of any such Third Party Request or legal

proceedings and will consult with the Office of the Interconnection

and/or any Affected Member in its efforts to deny the Third Party

Request or defend against such legal process, (iv) in the event a

protective order or other remedy is denied, will direct Authorized

Persons authorized by it to furnish only that portion of the

confidential information which their legal counsel advises the Office

of the Interconnection in writing is legally required to be furnished,

(v) will exercise its best efforts to obtain assurance that confidential

treatment will be accorded to such confidential information and (vi)

has adequate procedures to protect against the release of such

confidential information

; and (c) confirmation in writing that the

Authorized Person is authorized by the Commission to enter into the

Non-Disclosure Agreement and to receive confidential information

under this Agreement.

iii)

The Authorized Commission employing or retaining the Authorized

Person has provided the Office of the Interconnection with a State

Certification.

iv)

The Office of the Interconnection and the PJM Market Monitor shall

be expressly entitled to rely upon such FERC and Authorized

Commission orders, the State Certification and/or certifications of

counsel in providing confidential information to the Authorized

Person, and shall in no event be liable, or subject to damages or

claims of any kind or nature hereunder due to the ineffectiveness of

the FERC and/or Commission orders, or the inaccuracy of such

certification of counsel

.

Issued By:

Craig Glazer

Effective: June 29, 2004

Vice President, Government Policy

Issued On :

April 29, 2004

---

PJM Interconnection, L

.L.C.

Substitute Original Sheet No . 61B

Third Revised Rate Schedule FERC No . 24

Superseding Original Sheet No. 61B

v)

The Authorized Person may discuss confidential information with

other Authorized Persons who are parties to Non-Disclosure

Agreements ;

provided, however, that the Office

of the

Interconnection shall have confirmed in advance and in writing that it

has previously released the confidential information in question to

such Authorized Persons

. The Office of the Interconnection shall

respond to any written request for confirmation within two (2)

business days of its receipt.

vi)

The Office of the Interconnection shall maintain a schedule of all

Authorized Persons and the Authorized Commissions they represent,

which shall be made publicly available on its website, or by written

request. Such schedule shall be compiled by the Office of the

Interconnection, based on information provided by any Authorized

Person and/or Authorized Commission . The Office of the

Interconnection shall update the schedule promptly upon receipt of

information from an Authorized Person or Authorized Commission,

but shall have no obligation to verify or corroborate any such

information, and shall not be liable or otherwise responsible for any

inaccuracies in the schedule due to incomplete or erroneous

information conveyed to and relied upon by the Office of the

Interconnection in the compilation and/or maintenance of the

schedule .

(b)

The PJM Market Monitor or other designated representative of the Office of

the Interconnection may, in the course of discussions with an Authorized Person, orally disclose

information otherwise required to be maintained in confidence, without the need for a prior

Information Request

. Such oral disclosures shall provide enough information to enable the

Authorized Person or their Authorized Commission to determine whether additional Information

Requests for information are appropriate

. The PJM Market Monitor or other representative of the

Office of the Interconnection will not make any written or electronic disclosures of confidential

information to the Authorized Person pursuant to this section

. In any such discussions, the PJM

Market Monitor or other representative of the Office of the Interconnection shall ensure that the

individual or individuals receiving such confidential information are Authorized Persons as defined

herein, orally designate confidential information that is disclosed, and refrain from identifying any

specific Affected Member whose information is disclosed .

The PJM Market Monitor or other

representative of the Office of the Interconnection shall also be authorized to assist Authorized

Persons in interpreting confidential information that is disclosed

. The PJM Market Monitor or

representative of the Office of the Interconnection shall provide any Affected Member with oral

notice of any oral disclosure immediately, but not later than one (1) business day after the oral

disclosure

. Such oral notice to the Affected

Issued By :

Craig Glazer

Effective

: June 29, 2004

Vice President, Government Policy

Issued On :

July 28, 2004

Filed to comply with order of the Federal Energy Regulatory Commission, Docket No

. ER04-776-

000, issued June 28, 2004, 107 FERC 161,322,

---

PJM Interconnection, L

.L.C.

Original Sheet No . 61C

Third Revised Rate Schedule FERC No . 24

Member shall include the substance of the oral disclosure, but shall not reveal any confidential

information of any other Member and must be received by the Affected Member before the name of

the Affected Member is released to the Authorized Person

; provided however, the identity of

the

Affected Party must be made to the Authorized Person within two (2) business days of the initial oral

disclosure

.

(c)

As regards Information Requests :

(i)

Information Requests to the Office of the Interconnection shall be in

writing, which shall include electronic communications, addressed to

the PJM Market Monitor or other designated representative of the

Office of the Interconnection, and shall

: (a) describe with particularity

the information sought

; (b) provide a description of the purpose of the

Information Request

; (c) state the time period for which confidential

information is requested

; and (d) re-affirm that only the Authorized

Person shall have access to the confidential information requested

.

The Office of the Interconnection shall provide an Affected Member

with written notice, which shall include electronic communication, of

an Information Request of the Authorized Person as soon as possible,

but not later than two (2) business days after the receipt of the

Information Request .

(ii)

Subject to the provisions of section

(c)(iii),

the Office of the

Interconnection

shall supply

confidential information to

the

Authorized Person in response to any Information Request within five

(5) business days of the receipt of the Information Request, to the

extent that the requested confidential information can be made

available within such period

; provided however, that in no event shall

confidential information be released prior to the end of the fourth

(4'")

business day without the express consent of the Affected Member

.

To the extent that the Office of the Interconnection can not reasonably

prepare and deliver the requested confidential information within such

five (5) day period, it shall, within such period, provide the

Authorized Person with a written schedule for the provision of such

remaining confidential information

.

Upon providing confidential

information to the

Authorized Person,

the Office of the

Interconnection shall either provide a copy of the confidential

information to the Affected Member(s), or provide a listing of the

confidential information disclosed

; provided, however, that the Office

of the Interconnection shall not reveal any Member's confidential

information to any other Member

.

Issued By :

Craig Glazer

Effective : June 29, 2004

Vice President, Government Policy

Issued On :

April 29, 2004

---

PJM Interconnection, L

.L.C.

Original Sheet No. 61D

Third Revised Rate Schedule FERC No . 24

(iii) Notwithstanding section

(c)(ii), above, should the Office of the

Interconnection or an Affected Member object to an Information

Request or any portion thereof, either of them may, within four (4)

business days following the Office of the Interconnection's receipt of

the Information Request, request, in writing, a conference with the

Authorized Commission or the Authorized Commission's authorized

designee to resolve differences concerning the scope or timing of the

Information Request; provided, however, nothing herein shall require

the Authorized Commission to participate in any conference . Any

party to the conference may seek assistance from FERC staff in

resolution of the dispute. Should such conference be refused by any

participant, or not resolve the dispute, then the Office of the

Interconnection, the Affected Member or the Authorized Commission

may initiate appropriate legal action at FERC within three (3)

business days following receipt of written notice from any conference

participant terminating such conference . Any complaints filed at

FERC objecting to a particular Information Request shall be

designated by the party as a "fast track" complaint and each party

shall bear its own costs in connection with such FERC proceeding

. If

no FERC proceeding regarding the Information Request is

commenced within such three day period, the Office of the

Interconnection shall utilize its best efforts to respond to the

Information Request promptly .

(d)

In the event of any breach of a Non-Disclosure Agreement

:

(i)

The Authorized Person and/or their respective

Authorized

Commission shall promptly notify the Office of the Interconnection,

who shall, in turn, promptly notify any Affected Member of any

inadvertent or intentional release, or possible release, of confidential

information provided pursuant to any Non-Disclosure Agreement

.

(ii)

The Office of the Interconnection shall terminate such Non-

Disclosure Agreement upon written notice to the Authorized Person

and his or her Authorized Commission, and all rights of the

Authorized Person thereunder shall thereupon terminate ; provided,

however, that the Office of the Interconnection may restore an

individual's status as an Authorized Person after consulting with the

Affected Member and to the extent that

: (i) the Office of the

Interconnection determines that the disclosure was not due to the

intentional, reckless or negligent

action or omission of the

Authorized Person ; (ii) there were no harm or damages suffered by

the Affected Member

; or (iii) similar good cause shown . Any appeal

of the Office of the Interconnection's actions under this section shall

be to FERC

.

Issued By :

Craig Glazer

Effective : June 29, 2004

Vice President, Government Policy

Issued On :

April 29, 2004

---

PJM Interconnection, L.L.C

.

Substitute Original Sheet No . 61E

Third Revised Rate Schedule FERC No. 24

Superseding Original Sheet No . 61E

(iii)

The Office of the Interconnection and/or the Affected Member shall

have the right to seek and obtain at least the following types of relief

:

(a) an order from FERC requiring any breach to cease and preventing

any future breaches

; (b) temporary, preliminary, and/or permanent

injunctive relief with respect to any breach ; and (c) the immediate

return of all confidential information to the

Office of the

Interconnection .

(iv) No Authorized Person shall

have responsibility or liability

whatsoever under the Non-Disclosure Agreement or this Agreement

for any and all liabilities, losses, damages, demands, fines, monetary

judgments, penalties, costs and expenses caused by, resulting from, or

arising out of or in connection with the release of confidential

information to persons not authorized to receive it, provided that such

Authorized Person is an employee or member of an Authorized

Commission at the time of such unauthorized release

. Nothing in this

Section (d)(iv)

is intended to limit the liability of any person who is

not an employee of or a member of an Authorized Commission at the

time of such unauthorized release for any and all economic losses,

damages, demands, fines, monetary judgments, penalties, costs and

expenses caused by, resulting from, or arising out of or in connection

with such unauthorized release .

(v) Any dispute or conflict requesting the relief in section

(d)(ii) or

(d)(iii)(a)

above, shall be submitted to FERC for hearing and

resolution . Any dispute or conflict requesting the relief in section

(d)(iii)(c)

above may be submitted to FERC or any court of competent

jurisdiction for hearing and resolution .

18.18 Termination and Withdrawal

.

18.18.1 Termination

.

Upon termination of this Agreement, final settlement for obligations under this

Agreement shall include the accounting for the period ending with the last day of the last month for

which the Agreement was effective .

Issued By

:

Craig Glazer

Effective : June 29, 2004

Vice President, Government Policy

Issued On :

July 28, 2004

Filed to comply with order of the Federal Energy Regulatory Commission, Docket No

. ER04-776-

000, issued June 28, 2004, 107 FERC ¶ 61,322

.

---

ATTACHMENT 3

---

DECLARATION OF SCOTT MILLER

May 23, 2007

---

DECLARATION OF SCOTT MILLER

I, Scott Miller, being duly sworn upon oath, depose and state

:

1 .

I am employed by Midwest Generation EME, LLC ("Midwest Generation" or

"Company") as a Senior Engineer and am responsible for managing the air quality programs for

the Company's six coal-fired power stations in the State of Illinois, known as the Crawford, Fisk,

Joliet, Powerton, Will County and Waukegan power stations (the "Power Stations")

.

Specifically, I am responsible for overseeing compliance of the Power Stations with all

applicable air quality programs, including the Acid Rain, NO, SIP, ERMS, NSPS, NSR, Title V,

HAPs, PACT, BART, and NAAQS programs

. I have held this position with the Company since

1999, and served in the same capacity from 1982 through 1999 as an employee of

Commonwealth Edison Company ("ComEd"), the previous owner and operator of the Power

Stations

. I began my career with ComEd in 1978 as an employee at the Zion Nuclear Station

. I

received a Bachelor of Science in mechanical engineering form the University of Illinois at

Urban-Champaign in 1977 and a Master of Science in engineering management from

Northwestern University in 1982

.

2.

In sum, I have twenty-eight years of experience in the environmental field,

including my twenty-three years in charge of overseeing the compliance of the Power Stations

with air quality programs. As such, I am knowledgeable about the Company's compliance with

air quality programs, including its recordkeeping and reporting of emission data

.

3.

The purpose of my affidavit is to explain the manner in which Midwest

Generation reports to U

.S

. EPA and Illinois EPA the identity, amount, frequency, concentration,

or other characteristics (to the extent related to air quality) of (a) emissions from the units at the

Power Stations (hereinafter, the "Actual Emissions") and (b) the emissions which, under an

applicable standard or limitation, the units were authorized to emit (hereinafter, the "Permissible

Emissions").

4.

Midwest Generation submits its Actual Emissions of each pollutant regulated

under the Illinois SIP or NSPS to U .S

. EPA, Illinois EPA, or both . Midwest Generation has done

so since its inception in 1999, and ComEd submitted similar data to the agencies from at least

1982 through 1999 .

5 .

Midwest Generation currently submits the following reports of Actual Emissions

:

(a)

Annual Emissions Reports submitted to Illinois EPA pursuant to 35 III

.

Admin

. Code 254, which include Actual Emissions, on an annual basis, of NO,, SO

2, PM,

PM 10, PM2.5,

VOM, CO, Lead and Ammonia;

(b)

Quarterly Acid Rain and NO, SIP Electronic Data Reports submitted to

U.S . EPA pursuant to 40 C .F.R

. Parts 75 and 96, which include Actual Emissions, on a quarterly

basis, of NO, and SO2;

---

Notary Public

My Commission expires

3(

I Z( 2

of

CH2V 1441186 .2

Further, affiant sayeth not

.

Subscribed and sworn to before me,

0 2-3

1

3-001

a Notary Public, in and for the

County of Cook, State of Illinois

Scott Miller, Senior Engineer

"OFFICIAL

Kathleen KSEAL'

Public,

EVIM

State3/12/201

"T"

t

---

ATTACHMENT 4

---

217/782-5544

217/782-9143(TDD)

January 5, 2004

Jane E. Montgomery

Schiff Harden & Waite

6600 Sears Tower

Chicago, Illinois 60606-6360

Re :

Midwest Generation EME, L .L.C.

Dear Ms . Montgomery :

The Illinois Environmental Protection Agency ("Illinois EPA") is in receipt of

Midwest

Generation EME, L.L.C.'s

("Midwest") November 6, 2003, response to the USEPA Section 114

of the Clean Air Act information request, which was dated February 13, 2003 . The attachments

to Midwest's responses to requests number I -

3 and 9 wcrc claimcd as "contdcntial business

information", however, the claim was not properly justified pursuant to the Illinois Pollution

Control Board ("Board") trade secret regulations . (35 111

. Adm. Code Part 130)

The Illinois EPA is hereby requesting a statement of justification within 10 working days

of

receiving this letter as the Illinois EPA has received a FOIA request pertaining to the Section 114

request response . (35 Ill. Adm

. Code 130 .201 (a) and 130 .202(a)) Specifically, on November 3,

2003, the Illinois EPA received a Freedom of Information Act (FOIA) request from the Sierra

Club seeking records relating to all coal-fired power plants in Illinois

. Upon receipt of the

statement of justification and until such time as the Illinois EPA has made a final trade secret

determination, the documents will be protected from public disclosure

. (35 III . Adm. Code

130.200(d))

In order 1

-

or materials to be claimed confidential or trade secret, the requirements of 35 Ill

. Adm.

Code Part 130, Identification and Protection of Trade Secrets and

Oilier Non-Disclosable

Information, must be met

. The Board regulations require that a statement ofjustification

accompany the submission of any trade secret or confidential information or be submitted upon

request by the Illinois EPA

. In addition, Midwest must mark the documents in accordance with

35 111 . Adm

. Code 130.302.

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11.1 INO15 ENVIRONMENTAL PROTECTION AGENCY

1 (2 1 N'IRI1 GR4'\l' A\' :N '1 b» I . 1' .O 81,\ 19276, SPRINr,HFIn, I11wn15 62794- 1)276, 217-782-1197

ItvuR,TI115u's ,C:1v1 .R .100AA , R .lynolPri,SritF11- :300,CHI( '.uio .IL60601 . 112 .814-6021,

ROD R . BiACOa\3( I1

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RrNrr CII'RIANO, DIRE('.' OR

---

Specifically, the statement ofjustification must contain a detailed description of the procedures

used by Midwest to safeguard the article from becoming available to persons other than those

selected by Midwest to have access thereto for limited purposes ; a detailed statement identifying

the persons or class of persons to whom the article has been disclosed

; a certification that

Midwest has no knowledge that the article has ever been published or disseminated or has

otherwise become a matter of general public knowledge ; a detailed discussion of why Midwest

believes the article to be of competitive value ; and any other information that will support the

claim (35 ill

. Adm. Code 130.203) .

If you have any questions or concerns regarding this matter please do not hesitate to contact me .

Chris Pressnall

Assistant Counsel

Division of Legal Counsel

---

CERTIFICATE OF SERVICE

I, the undersigned, certify that I have served the attached Amended Petition for Review,

by U.S

. Mail, upon the following persons

:

Bradley P

. Halloran

Hearing Officer

Illinois Pollution Control Board

James R

. Thompson Center, Suite 11-500

100 W

. Randolph Street

Chicago, IL 60601

Lisa Madigan

Matthew Dunn

Ann Alexander

Paula Becker Wheeler

Office of the Attorney General

188 West Randolph Street, Suite 2000

Chicago, Illinois 60601

Dated: May 29, 2007

CH2\ 1863998 .1

Respectfully submitted,

MIDWEST GENERATION EME, LLC

By:

Sheldon A . Zab

( of

Mary Ann Mullin

Andrew N. Sawula

SCHIFF HARDIN LLP

6600 Sears Tower

Chicago, Illinois 60606

(312) 258-5687

One of the Attorneys for

Midwest Generation EME, LLC