Chapter 11 ) EDISON MISSION ENERGY, Et Al.,1 ) Case No

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UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

) In re: ) Chapter 11 ) EDISON MISSION ENERGY, et al.,1 ) Case No. 12-49219 (JPC) ) Debtors. ) (Jointly Administered)1 )

NOTICE OF HEARING ON DEBTORS’ APPLICATION TO EMPLOY AND RETAIN MCKINSEY RECOVERY & TRANSFORMATION SERVICES U.S., LLC AS RESTRUCTURING ADVISOR FOR THE DEBTORS AND DEBTORS IN POSSESSION NUNC PRO TUNC TO THE PETITION DATE

PLEASE TAKE NOTICE that on the 16th day of January, 2013, at 10:30 a.m. C.T. or as soon thereafter as counsel may be heard, the Debtors shall appear before the Honorable Bankruptcy Judge Jacqueline P. Cox or any other judge who may be sitting in her place and stead, in Courtroom 680 in the United States Courthouse, 219 South Dearborn Street, Chicago, Illinois, and present the attached, Debtors’ Application to Employ and Retain McKinsey Recovery & Transformation Services U.S., LLC as Restructuring Advisor for the Debtors and Debtors in Possession Nunc Pro Tunc to the Petition Date (the “Application”).

PLEASE TAKE FURTHER NOTICE that any objection to the Application must be filed with the Court by January 9, 2013 at, 4:00 p.m. (Central Time) and served by such time on: (a) counsel to the Debtors; (b) the Office of the U.S. Trustee for the Northern District of Illinois; (c) the entities listed on the Consolidated List of Creditors Holding the 30 Largest Unsecured Claims; (d) the indenture trustee for the Debtors’ senior unsecured notes; (e) counsel to the ad hoc committee of certain holders of the Debtors’ senior unsecured notes; (f) the indenture trustee for the lessor notes related to the Debtors’ Powerton generating station in Pekin, Illinois, and units 7 and 8 of the Debtors’ Joliet, Illinois, generating station and the pass- through trustee for the related pass-through certificates; (g) counsel to the ad hoc committee of certain holders of pass-through certificates related to the Debtors’ Powerton and Joliet generating stations; (h) the owner trusts and the equity investors for the Debtors’ Powerton and Joliet

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, include: Edison Mission Energy (1807); Camino Energy Company (2601); Chestnut Ridge Energy Company (6590); Edison Mission Energy Fuel Services, LLC (4630); Edison Mission Fuel Resources, Inc. (3014); Edison Mission Fuel Transportation, Inc. (3012); Edison Mission Holdings Co. (6940); Edison Mission Midwest Holdings Co. (6553); Midwest Finance Corp. (9350); Midwest Generation EME, LLC (1760); Midwest Generation, LLC (8558); Midwest Generation Procurement Services, LLC (2634); Midwest Peaker Holdings, Inc. (5282); Mission Energy Westside, Inc. (0657); San Joaquin Energy Company (1346); Southern Sierra Energy Company (6754); and Western Sierra Energy Company (1447). The location of parent Debtor Edison Mission Energy’s corporate headquarters and the Debtors’ service address is: 3 MacArthur Place, Suite 100, Santa Ana, California 92707.

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generating stations (and their respective counsel, if known); (i) the lender under Debtor Edison Mission Energy’s letter-of-credit facility (j) the state attorneys general for states in which the Debtors conduct business; (k) United States Attorney for the Northern District of Illinois; (l) the Internal Revenue Service; (m) the Securities and Exchange Commission; (n) the Environmental Protection Agency and similar state environmental agencies for states in which the Debtors conduct business; and (o) those parties who have requested service of papers in this case pursuant to Rule 2002 of the Federal Rules of Bankruptcy Procedure and the Order Establishing Certain Notice, Case Management and Administrative Procedures [Docket No. 183].

PLEASE TAKE FURTHER NOTICE that copies of all documents filed in these chapter 11 cases are available free of charge by visiting the case website maintained by GCG, Inc., the Debtors’ notice and claims agent for these chapter 11 cases, available at www.edisonmissionrestructuring.com or by calling (866) 241-6491. You may also obtain copies of any pleadings by visiting the Court’s website at www.ilnb.uscourts.gov in accordance with the procedures and fees set forth therein.

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Dated: December 28, 2012 /s/ David R. Seligman, P.C. James H.M. Sprayregen, P.C. David R. Seligman, P.C. Sarah Hiltz Seewer KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, Illinois 60654 Telephone: (312) 862-2000 Facsimile: (312) 862-2200 - and - Joshua A. Sussberg KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, New York 10022-4611 Telephone: (212) 446-4800 Facsimile: (212) 446-4900

Proposed Counsel to the Debtors and Debtors in Possession Other than Camino Energy Company - and - David A. Agay Joshua Gadharf MCDONALD HOPKINS LLC 300 North LaSalle Suite 2100 Chicago, Illinois 60654 Telephone: (312) 280-0111 Facsimile: (312) 280-8232

Proposed Counsel to Debtor Camino Energy Company and Conflicts Counsel to the other Debtors and Debtors in Possession

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UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

) In re: ) Chapter 11 ) EDISON MISSION ENERGY, et al.,1 ) Case No. 12-49219 (JPC) ) Debtors. ) (Jointly Administered)1 )

DEBTORS’ APPLICATION TO EMPLOY AND RETAIN MCKINSEY RECOVERY & TRANSFORMATION SERVICES U.S., LLC AS RESTRUCTURING ADVISOR FOR THE DEBTORS AND DEBTORS IN POSSESSION NUNC PRO TUNC TO THE PETITION DATE

The above-captioned debtors and debtors in possession (collectively, the “Debtors”) state as follows in support of this application (this “Application”):2

Relief Requested

1. By this Application, the Debtors request entry of an order, substantially in the form attached hereto as Exhibit A, authorizing the employment and retention of McKinsey

Recovery & Transformation Services U.S., LLC (“McKinsey RTS”), as restructuring advisor for the Debtors effective nunc pro tunc to the Petition Date (as defined herein) pursuant to the

2 The facts and circumstances supporting this Application are set forth in the Declaration of Maria Rigatti, Senior Vice President and Chief Financial Officer of Edison Mission Energy, in Support of Chapter 11 Petitions and First Day Motions [Docket No. 6] (the “First Day Declaration”), filed on December 17, 2012.

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engagement letter with Edison Mission Energy dated August 27, 2012, (as amended on

December 17, 2012, the “Engagement Letter”), a copy of which is annexed as Exhibit 1 to

Exhibit A attached hereto and incorporated by reference herein. In support of this Application,

the Debtors submit the Declaration of Jared D. Yerian, a Practice Leader of McKinsey RTS (the

“Yerian Declaration”), which is attached hereto as Exhibit B.

Jurisdiction

2. The United States Bankruptcy Court for the Northern District of Illinois

(the “Court”) has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334. This

matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2).

3. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.

4. The statutory bases for the relief requested herein are sections 327(a) and 328 of

title 11 of the United States Code (the “Bankruptcy Code”) and rules 2014(a) and 2016 of the

Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”).

Background

5. Edison Mission Energy, together with its Debtor and non-Debtor affiliates, is a

leading independent power producing enterprise specializing in developing, operating, and

selling energy and capacity from over 40 generating facilities in 12 states and the Republic of

Turkey. The Debtors have approximately 950 employees and maintain headquarters in Chicago,

Illinois and Santa Ana, California.

6. On December 17, 2012 (the “Petition Date”), each of the Debtors filed a petition

with this Court under chapter 11 of the Bankruptcy Code. The Debtors continue to operate their

businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and

1108 of the Bankruptcy Code. The Debtors’ chapter 11 cases have been procedurally

consolidated and are being jointly administered. No party has requested the appointment of a

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trustee or examiner in these chapter 11 cases, and no committees have been appointed or designated.

McKinsey RTS’ Qualifications

7. McKinsey RTS is a global, full service restructuring advisory and crisis management firm that draws on unmatched industry and functional expertise to support companies through all aspects of recovery and transformation. McKinsey RTS’ professionals are deeply experienced in providing chapter 11 advisory services, which include contingency planning, interim management, cash flow and liquidity assessment, forecasting and management, analysis and/or development of business and strategic plans, development and implementation of creditor and/or supplier strategies and development and implementation of operational and/or financial improvement or restructuring plans. McKinsey RTS has been or is currently involved in numerous large and complex restructurings

8. In addition, McKinsey RTS utilizes the expertise of its affiliates’ Electric Power and Natural Gas (“EPNG”) practice, which serves incumbent utilities, independent power producers, and new entrants in the power generation, transmission, distribution, and natural gas distribution sectors. McKinsey RTS affiliates help these EPNG clients with issues related to strategy, organization, and front-line operations. McKinsey RTS’ affiliates’ power and natural gas market analysis tools provide rigorous strategic insights into market structure and operating margins. The EPNG practice’s operational performance improvement packages improve heat rate, reliability, and operating margins for major generators nationwide. Moreover, the EPNG practice’s procurement expertise ensures clients capture the lowest costs available on the market today and its capital productivity tools help clients deliver more value with less risk in major capital projects.

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9. Over the last five months, McKinsey RTS has also become familiar with the

Debtors and their businesses, including the Debtors’ financial affairs, debt structure, operations, employee groups, cost structures, and related matters. McKinsey RTS has developed relevant experience and expertise regarding the Debtors that will assist it in providing effective and efficient services in the chapter 11 cases. Accordingly, McKinsey RTS has the skills, qualifications, and expertise necessary to assist the Debtors in an efficient and cost-effective manner. And the Debtors believe that McKinsey RTS is highly qualified to serve as the Debtors’ restructuring advisor in these chapter 11 cases.

Services to be Provided

10. The terms and the conditions of the Engagement Letter were negotiated between

the Debtors and McKinsey RTS and reflect the parties’ mutual agreement as to the substantial

efforts that will be required during the course of this engagement. In connection with the

Debtors’ restructuring, McKinsey RTS is providing services related to cash management and

forecasting, revenue growth, cost savings initiatives, financial reporting, constituent

management, bankruptcy reporting and administration, and other ad hoc activities as requested

by the Debtors. More specifically, as requested by the Debtors and agreed to by McKinsey RTS,

the services include the following:3

a. Assist the Debtors in contingency planning activities and potential ongoing administrative tasks, which, for example, would include;

• Interview key employees (CFO, Treasurer, controller, etc) to understand current financial and

3 The summary of the Engagement Letter contained in this application is provided for purposes of convenience only. In the event of any inconsistency between the summary contained herein and the terms and provisions of the Engagement Letter, the terms of the Engagement Letter shall control.

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other procedures, state of preparation and data readiness;

• Prepare data requests to complete necessary First Day Orders, Petitions, SOFA’s and supporting administrative schedules; and

• Compile/analyze data including bank account information, cash management processes, payable information, vendor assessment, etc.

b. Assist in developing ongoing accounting protocols for continued reporting (Monthly Operating Reports) throughout the process;

c. Manage communications with stakeholders as directed by the Debtors’ management;

d. Assist the Debtors in the development and preparation of analytics to be used in restructuring discussions if directed by the Debtors’ management;

e. Assist the Debtors in their development of strategic alternatives and negotiation of restructuring alternatives as needed;

f. Provide project-management services throughout the restructuring process;

g. Work with Debtors’ advisors to facilitate potential Debtor- in-Possession financing;

h. Validate the 13-week forecast and assess liquidity needs;

i. Support business plan development and prepare analysis to support the plan of reorganization as directed by Debtors;

j. Assist the Debtors in a strategic review of their procurement policies; and

k. As appropriate, assist the Debtors with all such other restructuring matters as may be requested that fall within McKinsey RTS’ expertise and that are mutually agreed upon between the parties.

11. The services that McKinsey RTS will provide to the Debtors are necessary to enable the Debtors to maximize the value of their estates. All of the services that McKinsey RTS

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will provide to the Debtors will be undertaken at the Debtors’ request and will be appropriately

directed by the Debtors so as to avoid duplicative efforts among the other professionals retained

in the chapter 11 cases.

Professional Compensation

12. McKinsey RTS intends to apply for compensation for professional services rendered and reimbursement of expenses incurred in connection with the Debtors’ chapter 11 cases, subject to the Court’s approval and in compliance with applicable provisions of the

Bankruptcy Code, and the Bankruptcy Rules, the Local Rules of the United States Bankruptcy

Court for the Northern District of Illinois (the “Local Bankruptcy Rules”), guidelines established

by the Office of the United States Trustee for the Northern District of Illinois (the “U.S. Trustee

Chapter 11 Guidelines”), and any other applicable procedures and orders of the Court and consistent with the proposed compensation agreed to by the Debtors set forth in the Engagement

Letter (the “Fee and Expense Structure”).4

a. Retainer — A retainer in an amount equal to $700,000.

b. Hourly Rates — Fees based on the following hourly rates:

4 On December 17, 2012, the Debtors filed the Debtors’ Motion to Approve Procedures for Interim Compensation and Reimbursement of Expenses for Professionals and Official Committee Members [Docket No. 33]. McKinsey RTS will comply with any interim compensation procedures approved by the Court pursuant to that motion.

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Title of Professional Hourly Rate

Practice Leader $750-985 Executive Vice President $675-750 Senior Vice President $545-675 Vice President $450-545 Senior Associate $400-450 Associate $295-400 Analyst $185-295 Paraprofessional $100-185

13. In addition to the fees described above, the Debtors will reimburse McKinsey

RTS for all reasonable out-of-pocket expenses incurred in connection with the engagement, such as travel and lodging following McKinsey RTS’ standard expense reporting. As McKinsey RTS clients frequently request that McKinsey RTS restructuring advisors travel to their offices and work there for extended periods of time, McKinsey RTS developed its own official reimbursement policy with respect to its restructuring advisors’ documentation of expenses (the

“RTS Reimbursement Policy”). More specifically, McKinsey RTS professionals serving the

Debtors will seek reimbursement for expenses over thirty-five dollars ($35) that a) have been charged on a McKinsey RTS-provided corporate credit card or have a receipt and b) have a receipt for lodging. For amounts under thirty-five dollars McKinsey RTS will seek reimbursement when exact amounts are submitted in lieu of a receipt. Therefore, McKinsey

RTS requests authority to maintain detailed documentation of its professionals’ actual and necessary costs and expenses in accordance with the RTS Reimbursement Policy. McKinsey

RTS’ reimbursement requests will be in compliance with Local Bankruptcy Rules and U.S.

Trustee Chapter 11 Guidelines.

14. The Fee and Expense Structure is comparable to compensation generally charged by other firms of similar stature to McKinsey RTS for comparable engagements, both in and out

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of chapter 11. McKinsey RTS and the Debtors believe that the foregoing compensation

arrangements are both reasonable and market-based and consistent with McKinsey RTS’ normal and customary billing levels for comparably sized and complex cases, both in and out-of-court, involving the services to be provided in these chapter 11 cases.

15. McKinsey RTS will also maintain detailed records of any actual and necessary

costs and expenses incurred in connection with the services in accordance with the RTS

Reimbursement Policy—as discussed above.

16. In light of the foregoing, the importance of McKinsey RTS’ expertise and

assistance in the Debtors’ reorganization effort, and the market prices for McKinsey RTS’

services for engagements of this nature both out-of-court and in a chapter 11 context, the Debtors

believe that the Fee and Expense Structure is market-based, fair, and reasonable. Furthermore,

McKinsey RTS has not shared or agreed to share any of its compensation from the Debtors with

any other person, other than as permitted by section 504 of the Bankruptcy Code.

17. As of the Petition Date, the Debtors do not owe McKinsey RTS any fees for

services performed or expenses incurred under the Engagement Letter. According to McKinsey

RTS’ books and records, during the 90-day period before the Petition Date, McKinsey RTS

received $1,985,911.00 for professional services performed, a retainer of $700,000 and

$318,481.74 in reimbursable expenses.

Indemnification and Contribution Provisions

18. As part of the overall compensation payable to McKinsey RTS under the terms of the Engagement Letter, the Debtors have agreed to certain indemnification and contribution provisions described in the Engagement Letter (the “Indemnification Provisions”). The

Indemnification Provisions provide that the Debtors will indemnify, hold harmless, and defend

McKinsey RTS (including its past, present, and future affiliates) and each of their directors,

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officers, managers, shareholders, partners, members, employees, agents, representatives,

advisors, and controlling persons (collectively, the “Indemnified Parties”) against liabilities

arising out of or in connection with the Engagement Letter and/or its retention by the Debtors in the chapter 11 cases, except for any liabilities judicially determined by a court of competent jurisdiction to have resulted primarily and directly from the bad faith, willful misconduct, or gross negligence of any of McKinsey RTS or the other indemnified parties in connection with

McKinsey RTS’ services provided under the Engagement Letter. In addition, if indemnification or reimbursement obligations are held to be unavailable by any court (other than circumstances where a court determines that liability is primarily and directly from the willful misconduct or gross negligence of the indemnified party), the Engagement Letter allocates contribution obligations based on the relative benefits and faults of McKinsey RTS and the Debtors, subject to a limitation on McKinsey RTS’ aggregate liability in an amount equal to its fees (but not expenses) actually received under the Engagement Letter.

19. The terms of the Engagement Letter, including the Indemnification Provisions, were fully negotiated between the Debtors and McKinsey RTS at arm’s-length and the Debtors respectfully submit that the Indemnification Provisions are reasonable and in the best interests of the Debtors, their estates, and creditors. Accordingly, as part of this Application, the Debtors request that this Court approve the Indemnification Provisions.

McKinsey RTS’ Disinterestedness

20. As set forth in the Yerian Declaration, McKinsey RTS has concluded a

computerized search of potential significant parties in the Debtors’ chapter 11 cases. Upon

review of its client database, McKinsey RTS has learned that it and its affiliates have business

relationships with certain creditors of the Debtors and other parties in interest, as more fully

discussed in the Yerian Declaration. The relationships and work conducted by McKinsey RTS

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and its affiliates for those parties in no way involve matters upon which McKinsey RTS is to be

engaged and should not disqualify McKinsey RTS from working with the Debtors.

21. To the best of the Debtors’ knowledge and except to the extent disclosed herein

and in the Yerian Declaration: (a) McKinsey RTS is a “disinterested person” within the meaning of section 101(14) of the Bankruptcy Code, as required by section 327(a) of the Bankruptcy

Code, and does not hold or represent an interest adverse to the Debtors’ estates; and

(b) McKinsey RTS has no connection to the Debtors, their creditors, or their related parties

except as may be disclosed in the Yerian Declaration. To the extent that any new relevant facts or relationships bearing on the matters described herein during the period of the Debtors’

retention are discovered or arise, McKinsey RTS will use reasonable efforts to file promptly a

supplemental declaration, as required by Bankruptcy Rule 2014(a).

Basis for Relief

22. Section 327(a) of the Bankruptcy Code provides that a debtor is authorized to

employ professional persons “that do not hold or represent an interest adverse to the estate, and

that are disinterested persons, to represent or assist the [debtor] in carrying out the [debtor’s]

duties under this title.” 11 U.S.C. § 327(a). Section 1107(b) of the Bankruptcy Code elaborates

upon sections 101(14) and 327(a) of the Bankruptcy Code in cases under chapter 11 of the

Bankruptcy Code and provides that “a person is not disqualified for employment under section

327 of the Bankruptcy Code by a debtor in possession solely because of such person’s

employment by or representation of the debtor before the commencement of the case.”

11 U.S.C. §1107(b).

23. The Debtors believe that McKinsey RTS’ fees are reasonable in light of industry

practice and market rates charged for comparable services and should be approved. In addition,

as noted above, McKinsey RTS is “disinterested” and all of its fees and expenses are subject to

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approval of the Court in accordance with the Bankruptcy Code, the Bankruptcy Rules, the Local

Bankruptcy Rules, the U.S. Trustee Chapter 11 Guidelines, and further orders of the Court.

Accordingly, the Court should approve the employment and retention of McKinsey RTS

pursuant to the terms set forth in the Engagement Letter.

24. Courts in this district have approved similar arrangements that contain reasonable

terms and conditions, and have granted such relief nunc pro tunc to the petition date. See, e.g.,

In re Ryan Int’l Airlines, Inc., No. 12-80802 (MB) (Bankr. N.D. Ill. Aug. 9, 2012) (authorizing

retention of restructuring advisor nunc pro tunc to the petition date and approving

indemnification provisions); In re Hartford Computer Hardware, Inc., No. 11-49744 (PSH)

(Bankr. N.D. Ill. Apr. 17, 2012) (authorizing retention of restructuring advisor nunc pro tunc to

the petition date); In re The Clare at Water Tower, No. 11-46151 (SPS) (Bankr. N.D. Ill. Jan. 20,

2012) (authorizing retention of restructuring advisor nunc pro tunc to the petition date and

approving indemnification provisions); In re Clare Oaks, No. 11-48903 (PSH) (Bankr. N.D. Ill.

Jan. 20, 2012) (same); see also In re XMH Corp. 1 (f/k/a Hartmarx Corp.), No. 09-02046 (BWB)

(Bankr. N.D. Ill. Mar. 4, 2009) (authorizing retention of financial advisor nunc pro tunc to the

petition date and approving indemnification provisions); In re Kimball Hill Inc., No. 08-10095

(SPS) (Bankr. N.D. Ill. May 28, 2008) (same); In re Enesco Grp., Inc., No. 07-00565 (ABG)

(Bankr. N.D. Ill. Jan. 26, 2007) (authorizing retention of investment banker nunc pro tunc to the

petition date and approving indemnification provisions).5

5 Because of the voluminous nature of the orders cited herein, such orders have not been attached to the Application. Copies of these orders are available upon request of the Debtors’ proposed counsel.

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Notice

25. The Debtors have provided notice of this Application to: (a) the Office of the

U.S. Trustee for the Northern District of Illinois; (b) the entities listed on the Consolidated List

of Creditors Holding the 30 Largest Unsecured Claims; (c) the indenture trustee for the Debtors’ senior unsecured notes; (d) counsel to the ad hoc committee of certain holders of the Debtors’ senior unsecured notes; (e) the indenture trustee for the lessor notes related to the Debtors’

Powerton generating station in Pekin, Illinois, and units 7 and 8 of the Debtors’ Joliet, Illinois, generating station and the pass-through trustee for the related pass-through certificates;

(f) counsel to the ad hoc committee of certain holders of pass-through certificates related to the

Debtors’ Powerton and Joliet generating stations; (g) the owner trusts and the equity investors for

the Debtors’ Powerton and Joliet generating stations (and their respective counsel, if known);

(h) the lender under Debtor Edison Mission Energy’s letter-of-credit facility (i) the state attorneys general for states in which the Debtors conduct business; (j) United States Attorney for the Northern District of Illinois; (k) the Internal Revenue Service; (l) the Securities and

Exchange Commission; and (m) the Environmental Protection Agency and similar state environmental agencies for states in which the Debtors conduct business. In light of the nature of the relief requested herein, the Debtors respectfully submit that no further notice is necessary.

No Prior Request

26. No prior request for the relief sought in this Application has been made to this or

any other court.

[Remainder of page intentionally left blank.]

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WHEREFORE, for the reasons set forth herein and in the Yerian Declaration, the

Debtors respectfully request that the Court enter an order, substantially in the form attached hereto as Exhibit A, granting the relief requested herein and such other and further relief as the

Court deems appropriate.

Dated: December 28, 2012 Chicago, Illinois By: /s/ Maria Rigatti ______Maria Rigatti Senior Vice President and Chief Financial Officer Edison Mission Energy

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EXHIBIT A

Proposed Order

K&E 23950598 UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS Eastern Division

In Re: ) BK No.: 12-49219 EDISON MISSION ENERGY, et al., ) (Jointly Administered) ) Chapter: 11 ) ) Honorable Jacqueline Cox ) Debtor(s) ) ORDER AUTHORIZING THE DEBTORS TO EMPLOY AND RETAIN MCKINSEY RECOVERY & TRANSFORMATION SERVICES U.S., LLC AS RESTRUCTURING ADVISOR FOR THE DEBTORS AND DEBTORS IN POSSESSION NUNC PRO TUNC TO THE PETITION DATE

Upon the application (the “Application”) of the above-captioned debtors and debtors in possession (collectively, the “Debtors”) for entry of an order (this “Order”) authorizing them to to employ and retain McKinsey Recovery & Transformation Services U.S., LLC (“McKinsey RTS”) as their restructuring advisor effective nunc pro tunc to the Petition Date; and upon the Yerian Declaration, the Court having reviewed the Application and the Yerian Declaration, and the Court being satisfied based on the representations made in the Application and the Yerian Declaration that (a) McKinsey RTS does not hold or represent an interest adverse to the Debtors’ estates and (b) McKinsey RTS is a “disinterested person” as defined in section 101(14) of the Bankruptcy Code and as required by section 327(a) of the Bankruptcy Code; it appearing that the relief requested in the Application is in the best interests of the Debtors’ estates, their creditors, and other parties in interest; it appearing that the Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334; it appearing that the Application is a core proceeding pursuant to 28 U.S.C. § 157(b); it appearing that venue of this proceeding and the Application in this district is proper pursuant to 28 U.S.C. §§ 1408 and 1409; the Court having determined that the legal and factual bases set forth in the Application establish just cause for the relief granted herein; due and proper notice of the Application having been provided; it appearing that no other or further notice need be provided; and any objections to the relief requested herein having been withdrawn or overruled on the merits; and after due deliberation and sufficient cause appearing therefor, it is HEREBY ORDERED THAT:

1. The Application is granted as set forth herein. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Application.

2. The Debtors are authorized pursuant to sections 327(a) and 328(a) of the Bankruptcy Code and Bankruptcy Rules 2014(a) and 2016 to employ and retain McKinsey RTS as their restructuring advisor nunc pro tunc to the Petition Date in accordance with the terms and conditions set forth in the Engagement Letter attached hereto as Exhibit 1, including, without limitation, the Indemnification Provisions as amended herein, and to pay reasonable fees and reimburse expenses to McKinsey RTS on the terms and at the times specified in the Engagement Letter.

3. The services provided by McKinsey RTS and described in the Application are approved, and McKinsey RTS will provide the following services to the Debtors:

a. Assist the Debtors in contingency planning activities and potential ongoing administrative tasks,

Rev: 20120501_bko which, for example, would include;

• Interview key employees (CFO, Treasurer, controller, etc) to understand current financial and other procedures, state of preparation and data readiness;

• Prepare data requests to complete necessary First Day Orders, Petitions, SOFA’s and supporting administrative schedules; and

• Compile/analyze data including bank account information, cash management processes, payable information, vendor assessment, etc.

b. Assist in developing ongoing accounting protocols for continued reporting (Monthly Operating Reports) throughout the process;

c. Manage communications with stakeholders as directed by the Debtors’ management;

d. Assist the Debtors in the development and preparation of analytics to be used in restructuring discussions if directed by the Debtors’ management;

e. Assist the Debtors in their development of strategic alternatives and negotiation of restructuring alternatives as needed;

f. Provide project-management services throughout the restructuring process;

g. Work with Debtors’ advisors to facilitate potential Debtor-in-Possession financing;

h. Validate the 13-week forecast and assess liquidity needs;

i. Support business plan development and prepare analysis to support the plan of reorganization as directed by Debtors;

j. Assist the Debtors in a strategic review of their procurement policies; and

k. As appropriate, assist the Debtors with all such other restructuring matters as may be requested that fall within McKinsey RTS’ expertise and that are mutually agreed upon between the parties.

4. Notwithstanding anything to the contrary in the Engagement Letter, the Application, or the Yerian Declaration, to the extent that the Debtors request McKinsey RTS to perform any services other than those detailed in the Engagement Letter, the Debtors shall seek further application for an order of approval by the Court for a supplement to the retention and any related modifications to the Engagement Letter and such application shall set forth, in addition to the additional services to be performed, the additional fees sought to be paid.

5. McKinsey RTS shall be compensated in accordance with, and will file, interim and final fee applications for the allowance of compensation for services rendered and reimbursement of expenses incurred in accordance with sections 330 and 331 of the Bankruptcy Code, the Bankruptcy Rules, the Local Bankruptcy Rules, the U.S. Trustee Chapter 11 Guidelines, and any applicable orders of the Court.

Rev: 20120501_bko 6. McKinsey RTS shall include in its fee applications, among other things, time records setting forth, in summary format, a description of the services rendered by each professional, and the amount of time spent on each date by each such individual in rendering services on behalf of the Debtors in one-tenth of an hour increments.

7. McKinsey RTS shall be reimbursed only for reasonable and necessary expenses as provided by the U.S. Trustee Chapter 11 Guidelines. McKinsey RTS shall maintain detailed documentation of its professionals’ actual and necessary costs and expenses in accordance with the RTS Reimbursement Policy as described in the Debtors’ Application.

8. All requests by Indemnified Parties for the payment of indemnification, contribution, or otherwise as set forth in the Engagement Letter shall be made by means of an application to the Court and shall be subject to review by the Court to ensure that payment of such indemnity conforms to the terms of the Engagement Letter and is reasonable under the circumstances of the litigation or settlement in respect of which indemnity is sought; provided, however, that in no event shall any Indemnified Party be indemnified in the case of its own bad faith, gross negligence, or willful misconduct.

9. In the event an Indemnified Party seeks reimbursement from the Debtors for attorneys’ fees and expenses in connection with the payment of an indemnity claim pursuant to the Engagement Letter, the invoices and supporting time records from such attorneys shall be included in McKinsey RTS’ own applications, both interim and final, and such invoices and time records shall be subject to the U.S. Trustee Chapter 11 Guidelines and the approval of the Court pursuant to sections 330 and 331 of the Bankruptcy Code without regard to whether such attorneys have been retained under section 327(a) of the Bankruptcy Code and without regard to whether such attorneys’ services satisfy section 330(a)(3) (C) of the Bankruptcy Code.

10. To the extent that there may be any inconsistency between the terms of the Application, the Yerian Declaration, the Engagement Letter, and this Order, the terms of this Order shall govern.

11. McKinsey RTS shall use its best efforts to avoid any duplication of services provided by any of the Debtors’ other retained professionals in the chapter 11 cases.

12. Notice of the Application as provided therein shall be deemed good and sufficient notice of such application and the requirements of the Local Bankruptcy Rules are satisfied by such notice.

13. The terms and conditions of this Order shall be immediately effective and enforceable upon its entry and the relief granted herein shall be binding upon any chapter 11 trustee appointed in the chapter 11 cases, or upon any chapter 7 trustee appointed in the event of a subsequent conversion of the chapter 11 cases to cases under chapter 7.

14. The Debtors are authorized to take all actions necessary to effectuate the relief granted pursuant to this Order in accordance with the Application.

15. The Court retains jurisdiction with respect to all matters arising from or related to the implementation of this Order.

Rev: 20120501_bko Enter:

Dated: United States Bankruptcy Judge Prepared by: James H.M. Sprayregen, P.C. David R. Seligman, P.C. Sarah Hiltz Seewer KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, Illinois 60654 Telephone: (312) 862-2000 Facsimile: (312) 862-2200

- and -

Joshua A. Sussberg KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, New York 10022-4611 Telephone: (212) 446-4800 Facsimile: (212) 446-4900

Proposed Counsel to the Debtors and Debtors in Possession Other than Camino Energy Company

- and -

David A. Agay Joshua Gadharf MCDONALD HOPKINS LLC 300 North LaSalle Suite 2100 Chicago, Illinois 60654 Telephone: (312) 280-0111 Facsimile: (312) 280-8232

Proposed Counsel to Debtor Camino Energy Company and Conflicts Counsel to the other Debtors and Debtors in Possession

Rev: 20120501_bko Case 12-49219 Doc 175-2 Filed 12/28/12 Entered 12/28/12 14:07:02 Desc Exhibit 1 - Engagement Letter Page 1 of 12

EXHIBIT 1

Engagement Letter

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EXHIBIT B

Yerian Declaration

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UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

) In re: ) Chapter 11 ) EDISON MISSION ENERGY, et al.,1 ) Case No. 12-49219 (JPC) ) Debtors. ) (Jointly Administered)1 )

DECLARATION OF JARED D. YERIAN IN SUPPORT OF DEBTORS’ APPLICATION TO EMPLOY AND RETAIN MCKINSEY RECOVERY & TRANSFORMATION SERVICES U.S., LLC AS RESTRUCTURING ADVISOR FOR THE DEBTORS AND DEBTORS IN POSSESSION NUNC PRO TUNC TO THE PETITION DATE

I, Jared D. Yerian, being duly sworn, state the following under penalty of perjury:

1. I am a Practice Leader in the professional services firm of McKinsey Recovery &

Transformation Services U.S. LLC (“McKinsey RTS”) with an office at 55 East 52nd Street,

New York, New York 10055. I am authorized to execute this declaration on behalf of McKinsey

RTS in support of the Application2 of the above-captioned debtors and debtors in possession

(collectively, the “Debtors”) for entry of an order authorizing the employment and retention of

2 Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Application.

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McKinsey RTS as restructuring advisor for the Debtors, nunc pro tunc to the Petition Date,

under the terms and conditions set forth in the Engagement Letter.

2. I submit this Declaration in accordance with section 327(a) of title 11 of the

United States Code (the “Bankruptcy Code”) and Rules 2014(a), 2016, and 5002 of the Federal

Rules of Bankruptcy Procedure (the “Bankruptcy Rules”).

3. Except as otherwise noted, the statements set forth herein are as a result of my

employment position and diligence undertaken by me or by professionals working under my

direction and, if called and sworn as a witness, I would testify competently thereto.

McKinsey RTS’ Qualifications

4. McKinsey RTS professionals serving the Debtors are herein referred to as the

“McKinsey RTS Team” for purposes of this Declaration. The McKinsey RTS Team has

considerable restructuring and electric power and natural gas industry experience. McKinsey

RTS is highly qualified to serve as the Debtors’ restructuring advisor in the chapter 11 cases.

McKinsey RTS is a restructuring advisory firm whose members have extensive experience in

improving the operational performance of financially troubled companies. McKinsey RTS is a

global, full service restructuring advisory and crisis management firm that draws on unmatched

industry and functional expertise to support companies through all aspects of recovery and

transformation. The McKinsey RTS Team is deeply experienced in providing chapter 11

advisory services, which include contingency planning, interim management, cash flow and

liquidity assessment, forecasting and management, analysis and/or development of business and

strategic plans, development and implementation of creditor and/or supplier strategies and

development and implementation of operational and/or financial improvement or restructuring

plans. McKinsey RTS has been or is currently involved in numerous large and complex

restructurings.

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5. In addition, McKinsey RTS utilizes the expertise of its affiliates’ Electric Power

and Natural Gas (“EPNG”) practice, which serves incumbent utilities, independent power

producers, and new entrants in the power generation, transmission, distribution, and natural gas

distribution sectors. McKinsey RTS affiliates help these EPNG clients with issues related to

strategy, organization, and front-line operations. McKinsey RTS’ affiliates’ power and natural

gas market analysis tools provide rigorous strategic insights into market structure and operating

margins. The EPNG practice’s operational performance improvement packages improve heat

rate, reliability, and operating margins for major generators nationwide. Moreover, the EPNG

practice’s procurement expertise ensures clients capture the lowest costs available on the market

today and its capital productivity tools help clients deliver more value with less risk in major

capital projects.

6. The McKinsey RTS Team has also become familiar with the Debtors and their

businesses, including the Debtors’ financial affairs, debt structure, operations, employee groups,

cost structures, and related matters. The McKinsey RTS Team has developed relevant experience

and expertise regarding the Debtors that will assist it in providing effective and efficient services

in the chapter 11 cases. Accordingly, the McKinsey RTS Team has the skills, qualifications and

expertise necessary to assist the Debtors in an efficient and cost-effective manner.

Services to be Provided

7. The terms and the conditions of the Engagement Letter were negotiated between

the Debtors and McKinsey RTS and reflect the parties’ mutual agreement as to the substantial

efforts that will be required during the course of this engagement. In connection with the

Debtors’ restructuring, McKinsey RTS is providing services related to cash management and forecasting, revenue growth, cost savings initiatives, financial reporting, constituent management, bankruptcy reporting and administration, and other ad hoc activities as requested

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