Exhibit 10.3

SECOND AMENDMENT AND RESTATEMENT

OF THE

POWER PURCHASE AND OPERATING AGREEMENT

BETWEEN

WESTMORELAND — LG&E PARTNERS

AND

VIRGINIA ELECTRIC AND POWER COMPANY

FOR

THE ROANOKE VALLEY II PROJECT

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SECOND AMENDMENT AND RESTATEMENT OF THE
POWER PURCHASE AND OPERATING AGREEMENT

Table of Contents

ARTICLE 1:   Definitions 5

1.1   "Abandonment" 5 1.2   "Business Day" 5 1.3   "Capacity Purchase Price" 5
1.4   "Commercial Operations Date" 5 1.5   "Common Systems" 6 1.6   "Day" 6 1.7
  "Dependable Capacity" 6 1.8   "Design Limits" 6 1.9   "Dispatch" 7 1.10  
"Effective Date" 7 1.11   "Emergency" 8 1.12   "Energy Purchase Price" 8 1.13  
"Estimated Dependable Capacity" 8 1.14   "Facility" 8 1.15   "FERC" 8 1.16  
"Financial Closing" 8 1.17   "Forced Outage" 8 1.18   "Initial Dependable
Capacity" 9 1.19   "Interconnection Facilities" 9 1.20   "Interconnection Point"
9 1.21   "Interest Rate" 9 1.22   "Maintenance Outage" 9 1.23   "Month" 10 1.24
  "NERC" 10 1.25   "Net Electrical Output" 10 1.26   "NCUC" 10 1.27   "Off Peak
Hours" 10 1.28   "On-Peak Hours" 10 1.29   "O&M Price" 10 1.30   "Prudent
Electrical Practices" 10 1.31   "Prudent Utility Practices" 10 1.32   "PURPA" 11
1.33   "QF" 11 1.34   "Quarter" 11 1.35   "Roanoke Valley I Project" 11 1.36  
"Scheduled Outage" 11 1.37   "Summer Demonstration Period" 11 1.38   "Summer
Period" 11

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1.39   "Term" 11 1.40   "Winter Demonstration Period" 12 1.41   "Winter Period"
12 1.42   "Year" 12

ARTICLE 2:   Sale and Purchase of Net Electrical Output and Dependable Capacity
12

ARTICLE 3:   Notices 13

ARTICLE 4:   Pre- and Post-Operation Period 14

ARTICLE 5:   Term, Defaults, and Termination 16

ARTICLE 6:   Representations, Warranties and Covenants 23

ARTICLE 7:   Control and Operation of the Facility; Dispatch 28

ARTICLE 8:   Interconnection 34

ARTICLE 9:   Metering 35

ARTICLE 10:   Compensation, Payment, and Billings 38

ARTICLE 11:   Testing and Capacity Ratings 45

ARTICLE 12:   Insurance 48

ARTICLE 13:   Liability, Noncompliance and Guarantees 50

ARTICLE 14:   Force Majeure 55

ARTICLE 15:   Taxes and Claims for Labor and Materials 57

ARTICLE 16:   Choice of Law 58

ARTICLE 17:   Miscellaneous Provisions 58

ARTICLE 18:   Statutory and Regulatory Changes 60

ARTICLE 19:   Coordination of Communications 63

ARTICLE 20:   Entirety 63

DATA REQUIRED TO PERFORM INTERCONNECTION STUDY   EXHIBIT A-1

EXAMPLES OF PAYMENTS FOR DEPENDABLE CAPACITY   EXHIBIT B-1

ROANOKE VALLEY I/II PROJECT STEAM DISTRIBUTION AND METERING SYSTEM   EXHIBIT C-1

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SECOND AMENDMENT AND RESTATEMENT
OF THE
POWER PURCHASE AND OPERATING AGREEMENT
BETWEEN
WESTMORELAND — LG&E PARTNERS
AND
VIRGINIA ELECTRIC AND POWER COMPANY
FOR THE ROANOKE VALLEY II PROJECT

        THIS AGREEMENT, effective as of the Effective Date, is by and between
WESTMORELAND — LG&E PARTNERS, a Virginia general partnership with its principal
office located in Charlottesville, Virginia (“Operator’), and VIRGINIA ELECTRIC
AND POWER COMPANY, a Virginia public service corporation with its principal
office located in Richmond, Virginia, operating in North Carolina as North
Carolina Power (“North Carolina Power” or “Company”). Both Operator and North
Carolina Power are herein individually referred to as “Party” and collectively
referred to as “Parties”.

R E C I T A L S

        WHEREAS, North Carolina Power was a party to a Power Purchase and
Operating Agreement with Wheelabrator Tidewater, Inc. dated July 13, 1990
(hereinafter referred to as "Agreement No. 1") under which Wheelabrator
Tidewater, Inc. was going to develop a waste to energy facility in Portsmouth,
Virginia, and Wheelabrator Tidewater, Inc. was unable to secure a reliable fuel
source; and

        WHEREAS, Wheelabrator Tidewater Inc. assigned its rights and obligations
under Agreement No. I to Westpower — Covington, L.P. with consent from North
Carolina Power via the CONSENT TO THE TRANSFER OF POWER PURCHASE AND OPERATING
AGREEMENT dated December 21, 1990; and

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        WHEREAS, Westpower — Covington, L.P. has relocated the Facility to a
location in Halifax County, North Carolina and changed the design of the
Facility from a waste to energy to a pulverized coal design; and

        WHEREAS, the owners of Westpower — Covington, L.P. have further assigned
Agreement No. 1 to Westmoreland — LG&E Partners via the ASSIGNMENT AND
ASSUMPTION AGREEMENT AND CONSENT TO ASSIGNMENT dated April 28, 1993; and

        WHEREAS, Operator owns and operates a new electric generating facility
located within North Carolina Power’s certificated retail service area in
Halifax County, North Carolina adjacent to the cogeneration facility known as
the Roanoke Valley I Project, with a nameplate rating of 56,000 kVA; such
facility in all future correspondence to be identified as the Roanoke Valley II
Project (“Facility”); and

        WHEREAS, the Parties agree that the Commercial Operations Date occurred
on June 1, 1995; and

        WHEREAS, Operator wishes to sell, exclusively to North Carolina Power,
all of the Facility’s electric generation and capacity made available for sale,
such sale to be pursuant to the terms and conditions set forth herein; and

        WHEREAS, North Carolina Power wishes to purchase the Net Electrical
Output and Dependable Capacity that is Dispatched by North Carolina Power
pursuant to the terms and conditions set forth herein; and

        WHEREAS, the Parties amended and restated Agreement No. 1 pursuant to
that certain Amendment and First Restatement, dated as of April 29, 1993 (the
“First Amendment and Restatement”); and

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        WHEREAS, the Parties now want to amend and restate the First Amendment
and Restatement by this Second Amendment and Restatement (hereinafter referred
to as the “Agreement”).

        NOW, THEREFORE, in consideration of these premises and of the mutual
covenants and agreements hereinafter set forth, Operator and North Carolina
Power covenant and agree, and amend and restate the First Amendment and
Restatement in its entirety, as follows:

ARTICLE 1: Definitions

        Whenever the following terms appear in this Agreement and in the
Recitals hereto, whether in the singular or in the plural, present or past
tense, they shall have the meaning stated below:

        1.1    “Abandonment” — Voluntary cessation of construction or operation
of the Facility, and the withdrawal of all, or substantially all, personnel by
Operator from the Facility for reasons other than North Carolina Power’s acts or
omissions or an event of Force Majeure.

        1.2    “Business Day” —Monday through Friday excluding, holidays
recognized by North Carolina Power. As of the date of this Agreement, these
holidays include New Year’s Day, Martin Luther King’s Birthday, Good Friday,
Memorial Day, Fourth of July, Labor Day, Veteran’s Day, Thanksgiving Day, day
after Thanksgiving Day, Christmas Eve and Christmas Day. North Carolina Power’s
observation of such holidays may be changed by North Carolina Power upon ten
(10) Days written notice to Operator.

        1.3    “Capacity Purchase Price” — The price, in cents per
kilowatt-hour, North Carolina Power will pay Operator for Dependable Capacity.

        1.4    “Commercial Operations Date” — June 1, 1995.

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        1.5    “Common Systems” —The Common Systems are Coal Receiving, Coal
Reclaim, Service Water Pump Station, Fire Water Pump Station, Coal Pile Run-off
Pond Pumps and Wastewater Treatment System, Control Room/DCS System,
Administration Building, Ash Silo and Load Out, Lime Receiving and Handling,
Auxiliary Boiler, Maintenance Shops and Warehouse, Fuel Oil Receiving and
Storage, Portions of Process Steam and Condensate Return Lines, Potable Water
System, Portions of Service, emergency and back-up power system, and Control Air
Systems Serving Common Systems. Additional items may be added to this list of
Common Systems, provided the Parties agree that such items are or must be shared
with the Roanoke Valley I Project and in no way can such items enable the
Roanoke Valley II Project and the Roanoke Valley I Project to provide electrical
power and/or steam to each other in a manner which could be used to satisfy the
Dispatch or QF requirements of the other.

        1.6    “Day” — The 24-hour period beginning and ending at 12:00 midnight
the prevailing Eastern Standard or Daylight Savings Time.

        1.7    “Dependable Capacity” — The amount of electrical generation, set
by Operator pursuant to Article 11, for each Summer Period and Winter Period and
made available from the Facility to North Carolina Power.

        1.8    “Design Limits” — When the Facility is Dispatched on-line by
North Carolina Power, it is capable of operation over the continuous range from
0% of the Dependable Capacity through 100% of the Dependable Capacity (the
“Maximum Operating Level”). North Carolina Power may Dispatch the Facility down
to a level of zero (0) MW (off-line) or under non-Emergency conditions to levels
ranging from twelve (12) MW (“Minimum Operating Level”) through the Maximum
Operating Level. Except in an Emergency, after the Facility has been off line
due to a Scheduled Outage, a Maintenance Outage, a Forced Outage, an event of
Force Majeure or in response to North Carolina Power’s Dispatch of the Facility,
it can achieve the level(s) of operation specified below within the time
period(s) indicated below:

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  (a)   If the Facility has been off line for less than 8 hours (hot start), it
can be resynchronized within 3 hours and can achieve its Minimum Operating Level
within 6 hours following North Carolina Power’s notice to start-up.

  (b)   If the Facility has been off line between 8 hours and 24 hours (warm
start), it can be resynchronized within 7 hours and can achieve its Minimum
Operating Level within 10 hours following North Carolina Power’s notice to
start-up.

  (c)   If the Facility has been off line for more than 24 hours (cold start),
it can be resynchronized within 12 hours and can achieve its Minimum Operating
Level within 15 hours following North Carolina Power’s notice to start-up.

Once the Facility has been synchronized with North Carolina Power’s system and
brought to its Minimum Operating Level, its Net Electrical Output may be incised
at the rate of 1.2 MW per minute. If the Facility is operating above its Minimum
Operating Level, its Net Electrical Output may be reduced at the rate of 1.2 MW
per minute down to the Minimum Operating Level.

        1.9   “Dispatch” — The right of North Carolina Power, or its exercise,
in accordance with Prudent Utility Practices to (i) schedule and control
(albeit, indirectly) from any of its division or system operating centers, the
generating level of the Facility in order to commence, increase, decrease or
cease the delivery of Net Electrical Output to the North Carolina Power system
and (ii) distribute the total North Carolina Power energy needs among available
electric energy sources for optimum system economy with due consideration of
incremental generating costs, incremental power purchase costs, and incremental
transmission losses, load flow considerations and other operational
considerations as reasonably determined solely by North Carolina Power.

        1.10    “Effective Date”— The latest date as of which this Agreement has
been executed by both of the Parties, as evidenced by the dates opposite such
signatures.

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        1.11    “Emergency” — A condition or situation which in the sole
reasonable judgment of North Carolina Power affects, or reasonably may affect,
North Carolina Power’s ability to meet its obligations to maintain safe and
reliable electric service to North Carolina Power’s customers and/or the
customers of any member of NERC.

        1.12    “Energy Purchase Price” — The price per kilowatt-hour North
Carolina Power will pay Operator in accordance with Article 10, Sections 1
through 6 for the Net Electrical Output delivered to North Carolina Power.

        1.13    “Estimated Dependable Capacity” — Those levels of Dependable
Capacity for both the Summer Period and the Winter Period that Operator
estimates the Facility will be able to provide for the Term. Such levels are set
forth in Section 11.1 hereof.

        1.14    “Facility” —Operator’s generation plant, including, without
limitation or regard to level of development, land, engineering and design
documents, all energy producing equipment and its auxiliary equipment, fuel
handling equipment and all equipment either installed or to be installed on
Operator’s side of the Interconnection Point that is not Interconnection
Facilities. The Facility includes one (1) steam boiler and one (1) turbine
generating unit.

        1.15    "FERC" - The Federal Energy Regulatory Commission or any
successor thereto.

        1.16    “Financial Closing”— If the Facility is financed by a third
party, the date on which documents which provide funding for the construction of
the Facility are executed, and such funds are released pursuant to those
documents. If the Facility is not financed by a third party, the date on which
the intercompany credit agreement relating to construction financing of the
Facility is entered into between Operator and any affiliated company.

        1.17    “Forced Outage” — An event, causing an interruption or reduction
in the Facility’s Net Electrical Output, that is not (i) a Scheduled Outage, a
Maintenance Outage or an event of Force Majeure or (ii) attributed to Dispatch
by North Carolina Power, unless such Dispatch is required due to Operator’s
failure to comply with Sections 6.2, 6.3, or 6.4 of this Agreement and which
failure presents a threat to the safety or reliability of North Carolina Power’s
bulk electric system.

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        1.18    “Initial Dependable Capacity” — The Dependable Capacity for the
first Summer Period and Winter Period that is established pursuant to Section
11.

        1.19    “Interconnection Facilities” — All the facilities, wherever
located, installed by North Carolina Power to enable North Carolina Power to
receive Net Electrical Output and Dependable Capacity from the Facility
including, but not limited to, all metering and telemetering equipment;
transmission and distribution lines and associated equipment; transformers and
associated equipment; relay and switching equipment; and protective devices and
safety equipment.

        1.20    “Interconnection Point” — The physical point(s) where the Net
Electrical Output of the Facility is delivered to the North Carolina Power
system.

        1.21    “Interest Rate” — At any time, the rate of interest which is 2
percent higher than the rate of interest from time to time publicly announced by
The Chase Manhattan Bank, NA., at its principal office, presently located at 1
Chase Manhattan Plaza, New York, New York 10081, as its prime commercial lending
rate. Interest at the Interest Rate shall be computed Monthly and prorated daily
from the time such obligation arises.

        1.22    “Maintenance Outage”— An interruption or reduction of the
Facility’s availability that (i) is not a Scheduled Outage, and (ii) Operator
elects to take in good faith for the purpose of performing work on the Facility
that should not, in the reasonable opinion of Operator, be postponed until the
next Scheduled Outage.

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        1.23    “Month” — The period beginning on the first Day of a calendar
month and ending on the last Day of such month.

        1.24    “NERC” — The North American Electric Reliability Council,
including any successor thereto and subdivisions thereof.

        1.25    “Net Electrical Output” — The Facility’s electrical energy
output produced in accordance with North Carolina Power’s Dispatch, measured in
accordance with Article 9, and delivered to the Interconnection Point.

        1.26    “NCUC” — North Carolina Utilities Commission or any successor
thereto.

        1.27    “Off Peak Hours”— The hours between 10:00 PM and 7:00 AM Monday
through Friday and all Day Saturday and Sunday.

        1.28    “On-Peak Hours” — The hours between 7:00 AM and 10:00 PM Monday
through Friday.

        1.29    “O&M Price” — The price North Carolina Power will pay Operator
in accordance with Section 10.6 for variable operations and maintenance
expenses.

        1.30    “Prudent Electrical Practices” — The use of equipment, practices
or methods, as required to comply with applicable industry codes, standards, and
regulations (i) to protect North Carolina Power’s system, employees, agents, and
customers from malfunctions occurring at the Facility and (ii) to protect the
Facility, and Operator’s employees and agents at the Facility, from malfunctions
occurring on North Carolina Power’s system or on any other electric utility
system with which North Carolina Power is directly or indirectly electrically
connected.

        1.31    “Prudent Utility Practices” — The practices generally followed
by the electric utility industry, as changed from time to time, which generally
include, but are not limited to, engineering and operating considerations, the
use of equipment, practices, methods, and adherence to applicable industry
codes, standards, and regulations.

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        1.32    "PURPA" - The Public Utility Regulatory Policies Act of 1978.

        1.33    “QF” — A cogeneration facility or a small power production
facility which is a Qualifying Facility under Subpart B of Subchapter K, Part
292 of Chapter I, Title 18, Code of Federal Regulations, promulgated by the
FERC.

        1.34    “Quarter” — A 3-Month period beginning either January 1, April
1, July 1, or October 1.

        1.35    “Roanoke Valley I Project” — The coal fired generating facility
directly adjacent to the south of the Facility, owned by the Operator and
identified as the Roanoke Valley Project in the Third Amendment and Restatement
of the Power Purchase and Operating Agreement between Operator and Virginia
Electric and Power Company, dated the same date as this Agreement.

        1.36    “Scheduled Outage”— A planned interruption of the Facility’s
generation exceeding seven (7) consecutive Days that is required or recommended,
in Operator’s sole discretion, for inspection, preventive maintenance,
corrective maintenance or repair or replacement of equipment and that is
scheduled as such pursuant to the provisions of Section 7.2.

        1.37    “Summer Demonstration Period” — The period beginning June 15 and
ending at the end of the Day on the following September 15, or some other three
consecutive month portion of the Summer Period designated by North Carolina
Power.

        1.38    "Summer Period" - The Months of April through September.

        1.39    “Term” — The initial term of this Agreement as specified in
Section 5.1, plus any renewal term determined pursuant to Section 5.2.

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        1.40    “Winter Demonstration Period” —The period beginning December 1
and ending at the end of the Day on the last Day of the following February, or
some other three consecutive month portion of the Winter Period designated by
North Carolina Power.

        1.41    "Winter Period" - The Months of October through March.

        1.42    "Year" - The 12-Month period beginning January 1 and ending at
the end of the Day on the subsequent December 31.

ARTICLE 2: Sale and Purchase of Net Electrical Output and Dependable Capacity

        2.1    Subject to the terms and conditions of this Agreement, Operator
agrees to sell exclusively to North Carolina Power all of the electric
generation made available for sale from the Facility, and North Carolina Power
agrees to purchase the Net Electrical Output that is Dispatched by North
Carolina Power.

        2.2    Except as otherwise provided herein, and subject to other terms
hereof, Operator agrees to sell, and North Carolina Power agrees to purchase.
Dependable Capacity from the Facility beginning on the Commercial Operations
Date as determined pursuant to Article 11.

        2.3    The Parties agree that Operator has fulfilled its obligation to
provide the information, documentation and other materials required pursuant to
Section 2.3 of the First Amendment and Restatement.

        2.4    In addition to the Facility’s Net Electrical Output and
Dependable Capacity sold to North Carolina Power pursuant to this Agreement,
Operator may propose to sell additional electrical energy and capacity from the
Facility to North Carolina Power in response to any future North Carolina Power
solicitation for capacity. However, nothing in this Agreement obligates North
Carolina Power to purchase such electrical energy and capacity.

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ARTICLE 3: Notices

        3.1    Any notice or submittals required by this Agreement or by North
Carolina Power, other than notices or communications related to Dispatch, will
be in writing and delivered to the addresses set forth below:

  In the case of Operator to:

  Westmoreland — Roanoke Valley, L.P.
c/o WEI – Roanoke Valley, Inc.
2 North Cascade Avenue, 14th Floor
Colorado Springs, Colorado 80903
Attn: President

  With a copy to:

  LG&E Roanoke Valley, L.P.
c/o LG&E Power 16 Incorporated
12500 Fair Lakes Circle, Suite 350
Fairfax, Virginia 22033-3804
Attn: President

  In the case of North Carolina Power to:

  Virginia Electric and Power Company (if by hand)
Director — Capacity Acquisition
One James River Plaza
701 East Cary Street, 15th Floor
Richmond, Virginia 23219
Facsimile Number: (804) 771-3005

  Virginia Electric and Power Company (if by mail)
Director — Capacity Acquisition
P.O. Box 26666
Richmond, Virginia 23261
Facsimile Number: (804) 771-3005

All such notices or submittals, other than those rotated to Dispatch, shall be
sent either by hand-delivery, registered or certified U.S. mail returned receipt
requested, overnight delivery, or facsimile and will be effective and deemed to
have been delivered: (i) when presented if hand-delivered to a Party; (ii) on
the third Business Day after the date delivered to the U. S. Post Office if sent
by registered or certified U. S. mail; (iii) on the next Business Day after the
date delivered to an overnight delivery company; or (iv) when confirmed by
telecopy machine report indicating satisfactory transmission, respectively,
addressed as aforesaid if sent by facsimile. Notices providing notice of an
Event of Default shall require the use of any two (2) of the above means. Such
notices shall be effective and deemed to have been delivered when the last such
means has been complied with. All other written communications regarding this
Agreement, including submittals of payments, may be sent by any of the above
means including regular first class U. S. mail.

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        3.2    Either Party may, by prior written notice to the other, change
the representative or the address to which notices and communications are to be
sent.

        3.3    Operator shall provide North Carolina Power with three (3) copies
of any written notice, communication or submittal called for by this Agreement
that is of an odd size, shape or material or otherwise not readily reproducible
on conventional office copiers.

ARTICLE 4: Pre- and Post-Operation Period

        4.1    Operator shall, at its expense, obtain and maintain certification
of the Facility from the FERC as a QF. Notwithstanding the foregoing sentence,
or any other contrary provisions hereof, Operator has already obtained approval
from the FERC as an Exempt Wholesale Generator (EWG). North Carolina Power
agrees that Operator may elect to operate the Facility without QF status and
that Operator shall not be obligated to maintain such QF certification. However,
if Operator so elects and before relinquishing such QF status, Operator first
shall obtain the approvals of any state or federal agencies that are needed to
permit Operator to operate the Facility without QF status. Operator covenants
that it shall use its reasonable efforts to obtain such approvals, and North
Carolina Power agrees to support any application or other efforts by Operator to
obtain such approvals. Operator agrees to maintain QF status until all such
approvals are obtained. This Agreement shall continue in full force and effect
whether or not such approvals are obtained. Notwithstanding any contrary
provisions hereof, North Carolina Power hereby waives, releases and relinquishes
any and all rights and causes of action that it may have against Operator as
they relate to the requirement that Operator maintain the QF status of the
Facility during the period from (and including) 1995 through the earlier of the
date as of which Operator relinquishes the QF status of the Facility as
aforesaid or January 1, 2002.

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        In addition, at its expense, Operator shall acquire and maintain in
effect, from any and all other federal, state and local agencies, commissions
and authorities with jurisdiction over Operator and/or the Facility, all
permits, licenses, and approvals, and complete or have completed all
environmental impact studies necessary as follows:

  (a)   For the operation and maintenance of the Facility.

  (b)   For Operator to perform its obligations under this Agreement.

        4.2    Not used.

        4.3    Not used.

        4.4    Not used.

        4.5    Operator and North Carolina Power have mutually developed and
agreed to written operating procedures. The operating procedures are based on
the design of the Facility and the design of the interconnection to North
Carolina Power’s bulk electric system. The operating procedures are intended as
a guide on how to integrate the Operator’s Facility, its Dependable Capacity,
and Net Electrical Output into North Carolina Power’s bulk electric system.
Topics covered include, but are not necessarily limited to, procedures for
testing pursuant to Article 11; method of day-to-day communications; key
personnel lists for Operator and North Carolina Power; clearances and switching
practices; outage reporting and scheduling; daily Dependable Capacity and Net
Electrical Output reports; unit operations log; and reactive power support. Such
operating procedures shall be consistent with the terms and conditions of this
Agreement.

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        4.6    North Carolina Power has prepared and submitted to Operator a
written voltage schedule. North Carolina Power may change such voltage schedule
any time during the Term upon thirty (30) Days prior written notice to Operator.
Operator hall use such voltage schedule in the operation of its Facility. This
voltage schedule shall be based on the normally expected operating conditions
for the Facility and the reactive power requirements of North Carolina Power’s
system.

        4.7    Not used

        4.8    Not used.

ARTICLE 5: Term, Defaults, and Termination

        5.1    The initial term of this Agreement is for a period of twenty-five
(25) years commencing with the Commercial Operations Date, unless extended under
this Article 5, terminated, or canceled.

        5.2    Upon agreement by the Parties, this Agreement may be extended for
periods of up to five (5) years each, provided that two (2) years prior to the
end of the initial term, or the prior extended term, as the case may be, the
Parties agree to such extension in writing.

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        5.3

  (a)   Events of Default — Operator — Any of the following shall constitute an
“Event of Default” as to Operator, if not cured in all material respects within
the applicable cure period provided herein, if any. Such failure or action must
be cured within (i) sixty (60) Days after receipt of notice from North Carolina
Power describing the Event of Default or (ii) such other time period as may be
expressly stated in this Section 5.3(a). Except for Events of Default described
in Sections 5.3(a)(5), 5.3(a)(9), 5.3(a)(10), and 5.3(a)(l1), for which no cure
period is allowed, if the Event of Default described in such notice is the type
of default that is not capable of being cured in all material respects within
the sixty (60) Day period or other period provided herein, and Operator can
demonstrate that Operator has promptly commenced and is continuing to use due
diligence to cure the Event of Default, North Carolina Power shall grant an
additional period of time reasonably sufficient to cure the Event of Default,
but such period of time shall not exceed one hundred and twenty (120) Days in
which to cure such Event of Default.

    (1)   Not used;

    (2)   Not used;

    (3)   Abandonment of operation of the Facility at any time;

    (4)   Not used;

    (5)   Operator, at any time, shall fail to pay any sum due and payable to
North Carolina Power arising hereunder, and such sum or portion thereof remains
outstanding after two consecutive bills have been rendered in accordance with
Section 10.9. No cure period shall be permitted for such an Event of Default;

    (6)   Any representation or warranty made by Operator pursuant to Section
6.12 herein or in any certificate delivered to North Carolina Power pursuant
hereto or thereto shall prove to have been incorrect on the date given in any
material respect, unless (i) within 20 Days after notice thereof has been given
to Operator by North Carolina Power, Operator cures any material and adverse
effect on North Carolina Power resulting from such fact, circumstance or
condition being otherwise than as first represented, or (ii) such fact,
circumstance or condition being otherwise than as first represented does not
materially adversely affect North Carolina Power;

    (7)   A court having jurisdiction shall enter (i) a decree or order for
relief in respect of Operator in an involuntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency, reorganization or other
similar law, or (ii) a decree or order adjudicating Operator bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of Operator under any
applicable Federal or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of
Operator or of any substantial part of its affairs;

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    (8)   Operator shall (i) commence a voluntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency, reorganization or other
similar law or any other case or proceeding to be adjudicated a bankrupt or
insolvent, or (ii) consent to the entry of a decree or order for relief in
respect of Operator in any involuntary case or proceeding under any applicable
Federal or state bankruptcy, insolvency, reorganization or other similar law or
to the commencement of any bankruptcy or insolvency case or proceeding against
it, or (iii) file any petition, answer or consent seeking reorganization or
relief under any applicable Federal or state law, or (iv) consent to the filing
of any petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official of
Operator or of any substantial part of its property, or (v) make an assignment
for the benefit of creditors, or (vi) be unable, or admit in writing its
inability, to pay its debts as they become due, or (vii) take any action in
furtherance of any of the foregoing;

    (9)   In connection with any event described in subsections (7) or (8) of
this Section 5.3(a), this Agreement shall be rejected within the meaning of the
Bankruptcy Reform Act of 1978, as amended, for which event no cure period shall
be permitted hereunder;

    (10)   Operator directed or endorsed acts by its employees, contractors or
subcontractors of any tier, of tampering with the Interconnection Facilities,
for which event no cure period shall be permitted hereunder;

    (11)   Failure to post security as stipulated in Section 13.5; for which
event no cure period shall be permitted hereunder; Operator agrees that in no
event shall Operator be entitled to any extension of the deadline for the
posting of security pursuant to Section 13.5, including by reason of Force
Majeure pursuant to Article 14;

    (12)   Not used;

    (13)   Operator, at any time, shall fail to discharge or perform any other
material duty or obligation of Operator under this Agreement;

    (14)   Not used;

    (15)   Operator loses QF certification (except as permitted pursuant to
Section 4.1 hereof), for which event a 365 Day cure period shall be permitted
hereunder,

    (16)   If electric power is, at any time, delivered to or received by the
Facility from the Roanoke Valley I Project, or from any source other than either
North Carolina Power or Operator’s Facility, other than for Common Systems; for
which event Operator shall not be paid for Dependable Capacity during the period
commencing on the earlier of the date (i) such event was discovered or (ii) the
event can be reasonably determined to have commenced and ending when the
Facility is modified to prevent the event from occurring in the future. If such
event occurs during a test for Dependable Capacity of either the Facility or the
Roanoke Valley I Project, the test shall be considered null and void, and North
Carolina Power may draw the entire security provided under Section 13.5 of this
Agreement;

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    (17)   Operator causes, allows for, or provides in any way an electrical
connection between the Facility and the Roanoke Valley I Project, or any other
project or entity on Operator’s side of the Interconnection Point other than
those required for operation of Common Systems; for which event Operator shall
not be paid for Dependable Capacity during the period commencing on the earlier
of the date (i) such event was discovered or (ii) the event can be reasonably
determined to have commenced and ending when the Facility is modified to prevent
the event from occurring in the future, and North Carolina Power may draw the
entire security provided under Section 13.5 of this Agreement; or

    (18)   Operator causes, allows for, or accepts steam delivery from the
Roanoke Valley I Project, or any other project or entity at any point upstream
of the Facility’s meter located upstream of the interconnection point with the
common steam line which is used to measure the Facility’s steam output (see
Exhibit C) and such act has the effect of assisting the Facility in meeting its
QF requirements; for which event Operator shall not be paid for Dependable
Capacity during the period commencing the earlier of the date (i) such event was
discovered or (ii) the event can be reasonably determined to have commenced and
ending when the Facility is modified to prevent the event from occurring in the
future, and North Carolina Power may draw the entire security provided under
Section 13.5 of this Agreement; provided that the events described in this
clause (18) shall no longer constitute an Event of Default, and North Carolina
Power shall have no right to draw the security provided under Section 13.5 of
this Agreement for the events described in this clause (18), from and after the
date as of which Operator relinquishes the Facility’s QF status as permitted
pursuant to Section 4.1 hereof.

    (19)   Not used.

  (b)   Rights of North Carolina Power for Event of Default of Operator — (i) If
an Event of Default as to Operator has occurred that results in Operator’s
failure to deliver any Net Electrical Output, then North Carolina Power shall
have no obligation to pay the Capacity Purchase Price for Dependable Capacity
until the earlier of either (x) the Day the Facility resumes delivery of Net
Electrical Output or (y) such Event of Default has been cured. (ii) If an Event
of Default as to Operator has not been cured in all material respects at the
conclusion of the cure period applicable to such Event of Default, North
Carolina Power, at its discretion, may take one or more of the following
actions:

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    (1)   Upon the expiration of the applicable cure period provided for in this
Article 5, if any, proceed by appropriate proceedings, judicial, administrative
or otherwise, at law, in equity or otherwise, to protect and enforce its rights,
to recover any damages to which it may be entitled, and to enforce performance
by Operator, including specific performance of Operator’s obligations hereunder;
or

    (2)   Terminate this Agreement by notice to Operator.

      The rights and remedies herein provided in case of an Event of Default as
to Operator shall not be exclusive but, to the extent permitted by law, shall be
cumulative and in addition to all other rights and remedies existing at law, in
equity or otherwise. No delay or omission of North Carolina Power to exercise
any right or remedy accruing upon any Event of Default as to Operator shall
impair any such right or remedy or constitute a waiver of such event or an
acquiescence thereto.

  (c)   Events of Default — North Carolina Power — Any of the following shall
constitute an “Event of Default” as to North Carolina Power, if not cured in all
material respects within the applicable cure period provided herein, if any.
Such failure or action must be cured within (i) sixty (60) Days after receipt of
notice from Operator describing the Event of Default or (ii) such other time
period as may be expressly stated in this Section 53(c). If the Event of Default
described in such notice is the type of default that is not capable of being
cured in all material respects within the sixty (60) Day period or other period
provided herein, and North Carolina Power can demonstrate that North Carolina
Power has promptly commenced and is continuing to use due diligence to cure the
Event of Default, Operator shall grant an additional period of time sufficient
to cure the Event of Default, but such period of time shall not exceed one
hundred and twenty (120) Days.

    (1)   North Carolina Power shall fail to pay any amount due and payable
under this Agreement, and such failure shall have continued for a period of 20
Days after notice thereof has been given by Operator to North Carolina Power;
provided, however, that for purposes of this subsection, the phrase “cured in
all material respects” shall mean payment in full of any sum payable to
Operator;

    (2)   North Carolina Power shall fail to accept or purchase Net Electrical
Output in accordance with this Agreement, and such failure shall continue for a
period of ten (10) Days after notice thereof shall have been given to North
Carolina Power by Operator; or

    (3)   North Carolina Power, at any time, shall fall to discharge or perform
any other material duty or obligation of North Carolina Power under this
Agreement.

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  (d)   Rights of Operator for Event of Default of North Carolina Power — If an
Event of Default as to North Carolina Power has occurred and such Event of
Default shall not have been cured in all material respects at the conclusion of
the cure period applicable to such Event of Default, Operator, at its
discretion, may take one or more of the following actions:

    (1)   proceed against North Carolina Power by appropriate proceedings,
judicial, administrative or otherwise, at law, in equity or otherwise, to
protect and enforce its rights and to recover any damages to which it may be
entitled, and to enforce performance by North Carolina Power, including specific
performance of North Carolina Power’s obligations hereunder;

    (2)   by written notice to North Carolina Power, suspend its obligations
hereunder until such failure is cured, and if such failure continues for ten
(10) Days after such notice of suspension, Operator may terminate this Agreement
by notice to North Carolina Power. If Operator terminates this Agreement
pursuant to this Section 53(d), North Carolina Power shall, at Operator’s
request, wheel the Facility’s generation under pricing and terms and conditions
then in effect at the time of termination.

      The rights and remedies herein provided in case of an Event of Default as
to North Carolina Power hail not be exclusive but, to the extent permitted by
law, shall be cumulative and in addition to all other rights and remedies
existing at law, in equity, or otherwise. No delay or omission of Operator to
exercise any right or remedy accruing upon any Event of Default as to North
Carolina Power shall impair any such right or remedy or constitute a waiver of
such event or an acquiescence thereto.

        5.4    Not used.

        5.5

  (a)   North Carolina Power may terminate this Agreement at its convenience
upon three hundred and sixty-five (365) Days notice to the Operator. In such
event, North Carolina Power shall pay Operator a lump sum amount (“Termination
Amount”) equal to. the net present value of all projected payments for
Dependable Capacity and Net Electrical Output for the remaining term of this
Agreement assuming (i) that the percentage change in the Gross National Product
Implicit Price Deflator published by the US Department of Commerce, Bureau of
Labor Statistics (“GDPIPD”) for the remaining term of this Agreement is 5% per
year and (ii) a discount rate equal to the long term borrowing rate, at the time
that North Carolina Power exercises its right to terminate hereunder, for
electric utilities rated A1 by Moody’s and/or A+ by Standard & Poors, as
determined by a mutually agreeable investment banking firm of national standing
as of the date of such termination. In the event of such termination for
convenience, North Carolina Power shall agree to transmit the Facility’s Net
Electrical Output to any electric utility outside the North Carolina Power
control area with which North Carolina Power is directly interconnected,
provided that such transmission can be performed without impairing the
reliability of North Carolina Power’s system or the quality of service to its
customers; provided, however, that North Carolina Power’s agreement to transmit
the Net Electrical Output of the Facility as described herein is expressly
conditioned upon Operator’s waiver of, and Operator hereby waives, any right
that Operator may have under PURPA to demand that North Carolina Power purchase
the Dependable Capacity or Net Electrical Output of the Facility. The rate
charged by North Carolina Power for such transmission service shall be
nondiscriminatory and shall be subject to approval by the appropriate,
regulatory authorities.

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  (b)   In the event North Carolina Power exercises its right to terminate
pursuant to Section 5.5(a), North Carolina Power shall have the right to
identify alternative purchasers of Dependable Capacity and Net Electrical Output
generated by the Facility and Operator shall consider in good faith such
alternative purchasers as potential purchasers of the Facility’s Dependable
Capacity and Net Electrical Output. Notwithstanding the preceding sentence,
Operator shall use all commercially reasonable efforts to obtain a contract with
a third party for the sale of the Facility’s Dependable Capacity and Net
Electrical Output. In the event that Operator executes a contract with a third
party for the sale of the Facility’s Dependable Capacity and Net Electrical
Output on terms and conditions reasonably satisfactory to Operator, Operator
shall return to North Carolina Power an amount equal to (i) the net present
value of the projected future payments for the lesser of (x) the term of such
third party contract and any other third party contracts entered into as a
replacement or substitute for this Agreement or (y) that period of time that
would otherwise have remained as the balance of the Term of this Agreement if it
had remained in effect, from such third party for the Facility’s Dependable
Capacity and Net Electrical Output (utilizing the same Dependable Capacity level
and assumptions for GDPIPD and discount rate as utilized for calculation of the
Termination Amount) net of transmission costs or (ii) 50% of the Termination
Amount, whichever is less.

  (c)   The difference between the Termination Amount and the amount to be
repaid to North Carolina Power pursuant to Section 5.5(b) (“Net Termination
Amount”) shall be calculated on a pre-tax basis. To the extent that the Net
Termination Amount is subject to applicable state and federal income taxes, it
will be further adjusted to provide Operator an amount equal to the Net
Termination Amount calculated on an after-tax basis. Upon payment of the
Termination Amount calculated hereunder, North Carolina Power shall have no
other obligation or liability to the Operator except as described in this
Section 5.5, and Operator shall retain title to the Facility.

  (d)   Each of the Parties agrees to cooperate with the other Party in
implementing the provisions of this Section 5.5 by providing the appropriate
information and documentation reasonably requested by the other Party.

        5.6    Not used.

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ARTICLE 6: Representations, Warranties and Covenants

        6.1    Operator represents and warrants that, at all times during the
Term, Operator will have a supply of fuel, of quality and in quantity,
sufficient to deliver the Net Electrical Output at the Dependable Capacity level
for a continuous thirty Day period. From time to time, as North Carolina Power
may reasonably request, Operator shall provide North Carolina Power evidence of
its compliance with this obligation. Alternate supplies of fuel will be
considered in determining whether Operator has a reliable supply of fuel.

        6.2    Operator covenants that the Facility will be operated and
maintained in material accordance with the following:

  (a)   Operating procedures developed pursuant to Section 4.5.

  (b)   Prudent Utility Practices, including without limitation synchronizing,
voltage and reactive power control.

  (c)   Generally accepted Prudent Electrical Practices.

        6.3    Operator covenants that the Facility will be operated in such a
manner so as not to have an adverse effect on North Carolina Power’s voltage
level or voltage waveform.

        6.4    Operator covenants that the Facility will be operated at the
voltage levels determined pursuant to Section 4.6 provided such levels are
within the Design Limits of the Facility.

        6.5    Not used.

        6.6    Operator covenants that it shall obtain and maintain the
insurance coverage specified in Article 12 of this Agreement with respect to the
operation of the Facility.

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        6.7    Operator covenants that North Carolina Power shall have access to
and the right to inspect the Facility at reasonable times on a recurring basis
as deemed necessary by North Carolina Power. All inspections by North Carolina
Power pursuant to this Agreement shall only occur upon prior reasonable notice
to Operator and in a manner that shall not interfere with the orderly operation
of the Facility. North Carolina Power’s inspections of the Facility shall not be
construed as endorsing the design thereof, nor as any warranty of the safety,
durability, reliability, or suitability of the Facility. Such inspections shall
not relieve Operator of any of Operator’s obligations under this Agreement.

        6.8    Operator covenants that it shall, (i) at all times, conform to
all applicable laws, ordinances, rules and regulations applicable to it; (ii)
give all required notices, procure and maintain all governmental permits,
licenses and inspections necessary for its performance of this Agreement; and
(iii) pay all charges and fees in connection therewith.

        6.9    Operator covenants that it shall comply with all applicable
provisions, and successor provisions thereto, of Executive Order 11246, as
amended; § 503 of the Rehabilitation Act of 1973, as amended; §402 of the
Vietnam Era Veterans Readjustment Assistance Act of 1974, as amended; and
implementing regulations set forth in 41 C.F.R. §§ 60-1, 60-250, and 60- 741 and
the applicable provisions relating to the utilization of small and minority
business concerns as set forth in 15 U.S.C. § 637, as amended. Operator agrees
that the equal opportunity clause set forth in 41 C.F.R. § 60-1.4 and the
affirmative action clauses set forth in 41 C.F.R. § 60-250.4 and 41 C.F.R. §
60-741.4 and the clauses relating to the utilization of small and minority
business concerns set forth in 15 U.S.C. § 637(d)(3) and 48 C.F.R. § 52-219-9
are hereby incorporated by reference and made a part of this Agreement. If this
Agreement has a value of more than $500,000, Operator shall adopt and comply
with a small business and small disadvantaged business subcontracting plan which
shall conform to the requirements set forth in 15 U.S.C. § 637(d)(6). The
provisions of this section 6.9 shall apply to Operator only to the extent that:

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  (a)   such provisions are otherwise required of Operator under existing law,

  (b)   Operator is not otherwise exempt from said provisions and

  (c)   compliance with said provisions is consistent with and not violative of
42 U.S.C. § 2000e et seq., 42 U.S.C. § 1981 et seq., or other acts of Congress.

        6.10    Any fines or other penalties incurred by Operator or its agents,
employees or subcontractors for noncompliance by Operator, its employees, or
subcontractors with laws, rules, regulations or ordinances shall not be
reimbursed by North Carolina Power but shall be the sole responsibility of
Operator. If fines, penalties or legal costs are assessed against North Carolina
Power by any government agency or court due to noncompliance by Operator with
any of the laws, rules, regulations or ordinances referred to in Sections 6.8
and 6.9 above or any other laws, rules, regulations or ordinances with which
compliance is required herein, or if the work of Operator or any part thereof is
delayed or stopped by order of any government agency or court due to Operator’s
noncompliance with any such laws, rules, regulations or ordinances, Operator
shall indemnify and hold harmless North Carolina Power against any and all
fines, penalties, and except to the extent Operator’s liabilities are limited
elsewhere in this Agreement, losses, liabilities, damages, and claims suffered
or incurred to the extent caused by the failure of Operator to comply therewith.
Operator shall also reimburse North Carolina Power for any and all legal or
other expenses (including attorneys’ fees) reasonably incurred by North Carolina
Power in connection with such fines, penalties, losses, liabilities, damages or
claims. Nothing in this Section 6.10 shall expand Operator’s liabilities to the
extent such liabilities are otherwise limited in this Agreement.

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        6.11    Operator covenants that no authorization or approval by any
governmental or other official agency is necessary for the due execution,
delivery and performance by the Operator of this Agreement, as in effect on the
date hereof.

        6.12    The Operator and general partners of Operator hereby represent
and warrant:

  (a)   (i) The Operator is a partnership duly organized and validly existing
under the laws of the Commonwealth of Virginia; (ii) the general partners of
Operator are Westmoreland-Roanoke Valley, L.P. a partnership whose general
partner is WEI-Roanoke Valley, Inc., both of which are duly organized, validly
existing and in good standing under the laws of the State of Delaware, and LG&E
Roanoke Valley, L.P. a limited partnership whose general partner is LG&E Power
16 Incorporated, both of which are duly organized, validly existing and in good
standing under the laws of the State of California. Operator and the general
partners of Operator are or will be qualified to do business in North Carolina
and in each other jurisdiction where the failure so to qualify would have a
material adverse effect upon their business or financial condition; and each has
all requisite power and authority to conduct its business, to own its
properties, and to execute, to deliver, and to perform its obligations under
this Agreement.

  (b)   The execution delivery and performance by the Operator of this Agreement
have been duly authorized by all necessary partnership or corporate action as
applicable, and do not and will not (i) require any consent or approval of the
Operator’s Board of Directors, partners or shareholders as applicable, other
than that which has been obtained (evidence of which has been delivered to North
Carolina Power), (ii) violate any provisions of the Operator’s corporate bylaws
or other organic documents, any indenture, contract or agreement to which it is
a party or by which it or its properties may be bound, or any law, rule,
regulation, order, writ, judgment, injunction, decree, determination, or award
presently in effect having applicability to the Operator, or (iii) result in a
breach or constitute a default under the Operator’s corporate bylaws, other
organic documents or other material indentures, contracts, or agreements, and
the Operator is not in default under its corporate bylaws or other organic
documents or other material indentures, contracts, or agreements to which it is
a party or by which it or its property may be bound.

  (c)   This Agreement is a valid and binding obligation of the Operator.

  (d)   There is no pending or, to the best of the Operator’s knowledge and
belief, threatened action or proceeding affecting the Operator before any court,
governmental agency or arbitrator that could reasonably be expected to affect
materially and adversely the financial condition or operations of the Operator
or the ability of the Operator to perform its obligations hereunder, or which
purports to affect the legality, validity or enforceability of this Agreement
(as in effect on the date hereof).

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        6.13    Operator agrees that upon request of North Carolina Power and,
in the case of (ii) below at no cost to North Carolina Power, Operator shall
cause its counsel to issue an opinion to North Carolina Power affirming the
representations in Section 6.12 and setting forth such further matters as North
Carolina Power may reasonably request either (i) to comply with requests of
regulatory bodies having proper jurisdiction, or (ii) in connection with North
Carolina Power’s execution of consents or other documents related to the
financing of the Facility. North Carolina Power agrees that, upon request of
Operator and at Operator’s expense, North Carolina Power shall cause its counsel
to issue an opinion to Operator or its lender(s) addressing such matters as
Operator may reasonably request related to the financing of the Facility.

        6.14    Operator agrees that, upon request of North Carolina Power, it
shall deliver or cause to be delivered from time to time to North Carolina Power
certifications of its officers, accountants, engineers, or agents as to such
matters as North Carolina Power may reasonably request.

        6.15    Operator agrees to preserve and keep in force and effect its
partnership existence and all franchises, licenses and permits necessary to the
proper conduct of its business, including without limitation the business of
owning and operating the Facility.

        6.16    Operator shall keep proper books of record and account in which
full correct entries will be made of all dealings or transactions of or in
relation to its business and affairs, in accordance with generally accepted
accounting principles consistently applied. From time to time through the Term
of this Agreement, but no more frequently than annually, North Carolina Power,
at Operator’s cost, shall have the right to designate an independent public
accounting firm to conduct a review of the Operator’s auditor’s audit of the
books and records of Operator under a confidentiality agreement with Operator to
the limited extent necessary (i) to verify that they are being kept in
accordance with generally accepted accounting principles, and (i) to advise
North Carolina Power of the financial condition of Operator and that Operator is
not in default under any loan agreements or fuel supply agreements. Operator
shall make all pertinent records available at its office at Charlottesville,
Virginia during normal business hours.

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        6.17    Operator shall provide North Carolina Power access, at the
Facility, to any maintenance evaluations or reports it performs with respect to
the Facility or has performed by or obtains from any third party including those
with a financial security interest in or lien on the Facility. The Operator
shall use due diligence to obtain for itself, and maintain at the Facility for
North Carolina Power, copies of any evaluations or reports with respect to the
Facility generated at the request of such third parties or performed by an
engineer employed by any such third party.

        6.18   Operator will provide to North Carolina Power, on a Monthly
basis, a statement of the total quantity and total delivered cost of all fuel
consumed in the Facility.

ARTICLE 7: Control and Operation of the Facility; Dispatch

        7.1    Prior to the beginning of each operating day (such day to be
defined in the operating procedures developed pursuant to Section 4.5) Operator
shall inform the North Carolina Power operations center designated in the
interconnection study performed pursuant to Article 8 as to the daily operating
availability and expected maximum generation capability of its Facility,
including, without limitation, any anticipated Forced Outage.

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        7.2    Operator shall submit to North Carolina Power, in writing, by
September 1 of each Year, its planned Scheduled Outage periods for the next
Year. Operator may modify its Scheduled Outage periods by notifying North
Carolina Power of any such modifications at least ninety (90) Days (or less if
North Carolina Power agrees) in advance. Operator shall not plan Scheduled
Outages of its Facility during the Winter Demonstration Period or during the
Summer Demonstration Period of any Year that would decrease the Net Electrical
Output of the Facility below the Dependable Capacity level established by
testing pursuant to Article 11 without the prior written consent of North
Carolina Power. Operator agrees and understands that North Carolina Power shall
not be obligated to grant approval for such periods. Such Scheduled Outages
shall not exceed 30 equivalent Days (for example, 60 days at 50% capacity equals
30 equivalent Days) in each Year except that every 5 Years up to 42 equivalent
Days may be scheduled. North Carolina Power shall have the right to approve the
start date of any Scheduled Outage, such approval not to be conditioned or
unreasonably withheld or delayed, and, in any event, shall notify Operator of
such approval or disapproval no later than the October 31 next following the
submission by Operator of its planned Scheduled Outage periods for the next
Year. During Scheduled Outages, North Carolina Power shall not Dispatch the
Facility above Operator’s scheduled generation level without the prior approval
of the Operator. Such approval by Operator shall not be unreasonably withheld,
delayed or conditioned. In addition to Scheduled Outages, Operator is entitled
to an unlimited number of Maintenance Outages during any Year. Operator shall
provide North Carolina Power with forty-eight (48) hours advance notice, or such
lesser notice as is practicable under the circumstances, of the timing and
estimated duration of any Maintenance Outage. Each such notice shall identify,
to the extent then known by Operator, the equipment involved in such Maintenance
Outage and the capacity that will not be available for Dispatch. During any such
Maintenance Outage, Operator shall notify North Carolina Power promptly of any
material changes in the notice information previously provided to North Carolina
Power. The Parties shall work together in good faith to coordinate the start
date of any Maintenance Outage. If North Carolina Power reasonably requests
Operator to return all or part of that portion of the Facility that is affected
by a Maintenance Outage, as the case may be, to operational status, Operator
shall complete its maintenance and repair work as soon as reasonably practical.

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        7.3    North Carolina Power shall have the right, upon one (1) year
prior written notice, to revise the periods, not exceeding six (6) Months, in
the aggregate, during which Operator shall not, unless mutually agreed, perform
Scheduled Outages.

        7.4    Each Party shall keep complete and accurate records and all other
data required by each of them for the purposes of proper administration of this
Agreement (including, for so long as Operator is required to maintain QF status
under Section 4.1 hereof, information necessary to determine whether Operator
has complied with minimum PURPA QF efficiency requirements) in accordance with
the following guidelines:

  (a)   All such records shall be maintained for a minimum of five (5) years
after the creation of such record or data and for any additional length of time
required by regulatory agencies with jurisdiction over the Parties; provided,
however, that Operator shall not dispose of or destroy any such records even
after the five (5) years without thirty (30) Days prior notice to North Carolina
Power.

  (b)   Operator shall maintain an accurate and up-to-date operating log at the
Facility with records of: (i) real and reactive power production for each clock
hour; (ii) changes in operating status, Scheduled Outages, Maintenance Outages
and Forced Outages; and (iii) any unusual conditions found during operation or
inspections.

  (c)   Either Party shall have the right from time to time, upon fourteen (14)
Days written notice to the other Party, to examine the records and data of the
other Party required to be maintained under this Agreement any time during the
period the records are required to be maintained.

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  (d)   By the 5th of each Month, Operator shall provide North Carolina Power
with Facility performance and events data for the preceding Month in accordance
with current NBRC and Generating Availability Data Systems (GADS) reporting
standards.

  (e)   North Carolina Power shall have the right, for so long as Operator is
required to maintain QF status under Section 4.1 hereof, to audit the Facility’s
performance to determine if Operator is complying with Operator’s QF
certification.

        7.5    North Carolina Power shall have the right to Dispatch the
Facility in accordance with its Design Limits subject to the following notice
provisions:

  (a)   Not used.

  (b)   North Carolina Power will provide Operator with thirty (30) minutes
notice (in addition to ramp rate times) of changes in operating levels to be
achieved by the Facility when the Facility is operating between the Minimum
Operating Level and 23 MW.

  (c)   When North Carolina Power Dispatches the Facility off-line, North
Carolina Power will provide Operator with an estimate, to the nearest hour, of
when the Facility will be required back on-line. In the event North Carolina
Power requires the Facility be back on-line earlier than such estimated time,
Operator may require, as reasonably necessary, North Carolina Power to provide
up to an additional six (6) hour notice in excess of the periods of time set
forth in Section 1.8 of this Agreement.

Operator agrees to comply with the notices received from North Carolina Power
pursuant to (b) and (c) above.

        7.6    In addition to North Carolina Power’s rights under Section 7.5
above, North Carolina Power shall have the right to Dispatch the Facility
outside its Design Limits but within Prudent Utility Practices, Prudent
Electrical Practices, permit requirements, and its technical capabilities when:

  (a)   In North Carolina Power’s sole opinion, a condition exists which
presents a physical threat to any persons or property; or

  (b)   It is necessary to construct, install, maintain, repair, replace,
remove, investigate, inspect or test any part of the Facility or the
Interconnection Facilities, or any other affected part of North Carolina Power’s
system.

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North Carolina Power will make a reasonable effort to notify and coordinate with
Operator concerning such Dispatch. With respect to Section 7.6(b) above, North
Carolina Power shall provide Operator with at least forty-eight (48) hours prior
notice except in the event of an Emergency. Any change in Facility output
required of Operator hereunder shall be implemented and completed as soon as
possible consistent with Prudent Utility Practices.

        7.7    Operator shall employ qualified personnel for operating and
monitoring the Facility and for maintaining communications between the Facility
and North Carolina Power and shall ensure that such personnel are on duty at all
times, twenty-four (24) hours a Day and seven (7) Days a week. During Scheduled
Outages, Maintenance Outages, Forced Outages or any event of Force Majeure,
Operator shall only be required to ensure that personnel are on duty to respond
to North Carolina Power requests.

        7.8    The Parties recognize that North Carolina Power is a member of
NERC and that, to ensure continuous and reliable electric service, North
Carolina Power operates its system in accordance with the operating criteria and
guidelines of NERC. If an Emergency is declared, North Carolina Power’s
operations center will notify Operator’s personnel and, if requested by North
Carolina Power, Operator’s personnel shall place the Net Electrical Output
within the exclusive (albeit indirect) control of North Carolina Power’s
division or system operations center for the duration of such Emergency. Without
limiting the generality of the foregoing, during an Emergency North Carolina
Power’s operations center may require Operator’s personnel to raise or lower the
Net Electrical Output generated by the Facility to maintain safe and reliable
load levels and voltages on North Carolina Power’s transmission and/or
distribution system; provided, however, any changes in the level of the Net
Electrical Output required of Operator hereunder shall be implemented in a
manner consistent with safe operating procedures and within the Facility’s
technical capabilities.

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        7.9    Operator shall cooperate with North Carolina Power in
establishing Emergency plans, including without limitation, recovery from a
local or widespread electrical blackout; voltage reduction in order to effect
load curtailment; and other plans which may arise. The Operator shall make
technical references available concerning start-up times, black-start
capabilities (if applicable) and minimum load-carrying ability.

        7.10    Operator shall, during an Emergency, supply such power as the
Facility is able to generate within its capability and North Carolina Power is
able to receive. If Operator has a Scheduled Outage, and such Scheduled Outage
occurs or would occur coincident with an Emergency, Operator shall make all good
faith efforts, consistent with Prudent Utility Practices, to reschedule the
outage or, if the outage has begun, to expedite the completion thereof.

        7.11    Operator shall operate the Facility with its speed governors and
voltage regulators in-service whenever the Facility is connected to or operated
in parallel with the North Carolina Power system.

        7.12    Operator may request North Carolina Power to Dispatch the
Facility during a Scheduled Outage period. Operator must make such request at
least twenty-four hours prior to the commencement of such requested Dispatch.
North Carolina Power shall, consistent with Prudent Utility Practices, Dispatch
the Facility during Scheduled Outage periods in accordance with Operator’s
request.

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ARTICLE 8: Interconnection

        8.1    Operator shall be responsible for the design, construction,
installation, maintenance and ownership of the Facility.

        8.2    If it is determined in the interconnection study performed by
North Carolina Power pursuant to Section 8.5 that the North Carolina Power owned
metering facilities (which may include current and potential transformers and
telemetering equipment) should be installed on Operator’s property then: (i)
North Carolina Power shall provide the Operator with the metering equipment,
(ii) Operator shall be required to install such metering equipment and (iii)
such installation shall be done as prescribed by North Carolina Power.

        8.3    North Carolina Power shall be responsible for the design,
construction, installation, maintenance and ownership of the Interconnection
Facilities at no cost to Operator.

        8.4    Operator has provided to North Carolina Power the data required
in Exhibit A attached hereto.

        8.5    North Carolina Power performed an interconnection study within
one hundred and twenty (120) Days of Operator’s completion of the requirements
of Section 8.4 above. The interconnection study (i) determined the
Interconnection Point and (ii) designated the North Carolina Power operations
center that coordinates the operation of the Facility.

        8.6    Operator granted, on or prior to Financial Closing, to North
Carolina Power all reasonably necessary rights of way and easements. Within
thirty (30) Days of receipt of the interconnection study, Operator provided a
site plan drawing showing the Facility’s grid system tied to the site property
lines and switchyard for the purpose of the transmission line survey. Operator
executed the documents that North Carolina Power required to record such rights
of way and easements. Consideration for such grants, deeds or documents was the
execution of the first Amendment and Restatement, and no other consideration
shall be required. Operator agrees that such rights of way and easements shall
survive termination or expiration of this Agreement.

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        8.7    North Carolina Power engineered and constructed the
Interconnection Facilities in accordance with the design determined in the
interconnection study performed pursuant to Section 8.5. North Carolina Power
completed the Interconnection Facilities by August 1, 1994.

        8.8    Not used.

        8.9    North Carolina Power reserves the right to modify or expand its
requirements for protective devices as reasonably necessary to conform with
Prudent Electrical Practices and to ensure safe uninterrupted operation of its
electrical system.

        8.10    Each Party shall notify the other in advance of any changes to
its system that will affect the proper coordination of protective devices on the
two systems.

ARTICLE 9: Metering

        9.1    North Carolina Power shall own and maintain all meters and
metering devices (including remote terminal units) used to measure, for payment
purposes, the delivery to North Carolina Power of the Facility’s Net Electrical
Output and Dependable Capacity. Nothing in this Agreement shall prevent
Operator, solely for Operator’s purposes, from installing Operator-owned and
maintained meters and metering devices in addition to North Carolina Power-owned
and maintained meters and metering devices.

        9.2    All North Carolina Power-owned meters and metering equipment used
to determine the Net Electrical Output and Dependable Capacity delivered to
North Carolina Power shall be sealed, and the seals opened only by North
Carolina Power personnel when the metors are to be inspected, tested, or
adjusted; North Carolina Power shall give Operator prior written notice of each
such opening of the seals, and Operator shall have the right to be present.
North Carolina Power will test the meter(s) in accordance with the provisions
for meter testing set forth in North Carolina Power’s approved “Terms and
Conditions for Supplying Electricity” as filed with the NCUC at the time the
test is performed.

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        9.3    Operator shall provide at its expense:

  (a)   For the purpose of telemetering, a telecommunication circuit to the
operations center designated by North Carolina Power;

  (b)   A voice telephone extension for the purpose of accessing North Carolina
Power’s dial-up metering equipment and for communicating with. the designated
North Carolina Power operations center;

  (c)   An extension of North Carolina Power’s system operations center’s PBX
system in the control room of the Facility;

  (d)   Equipment to transmit and receive telecopies for purposes of generation
scheduling, Dispatch orders and coordination of switching.

Each of the items provided by Operator in accordance with this Section 9.3 shall
be subject to the approval of North Carolina Power, which approval shall not be
unreasonably withheld.

        9.4    On a regular schedule and, in addition, upon two (2) weeks prior
written notice to Operator, North Carolina Power will test the meter(s) in
accordance with the provisions for meter testing in North Carolina Power’s
approved Terms and Conditions for Supplying Electricity as filed with the NCUC
at the time the test is performed. In addition, Operator may request North
Carolina Power to perform tests of North Carolina Power’s meters, and Operator
shall pay for the costs associated with such additional requested tests. North
Carolina Power shall perform such requested tests of its meters within a
reasonable period of time from receipt of notice of such request from Operator.
Operator may have a representative present during any metoring inspection, test,
or adjustment. When, as a result of such a test, a metor is found to be no more
than two (2) percent fast or slow because of incorrect calibration or tampering,
no adjustment will be made in the amount paid to Operator for energy, or energy
and Dependable Capacity, delivered to North Carolina Power. However, within
three Business Days of such meter test, the meter shall be recalibrated to
within industry standards for such meter to remove the fast or slow meter
reading. If the meter is found to be more than two (2) percent fast or slow,
North Carolina Power will calculate the correct amount delivered to North
Carolina Power for the actual period during which inaccurate measurements were
made or, if the actual period cannot be determined to the mutual satisfaction of
the Parties, for a period equal to one-half of the time elapsed since the most
recent test. The previous payments by North Carolina Power for this period shall
be subtracted from the amount of payments that are calculated to have been owed
under this Agreement. The difference shall be offset against or added to the
next payment to either Party as appropriate under this or other agreements
between the Parties. The percentage registration of a meter will be calculated
by the “weighted average” of light load and full load, which is calculated by
giving a value of one (1) to the light load and a value of four (4) to the full
load.

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        9.5    Whenever it is found that, for any reason other than incorrect
calibration or tampering, the metering apparatus has not registered the true
amount of electricity which has been delivered by Operator to North Carolina
Power, the electricity delivered during the entire period of incorrect
registration shall be estimated using alternative metering if available, and the
amount of electricity so estimated will be used in calculating the corrected
amounts to be paid to Operator. The adjusted amount will be for the actual
period during which inaccurate measurements were made or, if the actual period
cannot be determined to the mutual satisfaction of the Parties, for a period
equal to one-half of the time elapsed since the most recent test of the metoring
apparatus. Any overpayments or underpayments by North Carolina Power for energy,
or energy and capacity, delivered by Operator to North Carolina Power shall be
corrected in the manner described in Section 9.4.

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ARTICLE 10: Compensation, Payment, and Billings

        10.1    Operator shall be compensated for Net Electrical Output of the
Facility on a cents per kWh basis at a rate equal to the Energy Purchase Price.
For the purpose of payment to Operator for Net Electrical Output, the Net
Electrical Output shall be reduced by 2.25% to compensate North Carolina Power
for line losses. The Energy Purchase Price is a function of the fuel
compensation price, the heat rate, and the O&M Price. Accordingly, the Energy
Purchase Price for the integrated hourly Net Electrical Output = FH + V where
(i) F = fuel compensation price (as set forth in Section 10.2), (ii) H = heat
rate (as set forth in this Section 10.1), and (iii) V = O&M Price (as set forth
in Section 10.6). The Facility’s heat rate is 16,000 Btus/kWh and shall remain
fixed for the Term.

        10.2    The base fuel compensation price, effective October 1, 2000 for
Net Electrical Output received from the Facility is 0.177 ¢/million Btus. The
base fuel compensation price shall be subject to adjustment only as specified
herein.

        10.3   For the purpose of this Agreement, the following terms, whether
in the singular or in the plural, shall have the meaning stated below:

  (a)   Base Index — The Gross Domestic Product Implicit Price Deflator (GDPIPD)
for the 2nd Quarter of 2000 as first published by the US Department of Commerce
equal to 106.8, where 1996 equals 100.0.

  (b)   Reference Index — The GDPIPD Index first published for the 2nd Quarter
prior to the Quarter for which the filet compensation price is being determined.
The Reference Index shall be abbreviated as GDPIPD (q-2,y) where q is a Quarter
and y is a year.

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Should the index specified herein be discontinued, an index specified by the
appropriate government agency as the replacement index, if any, shall be used.
If no replacement index is specified, a new index which most accurately reflects
changes for the applicable cost component shall be substituted by agreement of
the Parties. If the basis of the calculation of the index specified herein is
substantially modified, the index as modified will continue to be used unless
another index is substituted by mutual agreement of the Parties. A change in the
base year reporting basis, minor changes in weighting, and minor changes in
benchmarks shall not be construed as substantial modification to the index, and
the affected values shall be re-established in accordance with the instructions
issued by the appropriate government agency.

        10.4    At least two (2) weeks prior to the beginning of each Quarter
the fuel compensation price (FCP) that will be effective during that subsequent
Quarter shall be calculated as follows:

FCP = 0.177¢/million Btu   X    Reference Index GDPIPD (q-2,y)
                        106.8

Thus, if the fuel compensation price were being determined for the first Quarter
of 2001, the numerator of the above equation would be GDPIPD (3,2000).

        10.5    Operator may nominate a revised fuel compensation price. This
revised fuel compensation price will be used for purpose of payment and
Dispatch. This revised fuel compensation price will be effective until the
Operator notifies North Carolina Power in writing that the revised fuel
compensation price is no longer to be used for purposes of payment and Dispatch,
except however, that such revised fuel compensation price shall be effective for
at least one (1) week. The revised fuel compensation price must be submitted to
and received by North Carolina Power in writing prior to the close of business
at 5:00 PM on the Monday before the effective date. The effective date will
always be on a Friday in order to be consistent with North Carolina Power’s
normal system operating schedule. The revised fuel compensation price shall not
exceed the Energy Purchase Price calculated in accordance with this Article 10.

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        10.6    North Carolina Power shall pay Operator, on a per kWh basis, the
O&M Price. This O&M Price shall be 0.187 cents/kWh fixed as of April 1, 1989,
and shall be increased or decreased, as appropriate, on April 1, 1990 and on
each April 1 thereafter by the percent change in the GDPIPD for the previous
Year.

        10.7    Subject to Sections 5.3(a)16, 5.3(a)17, 5.3(a)18, 5.3(b)(i), and
14.4, the Operator shall be paid for Dependable Capacity as follows:

  (a)   For payment purposes only, the payments for Dependable Capacity shall be
reduced by 2.25% to compensate North Carolina Power for line losses.

  (b)   Commencing on the Commercial Operations Date and, continuing until the
fifteen (15) anniversary of the Commercial Operations Date, the Capacity
Purchase Price shall be 4.909¢/kWh fixed for such fifteen (15) year period, plus
0.879¢/kWh in 1989 dollars increased or decreased as appropriate on April 1,
1990, and each April 1 thereafter through the period ending on the fifteenth
anniversary of the Commercial Operations Date, by the percent change in the
GDPIPD for the previous Year. Commencing on the fifteenth anniversary of the
Commercial Operations’ Date and continuing for the remaining Term, the Capacity
Purchase Price shall be 3.053¢/kWh fixed for such remaining Term, plus
0.879¢/kWh in 1989 dollars, increased or decreased as appropriate on April 1,
1990, and each April 1 thereafter for the Term, by the percent change in the
GDPIPD for the previous Year.

  (c)   During those hours the Facility’s Net Electrical Output meets or exceeds
the Dispatch level and the Dispatch level is equal to the Dependable Capacity
level, Operator shall be paid the Capacity Purchase Price times the
kilowatt-hours equal to the kilowatt-hours generated at the Dispatch level. (see
examples Exhibit B)

  (d)   During those hours the Facility’s Net Electrical Output meets or exceeds
the Dispatch level and the Dispatch level is less than the Dependable Capacity
level, Operator shall be paid the Capacity Purchase Price times (i) the
kilowatt-hours of Net Electrical Output equal to the kilowatt-hours generated at
the Dispatch level, plus (ii) the kilowatt-hours that are the difference between
the kilowatt-hours possible at the Dependable Capacity level and the
kilowatt-hours possible at the Dispatch level. (sec examples Exhibit B)

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  (e)   During those hours that are Scheduled Outage hours, Operator shall be
paid the Capacity Purchase Price times the kilowatt-hours equivalent to the
Dependable Capacity times the number of hours in the Scheduled Outage. (see
examples Exhibit B) During those hours that are Maintenance Outage hours,
Operator shall be paid the Capacity Purchase Price times the kilowatt-hours
equivalent to the Dependable Capacity times the number of hours in the
Maintenance Outage, but only to the extent that the Maintenance Outage hours,
when added to Scheduled Outage hours, do not, in the aggregate, exceed (i) 30
equivalent Days (for example, 60 days at 50% capacity equals 30 equivalent Days)
in each Year or (ii) 42 equivalent Days every 5 Years.

  (f)   During those hours the Facility’s Net Electrical Output fails to meet
the Dispatch level and the Dispatch level equals the Dependable Capacity level,
Operator will be paid the Capacity Purchase Price times (i) the kilowatt-hours
of Net Electrical Output, plus (ii) if available pursuant to Section 103(h),
sufficient accumulated kilowatt-hours not to exceed 5% of the kilowatt-hours
that could have been generated at the Dispatch level. In no case shall the sum
of kilowatt-hours in 10.7(f)(i) and 10.7(f)(ii) equal more than the
kilowatt-hours that could have been generated at the Dispatch level. (see
example Exhibit B)

  (g)   During those hours the Facility’s Net Electrical Output fails to meet
the Dispatch level and the Dispatch level is less than the Dependable Capacity
level, Operator will be paid the Capacity Purchase Price times (i) the
kilowatt-hours of Net Electrical Output, plus (ii) the kilowatt-hours that are
the difference between the kilowatt-hours possible at the Dependable Capacity
level and the kilowatt-hours possible at the Dispatch level, plus (iii) if
available pursuant to Section 10.7(h), accumulated kilowatt-hours not to exceed
5% of the kilowatt-hours that could have been generated at the Dispatch level.
In no case shall the sum of kilowatt-hours in 10.7(g)(i) and 10.7(g)(iii) equal
more than the kilowatt-hours that could have been generated at the Dispatch
level. (see example Exhibit B)

  (h)   For the purpose of offsetting lost kilowatt-hours pursuant to Section
10.7(f) and 10.7(g), the Facility, when operating in excess of the Dispatch
level during the billing period, will be allowed to accumulate those excess
kilowatt-hours generated during a billing period equal to an amount not to
exceed 5% of the kilowatt-hours generated at the Dispatch level during such
excess generation period(s). Kilowatt-hours generated in excess of 5% of those
kilowatt-hours generated at the Dispatch level will not be considered when
determining payments for Dependable Capacity. Accumulated kilowatt-hours can
only be applied in the billing period during which their generation occurred.
Unused accumulated kilowatt-hours in any billing period shall not be used in any
other billing period. (see example Exhibit B).

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  (i)   Not used.

  (j)   If, as a result of any Summer Demonstration Period or Winter
Demonstration Period testing done pursuant to Article 11, the Facility’s
Dependable Capacity is set at a level less than 90% of the Facility’s
immediately preceding Summer Period or Winter Period Dependable Capacity,
respectively, as determined by testing pursuant to Sections 11.5 and 11.6, then
Operator shall pay to North Carolina Power within thirty (30) Days of the test
an amount equal to $40.00 per kW, (in 1989 dollars as escalated by the GDPIPD on
April 1, 1990, and on each succeeding April 1), for the difference between 90%
of the immediately preceding Summer Period or Winter Period Dependable Capacity
and the Dependable Capacity determined for the current Summer Period or Winter
Period, respectively, pursuant to such testing as liquidated damages for the
detrimental impact of such lower Dependable Capacity on North Carolina Power’s
generation planning. In no event shall Operator be required to pay liquidated
damages under this Section 10.7(j) more than once during each Summer
Demonstration Period or Winter Demonstration Period.

        10.8    Operator shall pay North Carolina Power an amount reflecting all
reasonable costs incurred by North Carolina Power for meter reading and billing.
The monthly meter reading and billing charge per meter shall equal the bask
customer charge in the Rate Schedule under which the Operator purchases
electricity from North Carolina Power in effect at the time the meter is read.

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        10.9    Meters shall be read, and bills rendered, according to the meter
reading and billing schedule established by North Carolina Power, except that
not more than forty-five (45) Days shall pass between readings. Such schedule
normally results in twelve (12) readings per Year. Payment to Operator by North
Carolina Power for the Net Electrical Output, or for the Net Electrical Output
and Dependable Capacity, delivered to North Carolina Power during the billing
period shall be made on the third (3rd) Business Day of the second (2nd) Month
after the Month that such Net Electrical Output, or such Net Electrical Output
and Dependable Capacity, are delivered; provided that, if such third (3rd)
Business Day is a holiday for North Carolina Power, payment will be made on the
next Business Day. Interest shall accrue, at the Interest Rate, on any
outstanding payments due Operator commencing on the Day after such payments are
required to be made as aforesaid. Any amounts due North Carolina Power
attributed to purchases of electricity and related services from North Carolina
Power by Operator shall be paid to North Carolina Power within twenty-eight (28)
Days of the meter reading date; provided, however, that, at North Carolina
Power’s sole discretion, North Carolina Power may offset any amounts due North
Carolina Power by Operator against the amounts due Operator hereunder, and, in
such event, the net result shall be paid to the appropriate party by the date
specified in the third (3rd) sentence of this Section 10.9. Interest shall
accrue, at the Interest Rate, on any outstanding payments due North Carolina
Power commencing on the twenty-ninth (29th) Day after the meter reading date. In
the event that either Party should dispute any portion of the amount shown on
any statement rendered by the other Party for amounts due and payable hereunder,
such Party, nevertheless, shall pay the amount shown on the statement. Any
amount that is disputed in good faith and is thereafter determined not to have
been due and payable by the disputing Party, together with interest, at the.
Interest Rate, on such amount from the date such payment was originally paid,
shall be due and payable to the disputing Party within ten (10) Days of final
resolution of such dispute by written agreement of the Parties or final judgment
of a court of competent jurisdiction. Operator agrees that its purchase of
electricity from North Carolina Power will be on a rate schedule approved by the
NCUC, that such schedule may change from time to time and that the terms and
conditions of such changed schedule will supersede any provisions herein that
are in conflict. Payment to North Carolina Power shall be made by check to the
following address:

  North Carolina Power
P.O. Box 26019
Richmond, Virginia 23260-6019

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Payment to Operator shall be made by wire transfer to the following account:

  Bank of New York
ABA 021000018
Credit CSFB — Westmoreland LG&E ROVA I & II
Account Number 8900410639
For further credit to Westmoreland-LG&E Roanoke Valley I & II Project Control
Acct
Account Number 331309-02

Either Party may, by written notice to the other, change the address to which
such payments are to be sent.

        10.10    The Parties agree that North Carolina Power will be
substantially damaged in amounts that will be difficult or impossible to:
determine if the Facility cannot maintain the Dependable Capacity of at least
ninety (90) percent of the immediately preceding Summer Period or Winter Period
Dependable Capacity level established by testing as determined pursuant to
Section 11.6.

Therefore, the Parties have agreed on sums, as set forth in Section 10.7(j),
which the Parties agree are reasonable as liquidated doges for such occurrences.
It is further understood and agreed that the payment of the liquidated damages
is in lieu of any and all actual damages for such occurrences which would
otherwise be owing to North Carolina Power and that such liquidated damages, if
paid, shall be North Carolina Power’s sole and exclusive remedy for such
occurrences. Operator hereby waives any defense as to the validity of any
liquidated damages stated in this Agreement as they may appear on the grounds
that such liquidated damages are void as penalties.

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ARTICLE 11: Testing and Capacity Ratings

        11.1    Operator’s original Estimated Dependable Capacity is 40 MW for
the Summer Period and 41 MW for the Winter Period.

        11.2    All testing for the determination of Dependable Capacity shall
be in accordance with the following criteria:

  (a)   Testing shall last for six (6) hours during a Winter Period test and
twelve (12) hours during a Summer Period test from the time set forth in the
notice provided by North Carolina Power pursuant to the notice provision of
Section 11.2(c).

  (b)   Normal station use and operation of (i) unit auxiliaries (including
without limitation spray modules and cooling towers required by regulatory or
governmental authority) using steam or electricity produced at the Facility; and
(ii) auxiliary equipment that produces steam or electricity is required during
tests for Dependable Capacity; provided that the use and operation of auxiliary
steam-producing equipment shall not be required during any such tests from and
after the date as of which Operator relinquishes the Facility’s QF status as
permitted pursuant to Section 4.1 hereof.

  (c)   North Carolina Power shall provide notice to Operator of the date and
time of all tests. Such notice shall be provided to Operator no earlier than
forty-eight (48) hours in advance of the date and time of the test and no later
than necessary to allow the Facility, pursuant to the Design Limits, to reach
the appropriate Summer Period or Winter Period Estimated Dependable Capacity for
the appropriate Summer Period or Winter Period. Tests shall be initiated within
fourteen days after the start of the appropriate Summer Demonstration Period or
Winter Demonstration Period.

  (d)   During all tests, Operator may operate the Facility at any level
consistent with Prudent Utility Practices, Prudent Electrical Practices, all
licenses and permits, and technical limits of the Facility’s equipment.

  (e)   The lowest half-hour integrated kW demand reading from North Carolina
Power-owned meters during any such test shall equal the tested level (the
“Tested Level”).

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  (f)   North Carolina Power shall not schedule a test for Dependable Capacity
to be conducted during a Scheduled Outage or, if Operator notifies North
Carolina Power of a Maintenance Outage before North Carolina Power notifies
Operator of a proposed test, during such Maintenance Outage, In addition, if
Operator has notified North Carolina Power prior to North Carolina Power’s
notice of commencement of a test that the Facility is experiencing a Forced
Outage, then North Carolina Power shall not schedule a test for Dependable
Capacity to be conducted during that Forced Outage. Notwithstanding the
immediately preceding sentence, if a Forced Outage occurs any time after North
Carolina Power has given notice of a test or during a test, then the test will
be completed in its entirety and the results of that test will be used in the
determination of Dependable Capacity in accordance with this Article 11. If
during the last allowed test under any Section in this Article XI, the test is
interrupted or affected by an event of Force Majeure, Operator shall be entitled
to one additional test for Dependable Capacity.

        11.3    Testing was performed to establish the Initial Dependable
Capacity for the Summer Period in which the Commercial Operations Date occurred,
and the Initial Dependable Capacity for such Summer Period was established at
44.0 MW.

        11.4    Testing was performed to establish the Initial Dependable
Capacity for the Winter Period which followed the Summer Period in which the
Commercial Operations Date occurred, and the Initial Dependable Capacity for
such Winter Period was established at 45.1 MW.

        11.5    Testing to determine the Dependable Capacity for each Summer
Period and Winter Period after the Summer Period or Winter Period in which the
Initial Dependable Capacity was determined shall be as follows:

  (a)   At least fourteen Days prior to the beginning of each Summer Period or
Winter Period, Operator may notify North Carolina Power of the level of
generation (“Projected Dependable Capacity”) at which North Carolina Power may
Dispatch the Facility during the period before Operator sets the Dependable
Capacity. Such Projected Dependable Capacity shall not exceed 110% of the
Estimated Dependable Capacity for the appropriate Summer Period or Winter
Period.

  (b)   If Operator fails to notify North Carolina Power of a Projected
Dependable Capacity, the Dependable Capacity shall be the same level as the
previous appropriate Summer Period or Winter Period, up to which North Carolina
Power may Dispatch the Facility.

  (c)   Commencing with the start of each Summer Period or Winter Period for
which Operator has notified North Carolina Power of a Projected Dependable
Capacity, North Carolina Power may Dispatch the Facility up to the Projected
Dependable Capacity and shall pay Operator for capacity at the Projected
Dependable Capacity level.

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  (d)   Whether or not Operator sets a Projected Dependable Capacity, North
Carolina Power may require a test for Dependable Capacity and, if so, must do so
within the first fourteen (14) Days of the appropriate Summer Demonstration
Period or Winter Demonstration Period.

  (e)   North Carolina Power shall provide notice to Operator of the date and
time of the test in accordance with Section 11.2(c) and shall monitor such test.

  (f)   Within three (3) Business Days after the completion of the test, North
Carolina Power shall provide Operator the results of the test.

  (g)   Within three (3) Business Days after receipt of the test results,
Operator shall notify North Carolina Power whether or not Operator accepts or
rejects the test.

  (h)   If Operator accepts the test, Operator shall stipulate in the notice
pursuant to 11.5(g) the level at which the Dependable Capacity is set, and such
level shall not exceed the lesser of (i) 110% of the Estimated Dependable
Capacity for the appropriate Summer Period or Winter Period or (ii) the
appropriate Tested Level.

  (i)   If Operator rejects the test, fails to accept the test, or fails to set
the Dependable Capacity level in accordance with Section 11.5(h), the test is
null and void. Operator may, within five Business Days from receipt of test
results, request one additional test. Such test shall be conducted within
fourteen Days of notice requesting such test, and such test shall be conducted
pursuant to the procedures established in Sections 11.5(a) through 11.5(h). No
additional Operator requested tests will be allowed in any Summer Period or
Winter Period other than the test allowed in this Section 11.5(g) or pursuant to
Section 11.2(f).

  (j)   If, after testing, Operator sets the Dependable Capacity equal to or
less than the Projected Dependable Capacity, payments for Dependable Capacity
shall be decreased retroactive to the start of the appropriate Summer Period or
Winter Period.

  (k)   If, after testing, Operator sets the Dependable Capacity greater than
the Projected Dependable Capacity, payments for Dependable Capacity shall be
increased, effective the Day North Carolina Power receives such notice, to
reflect the new Dependable Capacity.

  (l)   If, after testing, Operator sets the Dependable Capacity equal to the
Projected Dependable Capacity, payments for Dependable Capacity continue and
will not be adjusted.

  (m)   If, after the completion of all testing for any Summer Period or Winter
Period, Operator fails to set the Dependable Capacity pursuant to this Section
11.5 or Section 11.6, the Dependable Capacity shall be the lessor of (i) the
Estimated Dependable Capacity for the appropriate Summer Period or Winter
Period, (ii) the appropriate Tested Level, or (iii) the Dependable Capacity
level of the previous corresponding Summer Period or Winter Period.

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        11.6    In addition to Operator requested tests, North Carolina Power
may require tests of the Dependable Capacity throughout the Term of this
Agreement as follows:

  (a)   Once per Summer Demonstration Period and Winter Demonstration Period at
North Carolina Power’s sole discretion, and

  (b)   At any time Operator fails two (2) consecutive times to either achieve
or maintain the operating level of the Facility within 15% of the Dispatch level
prescribed by North Carolina Power.

For tests pursuant to Sections 11.6(a) and 11.6(b), Operator may, at its sole
discretion, request one additional test within five (5) Days of the North
Carolina Power required test if Operator is not satisfied with the results of
the North Carolina Power required test. Upon completion of such test, Operator
shall set the Dependable Capacity at any level up to the tested capacity, except
that the Operator may not set the Dependable Capacity at any level, in excess of
one hundred and ten (110) percent of the Estimated Dependable Capacity as
specified in Section 11.1. Payments for Dependable Capacity shall be adjusted
accordingly, effective the day after any such testing is performed pursuant to
this Section 11.6.

ARTICLE 12: Insurance

        12.1    Operator shall obtain and maintain the following policies of
insurance from and after the Effective Date and throughout the Term of this
Agreement:

  (a)   Worker’s Compensation insurance which complies with the laws of the
Commonwealth of Virginia, or any other applicable jurisdiction and Employers'
Liability Insurance with limits of at least $1,000,000; and

  (b)   Comprehensive or Commercial General Liability insurance with bodily
Injury and property damage combined single limits of at least $5,000,000 per
occurrence. Such Insurance shall Include, but not necessarily be limited to,
specific coverage for contractual liability encompassing the indemnification
provisions in Article 13, broad form property damage liability, personal injury
liability, explosion and collapse hazard coverage, products/completed operations
liability, and, where applicable, watercraft protection and indemnity liability;
and

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  (c)   Comprehensive Automobile Liability insurance with bodily injury and
property damage combined single limits of at least $5,000,000 per occurrence
covering vehicles owned, hired or non-owned; and

  (d)   Excess Umbrella Liability Insurance with a single limit of at least
$5,000,000 per occurrence in excess of the limits of insurance provided in
subparagraphs (a), (b), and (c) above.

  (e)   Such other insurance (as to risks covered, policy amounts, policy
provisions or otherwise) as, in accordance with Prudent Utility Practices, are
from time to time insured against for property and facilities similar in nature,
use and location to the Facility to the extent the same is obtainable at
commercially reasonable rates.

        12.2    The amounts of insurance required in Section 12.1 above may be
satisfied by the Operator purchasing primary coverage in the amounts specified
or by buying a separate excess Umbrella Liability policy together with lower
limit primary underlying coverage. The structure of the coverage is the
Operator’s option, so long as the total amount of insurance meets North Carolina
Power’s requirements.

        12.3    The coverage requested in Section 12.1(b) above and any Umbrella
or Excess coverage should be “occurrence”form policies. In the event Operator
has “claims-made” form coverage, Operator must obtain prior approval of all
“claims-made” policies from North Carolina Power.

        12.4    Operator shall cause its insurers to amend its Comprehensive or
Commercial General Liability and, if applicable, Umbrella or Excess Liability
policies with the following endorsement items (a) through (e); and to amend
Operator’s Workers’ Compensation and Auto Liability policies with endorsement
item (e):

  (a)   North Carolina Power, its directors, officers, and employees are
additional insureds under this Policy as to liability arising out of operations
of Operator; and

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  (b)   This insurance is primary with respect to the interest of North Carolina
Power, its directors, officers, and employees and any other insurance maintained
by them is excess and not contributory with this insurance; and

  (c)   The following Cross Liability clause is made a part of the policy:
Except with respect to limits of insurance, and any rights or duties
specifically assigned in this coverage part to the first Named Insured, this
insurance applies (i) as if each Named Insured were the only Named Insured and
(ii) separately to each insured against whom claim is made or suit is brought;
and

  (d)   Insurer hereby waives all rights of subrogation against North Carolina
Power, its officers, directors and employees; and

  (e)   Notwithstanding any provision of the policy, this policy may not be
canceled, non-renewed, or materially changed by the insurer without giving
thirty (30) Days prior written notice to North Carolina Power, provided,
however, that such notice may be ten (10) Days in the event of nonpayment of
premiums. All other terms and conditions of the policy remain unchanged.

        12.5    Operator shall cause its insurers or agents to provide North
Carolina Power with certificates of insurance evidencing the policies and
endorsements listed above. Failure of North Carolina Power to obtain
certificates of insurance does not relieve Operator of the insurance
requirements set forth herein. Failure to obtain the insurance coverage required
by this Article 12 shall in no way relieve or limit Operator’s obligations and
liabilities under other provisions of this Agreement.

ARTICLE 13: Liability, Noncompliance and Guarantees

        13.1    Neither Party shall hold the other Party (including its
corporate affiliates, parent, subsidiaries, directors, officers, employees and
agents) liable for any claims, losses, costs and expenses of any kind or
character (including, without limitation, loss of earnings and attorneys’fees)
for damage to property of North Carolina Power or Operator in any way occurring
incident to, arising out of, or in connection with a Party’s performance or
non-performance under this Agreement, except as provided in Section 13.2 below.

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        13.2    Operator and North Carolina Power agree to indemnify and hold
each other harmless from and against all claims, demands, losses, liabilities
and expenses (including reasonable attorneys’ fees) for personal injury, bodily
injury, or death to persons and damage to each other’s property or facilities or
the property of any other person, entity, or corporation to the extent arising
out of, resulting from or caused by their negligence, gross negligence, or
willful misconduct. This indemnity is in addition to the indemnity set forth in
Section 6.10 of this Agreement.

        13.3    Not used.

        13.4    Not used.

        13.5    Commencing with the Commercial Operations Date, Operator shall
provide and maintain, at Operator’s sole expense, security as described in
Section 13.6, in an amount equal to $1,476,000 ($36.00 per kW for the Estimated
Dependable Capacity for the Winter Period pursuant to Section 11.1). Such
security shall be maintained throughout the Term and may be used to offset any
amounts Operator may owe North Carolina Power.

        13.6    Security provided pursuant to Suction 13.5 above shall consist
of an unconditional and irrevocable direct pay letter of credit issued by a bank
acceptable to North Carolina Power and in a form and with substance acceptable
to North Carolina Power; provided, however, in lieu of such letter of credit and
upon the prior approval of North Carolina Power, which approval shall be in
North Carolina Power’s sole discretion, Operator may provide a power plant
performance insurance (if available on commercially reasonable terms) provided
in a form and by an insurer acceptable to North Carolina Power.

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        13.7

  (a)   North Carolina Power shall have an exclusive right to purchase any
Transfer Interest or Equity Interest (as hereinafter defined) on the terms and
conditions set forth herein; provided, however, Operator may grant the steam
buyer a right of first refusal to purchase any Transfer Interest, which right
shall be prior to North Carolina Power’s right of first refusal. Any such right
of first refusal granted to the steam buyer shall require the steam buyer to
continue operating the Facility in accordance with the provisions of this
Agreement.

  (b)   If Operator or anyone having an ownership interest in the Facility: (i)
ever desires to dispose of its right, title, or interest in the Facility, or any
part thereof; (ii) receives a bona fide offer to purchase or lease the Facility,
or any part thereof, which offer the recipient is prepared to accept
(hereinafter any such right, title, or interest referred to in (i) or (ii) above
shall be referred to as a “Transfer Interest”); or if anyone having an ownership
interest in the Operator, the partners in the Operator, or an entity formed for
the purpose of holding interests in the Facility or any of the aforementioned
entities ever desires to transfer or dispose of such interest (hereinafter any
such interests shall be referred to as an “Equity Interest”); or if a bona fide
offer for an Equity Interest is received, which offer the recipient is prepared
to accept, the entity owning the subject Transfer Interest or Equity Interest
shall give notice thereof in writing to North Carolina Power (the “Notice”). The
Notice shall (i) specify the terms under which Operator desires to transfer or
sell the Transfer Interest or Equity Interest, including the purchase price of
the Transfer Interest or Equity Interest, or (ii) include a copy of the
acceptable offer (including the acceptable terms and purchase price) received.
If the steam buyer has been granted a right of first refusal as set forth above,
the Operator shall offer the Transfer Interest to the steam buyer in accordance
with the terms of the steam buyer’s right of first refusal. Operator shall offer
such Transfer Interest, or Equity Interest, to North Carolina Power on the
terms, including price, set forth in the Notice. For a period of one hundred
twenty (120) Days after receipt by North Carolina Power of the Notice, or ninety
(90) Days after North Carolina Power receives notice from Operator that the
steam buyer has waived its right of first refusal, if applicable, whichever is
longer. North Carolina Power shall have the right to exercise its right of first
refusal with respect to the Transfer Interest or Equity Interest by giving
written notice thereof to Operator.

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  (c)   If North Carolina Power elects to exercise its right of first refusal
with respect to the Transfer Interest or Equity Interest, the Parties shall
endeavor to fully consummate the transfer of the Transfer Interest or Equity
Interest within one hundred twenty (120) Days after North Carolina Power
exercises its right of first refusal, unless (i) the failure to consummate the
transfer to North Carolina Power within such one hundred twenty (120) Day period
arises out of the failure of North Carolina Power to timely obtain the necessary
FERC, NCUC, or other utility related regulatory approvals with respect to such
consummation and (ii) commencing on the date of the Notice, North Carolina Power
shall have used reasonable efforts to obtain such approvals. In such case, such
one hundred twenty (120) Day period shall be extended for such time as is
necessary to obtain such approvals (but in no event longer than an additional
one hundred twenty (120) Days) unless all such approvals have been obtained
within such period, in which case North Carolina Power shall in any event have
sixty (60) Days from the date the last such approval was obtained to consummate
such transfer to North Carolina Power. If such consummation shall have not taken
place within the initial one hundred twenty (120) Day period provided in (c)
above, and such failure to consummate is not the result of North Carolina
Power’s failure to timely obtain the necessary approval noted above, North
Carolina Power shall pay Interest to Operator on the amount payable in respect
of such Transfer Interest or Equity Interest beginning on the first Day after
the conclusion of such initial one hundred twenty (120) Day period.

  (d)   In the event North Carolina Power elects not to exercise its right to
purchase pursuant to the foregoing provisions, then for a period of one year
from the later of the date (x) North Carolina Power notifies Operator of its
election not to purchase or (y) the expiration of the applicable time periods
provided in (c) above, Operator shall be free to transfer such Transfer Interest
to a Transferee, or to transfer such Equity Interest, provided that in either
case the transfer is at a price no lower than and on terms not materially more
favorable than those offered in the Notice. For the purpose of this Section 13.7
and Article 17 hereof, Transferee shall mean a person who is either an
experienced power plant operator, legally permitted to operate the Facility, or
who shall have engaged, for the Term, the services of another person who is an
experienced power plant operator legally permitted to operate the Facility and
who does not, as a result of any transfer pursuant to this Section 13.7, violate
North Carolina Power’s then publicly stated policy on Ownership Diversity of
Non-Company Generation (“Ownership Diversity Policy”). Operator shall ensure
that, by the terms of such transfer, North Carolina Power’s right of first
refusal shall continue on the terms and conditions contained herein with respect
to any subsequent transfer. Any transfer or sale of any Transfer Interest or
Equity Interest shall not extinguish North Carolina Power’s right of first
refusal with respect to any portion of the Facility, the Operator, the partners
in Operator, or an entity thrilled for the purpose of holding interests in the
Facility or any of the aforementioned entities, as the case may be, not
transferred pursuant to such sale. Any lease of any Transfer Interest shall not
extinguish North Carolina Power’s right of first refusal with respect to any
extensions of such lease or with respect to any other leases, sales or other
dispositions of any Transfer Interest. Notwithstanding any other provisions to
the contrary, Operator agrees (i) that it will ensure that the terms of any
transfer (other than a transfer to North Carolina Power) provide for the
continued operation of the Facility in accordance with and under the terms of
this Agreement; and (ii) any transfer (other than a transfer to North Carolina
Power) of any Transfer Interest or Equity Interest which results directly or
indirectly in a transfer of management control over the operation of the
Facility shall be to a Transferee and require the Transferee’s acceptance of an
assignment (pursuant to Section 17.1 of this Agreement) of the transferor’s
obligations under this Agreement with respect to the operation of the Facility.

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  (e)   Notwithstanding the foregoing; North Carolina Power shall not exercise
its right of first refusal, and the obligation of the second sentence of Section
I3.7(b) to provide the Notice to North Carolina Power shall not apply under the
following circumstances, provided that any such transfer or sale does not result
in a violation of the Ownership Diversity Policy:

    (i)   any sale to implement the sale and leaseback of the Facility, or any
assignment or pledge of an interest in the Facility or Operator, the partners in
Operator, or an entity formed for the purpose of holding interests in the
Facility or any of the aforementioned entities, which is undertaken for the
purpose of obtaining financing for the Facility prior to or within twelve (12)
months after the Commercial Operations Date.

    (ii)   any transfer of a Transfer Interest or Equity Interest whereby North
Carolina Power’s ownership would cause, or in the reasoned legal opinion of
Operator’s counsel is reasonably likely to cause the Facility to lose its status
as a “Qualifying Facility” under the Public Utility Regulatory Policies Act of
1978, as amended or result in any governmental or regulatory action to reduce
the amounts payable by North Carolina Power under this Agreement, provided,
however, that this subsection (ii) shall not apply to transfers of a Transfer
Interest or an Equity Interest comprising 100% of the interest in the Facility
or Operator, or all of the partners in Operator.

    (iii)   any transfer or sale of an Equity Interest to an entity which is,
directly or indirectly, controlled by, or in control of, or under common control
with the Operator or to a Transferee which is a partner in the Operator on or
before Financial Closing.

    (iv)   any transfer of a Transfer Interest or Equity Interest which (x) does
not result directly or indirectly in a transfer of management control over the
Facility, or (y) does not exceed any percent (50%) of the total ownership
interest in the Facility or Operator, the partners in Operator, or an entity
formed for the purpose of holding interests in the Facility or any of the
aforementioned entities or (z) does not, when combined with other transfers made
pursuant to this paragraph, exceed fifty percent (50%) of such total ownership
interests;

  (f)   The Operator covenants and agrees to sign, execute and deliver, or cause
to be signed, executed and delivered, and to do or make, or cause to be done or
made, upon the written request of North Carolina Power, any and all agreements,
instruments, papers deeds, acts or things, supplemental, confirmatory or
otherwise, as may be required by North Carolina Power for the purpose of or in
connection with the right of first refusal established hereby.

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        13.8    Neither Party shall be liable to the other Party for indirect,
incidental, or consequential damages arising out of the performance or
non-performance of its obligations under this Agreement, regardless of whether
such liability arises out of claims based on contract, tort (including
negligence), strict liability, operation of law or otherwise. Notwithstanding
the above waiver of indirect, incidental or consequential damages, each Party to
this Agreement shall be liable for obligations (i) to pay direct damages
including, but not limited to, liquidated damages to the other Party as
expressly set forth in this Agreement and (ii) to indemnify the other Party
against those liabilities to third parties that are imposed by the first
sentence of Section 13.2 of this Agreement.

ARTICLE 14: Force Majeure

        14.1    Neither Party shall be responsible or liable for or deemed in
breach hereof because of any delay in the performance of or inability to perform
its obligations hereunder to the extent that it is due to circumstances beyond
the reasonable control of the Party experiencing such delay or inability,
including but not limited to acts of God; unusually severe weather conditions;
strikes or other labor difficulties; war; riots; except as described in Section
14.2, requirements, actions or failures to act on the part of governmental
authorities or legislative, regulatory or judicial bodies or agencies; inability
despite due diligence to obtain required permits or licenses; accident; or fire
(such causes hereinafter called “Force Majeure”); provided that:

  (a)   The non-performing Party gives the other Party written notice describing
the particulars of the occurrence within forty-eight (48) hours of the beginning
of said occurrence;

  (b)   The suspension of performance is of no greater scope and of no longer
duration than is required by the Force Majeure;

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  (c)   The non-performing Party uses all reasonable efforts to remedy its
inability to perform;

  (d)   When the non-performing Party is able to resume performance of its
obligations under this Agreement, that Party shall give the other Party written
notice to that effect;

  (e)   The Force Majeure was not caused by or connected with the non-performing
Party’s negligence, gross negligence, willful misconduct or failure to comply
with any applicable law, rule, regulation, order or ordinance or any breach or
default of this Agreement; and

  (f)   The Force Majeure was not attributed to normal wear and tear or flaws
randomly experienced in power generation materials and equipment and their
assembly and operation.

  (g)   Force Majeure, when applied to Operator, does not include unavailability
of equipment to Operator, inability of Operator to renew permits, labor strikes
or slowdowns of employees of Operator following the commercial Operations Date,
unless same is caused by an occurrence which would fit the definition of Force
Majeure in this Article 14.

        14.2    The term Force Majeure does not include (i) governmental,
legislative, regulatory or judicial action to the extent that it affects the
cost of Operator’s supply of fuel or any alternative supplies of fuel or (ii)
the lack or unavailability of money or changes in market conditions that affect
the cost or availability of Operator’s supply of fuel or any alternate supplies
of fuel.

        14.3   In no event will any condition of Force Majeure extend (1) the
deadline for Operator posting security pursuant to this Agreement or (ii) the
Term of this Agreement. If any condition of Force Majeure delays a Party’s
performance for a time period greater than eighteen (18) Months, the Party not
delayed by such Force Majeure may terminate this Agreement without further
obligation or liability of either Party, except obligations maturing prior to
such termination, or extend such period at its sole discretion if the Party
delayed by such Force Majeure is exercising due diligence in its efforts to cure
the condition of Force Majeure.

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        14.4    In no event will North Carolina Power pay Operator for
Dependable Capacity during a Force Majeure Period (for the purpose of this
Article 14 Force Majeure Period means the period of time beginning with the date
designated in Operator’s notice provided pursuant to Section 14.1(a) hereof and
ending with Operator’s notice provided pursuant to Section 14.1(d) hereof) when
Operator is unable to deliver the Facility’s Net Electrical Output to North
Carolina Power.

ARTICLE 15: Taxes and Claims for Labor and Materials

        15.1    All present or future federal, state, municipal or other lawful
taxes applicable to the sale of Net Electrical Output or Dependable Capacity
shall be paid by Operator.

        15.2    Operator will pay and discharge (a) all lawful taxes,
assessments or governmental charges or levies imposed upon it or in respect of
all or any part of its property or business and (b) all trade accounts payable
and all claims for work, labor or materials before the later of the due date
thereof and the date upon which the amount due, if unpaid, would become a lien
or charge on any of its property; provided, however, that Operator shall not be
required to pay any such tax, assessment, charge, levy, account payable or claim
if (i) the validity, applicability or amount thereof is being contested in good
faith by appropriate actions or proceedings which will prevent the forfeiture or
sale of any property of Operator or any material interference with Operator’s
use thereof and (ii) Operator shall set aside on its books reserves deemed by it
to be adequate with respect thereto.

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ARTICLE 16: Choice of Law

        16.1    This Agreement shall be interpreted, construed and governed by
the laws of the Commonwealth of Virginia. The Parties hereby submit to the
jurisdiction of courts located in, and venue is hereby stipulated to be in,
Richmond, Virginia.

ARTICLE 17: Miscellaneous Provisions

        17.1    Neither Party shall assign this Agreement or any portion thereof
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld; provided, however, North Carolina Power agrees to give
such consent in the event of an assignment by Operator to its parent or wholly
owned subsidiary; and provided further that: (i) any assignee shall be a
Transferee who shall expressly assume assignor’s obligations hereunder, (ii) no
such assignment shall impair any security given by Operator hereunder, and (iii)
unless expressly agreed by the other Party, no assignment, whether or not
consented to, shall relieve the assignor of its obligations hereunder in the
event its assignee fails to perform. North Carolina Power shall consent to the
assignment by Operator of its rights hereunder as security for the construction
and/or permanent financing for the Facility and shall execute such documents as
are requested by Operator and reasonably satisfactory to North Carolina Power to
evidence such consent, including documents referred to in Section 18.1(d) of
this Agreement.

        17.2    This Agreement, including the appendices and/or Exhibits hereto,
can be amended only by agreement between the Parties in writing.

        17.3    The failure of either Party to insist in any one or more
instances upon strict performance of any provisions of this Agreement, or to
take advantage of any of its rights hereunder, shall not be construed as a
waiver of any such provisions or the relinquishment of any such right or any
other right hereunder, which shall remain in full force and effect.

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        17.4    The headings contained in this Agreement are used solely for
convenience and do not constitute a part of this Agreement, nor should they be
used to aid in any manner in the construction of this Agreement.

        17.5    This Agreement is intended solely for the benefit of the Parties
hereto. Nothing in this Agreement shall be construed to create any duty to, or
standard of care with reference to, or any liability to, any person not a Party
to this Agreement.

        17.6    This Agreement shall not be interpreted or construed to create
an association, joint venture, or partnership between the Parties or to impose
any partnership obligation or liability upon either Party. Neither Party shall
have any right, power or authority to enter into any Agreement or undertaking
for, or act on behalf of, or to act as or be an agent or representative of, or
to otherwise bind, the other Party.

        17.7    Cancellation, expiration or earlier termination of this
Agreement shall not relieve the Parties of obligations that by their nature
should survive such cancellation, expiration or termination, including without
limitation warranties, remedies, promises of indemnity and confidentiality.

        17.8    All terms and conditions of the Confidentiality Agreement
between North Carolina Power and Operator, dated as of June 27, 1990, shall
survive and remain in effect during the Term of this Agreement, and the
cancellation, expiration or earlier termination of this Agreement shall not
relieve the Parties of obligations under such Confidentiality Agreement that by
their nature should survive such cancellation, expiration or termination.

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ARTICLE 18: Statutory and Regulatory Changes

        18.1    The Parties recognize and hereby agree that if any federal,
state or municipal government or regulatory authority, including without
limitation the NCUC, should for any reason enter an order, modify its rules, or
take any action whatsoever ordering North Carolina Power to pay bank to its
customers amounts collected as a result of payments made hereunder or
specifically disallowing North Carolina Power the recovery from its customers of
all or any portion of the payments (i) made hereunder, or (ii) to be made
hereunder for Dependable Capacity and Net Electrical Output (“Disallowance”) in
excess of the sum of payments made, or to be made, for Dependable Capacity and
Net Electrical Output based on the energy and capacity prices established
(notwithstanding any limitations on the size of the Facility) by the NCUC
pursuant to 18 C.F.R. 292.304(c) (currently represented by Schedule 19 POWER
PURCHASES FROM COGENERATION AND SMALL POWER PRODUCTION QUALIFYING FACILITIES)
and in effect at the time of the Disallowance for the period of time in which
such Disallowance is in effect, then the following terms and conditions shall be
applicable to such Disallowance, unless such Disallowance is due to North
Carolina Power’s failure to seek recovery or comply with procedural requirements
governing recovery of such costs. The number of years remaining in the Term of
this Agreement will constitute the Schedule 19 length of contract used to
determine the payment for Dependable Capacity hereunder.

  (a)   If the Disallowance occurs before the fifteenth anniversary of the
Commercial Operations Date, North Carolina Power shall continue to pay for
Dependable Capacity at the Capacity Purchase Price set forth in Article 10
through the fifteenth anniversary of the Commercial Operations Date. Payments
for Dependable Capacity beginning on the fifteenth anniversary of the Commercial
Operations Date shall not exceed the amount unaffected by the Disallowance.
Further, North Carolina Power may, at its option, beginning on the fifteenth
anniversary of the Commercial Operations Date withhold up to seventy-five (75)
percent of the payments for Dependable Capacity until the sooner of (i) the
eighteenth anniversary of the Commercial Operations Date or (ii) the entire
amount of the Disallowance is repaid with interest at the Interest Rate from the
date each part of the Disallowance was paid to Operator. In the event that such
withholding does not fully repay the Disallowance and accrued interest at the
Interest Rate by the eighteenth anniversary of the Commercial Operations Date,
then Operator shall pay the remainder to North Carolina Power within twenty
eight (28) Days after the eighteenth anniversary of the Commercial Operations
Date in a lump sum;

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  (b)   If the Disallowance occurs after the fifteenth anniversary of the
Commercial Operations Date, all future payments for Dependable Capacity shall
not exceed the amount unaffected by the Disallowance. Further, the Operator
shall repay the full amount of the Disallowance with interest at the Interest
Rate by the later of (i) one year from the date of such Disallowance or (ii) the
eighteenth anniversary of the Commercial Operations Date;

  (c)   In no event shall the Disallowance begin earlier than the date of the
final order in which such Disallowance occurred.

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  (d)   Not later than ten (10) days after North Carolina Power receives notice
that any federal, state, or municipal government regulatory authority, including
the NCUC; has been requested to make or is considering a Disallowance, North
Carolina Power shall use its best efforts to notify Operator in writing. Within
thirty (30) days of the date of a final order creating a Disallowance, Operator
shall, at its option, either grant to North Carolina. Power a valid second lien
(the “Second Lien”) on the Facility securing North Carolina Power’s right to
repayment of the Disallowance or provide to North Carolina Power a letter of
credit in a face amount set forth below in form and substance satisfactory to
Virginia Power. Any letter of credit issued or Second Lien granted pursuant to
this Section shall secure the maximum amount of the Disallowance that Operator
is obligated to repay North Carolina Power pursuant to this Agreement, based on
the parties’ estimate of the amount of such Disallowance that could accrue
assuming the Disallowance continues through the 15th anniversary of the
Commercial Operations Date. Any Second Lien and the payment obligations secured
thereby and all rights and privileges (including any rights to rents, income,
profits, insurance proceeds and condemnation awards) granted to secure North
Carolina Power shall be junior and in all respects subordinate to (i) the lien
of any mortgage, deed of trust and/or other security interest securing
construction or term financing, (ii) the obligations secured thereby (subject to
the last sentence of this Section 18.1(d)), any “Permitted Loan Modification”
(as defined below) and (iv) any other modifications to such obligations and
instruments to which North Carolina Power consents (such consent not to be
unreasonably withheld), (each of the foregoing being referred to herein as a
“First Lien”). A “Permitted Loan Modification” shall mean and include (i) any
increase in the principal amount of any construction or term financing if such
increase is attributable to (A) improvements, alterations or repairs to the
Facility including, without limitation, improvements required to comply with
applicable law or necessary for the proper operation or maintenance of the
Facility, or (B) interest accrual arising from or after a default by the
borrower or as a result of a restructure of the loan after or in anticipation of
any such default, (ii) any refinancing of construction or term financing to the
extent such refinancing does not exceed 115% of the original principal amount of
the construction or term financing which is being refinanced, (iii) any
amendments, modifications or supplements to a First Lion which do not extend the
term thereof or increase the amount scoured thereby, and (iv) any modifications,
amendments, agreements, deeds of trust, lions or security interests executed in
connection with or securing any of the foregoing. The form and substance of the
instruments or documents creating the Second Lien shall be in all respects
satisfactory to the holders of or beneficiaries under the First Lien and North
Carolina Power consistent with (i) its position as a second lienor and standard
commercial practice with respect to project financing and (ii) this Section
18.1(d). Such instruments or documents creating the Second Lien and documents
providing for the use of Common Facilities by the Facility to ensure that the
Facility can be owned and operated independent of the Roanoke Valley I Project
shall be negotiated prior to or as part of any third party financing requiring
the consent of North Carolina Power. North Carolina Power shall not be obligated
to consent to such financing until such instruments or documents are negotiated
and agreed to by the Parties. Operator shall provide the subordination
provisions required by the lenders for the Roanoke Valley I Project, which shall
serve as the basis for the subordination provisions for the Second Lien;
provided, however, to the extent that these provisions conflict with the
conditions of such subordination set forth in this Section 18.1(d), Section
18.1(d) shall control. Notwithstanding the foregoing, nothing contained in this
Section 18.1(d) or the Second Lien (including the subordination provisions
thereof) shall limit North Carolina Power’s right (i) to enforce any of its
rights under this Agreement in the event of any breach by Operator of its
obligations under this Agreement (including, without limitation, the right to
bring an action for damages resulting from Operator’s failure to perform in
accordance with this Article 18), or (ii) to enforce the Second Lien at any time
after the 18th anniversary of the Commercial Operations Date and, in connection
therewith, to sell the Facility subject to the First Lien.

The Parties obligate themselves to all good faith efforts to establish, if
practicable, an appeal and overruling of the Disallowance or a superseding
order, approval of modified rules or tariffs, or other action so as to allow
timely resumption of full or, failing that, adjusted payments hereunder.

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ARTICLE 19: Coordination of Communications

        19.1    Operator agrees to coordinate with North Carolina Power all
press, news, or other releases to private or public media groups relating to
this Agreement and to allow North Carolina Power to review such releases in
advance of release. Further, Operator agrees to comply with all reasonable
requests of North Carolina Power as to the content or manner of publication of
such releases.

        19.2    Operator agrees to allow North Carolina Power, at North Carolina
Power’s option, to accompany Operator and/or participate in any discussions or
filings with governmental or regulatory agencies relating to this Agreement.

ARTICLE 20: Entirety

        20.1    This Agreement and Exhibits A, B, and C attached hereto are
intended by the Parties as the final expression of their agreement and are
intended also as a complete and exclusive statement of the terms of their
agreement with respect to the Net Electrical Output and Dependable Capacity sold
and purchased hereunder and the manner of operation and maintenance of the
Facility. All prior written or oral understandings, offers or other
communications of every kind pertaining to the sale of Net Electrical Output and
Dependable Capacity hereunder to North Carolina Power by Operator are hereby
abrogated and superseded.

        IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed the ____ day of __________, 2000.

WESTMORELAND — LG&E PARTNERS, a
Virginia general partnership,
By: Its GENERAL PARTNERS:

VIRGINIA ELECTRIC AND
POWER COMPANY WESTMORELAND-ROANOKE VALLEY, L.P.,
a Delaware limited partnership
By: WEI-ROANOKE VALLEY, INC., a
Delaware corporation

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By: /s/ E. Paul Hilton
Title: Senior Vice President-Bulk Sales By: /s/ W. Michael Lepchitz
Title: President

LG&E ROANOKE VALLEY, L.P., a
California limited partnership
By: LG&E POWER 16 INCORPORATED, a California corporation

By: /s/ George W. Basinger
Title: President and Chief Financial Officer

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EXHIBIT A-1

EXHIBIT A

DATA REQUIRED TO PERFORM INTERCONNECTION STUDY

1.   Electrical one-line of Facility

2.   Explanation of proposed equipment protection and control scheme (may be
shown functionally on one line)

3.   Site plan showing plant layout, property lines, access roads and switchyard
boundaries

4.   Preliminary equipment layout and arrangement for switchyard and generator
step-up transformer (GSU)

5.   Estimated GSU impedance ± 20 percent

6.   GSU connection and winding

7.   Estimated generator reactances ± 10 percent

8.   Estimated generator kilowatt rating ± 10 percent

9.   Estimated generator kilovar rating ± 10 percent

10.   Estimated station auxiliary load ± 20 percent

11.   Requirements for construction and start-up power

12.   Project schedule (I-J or bar chart format) including but not limited to
the following milestones:

  12.1 QF Status obtained

  12.2 Engineering 30% complete

  12.3 One line approved

  12.4 Financial Closing

  12.5 Major licenses/permits

  12.6 Major material procurement

  12.7 Start construction

  12.8 Engineering 70% complete

  12.9 Utility technical submittals complete

  12.10 Operating procedures finalized

  12.11 Energize interconnect

  12.12 Initial synchronizing date

  12.13 Capacity test complete

  12.14 Anticipated Commercial Operations Date

        Data submitted in a preliminary or estimated form should be updated
within 30 days after final equipment arrangements and specifications are
established.

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EXHIBIT B-1

EXHIBIT B

EXAMPLES OF PAYMENTS FOR DEPENDABLE CAPACITY

ASSUME:   40 MW DEPENDABLE CAPACITY
CAPACITY PURCHASE PRICE - 1.0(cent)/KWH
HOURS PER BILLING PERIOD - 720 HOURS

CAPACITY PAYMENT FOR BILLING PERIOD???

EXAMPLE NO. 1: A) FACILITY DISPATCHED AT 40 MW - FACILITY OPERATES AT 40 MW. SEE
10.7(c).

B) CAPACITY PAYMENT FOR BILLING PERIOD = (720)(40MWX$0.01/KWH) = $288,000.00

EXAMPLE NO. 2: A) FACILITY DISPATCHED TO 40 MW - FACILITY OPERATES AT 38 MW. NO
ACCUMULATED EXCESS GENERATION AVAILABLE. SEE 10.7(f)(i).

B) CAPACITY PAYMENT FOR BILLING PERIOD = (720)(38MW) ($0.01/KWH) = $273,600.00

EXAMPLE NO. 3: A) FACILITY DISPATCHED TO 40 MW - FACILITY OPERATES AT 42 MW.
ACCUMULATES 2 MWH OF EXCESS GENERATION. HAS NO UNDER GENERATION (DOES NOT MISS
DISPATCH) DURING PERIOD FORFEITS EXCESS MWH'S. SEE 10.7(c) AND 10.7(h).

B) CAPACITY PAYMENT FOR BILLING PERIOD = (720)(40MW) ($0.01/KWH) = $288,000.00

EXAMPLE NO. 4: A) FACILITY HAS 5 DAYS OF FULL OR PARTIAL SCHEDULED OUTAGE (100
HRS) OTHERWISE GENERATES AT DISPATCH LEVEL. SEE 10.7(e)

B) CAPACITY PAYMENT FOR BILLING PERIOD = (620)(40MW) ($0.01/KWH) + (100)(40MW)
($.0.01/KWH) = $288,000.00

EXAMPLE NO. 5: A) FACILITY DISPATCHED TO 20 MW - FACILITY OPERATES AT 20 MW. SEE
I0.7(d)(i) AND I0.7(d)(ii).

B) CAPACITY PAYMENT FOR BILLING PERIOD = (720)(20MW) ($0.01/KWH) FOR NEO PLUS
[(720)(40MW) — (720)(20MW)] ($0.01) = $288,000.00

EXAMPLE NO. 6: A) FACILITY DISPATCHED TO 20 MW - FACILITY OPERATES-AT 18 MW. NO
ACCUMULATED EXCESS GENERATION AVAILABLE. SEE 10.7(g)(i) AND 10.7(g)(ii).

B) CAPACITY PAYMENT FOR BILLING PERIOD (720)(18MW) ($0.01/KWH) FOR NEO PLUS
[(720)(40MW) — (720)(20MW)) ($0.01) — $273,600.00

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EXHIBIT B-2

EXAMPLE NO. 7: A) FACILITY DISPATCHED TO 20 MW - FACILITY OPERATES AT 22 MW.
ACCUMULATES 2 MWH OF EXCESS GENERATION. HAS NO UNDER GENERATION (DOES NOT MISS
DISPATCH) DURING PERIOD. FORFEITS EXCESS MWH'S. SEE 10.7(d)(i), 10.7(d)(ii) AND
10.7(h).

B) CAPACITY PAYMENT FOR BILLING PERIOD = (720)(20MW) ($0.01/KWH) FOR NEO PLUS
[(720)(40MW) — (720)(20MW)] ($0.01) = $288,000.00

EXAMPLE NO. 8: A) FACILITY DISPATCHED TO 0 MW - FACILITY OPERATES AT 0 MW. SEE
10.7(d)(i) AND 10.7(d)(ii).

B) CAPACITY PAYMENT FOR BILLING PERIOD = (720)(0MW) ($0.01/KWH) FOR NEO PLUS
[(720)(40MW) — (720)(0MW)] ($0.01) = $288,000.00

EXAMPLE NO. 9: A) FACILITY DISPATCHED TO 40 MW - FACILITY OPERATES AT 45 MW FOR
100 HRS., 20 MW FOR 100 HRS, AND 40 MW FOR 520 HRS.

B) ACCUMULATED MWH’S = (100)(2MW) = 200 MWH’S SEE 10.7(h)

C) CAPACITY PAYMENT FOR BILLING PERIOD =
(620)(40MW)($0.01/KWH) = $248,000.00 FOR NEO, SEE 10.7(c)
+ (100)(20)($0.01/KWH) $20,000.00 FOR NEO, SEE 10.7(g)(i)
+ (100)(2MW) ($0.01) = $2,000.00 SEE 10.7(g)(iii)
TOTAL = $270,000.00

NOTE: 300 MWH'S OF EXCESS GENERATION FORFEITED

EXAMPLE NO. 10: A) FACILITY DISPATCHED TO 40 MW FOR 600 HRS AND 20 MW FOR 100
HRS AND 20 HOURS OF SCHEDULED OUTAGE — FACILITY OPERATES WHEN DISPATCHED TO 40
MW AT 45 MW FOR 100 HRS AND 40 MW FOR 500 HRS, AND WHEN DISPATCHED TO 20 MW
FACILITY OPERATES FOR 50 HRS AT 10 MW AND FOR 50 HRS AT 20 MW.

B) ACCUMULATED MWH’S = (100) (2MW) = 200 MWH’S SEE 10.7(h)

C) CAPACITY PAYMENT FOR BILLING PERIOD =
(500)(40MW)($0.01/KWH) $200,000.00 SEE 10.7(c)
+ (20)(40MW) ($0.01/KWH) $8,000 SEE 10.7(e)
+ (100)(40MW) ($0.01/KWH) $40,000.0 SEE 10.7(c)
+ (50)(10) ($0.01/KWH) $5,000.00 SEE 10.7(g)(i)
+ (50)(20M W)($0.01) $10,000.00 SEE 10.7(c)
+ [(100)(40MW) — (I OO)(20M W)] ($0.01) = $20,000.00 SEE 10.7(g)(ii)
+ (50) (1MW) ($0.01/KWH) $500.00 SEE 10.7(g)(iii)
TOTAL - $283,500.00

NOTE: 450 MWH’S OF EXCESS GENERATION FORFEITED

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EXHIBIT B-3

EXAMPLE NO. 11: A) FACILITY DISPATCHED TO 40 MW - FACILITY OPERATES AT 45 MW FOR
100 HRS, 40 MW FOR 500 HRS, AND 0 MW FOR 120 HRS.

B) ACCUMULATED MWH’S — (100) (2MW) = 200 MWH’S SEE 10.7(h)

C) CAPACITY PAYMENT FOR BILLING PERIOD =
(500)(40MW)($0.01 /K WH) = $200,000.00 SEE 10.7(c)
+ (100)(40)($0.01/KWH) = $40,000.00 SEE 10.7(c)
+ (100)(2MW)($0.01) = $2,000.00 SEE 10.7(h)
TOTAL = $242,000.00

NOTE: 300 MWH’S OF EXCESS GENERATION FORFEITED

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EXHIBIT C-1

EXHIBIT C

ROANOKE VALLEY (/(l PROJECT STEAM DISTRIBUTION AND METERING SYSTEM

[wcc_10q63006ex103flwcht.jpg]

Key:

(1)   Steam meter located at RVP-I used to measure RVP-I’s steam output*

(2)   Steam meter located at RVP-II used to measure RVP-II’s steam output*

(3)   Steam meter located at RVP-I host used to measure steam sales to RVP-I
host

(4)   Steam meter located at RVP-II host used to measure steam sales to RVP-II
host

* Defaults in Section 5.3(a) (18,19) tied to steam deliveries between RVP-I/II
upstream of these meters

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