Exhibit 10.7

AMENDMENT NO. 3 TO AMENDED AND RESTATED
CONSTRUCTION AND TERM LOAN AGREEMENT

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        This AMENDMENT NO. 3 TO AMENDED AND RESTATED CONSTRUCTION AND TERM LOAN
AGREEMENT, dated as of January 31, 1995, is made by and among (i)
WESTMORELAND-LG&E PARTNERS, a Virginia general partnership, as Borrower, (ii)
CREDIT SUISSE, NATIONAL WESTMINSTER BANK plc, THE BANK OF NOVA SCOTIA, THE
SUMITOMO BANK, LIMITED, New York Branch, THE SUMITOMO TRUST AND BANKING CO.,
LTD., New York Branch, THE INDUSTRIAL BANK OF JAPAN, LTD., New York Branch,
UNION BANK, UNION BANK OF SWITZERLAND, THE FUJI BANK LIMITED, Los Angeles
Agency, CREDIT LYONNAIS, New York Branch, CREDIT SUISSE. Cayman island Branch,
THE TORONTO-DOMINION BANK and each Purchasing Lender, as Lenders, (iii) THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA and each Purchasing Institutional
Lender, as Institutional Lenders, (iv) CREDIT SUISSE, New York Branch, as the
Issuing Bank, (v) CREDIT SUISSE, NATIONAL WESTMINSTER BANK plc, THE BANK OF NOVA
SCOTIA and THE SUMITOMO BANK, LIMITED, New York Branch, as Co-Agents, and (vi)
CREDIT SUISSE, as Agent for the Lenders, the Institutional Lenders and the
Iissuing Bank.

W I T N E S S E T H:

        WHEREAS, the Amended and Restated Construction and Term Loan Agreement,
dated as of December 1, 1993, as amended by Amendment No. 1 dated as of November
4, 1994 and Amendment No. 2 dated as of December 30, 1994 (the “Credit
Agreement”), among Borrower, the Lenders, the Institutional Lenders, the Issuing
Bank, the Co-Agents and Agent sets forth, among other things, the terms and
conditions upon which the Lenders and the Institutional Lenders are willing to
make available to Borrower certain Loans and Institutional Loans (unless
otherwise defined herein, terms used herein and defined in the Credit Agreement
shall have the meanings indicated in the Credit Agreement, and, unless otherwise
specified herein, references to any “Article” or “Section” shall refer to the
appropriate article or section of the Credit Agreement); and

        WHEREAS, Borrower, the Lenders, the Institutional Lenders, the Issuing
Bank, the Co-Agents and Agent desire to amend the Credit Agreement as provided
herein;

        NOW, THEREFORE, IT IS AGREED;

        Section 1.      Amendment. Subject to the limitations contained in
Section 2 hereof, the Credit Agreement is hereby amended as follows:

               (a)     Section 6.1(c)(vii) is hereby amended by inserting “or
such other date as requested by Borrower and approved by Agent and Institutional
Agent in their sole discretion” after the word “Date” in the third line thereof.

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               (b)     The second paragraph of Section 6.1(f) is hereby amended
by deleting the second and third sentences thereof and by inserting in lieu
thereof the following:

               “The amount of any Debt Protection Letter of Credit shall equal
the amount of cash withdrawn from the Debt Protection Account. Each Debt
Protection Letter of Credit shall provide that Agent may draw down the amount of
such Debt Protection Letter of Credit and apply the same to satisfy payment
obligations for which funds in the Debt Protection Account may be used, and upon
any such drawing Agent shall draw down the full amount of all such Debt
Protection Letters of Credit and deposit the amount of such drawdowns in the
Debt Protection Account. After Agent shall have so drawn down on any Debt
Protection Letter of Credit, Borrower shall not be entitled to deliver
additional Debt Protection Letters of Credit until and unless the Debt
Protection Account is funded in the full amount of the Required Debt Protection
Balance.”

               (c)     Section 6.l(g) is hereby amended by inserting “or, in the
event that Virginia Power’s withholding of capacity payments on the basis of
forced outages is upheld by a non-appealable decision of a court of competent
jurisdiction, $25,000,000” after the word “$20,000,000” in the fifth line
thereof.

               (d)     The definition of “Gross Revenues” in Exhibit X is hereby
amended by adding after the word “Accounts” in the last line thereof the
following:

               “; provided that (i) any accrued capacity payments related to
forced outages not received by Borrower during such period shall not be deemed
part of Gross Revenues for such period, (ii) the reversal of any accrual for
such capacity payments not received during such period shall not be a deduction
from Gross Revenues for such period, and (iii) the payment of any such accrued
capacity payments received by Borrower during such period shall be deemed part
of Gross Revenues for such period”.

        Section 2.      Limitations. Except as expressly stated hereby, all of
the representations, warranties, terms, covenants and conditions of the Credit
Agreement shall remain unamended and shall continue to be, and shall remain, in
full force and effect in accordance with their respective terms. This Amendment
No. 3 shall be limited precisely as provided for herein, and shall not be deemed
to be a waiver of, amendment of, consent to or modification of any other term or
provision of the Credit Agreement.

        Section 3.      Miscellaneous.

               (a)     On and after the effective date of this Amendment No. 3,
each reference in the Credit Agreement to “this Agreement”, “hereunder”,
“hereof” or words of like import, and each reference to the Credit Agreement by
the words “thereunder”, “thereof” or words of like import in any Project
Document, Loan Instrument or other document executed in connection with the
Credit Agreement, shall mean and be a reference to the Credit Agreement, as
amended or otherwise modified by this Amendment No. 3.

               (b)     This Amendment No. 3 may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

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               (c)     This Amendment No. 3 shall be governed by and construed
and interpreted in accordance with the laws of the State of New York without
regard to the principles of conflict of laws.

               (d)     All agreements, covenants, conditions and provisions of
this Amendment No. 3 shall be binding upon and inure to the benefit of the
successors and assigns of each of the parties hereto.

        IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Amendment No. 3 as of the date first above
written.

  BORROWER:

  WESTMORELAND-LG&E PARTNERS

  By: WESTMORELAND-ROANOKE VALLEY, L.P.,
as general partner

    By: WEI-ROANOKE VALLEY, INC.,
as general partner

    By: /s/ James S. Brown
Name: James S. Brown
Title:

  By: LG&E ROANOKE VALLEY, L.P.,
as general partner

    By: LG&E POWER 16 INCORPORATED,
as general partner

    By: /s/ S. Bradford Rives
Name: S. Bradford Rives
Title: Vice President And Treasurer

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  AGENT, CO-AGENTS AND LENDERS:

  CREDIT SUISSE, as Agent, Co-Agent and Lender

  By: /s/ p.p. Roland Pfeuti
Name: Roland Pfeuti
Title: Associate

  By: /s/ Bryon McGregor
Name: Bryon McGregor
Title: Member of Senior Management

  NATIONAL WESTMINSTER BANK PLC, as Co-Agent and Lender

  By: /s/ T. Patrick Holland
Name: T. Patrick Holland
Title: Vice President

  THE BANK OF NOVA SCOTIA, as Co-Agent and Lender

  By: /s/ Bruce A. Matheson
Name: Bruce A. Matheson
Title: Project Finance

  THE SUMITOMO BANK, LIMITED, New York Branch as Co-Agent and Lender

  By: /s/ Yoshinori Kawamura
Name: Yoshinori Kawamura
Title: Joint General Manager

  THE SUMITOMO TRUST AND BANKING CO., LTD.

  New York Branch, as Lender

  By: /s/ Suraj P. Bhatia
Name: Suraj P. Bhatia
Title: Senior Vice President
           Manager, Project Finance Department

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  THE INDUSTRIAL BANK OF JAPAN, LTD., New York Branch, as Lender

  By: /s/ [illegible]
Name:
Title:

  UNION BANK, as Lender

  By: /s/ Julie Bloomfield
Name: Julie Bloomfield
Title: AVP

  UNION BANK OF SWITZERLAND, as Lender

  By: /s/ Paul J. Brink
Name: Paul J. Brink
Title: Assistant Treasurer

  By: /s/ Paul G. Naumann
Name: Paul G. Naumann
Title: Managing Director

  THE FUJI BANK LIMITED, Los Angeles Agency, as Lender

  By: /s/ [illegible]
Name:
Title:

  CREDIT LYONNAIS, New York Branch, as Lender

  By: /s/ James F. Guidera
Name: James F. Guidera
Title: Vice President

  CREDIT LYONNAIS, Cayman Island Branch, as Lender

  By: /s/ James F. Guidera
Name: James F. Guidera
Title: Vice President

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  THE TORONTO DOMINION BANK, as Lender

  By: /s/ Linda A. Lavin
Name: Linda A. Lavin
Title: Director

  INSTITUTIONAL LENDER:

  THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
as Institutional Lender and Institutional Agent

  By: /s/ Joseph J. Lemanowicz
Name: Joseph J. Lemanowicz
Title: Vice President

  ISSUING BANK:

  CREDIT SUISSE, New York Branch, as Issuing Bank

  By: /s/ p.p. Roland Pfeuti
Name: Roland Pfeuti
Title: Associate

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