Exhibit 10.33

NORTH JERSEY ENERGY ASSOCIATES

700 Universe Blvd., P.O. Box 14000, Juno Beach, FL 33408

February 28, 2003

David M. Blank
Director - Rates & Regulatory Affairs
FirstEnergy
76 South Main Street
Akron, Ohio 44308

Re: Agreement on the variable energy rate ("VER") and adjustments to the VER in
future periods under the Power Purchase Agreement between Jersey Central Power &
Light Company ("JCP&L") and North Jersey Energy Associates, A Limited
Partnership ("NJEA"), dated as of October 22, 1987, as amended (the "PPA").

Dear Mr. Blank:

Subject to the approval of the New Jersey Board of Public Utilities ("NJBPU") as
detailed below, NJEA and JCP&L agree that effective as of August 14, 2002, all
references in the PPA to the "FERC form 423" and the "DOE/EIA publication 'Cost
and Quality of Fuel for Electric Utility Plants'" (including without limitation
in Appendix I of the PPA) shall be replaced with a reference to the arithmetic
average of the Monthly Gas Price, defined herein, for each month during the
applicable calendar year. The "Monthly Gas Price" for a month shall be expressed
in US dollars per MMBtu and shall be the arithmetic average of the monthly gas
price published in The Gas Daily Price Guide "Monthly Contract Index" under
"Market Centers", "Northeast", "Texas Eastern, zone M-3" and the monthly gas
price published in The Gas Daily Price Guide "Monthly Contract Index" under
"Market Centers", "Northeast", "Transco, zone 6 non-N.Y.", each as published on
or about the fifth business day of such month (each an "Index" and collectively,
the "Indices").

Collectively, the Indices are intended by the parties to reflect the price of
natural gas in Middlesex County, New Jersey. In the event either Index ceases to
be published or ceases to be determined as such Index is determined on the date
of this letter agreement, then JCP&L and NJEA shall meet as soon thereafter as
possible to identify a replacement index or indices (as the case may be) with
the intent of such replacement(s) being to represent the market price of natural
gas in Middlesex County, New Jersey.

NJEA and JCP&L further agree that the VER, as described and utilized in Section
3.1.(a) and Appendix I of the PPA, effective on August 14, 2002 shall be 5.700
cents/kWh. JCP&L and NJEA further agree that such rate shall be adjusted each
year on August 14th by dividing the arithmetic average of the Monthly Gas Price,
as defined above, for the preceding calendar year by the calendar year
arithmetic average of the Monthly Gas Price, as defined above, for the calendar
year two (2) years prior and multiplying such quotient by the VER in effect
immediately prior to such adjustment. Included in Attachment A is a calculation
of the VER that is effective as of August 14, 2003 of 4.117 cents/kWh, to which
NJEA and JCP&L hereby agree, and the methodology to calculate the VER for the
remaining term of the PPA.

JCP&L agrees that payments for power delivered to JCP&L by NJEA for the period
since August 14, 2002, have been based upon the power purchase rate that was in
effect on August 13, 2002. JCP&L agrees to pay to NJEA, on or prior to March 4,
2003, $9,170,750.02 for power delivered to JCP&L by NJEA for the period of
August 14, 2002, through January 31, 2003, plus Interest, as hereinafter
described, of $50,585.01 for a total payment of $9,221,335.03 (the "True-Up
Payment"). Interest shall be calculated on the last day of each month using the
one month London Interbank Offered Rate ("Libor") as published in the Wall
Street Journal under "Money Rates" on the last business day of such month plus
125 basis points (1.25%). Attachment B details the calculation of the True-Up
Payment.

Payments for power delivered beginning February 1, 2003, through the end of the
PPA term shall be made in accordance with the PPA using the mutually agreed upon
VER as described above and on Attachment A.

The above terms of this letter agreement relating to the VER and Indices (the
"Index Settlement Terms") will be incorporated into an Amended and Restated PPA,
which NJEA and JCP&L are in the process of negotiating. Both parties agree to
use commercially reasonable efforts to obtain a Final NJBPU Order (as defined
below) approving the terms of the Amended and Restated PPA incorporating, among
other things, the Index Settlement Terms. "Final NJBPU Order" means a final and
non-appealable order of the NJBPU, in form and substance reasonably acceptable
to JCP&L & NJEA approving the agreement that is the subject of the Final NJBPU
Order, finding that such agreement is reasonable and prudent and providing for
full and timely recovery of all amounts paid by JCP&L under such agreement. Both
parties will provide such other documents or take such further steps as may
reasonably be required to secure the Final NJBPU Order relating to the Amended
and Restated PPA. The parties agree the obligation to use commercially
reasonable efforts to secure any of the Final NJBPU Orders described in this
letter agreement does not obligate either party to seek rehearing of, or to
appeal, an adverse NJBPU ruling. The parties further agree that upon the
effective date of the Amended and Restated PPA in accordance with its terms,
this letter agreement will be superceded by the Amended and Restated PPA and all
issues and/or claims between the parties under the PPA up to and including
August 14, 2002 shall be irrevocably deemed resolved or waived.

In the event that (a) a petition seeking a Final NJBPU Order with respect to the
Amended and Restated PPA has not been filed with the NJBPU by May 30, 2003, and
the parties have not mutually agreed to extend that deadline or (b) the NJBPU
makes a determination not to issue a Final NJBPU Order with respect to the
Amended and Restated PPA or (c) the NJBPU has not initially issued a Final NJBPU
Order with respect to the Amended and Restated PPA by October 1, 2003 and the
parties have not mutually agreed to extend the deadline for initial issuance of
such Final NJBPU Order, then the parties will immediately seek a final NJBPU
order approving the Index Settlement Terms without approval of the Amended and
Restated PPA.

The parties will use commercially reasonable efforts to obtain a Final NJBPU
Order with respect to the Index Settlement Terms and will provide such documents
and take such further steps as may reasonably be required to secure such Final
NJBPU Order. If within ninety (90) days following submission of a petition
seeking the Final NJBPU Order with respect to the Index Settlement Terms, the
NJBPU does not either (1) initially issue a Final NJBPU Order with respect to
the Index Settlement Terms or (2) initially issue a final and non-appealable
order in form and substance reasonably acceptable to JCP&L and NJEA, providing
that JCP&L has full authority under the existing NJBPU order approving the PPA
to enter into an amendment of the PPA incorporating the Index Settlement Terms,
without additional NJBPU explicit approval of the Index Settlement Terms, such
that JCP&L shall be entitled to fully and timely recover from its customers all
amounts paid by JCP&L under the PPA as modified by the Index Settlement Terms,
and the parties have not mutually agreed to extend the deadline for initial
issuance of such order or other NJBPU order, then (A) the VER in effect on
August 13, 2002, will be restored pending resolution of the VER dispute and NJEA
will repay the amount of the True-Up Payment made to it, plus the amount by
which any payments for power delivered on and after February 1, 2003, exceeds
the amount that would have been paid based upon the VER in effect on August 13,
2002 ("Excess Power Payments"), with Interest from the date of NJEA's receipt of
the True-Up Payment, or of any Excess Power Payments, as the case may be, to the
date of repayment or use of Set-off Rights (as defined below), as the case may
be (collectively, the "Repayments"). If NJEA fails to make the Repayments within
ten (10) calendar days of JCP&L's request for the Repayments, JCP&L will be
entitled to set-off such amounts dollar-for dollar, against any payments JCP&L
owes NJEA under the PPA (the "Set-Off Rights"), and (B) the parties will
immediately seek a final NJBPU order approving binding arbitration in accordance
with the terms of Attachment C as the means of resolving the VER dispute under
the PPA.

The parties will use commercially reasonable efforts to obtain a final NJBPU
order with respect to the use of binding arbitration in accordance with the
terms of Attachment C as the means of resolving the VER dispute under the PPA
and will provide such documents and take such further steps as may reasonably be
required to secure such final NJBPU order. If the NJBPU issues a final NJBPU
order approving binding arbitration in accordance with the terms of Attachment C
as the means of resolving the VER dispute under the PPA, then the parties will
submit the VER dispute to arbitration in accordance with the terms of Attachment
C. If within ninety (90) days following submission of a petition seeking the
final NJBPU order approving binding arbitration in accordance with the terms of
Attachment C as the means of resolving the VER dispute under the PPA, the NJBPU
does not either (1) initially issue a final NJBPU order with respect to the use
of binding arbitration in accordance with the terms of Attachment C as the means
of resolving the VER dispute under the PPA or (2) initially issue a final and
non-appealable order in form and substance reasonably acceptable to JCP&L and
NJEA, providing that JCP&L has full authority under the existing NJBPU order
approving the PPA to use binding arbitration in accordance with the terms of
Attachment C as the means of resolving the VER dispute under the PPA, without
additional NJBPU explicit approval of the use of such binding arbitration to
resolve the VER dispute, such that JCP&L shall be entitled to fully and timely
recover from its customers all amounts paid by JCP&L under the PPA as modified
by the final decision of the arbitration proceedings regarding the VER dispute,
and the parties have not mutually agreed to extend the deadline for initial
issuance of such final NJBPU order or other NJBPU order, than the VER dispute
shall be settled between the parties as provided in the PPA without regard to
the alternative dispute resolution proceedings described in this letter
agreement.

This letter agreement shall become effective upon execution by both of the
parties; provided, however, upon the effective date of the Amended and Restated
PPA, this letter agreement shall be superceded by the terms and provisions of
the Amended and Restated PPA. This letter agreement represents the sole and
exclusive agreement of the parties with respect to Index Settlement Terms and
supercedes and prior oral or written agreement, understanding or proposal with
respect to such matters.

 

 

If you are in agreement with the foregoing, please have an officer of JCP&L
authorized to execute amendments to the PPA sign in the space provided below and
fax a signed copy back to our office.

 

Sincerely,

North Jersey Energy Associates
  A Limited Partnership
By Northeast Energy LP
  Its General Partner
By ESI Northeast Energy GP Inc.
  Its administrative General Partner

 

/s/ NATHAN HANSON

 

Nathan Hanson
Director of Business Management

Acknowledged and Agreed to this
28th day of February, 2003 by Jersey Central Power & Light Company

By:

EDWARD J. UDOVICH

 

     

Name:

Edward J. Udovich

 

     

Title:

Authorized Officer
Assistant Corporate Secretary

 

 

 

Attachment A

Monthly Gas Price

   

Calendar Year Averages

   

Transco
Zone 6
Non-NY

 

Texas
Eastern
M-3

     

Transco
Zone 6
Non-NY

 

Texas
Eastern
M-3

 

Z6 NNY -
M3
Average

1/31/2001

 

$15.15

 

$14.23

 

2001

 

$5.146

 

$5.024

 

$5.85

2/28/2001

 

$7.55

 

$7.09

 

2002

 

$3.670

 

$3.676

 

$3.673

3/31/2001

 

$5.57

 

$5.54

               

4/30/2001

 

$5.80

 

$5.81

               

5/31/2001

 

$5.33

 

$5.30

               

6/30/2001

 

$4.13

 

$4.09

               

7/31/2001

 

$3.48

 

$3.52

 

VER Aug. 14, 2002 - Aug. 13, 2003 =

5.700 cents/kWh

8/31/2001

 

$3.46

 

$3.51

               

9/30/2001

 

$2.56

 

$2.59

 

VER Aug. 14, 2003 - Aug. 13, 2004 =

10/31/2001

 

$2.13

 

$2.12

               

11/30/2001

 

$3.62

 

$3.56

 

   VER year n = VER year n-1 (Avg of Monthly Gas Price year n-1 / Avg of Monthly
Gas Price year n-2)

12/31/2001

 

$2.97

 

$2.93

               

1/31/2002

 

$3.70

 

$3.58

 

VER Aug. 14, 2003 - Aug. 13, 2004 = 5.700 (3.673/5.085)

2/28/2002

 

$2.46

 

$2.43

               

3/31/2002

 

$2.69

 

$2.68

 

VER Aug. 14, 2003 - Aug. 13, 2004 =

4.117 cents/kWh

4/30/2002

 

$3.74

 

$3.73

               

5/31/2002

 

$3.63

 

$3.64

               

6/30/2002

 

$3.67

 

$3.71

               

7/31/2002

 

$3.57

 

$3.68

               

8/31/2002

 

$3.29

 

$3.30

               

9/30/2002

 

$3.59

 

$3.59

               

10/31/2002

 

$4.01

 

$4.06

               

11/30/2002

 

$4.73

 

$4.74

               

12/31/2002

 

$4.96

 

$4.97

               

 

 

Attachment B

                           

True Up

   

PPA

Revenues  

10/2/2002

 

11/1/02

 

12/2/02

 

12/31/02

 

1/31/03

 

03/04/03

 

Interest

           

2.99%

 

2.63%

 

2.63%

 

2.59%

 

2.59%

   

Aug-02

 

$1,073,923.49

 

$1,073,923.49

 

$1,076,651.58

 

$1,079,134.07

 

$1,081,468.55

 

$1,083,923.27

 

$1,086,461.44

 

$12,537.95

Sep-02

 

$1,763,903.53

     

$1,763,903.53

 

$1,767,843.56

 

$1,771,667.91

 

$1,775,689.28

 

$1,779,847.29

 

$15,943.76

Oct-02

 

$1,803,471.88

         

$1,803,471.88

 

$1,807,373.31

 

$1,811,475.7 

 

$1,815,717.53

 

$12,245.65

Nov-02

 

$1,228,675.35

             

$1,228,675.35

 

$1,231,464.21

 

$1,234,347.86

 

$5,672.51

Dec-02

 

$1,787,267.79

                 

$1,787,267.79

 

$1,7991,452.93

 

$4,185.14

Jan-03

 

$1,513,507.98

                     

$1,513,507.98

 

$0

Total

 

$9,170,750.02

                     

$9,221,335.03

 

$50,585.01

 

 

Attachment C

The determination of the VER effective August 14, 2002, and any subsequent
yearly adjustments thereto, shall be settled by arbitration in accordance with
the Commercial Arbitration Rules (the "Rules") of the American Arbitration
Association (the "AAA") then in effect and the provisions set forth in this
paragraph. In the event of any conflict between the Rules and the provisions of
this paragraph, the provisions of this paragraph shall control. Any such
arbitration shall take place in New York in accordance with the laws of the
State of New Jersey. The determination of the VER or any adjustments thereto
shall be referred to one (1) arbitrator who has been chosen mutually by NJEA and
JCP&L from a list of the National Panel of Arbitrators maintained by the AAA. In
the event that NJEA and JCP&L cannot agree on the selection of an arbitrator,
one shall be assigned by the AAA. This matter shall be governed by the laws of
the State of New Jersey and federal law, as applicable. Within ten (10) business
days after the selection of the arbitrator, each of NJEA and JCP&L shall submit
to the arbitrator a written proposal containing such party's proposed VER amount
effective on August 14, 2002, and its proposed method for adjusting the VER on a
yearly basis. Failure by NJEA or JCP&L to submit its written proposal to the
arbitrator within such ten (10) business day period shall result in the other
party's written proposal being automatically accepted by the arbitrator. The
arbitrator shall select one of the submitted proposals within thirty (30) days
of the due date of the written proposals. Any judgment rendered or received
pursuant to this arbitration shall be binding on both parties. Each of NJEA and
JCP&L shall bear their respective costs (including attorney's fees) incurred in
connection with this arbitration procedure.