<PAGE>
 
                                                               HECO Exhibit 10.9
                                                               -----------------



        INTER-ISLAND INDUSTRIAL FUEL OIL AND DIESEL FUEL SUPPLY CONTRACT

                                 By and Between


                           CHEVRON PRODUCTS COMPANY,
                        A DIVISION OF CHEVRON U.S.A. INC

                                      and

                        HAWAIIAN ELECTRIC COMPANY, INC.;

                          MAUI ELECTRIC COMPANY, LTD.;

                        HAWAII ELECTRIC LIGHT CO., INC.;

                          HAWAIIAN TUG & BARGE CORP.;

                          and YOUNG BROTHERS, LIMITED.



                         * * * * * * * * * * * * * * *
<PAGE>
 
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
ARTICLE                                                            PAGE
-------                                                            ----
<S>                   <C>                                          <C>
 
ARTICLE I:   Definitions                                             1
ARTICLE 2:   Term                                                    4
ARTICLE 3:   Quantity                                                4
      Section 3.1:    Minimum and Maximum Annual Quantities          4
      Section 3.2:    Forecast                                       5
      Section 3.3:    Ratability                                     6
      Section 3.4:    Effect of Purchase Power Agreements (PPA)      6
ARTICLE 4:   Quality                                                 7
      Section 4.1:    CIFO Specifications                            7
      Section 4.2:    Diesel Specifications                          7
      Section 4.3:    Jet Fuel Grade                                 7
      Section 4.4:    No Warranty of Merchantability or Fitness      8
ARTICLE 5:   Price, BTU Determination                                8
      Section 5.1:    Diesel, CIFO and Jet Prices                    8
      Section 5.2:    Determination of Source of Raw Materials       8
      Section 5.3:    Reimbursement of All Taxes, Assessments and
                      Levies                                        10
      Section 5.4     Determination of BTU Content For Diesel       11
      Section 5.5:    Determination of BTU Content For CIFO         11
      Section 5.6:    Dispute                                       11
      Section 5.7:    Rounding of Prices                            11
      Section 5.8:    Successor Publications                        12
ARTICLE 6:   Deliveries                                             12
      Section 6.1:    Delivery of Diesel and CIFO to MECO 
                      and HELCO                                     12
      Section 6.2:    Delivery of Diesel to HT&B and YB             13
      Section 6.3:    Delivery of Diesel to HECO                    13
      Section 6.4:    Delivery of Jet to MECO and HELCO             13
      Section 6.5:    Chevron's Delivery of Diesel to Molokai,             
                      Kahului, Maui, Hilo, Hawaii and Kawaihae,
                      Hawaii                                        13
      Section 6.6:    Title and Risk of Loss                        13
      Section 6.7:    Notice of Delivery                            14
ARTICLE 7:   Determination Of Quality                               14
      Section 7.1:    Sampling Procedures                           14
      Section 7.2:    Quality Disputes                              15
      Section 7.3:    Impact of Less Than Quality Product           15
ARTICLE 8:   Measurement Of Quantity                                16
      Section 8.1:    Determination of Quantity                     16
      Section 8.2     Determination of Quantities at HDT            16
      Section 8.3     Quantity Dispute                              16
ARTICLE 9:   Invoicing and Payment                                  17
      Section 9.1:    Invoices                                      17
      Section 9.2:    Payment Terms                                 17
      Section 9.3:    Method of Payment                             17
ARTICLE 10:  Chevron's Facilities On Oahu                           18
ARTICLE 11:  Chevron's Facilities On Maui And Hawaii                19
      Section 11.1:   Use of Chevron Storage and Handling 
                      Facilities                                    19
      Section 11.2:   Barge Schedule Notification                   19
      Section 11.3    Loaded Samples                                20
      Section 11.4    Coast Guard Dock Watch Requirements           20
      Section 11.5:   Care, Custody and Control of Received Oil     20
</TABLE>

                                      ii
<PAGE>
 
<TABLE>
<S>                   <C>                                          <C>
      Section 11.6:   Determination of Quality of Received Oil 
                      at Unloading                                  21
      Section 11.7    Determination of Quantity of Received Oil 
                      and Oil at Time of Custody Transfer           21
      Section 11.8    Commingle Product                             22
      Section 11.9    Transfer Notification From Kahului and Hilo   22
      Section 11.10   Custody of Returned Fuel Oil                  22
      Section 11.11   Custody of Returned Diesel                    22
      Section 11.12   Return Oil Quantities                         23
      Section 11.13   Transfer of Returned Oil                      23
      Section 11.14   Terminaling and Handling Fees                 23
ARTICLE 12:  Contingencies                                          24
      Section 12.1:   Definition of Contingency                     24
      Section 12.2:   Obligation to Supply Product                  25
      Section 12.3:   Obligation to Purchase Product                25
      Section 12.4:   Price Determination Prevention                25
      Section 12.5:   Governmental Regulation Requirements          25
      Section 12.6:   Chevron's Obligations Under Contract          25
ARTICLE 13:  Effect Of Suspension Or Reduction                      26
      Section 13.1:   Event of Suspension                           26
      Section 13.2:   Suspension For More Than 180 Days             26
      Section 13.3:   Notification of Suspension                    26
      Section 13.4:   Obligation to Pay In Full                     26
      Section 13.5    Suspension Not A Breach Of Contract           26
ARTICLE 14   Waiver And Nonassignability                            26
      Section 14.1:   Waiver By One Party                           26
      Section 14.2:   Assignability of Contract                     27
ARTICLE 15   Conflict Of Interest                                   27
ARTICLE 16:  Default                                                27
ARTICLE 17:  Applicable Law                                         28
ARTICLE 18:  Indemnity                                              28
      Section 18.1:   Buyer Held Harmless for General Indemnity 
                      when title and risk of loss is with Chevron   28
      Section 18.2:   Buyer Held Harmless for Releases to the 
                      Environment when title and risk of loss is 
                      with Chevron                                  28
      Section 18.3    Chevron Held Harmless for General Indemnity 
                      when title and risk of loss is with Buyer     28
      Section 18.4:   Chevron Held Harmless for Releases to the 
                      Environment when title and risk of loss is 
                      with Buyer                                    29
ARTICLE 19:  Public Utilities Commission                            29
      Section 19.1:   Filing Requirements; Buyers Energy Cost 
                      Adjustment Clause                             29
      Section 19.2:   Decision and Order Impairing Chevron          29
      Section 19.3    Use as a Public Utility                       29
ARTICLE 20:  Insurance                                              30
      Section 20.1:   Requirements                                  30
      Section 20.2:   Change of Insurance Notification              30
      Section 20.3:   Certificate of Insurance From Subsequent 
                      Buyers and Carriers                           30
      Section 20.4:   Obtaining Insurance Documents                 31
      Section 20.5:   Terminaling and Handling Fees Insurance 
                      Exclusion                                     31
ARTICLE 21:  Safety And Terminal Protection                         31
      Section 21.1:   Operating and Safety Regulations              31
      Section 21.2:   Right To Refuse Acceptance                    31
ARTICLE 22:  Pollution Mitigation                                   31
      Section 22.1:   Responsibility To Mitigate                    31
      Section 22.2:   Cooperation With Chevron's Measures           32
</TABLE>

                                      iii
<PAGE>
 
<TABLE>
<S>                   <C>                                          <C>
ARTICLE 23:  Miscellaneous                                          32
      Section 23.1:   Heading of Articles and Sections              32
      Section 23.2:   Content of Document                           32
      Section 23.3:   Notification                                  32
      Section 23.4    Court Rulings                                 33
      Section 23.5:   Benefit of And Binding                        33
      Section 23.6:   Effective Date and Supersedence               33
ADDENDUM No. 1   Illustrative Schedule of Prices                    36
ADDENDUM No. 2   Quality Control Samples Summary and Schematic of 
                 Sample Locations                                   46
ADDENDUM No. 3   [---]                                              49
</TABLE>

                                      iv
<PAGE>
 
        INTER-ISLAND INDUSTRIAL FUEL OIL AND DIESEL FUEL SUPPLY CONTRACT
        ----------------------------------------------------------------

          THIS CONTRACT, dated as of Nov. 14, 1997, by and between CHEVRON
PRODUCTS COMPANY, A DIVISION OF CHEVRON U.S.A. INC a Pennsylvania corporation
("Chevron"), and HAWAIIAN ELECTRIC COMPANY, INC.; MAUI ELECTRIC COMPANY, LTD.;
HAWAII ELECTRIC LIGHT CO., INC.; HAWAIIAN TUG & BARGE CORP.; and YOUNG BROTHERS,
LIMITED, each a Hawaii corporation (collectively referred to as "Buyers" and
individually referred to as "Buyer" herein unless otherwise indicated).

          WHEREAS, Chevron is a supplier of petroleum fuels with terminal and
Refinery facilities in Hawaii.

          WHEREAS, Buyers are engaged in various business activities:  HECO,
HELCO, and MECO are utilities engaged in the generation, purchase and sale of
electricity in Hawaii; HT&B is a tug and barge company; YB is a barge company
engaged in general marine transportation.

          NOW, therefore, the parties agree as follows:


                                   ARTICLE I
                                  DEFINITIONS
                                  -----------
Except where otherwise indicated, the following definitions shall apply
throughout this Contract:

       1.   "API" or "API Gravity" means the American Petroleum Institutes
            standard measurement of gravity for petroleum products.

       2.   "ASTM" means the American Society for Testing and Materials whose
            standards are utilized in this Contract with respect to fuel
            specifications, quantitative measurements, sampling and testing.

       3.   "Affiliate", except where otherwise expressly provided, means a
            corporation controlling, controlled by or under common control with
            Chevron or Buyer, as the case may be.

       4.   [---]

       5.   "barrel" means 42 American bulk gallons at 60 degrees Fahrenheit

       6.   "Black Oil Pipeline" means Chevron's 8 inch black oil distribution
            pipeline between Chevron's Refinery and HMT with interconnections to
            HECO's Waiau electric generating station and HECO's Iwilei petroleum
            storage facility.

       7.   "BPH" means barrels per hour, a unit of measure of the rate of the
            physical transfer or movement of petroleum products.

       8.   "BTU" and "BTU content" means British Thermal Unit and refers to the
            standard assessment of a fuel's gross heating value or gross heat
            content.

       9.   "Buyer's Barbers Point Storage Facilities" means Buyer's bulk
            petroleum receiving, storage and distribution facilities located in
            the Barbers Point area of Oahu, located in Campbell Estate
            Industrial Park, Kapolei, Hawaii.

                                       1
<PAGE>
 
      10.    [---] means [---]

      11.    [---] means [---]

      12.    "Carrier" means Buyer's Nominated Barge or designated trucking
             company.

      13.    "Certificate of Quality" means the means the formal document
             recording the Chevron laboratory determinations of the quality and
             BTU content of a particular sample which represents a specific
             Delivery, said laboratory determinations having been performed in
             accordance with the standard test methods described in Article 4.

      14.    "Certificate of Quantity" means the document issued by the
             Independent Inspector verifying the measurements and quantities of
             oil delivered to Buyer as determined under Article VIII.

      15.    [---] means [---]

      16.    "Chevron's Terminal" means Chevron's bulk petroleum receiving,
             storage and distribution facility used to Deliver Oil to a
             respective Buyer's Nominated Barge.

      17.    "CIFO" means Chevron Industrial Fuel Oil No. 6 as per Section 4.1.

      18.    "Contingency" means an act or event specified in Section 12.1

      19.    "Contract" means this Inter-Island Industrial Fuel Oil and Diesel
             Fuel Supply Contract, between Chevron and HECO, MECO,HELCO, HTB &
             YB, the term of which commences January 1, 1998.

      20.    "Day" or "Days" means a calendar day of 24 hours

      21.    "Deliver, Delivery, Deliveries, or Delivered" refers to the Oil or
             Jet sold by Chevron and purchased by Buyer.

      22.    "Diesel" means Chevron Diesel Fuel No. 2 per Section 4.2.

      23.    "diesel" means either Chevron Diesel Fuel No. 2 or a third party
             diesel fuel similar to Chevron Diesel Fuel No. 2.

      24.    "Effective Date" means, for the purposes of this Contract, 
             January 1, 1998

      25.    "Extension" means successive 12-Month periods in the term of this
             Contract in addition to and after the initial term of this Contract
             which is through December 31, 2004, each Extension beginning
             January 1.

      26.    "Fuel Oil" means either Chevron Industrial Fuel Oil No. 6 or third
             party industrial fuel oil similar to Chevron Industrial Fuel Oil
             No. 6.

      27.    "G.S.V." means gross standard volume in U.S. barrels or in U.S.
             gallons at 60 degrees Fahrenheit.

      28.    "gallon" means a United States gallon of 231 cubic inches at 60
             degrees Fahrenheit

                                       2
<PAGE>
 
      29.    "HDT" means Chevron's Honolulu Distribution Terminal at Honolulu
             Harbor Pier 35.
 
      30.    "HMT" means Chevron's Honolulu Marine Terminal at Honolulu Harbor
             Piers 30 and 31.

      31.    "HT&B" means Hawaiian Tug & Barge Corp., which operates a tug and
             barge fleet.

      32.    "HECO" means Hawaiian Electric Company, Inc., which has electrical
             generating facilities on the island of Oahu.

      33.    "HELCO" means Hawaii Electric Light Co., Inc., which has electrical
             generating facilities on the island of Hawaii.

      34.    "Independent Inspector" means a qualified third-party petroleum
             inspection contractor acceptable to both Chevron and Buyer 
             providing petroleum sampling, measurement and oversight over 
             Delivery operations.

      35.    [---]

      36.    "Jet" means Chevron Jet Fuel per Section 4.3.

      37.    "jet" means either Chevron Jet Fuel or a third party jet fuel
             similar to Chevron Jet Fuel.

      38.    "Kaunakakai Terminal" means a third party Marine Terminal at
             Kaunakakai Harbor, Molokai.
  
      39.    "Loaded", when used in conjunction with Oil or Jet, refers to
             Buyer's Delivered Oil or Jet mixed with any cargo retains within
             Buyer's Nominated Barge.

      40.    "loaded", when used in conjunction with Oil or Jet, refers to
             Buyer's Delivered Oil or Jet or a third party's delivered oil or 
             jet mixed with any cargo retains within Buyer's Nominated Barge.

      41.    "MECO" means Maui Electric Company, Ltd., which has electrical
             generating facilities on the islands of Maui, Lanai and Molokai. 
             For the purposes of this Contract "MECO" refers to the operations 
             on the island of Maui only.

      42.    "MECO-Molokai" means the Molokai Division of Maui Electric Company,
             Ltd., which has electrical generation facilities on the island of
             Molokai.

      43.    "Month" means a calendar month.

      44.    "Nominated Barge" means a petroleum tank barge or vessel designated
             by Buyer to receive Oil Delivered by Chevron when the defined term
             is used in conjunction with Buyer, as in "Buyer's Nominated Barge";
             and means a petroleum tank barge or vessel designated by Chevron to
             Deliver Diesel when the defined term is used in conjunction with
             Chevron, as in "Chevron's Nominated Barge."

      45.    "Nominated Terminal" means a bulk petroleum receiving, storage and
             distribution facility designated by a respective Buyer to receive
             Diesel Delivered by Chevron at Kahului, Maui, Hilo, Hawaii or
             Kawaihae, Hawaii, when used in conjunction with "Buyer's" as in
             "Buyer's Nominated Terminal."

                                       3
<PAGE>
 
       46.   "Nominated Vessel" means a petroleum tank vessel designated by
             Buyer to deliver or receive Buyer's Petroleum Products when he
             defined term is used in conjunction with Buyer, as in "Buyer's
             Nominated Vessel."

       47.   "Oahu P/L" means Chevron's 8 inch white oil distribution pipeline
             between Chevron's Refinery and HMT with an interconnection to 
             HECO's Waiau electric generating station.

       48.   "Oil" means either Chevron Industrial Fuel Oil No. 6 or Chevron
             Diesel Fuel No. 2.

       49.   "oil" means Chevron Industrial Fuel Oil No. 6, Chevron Diesel Fuel
             No. 2, a third party industrial fuel oil similar to Chevron
             Industrial Fuel Oil No. 6, or a third party diesel fuel similar to
             Chevron Diesel Fuel Oil No. 2.

       50.   "Received", when used in conjunction with Oil or Jet, refers to 
             Buyer's Oil or Jet to be received by Chevron into its terminals on
             Maui and Hawaii. "Received", when used in conjunction with oil,
             means a third party industrial fuel oil similar to Chevron
             Industrial Fuel Oil No. 6 or a third party diesel fuel similar to
             Chevron Diesel Fuel Oil No. 2 received by Chevron into its
             terminals on Maui and Hawaii from Buyer's Nominated Barge.

       51.   "Returned", when used in conjunction with Oil, oil or Jet, refers 
             to the Oil, oil or Jet returned by Chevron from its terminals on
             Maui and Hawaii to Buyer for Buyer's use in Buyer's electrical
             generating facilities.

       52.   "Refinery" means Chevron's oil refining and related facilities
             located in the Barbers Point area of Oahu, in Campbell Estate
             Industrial Park, Kapolei Hawaii.

       53.   "YB" means Young Brothers, Limited, which operates a general marine
             transportation business.

       54.   "Year" means a calendar year.


                                   ARTICLE II
                                      TERM
                                      ----

The term of this Contract shall be from January 1, 1998 through December 31,
2004, and shall continue thereafter for Extensions beginning each successive
January 1, unless Buyer or Chevron gives written notice of termination at least
120 Days before the beginning of an Extension.


                                  ARTICLE III
                                    QUANTITY
                                    --------

Section 3.1:  Minimum And Maximum Annual Quantities

During each Year this Contract is in effect, Chevron shall sell and Deliver to
Buyer, and Buyer shall purchase and receive from Chevron no less than the
minimum nor more than the maximum annual quantity, except as otherwise expressly
provided herein, of CIFO, Diesel and Jet as set out below for each Buyer and
described in Article IV, from the HMT, the HDT, the Oahu P/L, Chevron-Nominated
Barge at Kahului, Maui, Chevron-Nominated Barge at Hilo, Hawaii, Chevron-
Nominated Barge at Kawaihae, Hawaii or a Chevron-Nominated Barge at the
Kaunakakai Terminal, as described in Article VI.  The purchase of CIFO and
Diesel shall be at a reasonably uniform rate.  Chevron shall sell and Deliver to
Buyer and Buyer shall purchase and receive from Chevron CIFO and Diesel [---]

                                       4
<PAGE>
 
<TABLE>
<CAPTION>
             All quantities shall be stated 
               in annual physical barrels.

I.   DIESEL
<S>  <C>            <C>       <C>
          1998      MINIMUM   MAXIMUM
          ----      -------   -------
     HECO           [---]     [---]
     HELCO          [---]     [---]
     MECO           [---]     [---]
     MECO-Molokai   [---]     [---]
     HT&B and YB    [---]     [---]
     TOTAL          [---]     [---]
     
       1999-2004
       ---------
     HECO           [---]     [---]
     HELCO          [---]     [---]
     MECO           [---]     [---]
     MECO-Molokai   [---]     [---]
     HT&B and YB    [---]     [---]
     TOTAL          [---]     [---]
     
     
II.  CIFO
        1998-       MINIMUM   MAXIMUM
        -----       -------   -------
     HELCO          [---]     [---]
     MECO           [---]     [---]
     TOTAL          [---]     [---]
     
     1999-2004
     ---------  
     HELCO          [---]     [---]
     MECO           [---]     [---]
     TOTAL          [---]     [---]
     
III. JET
     1998-2004      MINIMUM   MAXIMUM
     -----------    -------   -------
     HELCO                0   [---]
     MECO                 0   [---]
     TOTAL                0   [---]
</TABLE>

Upon prior written notice to Chevron, the respective Buyers may modify their
individual minimum and maximum annual physical quantities of Fuel Oil and Diesel
provided that the total annual minimum and maximum annual physical quantities of
CIFO, Diesel and Jet which shall be sold and Delivered by Chevron and purchased
and received by Buyers collectively, shall fall within the limits specified in
this Section 3.1

The minimum and maximum annual volumes of CIFO, Diesel and Jet to be sold and
Delivered by Chevron and purchased and received by Buyer shown above for Year
2004 shall also apply to any Extensions, unless mutually agreed otherwise .
Subject to availability, Chevron will sell and Deliver and Buyer shall purchase
and receive such additional volumes as are mutually agreed.

Section 3.2:  Forecast

Prior to the [---] Day of each Month, Buyer shall give Chevron a forecast of
each respective Buyer's Monthly lifting of Diesel, CIFO and Jet for each of the
coming three Months.  In addition and also prior to the [---]  Day of each
Month, Buyer shall provide Chevron a schedule of Buyer's Nominated Barge
loadings for the following Month. Such schedule shall show the expected place,
date and time of the commencement of the vessel's loading.

                                       5
<PAGE>
 
Each Buyer should update seller of any changes as they might occur. Buyer
recognizes the importance to Chevron of reasonably accurate lifting forecasts
because of Chevron's need to plan production and shipments.

Section 3.3:  Ratability

Buyers' purchases and Chevron's Deliveries of CIFO and Diesel will occur in a
reasonably ratable fashion throughout the Year.

At the end of each Year, Buyers' CIFO and Diesel purchase performance will each
be reviewed by Chevron for ratability.
 
     i.   If upon review Buyers' volumes in any calendar quarter were [---] of 
          the total minimum annual liftings for either CIFO or Diesel, [---]

     ii.  If upon review Buyers' volumes in any calendar quarter were [---] of 
          the total maximum annual liftings for either CIFO or Diesel, [---]

     iii. Chevron understands Buyers' Jet purchases will occur in a 
          non-ratable fashion and no ratability premiums will be applied to 
          Jet purchases

Section 3.4:  Effect of Purchase Power Agreements (PPA)

If due to the commencement of commercial operation of a generating plant or
generating plants supplying power to HELCO or MECO, or an increase in firm
capacity output under contracts existing as of the Effective Date, in aggregate
under one or more Purchase Power Agreements ("PPA") firm capacity in excess of
twenty (20) megawatts (gross basis), HELCO's or MECO's anticipated demands for
CIFO or Diesel results in Buyers' aggregate anticipated demand from Chevron on
an annual basis during any Year during the term of this Contract for CIFO or
Diesel to decline below the Buyers' aggregate minimum annual quantities set
forth in Section 3.1 (the difference between Buyers' aggregate anticipated
demand from Chevron and Buyers' aggregate minimum annual quantities being the
"Fuel Requirement Reduction"), then Buyers shall give written notice to Chevron
of Buyers' request that Chevron accept the Fuel Requirement Reduction.  Chevron
shall have fifteen (15) Days within which to accept Buyers' Fuel Requirement
Reduction or reject Buyers' Fuel Requirement Reduction and request a
renegotiation of HELCO's or MECO's, whichever is the affected Buyer, minimum
annual quantities of CIFO or Diesel in Section 3.1 and/or the price of HELCO's
or MECO's, whichever is the affected Buyer, CIFO or Diesel in Section 5.1 of
this Contract.

If Chevron either accepts Buyers' Fuel Requirement Reduction or fails to give
any notice of acceptance or rejection within said fifteen (15) Day period, then
Buyers' Fuel Requirement Reduction shall be deemed to have been accepted by
Chevron and shall become effective upon the expiration of said fifteen (15) Day
period.  Should Chevron reject Buyers' request for the Fuel Requirement
Reduction then, within sixty (60) Days following the date of any such rejection
notice, if the parties are unable to renegotiate HELCO's or MECO's, whichever is
the affected Buyer, minimum annual quantities and/or the price for HELCO's or
MECO's, whichever is the affected Buyer, CIFO or Diesel, in a manner mutually
satisfactory to both Chevron and the affected Buyer, then Chevron, upon thirty
(30) Days written notice, may elect to terminate its obligation to sell CIFO or
Diesel to the affected Buyer  under this Contract.  Until Buyers' request for a
Fuel Reduction Requirement (i) is accepted or deemed accepted by Chevron, (ii) a
mutually satisfactory provision for the affected Buyer's minimum annual
quantities and/or the affected Buyer's price for CIFO or Diesel, is
renegotiated, or (iii) the obligation to sell CIFO or Diesel to HELCO or MECO,
whichever is the affected Buyer, under this Contract is terminated in accordance
with this Section 3.4, the terms and conditions of this Contract shall be and
remain in full force and effect.

                                       6
<PAGE>
 
Notwithstanding any item to the contrary herein, any reduction in Buyers'
aggregated demand suppliers as a result of PPA's, shall be ratably allocated
among all Buyers' suppliers and/or sellers on basis of actual sales from each
supplier and/or seller over the immediately preceeding Year . Any reduction in
Chevron's minimum annual quantities as a result of PPA's shall also identically
reduce [---]

                                   ARTICLE IV
                                    QUALITY
                                    -------

Section 4.1:  CIFO Specifications

The CIFO to be supplied hereunder shall be Chevron's regular commercial grade of
Chevron Industrial Fuel Oil No. 6, having the following specifications:

<TABLE>
<CAPTION>
                                                             ASTM
Item                             Specifications          Test Method
----------------------------   ------------------   ---------------------
<S>                            <C>                  <C>
Gravity @ 60 degrees F, API    6.5 min.             D1298 or D4052-86
Flash, degrees F               150 min.             D93
Viscosity, SSF @ 122 degrees F 179 min., 226 max.   D445/D2161
Pour Point, degrees F          55 max.              D97
Sulfur, % Wt.                  2.00 max.            D1552, D2622 or D4294
Sediment & Water, % Vol.       0.5 max.             D1796
BTU content *, MM BTU/BBL      6.0                  D240
Vanadium **, PPM wt.           100                  D5863
Nitrogen ***, PPM wt.          6500                 D5762 or D4629
</TABLE>

* Typical Value is 6.3 MM BTU/bbl, value is typical; it is not guaranteed.
** Typical Value is shown, value is not a specification limit.
*** Typical Value is shown, value is not a specification limit.

Section 4.2:  Diesel Specifications

The Diesel to be supplied hereunder shall be similar to Chevron's regular
commercial grade of Chevron Diesel Fuel No. 2 and have the following
specifications:

<TABLE>
<CAPTION>
                                                 Specification             Test
Item                              Units             Limits                Method
---------------------------   -------------   -------------------   ------------------
<S>                           <C>             <C>                   <C>
Gravity @ 60 degrees F        degrees API,    30.0 min., .88 max.   D1298 or D4052-86                   
                              Specific                                                                  
Viscosity @ 100 DF            SSU             32.3 - 40.0           D445, D2161                         
BTU content *                 MM BTU/BBL      5.84                  Calculated or D240                  
Heat Value, Net               MM BTU/BBL      Report                Calculated or D240                  
Flash Point, PM               degrees F       150 min.              D93                                 
Pour Point *                  degrees F       35                    D97                                 
Ash                           PPM, wt.        100 max.              D482                                
Cetane Index                                  40 min.               D4737                               
Carbon Residue,
  10% Residuum                %, wt.          0.35 max.             D524
Sediment & Water              %, vol.         0.05 max.             D1796
Sulfur                        %, wt.          0.40 max.             D1552, D2622 or
                                                                    D4294
Distillation                                  
  90% Recovered               degrees F       540 - 650             D86
Sodium+Potassium              PPM, wt.        0.5 max.              D3605
Solium+Potassium+Lithium      PPM, wt.        Report                D3605
Vanadium **                   PPM, wt.        0.8                   D3605
</TABLE>

                                       7
<PAGE>
 
<TABLE>
<S>                           <C>             <C>                   <C>
Nitrogen ***                  PPM, wt.        120                   D4629 or D5762
</TABLE>

* Chevron does not provide specifications on these items.  Values are typical;
  they are not guaranteed.
** Typical value is shown, value is not a specification limit.
*** Typical value is shown, value is not a specification limit.

Section 4.3:  Jet Fuel Grade

The Jet to be supplied hereunder shall be similar to Chevron's regular
commercial grade of Chevron Jet Fuel; provided, however, Buyer agrees that the
Jet shall be used exclusively as stationary combustion turbine start-up fuel.
Any other use, including without limitation its use for aviation purposes, shall
constitute foreseeable misuse.

Section 4.4:  No Warranty of Merchantability or Fitness

CHEVRON MAKES NO WARRANTY, EXPRESSED OR IMPLIED IN FACT OR BY LAW, AS TO
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE concerning the Oil and Jet
other than it shall comply with the quality herein specified, that the Diesel
shall be suitable for use as a fuel, the CIFO shall be suitable for use as a
boiler fuel, and the Jet shall be suitable for use as stationary combustion
turbine start-up fuel.


                                   ARTICLE V
                           PRICE, BTU DETERMINATION
                           ------------------------
                                        
Section 5.1:  Diesel, CIFO and Jet Prices

I.  NO. 2 DIESEL FUEL

          a.       For HECO, HT&B, YB; and MECO or HELCO FOB point of Delivery
                   as per Section 6.3, Section 6.2 and Section 6.1, 
                   respectively:
                   [---]
          b.       For MECO-Molokai/Delivered Kaunakakai:
                   [---]

          c.       For MECO-Maui/Delivered Kahului:
                   [---]
 
          d.       For HELCO-Hawaii/Delivered Hilo:
                   [---]

          e.       For HELCO-Hawaii/Delivered Kawaihae:
                   [---]
          where:
          PD1  =  Price per physical gallon for the Month of Delivery for No. 2
          Diesel Fuel purchased by HECO, HT&B, YB, MECO or HELCO in U.S. Dollars
          ("$") per ("/") gallon.
          PD2  =  Price per physical gallon for the Month of Delivery for No. 2
          Diesel purchased by MECO-Molokai, in $/gallon.
          PD3  =  Price per physical gallon for the Month of Delivery for No. 2
          Diesel purchased by MECO-Maui, Delivered to Kahului Maui, in $/gallon.
 

                                       8
<PAGE>
 
          PD4  =  Price per physical gallon for the Month of Delivery for No. 2 
          Diesel purchased by HELCO-Hawaii, Delivered to Hilo Hawaii, in 
          $/gallon.
          PD5  =  Price per physical gallon for the Month of Delivery for No. 2
          Diesel purchased by HELCO-Hawaii, Delivered to Kawaihae Hawaii, in
          $/gallon.
          DI  =  Index for No. 2 Diesel Fuel, which shall be the simple average
          of the high and low price assessments on all dates of publication for
          West Coast Pipeline, Los Angeles California Low Sulfur No. 2 Diesel as
          reported by Platt's Oilgram Price Report ("Platt's Oilgram") during 
          the period beginning  the 21st Day of the second preceding Month to 
          the 20th Day of the Month preceding Delivery, expressed in $/gallon.
          [---]

                [---]

                [---]

                [---]
          LP1, LP2, LP3, and LP4 are [---] for Deliveries in bulk to the
          respective Buyer at Kaunakakai, Molokai, Kahului, Maui, Hilo, Hawaii 
          or Kawaihae, Hawaii, during the period indicated and expressed in $ 
          per gallon, as follows:

<TABLE>
<CAPTION>
                                1988-1989   2000-2001   2002-2004
          <S>                   <C>         <C>         <C>
                 [---]          [---]       [---]       [---]
                 [---]          [---]       [---]       [---]
                 [---]          [---]       [---]       [---]
                 [---]          [---]       [---]       [---]
</TABLE>
 
          TD1/TD2/TD3/TD4/TD5 = Taxes applicable to the sale of Diesel pursuant 
          to Section 5.3 herein.
 
   II.  CIFO

               [---]
 
          where:
          PF = Price per physical barrel for the Month of Delivery for CIFO, 
          in $/barrel .
          FI = the Index for CIFO which shall be the simple average of the low
          and high price assessments for Los Angeles Bunker C Fuel Oil  as
          reported by Platt's Oilgram Bunkerwire ("Platt's Bunkerwire") for all
          dates of publication from the 21st Day of the second preceding Month 
          to 20th Day of the Month preceding Delivery expressed in $/barrel,
          converting to barrels from metric tons using a conversion factor of
          6.368 barrels/metric ton.
          [---]

          [---]

                                       9
<PAGE>
 
          [---]

          [---]
          TF = Taxes applicable to the sale of CIFO pursuant to Section 5.3
          herein.


 III.  JET.
               [---]

          where:
          PJ = price per physical barrel for the Month of Delivery for Jet, in 
               $/gallon.
          JI = Index for jet fuel which shall be the simple average of the
               Friday high and low price assessments of West Coast Spot 
               Pipeline price for jet fuel in Los Angeles as reported by 
               Platt's Oilgram from the 21st of the second preceding Month to
               the 20th Day of the Month preceding Delivery expressed in $ per
               gallon.

               If Platt's Oilgram is not published or does not publish a high 
               and low price for a particular Friday during the relevant
               period, the high and low prices for the closest preceding Day
               for which Platt's Oilgram publishes a price report will be used.

          TJ = Taxes applicable to the sale of Jet pursuant to Section 5.3
               herein.

Addendum No. 1 hereto contains an illustrative schedule of prices calculated
pursuant to this Section 5.1

Section 5.2:  Determination of Source of Raw Materials

To provide the flexibility needed by Chevron to meet its obligations to Buyer,
the source and type of crude oil and other raw material, the place of
manufacture, and the manufacturer of Oil and Jet for Delivery to Buyer hereunder
shall be determined solely by Chevron. The price of all Oil and Jet Delivered by
Chevron to Buyer hereunder shall be determined in accordance with the terms of
this Contract regardless of where, how and by whom such Oil and Jet is
manufactured and regardless of the type or source of crude oil or other raw
materials used in its manufacture.

Section 5.3:  Reimbursement of All Taxes, Assessments and Levies

In addition to all other amounts payable by Buyer under this Contract, Buyer
shall reimburse Chevron for all taxes, assessments, levies and imposts of
whatsoever kind or nature imposed on Chevron by any governmental or quasi-
governmental body as adjusted, modified or revised from time to time, including
without limitation the Hawaii General Excise Tax, [---] the Hawaii Environmental
Response Tax and Hawaii Liquid Fuel Tax, applicable to the sale of Diesel, with
respect to the execution or performance of this Contract or the receipt by
Chevron of payments hereunder. Notwithstanding the foregoing and any
illustrative schedule of prices herein, Buyer shall not be required to reimburse
Chevron for any tax measured by or based on the net income of Chevron.  To avoid
duplication of recovery, Buyer shall not be required to reimburse Chevron under
this Section 5.3 for any item expressly mentioned by Platt's Oilgram Price
Report or Platt's Bunkerwire, or confirmed by Platt's Oilgram Price Report or
Platt's Bunkerwire in writing upon inquiry by either Buyer or Chevron, as being
included in a price used to compute PD1, PD2, PD3, PD4, PD5, PD6, PF or PJ under
Section 5.1.

As of the Effective date of this Contract, the taxes and government fees which
are currently in effect include the Hawaii General Excise Tax (4.166%), [---],
the Hawaii Environmental Response Tax

                                       10
<PAGE>
 
($0.05 per barrel or $0.0012 per gallon) and the Hawaii Liquid Fuel Tax,
applicable to the sale of Diesel only, ($0.01 per gallon).  The Hawaii
Environmental Response Tax and Hawaii Liquid Fuel Tax are not subject to the
Hawaii General Excise Tax [---]

Section 5.4:  Determination of BTU Content For Diesel

Chevron will draw representative samples of all Diesel Delivered to each
respective Buyer as per Sections 6.1, 6.3. ii and 6.5 to determine the BTU
content per Section 7.1.  If the weighted average BTU content per gallon of the
representative samples of Diesel purchased by each respective Buyer during any
calendar quarter [---] the price charged for the Diesel sold and Delivered to
that respective Buyer during each Month of the calendar quarter in question
shall be adjusted by multiplying the Diesel price determined in Article V, by
the ratio of the actual heat content to a standard of [---]. If the weighted
average BTU content per gallon of the representative samples of Diesel purchased
by each respective Buyer during any calendar quarter [---], the price charged
for the Diesel sold and Delivered to that respective Buyer during each Month of
the calendar quarter in question shall be adjusted by multiplying the Diesel
price determined in Article V, by the ratio of the actual heat content [---].
Chevron shall credit Buyer's account for overpayments and Buyer shall pay
Chevron for underpayments resulting from the BTU adjustments as soon as
reasonably possible after the close of the Month following the end of a calendar
quarter.  Such adjustments to either Buyer or Chevron will be handled as
separate credits or invoices and each individual invoice drawn during the
calendar quarter will not be corrected and reissued.

Section 5.5:  Determination of BTU Content for CIFO

Chevron will draw representative samples of each CIFO Delivery to each
respective Buyer as per Section 6.1, to determine the CIFO BTU content per
Section 7.1.  If the weighted average BTU content of the CIFO sold and Delivered
to Buyer during any calendar quarter falls within the range  [---] physical
barrel, no price adjustment will be made.  If the CIFO BTU content per physical
barrel [---] per physical barrel, the price charged  for the  CIFO sold and
Delivered to that respective Buyer during each Month of the calendar quarter in
question shall be adjusted by multiplying the CIFO price as determined by
Section 5.1.ii.  by a ratio of actual average heat content to [---].  Chevron
shall credit Buyer's account for overpayments and Buyer shall pay Chevron for
underpayments resulting from the BTU adjustments as soon as reasonably possible
after the close of Month following the end of a calendar quarter.  Such
adjustments to either Buyer or Chevron  will be handled as separate credits or
invoices and each individual invoice drawn during the Month will not be
corrected and reissued.

Section 5.6:  Dispute

The official BTU content determination shall be based upon Chevron's laboratory
results provided that the arithmetic difference between Chevron's and Buyer's
laboratory results is equal to or less than the then existing ASTM
reproducibility standard (currently 0.4 MJ/kg, which shall be set equal to
60,000 BTU per barrel for CIFO and 1,200 BTU per gallon for Diesel for this
purpose) for test D-240.  If the difference between Chevron's and Buyer's
laboratory results should fall outside the ASTM reproducibility standard for
ASTM test D-240, at Chevron's or Buyer's option, the sealed sample in the
possession of the Independent Inspector shall be provided to an independent
laboratory for an official determination, which shall be binding upon the
parties.  Chevron and Buyer shall share equally the costs of independent tests
and determinations.

Section 5.7:  Rounding of Prices

All prices, adjustments thereto and other sums payable hereunder shall be stated
in the nearest thousandth of a dollar when related to the sale and purchase of
CIFO hereunder and all prices, adjustments thereto and other sums payable
hereunder shall be stated in the nearest ten thousandth of a dollar when related
to the sale and purchase of Diesel or Jet hereunder.

                                       11
<PAGE>
 
Section 5.8:  Successor Publications

Platt's Oilgram and Platt's Bunkerwire shall include any successor
publication(s) and, in the event of either the discontinuance of these
publications or the assessments of West Coast Pipeline, Los Angeles California
Low Sulfur No. 2 Diesel, West Coast Spot Pipeline, Los Angeles Jet or Los
Angeles Bunker C Fuel Oil, respectively, the parties shall agree upon an
alternate price reporting services and publications or market price assessments
and any modification of the per gallon or per barrel [---] for Diesel, Jet or
CIFO, as applicable, as may be reasonable under the circumstances.


                                   ARTICLE VI
                                   DELIVERIES
                                   ----------

Section 6.1:  Delivery of Diesel and CIFO to MECO and HELCO
 
     i.     Chevron agrees to Deliver and MECO and HELCO agree to receive their 
            Oil into Buyer's Nominated Barge, Free On Board ("F.O.B.") at HMT.
            The Delivery rate on Diesel shall be [---] minimum. The Delivery
            rate on CIFO at HMT shall be [---] minimum. Chevron agrees to make
            its best, reasonable efforts to load Diesel and CIFO concurrently,
            provided however that Buyer's Nominated Barge is capable of
            receiving same and to operate its current CIFO Delivery systems to
            Deliver CIFO into said Nominated Barge at a temperature [---] at
            HMT. Buyer acknowledges that the CIFO Delivery temperature is
            determined by Chevron's and HECO's scheduling of other fuels in
            Chevron's pipeline, and hence cannot be guaranteed.

     ii.    [---]Chevron agrees to make its best, reasonable efforts to load 
            Diesel and CIFO concurrently, provided however that Buyer's
            Nominated Barge is capable of receiving same and in operating its
            current CIFO Delivery systems to Deliver CIFO into said Nominated
            Barge at a temperature about [---]. Buyer acknowledges that the CIFO
            Delivery temperature is determined by Chevron's and HECO's
            scheduling of other fuels in Chevron's pipeline, and hence cannot be
            guaranteed.

     iii.   Chevron and Buyer's agent or an Independent Inspector shall inspect
            the receiving barge cargo tanks to ensure that they contain only
            minimal remains of the previous cargo, before Chevron will Deliver
            Oil to be terminaled per Article XI. The Independent Inspector and
            shall draw composite samples of any diesel and fuel oil remains
            ("Buyer's Remains Samples") if such remains ("Remains") are
            accessible to standard sampling equipment. The Remain Samples shall
            be sealed and retained by the Independent Inspector for a period of
            not less than three (3) Months. The quality and quantity of the
            Remains exceeding common commercial practice shall be removed by
            Buyer to protect the quality of the Delivered Oil. Buyer or Buyer's
            agent may remove the Remains by any legal method at their disposal,
            including pumping the Remains into Chevron's slop tank at the HMT,
            if convenient to Chevron. Chevron shall have the right to charge
            Buyer for accepting Remains if the quantity to be removed from any
            barge or the number of barges requiring Remains to be removed
            becomes excessive. Chevron shall have the right to flush the
            receiving barge cargo tanks with a small quantity of Chevron's Oil
            before loading the Delivered Oil.

     iv.    To provide an early warning of any quality problems with the Diesel 
            or CIFO, Chevron agrees to perform a preliminary analysis
            ("Preliminary Analysis") including API gravity, and flash point on a
            composite sample(s) from the relevant HMT or Refinery issuing
            tank(s) and pipeline fill, if any, so as to be approximately
            representative of the quality of the Diesel and CIFO intended to be
            sold and Delivered to Buyer. The Independent Inspector shall ensure
            that copies of the Preliminary Analysis and other relevant quality
            documentation are placed on Buyer's Nominated Barge prior to its
            departure to be made available to representatives of the terminal
            facility receiving the cargo onboard Buyer's Nominated Barge.

                                       12
<PAGE>
 
Section 6.2:  Delivery of Diesel to HT&B and YB

Chevron agrees to Deliver and HT&B and YB agree to receive their Diesel into
their nominated vessel F.O.B. the HMT, Pier 31 or 32.  The Delivery rate shall
be 175 BPH minimum.

[---]

Section 6.3:  Delivery of Diesel to HECO

Chevron agrees to Deliver and HECO agrees to receive its Diesel under either of
the options below.

     i.   Chevron will Deliver Diesel from the HDT into HECO's nominated tank 
          truck at a Delivery rate of [---] minimum.

     ii.  Chevron will Deliver Diesel from the Oahu P/L into HECO's storage at 
          HECO's Waiau Power Plant, at a Delivery rate of [---] minimum.

Section 6.4:  Delivery of Jet to MECO and HELCO

Chevron agrees to deliver and MECO and HELCO agree to receive Jet at MECO's or
HELCO's respective power plant truck unloading rack.

Section 6.5:  Chevron's Delivery of Diesel to Molokai, Kahului, Maui, Hilo,
Hawaii and Kawaihae, Hawaii

     i.   Chevron agrees to Deliver Diesel in Chevron Nominated Barges and 
          MECO-Molokai agrees to receive its Oil into its nominated marine 
          terminal at Kaunakakai Harbor, Molokai.  The Delivery rate shall be 
          [---] minimum.  Buyer will provide discharge facilities through an 
          independent third party; Chevron has no responsibility to procure 
          discharge facilities on the island of Molokai.

     ii.  On a space available basis and when the date is mutually agreed to, 
          Chevron may Deliver in Chevron's Nominated Barge and MECO and HELCO
          may receive into their nominated marine terminal at Kahului, Maui and
          Hilo and Kawaihae, Hawaii, respectively. The Delivery rate shall be 
          [---] minimum. The respective Buyer is responsible for providing 
          discharge facilities; Chevron has no responsibility to procure
          discharge facilities on the islands of Maui and Hawaii for the sole
          purpose of receiving Deliveries of Diesel in bulk from Chevron's
          Nominated Barge on behalf of Buyer.

Section 6.6:  Title and Risk of Loss
 
     i.   For the Delivered Oil under Sections 6.1 and 6.2, care, custody, 
          control, title and risk of loss shall pass to Buyer as the Oil passes
          the flange connecting Chevron's pipeline to the cargo hose of the
          Buyer's Nominated Barge or vessel.

     ii.  For the Delivered Diesel under Section 6.3.i., care, custody, 
          control, title and risk of loss shall pass to Buyer as the Oil passes
          the flange connecting the cargo hose at Chevrons' truck loading rack
          to the Buyer's nominated tank truck.

     iii. For the Delivered Diesel under Section 6.3.ii., care, custody, 
          control, title and risk of loss shall pass to Buyer as the Oil passes
          the flange connecting Buyer's pipeline at the Chevron Oahu P/L to the
          Waiau Power Plant.

     iv.  For the Delivered Diesel under Section 6.5.i and Section 6.5.ii, 
          care, custody, control, title and risk of loss shall pass to Buyer as
          the Oil passes the flange connecting the cargo hose of the

                                       13
<PAGE>
 
          Chevron's Nominated Barge or vessel to the Buyer's designated pipeline

     v.   For the delivered Jet under section 6.4, care, custody, control, 
          title and risk of loss shall pass to Buyer as the jet passes the
          flange connecting the cargo hose of the Chevron's tank truck and
          Buyer's truck unloading rack at HELCO's and MECO's respective power
          plant.

Section 6.7:  Notice of Delivery

The respective Buyer, or its agent, shall provide Chevron with advance notice of
Oil to be Delivered and received under Sections 6.1, 6.3ii, 6.4 and 6.5 in
accordance with Section 3.2 or [---],  and the respective Buyer shall provide
telephone notification for Diesel to be Delivered under Section 6.2 or 6.3.i.
Chevron shall make all reasonable effort to comply with this notice and advise
Buyer promptly if the Delivery time cannot be met.


                                  ARTICLE VII
                            DETERMINATION OF QUALITY
                            ------------------------

Section 7.1:  Sampling Procedures

The quality of the Oil purchased by HECO, having its origination at HDT, the
quality of Diesel purchased by HT&B and YB and the quality of Jet purchased by
HELCO and MECO shall be determined on the basis of  a volumetric weighted
average composite of samples drawn from the issuing tank(s) by Chevron in such a
manner as to be representative of each Delivery.  Such samples of Oil or Jet
shall be referred to as "Chevron's terminal samples" and shall be divided into a
minimum of two (2) parts one of which shall be sealed and dated and retained by
Chevron, or an Independent Inspector at the option of Chevron, for a period of
not less than three (3) Months.

The quality of Oil purchased by HECO and Delivered by Chevron from Chevron's
Oahu P/L into HECO's storage at HECO's Waiau Power Plant shall be determined on
the basis of a volumetric weighted average composite of samples drawn from
Chevron's issuing tank(s) in such a manner as to be representative of the
Delivery ("Chevron's piped sample").  In addition, a volumetric weighted average
composite of samples from HECO's receiving tank(s) at HECO's Waiau Power Plant
in such a manner as to be representative of the affected tank's contents
("Buyer's piped sample").  The Buyer's piped sample is to be divided into a
minimum of two (2) parts one of which shall be retained by the Independent
Inspector for a period of not less than three (3) Months.

The quality of the Oil purchased by MECO-Molokai, and MECO or HELCO if Delivery
is made pursuant to Section 6.5, shall be determined on the basis of a
volumetric weighted average composite of samples drawn by Chevron from tanks of
Chevron's Nominated Barge in such a manner as to be representative of the
Delivered Oil ("Chevron's barge sample," can also be considered "Chevron's
loaded sample" if the receiving tank is in Chevron's facilities on Maui or
Hawaii").  In addition, the Independent Inspector shall draw a volumetric
weighted average composite of samples from the receiving tank(s) at the
Kaunakakai Terminal, or Buyer's Nominated Terminal in Kahului, Maui, Hilo,
Hawaii and Kawaihae, Hawaii after the completion of each Delivery, in such a
manner as to be representative of the Diesel inventory ("Buyer's terminal
sample," can also be considered "Chevron's Received Sample" if the receiving
tank is in Chevron's facilities on Maui or Hawaii).  The Buyer's terminal sample
is to be divided into a minimum of two (2) parts one of which shall be retained
by the Independent Inspector for a period of not less than three (3) Months.

Unless otherwise specifically agreed by the parties, the quality and heat
content of the Oil Delivered by Chevron into Buyer's Nominated Barge at
Chevron's HMT [---] shall be determined on the basis of a volumetric weighted
average composite of samples ("Chevron's loaded sample") drawn by the
Independent Inspector from the cargo tanks of Buyer's Nominated Barge at the
completion of loading in such a manner as to be representative of the total
volume of the Delivery.  See Addendum No. 2 attached hereto for an overview of
Chevron sampling.

                                       14
<PAGE>
 
The Chevron's loaded sample, Chevron's piped sample, Chevron's barge sample and
any other sample not otherwise specifically provided shall be divided into three
(3) parts and dated, such parts to be distributed as follows:

     1.   One part shall be provided to Chevron's laboratory for analysis and 
          quality determination.

     2.   One part shall be provided to Buyer's laboratory for the purpose of 
          verifying Chevron's determinations.

     3.   One part shall be sealed and retained by the Independent Inspector 
          for a period of not less than three (3) Months.

The determination of the Oil or Jet's quality and BTU content shall be reported
through the preparation of a Certificate of Quality by Chevron's laboratory.
Chevron agrees to provide Buyer and the Independent Inspector copies of the
complete Certificate of Quality of the Oil or Jet; and will make best reasonable
efforts to provide the Certificate of Quality no later than two (2) working days
after the completion of the Delivery.  Buyer shall have the right to perform
laboratory analyses in order to verify the results of Chevron's quality and BTU
content determinations.

Section 7.2:  Quality Disputes

Within sixty (60) Days after the end of each Month, Buyer shall give Chevron
notice of any disagreement with Chevron's quality or BTU content determination
for Delivered Oil and Delivered Jet during such Month. Buyer shall present
Chevron with documents supporting such disagreement and the parties will confer,
in good faith, on the causes for the discrepancy and shall proceed to correct
such causes and adjust the quality, if justified, for the Delivery in question.
In the event that such disagreement is not resolved within thirty (30) Days of
the date of Buyer's notice, the Independent Inspector shall prepare, in whole or
in part from the samples in its possession, a representative sample of the
disputed Delivery ("Referee Sample") which shall be submitted to a mutually
agreed upon independent laboratory for a final determination, whose
determination shall be final and binding on both parties. The Referee Sample
shall include a volumetric weighted proportion of samples as are applicable to
the Oil or Jet in question, including Buyer's remain samples, or in lieu thereof
samples of the oil from the previous cargo, should the retains of the previous
cargo be reasonably suspected as a cause of the quality problem..

Section 7.3:  Impact of Less Than Quality Product

If Buyer and Chevron agree or the Independent Inspector or independent
laboratory determines that the quality of Delivered Oil and Delivered Jet did
not equal the qualities described in Article IV (regardless of whether or not
the Preliminary Analysis indicated a quality problem or whether such Oil and Jet
passed tests of conditional acceptance), the Buyer and Chevron shall attempt to
minimize the impact.  This may include specification waiver especially if use of
Oil and Jet will not harm Buyer or Chevron, or delivering higher quality Oil and
Jet in a timely manner to produce a specification quality blend in Chevron's
terminal or at Buyer's nominated vessel or terminal, wherever the Oil or Jet or
oil or jet in question then resides.  If all such, or similar efforts fail to
resolve the quality problem, then Chevron at Chevron's expense, shall exchange
the non-specification Oil and Jet and other oil downgraded by commingling with
Chevron's Oil and Jet, with Oil and Jet meeting the qualities of Article IV. All
costs and expenses, including testing, transportation, re-refining and handling
costs incurred in returning and replacing off-specification Oil and Jet shall be
paid by the responsible party as determined by the Independent Inspector,
independent laboratory and any other available relevant evidence.  However, in
no event shall Chevron be liable for any indirect, consequential, special or
incidental damages of any kind whether based in contract, tort (including
without limitation negligence or strict liability), warranty or otherwise
allegedly caused by or based upon the qualities of the Oil and Jet.

                                       15
<PAGE>
 
                                  ARTICLE VIII
                            MEASUREMENT OF QUANTITY
                            -----------------------
Section 8.1:  Determination of Quantity

     i.   Quantities of the Oil sold and Delivered by Chevron and purchased and 
          received by Buyers under this Contract at the HMT shall be determined
          at the time of each Delivery by gauging the HMT tanks before and after
          pumping under the supervision of the Independent Inspector.

     ii.  Quantities of Oil sold by Chevron and purchased and received by 
          Buyers under this Contract where Delivery of the Oil at the HMT pumped
          from the Refinery in direct continuation through Chevron's Oahu P/L or
          Chevron's Black Oil Pipeline, sold and purchased under this Contract
          and Delivered to Buyer at the Waiau Power Plant [---], shall be
          determined at the time of each Delivery by gauging Chevron's tanks at
          its Barbers Point Refinery before and after pumping under the
          supervision of the Independent Inspector.

     iii. Diesel sold by Chevron and purchased and received by Buyers under 
          this Contract at the Kaunakakai Terminal, or at Buyer's Nominated
          Terminal at Kahului, Maui, Hilo Hawaii or Kawaihae, Hawaii shall be
          determined at the time of each Delivery by gauging Buyer's tank(s) at
          the Kaunakakai terminal or Buyer's Nominated Terminal before and after
          pumping under the supervision of the Independent Inspector.

     iv.  Quantities Delivered hereunder shall be calculated in accordance with 
          current measurement standards adopted by industry, ASTM, API and other
          standard-setting bodies as applicable in the opinion of the
          Independent Inspector and shall be expressed in G.S.V., U.S. barrels
          or U.S. gallons @ 60 degrees F.

     v.   All such measurements shall be taken by a mutually agreed upon 
          Independent Inspector who shall (1) prepare and sign a certificate
          stating the quantity of Oil determined according to the provisions of
          this Section 8.1 to have been Delivered to Buyer ("Certificate of
          Quantity"); (2) furnish Chevron and Buyer each with a copy of such
          Certificate of Quantity; and (3) advise by facsimile or electronic
          mail the quantity Delivered to Buyer. The data in the Independent
          Inspector's report and Certificate of Quantity prepared as provided
          herein shall, absent fraud or error and omissions, be binding and
          conclusive upon both parties, and shall be used for verification of
          the invoice and Bill of Lading . Chevron and Buyer shall share equally
          the cost of independent inspections. Chevron reserves the right to
          install meters on the Oahu P/L and to determine quantity as in Section
          8.2.

Section 8.2:  Determination of Quantities at HDT

Diesel sold and purchased under this Contract at the HDT and Jet sold and
purchased by HELCO and MECO shall be determined at the time of each Delivery by
reading calibrated meters, corrected in each instance to volume at 60 degrees F 
in accordance with current measurement standards adopted by industry, ASTM, API
and other standard-setting bodies as applicable in the opinion of the
Independent Inspector. The meters used at the HDT and Chevron's terminals on
Hawaii and Maui shall be Chevron's meters. Both Buyer and Chevron shall have the
right to review each other's routine certification documents.

Section 8.3:  Quantity Dispute

If Buyer or Chevron has reason to believe that the quantity of Oil and Jet
stated for a particular Delivery per Sections 8.1 or 8.2 is incorrect, the party
shall within sixty (60) Days of the Delivery date, present the other party with
documentation supporting such determination and the parties will confer, in good
faith, on the causes for the discrepancy and shall proceed to correct such
causes and adjust the quantity, if justified, for the Deliveries in question.

                                       16
<PAGE>
 
                                   ARTICLE IX
                             INVOICING AND PAYMENT
                             ---------------------
Section 9.1:  Invoices

Invoices for the sale of CIFO, Diesel, and Jet, which will show the price per
physical barrel sold will be prepared and dated following Delivery, and for the
services provided by Chevron as outlined in Article XI, shall be rendered
promptly to Buyer.  Original invoices shall include documentation acceptable to
both parties, including Certificate of Quality, Certificate of Quantity or
report of the Independent Inspector and price calculation; such documentation
may, however, be provided to Buyer or its agent separately.

Section 9.2:  Payment Terms

Payments shall be made in U.S. dollars.  Subject to Section 8.3 herein, the
timing of payments of  invoices shall be as follows:

     i.   Invoices to HECO, MECO, MECO-Molokai and HELCO:

          a.   Payment for Deliveries and services from the first through the 
               tenth Day of a Month for which invoices have been received is 
               due on the twentieth Day of the Month.

          b.   Payment for Deliveries and services from the eleventh through the
               twentieth Day of a Month for which invoices have been received is
               due on the last Day of the Month.

          c.   Payment for Deliveries and services from the twenty-first 
               through the last Day of a Month for which invoices have been 
               received is due on the tenth Day of the following Month.

          Due dates are dates payments are to reach Chevron.  If the due date
          falls on a Saturday, the payment shall be due on the preceding 
          business day.  If such date falls on a Sunday or a holiday, payment 
          shall be due the following business day.

     ii.  Payment for Deliveries to HT&B and YB for which invoices have been
          received shall be paid within thirty (30) Days of the Delivery date.

     iii. If an invoice incorporating an item at variance with the documentation
          or is disputed has been sent to Buyer, then Buyer shall hold said
          invoice without penalty until such error, variance with documentation
          or dispute is resolved and Buyer shall have received a corrected
          invoice or debit or credit issued subsequently to the original
          invoice. Buyer shall make payment for such subsequent invoices or
          debits in accordance with Section 9.2.i or Section 9.2.ii, whichever
          is applicable. If a disputed item has not been resolved in 30 Days
          from date of invoice, Buyer shall pay the undisputed amount.

Section 9.3:  Method of Payment

Method of payment shall be as follows:

     i.   Payments of HECO, MECO, MECO-Molokai, and HELCO shall be by bank wire
               transfer of immediately available funds to:
               First National Bank of Chicago, Chicago, Illinois 60607
               Attention:  GFTS
          for credit to the following accounts, depending on which Buyer is
          making a payment:
          a.   HECO           Chevron Products Company,
                              a division of Chevron U.S.A. Inc
                              Section #632
                              Account No. 1184762

                                       17
<PAGE>
 
          b.   HELCO          Chevron Products Company,
                              a division of Chevron U.S.A. Inc
                              Section #632
                              Account No. 1237632

          c.   MECO           Chevron Products Company,
                              a division of Chevron U.S.A. Inc
                              Section #632
                              Account No. 1237636

          d.   MECO-Molokai   Chevron Products Company,
                              a division of Chevron U.S.A. Inc
                              Section #632
                              Account No. 6049549

     For identification purposes, all wires must clearly indicate that payment
     is being made by order of Buyer and indicate the invoice reference number.
     In addition, written documentation evidencing specific invoices being paid
     shall be immediately forwarded to:

                              Chevron Products Company,
                              a division of Chevron U.S.A. Inc
                              P.O. Box R
                              Concord, California 94524

     ii.  Payment by HT&B and YB shall be mailed to:
                              Chevron Products Company,
                              a division of Chevron U.S.A. Inc
                              c/o First Interstate Bank
                              Dept. 7351
                              Los Angeles, CA 90088

     Payment shall include written documentation evidencing specific invoices 
     being paid.


                                   ARTICLE X
                          CHEVRON'S FACILITIES ON OAHU
                          ----------------------------

     i.   Chevron agrees to provide the use of its Oahu P/L for the Diesel  
          Delivered to HECO's Waiau Power Plant per Section 6.3.ii.

     ii.  Chevron agrees to make available on a  [---] the use of [---], such 
          use shall include an [---], if and whenever said  [---] Contract and 
          Addendum No. 3 attached hereto and incorporated herein by reference.

                                       18
<PAGE>
 
                                   ARTICLE XI
                    CHEVRON'S FACILITIES ON MAUI AND HAWAII
                    ---------------------------------------
                                        
As used in this Article XI, "Buyer" will refer only to MECO or HELCO.

Section 11.1:  Use of Chevron Storage and Handling Facilities

     i.   Chevron agrees to provide MECO the use of its storage and handling 
          facilities for Diesel Received at Kahului, Maui, and to provide HELCO
          the use of its storage and handling facilities for Diesel and CIFO
          Received at Hilo, Hawaii; for the Delivered Oil under Article VI and
          the third party oil purchased as a result of the force majeure
          conditions of Article XIII, on the terms and conditions described in
          this Article XI. To provide operating flexibility to a valued, long-
          term customer, Chevron shall grant HELCO the non-exclusive right to
          terminal oil purchased from third parties at Chevron's facility at
          Hilo, Hawaii up to a maximum quantity per Year of [---] and [---],
          which meet the specifications set out herein. Buyer agrees to schedule
          its deliveries such that they contain a minimum of [---] barrels of
          oil such that they arrive at regular intervals. For the same reasons,
          Chevron shall grant MECO the non-exclusive right to terminal No. 2
          diesel fuel purchased from third parties at Chevron's facility on Maui
          up to a maximum quantity of [---] barrels per Year, which meets the
          specifications set out herein. Buyer agrees to schedule its deliveries
          such that they contain a minimum of [---] barrels of diesel fuel and
          that they arrive at regular intervals.

     ii.  Whenever Buyer purchases third party oil which is to be terminaled in 
          Chevron's facilities, Buyer shall obtain a sample representative of
          the oil in the barge cargo tanks, after the third party supplier has
          completed the loading of such oil into Buyer's Nominated Barge. Buyer
          shall provide a part of a volumetric weighted average composite sample
          representative of the oil in the barge cargo tanks upon completion of
          loading to the Independent Inspector who shall retain it for a period
          of not less than three (3) Months. This sample ("Buyer's loaded
          sample") shall be available for analysis by Chevron, Buyer or an
          independent laboratory should Chevron's subsequent sampling and
          analysis indicate a quality problem. This sample shall indicate the
          quality of this mixture of purchased oil and the previous cargo
          remains. To provide an early warning of any quality problems with the
          Received oil, Buyer agrees to instruct the Independent Inspector to
          provide Chevron a preliminary analysis of Buyer's loaded sample
          consisting of API gravity, appearance and, in the case of diesel fuel,
          flash point, at the time such third party oil is loaded for transport.
          Buyer also agrees to instruct the Independent Inspector to deliver one
          copy of such preliminary analysis promptly to Chevron's representative
          at the Honolulu Marine Terminal and to deliver a copy of the
          Preliminary Analysis and other relevant quality documentation in
          Buyer's or the Independent Inspector's possession to Buyer's Nominated
          Barge for delivery to Chevron's representative upon arrival at the
          appropriate outer island terminal. Buyer further agrees that the cost
          of any additives which may be required to eliminate compatibility
          problems between third party oil and Chevron's Oil at the outer island
          terminal shall be solely for Buyer's account.

Section 11.2:  Barge Schedule Notification

Buyer shall provide Chevron with estimated arrival times of the barge
transporting the oil for which Buyer desires to use Chevron's facilities on Maui
or Hawaii. Buyer or Buyer's agent shall provide radio, phone or facsimile
notification to Chevron's representative at each unloading location at least
seven Days prior to a third-party supplied oil delivery and at least 24 hours
prior to a Chevron supplied oil delivery. Buyer or Buyer's agent shall also
provide the Captain of the Port with radio or phone notification at least 24
hours prior to any delivery. Should the estimated time of arrival change by two
or more hours following the 24 hour arrival report, Buyer or Buyer's agent shall
promptly report the change to Chevron's representative and the Captain of the
Port at the place of planned arrival.

                                       19
<PAGE>
 
Section 11.3:  Loaded Samples

     i.   Chevron shall analyze Chevron's Loaded sample of Section 6.1.iv and
          review Buyer's supplied results from any Buyer's loaded sample of
          Section 11.1.ii for conditional acceptance for receiving the oil, and
          if warranted, analyze Chevron's Loaded sample of Section 6.1.iv and if
          a quality problem with the loaded oil is reasonably indicated, obtain
          and analyze a sufficient portion of Buyer's loaded sample of Section
          11.1.ii for all the qualities described in Article IV, while Buyer's
          Nominated Barge is enroute to Maui or Hawaii, to reduce the risk of
          contaminating Chevron's terminal inventories. See Addendum No. 2
          hereto for an overview of all Chevron sampling. If Buyer's supplied
          results from any Buyer's loaded sample fails conditional acceptance or
          Chevron's analysis of Buyer's loaded sample is not consistent with the
          qualities described in Article IV, Chevron shall promptly notify Buyer
          of any quality problems with the loaded oil. Both Buyer and Chevron
          shall attempt to minimize the impact of any quality problem by
          specification waiver especially if use of the loaded oil will not harm
          either Buyer or Chevron, or by Buyer or Chevron Delivering higher
          quality oil in a timely manner to produce a specification quality
          blend at Chevron's terminal. If all such, and similar, efforts fail to
          resolve the quality problem, then Buyer's loaded oil shall not be
          unloaded into Chevron's terminal tanks. Buyer may return non-
          specification Loaded Oil to Chevron's Barbers Point Refinery, in which
          case Chevron shall replace the non-specification Loaded Oil by
          Delivering an equal volume of Oil into Buyer's Nominated Barge at the
          HMT, in a timely manner.

     ii.  All costs and expenses, including transportation, re-refining and
          handling costs incurred in returning and replacing non-specification
          loaded oil and Loaded Oil shall be paid by the party responsible for
          the contamination. Responsibility shall be determined by analyzing the
          Buyer's barge retain sample or Chevron's Loaded Sample of Section 7.1
          and the Buyer's loaded sample of Section 11.1.ii. If Buyer and Chevron
          cannot agree whether the Chevron's Loaded Oil or the loaded oil meet
          the qualities specified in Article IV, then the applicable samples in
          the possession of Chevron, Buyer and the Independent Inspector which
          relate to the oil in question shall be submitted to a mutually agreed
          upon independent laboratory, whose determination shall be final and
          binding on both parties. Chevron shall have the responsibility for
          Buyer's transportation and handling costs for its own re-refining cost
          if it is determined that the qualities described in Article IV are not
          met by the Delivered Oil. Otherwise, Buyer shall be responsible for
          Chevron's handling and re-refining cost and its own transportation and
          handling costs. The responsible party shall reimburse the other party
          for such costs and expenses within sixty (60) Days of the delivery
          date of the non-specification loaded oil. However, in no event shall
          such party be responsible for any indirect, consequential, special or
          incidental damages of any kind whether based in contract, tort
          (including without limitation negligence or strict liability),
          warranty or otherwise allegedly caused by or based upon the quality of
          the non-specification loaded oil. Chevron and Buyer shall share
          equally the cost of any independent inspections.

Section 11.4:  Coast Guard Dock Watch Requirements

Buyer shall be responsible for meeting all Coast Guard dock watch requirements
at Hilo, Hawaii and Kahului, Maui.  Charges levied by any governmental agency
for the use of their facilities at Hilo, Hawaii or Kahului, Maui, including but
not limited to the State of Hawaii's wharf and pipeline fees, shall be for
Buyer's account.

Section 11.5:  Custody of Received Oil

Chevron will accept custody and exercise control of Received oil having
conditionally acceptable quality per Section 11.6 at the flange connecting
Chevron's independently owned pipeline at each location [---]. Title and risk of
loss shall remain with Buyer. Not withstanding Article 18, Chevron shall not be
responsible for any type of loss of the oil while it is in Chevron's custody
except when loss or damage is caused by Chevron's gross negligence or willful
misconduct in receiving, handling, storing, or delivering such oil. Received oil
will be commingled with Chevron's Oil in Chevron's tankage at Chevron's Kahului,
Maui or Hilo, Hawaii terminals.

                                       20
<PAGE>
 
Section 11.6:  Determination of Quality of Received Oil at Unloading

     i.   Quality of Received oil at the unloading location shall be determined 
          by testing a volumetric weighted average composite of representative
          samples taken from Carrier's barge tanks by the Independent Inspector.
          See Addendum No. 2 hereto for an overview of all Chevron sampling.
          Samples will be divided into three parts and dated. One part shall be
          tested promptly per Section 11.6.ii. One part shall be labeled
          "Chevron's Received Sample," one part shall be sealed and labeled
          "Chevron's Received Retain" which shall be retained by the Independent
          Inspector for a period of not less than three (3) Months.

     ii.  To facilitate Buyer's barge turnaround, Chevron shall promptly 
          perform a preliminary analysis on one part of the sample taken in
          Section 11.6.i for its API gravity, appearance and in the case of
          Diesel also for its flash point. Received Oil will be considered
          conditionally acceptable if its API gravity is within 0.3 degrees of
          its gravity delivered to Buyer under Article VI. Received oil will be
          considered acceptable if its API gravity is within 0.3 degrees of the
          Supplier's loaded sample gravity as determined in Section 11.1.ii, and
          for diesel cargoes, if its Flash point is above its 150 degrees F 
          specification of Section 4.2.

     iii. Notwithstanding the above conditional acceptance, Chevron may use 
          Chevron's Received Sample to determine all the qualities described in
          Article IV for Received oil. Within thirty (30) Days after each oil
          cargo unloading, Chevron shall give Buyer notice of any claim of
          contamination of Chevron's Oil from commingling with Received oil. In
          the event that such claim is not resolved within thirty (30) Days of
          the original claim, the Independent Inspector shall prepare, in whole
          or in part from the samples in its possession, a representative sample
          of the disputed delivery ("Referee Sample") which shall be submitted
          to a mutually agreed upon independent laboratory for a final
          determination, whose determination shall be final and binding on both
          parties. The Referee Sample shall include a volumetric weighted
          proportion of samples as are applicable to the oil in question,
          including Chevron's Received Retain Buyer's remain samples, or in lieu
          thereof samples of the oil from the previous cargo, should the retains
          of the previous cargo be reasonably suspected as a cause of the
          quality

     iv.  If Buyer and Chevron agree or the Independent Inspector determines
          that the quality of the Received oil did not meet the qualities
          described in Article IV, and the Received oil has contaminated
          Chevron's terminal inventories, both Buyer and Chevron shall attempt
          to minimize the impact of any quality problem on Buyer by waiver of
          Buyer's requirement to meet specifications especially if Chevron's use
          of the oil will not significantly harm Chevron, or by Buyer or Chevron
          delivering higher quality oil in a timely manner to produce a
          specification quality blend at Chevron's terminal. If all such, and
          similar, efforts fail to resolve the quality problem, then Buyer will
          reimburse Chevron the transportation, handling and re-refining costs
          of exchanging Buyer's and Chevron's oil, with oil meeting the
          qualities described in Article IV. to the extent the contamination of
          Chevron's terminal inventories was not caused or contributed to by
          Chevron. Such reimbursement shall occur within sixty (60) Days of
          Chevron's original claim. However, in no event shall Buyer be liable
          for any indirect, consequential, special or incidental damages of any
          kind whether based in contract, tort (including without limitation
          negligence or strict liability), warranty or otherwise allegedly
          caused by or based upon the quality of the Received oil.

Section 11.7: Determination of Quantity of Received Oil and Oil at Time of
Custody Transfer

The quantity of Received oil and Received Oil over which Chevron takes custody
shall be determined at the time of each barge cargo unloading by gauging
Chevron's terminal tank before and after pumping. Free water shall be drawn off
prior to each level measurement. Volumes delivered hereunder shall be calculated
in accordance with current measurement standards adopted by industry, ASTM, API
and other standard-setting bodies as applicable in the opinion of the
Independent Inspector and shall be expressed in G.S.V., U.S. barrels @ 60
degrees F. Measurements shall be taken by Chevron and witnessed by Buyer or
Buyer's agent. However, at Buyer's option, such measurement shall be taken by a
mutually agreed upon independent inspector. Buyer and Chevron shall share
equally the cost of independent inspections.

                                       21
<PAGE>
 
Section 11.8:  Commingle Product

In the event that Buyer and Chevron have agreed to commingle their oil in a
barge or vessel compartment to reduce freight costs, and there are discrepancies
between either the quantities of oil loaded per Section 6.1 and unloaded per
Section 11.7 or the qualities of oil loaded per Section 7.1 and unloaded per
Section 11.6, then Buyer and Chevron shall share the benefits or losses of the
discrepancy proportionally to the loaded volumes.

Section 11.9:  Transfer Notification From Kahului and Hilo

Buyer will provide Chevron's terminal representative, during normal working
hours, at least 24-hour notice of any transfers required from Chevron's
facilities in Kahului or Hilo.

Section 11.10:  Custody of Returned Fuel Oil

Buyer shall regain custody and control of Returned Fuel Oil at the flange
connecting Chevron's Hilo terminal pipeline to Buyer's pipeline.

     i.   The quantity of Fuel Oil over which Chevron returns custody shall be 
          determined at the time of each transfer by gauging Chevron's terminal
          tank(s) before and after pumping. Volumes Returned hereunder shall be
          calculated in accordance with current measurement standards adopted by
          industry, ASTM, API and other standard-setting bodies as applicable in
          the opinion of the Independent Inspector and shall be expressed in
          G.S.V., U.S. barrels @ 60 degrees F. Measurements shall be taken by
          Chevron and witnessed by Buyer or Buyer's agent. However, at Buyer
          option, such measurements shall be taken by the Independent Inspector.
          Buyer and Chevron shall share equally the cost of independent
          inspections.

     ii.  Chevron shall maintain a record of Buyer's net Fuel Oil inventory
          stored in its Hilo terminal based on receipts as determined in Section
          11.7 and returns as determined in Section 11.10.i. Chevron will
          provide book inventory records once each week, convenient to Chevron's
          normal weekly inventory period..

Section 11.11:  Custody of Returned Diesel

Buyer shall regain, custody and control of Returned diesel at the end of the
fill pipe connecting Chevron's terminal pipelines to Carrier's tank trucks.
Transfers will be made in minimum 5,000 gallons per delivery load.

     i.   The quantity of diesel over which Chevron returns custody shall be 
          determined at the time of each transfer by reading Chevron's
          calibrated meters corrected in each instance in accordance with
          current measurement standards adopted by industry, ASTM, API and other
          standard-setting bodies as applicable in the opinion of the
          Independent Inspector and shall be expressed in G.S.V., U.S. barrels
          or U.S. gallons @ 60 degrees F. If Buyer or Chevron have reason to
          believe that the quantity of Returned diesel stated for a particular
          transfer is incorrect, that party shall within fifteen Days of the
          transfer date, present the other party with documentation supporting
          such determination and the parties will confer, in good faith, on the
          causes for the discrepancy and shall proceed to correct such causes
          and adjust the quantity, if justified, for the transfers in question.

     ii.  Chevron shall maintain records of Buyer's net diesel inventories 
          stored at each of its Kahului, Maui and Hilo, Hawaii terminals, based
          on receipts as determined in Section 11.7 and returns as determined in
          Section 11.11.i. Chevron will provide book inventory records once each
          week, convenient to Chevron's normal weekly inventory period.

     iii. Chevron will periodically reconcile meter measurements with tank
          gaugings. Buyer may review Chevron's reconciliation calculations.
          However, there will be no retroactive adjustments to the volumes
          delivered or received as a result of this procedure.

                                       22
<PAGE>
 
Section 11.12:  Return Oil Quantities

Chevron shall be under no obligation to provide Buyer quantities of Returned oil
greater than Buyer's current net oil inventory. However, Chevron will attempt to
meet Buyer's unanticipated needs, after considering the needs of its other
customers and its own available inventory.

Section 11.13:  Transfer of Returned Oil

     i.   Returned oil transferred by Chevron shall meet the qualities 
          described in Article IV. Chevron, or at Buyer's option the Independent
          Inspector, shall draw a volumetric weighted average composite sample
          representative of the oil in Chevron's tanks on Maui and Hawaii after
          each receipt of Buyer's or Chevron's oil in order to verify the
          quality of the Returned oil in Chevron's terminal ("Chevron's Returned
          sample"). This sample will be divided into three parts and dated. .
          See Addendum No. 2 hereto for an overview of Chevron sampling. One
          part of this sample shall be promptly tested by Chevron for its API
          gravity, appearance and in the case of diesel also for its flash
          point. Buyer and Chevron agree that successful passage of the prompt
          test on this sample is sufficient evidence for Chevron to return oil
          to Buyer, without limiting Buyer's rights within Section 11.13.ii. One
          part of the Chevron's Returned sample shall be retained by Chevron and
          one part shall be sealed and shall be provided to the Independent
          Inspector to be retained for a period of not less than three (3)
          Months.

     ii.  Notwithstanding the above conditional acceptance, if a quality 
          problem with the Returned oil is reasonably indicated, Buyer may
          obtain and analyze a sufficient portion of Chevron's Returned Sample
          in the possession of the Independent Inspector to determine all the
          qualities described in Article IV for the Returned oil. Within thirty
          (30) Days after each oil delivery, Buyer shall give Chevron notice of
          any claim of contamination and of resulting losses. In the event that
          such claim is not resolved within thirty (30) Days of the original
          claim, the Independent Inspector shall prepare, in whole or in part
          from the samples in its possession, a representative sample of the
          disputed delivery ("Referee Sample") which shall be submitted to a
          mutually agreed upon independent laboratory for a final determination,
          whose determination shall be final and binding on both parties. The
          Referee Sample shall include a volumetric weighted proportion of
          samples as are applicable to the oil in question..

     iii. If Buyer and Chevron agree or the Independent Inspector determines
          that the quality of the Returned oil did not meet the qualities
          described in Article IV and that and indicates that Chevron's terminal
          inventories, including Buyer's oil stored there and Buyer's power
          plant inventories are contaminated, both Buyer and Chevron shall
          attempt to minimize the impact of any quality problem on Chevron by
          waiver of Chevron's requirement to meet specifications, especially if
          Buyer's use of the oil will not significantly harm Buyer, or by
          Chevron Delivering higher quality oil to produce a specification
          quality blend at Chevron's terminal inventory and Buyer's plants. If
          all such, and similar, efforts fail to resolve the quality problem,
          then Chevron will, at Chevron's expense, exchange Buyer's Returned oil
          to the extent the contamination of Buyer's other similar oil was
          caused or contributed to by Chevron, and, if appropriate, any of
          Buyer's other similar oil which has been downgraded by commingling
          with the Returned oil, with oil meeting the qualities described in
          Article IV. Chevron shall make its best, reasonable effort to replace
          Buyer's oil in a timely manner. However, in no event shall Chevron be
          liable for any indirect, consequential, special or incidental damages
          of any kind whether based in contract, tort (including without
          limitation negligence or strict liability), warranty or otherwise
          allegedly caused by or based upon the quality of the Returned oil.

Section 11.14:  Terminaling and Handling Fees

Effective upon the commencement of this Contract, Chevron will invoice Buyer and
Buyer will pay Chevron per Article IX, terminaling and handling fees based on
the quantities of oil determined in Section 11.7 at the rates listed below.

                                       23
<PAGE>
 
     i.   At Kahului, Maui, the terminaling and handling fee shall be [---] 
          per gallon of diesel [---] per physical barrel of diesel).

     ii.  At Hilo, Hawaii, the terminaling and handling fee shall be [---] per 
          gallon of oil [---] per physical barrel of oil).

     iii. The terminaling and handling fees specified in Section 11.14i and 
          Section 11.14.ii shall be subject to [---], 50% of the annual
          escalation factor shall be the arithmetic average of the hourly
          earnings in dollars per hour for the petroleum and coal products
          industry as shown in the "Employment and Earning" publication of the
          U.S. Department of Labor, Bureau of Labor Statistics, for the three
          Months of the second calendar quarter immediately preceding the
          calendar quarter of the Month in which services are rendered, divided
          by the arithmetic average of the hourly earnings in dollars per hour
          for the petroleum and coal products industry as shown in the
          "Employment and Earning" publication of the U.S. Department of Labor,
          Bureau of Labor statistics, for the Months January through March, 1997
          (20.353);the remaining 50% of the annual escalation factor shall be
          the arithmetic average of the Producer Price Index (PPI) for
          Industrial Commodities as published by the U.S. Department of Labor,
          Bureau of Labor Statistics, for the three Months of the second
          calendar quarter immediately preceding the calendar quarter of the
          Month in which services are rendered, divided by the arithmetic
          average of the Producer Price Index (PPI) for Industrial Commodities
          as published by the U.S. Department of Labor, Bureau of Labor
          Statistics, for the Months January through March, 1997 (128.50).

For the purpose of invoicing, the terminaling and handling services shall be
considered received by Buyer when Chevron first takes custody of Buyer's oil per
Section 11.5.


                                  ARTICLE XII
                                 CONTINGENCIES
                                 -------------

Section 12.1:  Definition of Contingency

As used in this Article XII, the term "Contingency" means: 

     (a)  any event reasonably beyond the control of the party affected;

     (b)  compliance, voluntary or involuntary, with a direction or request of 
          any government or person purporting to act with governmental
          authority; excluding, however, any such direction or request
          restricting or otherwise regulating combustion of the oil to be
          purchased by Buyer hereunder, the effect of which restrictions or
          regulation upon the parties' performance shall be governed by Section
          12.5 of this Contract;

     (c)  total or partial expropriation, nationalization, confiscation, 
          requisitioning or abrogation or breach of a government contract or
          concession;

     (d)  closing of, or restriction on the use of, a port or pipeline;

     (e)  maritime peril (including but not limited to, negligence in 
          navigation or management of vessel, collision, stranding, destruction,
          or loss of vessel), storm, earthquake, flood;

     (f)  accident, fire, explosion;

     (g)  hostilities or war (declared or undeclared), embargo, blockage, riot, 
          civil unrest, sabotage, revolution, insurrection;

     (h)  strike or other labor difficulty (whomever's employees are involved), 
          even though the strike or other labor difficulty could be settled by
          acceding to the demands of a labor group; or,

                                       24
<PAGE>
 
     (i)  loss or shortage of supply, production, manufacturing, distribution, 
          refining, transportation, Delivery facilities, receiving facilities,
          equipment, labor, material, power generation or power distribution
          caused by circumstances which the affected party is not able to
          overcome by the exercise of reasonable diligence or which the affected
          party is able to overcome only at substantial additional expense in
          relation to the expected revenue, benefits or rights related directly
          to this Contract.

Section 12.2:  Obligation to Supply Product

Chevron shall not be obligated to sell or deliver Oil or Jet to the extent that
performance of this Contract is prevented, restricted or delayed by a
Contingency which significantly affects Chevron's ability to supply, manufacture
or transport Diesel  or Jet to Buyer under this Contract from [---].  In such
circumstances, Deliveries of Oil or Jet to Buyer may be reduced on a basis as
equitable to Buyer as to Chevron's and its affiliates' other customers of crude
and petroleum products, and Chevron shall not be obligated to acquire additional
crude, oil or jet but to the extent that it does acquire additional crude, oil
or jet, Buyer shall be entitled to an equitable share of the oil or jet acquired
or derived from the crude acquired, at a price to be agreed from time to time.

Section 12.3:  Obligation to Purchase Product

Buyer shall not be obligated to purchase, receive or use Oil or Jet to the
extent that performance of this Contract in the customary manner is prevented,
restricted or delayed by a Contingency.  In such circumstances, purchases from
Chevron may be reduced on any basis as equitable to Chevron as to Buyer's other
suppliers of oil or jet.

Section 12.4:  Price Determination Prevention

If at any time any price determined under this Contract cannot be given effect
because to do so would violate a direction or request of any government or
person purporting to act with governmental authority, Buyer and Chevron shall
attempt to agree on an alternate course of action but failing agreement within
ten (10) Days the party adversely affected may suspend performance with respect
to the quantity of Oil or Jet affected by the direction or request.

Section 12.5:  Governmental Regulation Requirements

To the extent that any governmental regulation requires combustion of oil or jet
meeting specifications other than those in Article IV, Buyer and Chevron shall
negotiate in good faith to agree on an alternative course of action that will
reasonably allow Buyer to comply with such regulation while fulfilling its
minimum annual purchase volume commitment  under Article III, at a price and on
other terms and conditions that are fair to both parties. Chevron shall have no
obligation to Deliver oil or jet meeting new specifications if it is not
available for purchase from third parties and Chevron cannot manufacture such
oil or jet in existing facilities without substantial new capital investment.

If Buyer and Chevron do not agree on such an alternative course of action, then
Buyer may comply with such regulation in any reasonable manner it chooses,
including the option to purchase from other sources for its plants located
within the area in which such regulation specifically applies, fuels which will
enable Buyer to comply with such regulation. In such case, Buyer's minimum
purchase requirement under Article III shall be reduced accordingly.

Section 12.6:  Chevron's Obligations Under Contract

     [---]

                                       25
<PAGE>
 
     [---]
     [---]


                                  ARTICLE XIII
                       EFFECT OF SUSPENSION OR REDUCTION
                       ---------------------------------

Section 13.1:  Event of Suspension

In the event of any suspension of sales and Deliveries under Article XII,
Chevron shall not be obligated to sell and Buyer shall not be obligated to buy,
after the period of suspension or reduction, the undelivered quantity of Oil or
Jet which normally would have been sold and Delivered hereunder during the
period of suspension or reduction.

Section 13.2:  Suspension For More Than 180 Days

If sales and Deliveries are suspended under Article XII for more than one
hundred eighty (180) Days, Chevron or Buyer shall then have the option while
such suspension continues to terminate its obligations to the other party under
this Contract on thirty (30) Days' written notice to the other party.

Section 13.3:  Notification of Suspension

Any party which relies upon Article XII shall give the other party prompt notice
thereof specifying the anticipated amount and duration of any suspension or
reduction of Deliveries. It shall also give prompt notice when it no longer
expects to rely on Article XII and Deliveries shall be reinstated subject to all
conditions of this Contract, unless this Contract has been terminated previously
under Section 13.2.

Section 13.4:  Obligation to Pay In Full

Nothing in Article XII shall relieve Buyer of the obligations to pay in full in
United States currency for the Oil or Jet sold and Delivered hereunder and for
other amounts due to Buyer to Chevron under this Contract, nor relieve Chevron
of the obligation to return to Buyer the net positive inventory of Buyer's oil
stored in Chevron's Hilo, Hawaii and Kahului, Maui terminals.

Section 13.5:  Suspension Not A Breach Of Contract

While Deliveries are suspended or reduced by Chevron pursuant to Article XII, it
shall not be a breach of this Contract for Buyer to buy from a supplier other
than Chevron the quantities of Oil or Jet which Chevron does not Deliver. During
this period of time, there will be no minimum volume requirements. After any
suspension or reduction has ended, minimum and maximum volume requirements for
the semiannual period in which the suspension or reduction occurred will be
reduced in proportion to the ratio of the number of Days within the semiannual
period during which no suspension or reduction was in effect, to the number of
Days within the semiannual period.


                                  ARTICLE XIV
                          WAIVER AND NONASSIGNABILITY
                          ---------------------------

Section 14.1:  Waiver By One Party

Waiver by one party of the other's breach of any provision of this Contract
shall not be deemed a waiver of any subsequent or continuing breach of such
provisions or of the breach of any other provision or provisions hereof.

                                       26
<PAGE>
 
Section 14.2:  Assignability of Contract

This Contract shall not be assignable by either party without the written
consent of the other, which shall not be unreasonably withheld, except that
Chevron may assign this Contract to any affiliate, provided that any such
assignment shall not release Chevron from any of its obligations hereunder, and
except that HECO, MECO, MECO-Molokai, and HELCO may assign their interests in
the Contract to the Trustee under their respective First Mortgage Bond
Indentures. Chevron does not, by agreement to such an assignment, waive any
right it may have to terminate this Contract for any breach hereof occurring at
any time before or after any such assignment or release Buyer of any obligations
arising under this Contract after any such assignment.  Following any such
assignment, no further assignment may be made without the consent of Chevron.


                                   ARTICLE XV
                              CONFLICT OF INTEREST
                              --------------------

Conflicts of interest related to this Contract are strictly prohibited. Except
as otherwise expressly provided herein, neither party nor any director, employee
or agent of a party shall give to or receive from any director, employee or
agent of the other party any gift, entertainment or other favor of significant
value, or any commission, fee or rebate. Likewise, neither party nor any
director, employee or agent of a party shall enter into any business arrangement
with any director, employee or agent of the other party (or any affiliate),
unless such person is acting for and on behalf of the other party, without prior
written notification thereof to the other party. In the event of any violation
of this paragraph, including any violation occurring prior to the date of this
Contract which resulted directly or indirectly in one party's consent to enter
into this Contract with the other party, such party may, at its sole option,
terminate this Contract at any time and, except for Buyer's obligation to pay in
full in United States currency for the Oil sold and Delivered hereunder and for
other amounts due by Buyer to Chevron under this Contract, and for Chevron's
obligation to return to Buyer the net positive inventory of Buyer's oil stored
in Chevron's Hilo, Hawaii and Kahului, Maui terminals, shall be relieved of any
further obligation under this Contract.

Both parties agree to immediately notify the other of any known violation of
this Article.


                                  ARTICLE XVI
                                    DEFAULT
                                    -------

If Buyer or Chevron considers the other party to be in default of any obligation
under this Contract, such party shall give the other party notice thereof.  Such
other party shall then have 30 Days in which to remedy such default.  If the
default is not remedied, the other party may, without prejudice to any other
right or remedy of such party in respect of such breach, terminate its
obligations under this Contract, except for Buyer's obligation to pay in full in
United States currency for the Oil or Jet sold and Delivered hereunder and for
other amounts due by Buyer to Chevron under this Contract, and for Chevron's
obligation to return to Buyer the net positive inventory of Buyer's oil stored
in Chevron's Hilo, Hawaii and Kahului, Maui terminals, by forty five (45) Days'
written notice to the party in breach. Any termination shall be without
prejudice to accrued rights. All rights and remedies hereunder are independent
of each other and election of one remedy shall not exclude another.

Except as provided under Sections 18.2 and 18.4, in no event shall either party
be liable for any indirect, consequential, special or incidental damages of any
kind whether based in contract, tort (including without limitation negligence or
strict liability), warranty or otherwise.

Chevron's termination of its obligations to a Buyer in this Contract due to
default by that Buyer shall not terminate Chevron's obligations to the remaining
Buyers not in default of this Contract.

                                       27
<PAGE>
 
                                  ARTICLE XVII
                                 APPLICABLE LAW
                                 --------------

This Contract shall be construed in accordance with, and all disputes arising
hereunder shall be determined in accordance with, the local law of the State of
Hawaii, U.S.A.


                                 ARTICLE XVIII
                                   INDEMNITY
                                   ---------

Section 18.1:  Buyer Held Harmless for General Indemnity where title and risk of
loss is with Chevron

Chevron shall indemnify, defend and hold harmless Buyer, its directors,
officers, employees and agents (including but not limited to affiliates and
contractors and their employees) from and against all liabilities, damages,
losses, penalties, claims, demands, suits, costs, expenses (including reasonable
attorneys' fees), and proceedings of any nature whatsoever for personal injury
(including death), or property damage, including but not limited to Buyer's
facilities (collectively "Injury or Damage"), that results from non-
specification or contaminated Delivered Oil or Jet, or that arises out of or is
in any manner connected with the Delivery or Receipt of Oil or Jet related to
this Contract at Chevron's facilities when in the custody of Chevron or the
transportation of Oil or Jet related to this Contract when in the custody of
Chevron, except to the extent that such Injury or Damage may be attributable to
the negligence or willful action of Buyer.  This Section 18.1 shall not include
any indirect, consequential, special or incidental damages of any kind whether
based in contract, tort (including without limitation negligence or strict
liability), warranty or otherwise.

Section 18.2:  Buyer Held Harmless for Releases to the Environment when title
and risk of loss is with Chevron

Without limiting the generality of Section 18.1, Chevron shall indemnify, defend
and hold harmless Buyer, its directors, officers, employees and agents
(including but not limited to affiliates and contractors and their employees)
from and against all liabilities, damages, losses, penalties, claims, demands,
suits, costs, expenses, and proceedings of any nature whatsoever directly or
indirectly arising out of or attributable to the release, threatened release,
discharge, disposal or presence of Oil, Jet or hazardous material related to
this Contract when in the custody of Chevron, or of Diesel sold pursuant to the
provisions of Section 6.5 herein when in the custody of any Chevron-chartered
barge, except to the extent that such release, threatened release, discharge,
disposal or presence of Oil, Jet or hazardous material may be attributable to
the negligence or willful action of Buyer, including without limitation: (1) all
foreseeable and unforeseeable consequential damages; (2) the reasonable costs of
any required or necessary repair, cleanup or detoxification of an area of oil,
jet or hazardous material and the preparation and implementation of any closure,
remedial or other required plans; (3) the reasonable costs of the investigation
of any environmental claims by Buyer; (4) the reasonable costs of Buyer's
enforcement of this Contract; and (5) all reasonable costs and expenses incurred
by Buyer in connection with clauses (1), (2), (3), and (4), including without
limitation reasonable attorneys' fees and court costs.

Section 18.3:  Chevron Held Harmless For General Indemnity when title and risk
of loss is with Buyer

Buyer shall indemnify, defend and hold harmless Chevron, its directors,
officers, employees and agents (including but not limited to affiliates and
contractors and their employees) from and against all liabilities, damages,
losses, penalties, claims, demands, suits, costs, expenses (including reasonable
attorneys' fees), and proceedings of any nature whatsoever for personal injury
(including death), or property damage, including but not limited to Chevron's
facilities (collectively "Injury or Damage"), that results from non-
specification or contaminated Received oil or jet, or that arises out of or is
in any manner connected with the Delivery or receipt of oil or jet at Chevron's
facilities when in the custody of Buyer, any carrier or subsequent buyer of oil
or jet related to this Contract or the transportation of oil or jet when in the
custody of Buyer, any carrier or subsequent buyer of oil or jet related to this
Contract, except to the extent that such Injury or Damage may be attributable to
the negligence or willful action of Chevron.  This Section 18.3 shall not
include any indirect, consequential, special or incidental

                                       28
<PAGE>
 
damages of any kind whether based in contract, tort (including without
limitation negligence or strict liability), warranty or otherwise.

Section 18.4:  Chevron Held Harmless for Releases to the Environment when title
and risk of loss is with Buyer

Without limiting the generality of Section 18.3, Buyer shall indemnify, defend
and hold harmless Chevron, its directors, officers, employees and agents
(including but not limited to affiliates and contractors and their employees)
from and against all liabilities, damages, losses, penalties, claims, demands,
suits, costs, expenses, and proceedings of any nature whatsoever directly or
indirectly arising out of or attributable to the release, threatened release,
discharge, disposal or presence of oil, jet or hazardous material related to
this Contract when in the custody of Buyer, any carrier (except any Chevron-
chartered barge carrying Diesel sold pursuant to the provisions of Section 6.5
herein) or subsequent buyer of oil or jet related to this Contract, except to
the extent that such release, threatened release, discharge, disposal or
presence of oil, jet or hazardous material may be attributable to the negligence
or willful action of Chevron, including without limitation:  (1) all foreseeable
and unforeseeable consequential damages; (2) the reasonable costs of any
required or necessary repair, cleanup or detoxification of an area of oil, jet
or hazardous material and the preparation and implementation of any closure,
remedial or other required plans; (3) the reasonable costs of the investigation
of any environmental claims by Chevron; (4) the reasonable costs of Chevron's
enforcement of this Contract; and (5) all reasonable costs and expenses incurred
by Chevron in connection with clauses (1), (2), (3), and (4), including without
limitation reasonable attorneys' fees and court costs.


                                  ARTICLE XIX
                          PUBLIC UTILITIES COMMISSION
                          ---------------------------

Section 19.1:  Filing Requirements; Buyers Energy Cost Adjustment Clause

This Contract is required to be filed with the Hawaii Public Utilities
Commission ("PUC") for approval.  If in the proceedings initiated as a result of
the filing of this Contract the PUC disapproves or fails to authorize the full
recovery of the fuel costs incurred under this Contract through Buyer's Energy
Cost Adjustment Clause, Buyer may terminate this Contract at any time within
ninety (90) Days of disapproval by giving sixty (60) Days' written notice to
Chevron.

Section 19.2:  Decision and Order Impairing Chevron

In the event that a Decision and Order or other action by a governmental
regulatory body impairs Chevron's ability to enforce any terminal and safety
protection or operation provisions under this Contract, Buyer and Chevron shall
attempt to agree on an alternate course of action, but failing agreement within
10 Days, the Chevron may suspend performance with respect to the quantity of oil
or jet affected by said Decision and Order after giving Buyer ninety (90) Days'
written notice.

Section 19.3:  Use as a Public Utility

No use of the pipelines, facilities or equipment owned by Chevron and used in
connection with this Contract shall be construed as having been dedicated by
Chevron to a public use and it is hereby acknowledged by the parties that
Chevron retains the exclusive right to determine who, other than the parties to
this Contract, shall use said pipelines, facilities, and equipment.

                                       29
<PAGE>
 
                                   ARTICLE XX
                                   INSURANCE
                                   ---------

Section 20.1:  Requirements

Without in any way limiting Buyer's liability pursuant to this Contract, Buyer
shall maintain and require any carrier or subsequent buyer of oil or jet related
to this Contract to maintain the following insurance and all insurance that may
be required under the applicable laws, ordinances, and regulations of any
governmental authority:

     i.   Workers' Compensation and Employers' Liability Insurance as 
          prescribed by applicable law, including insurance covering liability
          under the Longshoremen's and Harbor Workers' Act, the Jones Act and
          the Outer Continental Shelf Land Act, if applicable.

     ii.  Commercial General Liability Insurance including Bodily Injury and 
          Property Damage Insurance with a limit not less than $1,000,000
          combined single limit per occurrence.

     iii. Automobile Bodily Injury and Property Damage Liability Insurance on 
          all owned, non-owned and hired vehicles used in receiving oil or jet
          from Chevron's facilities with a limit not less than $1,000,000
          combined single limit per occurrence for bodily injury and property
          damage.

     iv.  Hull and Machinery Insurance including collision liability and 
          tower's liability on vessels engaged in towage with a limit at least
          equal to the actual value of each vessel and barge.

     v.   Marine Insurance under one of the two following options:

          Option One:  Protection and Indemnity Insurance including coverage 
                       for injuries to or death of masters, mates and crew and
                       excess collision liabilities. The limits of such
                       insurance shall not be less than $25 million per
                       occurrence. Vessel pollution liability insurance
                       including coverage for pollution liabilities imposed by
                       federal and state laws now or hereafter in effect in an
                       amount not less than $500 million; or,

          Option Two:  Protection and Indemnity Insurance on a full entry basis 
                       with an International Group P&I Club. Such insurance
                       shall include, but not be limited to, coverage for
                       injuries to or death of masters, mates and crew; excess
                       collision liabilities and pollution liabilities imposed
                       by federal and state laws now or hereafter in effect).
                       Such insurance shall be unlimited as per International
                       Group, P&I Club rules except for pollution liabilities
                       which shall be limited to $500 million or the maximum
                       pollution limit offered by the P&I Clubs of the
                       International Group.

Section 20.2:  Change of Insurance Notification

The above insurance shall include a requirement that the insurer provide Chevron
with 30 Days' written notice prior to the effective date of any cancellation or
material change of the insurance.  The insurance specified in Sections 20.1 (i)
and 20.1 (iv) shall contain a waiver of subrogation against Chevron and an
assignment of statutory lien, if applicable.  The insurance specified in
Sections 20.1 (ii), 20.1 (iii), and 20.1 (v) Option One Protection and Indemnity
Insurance shall name Chevron as additional insured.

Section 20.3:  Certificate of Insurance From Subsequent Buyers and Carriers

Before performance of this Contract, Buyer shall provide Chevron with
certificates or other documentary evidence satisfactory to Chevron of the
insurance coverages and endorsements.

                                       30
<PAGE>
 
Section 20.4:  Obtaining Insurance Documents

Without in any way limiting Chevron's liability, Chevron shall obtain from any
Chevron carrier or subsequent buyer from Chevron of oil or jet related to this
Contract the insurance coverages and endorsements set forth in this Article
excepting that both Chevron and Buyer be named as additional insureds.

Section 20.5:  Terminaling and Handling Fees Insurance Exclusion

The terminaling and handling fees listed in Section 11.14 do not include any
insurance covering loss of Buyer's oil or jet while it is in the custody of
Chevron. It is expressly understood and agreed that insurance, if any is desired
by Buyer, shall be carried by Buyer at its own expense.


                                  ARTICLE XXI
                       SAFETY AND TERMINATION PROTECTION
                       ---------------------------------

Section 21.1:  Operating and Safety Regulations

Any buyer or carrier of oil or jet related to this Contract or their agents
shall comply with all of the operating and safety regulations of Chevron, as
amended from time-to-time, when alongside, upon, or when approaching the
premises of Chevron for the purpose of loading oil or jet related to this
Contract or when departing Chevron's premises after loading oil or jet related
to this Contract.  In particular, all smoking shall be limited to such locations
and occasions as are specifically authorized in writing by Chevron.  If Chevron
determines that an unsafe condition exists, Chevron may, at its absolute
discretion, cease the loading or unloading operations and order any buyer or
carrier of oil or jet related to this Contract or their agents to leave its
place of mooring.  Any loss or damage incurred by Chevron, any buyer or carrier
of oil or jet related to this Contract or their agents due to any violation by
any buyer or carrier of oil or jet related to this Contract or their agents of
Chevron's operating and safety regulations shall be for Buyer's or Carrier's
account.  Copies of Chevron's operating and safety regulations are available
upon request.

Section 21.2:  Right To Refuse Acceptance

In addition to its rights under Section 21.1, Chevron shall have the[---] of any
barge or vessel nominated by Buyer to load or discharge if in Chevron's
Terminal's [---] for [---].  Chevron's Terminal's acceptance or rejection of
Buyer's Nominated Barge or vessel shall be communicated to Buyer within [---]
hours after the Terminal's receipt of nomination, and in the event Buyer's barge
nomination is rejected, Chevron shall provide Buyer satisfactory documentation
of the basis for the rejection of such nomination.  Chevron's Terminal's
acceptance or rejection of any barge or vessel shall not constitute a continuing
acceptance or rejection of such barge or vessel for subsequent loading or
discharge.  Chevron shall not be liable for any loss, damage or delay caused by
its rejection of a vessel nomination hereunder, nor any loss, damage or delay
caused by its rejection of a vessel for failure to comply pursuant to Section
21.1.  In no event shall the acceptance of a vessel by Chevron be construed in
any manner as a representation as to the vessel's operational, environmental or
safety status.  Neither Buyer nor any other party shall be entitled to rely on
any such acceptance of a vessel by Chevron hereunder.


                                  ARTICLE XXII
                              POLLUTION MITIGATION
                              --------------------

Section 22.1:  Responsibility to Mitigate

In the event an escape or discharge of oil or jet occurs from any barge or
vessel carrying oil or jet related to this Contract and causes or threatens to
cause pollution damage, Buyer or carrier will promptly take whatever measures
are necessary to prevent or mitigate such damage.  Buyer hereby authorizes
Chevron, or its agent, at

                                       31
<PAGE>
 
Chevron's option, upon notice to Buyer or master on the tug, to undertake such
measures as are reasonably necessary to prevent or mitigate the pollution
damage.  Chevron or its agent shall keep Buyer advised of the nature and results
of any such measures taken and, if time permits, intended to be taken.  Any of
the aforementioned measures shall be at Buyer's sole expense (except to the
extent that such escape or discharge was caused by the negligence or willful
action of Chevron or its agent), provided that if Buyer considers said measures
should be discontinued, Buyer shall so notify Chevron or its agent and
thereafter Chevron or its agent shall have no right to continue said measures at
Buyer's authority or expense except as provided in Section 18.4.  This provision
shall be applicable only between Buyer and Chevron and shall not affect, as
between Buyer and Chevron, any liability of Buyer to any third parties,
including but not limited to governments.

Section 22.2:  Cooperation With Chevron's Measures

In addition to its duties under Section 22.1, Buyer agrees to cooperate with all
efforts and to pay all reasonable costs associated with preventive booming or
other preventive measures that Chevron reasonably determines is advisable on an
isolated or routine basis.


                                 ARTICLE XXIII
                                 MISCELLANEOUS
                                 -------------

Section 23.1:  Heading of Articles and Sections

Headings of the Articles and Sections are for convenient reference only and are
not to be considered part of this Contract.

Section 23.2:  Content of Document

This document contains the entire agreement between the parties covering the
subject matter and cancels, as of the Effective date hereof, all prior
agreements of any kind between the parties covering such subject matter and any
amendments thereto.  There are no other agreements which constitute any part of
the consideration for, or any condition to, either party's compliance with its
obligations under this Contract.

Section 23.3:  Notification

Except as otherwise expressly provided herein, all notices shall be given in
writing, by letter, facsimile, electronic mail  to the following addresses, or
such other address as the parties may designate by notice, and shall be deemed
given upon receipt.

          Chevron:     Manager, Petroleum Coke, Heavy Fuels & Sulfur
                       Chevron Products Company,
                       A Division of Chevron U.S.A. Inc
                       P.O. Box 7006
                       San Francisco, CA  94120-7006
                       FAX:  (415) 894-1195

          Buyer:       Manager, Power Supply Services Department
                       Hawaiian Electric Company, Inc.
                       P.O. Box 2750
                       Honolulu, HI  96840-0001
                       FAX:  (808) 543-4366

The Manager, Power Supply Services Department, for Hawaiian Electric Company,
Inc., shall be responsible for forwarding notices to the other parties to this
Contract.

                                       32
<PAGE>
 
Section 23.4:  Court Rulings

If any term or provision, or any part of any term or provision, of this Contract
is held by any court or other competent authority to be illegal or
unenforceable, the remaining terms, provisions, rights and obligations shall not
be affected.

Section 23.5:  Benefit of And Binding

This Contract shall inure to the benefit of and be binding upon the parties
hereto, their successors and permitted assigns.

Section 23.6:  Effective Date and Supersedence

Effective as of the Effective Date of the Term hereunder, this Contract hereby
supersedes that certain Inter-Island Industrial Fuel Oil and Diesel Fuel
Contract between the parties dated, November 20, 1995 and all amendments
thereto.

                                       33
<PAGE>
 
          IN WITNESS WHEREOF, the parties have caused these presents to become
effective as of the day and year first herein above written.

ACCEPTED AND AGREED:
"Chevron"

CHEVRON PRODUCTS COMPANY,
A DIVISION OF CHEVRON U.S.A. INC

BY:  /s/ Phillip H. Fisher
     ---------------------
         Phillip H. Fisher

TITLE:  Manager, Petroleum Coke, Heavy Fuels & Sulfur

"Buyers"

HAWAIIAN ELECTRIC COMPANY, INC.        MAUI ELECTRIC COMPANY, LTD.

BY:   /s/ Edward Y. Hirata             BY:   /s/ Edward Y. Hirata
    ------------------------------         ------------------------------

          Edward Y. Hirata                       Edward Y. Hirata
----------------------------------     ----------------------------------
          (Printed or Typed Name)                (Printed or Typed Name)

TITLE: Vice President, Regulatory      TITLE: Vice President, Regulatory 
       Affairs                                Affairs
       ---------------------------            --------------------------- 


BY:   /s/ Marvin A. Hawthorne          BY:   /s/ Marvin A. Hawthorne
    ------------------------------         ------------------------------

          Marvin A. Hawthorne                    Marvin A. Hawthorne
----------------------------------     ----------------------------------
          (Printed or Typed Name)                (Printed or Typed Name)

TITLE:  Assistant Treasurer            TITLE:  Assistant Treasurer
       ---------------------------            --------------------------- 

                                       34
<PAGE>
 
HAWAII ELECTRIC LIGHT COMPANY, INC.    HAWAIIAN TUG & BARGE CORP.

BY:   /s/ Edward Y. Hirata             BY:   /s/ Glenn K. Y. Hong
    ------------------------------         ------------------------------

          Edward Y. Hirata                       Glenn K. Y. Hong
----------------------------------     ----------------------------------
          (Printed or Typed Name)                (Printed or Typed Name)

TITLE:  Vice President, Regulatory     TITLE:  President
        Affairs                               --------------------------- 
       ---------------------------     

HAWAII ELECTRIC LIGHT COMPANY, INC.    HAWAIIAN TUG & BARGE CORP.

BY:   /s/ Marvin A. Hawthorne          BY:   /s/ Lisa M. K. Sakamoto
    ------------------------------         ------------------------------

          Marvin A. Hawthorne                    Lisa M. K. Sakamoto
----------------------------------     ----------------------------------
          (Printed or Typed Name)                (Printed or Typed Name)

TITLE:  Assistant Treasurer            TITLE:  Vice President
       ---------------------------            --------------------------- 


YOUNG BROTHERS, LIMITED

BY:   /s/ Glenn K. Y. Hong
    ------------------------------         

          Glenn K. Y. Hong
----------------------------------
          (Printed or Typed Name)

TITLE:  President
       ---------------------------


BY:   /s/ Lisa M. K. Sakamoto
    ------------------------------

          Lisa M. K. Sakamoto
----------------------------------
          (Printed or Typed Name)

TITLE:  Vice President
       ---------------------------

                                       35
<PAGE>
 
                                 ADDENDUM NO. 1

                        ILLUSTRATIVE SCHEDULE OF PRICES
                        -------------------------------

                Illustrative Product Price Calculation for [---]

I.  NO. 2 DIESEL FUEL

For HECO, HT&B, YB; and MECO or HELCO FOB point of Delivery as per Section 6.3,
Section 6.2 and Section 6.1, respectively:

     [---]
 
where PD1 is equal to the price per physical gallon for the Month of Delivery
for No. 2 Diesel Fuel purchased by HECO, HT&B, YB, MECO or HELCO in U.S. Dollars
("$") per ("/") gallon.

I.   DI = Index for No. 2 Diesel Fuel, which shall be the simple average of the 
     high and low price assessments on all dates of publication for West Coast
     Pipeline, Los Angeles California Low Sulfur No. 2 Diesel as reported by
     Platt's Oilgram Price Report ("Platt's Oilgram") during the period
     beginning the 21st Day of the second preceding Month to the 20th Day of the
     Month preceding Delivery, expressed in $/gallon.

<TABLE>
<CAPTION>
     Date     Low     High     Average
     ----     ---     ----     -------
     <S>      <C>     <C>      <C>    
     [---]

     AVERAGE [---] IN USD      [---] PER GALLON
</TABLE>

II.  [---]

                                       36
<PAGE>
 
               Assume [---] per barrel premium values apply:

          [---]

     [---]

[---]

III.  TD1/TD2/TD3/TD4/TD5 = Taxes applicable to the sale of Diesel pursuant to
      Section 5.3 herein.

      Hawaii General Excise Tax = 4.166% of pre-HGET price
      [---]

      Taxes after application of HGET [---]
           Hawaii Environmental Response Tax  =  $0.05 per barrel, $0.0012 per
             gallon
           Hawaii Liquid Fuel Tax  = $0.01 per gallon

IV.  LP1, LP2, LP3, and LP4 are [---] for Deliveries in bulk to the respective
     Buyer at Kaunakakai, Molokai, Kahului, Maui, Hilo, Hawaii and Kawaihae,
     Hawaii, respectively, during the period indicated and expressed in $ per
     gallon, as follows:

<TABLE>
<CAPTION>
              1988-1989   2000-2001   2002-2004
     <S>      <C>         <C>         <C>
     LP1      [---]       [---]       [---]
     LP2      [---]       [---]       [---]
     LP3      [---]       [---]       [---]
     LP4      [---]       [---]       [---]
</TABLE>

A.  PRODUCT PRICE COMPUTATION FOR [---] DELIVERY OF NO. 2 DIESEL FUEL PURCHASED
    BY HECO, HT&B, YB, MECO OR HELCO HAVING A STANDARD BTU CONTENT  OF [---] TO
    141,000 BTU  PER GALLON

[---] = [---]

      = [---]

where TD1 = sum of

<TABLE>
     <S>                                                         <C>
     HGET = 4.166% of Diesel Index + [---] = 0.04166*[---]=      [---]
     [---] of Diesel Index + [---] =                             [---]
     Hawaii Environmental Response Tax =                         $0.0012/gallon
     Hawaii Liquid Fuel Tax =                                    $0.0100/gallon
                                                                 --------------
                                                                 [---]
</TABLE>

[---] = [---]

      = [---] PER GALLON

                                       37
<PAGE>
 
B.  PRODUCT PRICE COMPUTATION FOR [---] DELIVERY OF NO. 2 DIESEL FUEL PURCHASED
    BY HECO, HT&B, YB, MECO OR HELCO HAVING OTHER THAN A STANDARD BTU CONTENT

    Assume the weighted average BTU content per gallon of the representative
    samples of Diesel purchased by a respective Buyer during a calendar quarter
    was [---].  The price charged for the Diesel sold and Delivered to that
    respective Buyer during each Month of the calendar quarter in question shall
    be adjusted by multiplying the Diesel price by the ratio of the actual heat
    content to a standard of [---].

[---] = [---]
      = [---]
      = [---]

where TD1 = sum of

<TABLE>
     <S>                                                          <C>
     HGET = 4.166% of adjusted (Diesel Index + [---] =            [---]
     [---] of adjusted (Diesel Index + [---] =                    [---]
     Hawaii Environmental Response Tax =                          $0.0012/gallon
     Hawaii Liquid Fuel Tax =                                     $0.0100/gallon
                                                                  --------------
                                                                  [---]
</TABLE>

[---] = [---]

      = [---] PER GALLON

C.  PRODUCT PRICE COMPUTATION FOR [---] DELIVERY OF NO. 2 DIESEL FUEL
    PURCHASED BY MECO AND HELCO TO BUYER'S NOMINATED MARINE TERMINAL AT
    KAUNAKAKAI, MOLOKAI, KAHULUI, MAUI, HILO, HAWAII OR KAWAIHAE HAWAII HAVING A
    STANDARD BTU CONTENT OF [---]

1.  For MECO-Molokai/Delivered Kaunakakai:

          [---]

Where PD2 is equal to the price per physical gallon for the Month of Delivery
for No. 2 Diesel purchased by MECO-Molokai, Delivered to Kaunakakai, in
$/gallon.

Assume [---] value applies, thus

[---]

[---]

     [---]

                                       38
<PAGE>
 
where TD2 = sum of

<TABLE>
     <S>                                                  <C>
     HGET = 4.166% of Diesel Index +[---] =               [---]
     [---]
     [---] =                                              [---]
     Hawaii Environmental Response Tax =                  $0.0012/gallon
     Hawaii Liquid Fuel Tax =                             $0.0100/gallon
                                                          --------------
                                                          [---]
</TABLE>

[---] = [---]

      = [---] PER GALLON

2.   For MECO/Delivered Kahului:

          [---]

Where PD3 is equal to the price per physical gallon for the Month of Delivery
for No. 2 Diesel purchased by MECO-Maui, Delivered to Kahului, Maui, in
$/gallon,

Assume [---]value applies, thus

[---] = [---]

[---] = [---]

      = [---]

where TD3 = sum of

<TABLE>
     <S>                                                          <C>
     HGET = 4.166% of Diesel Index [---] = 0.04166*[---] =        [---]
     [---] =                                                      [---]
     Hawaii Environmental Response Tax =                          $0.0012/gallon
     Hawaii Liquid Fuel Tax =                                     $0.0100/gallon
                                                                  --------------
                                                                  [---]
</TABLE>

[---] = [---]

      = [---] PER GALLON

3.  For HELCO/Delivered Hilo:

          [---]

Where PD4 is equal to the price per physical gallon for the Month of Delivery
for No. 2 Diesel purchased by HELCO-Hawaii, Delivered to Hilo Hawaii, in
$/gallon.

Assume [---] value applies, thus

                                       39
<PAGE>
 
[---] = [---]

[---] = [---]

      = [---]

where TD4 = sum of

<TABLE>
     <S>                                                  <C>
     HGET = 4.166% of Diesel Index [---] =                [---]
     [---] =                                              [---]
     Hawaii Environmental Response Tax =                  $0.0012/gallon
     Hawaii Liquid Fuel Tax =                             $0.0100/gallon
                                                          --------------
                                                          [---]
</TABLE>

[---] = [---]

      = [---] PER GALLON

4.   For HELCO/Delivered Kawaihae:

          [---]

Where PD5 is equal to the price per physical gallon for the Month of Delivery
for No. 2 Diesel purchased by HELCO-Hawaii, Delivered to Kawaihae Hawaii, in
$/gallon.

Assume [---] value applies, thus

[---] = [---]

[---] = [---]

      = [---]

where TD5 = sum of

<TABLE>
     <S>                                                  <C>
     HGET = 4.166% of Diesel Index [---] =                [---]
     [---] =                                              [---]
     Hawaii Environmental Response Tax =                  $0.0012/gallon
     Hawaii Liquid Fuel Tax =                             $0.0100/gallon
                                                          --------------
                                                          [---]
</TABLE>

[---] = [---]

      = [---] PER GALLON

                                       40
<PAGE>
 
D.  PRODUCT PRICE COMPUTATION FOR [---] DELIVERY OF NO. 2 DIESEL FUEL PURCHASED
    BY MECO AND HELCO TO BUYER'S NOMINATED MARINE TERMINAL AT KAUNAKAKAI, 
    MOLOKAI, KAHULUI, MAUI, HILO, HAWAII OR KAWAIHAE HAWAII HAVING A BTU 
    CONTENT OF OTHER THAN STANDARD

    Assume the weighted average BTU content per gallon of the representative
    samples of Diesel purchased by a respective Buyer during a calendar quarter
    [---].  The price charged for the Diesel sold and Delivered to that 
    respective Buyer during each Month of the calendar quarter in question 
    shall be adjusted by multiplying the Diesel price by the ratio of the 
    actual BTU content to a standard of [---].

For MECO-Molokai/Delivered Kaunakakai:

          [---]

Where PD2 is equal to the price per physical gallon for the Month of Delivery
for No. 2 Diesel purchased by MECO-Molokai, Delivered to Kaunakakai, in
$/gallon.

Assume [---] value applies, thus

[---] = [---]

[---] = [---]

      = [---]

      = [---]

where TD2 = sum of

<TABLE> 
     <S>                                                  <C>
     HGET = 4.166% of adjusted (Diesel Index [---] =      [---]
     [---] =                                              [---]
     Hawaii Environmental Response Tax =                  $0.0012/gallon
     Hawaii Liquid Fuel Tax =                             $0.0100/gallon
                                                          --------------
                                                          [---]
</TABLE>

[---] = [---]

      = [---] PER GALLON

Note on computation of other Diesel Delivered to Kahului, Hilo and Kawaihae:
----------------------------------------------------------------------------
Price per physical gallon for the Month of Delivery for No. 2 Diesel purchased
by MECO-Maui, Delivered to Kahului, HELCO-Hawaii, Delivered to Hilo, Hawaii and
by HELCO-Hawaii, Delivered to Kawaihae, Hawaii in $/gallon having a BTU content
other than standard would be determined in a manner logically consistent with
than computed above for MECO-Molokai.


CIFO

For MECO or HELCO FOB their respective Nominated Barge:

 

                                       41
<PAGE>
 
          [---]

Where PF is equal to the price per physical barrel for the Month of Delivery for
CIFO, in $/barrel.

I.  FI = the Index for CIFO which shall be the simple average of the low and
    high price assessments for Los Angeles Bunker C Fuel Oil as reported by
    Platt's Oilgram Bunkerwire ("Platt's Bunkerwire") for all dates of
    publication from the 21st Day of the second preceding Month to 20th Day of
    the Month preceding Delivery expressed in $/barrel

<TABLE>
<CAPTION>
    Date    Low     High    Average
    ----    ---     ----    ------- 
    <S>     <C>     <C>     <C>
    [---]   [---]   [---]   [---]
</TABLE>

AVERAGE [---] IN USD     [---] PER [---]

[---]

      = [---]
 
[---] = [---] PER BARREL


II. [---]

          Assume [---]per barrel premium values apply:

          [---]

                                       42
<PAGE>
 
Assume further that the barrel volume in the Delivery to be priced is [---],
thus

[---] = [---]


III.  TF = Taxes applicable to the sale of CIFO pursuant to Section 5.3 herein.

      Hawaii General Excise Tax = 4.166% of pre-HGET price
      [---]

      Taxes after application of HGET [---]:
      Hawaii Environmental Response Tax = $0.05 per barrel


E.   PRODUCT PRICE COMPUTATION FOR [---] DELIVERY OF CIFO PURCHASED BY MECO OR
     HELCO HAVING A STANDARD BTU CONTENT OF [---] BARREL

[---] = [---]

      = [---]

where TF = sum of

<TABLE>
     <S>                                                   <C>
     HGET = 4.166% of CIFO Index [---] =                   [---]
     [---] =                                               [---]
     Hawaii Environmental Response Tax =                   $0.050/barrel
                                                           -------------
                                                           [---]
</TABLE>

[---] = [---]

      = [---] PER BARREL

F.  PRODUCT PRICE COMPUTATION FOR [---] DELIVERY OF CIFO PURCHASED BY MECO OR
    HELCO HAVING OTHER THAN A STANDARD BTU CONTENT

    Assume the weighted average BTU content per barrel of the representative
    samples of CIFO purchased by a respective Buyer during a calendar quarter 
    [---].  The price charged for the CIFO sold and Delivered to that 
    respective Buyer during each Month of the calendar quarter in question 
    shall be adjusted by multiplying the CIFO price by the ratio of the actual 
    BTU content to a standard of [---].

[---] = [---]

      = [---]

      = [---]

where TF = sum of

                                       43
<PAGE>
 
<TABLE>
     <S>                                                        <C>
     HGET = 4.166% of adjusted (CIFO Index +[---] =             [---]
     [---] =                                                    [---]
     Hawaii Environmental Response Tax =                        $0.050/barrel
                                                                -------------
                                                                [---]
</TABLE>

[---] = [---]

      = [---] PER BARREL

Note on items as they appear on invoices
----------------------------------------
Actual invoices for sales and Deliveries of Diesel and CIFO may include
additional charges for Hawaii DOT/Harbors Div. wharfage fees applied when
Buyer's Nominated Barge is moored, all or in part, against or to State piers.

For billing purposes, certain taxes, such as the HGET [---], on the sale and
Delivery of Diesel may be consolidated with the corresponding tax charged on the
sale and Delivery of CIFO.

Actual invoices for sales and Deliveries of Diesel and CIFO may also contain
comments which reference the wharfage charge per unit, and volume of Diesel and
CIFO on which the wharfage fee is levied and the identifying number of the State
pier for which wharfage is being levied.


JET

For MECO or HELCO FOB MECO's or HELCO's respective power plant truck unloading
rack:.
their respective Nominated Barge:

                             PJ = JI + [---] + TJ

Where PJ is equal to the price per physical barrel for the Month of Delivery for
Jet, in $/gallon.

I.   JI = the Index for Jet which shall be the Friday simple average West Coast
     Spot Pipeline price for jet fuel in Los Angeles in the Month preceding
     Delivery, as reported by the Platt's Oilgram from the 21st of the second
     preceding Month to the 20th Day of the Month preceding Delivery.

<TABLE>
<CAPTION>
     Date            Low      High     Average
     ----          -------   -------   -------
     <S>            <C>       <C>       <C>
     08/22/97      $0.5850   $0.6025   $0.5938
     08/29/97      $0.5775   $0.5850   $0.5813
     09/05/97      $0.5750   $0.5875   $0.5813
     09/12/97      $0.5700   $0.5800   $0.5750
     09/19/97      $0.6025   $0.6150   $0.6088
</TABLE>

AVERAGE OF MEAN IN USD   $0.5880 PER GALLON

II.  TJ = Taxes applicable to the sale of Jet pursuant to Section 5.3 herein.

                                       44
<PAGE>
 
     Hawaii General Excise Tax = 4.166% of pre-HGET price
     [---]

     Taxes after application of HGET[---]:
     Hawaii Environmental Response Tax  =  $0.05 per barrel, $0.0012 per gallon


G.   PRODUCT PRICE COMPUTATION FOR DELIVERY OF JET PURCHASED BY MECO OR HELCO

PJ = $0.5880 + [---] + TJ

   = [---] + TJ

where TJ = sum of

<TABLE>
     <S>                                                          <C>
     HGET = 4.166% of Jet Index [---] = 0.04166* [---] =          [---]
     [---] =                                                      [---]
     Hawaii Environmental Response Tax =                          $0.0012/gallon
                                                                  --------------
                                                                  [---]
</TABLE>

[---] = [---]

      = [---] PER GALLON

                                       45
<PAGE>
 
                                 ADDENDUM NO. 2

                        QUALITY CONTROL SAMPLES SUMMARY
                        -------------------------------
<TABLE>
<CAPTION>
                                                                                          ----------------------------------
                                                 FREQUENCY                                APPLICATION   CONTRACT   SELECTION
                                              --------------                              ----------------------------------
                                        TAKING THE       SAMPLE          METHOD &         SAMPLE        SAMPLE     ACTION ON
TYPE                     LABEL          SAMPLE           ANALYSIS        LOCATION         TAKING        ANALYSIS   FAILURE
----                     -----          --------------   -------------   --------------   -----------   --------   ---------
<S>                      <C>            <C>              <C>             <C>              <C>           <C>        <C>
1. Refinery Production   ---            After Each       After Each      Composite        N/A           N/A        N/A
                                        Tank Receipt     Receipt         from Refinery
                                                                         Tank
2. HMT Inventory         ---            After Each       After Each      Composite        N/A           N/A        N/A
                                        Tank Receipt     Receipt         from HMT Tank
3. Delivered             A. Buyer's     During Each      Only If         Drip From        7.1           7.2        7.3
                         Sample         Barge            Necessary       Loading Line
                                        Loading or                       at HMT or
                         B. Chevron's   Monthly                          Composite
                         Sample                                          from [---]

                         C. Buyer's
                         Retain

4. Loaded                A. Chevron's   After Each       A. After        Composite        6.1iii        11.3i      11.3I &
                         Sample         Barge Loading    Each Loading    From Barge                                11.3ii
                                                         B. Only If      Tanks at HMT
                                                         Necessary
                         B. Buyer's
                         Retain

5. Loaded (Third-Party)  A. Buyer's     After Each       A. After        Composite        11.1ii        11.3I      11.3I &
                         Sample         Barge Loading    Each Loading    from Barge                                11.3ii
                                        of               B.( Only If     Tanks at
                                        Third-Party      Necessary       Third-Party
                         B. Chevron's   Oil                              Supplier's
                         Sample                                          Dock

                         C. Buyer's
                         Retain

6. Received              A. Prompt      Before Each      A. Before       Composite        A. 11.6i      11.6ii     11.6iv
                                        Barge            Each Loading    from Barge
                         B. Buyer's     Unloading        B.,C.,D.        Tanks at Hilo    B. 11.6Ii     11.6iii    11.6iv
                         Sample         Whether          (Only if        or Kahului
                                        Buyer's or       Necessary)      Harbor
                                        Chevron's
                         C. Chevron's
                         Sample

                         D. Buyer's
                         Retain

7. Returned              A. Prompt      After Each       A. Before       Composite        A. 11.3i      11.13I     11.13iii
                                        Barge            Each Loading    from
                         B. Buyer's                      B.,C.,D.        Chevron's        B. 11.3i      11.13ii    11.13iii
                         Sample         Unloading        (Only if        Tanks at Hilo
                                        Whether          Necessary       or Kahului
                                        Buyer's or                       Terminals
                         C. Chevron's   Chevron's
                         Sample
                         D. Buyer's
                         Retain
</TABLE>

                                       46
<PAGE>
 
                    ADDENDUM NO. 2 - QUALITY CONTROL SAMPLES

                        SCHEMATIC Part 1 of 2  (diagram)

                                       47
<PAGE>
 
                    ADDENDUM NO. 2 - QUALITY CONTROL SAMPLES

                        SCHEMATIC Part 2 of 2  (diagram)

                                       48
<PAGE>
 
                                 ADDENDUM NO. 3

                                     [---]

SECTION 1
---------

[---] (also referred to herein as the [---]). The provisions of [---] shall only
apply to the [---] as described herein and shall [---]. If and whenever said 
[---] for the use of [---] and for the [---] provided:

1.   Chevron shall have the right to review the quality of [---]; and

2.   Buyer shall permit Chevron, its employees and agents (including but not 
     limited to affiliates and contractors and their employees) to enter upon 
     and inspect Buyer's Barbers Point Storage Facilities immediately prior to,
     during and immediately after [---] upon reasonable advance notice to Buyer
     and provided that such entry and inspection shall not interfere with
     operation of Buyer's Barbers Point Storage Facilities.

3.   Buyer shall operate the [---] in a safe manner, in compliance with all
     applicable laws and regulations, and in accordance with good engineering 
     and operating practices ("GEOPS") and in accordance with generally accepted
     industry practices.

4.   Buyer's use of the [---] during any Year of this Contract, if and 
     whenever said [---] are completed, shall be [---]


SECTION 2
---------

[---] need to be constructed in the location where [---] physically intersect
and connect with the [---], which shall be taken to be at the[---].  Provided
further:

a.   [---] shall be responsible for the design, engineering and construction and
     shall bear the costs arising therefrom of the [---] shall have the right to
     approve in advance, [---] designs, engineering and construction standards,
     provided, however,  that such approval shall not be unreasonably withheld

b.   [---], may, at its option, engage third-party consultants or contractors to
     perform the design, engineering and construction of the [---], provided 
     that [---] selection of such consultants and contractors shall be subject 
     to [---] approval, provided, however, that such approval shall not be 
     unreasonably withheld.

                                       49
<PAGE>
 
c.   The design and engineering plans (the "Plans") for the [---] shall be 
     developed in accordance with all applicable laws and regulations and GEOPS.
     [---] shall have twenty (20) working days following its receipt of the
     Plans ("20-day Period") to review the Plans and submit written comments to
     [---]. Should [---] fail to provide written notice to [---] of its
     approval, conditional approval or disapproval of the Plans prior to the end
     of said 20-day Period, [---] shall be deemed to have approved the Plans.

d.   [---] shall permit [---] to inspect the construction of the [---] at all
     times during normal business hours and upon reasonable advance notice. [---
     ] shall perform all construction work in compliance with all applicable
     laws and regulations.

e.   Following the completion of the construction of the [---] shall transfer 
     to [---] all of [---] rights, title and interest in and to the [---] which
     shall then be a part of the [---]. On and after such date and time of
     transfer, [---] shall own, operate and maintain the tee branch connection
     and other components of the [---]. Subject to the prior approval of [---],
     which shall not be unreasonably withheld, [---] shall schedule and perform
     such routine maintenance on the [---] as shall be required to by applicable
     laws, regulations, general industry practices and GEOPS. [---] shall
     reimburse [---] for its reasonable documented out of pocket costs and
     expenses incurred solely as a result of such routine maintenance.


SECTION 3
---------

Whenever [---] operates the [---], it shall do so at all times in a safe,
effective and efficient manner, in compliance with all applicable laws and
regulations, in a reasonable and prudent manner and in conformance with
generally accepted industry practices and GEOPS.

[---] operating standards and instructions shall be available for [---]
inspection at [---].


SECTION 4
---------

Consent of [---] shall not be required for routine maintenance of the [---],
provided, however, [---] shall be required to advise [---] regarding the
potential impact on shipments of [---] caused by any maintenance procedures or
improvements which are not routine or minor in nature and which are not urgent
and necessary to maintain the [---] in good order. Such maintenance shall be
performed by [---] as may be required from time to time.

[---] shall maintain accurate and complete records of maintenance performed and
shall provide same and any other relevant supporting information as [---] may
reasonably require.


SECTION 5
---------

If subsequent to [---], additions or modifications to any part of the [---] are
reasonably required in the mutual opinion of [---] and [---] solely in order to
accommodate [---] use, such modifications shall be designed, engineered and
constructed in accordance with the provisions of Section 2 herein.  All rights,
title and interest in the addition or modification shall rest with [---] who
shall own, operate and maintain such addition or modification in accordance with
the provisions herein including but not limited to Sections 2, 3 and 4. [---]
shall reimburse [---] for its reasonable costs and expenses incurred pursuant to
the installation and maintenance of  the addition or modification upon
presentation of invoices or other suitable documentation in accordance with
Section 2 and Section 11 herein.

                                       50
<PAGE>
 
SECTION 6
---------

[---] will mutually coordinate the shipment of [---] through the [---].
Shipment scheduling shall be flexible to ensure that [---] shipments are not
unreasonably interrupted.  To assist in the coordination of shipments:

1.   [---] shall provide [---] a forecast of intended shipments of [---] 
     through the [---] ten Days prior to the beginning of any Month for the [---
     ]. The forecast for the [---] shall define on a [---] basis the nature and
     volume of shipments. The forecast for the [---] shall specify the total
     volume of shipments for [---].

2.   With respect to each individual shipment of [---] though the [---] shall 
     provide [---] a proposed 3-Day shipment period or window upon no less than
     ten (10) Days' notice prior to the first Day of the proposed shipment
     period ("10-Day Notice"). The 10-Day Notice shall also specify the amount
     of [---] to be shipped, subject to a variation of plus or minus twenty (20)
     percent with respect to the actual volume shipped. [---] may reject the
     proposed shipment period upon providing [---] notice, no later than one (1)
     business day from the receipt of [---] 10-Day Notice, of an alternate 3-Day
     shipment period where the date of the first Day of such alternate 3-Day
     period is within one (1) Day of the date of the first Day of [---] first
     proposed 3-Day shipment period. Subsequent to the agreement by the parties
     on the shipment period contained in the 10-Day Notice, [---] shall make
     reasonable best efforts to adjust the shipment period to accommodate the
     priority berthing of [---] at the [---]. Should [---] reasonably estimate
     that the duration of shipment operations will be less than 3 Days, the
     agreed 3-Day shipment period is to be narrowed by [---] to two (2) Days
     upon no less than five (5) Days' notice prior to the first Day of the 2-Day
     shipment period. Similarly, should [---] reasonably estimate that the
     duration of shipment operations will be less than 2 Days, the 2-Day
     shipment period is to be narrowed by [---] to one (1) Day upon no less than
     two (2) Days' notice prior to the date and time of commencement of shipment
     operations. Notices may be given by electronic mail, facsimile, radio or
     telephone.

3.   Notwithstanding the estimated duration of shipment operations, the 
     estimated date and time of the commencement of shipment operations shall be
     narrowed to 12 hours by mutual consent of [---] and [---] no later than two
     (2) Days prior to the estimated shipment commencement time and date

4.   When [---] is ready to load or discharge, the master of said vessel shall
     provide [---] notice of readiness ("NOR"), and laytime shall commence six
     (6) hours after receipt of the NOR, or upon [---] arrival in berth (all
     fast), whichever first occurs. [---] shall be allowed laytime for loading
     or discharging [---] on the basis of the shipment volume in barrels divided
     by a pumping rate standard of [---] barrels per hour. Demurrage shall be
     payable to [---] against [---] invoice, supported by such data as may be
     reasonably requested, at a rate equal to [---] actual demurrage rate per
     hour for each hour used and prorated for each portion of an hour used in
     excess of allowable laytime and for all delays caused by [---] subsequent
     to six (6) hours after NOR is effective and prior to the time [---] is
     advised that a berth is available for the vessel except if such delay is
     caused by any event or acts beyond the reasonable control of [---],
     including but not limited to acts of God, fire, governmental acts or labor
     disturbances.

5.   [---] shall vacate the berth at [---] when cargo operations are completed. 
     [---] shall be responsible for any actual loss or damage incurred by [---]
     as a direct result of the failure of [---] to promptly vacate the berth
     except if such delay is caused by any event or acts beyond the reasonable
     control of [---], including but not limited to acts of God, fire,
     governmental acts or labor disturbances. In no event shall either party be
     responsible for loss of prospective profits, or consequential damages
     allegedly caused by or based upon failure of [---] to promptly vacate the
     berth.

                                       51
<PAGE>
 
SECTION 7
---------

The quantity of each shipment of  [---] shall be determined by an Independent
Inspector in accordance with Article VIII.  The Independent Inspector or [---]
shall provide [---] with summary documentation of [---] shipments describing the
volumes and dates of such shipments through the [---].


SECTION 8
---------

Title to [---] transported through the [---] for [---] account shall at all
times remain with [---].


SECTION 9
---------

If for operational reasons it is necessary for [---] to deliver line
displacement stock to [---], such line displacement stock shall be the least
expensive grade or type available which is suitable for the purpose and the line
displacement stock shall be of such quality specification that neither causes
operational problems to [---] nor results in the contamination of [---] such
that [---] fail to comply with the  specification limits with which they would
have otherwise been in compliance. If time permits, [---] shall have the right
to approve in advance the suitability of such pipeline displacement stock,
provided that such approval shall not be unreasonably withheld. [---] shall
purchase such stock from [---] in accordance with the prices set forth in
Article 5.  The quantity of line displacement stock delivered to [---] shall be
determined by the Independent Inspector in accordance with Article VIII.

To the extent that small portions of [---] shipped through the [---] are
delivered to [---] in the course of acting as an interface between [---]
petroleum products in that portion of the [---] not used to ship [---] shall
credit [---] for such transferred petroleum products at the prices set forth in
Article V. The quantity of such transferred petroleum products shall be
determined by the Independent Inspector in accordance with Article VIII.


SECTION 10
----------

In consideration for its use of the [---] and for performing line displacement
operations for [---] both before and after   [---] use of the [---] shall pay to
[---] a throughput charge ("Throughput") on each shipment of [---] transferred
through the [---].

The Throughput shall be calculated by multiplying the number of physical barrels
of [---] shipped through the [---] as determined by the Independent Inspector
and the transport charge per physical barrel ("Rate").  The number of physical
barrels of [---] shipped shall be determined pursuant to Article 8.

The base Rate shall be [---] per barrel. [---].  Escalation factor A ("FA"),
escalation factor B ("FB") and escalation factor C ("FC") are defined as
follows:

     (i)    A labor adjustment factor An which is defined as the arithmetic 
            average of the hourly earnings in dollars per hour for the petroleum
            and coal products industry as shown in the "Employment and Earnings"
            publication of the U.S. Department of Labor, Bureau of Labor
            Statistics, for the three Months of the second calendar quarter
            immediately preceding the calendar quarter of the Month in which
            services are rendered, divided by (19.76).

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     (ii)   An industrial commodities adjustment factor Bn which is defined as 
            the arithmetic average of the Producer Price Index for Industrial
            Commodities as published by the U.S. Department of Labor, Bureau of
            Labor Statistics, for the three Months of the second calendar
            quarter immediately preceding the calendar quarter of the Month in
            which services are rendered, divided by (128.0).

     (iii)  A fuels and power adjustment factor Cn which is defined as the
            arithmetic average of the Producer Price Index for Fuels and Power
            (Code 5), as published by the U.S. Department of Labor, Bureau of
            Labor Statistics, for the three Months of the second calendar
            quarter immediately preceding the calendar quarter of the Month in
            which services are rendered, divided by (88.9).

[---] shall employ and also be responsible for costs of any support vessels,
pilots, mooring masters, or line handlers supplied by [---] or otherwise
required by [---], all of which shall become borrowed servants of [---].  Dues
and other charges on [---] (whether or not such dues or charges are based on the
quantity of [---] loaded or discharged or on the freight and without regard from
whom such dues or charges are withheld) shall be paid by [---].  Any taxes on
freight shall be borne by [---] shall be responsible for any State fee imposed
for its use of the [---] in the nature of wharfage or pipeline toll.


SECTION 11
----------

[---] shall issue invoices for Throughput or for reimbursement for additions or
modifications in the Month following the Month in which the services or costs
and expenses are incurred. [---] will pay on these invoices in accordance with
Article IX.


SECTION 12
----------

[---] shall each indemnify, defend and hold harmless the other party pursuant to
Article XVIII herein.


SECTION 13
----------

In the event an escape or discharge of [---] occurs from [---], the
responsibilities of the respective parties shall be as per Article XXII herein.


SECTION 14
----------

[---] shall comply with all applicable provisions of Article XX and XXI of this
Contract, including but not limited to compliance with regulations, compliance
with [---] vessel acceptance standards, compliance with [---] Operations Manual,
pollution mitigation, required insurance, liability for dues and other charges
on said vessel.


SECTION 15
----------

Nothing herein shall be construed as a dedication of the [---] to public use
pursuant to Section 19.3 of this Contract.

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SECTION 16
----------

Neither [---] nor [---] shall commit or suffer to be committed any act or
default whereby the rights and interests of either party in and under right of
entry or easements shall be jeopardized.

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