<PAGE>

                                                                EXHIBIT (10)(b)

                          PALISADES NUCLEAR POWER PLANT

                            POWER PURCHASE AGREEMENT

                                     BETWEEN

                         ENTERGY NUCLEAR PALISADES, LLC

                                       AND

                            CONSUMERS ENERGY COMPANY

                            DATED AS OF JULY 11, 2006

<PAGE>

                            POWER PURCHASE AGREEMENT
                                TABLE OF CONTENTS

<TABLE>
<S>                                                                          <C>
ARTICLE I: DEFINITIONS....................................................     1
   1.1.   Defined Terms...................................................     1
   1.2.   Rules of Interpretation.........................................     8

ARTICLE II: PURCHASE OF CAPACITY, ENERGY, AND ANCILLARY SERVICES..........    10
   2.1.   Capacity Sale and Purchase......................................    10
   2.2.   Energy Sale and Purchase........................................    10
   2.3.   Ancillary Services..............................................    10
   2.4.   Replacement Energy and Replacement Capacity.....................    11
   2.5.   Delivery Point..................................................    13
   2.6.   Entitlement Due to Uprate.......................................    14
   2.7.   Capacity Accreditation..........................................    14
   2.8.   Reactive Power..................................................    15
   2.9.   Station Power Service...........................................    15

ARTICLE III: PAYMENTS.....................................................    15
   3.1.   Purchase Payments...............................................    15
   3.2.   Peak Adjustment Payment.........................................    16

ARTICLE IV: MAINTENANCE AND OPERATION.....................................    16
   4.1.   Scheduled Maintenance...........................................    16
   4.2.   Derate Notices..................................................    18
   4.3.   Other Operations Obligations....................................    18

ARTICLE V: METERING, BILLING AND PAYMENT..................................    19
   5.1.   Metering........................................................    19
   5.2.   Billing and Payment.............................................    21
   5.3.   Scheduling......................................................    22

ARTICLE VI: FORCE MAJEURE.................................................    23
   6.1.   Conditions of Excuse from Performance...........................    23
   6.2.   No Termination; Extension of Term...............................    23
   6.3.   Adjustment Payments.............................................    24

ARTICLE VII: EVENTS OF DEFAULT; REMEDIES..................................    24
   7.1.   List of Default Events..........................................    24
   7.2.   Seller's Security...............................................    25
   7.3.   Buyer's Security................................................    26
   7.4.   No Consequential Damages........................................    27

ARTICLE VIII: REPRESENTATIONS AND WARRANTIES..............................    27
   8.1.   Representations and Warranties of Buyer.........................    27
   8.2.   Representations and Warranties of Seller........................    28
</TABLE>


                                        i

<PAGE>

<TABLE>
<S>                                                                          <C>
ARTICLE IX: INDEMNITY AND LIMITATION OF LIABILITY.........................    29
   9.1.   Title and Risk of Loss..........................................    29
   9.2.   Indemnification.................................................    29
   9.3.   No Partnership..................................................    30
   9.4.   Responsibility for Employees....................................    30

ARTICLE X: TERM...........................................................    30
   10.1.  Term............................................................    30
   10.2.  Termination.....................................................    30
   10.3.  Effect of Termination...........................................    31

ARTICLE XI: RECORDS.......................................................    31
   11.1.  Inspection of Records...........................................    31

ARTICLE XII: ADMINISTRATIVE COMMITTEE.....................................    31
   12.1.  Purpose.........................................................    31
   12.2.  Membership......................................................    32
   12.3.  Meetings........................................................    32
   12.4.  Functions.......................................................    32
   12.5.  Expenses........................................................    32

ARTICLE XIII: NOTICES.....................................................    32
   13.1.  Notices in Writing..............................................    32
   13.2.  Date of Notification............................................    33
   13.3.  Oral Notice in Emergency........................................    33

ARTICLE XIV: CONFIDENTIALITY..............................................    33
   14.1.  Non-Disclosure to Third Parties.................................    33
   14.2.  Disclosure Permitted............................................    34
   14.3.  Survival of Confidentiality.....................................    34

ARTICLE XV: INSURANCE.....................................................    34
   15.1.  Coverage and Amounts of Seller and Buyer........................    34
   15.2.  Coverage for Full Term..........................................    35

ARTICLE XVI: ASSIGNMENT...................................................    35
   16.1.  Binding Effect..................................................    35
   16.2.  General.........................................................    36
   16.3.  Assignment to an Affiliate......................................    36
   16.4.  Assignment to Lenders...........................................    36

ARTICLE XVII: MISCELLANEOUS...............................................    36
   17.1.  Dispute Resolution..............................................    36
   17.2.  Recording Telephone Conversations...............................    37
   17.3.  Compliance with Laws............................................    37
   17.4.  Taxes and Other Charges.........................................    38
   17.5.  Future Attributes...............................................    38
</TABLE>


                                       ii

<PAGE>

<TABLE>
<S>                                                                          <C>
   17.6.  Financial Transmission Rights...................................    38
   17.7.  Governing Law; Venue............................................    39
   17.8.  Entire Agreement; Amendment.....................................    39
   17.9.  No Implied Waiver...............................................    39
   17.10. Severability....................................................    40
   17.11. No Exclusivity/Dedication of Assets.............................    40
   17.12. Expenses........................................................    40
   17.13. Counterparts....................................................    40
   17.14. Survival........................................................    40
   17.15. Third-Party Beneficiary.........................................    41
   17.16. Mobile-Sierra...................................................    41
   17.17. Forward Contract................................................    41
</TABLE>

          Exhibits

Exhibit A Capacity and Energy Charges
Exhibit B Buyer's Capacity Amount
Exhibit C Capacity and Energy Charge Shaping Factors
Exhibit D Diagram of Billing Meters
Exhibit E Form of Seller's Guaranty
Exhibit F Form of Buyer's Guaranty
Exhibit G Peak Adjustment Payment
Exhibit H Scheduling Procedures


                                       iii
<PAGE>

                            POWER PURCHASE AGREEMENT

     This POWER PURCHASE AGREEMENT is made and entered into as of July 11, 2006,
by and between ENTERGY NUCLEAR PALISADES, LLC, a Delaware limited liability
company ("Seller"), and CONSUMERS ENERGY COMPANY, a Michigan corporation
("Buyer") (hereinafter the parties hereto are sometimes referred to collectively
as the "Parties," or individually as a "Party").

                                   WITNESSETH:

     WHEREAS, Buyer is a public utility which operates a system for generation
and distribution of electric power in the State of Michigan; and

     WHEREAS, Buyer intends to transfer to Seller all of its rights, title, and
interests in and to the Palisades Nuclear Power Plant, an approximately 798 MW
(net) nuclear-powered electric generating facility and related assets located in
South Haven, Michigan, NRC Operating License No. DPR-20 (the "Facility"); and

     WHEREAS, in order to continue serving its wholesale and retail customers
following transfer of Buyer's interests in the Facility to Seller, Buyer desires
to purchase, and Seller desires to sell, Capacity, Energy, and all associated
Ancillary Services, on a unit contingent basis, on the terms, and subject to the
conditions, set forth below.

     NOW THEREFORE, in consideration of the mutual agreements contained herein,
the Parties agree as follows:

                             ARTICLE I: DEFINITIONS

1.1. DEFINED TERMS

     As used in this Agreement, the following terms shall have the following
     meanings:

1.   "ACCREDITED CAPACITY" shall mean Capacity or Replacement Capacity that (a)
     meets the resource adequacy requirements in Module E of the MISO Tariff, as
     amended or superseded ("Module E"), and (b) is measured in accordance with
     the "Criteria and Method For the Uniform Rating of Generating Equipment"
     set forth in ECAR 4; provided, however, that if either requirement in (a)
     or (b) is inapplicable, or if both are inapplicable, then Accredited
     Capacity shall mean Capacity or Replacement Capacity that meets the
     applicable requirements for Capacity (the "Effective Capacity
     Requirements") of any Governing Authority having jurisdiction over Buyer,
     including any Capacity from the Facility that may be deemed available under
     the Effective Capacity Requirements even if the Facility is not operating.

2.   "ADMINISTRATIVE COMMITTEE" shall have the meaning set forth in Article XII.

3.   "AFFILIATE" shall mean, with respect to any Person, any other Person (other
     than an individual) that, directly or indirectly, through one or more
     intermediaries, controls, or is

<PAGE>

     controlled by, or is under common control with, such Person. For this
     purpose, "control" means the direct or indirect ownership of fifty percent
     (50%) or more of the outstanding capital stock or other equity interests
     having ordinary voting power.

4.   "AGREEMENT" shall mean this Power Purchase Agreement entered into by Seller
     and Buyer, including all Exhibits and any and all subsequent modifications
     or amendments hereto made in accordance herewith.

5.   "ALTERNATE DELIVERY POINT" shall have the meaning set forth in Section
     2.5(b).

6.   "ANCILLARY SERVICES" shall mean those services during the Term that are
     necessary to support the transmission of electric capacity and energy, and
     support the generation or transmission of Energy from the Facility while
     maintaining reliable operation of the transmission system, associated with
     or otherwise corresponding to the Capacity of the Facility and/or output of
     Energy at such time, which Ancillary Services shall include but not be
     limited to Reactive Power, regulation, and frequency response service.

7.   "ASSET SALE AGREEMENT" shall mean that certain Asset Sale Agreement between
     Buyer and Seller, dated as of the date hereof.

8.   "AUTHORIZATION" shall mean any license, permit, approval, consent, filing,
     waiver, exemption, variance, clearance, entitlement, allowance, franchise,
     or other authorization, whether corporate, governmental or otherwise.

9.   "BILLING CYCLE" shall mean each calendar month during the Term and any
     partial calendar month at the beginning or end of the Term.

10.  "BILLING METERS" means the bi-directional metering devices designated on
     Exhibit D as meters numbered one through four.

11.  "BUSINESS DAY" shall mean any day other than Saturday, Sunday, or any NERC
     holiday.

12.  "BUYER" shall have the meaning set forth in the preamble hereto.

13.  "BUYER'S CAPACITY AMOUNT" shall mean, for any given time, the applicable
     amount calculated in accordance with Exhibit B. The amount specified in the
     column entitled "Buyer's Capacity Amount" in Exhibit B shall equal the
     product of (a) the Capacity rating of the Facility, which shall be set
     forth in the column entitled "Capacity of the Facility" in Exhibit B, and
     determined in accordance with the applicable requirements for Capacity of
     ECAR 4 (or with the Effective Capacity Requirements, if applicable), and
     (b) the Buyer's Entitlement, which shall be set forth in the column
     entitled "Buyer's Entitlement" in Exhibit B, and determined in accordance
     with Section 2.6. The Capacity of the Facility, and the associated amounts
     in the column in Exhibit B entitled "Capacity of the Facility," shall be
     revised during the Term, upon written notice from Seller to Buyer providing
     the results of any net capability testing conducted of the Facility,
     whether or not conducted as part of an Uprate, in accordance with ECAR 4
     (or with the Effective Capacity Requirements, if applicable).


                                       2

<PAGE>

14.  "BUYER'S GUARANTOR" shall have the meaning set forth in Section 7.3.

15.  "BUYER'S GUARANTY" shall have the meaning set forth in Section 7.3.

16.  "BUYER'S ENTITLEMENT" shall mean the percentage of Capacity, Net Energy
     Output and Ancillary Services allocated to Buyer pursuant to this
     Agreement, which as of the Effective Date is 100%, as may subsequently be
     reduced pursuant to Section 2.6.

17.  "CALENDAR YEAR" shall mean a twelve-month period beginning January 1 and
     ending December 31.

18.  "CAPACITY" shall mean, on or as of any date of determination, a power
     generation unit's capability to generate a specific amount of electrical
     energy at a given point in time.

19.  "CAPACITY PAYMENT" shall have the meaning set forth in Section 3.1(a).

20.  "CLAIMS" shall mean all third party claims or actions, threatened or filed
     and, whether groundless, false, fraudulent or otherwise, that directly or
     indirectly relate to the subject matter of an indemnity, and the resulting
     losses, damages, expenses, reasonable attorneys' fees and court costs.

21.  "CPNODE" shall have the meaning ascribed to such term by MISO in the
     applicable MISO Tariff or related documents, as such relevant meaning or
     relevant term may be modified from time to time.

22.  "DEFAULT INTEREST RATE" shall mean, with respect to all obligations to pay
     sums due under this Agreement, other than cash collateral held as security,
     the Interest Rate plus 200 basis points.

23.  "DELIVERED ENERGY" shall mean, for any period of time, the sum of Buyer's
     Entitlement of Net Energy Output plus Replacement Energy.

24.  "DELIVERY POINT" shall have the meaning set forth in Section 2.5.

25.  "DERATE" shall mean an event or condition which causes the Buyer's
     Entitlement of Net Energy Output to be less than ninety-five percent (95%)
     of the associated Buyer's Capacity Amount.

26.  "DERATE NOTICE" shall have the meaning set forth in Section 4.2.

27.  "DNR" shall mean a Designated Network Resource as defined under applicable
     MISO Tariffs and related documents, as amended or superseded. The term DNR
     shall apply to both the Facility and to the resource selected by Seller,
     and accepted by MISO, to provide Replacement Capacity for Buyer, in
     accordance with the terms and conditions of this Agreement.

28.  "DOWNGRADE EVENT" shall mean, with respect to the Seller's Guarantor or the
     Buyer's Guarantor, any period of time when such party's unsecured, senior
     long-term debt


                                       3

<PAGE>

     obligations (not supported by third-party credit enhancements) are rated
     below Baa3 by Moody's Investment Services, Inc. (or its successor), and
     rated below BBB- by Standard & Poor's Rating Group (or its successor).

29.  "ECAR 4" shall mean ECAR Document No. 4, "Criteria and Method for the
     Uniform Rating of Generating Equipment," which is an Organizational
     Standard of ReliabilityFirst Corporation, the successor organization to the
     East Central Area Coordination Agreement organization, as such document may
     be amended, superseded or adopted in whole or in part by ReliabilityFirst
     Corporation.

30.  "EFFECTIVE DATE" shall mean the Closing Date, as defined in the Asset Sale
     Agreement.

31.  "ENERGY" shall mean electric energy expressed in MWh.

32.  "ENERGY PAYMENT" shall have the meaning set forth in Section 3.1(b).

33.  "EST" shall mean Eastern Standard Time.

34.  "FACILITY" shall have the meaning set forth in the second recital of this
     Agreement.

35.  "FERC" shall mean the Federal Energy Regulatory Commission or any successor
     thereto.

36.  "FINANCIAL BILATERAL TRANSACTION" shall have the meaning ascribed to such
     term by MISO in the applicable MISO Tariff or related documents, as such
     relevant meaning or relevant term may be modified from time to time.

37.  "FORCE MAJEURE" shall mean an event or circumstance which prevents one
     Party from performing some or all of its obligations hereunder that (a) is
     not within the control of the Party relying thereon, and (b) could not have
     been prevented or avoided by such Party through the exercise of reasonable
     diligence. Subject to the foregoing, Force Majeure may include, without
     limitation, an act of God, war, insurrection, riot, terrorism or shutdowns
     or reductions in Facility output or capabilities required, caused by, or
     related to, directives, orders or requirements of any Governing Authority;
     provided, however, that the following acts, events or causes shall in no
     event constitute an event of Force Majeure: (i) any lack of profitability
     to a Party or any losses incurred by a Party or any other financial
     consideration of a Party; (ii) unavailability of funds or financing; (iii)
     an event caused by conditions of national or local economics or markets;
     and (iv) any failure of equipment which is not itself directly caused by an
     event which would otherwise independently constitute a Force Majeure.

38.  "GENERATION OFFER" shall have the meaning ascribed to such term by MISO in
     the applicable MISO Tariff or related documents, as such relevant meaning
     or relevant term may be modified from time to time.

39.  "GOOD UTILITY PRACTICES" shall mean any applicable practices, methods, and
     acts engaged in or approved by a significant portion of (a) as to Seller,
     the nuclear power electric generating industry, or (b) as to Buyer, the
     electric utility industry, during the relevant


                                       4

<PAGE>

     time period, or the practices, methods, and acts which, in the exercise of
     reasonable judgment by a prudent nuclear operator (or prudent utility
     operator, if applicable to Buyer) in light of the facts known at the time
     the decision was made, could have been expected to accomplish the desired
     result at a reasonable cost consistent with good business practices,
     reliability, safety, expedition, and the requirements of any Governing
     Authority having jurisdiction. Without limitation of the foregoing, "Good
     Utility Practices" shall include the applicable operating policies,
     standards, criteria, and/or guidelines of NERC, MISO, METC, NRC, RFC and
     any other Governing Authority. "Good Utility Practices" is not intended to
     be limited to the optimum practice, method, or act to the exclusion of all
     others, but rather to the acceptable practices, methods, or acts generally
     accepted in (a) as to Seller, the nuclear power electric generating
     industry, or (b) as to Buyer, the electric utility industry.

40.  "GOVERNING AUTHORITY" shall mean the federal government of the United
     States, and any state, county or local government, and any regulatory
     department, body, political subdivision, commission, bureau,
     administration, agency, instrumentality, ministry, court, judicial or
     administrative body, taxing authority, or other authority of any of the
     foregoing (including, without limitation, any corporation or other entity
     owned or controlled by any of the foregoing), MISO, METC, NERC, RFC, NRC,
     and any other regional reliability council, the Transmission Provider and
     any other regional transmission organization, in each case having
     jurisdiction over either or both of the Parties, the Facility, or the
     Transmission Provider's transmission system, whether acting under express
     or delegated authority.

41.  "INTERCONNECTION AGREEMENT" shall mean, with respect to the Facility, the
     interconnection agreement by and among Seller, MISO and METC, and any other
     agreement by and among Seller, MISO and METC, governing the interconnection
     of the Facility to the MISO or METC system and transmission of Energy from
     the Facility into the MISO or METC system, as amended or superseded.

42.  "INTERCONNECTION POINT" shall mean, with respect to the Facility, the
     Point(s) of Interconnection described in the Interconnection Agreement,
     unless the Parties specifically agree otherwise in writing.

43.  "INTEREST RATE" shall mean, the one-month LIBOR rate as published in The
     Wall Street Journal for the then current month, or in a comparable
     publication.

44.  "LAW" shall mean any law, statute, rule, regulation, or ordinance issued or
     promulgated by a Governing Authority.

45.  "LETTER(S) OF CREDIT" means one or more irrevocable, transferable standby
     Letters of Credit issued by a U.S. commercial bank or a foreign bank with a
     U.S. branch with such bank having a credit rating of at least A- from S&P
     or A3 from Moody's, in a form acceptable to the Party in whose favor the
     Letter of Credit is issued. Costs of a Letter of Credit shall be borne by
     the applicant for such Letter of Credit.

46.  "LMP" shall mean the Locational Marginal Price at the relevant CPNode for
     the relevant


                                       5

<PAGE>

     hour(s) and day(s), as posted by MISO.

47.  "MAINTENANCE SCHEDULE" shall have the meaning set forth in Section 4.1(a).

48.  "MERCHANT OPERATIONS CENTER" shall mean that operations center responsible
     for monitoring, coordinating and scheduling the outages and dispatch of
     generation facilities.

49.  "METERING PARTY" shall have the meaning set forth in Section 5.1(a).

50.  "METC" shall mean the Michigan Electric Transmission Company, or any
     successor entity.

51.  "MISO" shall mean the Midwest Independent Transmission System Operator,
     Inc., or any successor entity.

52.  "MISO TARIFF" shall mean the "Open Access Transmission and Energy Market
     Tariff for the Midwest Independent Transmission System Operator, Inc.," as
     amended or superseded.

53.  "MPSC" shall have the meaning set forth in Section 10.l.

54.  "MWH" shall mean megawatt hours.

55.  "NERC" shall mean the North American Electric Reliability Council, or any
     successor entity.

56.  "NET ENERGY OUTPUT" shall mean, for any hour during a Billing Cycle and
     with respect to the Facility, (a) if the Facility is operating, total
     Energy output of the Facility as measured at the Delivery Point, less
     Station Power Service Load, which amounts shall be calculated at the
     applicable Billing Meters, and provided that Net Energy Output can in no
     event be less than zero, or (b) if the Facility is not operating, zero. In
     accordance with the foregoing, if the Facility is operating, Net Energy
     Output is equal to the sum of the Billing Meter data for "in" flows less
     the sum of the Billing Meter data for "out" flows; where "in" flows are
     those flows having a direction designated as being from the Facility to the
     transmission system and "out" flows are those flows having a direction
     designated as being from the transmission system to the Facility. The
     absolute value of the data from each Billing Meter shall be used to
     calculate Net Energy Output.

57.  "NRC" shall mean the Nuclear Regulatory Commission, or any successor
     entity.

58.  "OFF-PEAK" shall mean all hours that are not On-Peak hours.

59.  "ON-PEAK" shall mean hour ending 0700 EST through hour ending 2200 EST,
     Monday through Friday, excluding NERC holidays.

60.  "OPERATING DAY" shall have the meaning ascribed to such term by MISO in the
     applicable MISO Tariff or related documents, as such relevant meaning or
     relevant term may be modified from time to time.


                                       6

<PAGE>

61.  "PARTY" shall have the meaning set forth in the preamble hereto.

62.  "PEAK ADJUSTMENT PAYMENT" shall have the meaning set forth in Section 3.2.

63.  "PERSON" shall mean any legal or natural person, including any individual,
     corporation, partnership, limited liability company, joint stock company,
     association, joint venture, trust, Governing Authority or international
     body or agency, or other entity.

64.  "REACTIVE POWER" shall mean the capability of the Facility when operating
     to produce or absorb reactive power.

65.  "REGULATORY EVENT" shall have the meaning set forth in Section 17.10.

66.  "REPLACEMENT CAPACITY" shall mean, at any time, Accredited Capacity
     supplied to Buyer by Seller from any DNR other than the Facility to
     fulfill, in whole or in part, Seller's obligation to supply Accredited
     Capacity under this Agreement. Replacement Capacity shall not exceed the
     Buyer's Capacity Amount. In addition, Replacement Capacity shall (a) not be
     committed for sale to any third party, and (b) be available at all times to
     serve Buyer's Capacity requirements.

67.  "REPLACEMENT ENERGY" shall mean, at any time, Energy supplied to Buyer by
     Seller from any generation resource other than the Facility to fulfill, in
     part or in whole, Seller's obligation to deliver Energy which, when
     combined with Buyer's Entitlement of Net Energy Output, shall not exceed
     the Buyer's Capacity Amount applicable to Buyer at such time under this
     Agreement.

68.  "RFC" shall mean the ReliabilityFirst Corporation, or any successor entity.

69.  "SCADA" shall mean supervisory, control and data acquisition technology and
     equipment.

70.  "SCHEDULED" or "SCHEDULING" means the actions of Seller, Buyer and/or their
     designated representatives, of notifying, requesting and confirming to each
     other and any third party the quantity and type of Energy to be delivered
     on any Operating Day (a) submitted to MISO by Seller as Seller's Generation
     Offer from the Facility for a relevant Operating Day during the Term
     pursuant to this Agreement, or (b) submitted to MISO by Seller and accepted
     by Buyer as a Financial Bilateral Transaction for a relevant Operating Day
     during the Term pursuant to this Agreement.

71.  "SCHEDULED MAINTENANCE OUTAGE" shall have the meaning set forth in Section
     4.1(a).

72.  "SELLER" shall have the meaning set forth in the preamble hereto.

73.  "SELLER'S GUARANTOR" shall have the meaning set forth in Section 7.2.

74.  "SELLER'S GUARANTY" shall have the meaning set forth in Section 7.2.

75.  "STATION POWER SERVICE LOAD" shall mean, for the Facility and for any hour
     during a


                                       7

<PAGE>

     Billing Cycle, the sum of the following items: (a) the station start-up
     transformer load for that hour; (b) the safeguard transformer load for that
     hour; and (c) the main transformer load for that hour.

76.  "SUMMER MAINTENANCE OUTAGE" shall have the meaning set forth in Section
     4.1(b)(i).

77.  "TARGET CAPACITY FACTOR" shall mean 0.9500.

78.  "TAX" shall mean all taxes, charges, fees, levies, penalties or other
     assessments imposed by any Governing Authority, including income, gross
     receipts, single business, excise, real or personal property, sales,
     transfer, customs, duties, franchise, payroll, withholding, social
     security, receipts, license, stamp, occupation, employment, or other taxes,
     including any interest, penalties or additions attributable thereto, and
     any payments to any state, local, provincial or foreign taxing authorities
     in lieu of any such taxes, charges, fees, levies or assessments.

79.  "TERM" shall mean the period from and after the Closing as defined in the
     Asset Sale Agreement to and including the date and time on which this
     Agreement is terminated in accordance with the terms hereof.

80.  "TERMINATION DATE" shall have the meaning set forth in Section 10.1.

81.  "TRANSMISSION OWNER" shall mean METC.

82.  "TRANSMISSION PROVIDER" shall mean the MISO.

83.  "UPRATE" shall mean the increase in the maximum power level at which the
     Facility may operate (a) under its NRC license as such license may be
     amended after the date hereof and/or (b) any increase in the power level at
     which the Facility may operate as a result of the replacement or
     modification of the Facility's moisture-separator reheaters.

1.2. RULES OF INTERPRETATION

     (a)  Unless otherwise required by the context in which any term appears:

          (i)  Capitalized terms used in this Agreement shall have the meanings
               specified in this Article.

          (ii) The singular shall include the plural, the plural shall include
               the singular, and the masculine shall include the feminine and
               neuter.

          (iii) References to "Articles," "Sections," or "Exhibits" shall be to
               articles, sections, or exhibits of this Agreement, and references
               to "Paragraphs" or "Clauses" shall be to separate paragraphs or
               clauses of the section or subsection in which the reference
               occurs.

          (iv) The words "herein," "hereof" and "hereunder" shall refer to this
               Agreement as a whole and not to any particular section or
               subsection of


                                       8

<PAGE>

               this Agreement; and the words "include," "includes" or
               "including" shall mean "including, but not limited to."

          (v)  The term "day" shall mean a calendar day, commencing at 12:00
               a.m. (EST). The term "week" shall mean any seven consecutive day
               period, and the term "month" shall mean a calendar month;
               provided that when a period measured in months commences on a
               date other than the first day of a month, the period shall run
               from the date on which it starts to the corresponding date in the
               next month and, as appropriate, to succeeding months thereafter.
               Whenever an event is to be performed or a payment is to be made
               by a particular date and the date in question falls on a day
               which is not a Business Day, the event shall be performed, or the
               payment shall be made, on the next succeeding Business Day;
               provided, however, that all calculations shall be made regardless
               of whether any given day is a Business Day and whether or not any
               given period ends on a Business Day.

          (vi) All references to a particular entity shall include such entity's
               permitted successors and permitted assigns unless otherwise
               specifically provided herein.

          (vii) All references herein to any Law or to any contract or other
               agreement shall be to such Law, contract or other agreement as
               amended, supplemented or modified from time to time unless
               otherwise specifically provided herein.

     (b)  The titles of the articles and sections herein have been inserted as a
          matter of convenience of reference only, and shall not control or
          affect the meaning or construction of any of the terms or provisions
          hereof.

     (c)  This Agreement was negotiated and prepared by both Parties with advice
          of counsel to the extent deemed necessary by each Party; the Parties
          have agreed to the wording of this Agreement; and none of the
          provisions hereof shall be construed against one Party on the ground
          that such Party is the author of this Agreement or any part hereof.

     (d)  The Exhibits hereto are incorporated in and are intended to be a part
          of this Agreement; provided, however, that in the event of a conflict
          between the terms of any Exhibit and the terms of the remainder of
          this Agreement, the terms of the remainder of this Agreement shall
          take precedence.


                                       9

<PAGE>

                  ARTICLE II: PURCHASE OF CAPACITY, ENERGY, AND
                               ANCILLARY SERVICES

2.1. CAPACITY SALE AND PURCHASE

     Subject to the terms and conditions of this Agreement, Seller agrees to
     sell and supply to Buyer, and Buyer agrees to accept and purchase from
     Seller, Buyer's Entitlement of all Accredited Capacity that Seller has
     available from the Facility for the duration of the Term. Seller agrees to
     sell and supply, and Buyer agrees to accept and purchase from Seller, all
     Accredited Capacity associated with Replacement Capacity that Seller
     supplies to Buyer pursuant to the terms of this Agreement. Buyer's
     obligation to pay for Accredited Capacity sold and supplied by Seller to
     Buyer for any period of time shall be based on the aggregate amount of
     Delivered Energy for that period of time.

2.2. ENERGY SALE AND PURCHASE

     Subject to the terms and conditions of this Agreement, for the duration of
     the Term, Seller shall sell and deliver to Buyer at the Delivery Point, and
     Buyer shall accept and purchase, Buyer's Entitlement of the Net Energy
     Output of the Facility. Buyer also agrees to accept and purchase all
     Replacement Energy that Seller delivers to Buyer pursuant to the terms of
     this Agreement. The amount of all Energy sold and delivered by Seller and
     accepted and purchased by Buyer pursuant to this Section 2.2, for any
     period of time, shall be the aggregate amount of Delivered Energy for such
     period of time.

2.3. ANCILLARY SERVICES

     (a)  The sale of Capacity and Energy hereunder from the Facility to Buyer
          shall include the Ancillary Services associated with Buyer's
          Entitlement of such Capacity and Energy from the Facility. Seller
          agrees to provide and/or execute any documents or agreements necessary
          to transfer to Buyer any revenue in excess of revenues from the sale
          of Energy and Capacity under this Agreement, and any other benefits
          and rights, received by Seller in providing such Ancillary Services.

     (b)  To the extent that Seller's unexcused failure to deliver Ancillary
          Services to Buyer results in any increased cost or penalty incurred by
          Buyer, Seller shall reimburse Buyer for any such increased cost or
          penalty. The amount of such cost or penalty to be reimbursed shall not
          exceed an amount equal to the increased costs or penalties actually
          incurred by Buyer. In the event that during the Term there exists a
          market for the purchase and sale of Ancillary Services, then (i) if
          Seller fails to provide an Ancillary Service required to be delivered
          hereunder from the Facility, Seller shall use commercially reasonable
          efforts to provide Buyer with a replacement for such Ancillary Service
          and (ii) if Seller is unsuccessful in satisfying its obligation under
          clause (i), Seller shall reimburse Buyer for the market-clearing price
          for such undelivered Ancillary Service to the extent such
          market-clearing price exceeds those amounts already due from Seller


                                       10

<PAGE>

          pursuant to this Section 2.3(b).

2.4. REPLACEMENT ENERGY AND REPLACEMENT CAPACITY

     Subject to the provisions of this Agreement, Seller may provide Buyer with
     Replacement Energy and Replacement Capacity and/or Accredited Capacity from
     the Facility as set forth below in this Section 2.4 during a Derate with a
     duration of more than one (1) day, including a Derate caused by a Scheduled
     Maintenance Outage, a Summer Maintenance Outage, or any other scheduled
     outage of the Facility. If Seller supplies Replacement Capacity and/or
     Accredited Capacity from the Facility without also simultaneously
     delivering Replacement Energy, Seller shall be deemed as not having
     supplied Replacement Capacity and as not having delivered Replacement
     Energy. If Seller delivers Replacement Energy without also simultaneously
     supplying Replacement Capacity and/or Accredited Capacity from the
     Facility, Seller shall be deemed as not having supplied Replacement
     Capacity and as not having delivered Replacement Energy. Seller may provide
     Replacement Energy from a generation resource that differs from the DNR
     selected by Seller to supply Replacement Capacity, if any.

     (a)  Notices to Supply Replacement Capacity and Deliver Replacement Energy

          If the event or condition constituting the Derate is an event or
          condition other than a Scheduled Maintenance Outage, Summer
          Maintenance Outage, or any other scheduled outage of the Facility,
          Seller shall notify Buyer's Merchant Operations Center of Seller's
          election in accordance with Section 2.4(b) below to provide or not to
          provide Replacement Capacity (to the extent not supplying Accredited
          Capacity from the Facility) and Replacement Energy no later than the
          second Business Day following the day that the Derate commenced.

          If the event or condition constituting the Derate is a Scheduled
          Maintenance Outage, a Summer Maintenance Outage, or any other
          scheduled outage of the Facility, Seller shall notify Buyer's Merchant
          Operations Center of Seller's election in accordance with Section
          2.4(b) below to provide or not to provide Replacement Capacity (to the
          extent not supplying Accredited Capacity from the Facility) and
          Replacement Energy no later than two (2) Business Days prior to the
          scheduled commencement of such Scheduled Maintenance Outage, Summer
          Maintenance Outage, or other scheduled outage of the Facility.

     (b)  Seller's Replacement Capacity and Replacement Energy Options

          Seller shall have the option of electing to provide: (i) Replacement
          Capacity (to the extent not supplying Accredited Capacity from the
          Facility) and Replacement Energy on a weekly basis, (ii) Replacement
          Capacity (to the extent not supplying Accredited Capacity from the
          Facility) and Replacement Energy for the expected duration of the
          Derate, or (iii) no Replacement Capacity and Replacement Energy for
          the expected duration of the Derate; provided, however, that with
          respect to a Derate other than a Scheduled Maintenance Outage, a
          Summer Maintenance Outage, or another scheduled outage of the
          Facility, Replacement Capacity (to the extent not supplying Accredited
          Capacity from the Facility) and Replacement


                                       11

<PAGE>

          Energy, if provided, must be provided for the remaining duration of
          the Derate commencing with the date that Buyer's Merchant Operations
          Center is notified in accordance with Section 2.4(a) above.
          Notwithstanding anything else in this Agreement to the contrary, if a
          Derate occurs in the month of July or August and is expected to have a
          duration in excess of one (1) week during any part of that two-month
          period, then Seller shall not have option (i) above with respect to
          Replacement Capacity and Replacement Energy but will have options (ii)
          and (iii) above. Notwithstanding the foregoing, Seller's only option
          with respect to a Summer Maintenance Outage is to provide Replacement
          Capacity (to the extent not supplying Accredited Capacity from the
          Facility) and Replacement Energy on a continuous basis for the
          duration of such an outage equal to the Buyer's Capacity Amount.

     (c)  Replacement Energy Scheduling

          Any Replacement Energy Scheduled hereunder shall be Scheduled in
          accordance with Section 5.3, subject to the following:

          (i)  Seller shall provide notice to Buyer of the proposed source and
               Delivery Point (or Alternate Delivery Point, as the case may be)
               of the Replacement Energy by the required time for notices to be
               provided to Buyer pursuant to Section 2.4(a) above; and,

          (ii) Replacement Energy may only be Scheduled and delivered on a
               continuous basis in either (A) a single fixed quantity or (B) a
               quantity varied to reflect expected changes in the Buyer's
               Entitlement of Net Energy Output of the Facility (e.g., changes
               in Facility output or ramp rates or expected resolution of
               outages) such that the aggregate of such Replacement Energy and
               Buyer's Entitlement of Net Energy Output of the Facility will
               result in a single, fixed quantity.

     (d)  Failure to Schedule/Deliver

          If Seller fails to deliver or cause to be delivered all or part of the
          Replacement Energy that is Scheduled in accordance with Section 2.4(c)
          above, or fails to Schedule Replacement Energy in accordance with
          Section 2.4(c) above after providing the requisite notice under
          Section 2.4(a), and such failure is not excused under the terms of
          this Agreement, then Seller shall pay to Buyer, within ten (10)
          Business Days of invoice receipt therefore, an amount equal to the
          positive difference, if any, between (i) the cost incurred by Buyer
          acting in a commercially reasonable manner to replace the Replacement
          Energy not delivered or Scheduled by Seller, including the cost
          incurred by Buyer in purchasing Energy to replace, at the Delivery
          Point, the Replacement Energy not delivered or Scheduled by Seller in
          either a bilateral transaction or the market price at the Delivery
          Point, plus additional transmission charges, if any, reasonably
          incurred by Buyer for the delivery of the Energy to the Delivery
          Point, and (ii) the cost (using the Energy Charge) that Buyer would
          have incurred under this Agreement had the


                                       12

<PAGE>

          Replacement Energy been delivered or Scheduled. Any invoice submitted
          by Buyer to Seller pursuant to this Section 2.4(d) shall include a
          written statement explaining in reasonable detail the calculation of
          the amount due from Seller.

          If Buyer fails to Schedule, receive or cause to be received all or
          part of the Replacement Energy that is Scheduled by Seller in
          accordance with Section 2.4 herein, and such failure is not excused
          under the terms of this Agreement, then Buyer shall pay to Seller,
          within ten (10) Business Days of invoice receipt therefore, an amount
          equal to the negative difference, if any, between (i) the amount
          received by Seller acting in a commercially reasonable manner in the
          reselling at the Delivery Point any Replacement Energy not received by
          Buyer, including the amount received by Seller in reselling any
          Replacement Energy, at the Delivery Point, not received by Buyer in
          either a bilateral transaction or the market price at the Delivery
          Point, less additional transmission charges, if any, and (ii) the
          amount (using the Energy Charge) that Seller would have received under
          this Agreement had the Replacement Energy been received by Buyer. Any
          invoice submitted by Seller to Buyer pursuant to this Section 2.4(d)
          shall include a written statement explaining in reasonable detail the
          calculation of the amount due from Buyer.

     (e)  Failure to Supply

          Seller shall have the option to supply Replacement Capacity to Buyer
          in accordance with this Agreement, provided that the combined amount
          of Capacity supplied from the Facility and the Replacement Capacity is
          equal to or less than the Buyer's Capacity Amount. If Seller fails to
          supply Replacement Capacity (to the extent it is not supplying
          Accredited Capacity from the Facility) after providing the requisite
          notice under Section 2.4(a), and such failure is not excused under the
          terms of this Agreement, then Seller shall pay Buyer, within ten (10)
          Business Days of invoice receipt therefore, an amount equal to the
          positive difference, if any, between (i) the cost incurred by Buyer
          acting in a commercially reasonable manner to replace the Replacement
          Capacity not supplied by Seller, including the cost incurred by Buyer
          in purchasing Capacity to replace the Replacement Capacity not
          supplied by Seller in either a bilateral transaction or the market
          price at the Delivery Point, and (ii) the cost (using the Capacity
          Charge) that Buyer would have incurred under this Agreement had the
          Replacement Capacity been supplied. Any invoice submitted by Buyer to
          Seller pursuant to this Section 2.4(e) shall include a written
          statement explaining in reasonable detail the calculation of the
          amount due from Seller.

     (f)  When supplying Replacement Energy and Replacement Capacity, Seller
          shall not be required to supply Ancillary Services with respect
          thereto.

2.5. DELIVERY POINT

     (a)  If the Facility is the generation source of Energy to be delivered to
          Buyer hereunder, then the "Delivery Point" for such Energy is the
          CPNode that


                                       13

<PAGE>

          corresponds to the Interconnection Point for the main transformer.

     (b)  If the Facility is not the generation source of Energy to be delivered
          to Buyer hereunder (i.e., if Replacement Energy is being supplied),
          then the "Delivery Point" for the Replacement Energy shall be,
          pursuant to the Seller's choice, any of: (i) the CPNode that
          corresponds to the Interconnection Point for the main transformer,
          (ii) any other CPNode located within the METC Sub-Control Area, or
          (iii) the CPNode that corresponds to the Buyer's Load Zone as defined
          by MISO ((ii) or (iii) being the "Alternate Delivery Point").

     (c)  In the event that Seller chooses to deliver Replacement Energy to an
          Alternate Delivery Point permitted by Section 2.5(b) above, Seller
          shall reimburse Buyer for any additional costs (net of any savings)
          incurred by Buyer (relative to that which would have been incurred by
          Buyer if such delivery had been made to the CPNode that corresponds to
          the Interconnection Point) as a result of the delivery of such
          Replacement Energy, including, but not limited to, LMP differentials,
          transmission costs, imbalance penalties or charges, scheduling
          penalties or fees, redispatch costs, cash out charges, congestion
          management fees, Ancillary Service costs associated with the
          incremental transmission, line losses and similar costs, regulation
          and frequency response charges, voltage support charges or any similar
          penalties, fees or charges assessed by Transmission Provider for
          failure to satisfy the Transmission Provider's balance, nomination
          and/or scheduling requirements.

2.6. ENTITLEMENT DUE TO UPRATE

     In the event of an Uprate, Seller shall be entitled to sell, and Buyer
     shall have no right to, all additional Capacity, Energy and Ancillary
     Services attributed to the Uprate. In the event of an Uprate, Seller will
     arrange for a net capability test (the "Uprate Capability Test") in
     accordance with ECAR 4 (or with the Effective Capacity Requirements, if
     applicable) to be conducted, after the Uprate is completed, tested and
     operational as determined by Seller, to calculate the actual net increase
     in the Capacity of the Facility attributable to the Uprate. Once the Uprate
     Capability Test is completed, the Buyer's Entitlement and the associated
     percentages in the column in Exhibit B entitled "Buyer's Entitlement" shall
     be revised, upon written notice from Seller to Buyer, to equal the
     quotient, stated as a percentage, resulting from (a) the Capacity of the
     Facility amount from Exhibit B (without taking into account the effect of
     the Uprate) corresponding to the month in which the Uprate is completed,
     tested and operational as determined by Seller, divided by (b) the Capacity
     rating of the Facility resulting from the Uprate Capability Test. Buyer
     shall be entitled under this Agreement to the Buyer's Entitlement of all
     Capacity made available, or capable of being made available, from the
     Facility (except for Capacity from the Facility attributable to an Uprate),
     and Seller shall not sell or commit to sell such Capacity to any party
     other than Buyer.

2.7. CAPACITY ACCREDITATION

     Seller shall, at its cost and expense, (a) on an annual basis (or more
     frequently as Seller may be directed by any Governing Authority), perform a
     Capacity test of the Facility, in


                                       14

<PAGE>

     accordance with ECAR 4 and Module E, and (b) take all other actions
     reasonably required to cause the Capacity of the Facility and the
     Replacement Capacity to be Accredited Capacity, including the satisfaction
     of all applicable requirements to establish and maintain the DNR status (as
     defined under applicable MISO Tariffs) of the Facility or the source of the
     Replacement Capacity for Buyer.

2.8. REACTIVE POWER

     (a)  Seller agrees that it shall not have any rights to the production or
          absorption of the Reactive Power capabilities of the Facility existing
          as of the time of closing of the transactions contemplated by the
          Asset Sale Agreement (which capabilities are identified in the
          Interconnection Agreement), and that Seller shall not operate the
          Facility to produce real power at a level or in a manner that
          compromises its ability to operate the Facility to produce or absorb
          Reactive Power to maintain the output voltage or power factor at the
          Interconnection Point as specified in the Interconnection Agreement
          or, if the Interconnection Agreement is not applicable, any other
          applicable agreement governing Seller's obligation to provide Reactive
          Power from the Facility. In addition, Seller shall maintain the
          Reactive Power capability of the Facility at the levels set forth in
          the Interconnection Agreement as the same may be amended by the
          parties thereto. Notwithstanding the foregoing, in no event shall
          Seller be required by Buyer to reduce its real power output below the
          Buyer's Capacity Amount for the purpose of producing Reactive Power.

     (b)  Notwithstanding Section 2.8(a), Seller may alter the Facility's
          ability to absorb or produce Reactive Power or otherwise change the
          amount or nature of Reactive Power if such alteration is approved by
          the applicable Governing Authority.

2.9. STATION POWER SERVICE

     During any period in which the Facility is operating, Seller shall be
     entitled to satisfy the Station Power Service Load using Energy generated
     by the Facility. Seller shall be solely responsible for obtaining, at its
     cost, Energy to serve the Station Power Service Load, including any
     transmission charges (if applicable) associated with such Energy, during
     any period of time in which the Facility is not operating, or is not
     generating sufficient Energy to meet the Station Power Service Load. In the
     event that any fees, penalties, or transmission charges are assessed
     against Buyer by any Governing Authority in connection with Seller's
     consumption of Energy to serve the Station Power Service Load or any Energy
     obtained by Seller to serve the Station Power Service Load, Seller shall
     reimburse Buyer for such fees, penalties, or transmission charges or
     Energy.

                              ARTICLE III: PAYMENTS

3.1. PURCHASE PAYMENTS

     The amounts to be paid to the Seller by the Buyer for purchases of
     Capacity, Energy and Ancillary Services under this Agreement shall be
     determined as follows:


                                       15
<PAGE>

     (a)  Capacity Payment. With respect to each Billing Cycle, Buyer shall make
          a payment to Seller equal to the product of: (i) the applicable
          "Capacity Charge" set forth in Exhibit A; (ii) the applicable Capacity
          Charge Shaping Factor set forth in Exhibit C; and (iii) the number of
          MWhs of Delivered Energy for the Billing Cycle (each, a "Capacity
          Payment").

     (b)  Energy Payment. With respect to each Billing Cycle, Buyer shall make a
          payment to Seller equal to the product of: (i) the applicable "Energy
          Charge" set forth in Exhibit A; (ii) the applicable Energy Charge
          Shaping Factor set forth in Exhibit C; and (iii) the number of MWhs of
          Delivered Energy for the Billing Cycle (each, an "Energy Payment").

     (c)  Ancillary Services. The Capacity Payment and the Energy Payment
          include payment for any and all Ancillary Services received by Buyer,
          and no additional payment in respect thereof shall be due at any time.
          Without limiting the generality of the foregoing, Seller specifically
          agrees that it shall not be entitled to any payment for Reactive Power
          under this Agreement, notwithstanding its obligation to operate the
          Facility in accordance with Section 2.8.

3.2. PEAK ADJUSTMENT PAYMENT

     If applicable, Seller shall make a payment to Buyer as determined in
     accordance with Exhibit G (each, a "Peak Adjustment Payment").

                      ARTICLE IV: MAINTENANCE AND OPERATION

4.1. SCHEDULED MAINTENANCE

     (a)  Scheduling Procedure

          Seller shall submit to Buyer a schedule of maintenance of the Facility
          (each, a "Maintenance Schedule" and each item thereon a "Scheduled
          Maintenance Outage") for each Calendar Year during the Term no later
          than twelve (12) months before the beginning of such year (or no later
          than three (3) months prior to the deadline for submittal of any such
          schedule to the Transmission Provider or any other applicable
          Governing Authority, if earlier); except that within thirty (30) days
          following the Effective Date, Seller shall submit to Buyer a
          Maintenance Schedule for the Calendar Year in which the Effective Date
          occurs and for the following Calendar Year. Each Maintenance Schedule
          shall meet the requirements set forth in Section 4.1(b) and shall be
          deemed confidential information and shall be treated accordingly as
          provided in Article XIV of this Agreement; provided, however, that
          Buyer shall have the right, consistent with Section 14.2(a), to submit
          the Maintenance Schedule to the MPSC. Seller shall also submit to
          Buyer any schedule of maintenance provided to the Transmission
          Provider, any Governing Authority or other entity.

     (b)  Limitations on Scheduled Maintenance Outages


                                       16

<PAGE>

          (i)  If Seller plans a Scheduled Maintenance Outage during the period
               from June 1st through August 31st (a "Summer Maintenance
               Outage"), Seller must comply with the notice and Scheduling
               provisions of Section 2.4 and the following terms and conditions:

               (A)  Seller shall supply Replacement Capacity (if and to the
                    extent Accredited Capacity from the Facility is not
                    provided), and Schedule and deliver Replacement Energy, on a
                    continuous basis to the Delivery Point (or Alternate
                    Delivery Point) for each hour of such Summer Maintenance
                    Outage in an amount equal to the Buyer's Capacity Amount;
                    and

               (B)  If Seller fails to deliver or cause to be delivered, or
                    fails to Schedule, all or part of the Replacement Energy
                    required by subsection (i)(A) above, and such failure is not
                    excused under the terms of this Agreement, then Seller shall
                    pay to Buyer, within ten (10) Business Days of invoice
                    receipt therefore, an amount equal to the positive
                    difference, if any, between (1) the cost incurred by Buyer
                    acting in a commercially reasonable manner to replace the
                    Replacement Energy not delivered or Scheduled by Seller,
                    including the cost incurred by Buyer in purchasing Energy to
                    replace, at the Delivery Point, the Replacement Energy not
                    delivered or Scheduled by Seller in either a bilateral
                    transaction or the market price at the Delivery Point, plus
                    additional transmission charges, if any, reasonably incurred
                    by Buyer for the delivery of the Energy to the Delivery
                    Point, and (2) the cost (using the Energy Charge) that Buyer
                    would have incurred under this Agreement had the Replacement
                    Energy been delivered or Scheduled. Any invoice submitted by
                    Buyer to Seller pursuant to this subsection (i)(B) shall
                    include a written statement explaining in reasonable detail
                    the calculation of the amount due from Seller.

               (C)  If Buyer fails to Schedule, receive or cause to be received
                    all or part of the Replacement Energy that is Scheduled by
                    Seller in accordance with subsection (i)(A) above and such
                    failure is not excused under the terms of this Agreement,
                    then Buyer shall pay to Seller, within ten (10) Business
                    Days of invoice receipt therefore, an amount equal to the
                    negative difference, if any, between (1) the amount received
                    by Seller acting in a commercially reasonable manner in the
                    reselling at the Delivery Point any Replacement Energy not
                    received by Buyer, including the amount received by Seller
                    in reselling any Replacement Energy, at the Delivery Point,
                    not received by Buyer in either a bilateral transaction or
                    the market price at the Delivery Point, less additional
                    transmission charges, if any, and (2) the amount (using the
                    Energy Charge) that Seller would have received under this
                    Agreement had the Replacement Energy been received by Buyer.
                    Any invoice submitted by Seller


                                       17

<PAGE>

                    to Buyer pursuant to this subsection (i)(C) shall include a
                    written statement explaining in reasonable detail the
                    calculation of the amount due from Buyer.

               (D)  If Seller fails to supply Replacement Capacity in accordance
                    with subsection (i)(A) above and such failure is not excused
                    under the terms of this Agreement, then Seller shall pay
                    Buyer, within ten (10) Business Days of invoice receipt
                    therefore, an amount equal to the positive difference, if
                    any, between (1) the cost incurred by Buyer to replace the
                    Replacement Capacity not supplied by Seller, including the
                    cost incurred by Buyer in purchasing Capacity to replace the
                    Replacement Capacity or the market price paid by Buyer for
                    Replacement Capacity not supplied by Seller, and (2) the
                    cost (using the Capacity Charge) that Buyer would have
                    incurred under this Agreement had the Replacement Capacity
                    been supplied. Any invoice submitted by Buyer to Seller
                    pursuant to this subsection (i)(D) shall include a written
                    statement explaining in reasonable detail the calculation of
                    the amount due from Seller.

          (ii) The conditions set forth in Section 4.1(b)(i) shall not apply to
               (x) the Scheduled Maintenance Outage which includes the
               Facility's reactor head replacement, (y) the Scheduled
               Maintenance Outage, if any, during which the Facility's steam
               generator is replaced, or (z) any unexpected maintenance outage
               (i.e., a maintenance outage which is scheduled in less than three
               months).

4.2. DERATE NOTICES

     In the event of any Derate, other than a Scheduled Maintenance Outage, any
     Summer Maintenance Outage, or any other scheduled outage of the Facility,
     Seller must notify Buyer's Merchant Operations Center telephonically of
     such Derate as soon as practicable after Seller becomes aware of the
     necessity or occurrence thereof (each, a "Derate Notice"), with written
     confirmation within 24 hours. During any ongoing Derate, Seller shall
     provide daily or more frequent updates to Buyer's Merchant Operations
     Center of the nature and expected duration of such Derate. During the
     course of development of a Derate, Seller shall provide frequent updates as
     to the magnitude and timing of actual and expected output changes of the
     Facility and such other information as may assist Buyer in assessing the
     reliability of output from the Facility.

4.3. OTHER OPERATIONS OBLIGATIONS

     (a)  Permits, Licenses and Approvals; Compliance with Laws

          Seller shall, at its expense, acquire and maintain in effect
          throughout the Term of this Agreement all permits, licenses, approvals
          and other Authorizations of any Governing Authority required for the
          lawful operation and maintenance of the Facility.


                                       18

<PAGE>

     (b)  Information Requirements

          Seller shall provide Buyer with the following real-time telemetered
          data (scanned no less frequently than once every four seconds) for the
          duration of the Term: (i) net output (megawatts and megaVARs), (ii)
          status (i.e., open or closed) of the applicable breaker, (iii)
          operating limits, and (iv) such additional information as may be
          required from time to time by the Transmission Provider or any
          Governing Authority, or Buyer's control area operator, or by Good
          Utility Practices. Seller shall provide Buyer with copies of any
          scheduling notices or requests submitted to the Transmission Provider,
          concurrently with the submission thereof. In addition, Seller shall
          provide Buyer with any other information Buyer may reasonably request
          regarding the operation of the Facility. Seller shall advise Buyer and
          provide information regarding events, ongoing work or Facility status
          which may create a risk of Derates. In no event shall the provisions
          of this Section 4.3(b) require Seller to provide Buyer with any
          information that Seller believes in good faith, based on established
          precedent or reasonable inquiry, violates the rules or regulations on
          transfer of information promulgated by any Governing Authority or
          Transmission Provider.

     (c)  SCADA Data

          Seller shall provide and make available to Buyer, on a real-time
          basis, all data generated by the SCADA system at the Facility,
          including, without limitation, all four-second meter data.

     (d)  Quality of Energy

          All Energy delivered hereunder shall be three-phase, 60 Hertz (plus or
          minus variations as may be required or allowed by the Transmission
          Provider), alternating current, at a voltage acceptable to the
          Transmission Provider, or shall otherwise comply with such other
          specifications of the Transmission Provider, regional reliability
          council or other Governing Authority responsible for the safety and
          reliability of the electric grid with authority over the Delivery
          Point (or Alternate Delivery Point, if applicable) as may be in effect
          at the time of delivery.

     (e)  Compliance with Interconnection Agreement

          To the extent the Interconnection Agreement requires delivery to Buyer
          of information and data substantially similar to that referred to in
          Sections 4.3(b) and (c), the information and data required by the
          Interconnection Agreement shall be delivered to Buyer in lieu of that
          required under Sections 4.3(b) and (c).

                    ARTICLE V: METERING, BILLING AND PAYMENT

5.1. METERING

     (a)  The Billing Meters shall at all times during the Term meet the
          requirements set by


                                       19

<PAGE>

          the Transmission Provider and all applicable Governing Authorities.
          Seller shall arrange with Transmission Owner for Transmission Owner to
          own, operate, test, maintain, and replace the Billing Meters at the
          main transformer (Meters #2 and #3 on Exhibit D). Transmission Owner
          shall be the metering party ("Metering Party") as to such Billing
          Meters. As between Seller and Buyer following the Effective Date,
          Seller shall bear all reasonable, documented costs associated with the
          operation, testing, maintenance, or replacement of the Billing Meters
          at the main transformer. Seller shall use reasonable efforts to cause
          the Transmission Owner to provide metering quantities, in analog
          and/or digital form, to Buyer upon Buyer's request.

     (b)  Buyer shall own, operate, test, maintain, and replace the Billing
          Meters at the start-up transformer and the safeguard transformer
          (Meters #1 and #4 on Exhibit D) in accordance with Good Utility
          Practices. Buyer shall be the Metering Party as to such Billing
          Meters. Following the Effective Date, Seller shall bear all
          reasonable, documented costs associated with the operation, testing,
          maintenance, or replacement of the Billing Meters at the start-up
          transformer or the standby transformer. Buyer shall provide metering
          quantities, in analog and/or digital form, to Seller upon Seller's
          request.

     (c)  The Transmission Owner's and Buyer's Billing Meters, which are shown
          on Exhibit D, shall be used for measurements under this Agreement and
          shall be sufficient to permit an accurate determination of the
          quantity and time of delivery of Energy delivered to Buyer. Buyer
          shall calibrate, and Seller shall use reasonable efforts following the
          Effective Date to cause the Transmission Owner to calibrate, their
          respective Billing Meters at least annually, and otherwise in
          accordance with applicable Governing Authority standards. Seller or
          Seller's representative shall have the right to be present during any
          calibration of the Billing Meters owned by Buyer, and Buyer shall
          provide reasonable notice to Seller of any such calibration. Seller
          agrees, and shall use reasonable efforts to cause the Transmission
          Owner to agree in writing, that upon reasonable notice, Transmission
          Owner (and Seller) shall provide Buyer access to the Billing Meters
          owned by Buyer and Transmission Owner during normal business hours for
          the purpose of reading, inspecting, calibrating, and testing such
          equipment, or witnessing the reading, inspecting, calibrating, and
          testing of such equipment by another party.

     (d)  Check Meters. Seller, at its option and expense, may install and
          operate on its premises and on its side of the Interconnection Points,
          one or more check meters to check the Billing Meters owned by Buyer.
          Seller is responsible for any separate arrangements to install check
          meters with respect to the Billing Meters owned by Transmission Owner.
          All such check meters shall be for check purposes only and shall not
          be used for the measurement of Energy flows for purposes of this
          Agreement, except as provided in Section 5.1(e) below. The check
          meters shall be subject at all reasonable times to inspection and
          examination by Transmission Provider, Buyer or their designees. The
          installation, operation and maintenance thereof shall be performed
          entirely by


                                       20

<PAGE>

          Seller in accordance with Good Utility Practice.

     (e)  Testing of Metering Equipment. Seller and Buyer agree, and Seller
          shall use reasonable efforts to cause the Transmission Owner to agree
          in writing to the following: the Metering Party shall inspect and test
          its Billing Meters upon installation and at least once every two (2)
          years thereafter. If requested to do so by a Party, the Metering Party
          shall, at the requesting Party's expense, inspect and test Billing
          Meters more frequently than once every two (2) years. The Metering
          Party shall give reasonable notice to the other Party of the time when
          any inspection or test shall take place, and the other Party may have
          representatives present at the test or inspection. In addition, Seller
          shall have the right to inspect Buyer's Billing Meters from time to
          time at its discretion. If at any time a Billing Meter is found to be
          inaccurate or defective, it shall be adjusted, repaired or replaced at
          Seller's expense, in order to provide accurate metering, unless the
          inaccuracy or defect is due to the Metering Party's failure to
          maintain, then the Metering Party shall pay. If a Billing Meter fails
          to register, or if the measurement made by a Billing Meter during a
          test varies by more than one-half of one percent (0.5%) from the
          measurement made by the standard meter used in the test, the Metering
          Party shall adjust the measurements by correcting all measurements for
          the period during which the Billing Meter was in error by using
          Seller's check meters, if installed and if, when tested, varied less
          than the Billing Meter. If no such check meters are installed, the
          Parties shall use the best available data for the period in question.
          If no other data are available, or if the period cannot be reasonably
          ascertained, the adjustment shall be for the period immediately
          preceding the test of the Billing Meter equal to one-half the time
          from the date of the previous test of the Billing Meter.

     (f)  Seller and Buyer agree, and Seller shall use reasonable efforts to
          cause the Transmission Owner to agree in writing, to the following: at
          Seller's expense, the metered data shall be telemetered by the
          Metering Party to one or more locations, designated by Transmission
          Owner and one or more locations designated by Buyer.

5.2. BILLING AND PAYMENT

     (a)  Seller shall send a billing statement to Buyer on or before the tenth
          (10th) day after the end of each Billing Cycle. If any net amount is
          due to Seller pursuant to any such billing statement, Buyer shall pay
          such amount to Seller by the later of (i) ten (10) Business Days after
          receipt of such billing statement, or (ii) the 20th day of the month
          in which the billing statement was received. If any net amount is due
          to Buyer pursuant to any such billing statement, Seller shall pay such
          amount to Buyer by the later of (i) ten (10) Business Days after
          receipt of such billing statement, or (ii) the 20th day of the month
          in which the billing statement was received. The billing statement
          shall show the kilowatt-hours of Delivered Energy for such Billing
          Cycle; the amounts due Seller for that Billing Cycle in respect of (i)
          the Capacity Payment and the Energy Payment, and (ii) any other
          amounts due to Seller hereunder; the amounts due Buyer for that
          Billing Cycle in


                                       21

<PAGE>

          respect of (iii) the Peak Adjustment Payment, and (iv) any other
          amounts due to Buyer hereunder; and the data reasonably pertinent to
          the calculation of the payments due to Seller or Buyer. If meter
          readings cannot be made during such Billing Cycle (or any portion
          thereof), the Buyer shall estimate deliveries to it for such period,
          tender payment accordingly, and make an adjustment for actual
          purchases in the next Billing Cycle's statement. For purposes of
          billing for Replacement Capacity and Replacement Energy, the Capacity
          of the resources providing Replacement Capacity and Replacement Energy
          shall be determined in accordance with Module E of the MISO Tariff,
          such determination to be submitted by Seller and Buyer and the
          Schedule(s) submitted in accordance with Section 2.4 to determine the
          amount of Replacement Capacity and Replacement Energy supplied and
          delivered to Buyer. Any amounts not paid by the due date shall be
          deemed delinquent and shall accrue interest at the Default Interest
          Rate, such interest to be calculated from and including the due date
          to but excluding the date the delinquent amount is paid in full.

     (b)  In the event of a dispute as to the amount of any bill, the disputing
          Party shall notify the other Party of the amount in dispute and Buyer
          or Seller, as applicable, shall pay to the other Party the undisputed
          portion of the bill on or prior to the due date therefor, as
          identified in Section 5.2(a). Buyer or Seller, as applicable, shall
          pay, with an interest charge computed at the Default Interest Rate,
          from and including the date payment was due to but excluding the date
          payment is made, any portion of the disputed amount ultimately found
          to be proper. In the event of a refund, Buyer or Seller, as
          applicable, shall pay, with an interest charge computed at the Default
          Interest Rate, from and including the date the disputed payment was
          made to but excluding the date the refund payment is made, any refund
          amount ultimately found to be due to the other Party.

     (c)  Neither the Buyer nor Seller shall have the right to challenge any
          billing statement rendered or received hereunder after a period of two
          (2) years from the date such statement was rendered. In the event that
          any such billing statement depends in whole or in part upon estimated
          data, this two (2) year limitation period shall be deemed to begin on
          the first day of the Billing Cycle in which such estimated data is
          adjusted to actual.

5.3. SCHEDULING

     Seller shall submit its Generation Offers and Financial Bilateral
     Transactions in accordance with applicable MISO rules and procedures, as
     the same may be amended or superseded, and consistent with offering the
     Facility in the MISO day-ahead market for dispatch as a must-run generation
     unit. The current version of such rules and procedures are attached hereto
     as Exhibit H.


                                       22

<PAGE>

                            ARTICLE VI: FORCE MAJEURE

6.1. CONDITIONS OF EXCUSE FROM PERFORMANCE

     If and to the extent resulting from a Force Majeure a Party hereto is
     rendered unable to perform any of its obligations under this Agreement
     (other than obligations of such Party to pay money when such money is due),
     that Party shall be excused, except as specifically provided elsewhere in
     this Agreement, from whatever performance is prevented by the Force Majeure
     to the extent so prevented, provided that:

     (a)  The Party claiming excuse gives the other Party prompt written notice
          describing how the event qualifies as a Force Majeure;

     (b)  The permitted suspension of performance is of no greater scope and of
          no longer duration than is required by the Force Majeure; provided,
          however, that performance under this Agreement shall only be excused
          for longer than one (1) year by reason of any particular Force Majeure
          if Seller first complies with subsection (e) below;

     (c)  No obligations of a Party hereto under this Agreement which arose and
          accrued before the Force Majeure are excused as a result of the Force
          Majeure;

     (d)  A Party's performance may be excused due to Force Majeure only for so
          long as such Party claiming Force Majeure is exercising commercially
          reasonable efforts consistent with Good Utility Practices to eliminate
          or ameliorate the Force Majeure condition; and

     (e)  Seller shall, within sixty (60) days of the occurrence of a Force
          Majeure affecting Seller's performance under this Agreement that
          Seller reasonably anticipates will last more than twelve (12) months
          after the commencement thereof, deliver to Buyer a detailed plan for
          the remedy of the Force Majeure condition, which plan shall include:
          (i) a detailed specification of Seller's proposal (including a
          timetable) to remedy the Force Majeure condition and restore the
          Facility to maximum attainable operating status, and (ii) Seller's
          decision as to whether it will commence supplying and delivering
          Replacement Capacity and Replacement Energy after the sixth (6th)
          month of the Force Majeure if the Force Majeure condition has not been
          remedied; provided, however, that, if Seller decides to provide
          Replacement Capacity and Replacement Energy after the sixth (6th)
          month of the Force Majeure, Seller must provide both Replacement
          Capacity and Replacement Energy on a continuous basis until the event
          that previously constituted the Force Majeure has been remedied.

6.2. NO TERMINATION; EXTENSION OF TERM

     In no event shall a condition of Force Majeure be grounds for termination
     of this Agreement, or extend the Term of this Agreement.


                                       23

<PAGE>

6.3. ADJUSTMENT PAYMENTS

     No Peak Adjustment Payment shall be calculated or accrue in favor of Buyer
     while performance of the Seller is excused pursuant to Section 6.1.

                    ARTICLE VII: EVENTS OF DEFAULT; REMEDIES

7.1. LIST OF DEFAULT EVENTS

     Except as otherwise provided in this Agreement and subject to the
     limitations contained in this Section 7.1, Section 7.2 and Section 7.3, a
     Party shall be entitled to pursue any remedies available to it under
     generally applicable Laws or under this Agreement upon the occurrence of
     any of the following events (except as to the event described in Section
     7.1(f), for which only Seller shall be entitled to pursue any remedies
     available to it under generally applicable Laws or under this Agreement):

     (a)  The failure of the other Party to make any undisputed payment due
          hereunder and such failure shall continue for ten (10) Business Days
          after written notice demanding such payment is received;

     (b)  In the event the other Party shall cease doing business as a going
          concern, shall generally not pay its debts as they become due or admit
          in writing its inability to pay its debts as they become due, shall
          file a voluntary petition in bankruptcy or shall be adjudicated as
          bankrupt or insolvent, or shall file any petition or answer seeking
          any reorganization, arrangement, composition, readjustment,
          liquidation, dissolution or similar relief under the present or any
          future federal bankruptcy code or any other present or future
          applicable Law, or shall seek or consent to or acquiesce in the
          appointment of any trustee, receiver, custodian or liquidator of said
          Party or of all or any substantial part of its properties, or shall
          make an assignment for the benefit of creditors, or said Party shall
          take any corporate action to authorize or that is in contemplation of
          the actions set forth above in this Section 7.1(b);

     (c)  In the event that within thirty (30) days after the commencement of
          any proceeding against either Party seeking any reorganization,
          arrangement, composition, readjustment, liquidation, dissolution or
          similar relief under the present or any future federal bankruptcy code
          or any other statute or Law, such proceeding shall not have been
          dismissed, or if, within thirty (30) days after the appointment
          without the consent or acquiescence of said Party of any trustee,
          receiver, custodian or liquidator of said Party or of all or any
          substantial part of its properties, such appointment shall not have
          been vacated or stayed on appeal or otherwise, or if, within thirty
          (30) days after the expiration of any such stay, such appointment
          shall not have been vacated;

     (d)  Any of the other Party's representations and warranties contained in
          Article VIII hereof was false or misleading in any material respect
          when made, unless the fact, circumstance or condition that is the
          subject of such representation or warranty is


                                       24

<PAGE>

          made true within thirty (30) days after the defaulting Party has
          received notice thereof from the non-defaulting Party;

     (e)  A default in performance by a Party of any agreement, undertaking,
          covenant or other obligation contained in Section 7.2 and Section 7.3,
          and such default shall continue for ten (10) Business Days after
          written notice demanding such performance is received;

     (f)  The failure of either Party to provide the other Party's employees,
          agents, and other representatives reasonable access to test or examine
          the other Party's Billing Meters after receiving notice to do so by
          the applicable Party as required under this Agreement;

     (g)  A material default in performance or observance of any other
          agreement, undertaking, covenant or other material obligation
          contained in this Agreement by a Party unless, within thirty (30) days
          after written notice from the non-defaulting Party specifying the
          nature of such material default, the defaulting Party cures such
          default or, if such cure cannot reasonably be completed within thirty
          (30) days and if the defaulting Party within such thirty (30) day
          period commences, and thereafter proceeds with all due diligence, to
          cure such default, said period shall be extended for such further
          period as shall be necessary for the defaulting Party to cure such
          default with all due diligence, provided that the extended cure period
          shall not exceed ninety (90) days from the date of the original
          notice; or

     (h)  Seller or Buyer shall permanently or persistently fail to perform
          under the terms of this Agreement, such persistent failure continues
          for a period of thirty (30) days following notice to Seller or Buyer
          (as appropriate) of such persistent failure and such failure is not
          due to Force Majeure.

If an event of default under Sections 7.1(a), (b), (c) or (e) occurs, the other
Party (the "Non-Defaulting Party") shall have (in addition to any remedies
available to under generally applicable Laws or under this Agreement) the right
(i) to terminate this Agreement and/or (ii) to suspend performance hereunder
including without limitation the delivery of Energy; provided, however, that
with respect to the circumstances described in Sections 7.1(a) and 7.1(e),
Seller's right to suspend performance hereunder, including without limitation
the delivery of Energy (but not the right to terminate this Agreement) shall
become effective upon the expiration of five (5) Business Days after (iii)
written notice demanding payment is received under Section 7.1.(a), or (iv)
written notice demanding performance is received under Section 7.1(e), as
applicable.

7.2. SELLER'S SECURITY

     (a)  Seller shall provide on the Effective Date, and maintain thereafter
          throughout the remainder of the Term, security for compliance with its
          payment obligations under this Agreement, which shall consist of (1) a
          cash deposit in the amount of $30,000,000, which deposit shall earn
          interest at the Interest Rate, (2) a corporate guaranty (the "Seller's
          Guaranty") in the form attached hereto as Exhibit E, from Entergy
          Corporation, or its Affiliate or successor ("Seller's Guarantor")
          whose


                                       25

<PAGE>

          unsecured, senior long-term debt obligations (not supported by
          third-party credit enhancements) are rated Baa3 or better by Moody's
          Investment Services, Inc. (or its successor), or BBB- or better by
          Standard & Poor's Rating Group (or its successor) in the amount of
          $30,000,000, or (3) a Letter or Letters of Credit in the amount of
          $30,000,000.

     (b)  A default specified in Section 7.1(a) may not be cured by drawing, or
          permitting a draw on, the cash deposit, Seller's Guaranty or Letter of
          Credit, unless the cash deposit, Seller's Guaranty or Letter of Credit
          is immediately replenished up to the required amount of the cash
          deposit, Seller's Guaranty or Letter of Credit under Section 7.2(a).

     (c)  If at any time there shall occur a Downgrade Event with respect to
          Seller's Guarantor or if the rating of the Letter of Credit issuing
          bank falls below the minimum acceptable level as set forth in the
          definition of Letter of Credit, then Buyer may require Seller to
          replace the Seller's Guaranty or Letter of Credit with a Letter of
          Credit acceptable to the beneficiary in the amount of $30,000,000, and
          shall be subject to all terms and conditions of this Agreement
          applicable to a Letter of Credit. In the event Seller shall fail to
          provide such security within ten (10) Business Days of receipt of
          written notice, then a breach of this Agreement shall be deemed to
          have occurred; provided, however, that Seller's obligation to provide
          a Letter of Credit due to a Downgrade Event with respect to Seller's
          Guarantor shall be suspended if the unsecured, senior long-term debt
          obligations (not supported by third-party credit enhancements) of the
          Seller's Guarantor are restored to a rating of Baa3 or better by
          Moody's Investment Services, Inc. (or its successor), or BBB- or
          better by Standard & Poor's Rating Group (or its successor).

7.3. BUYER'S SECURITY

     (a)  Buyer shall provide on the Effective Date, and maintain thereafter
          throughout the remainder of the Term, security for compliance with its
          payment obligations under this Agreement, which shall consist of (1) a
          cash deposit in the amount of $30,000,000, which deposit shall earn
          interest at the Interest Rate, (2) a corporate guaranty (the "Buyer's
          Guaranty") in the form attached hereto as Exhibit F, from CMS Energy
          Corporation, or its Affiliate or successor ("Buyer's Guarantor") whose
          unsecured, senior long-term debt obligations (not supported by
          third-party credit enhancements) are rated Baa3 or better by Moody's
          Investment Services, Inc. (or its successor), or BBB- or better by
          Standard & Poor's Rating Group (or its successor) in the amount of
          $30,000,000, or (3) a Letter or Letters of Credit in the amount of
          $30,000,000.

     (b)  A default specified in Section 7.1(a) may not be cured by drawing, or
          permitting a draw on, the cash deposit, Buyer's Guaranty or Letter of
          Credit, unless the cash deposit, Buyer's Guaranty or Letter of Credit
          is immediately replenished up to the required amount of the cash
          deposit, Buyer's Guaranty or Letter of Credit under Section 7.3(a).


                                       26

<PAGE>

     (c)  If at any time there shall occur a Downgrade Event with respect to
          Buyer's Guarantor or if the rating of the Letter of Credit issuing
          bank falls below the minimum acceptable level as set forth in the
          definition of Letter of Credit, then Seller may require Buyer to
          replace the Buyer's Guaranty or Letter of Credit with a Letter of
          Credit acceptable to the beneficiary in the amount of $30,000,000, and
          shall be subject to all terms and conditions of this Agreement
          applicable to a Letter of Credit. In the event Buyer shall fail to
          provide such security within ten (10) Business Days of receipt of
          written notice, then a breach of this Agreement shall be deemed to
          have occurred; provided, however, that Buyer's obligation to provide a
          Letter of Credit due to a Downgrade Event with respect to Buyer's
          Guarantor shall be suspended if the unsecured, senior long-term debt
          obligations (not supported by third-party credit enhancements) of the
          Buyer's Guarantor are restored to a rating of Baa3 or better by
          Moody's Investment Services, Inc. (or its successor), or BBB- or
          better by Standard & Poor's Rating Group (or its successor).

7.4. NO CONSEQUENTIAL DAMAGES

     In actions arising under Section 7.1 of this Agreement, and in all other
     claims arising under this Agreement by either Party against the other
     Party, neither Seller nor the Buyer shall be liable to the other for
     indirect, special, incidental, or consequential damages, except as to the
     indemnification obligations of the Parties under Article IX for the
     indirect, special, or consequential damages of third parties.

                  ARTICLE VIII: REPRESENTATIONS AND WARRANTIES

8.1. REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer makes the following representations and warranties to Seller, each of
     which is true and correct as of the Effective Date:

     (a)  Buyer is a corporation duly organized and in active status under the
          Laws of the State of Michigan.

     (b)  Buyer has all corporate power and authority to enter into and perform
          this Agreement and to carry out the transactions contemplated herein.

     (c)  Buyer's execution, delivery and performance of this Agreement have
          been duly authorized by, and are in accordance with, its articles of
          incorporation and by-laws; this Agreement has been duly executed and
          delivered for it by the signatory so authorized; and this Agreement
          constitutes its legal, valid, and binding obligation, enforceable
          against it in accordance with the terms hereof.

     (d)  Buyer's execution, delivery and performance of this Agreement (i) will
          not result in a breach or violation of, or constitute a default under,
          any Authorization, or any contract, lease or other agreement or
          instrument to which it is a party, or by which it or its properties
          may be bound or affected; and (ii) does not require any


                                       27

<PAGE>

          Authorization, or the consent, authorization or notification of any
          other Person, or any other action by or with respect to any other
          Person (except for Authorizations and consents or authorizations of
          other Persons already obtained, notifications already delivered, or
          other actions already taken).

     (e)  No suit, action or arbitration, or legal, administrative or other
          proceeding is pending or has been threatened against Buyer that would
          affect the validity or enforceability of this Agreement or the ability
          of Buyer to perform its obligations hereunder in any material respect,
          or that would, if adversely determined, have a material adverse effect
          on the business or financial condition of Buyer. There are no
          bankruptcy, insolvency, reorganization, receivership or other
          arrangement proceedings pending against or being contemplated by
          Buyer, or, to Buyer's knowledge, threatened against it.

     (f)  Buyer is not in breach of, in default under, or in violation of, any
          applicable Law, or the provisions of any Authorization, or in breach
          of, in default under, or in violation of, any provision of any
          promissory note, indenture or any evidence of indebtedness or security
          therefor, lease, contract, or other agreement by which it is bound,
          except for any such breaches, defaults or violations which,
          individually or in the aggregate, could not reasonably be expected to
          have a material adverse effect on the business or financial condition
          of Buyer or its ability to perform its obligations hereunder.

8.2. REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller makes the following representations and warranties to Buyer, each of
     which is true as of the Effective Date:

     (a)  Seller is a limited liability company duly organized and in good
          standing under the Laws of the State of Delaware and qualified to do
          business in the State of Michigan.

     (b)  Seller has all limited liability company power and authority to enter
          into and perform this Agreement and to carry out the transactions
          contemplated herein.

     (c)  Seller's execution, delivery and performance of this Agreement have
          been duly authorized by, and are in accordance with, its certificate
          of formation and operating agreement; this Agreement has been duly
          executed and delivered for it by the signatory so authorized; and this
          Agreement constitutes Seller's legal, valid and binding obligation,
          enforceable against it in accordance with the terms hereof.

     (d)  Seller's execution, delivery and performance of this Agreement (i)
          will not result in a breach or violation of, or constitute a default
          under, any Authorization, or any contract, lease or other agreement or
          instrument to which it is a party, or by which it or its properties
          may be bound or affected; and (ii) does not require any Authorization,
          or the consent, authorization or notification of any other Person, or
          any other action by or with respect to any other Person (except for
          Authorizations and consents or authorizations of other Persons already
          obtained, notifications


                                       28

<PAGE>

          already delivered, or other actions already taken).

     (e)  No suit, action or arbitration, or legal, administrative or other
          proceeding is pending or has been threatened against Seller that would
          affect the validity or enforceability of this Agreement or the ability
          of Seller to perform its obligations hereunder in any material
          respect, or that would, if adversely determined, have a material
          adverse effect on the business or financial condition of Seller. There
          are no bankruptcy, insolvency, reorganization, receivership or other
          arrangement proceedings pending against or being contemplated by
          Seller, or, to Seller's knowledge, threatened against it.

     (f)  Seller is not in breach of, in default under, or in violation of, any
          applicable Law, or the provisions of any Authorization, or in breach
          of, in default under, or in violation of, any provision of any
          promissory note, indenture or any evidence of indebtedness or security
          therefor, lease, contract, or other agreement by which it is bound,
          except for any such breaches, defaults or violations which,
          individually or in the aggregate, could not reasonably be expected to
          have a material adverse effect on the business or financial condition
          of Seller or its ability to perform its obligations hereunder.

                ARTICLE IX: INDEMNITY AND LIMITATION OF LIABILITY

9.1. TITLE AND RISK OF LOSS

     Title to and risk of loss related to the Capacity, Energy or Ancillary
     Services shall transfer from Seller to Buyer at the Delivery Point (or
     Alternate Delivery Point, if applicable). Seller warrants that it will
     deliver to Buyer the Capacity, Energy and Ancillary Services free and clear
     of all liens, security interests, claims and encumbrances or any interest
     therein or thereto by any Person arising prior to the Delivery Point (or
     Alternate Delivery Point, if applicable).

9.2. INDEMNIFICATION

     (a)  Each Party shall indemnify, defend and hold harmless the other Party
          from and against any Claims related to, or arising under, this
          Agreement and arising from or out of any event, circumstance, act or
          incident first occurring or existing during the period when control
          and title to Energy, Capacity and Ancillary Services is vested in such
          Party as provided in Section 9.1. Each Party shall indemnify, defend
          and hold harmless the other Party against any charges imposed by
          Governing Authority for which such Party is responsible.

     (b)  Notwithstanding any language to the contrary in this Agreement,
          neither Party shall have liability to the other Party with respect to
          provision of advice, consultation, proposals or recommendations by the
          first Party's personnel or representatives to the second Party whether
          occasioned by comments or requests of or by the second Party or by the
          negligent acts or omissions of employees or representatives of the
          first Party or otherwise, and the second Party shall


                                       29

<PAGE>

          indemnify the first Party and hold harmless the first Party from and
          against losses, damages, costs or liabilities arising therefrom.

     (c)  Each Party shall promptly notify the other Party of the assertion of
          any Claim against which such other Party may be required to provide
          indemnity hereunder and shall give such other Party an opportunity to
          defend such Claim. These indemnification provisions are for the
          protection of the Parties hereto only and shall not establish, of
          themselves, any liability to third parties.

9.3. NO PARTNERSHIP

     The Parties do not by this Agreement effect a joint undertaking and do not
     intend to create any joint or several obligations to third parties. Neither
     this Agreement nor any transaction hereunder, shall be construed to create
     a new entity, such as a partnership or a joint venture, or constitute an
     agency or employment relationship. Neither Party shall be under the control
     of or be deemed to control the other Party, and no Party shall have the
     right or power to bind any other Party.

9.4. RESPONSIBILITY FOR EMPLOYEES

     The Parties agree that, as between themselves, each Party shall be
     responsible for the acts and omissions of, and any claims by and
     compensation to, its employees and agents, irrespective of any limitation
     on the amount or type of damages, compensation or benefits payable by or
     for such Party under workers' or workmen's compensation acts, disability
     benefit acts or other employee benefit acts; provided, however, that the
     foregoing is not intended to create third-party beneficiary rights in any
     Person not a Party to this Agreement. Each Party shall indemnify the other
     Party from and against all liabilities, Claims, damages, suits, fines or
     judgments, including reasonable attorneys' fees and defense fees,
     disbursements and expenses, for injury or death to third persons and damage
     to or destruction of property of third persons, to the extent caused by
     such Party's employees or agents.

                                 ARTICLE X: TERM

10.1. TERM

     Subject to the terms and conditions of this Agreement, including the final
     approval of the Michigan Public Service Commission ("MPSC"), this Agreement
     shall commence on the Effective Date and, unless terminated earlier as
     expressly provided herein, shall continue in effect until 11:59:59 p.m.
     (EST) on the Fifteenth (15th) anniversary of the Effective Date (the
     "Termination Date").

10.2. TERMINATION

     If the NRC does not grant the application for renewal of Operating License
     No. DPR-20 for the Facility for an additional twenty years as set forth in
     NRC Docket No. 50-255, the Termination Date shall be March 24, 2011 and
     neither Party shall have any further


                                       30
<PAGE>

     obligations hereunder except for those obligations which survive such
     termination.

     Promptly following Seller's determination that operation of the Facility
     has become materially and economically adverse such that continued
     operation of the Facility is no longer feasible, prudent and/or
     sustainable, Seller shall provide twelve (12) months' written notice to
     Buyer (or longer notice if commercially feasible under the circumstances)
     that Seller will permanently retire the Facility at the expiration of that
     notice period (unless twelve (12) months' notice is not commercially
     feasible under the circumstances, in which case Seller shall provide such
     notice as is commercially feasible under the circumstances). This Agreement
     will terminate at the time specified in such notice which will become the
     Termination Date, and neither Party shall have any further obligations
     hereunder except for those obligations which survive such termination.

10.3. EFFECT OF TERMINATION

     Termination of this Agreement shall not terminate the rights or duties of
     either Party hereunder with respect to any obligations due to be performed
     on or before the effective date of termination. Without limitation of the
     foregoing, Article IX, Article XI and Article XIV shall survive the
     termination of this Agreement.

                               ARTICLE XI: RECORDS

11.1. INSPECTION OF RECORDS

     Buyer and Seller shall maintain, to the extent applicable, for a period of
     not less than seven (7) years from the date of preparation thereof complete
     and accurate records of: (a) all measurements by Billing Meters of
     Delivered Energy pursuant to this Agreement, (b) real and reactive power
     production for each hour, changes in operating status, scheduled outages
     and any unusual conditions found during inspections, and (c) all other data
     and information necessary to calculate payments as provided in this
     Agreement, including invoices, receipts, charts, printouts, and other
     materials and documents. Subject to limitations imposed by applicable Law,
     Seller or Buyer, or their respective representatives shall be permitted to
     inspect such records upon request during normal business hours and copies
     of such records shall be provided, if requested, at the requesting Party's
     expense, within thirty (30) days of such request.

                      ARTICLE XII: ADMINISTRATIVE COMMITTEE

12.1. PURPOSE

     From time to time various administrative and technical matters may arise in
     connection with the terms and conditions of this Agreement which will
     require the cooperation and consultation of the Parties and the exchange of
     information. As a means of providing for such cooperation, consultation and
     exchange, an Administrative Committee is hereby established with the
     functions described in Section 12.4. However, the Administrative Committee
     shall not (a) have the authority to amend this Agreement, or (b) diminish
     in


                                       31

<PAGE>

     any manner the authority or responsibility of either Party as set forth in
     the various sections of this Agreement.

12.2. MEMBERSHIP

     The Administrative Committee shall have two (2) members. Within sixty (60)
     days after execution of this Agreement, each Party shall designate its
     representative on the Administrative Committee and shall promptly give
     written notice thereof to the other Party. Thereafter, each Party shall
     promptly give written notice to the other Party of any change in the
     designation of its representative on the Administrative Committee. All
     actions taken by the Administrative Committee must be approved by both
     members.

12.3. MEETINGS

     Meetings as are reasonably required may be called by either member with as
     much advance notice as is practicable. Meetings may be attended by other
     representatives of the Parties.

12.4. FUNCTIONS

     The Administrative Committee shall have the following functions:

1.   Provide liaison between the Parties at the management level and exchange
     information with respect to significant matters arising under this
     Agreement.

2.   Appoint ad hoc committees, the members of which need not be members of the
     Administrative Committee, as necessary to perform detailed work and conduct
     studies regarding matters requiring investigation.

3.   Review, discuss and attempt to resolve disputes arising under this
     Agreement; provided, nothing herein shall limit the provisions of Section
     17.1.

4.   Provide liaison between the Parties concerning the status of and operation
     of the Facility.

12.5. EXPENSES

     Each Party shall be responsible for the salary and out-of-pocket expenses
     of its representative and its other attendees. All other expenses incurred
     in connection with the performance by the Administrative Committee of its
     functions shall be allocated and paid as determined by the Administrative
     Committee.

                              ARTICLE XIII: NOTICES

13.1. NOTICES IN WRITING

     All notices or other communications which are required or permitted under
     this Agreement shall be effective if they are in writing and delivered
     personally or by certified mail (postage prepaid and return receipt
     requested), reputable overnight delivery service,


                                       32

<PAGE>

     or telecopy or other confirmable form of electronic delivery, to the
     following address (except as to notices which are required by this
     Agreement to be delivered to a Party's Administrative Committee
     representative or to Buyer's Merchant Operations Center, which shall be
     delivered to such Party's Administrative Committee representative or the
     Buyer's Merchant Operations Center, as the case may be):

          (a)  if to Seller:    c/o Entergy Northeast
                                440 Hamilton Avenue
                                White Plains, NY 10601

          With a copy to:       c/o ENTERGY
                                100 First Stamford Place
                                Stamford, CT 06902

          (b)  if to the Buyer: Consumers Energy Company
                                1945 W. Parnall Road
                                Jackson, MI 49201
                                Attention: William E. Garrity

          (c)  or to such other person or address as the addressee may have
               specified in a notice duly given to the sender as provided
               herein.

13.2. DATE OF NOTIFICATION

     All notices or communications duly delivered or mailed and postmarked to a
     Party hereto as provided in Section 13.1 shall be effective as of the date
     of receipt.

13.3. ORAL NOTICE IN EMERGENCY

     Notwithstanding the provisions of Section 13.1, any notice required
     hereunder with respect to an occurrence or event requiring immediate
     attention may be made orally, by telephone or otherwise, provided such
     notice shall be confirmed in writing promptly thereafter. Each Party shall
     make any such oral notice directly to the Administrative Committee
     representative of the other Party.

                          ARTICLE XIV: CONFIDENTIALITY

14.1. NON-DISCLOSURE TO THIRD PARTIES

     Except in any proceeding to approve or enforce this Agreement, Seller and
     Buyer will not disclose to any third person (including any of Seller's
     personnel engaged in electricity market related activity, but excluding
     each Party's employees, lenders, counsel, accountants or advisors who have
     a need to know such information and have agreed to keep such items
     confidential) without the prior written consent of the other Party which
     shall not be unreasonably withheld: (a) the terms or conditions of this
     Agreement or any other agreement between the Parties required hereby or
     referred to herein; or (b) any confidential or proprietary information or
     data, whether oral or written, received from the


                                       33

<PAGE>

     other Party.

14.2. DISCLOSURE PERMITTED

     Notwithstanding Section 14.1, Seller or Buyer may disclose: (a) such
     information as may be required by any applicable Law, regulation, or
     governmental order, including a requirement, regulation or order of the
     MPSC; (b) such information as may reasonably be required by any operator of
     the Facility, or by independent accountants, attorneys, credit rating
     agency representatives, other professional consultants, or prospective
     lenders or investors, subject to reasonable procedures and other safeguards
     to protect the confidentiality of the information disclosed; (c) any
     information which is or becomes publicly known, other than by breach of
     this Agreement by the receiving Party; (d) information which becomes
     available to the receiving Party hereunder without restriction from a third
     party; (e) information which is at any time developed by the receiving
     Party independently of any disclosures hereunder; or (f) such information
     regarding the terms of this Agreement as such Party deems necessary to
     enable it to comply with the Securities Exchange Act of 1934, as amended,
     or the rules, regulations and forms of the Securities and Exchange
     Commission issued thereunder, the rules of the New York Stock Exchange, or
     the rules, regulations or orders of the FERC. In addition, the Buyer or
     Seller may use the confidential information in connection with their
     respective dealings with Governing Authorities of competent jurisdiction.
     In connection with any such use, the Buyer or Seller, as applicable, agrees
     to request confidential treatment of the information.

14.3. SURVIVAL OF CONFIDENTIALITY

     The provisions of this Article XIV shall survive the Termination Date (or
     any earlier termination of this Agreement) for a period of five (5) years.

                              ARTICLE XV: INSURANCE

15.1. COVERAGE AND AMOUNTS OF SELLER AND BUYER. During the Term, Seller and
     Buyer shall procure, pay premiums for and maintain in full force and effect
     the insurance coverages described below.

     (a)  Worker's Compensation Insurance as required by the Laws of the State
          of Michigan, and employer's liability insurance with limits
          established by state or federal Law, if applicable. This policy is to
          be endorsed to include a Waiver of Subrogation in favor of the Buyer
          or Seller, as the case may be.

     (b)  Commercial General Liability Insurance, including coverage for: (i)
          premises/operations, (ii) independent contractor, (iii) products and
          completed operations, (iv) broad form contractual liability, (v) broad
          form property damage, (vi) explosion, collapse and underground damage
          exclusion deletion, and (vii) personal injury, all with limits of not
          less than $25,000,000 each occurrence and in the aggregate. Such
          coverage can be made up of a combination of primary (or


                                       34

<PAGE>

          in lieu thereof, self-insurance of no more than $10,000,000) and
          excess coverage policies.

     (c)  Comprehensive Vehicle Liability Insurance, covering all vehicles and
          automobiles whether owned, leased, or rented when used by such Party
          in connection with performance of this Agreement and including
          coverage for bodily injury and property damage in an amount not less
          than $1,000,000 per accident.

     (d)  Notwithstanding the foregoing, Seller or Buyer may self-insure to meet
          the minimum insurance requirements of Sections 15.1(a) through 15.1(c)
          to the extent it maintains a self-insurance program; provided that
          Seller's or Buyer's, as the case may be (or the Seller's Guarantor or
          Buyer's Guarantor, as the case may be) senior secured debt meets the
          rating specified in Section 7.2(a)(2) or 7.3(a)(2) and that its
          self-insurance program meets minimum insurance requirements under
          Sections 15.1(a) through 15.1(c). For any period of time that Seller
          or Buyer, as the case may be (or Seller's Guarantor or Buyer's
          Guarantor, as the case may be) senior secured debt is unrated, the
          Party shall comply with the insurance requirements applicable to it
          under Sections 15.1(a) through 15.1(c). In the event that a Party is
          permitted to self-insure pursuant to this Section 15.1(d), it shall
          notify the other Party that it meets the minimum insurance requirement
          in a manner consistent with that specified in this Article XV.

     (e)  On the Effective Date, and thereafter from time to time at the request
          of a Party, the other Party shall provide certificates of insurance
          from insurance companies having a Best rating of A minus or better
          confirming that the insurance coverages required herein are
          maintained. Such certificates shall provide that the other Party be
          given thirty (30) days' prior written notice by the insurer, or its
          authorized representative, of any cancellation and ten (10) days'
          prior written notice due to cancellation for non-payment of premiums
          in any required coverage provided by such insurer as evidenced by the
          certificates. In addition, each Party agrees to provide notice to the
          other Party of any material change in the insurance coverages or
          policies required hereby.

15.2. COVERAGE FOR FULL TERM

All required coverages shall remain in full force and effect during the Term.
Buyer's and Seller's liability under this Agreement shall not be limited to or
by the insurance coverage required in this Article XV.

                             ARTICLE XVI: ASSIGNMENT

16.1. BINDING EFFECT

     This Agreement shall be binding upon and shall inure to the benefit of the
     Parties and their respective successors and permitted assignees.


                                       35

<PAGE>

16.2. GENERAL

     Except as provided in this Article XVI, neither Party shall assign or
     otherwise convey any of its right, title, or interest under this Agreement
     without the prior written consent of the other Party hereto (which consent
     shall not be unreasonably withheld or delayed). Seller shall not be
     permitted to assign this Agreement to any Person unless such Person also
     acquires all or substantially all of Seller's interest in the Facility. Any
     assignment or delegation made without required consent shall be null and
     void.

16.3. ASSIGNMENT TO AN AFFILIATE

     Notwithstanding Section 16.2, each Party shall have the right to assign all
     or a portion of its rights or obligations under this Agreement to an
     Affiliate without the consent of the other Party, and such Affiliate to
     which this Agreement has been assigned shall have the right to further
     assign the Agreement back to assigning Party without the consent of the
     other Party; provided, however that (a) the assigning Party shall provide
     written notice of such assignment to the other Party and the assuming
     Affiliate agrees in writing to assume all obligations under this Agreement,
     (b) the assignee can document its financial strength is no worse than that
     of the assignor, or the assignee will provide credit support from an entity
     with financial strength no worse than that of the assignor, and (c) any
     security requirements then in effect pursuant to Article VII remain
     effective following the assignment, or are replaced with equivalent
     security to the reasonable satisfaction of the non-assigning Party. In the
     event of an assignment to an Affiliate pursuant to this section, the
     Parties agree that the assignor is not released from any and all further
     obligations under this Agreement.

16.4. ASSIGNMENT TO LENDERS

     Seller shall have the right to assign all or a portion of its rights or
     obligations under this Agreement to any lender providing financing for
     Seller's acquisition of the Facility as collateral security for obligations
     under the financing documents entered into with such lenders provided that:
     (a) Seller first provides Buyer with written notice of not less than sixty
     (60) days of such collateral assignment; and (b) Buyer consents to the form
     of collateral assignment and related documentation.

                           ARTICLE XVII: MISCELLANEOUS

17.1. DISPUTE RESOLUTION

     If a dispute arises between the Parties relating to this Agreement except
     with respect to the matters set forth in Sections 7.1(a), (b), (c) or (e),
     the following procedure shall be followed except that either Party may seek
     injunctive relief from a court where appropriate in order to maintain the
     status quo while this procedure is being followed.

     (a)  The Parties shall promptly hold a meeting, attended by persons with
          decision-making authority regarding the dispute, to attempt in good
          faith to negotiate a


                                       36

<PAGE>

          resolution of the dispute; provided, however, that no such meeting
          shall be deemed to vitiate or reduce the obligations or liabilities of
          the Parties hereunder or be deemed a waiver of a Party hereof of any
          remedies to which such Party would otherwise be entitled hereunder.

     (b)  If, within thirty (30) days following such meeting, the Parties have
          not succeeded in negotiating a resolution of the dispute, they agree
          to submit the dispute to binding arbitration in accordance with the
          Center for Public Resources Rules for Non-Administered Arbitration of
          Business Disputes, by a neutral arbitrator to be mutually selected by
          the Parties. The cost of the arbitrator shall be borne by the Parties,
          and the Parties shall equally bear the costs of such arbitration. If
          the Parties are unable to agree upon an arbitrator within thirty (30)
          days, the Parties may then petition the Circuit Court of Jackson
          County, Michigan to appoint the arbitrator.

     (c)  In the event the Circuit Court appoints an arbitrator, arbitration
          shall take place in a mutually acceptable location in the State of
          Michigan. Otherwise the location for arbitration shall be mutually
          agreed to by the Parties. In either case the substantive and
          procedural law of the State of Michigan shall apply to the
          proceedings. Equitable remedies shall be available in any arbitration.
          Punitive damages shall not be awarded. The written decision of the
          arbitrator shall be binding on the Parties and the Parties hereby
          agree to execute all necessary documents, including releases and
          subrogation agreements as necessary in order to conclude the matter
          upon the arbitrator rendering a final award. This Section is subject
          to the Federal Arbitration Act, 9 USCA Section 1 et seq. and judgment
          upon the award, if any, may be entered by any court having
          jurisdiction thereof.

17.2. RECORDING TELEPHONE CONVERSATIONS

     Each Party agrees that the other Party or its representatives may record
     any or all telephone conversations between representatives of the two
     Parties pursuant to or relating to this Agreement and will advise the other
     Party that the conversation is being recorded. Seller is hereby advised
     that telephone conversations with Buyer's personnel relating to Articles
     II, IV and V are routinely recorded. Each Party further agrees that such
     recorded telephone conversations shall not be deemed inadmissible in any
     arbitration proceeding or court of law by virtue of the recorded nature of
     the conversations or any authority or lack of authority to make such
     recording. Each Party hereby waives any objection to the introduction of
     such recorded telephone conversations as evidence in any arbitration
     proceeding or court of law to the extent such objections are based on the
     recorded nature of such conversations or the authority or lack of authority
     to make such recording.

17.3. COMPLIANCE WITH LAWS

     Each Party shall at all times conform to all applicable Laws. Each Party
     shall give all required notices, shall procure and maintain all necessary
     Authorizations, governmental permits, licenses and inspections necessary
     for its performance of this Agreement, and shall pay all charges and fees
     in connection therewith.


                                       37

<PAGE>

17.4. TAXES AND OTHER CHARGES

     (a)  Seller's Taxes.

          Seller is liable for and shall pay, or cause to be paid, or reimburse
          Buyer if Buyer has paid, all Taxes applicable to any transaction
          arising out of this Agreement prior to the Delivery Point on the sale
          of Energy, Capacity or Ancillary Services to Buyer. Seller shall
          indemnify, defend and hold harmless Buyer from any Claims for such
          Taxes applicable prior to the Delivery Point.

     (b)  Buyer's Taxes.

          Buyer is liable for and shall pay, or cause to be paid, or reimburse
          Seller if Seller has paid, all Taxes applicable to any transaction
          arising out of this Agreement at or after the Delivery Point on the
          purchase by Buyer of Energy, Capacity or Ancillary Services. Buyer
          shall indemnify, defend and hold harmless Seller from any Claims for
          such Taxes applicable at or after the Delivery Point.

     (c)  Certificate of Tax Exemption.

          Either Party, upon written request of the other, shall provide a
          certificate of exemption or other reasonably satisfactory evidence of
          exemption if either Party is exempt from Taxes.

17.5. FUTURE ATTRIBUTES

     In the event that, at any time during the Term, a change in Law occurs that
     causes capability of the Facility as in existence on the date hereof to
     become a tradable attribute (e.g., emission credit, renewable energy
     credit, environmental credit, "Green" credit, etc.) or otherwise to have a
     market value, Buyer shall be entitled to one hundred percent (100%) of such
     tradable attribute and the benefits of such attribute until the tenth
     (10th) anniversary of the Effective Date and thereafter fifty percent (50%)
     until the Termination Date (with the other fifty percent (50%) belonging to
     Seller), and the Parties shall in good faith negotiate to reflect such
     allocation to Buyer at no additional cost to Buyer. Seller agrees to
     execute a separate agreement to transfer to Buyer any revenue, or any other
     benefit received by Seller for Buyer's tradable attributes and to execute
     all documents and agreements and take all steps necessary to permit Buyer
     to market Buyer's tradable attributes. Seller shall be entitled to all
     attributes and benefits arising from an Uprate.

17.6. FINANCIAL TRANSMISSION RIGHTS

     Buyer shall be entitled to all financial transmission rights or other
     rights and benefits with the Transmission Provider associated with the
     Capacity, Energy and Ancillary Services being purchased hereunder. Seller
     shall cooperate in good faith with Buyer to ensure that such financial
     transmission rights and other rights and benefits are assigned and
     transferred to Buyer at no additional cost to Buyer.


                                       38

<PAGE>

17.7. GOVERNING LAW; VENUE

     This Agreement shall be governed by and construed in accordance with the
     law of the State of Michigan (without giving effect to conflict of law
     principles) as to all matters, including but not limited to matters of
     validity, construction, effect, performance and remedies. THE PARTIES
     HERETO AGREE THAT VENUE IN ANY AND ALL ACTIONS AND PROCEEDINGS RELATED TO
     THE SUBJECT MATTER OF THIS AGREEMENT SHALL BE IN THE UNITED STATES DISTRICT
     COURT FOR THE WESTERN DISTRICT OF MICHIGAN. THE FOREGOING COURT SHALL HAVE
     EXCLUSIVE JURISDICTION FOR SUCH PURPOSES, AND THE PARTIES HERETO
     IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURT AND
     IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
     OF ANY SUCH ACTION OR PROCEEDING. SERVICE OF PROCESS MAY BE MADE IN ANY
     MANNER RECOGNIZED BY SUCH COURT. EACH OF THE PARTIES HERETO IRREVOCABLY
     WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
     ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT OR THE
     TRANSACTIONS CONTEMPLATED HEREBY.

17.8. ENTIRE AGREEMENT; AMENDMENT

     This Agreement constitutes the entire agreement between the Parties
     pertaining to the subject matter of this Agreement, and supersedes and
     terminates any letters of intent and all prior and contemporaneous
     agreements, understandings, negotiations and discussions with the Parties,
     whether oral or written, regarding said subject matter, and there are no
     warranties, representations or other agreements between the Parties in
     connection with the subject matter of this Agreement, except as
     specifically set forth in this Agreement. NEITHER PARTY TO THIS AGREEMENT
     MAKES ANY REPRESENTATION, WARRANTY OR INDEMNITY, EXPRESS OR IMPLIED, TO THE
     OTHER PARTY TO THIS AGREEMENT EXCEPT FOR THE REPRESENTATIONS, WARRANTIES
     AND INDEMNITIES EXPRESSLY SET FORTH IN THIS AGREEMENT. No amendment,
     supplement, modification, waiver or termination of this Agreement shall be
     binding unless executed in writing by the Party to be bound thereby. No
     waiver of any of the provisions of this Agreement shall be deemed or shall
     constitute a waiver of any other provision of this Agreement, whether or
     not similar, nor shall such waiver constitute a continuing waiver unless
     otherwise expressly provided.

17.9. NO IMPLIED WAIVER

     The failure or delay of any Party hereto to enforce at any time any of the
     provisions of this Agreement, or to require at any time performance of the
     other Party hereto of any of the provisions hereof, shall neither be
     construed to be a waiver of such provisions nor affect the validity of this
     Agreement or any part hereof or the right of such Party thereafter to
     enforce each and every such provision.


                                       39

<PAGE>

17.10. SEVERABILITY

     Any provision of this Agreement declared or rendered unlawful by any
     Governing Authority or deemed unlawful because of a statutory change
     (individually or collectively, such events referred to as a "Regulatory
     Event") will not otherwise affect the remaining lawful obligations that
     arise under this Agreement; provided, however, that if a Regulatory Event
     occurs, the Parties shall use their best efforts to reform this Agreement
     in order to give effect to the original intention of the Parties.
     Additionally, in the event any Governing Authority imposes on Seller, the
     Facility or any Energy, Capacity or Ancillary Services delivered to Buyer
     by Seller pursuant to this Agreement any Tax or other payment obligation
     related to the ownership or operation of the Facility and not otherwise
     generally imposed on electric generation facilities under the jurisdiction
     of such Governing Authority, or energy, capacity or ancillary services
     produced thereby, then in such case the Energy Payment applicable to a
     Billing Cycle shall be increased to reflect fifty percent (50%) of such Tax
     or other payment obligation to the extent paid by Seller in such Billing
     Cycle. The Energy Payment applicable to a Billing Cycle shall be increased
     to reflect one-twelfth of 50% of any incremental real property Taxes paid
     with respect to any spent nuclear fuel storage facility located in
     Charlevoix County, Michigan owned by Seller, to the extent such Taxes with
     respect to such facility exceed $50,000 in the year of the Effective Date,
     or in subsequent years, $50,000 plus 4% per year.

17.11. NO EXCLUSIVITY/DEDICATION OF ASSETS

     This Agreement is not intended to be an exclusive arrangement between Buyer
     and Seller. No undertaking by a Party hereto to the other Party hereto
     under any provision of this Agreement shall constitute the dedication of
     that Party's assets or any portion thereof to the other Party or to the
     public.

17.12. EXPENSES

     Each Party shall pay the fees and expenses of its respective counsel,
     accountants, brokers, consultants, investment bankers and other experts
     incident to the negotiation and preparation of this Agreement.

17.13. COUNTERPARTS

     This Agreement may be executed simultaneously in two (2) or more
     counterparts, each of which shall be deemed an original but all of which
     together shall constitute one and the same instrument.

17.14. SURVIVAL

     The applicable provisions of this Agreement shall continue in effect after
     the termination of this Agreement, to the extent necessary to provide for
     final billing and adjustment, and to make other appropriate settlements
     hereunder. Those provisions hereof that by their express terms are intended
     to survive this Agreement shall so survive for the periods indicated.


                                       40

<PAGE>

17.15. THIRD-PARTY BENEFICIARY

     Nothing expressed or referenced in this Agreement shall be construed to
     give any Person other than the Parties hereto any legal or equitable right,
     remedy or claim under or with respect to this Agreement or any provision of
     this Agreement. This Agreement and the provisions and conditions hereof are
     for the sole and exclusive benefit of the Parties hereto, and their
     permitted successors and permitted assigns.

17.16. MOBILE-SIERRA

     It is the intent of the Parties that the rates and all other terms and
     conditions of the services provided hereunder shall not be subject to
     change under Sections 205 or 206 of the Federal Power Act of 1935, as
     amended, 16 U.S.C. Section 791 et seq. (or any successor legislation),
     without the consent of both Parties. Each of the Parties hereto agrees not
     to unilaterally file with the FERC a change in the rates, terms or
     conditions of this Agreement. Moreover, absent agreement of all Parties to
     a proposed change, the standard of review for changes to any rate, term or
     condition of this Agreement proposed by a non-Party or the FERC or any
     other Governing Authority acting sua sponte shall be the "public interest"
     standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas
     Services Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra
     Pacific Power Co., 350 U.S. 348 (1956). To the extent that the FERC adopts
     specific language that parties must incorporate into agreements in order to
     bind FERC, third parties and themselves to a public interest standard of
     review, the Parties hereby incorporate such language herein by reference.

17.17. FORWARD CONTRACT

     The Parties acknowledge and agree that this Agreement, the transactions
     contemplated hereby, and any security instrument that may be provided by
     either Party under Article VII shall each, and together, constitute one and
     the same "forward contract" within the meaning of the United Stated
     Bankruptcy Code (the "Code"), and Seller, Seller's Guarantor, Buyer, and
     the Buyer's Guarantor shall each constitute a "forward contract merchant"
     under the Code.


                                       41

<PAGE>

          IN WITNESS WHEREOF, each of the Parties hereto has caused this
Agreement to be executed on its behalf by its duly authorized officer as of the
date first set forth above.

                                        ENTERGY NUCLEAR PALISADES, LLC


                                        By: /s/ Gary J. Taylor
                                            ------------------------------------
                                            Gary J. Taylor
                                            President


                                        CONSUMERS ENERGY COMPANY


                                        By: /s/ Robert A. Fenech
                                            ------------------------------------
                                            Robert A. Fenech
                                            Senior Vice President
                                            Nuclear, Fossil & Hydro Operations


                                       42
<PAGE>

                                    EXHIBIT A

                         CAPACITY AND ENERGY CHARGES(1)

<TABLE>
<CAPTION>
            CAPACITY       ENERGY CHARGE (IN      TOTAL
YEAR   CHARGE (IN $/MWH)         $/MWH)        (IN $/MWH)
----   -----------------   -----------------   ----------
<S>    <C>                 <C>                 <C>
2007    [to be inserted]    [to be inserted]     $43.50
2008    [to be inserted]    [to be inserted]     $44.00
2009    [to be inserted]    [to be inserted]     $44.50
2010    [to be inserted]    [to be inserted]     $45.75
2011    [to be inserted]    [to be inserted]     $47.00
2012    [to be inserted]    [to be inserted]     $48.25
2013    [to be inserted]    [to be inserted]     $49.00
2014    [to be inserted]    [to be inserted]     $50.00
2015    [to be inserted]    [to be inserted]     $51.00
2016    [to be inserted]    [to be inserted]     $52.50
2017    [to be inserted]    [to be inserted]     $54.00
2018    [to be inserted]    [to be inserted]     $55.50
2019    [to be inserted]    [to be inserted]     $57.00
2020    [to be inserted]    [to be inserted]     $58.50
2021    [to be inserted]    [to be inserted]     $60.00
2022    [to be inserted]    [to be inserted]     $61.50
2023    [to be inserted]    [to be inserted]     $63.00
</TABLE>

For each month during the Term, the Capacity Charge and the Energy Charge set
forth above shall be adjusted by multiplying the amount of such charge by the
applicable Shaping Factor for such month as set forth on Exhibit C hereto.

----------
(1)  Within three weeks of the execution of this Agreement, Buyer shall provide
     a notice to Seller that shall allocate the Total value for each year in the
     above table as between the Capacity Charge and the Energy Charge, and this
     Exhibit A shall be modified accordingly.

<PAGE>

                                    EXHIBIT B

                             BUYER'S CAPACITY AMOUNT

For any given month during the Term, the Buyer's Capacity Amount shall be as set
forth in the table below:

<TABLE>
<CAPTION>
COLUMN A            COLUMN B                 COLUMN C               COLUMN D
MONTH       CAPACITY OF THE FACILITY   BUYER'S ENTITLEMENT   BUYER'S CAPACITY AMOUNT
--------    ------------------------   -------------------   -----------------------
<S>         <C>                        <C>                   <C>
January              813 MW                    100%                   813 MW
February             811 MW                    100%                   811 MW
March                809 MW                    100%                   809 MW
April                801 MW                    100%                   801 MW
May                  794 MW                    100%                   794 MW
June                 786 MW                    100%                   786 MW
July                 781 MW                    100%                   781 MW
August               778 MW                    100%                   778 MW
September            783 MW                    100%                   783 MW
October              800 MW                    100%                   800 MW
November             809 MW                    100%                   809 MW
December             810 MW                    100%                   810 MW
</TABLE>

Column A - Depicts the month of the year.

Column B - Will be updated over the Term of this Agreement to reflect the
Capacity of the Facility, as determined in accordance with ECAR 4 (or with the
Effective Capacity Requirements, if applicable).

Column C - Indicates the Buyer's Entitlement of the output of the Facility. This
value will be updated only after an Uprate (as defined in 1.1 (83)). The Buyer's
Entitlement shall be determined in accordance with Section 2.6 as follows (both
values shall be determined or measured for the same month):

           Capacity of the Facility before the Uprate Capability Test
    -------------------------------------------------------------------------
       Capacity of the Facility resulting from the Uprate Capability Test

Column D - Shall be the product of Column B and Column C, as those values may be
revised over the Term of this Agreement.

<PAGE>

                                    EXHIBIT C

                   CAPACITY AND ENERGY CHARGE SHAPING FACTORS

<TABLE>
<CAPTION>
MONTH       ON-PEAK HOURS   OFF-PEAK HOURS
-----       -------------   --------------
<S>         <C>             <C>
January         1.350           0.8275
February        1.200           0.6750
March           1.140           0.6750
April           1.140           0.6750
May             1.200           0.6750
June            1.400           0.8250
July            1.500           0.9500
August          1.500           0.9500
September       1.400           0.8275
October         1.140           0.6750
November        1.140           0.6750
December        1.200           0.6750
</TABLE>

<PAGE>

                                    EXHIBIT G

                             PEAK ADJUSTMENT PAYMENT

During the months of July and August for each Calendar Year of the Term (the
"Peak Period"), Seller must achieve a specified capacity factor for the Facility
as set forth in this Exhibit G. If Seller fails to achieve such a capacity
factor for the specified period, Seller shall be responsible for a payment to
Buyer (the "Peak Adjustment Payment") calculated in accordance with the
following formula:

(TEM - DEM) x $20/MWh

where

TEM = Targeted Energy for the month, which shall be the product of: (i) the
applicable Buyer's Capacity Amount for the month; (ii) the number of hours in
the month; and (iii) the Target Capacity Factor.

DEM = Delivered Energy for the month.

If the resulting product of the above formula is positive, then such positive
amount shall equal the Peak Adjustment Payment for the month in question and
Seller shall pay that Peak Adjustment Payment in accordance with this Exhibit G.
If the resulting product is zero or negative, then Seller shall owe no Peak
Adjustment Payment to Buyer for the month. For purposes of calculating the TEM
and DEM, the determination of the applicable number of hours in a month and the
Delivered Energy for a month shall exclude (a) hours within an Summer
Maintenance Outage that occurs in that month and Energy delivered during those
outage hours, and (b) hours for which a damages amount has been paid by, or is
due from, Seller pursuant to Section 2.4(d) or Section 4.1(b).

If it is determined that Seller owes Buyer a Peak Adjustment Payment for a
particular month, Buyer shall have the right to either (a) demand payment of
that Peak Adjustment Payment in writing, in which case Seller shall make such
payment to Buyer within five (5) Business Days after the written demand for
payment is received, or (b) reduce the payments otherwise due to Seller under
this Agreement for the Billing Cycle that includes the month in question by the
amount of the Peak Adjustment Payment.