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                                                                    Exhibit 10.1

                              EMPLOYMENT AGREEMENT

                  WHEREAS, Walter M. Higgins ("Executive") is presently employed
as Chairman, President and Chief Executive Officer of Sierra Pacific Resources
("SPR"), Chairman and Chief Executive Officer of its principal two subsidiaries,
Sierra Pacific Power Company ("SPPC") and Nevada Power Company ("NPC")
(together, "Utility Subsidiaries", and all three companies collectively, the
"Company", and all together, the "Parties")), and also has various other
positions with other subsidiaries of SPR, SPPC and NPC; and

                  WHEREAS, the Company, through its Board of Directors,
considers it in the best interests of its stockholders to secure the continued
employment of Executive in his present capacity, and desires to retain and
continue to retain the Executive in his present employment and current
positions, subject to certain terms and conditions as set forth more fully
below; and

                  WHEREAS, Executive is willing to continue his employment and
remain in his current position, subject to certain terms and conditions as set
forth more fully below;

                  WHEREAS, Executive and Company are currently parties to an
employment agreement dated August 4, 2000 (the "Prior Employment Agreement"),
and a Change in Control Agreement dated May 21, 2001 (the "Prior Change in
Control Agreement"), which agreements, except for any specific provisions
provided for and incorporated herein or carried forward herein, the parties
agree to terminate and cancel in consideration for the promises and covenants
set forth herein.

                  WHEREAS, The Board of Directors (exclusive of the Executive,
who has abstained from the relevant proceedings) has specifically authorized the
Company to enter into this Agreement.

                  NOW, THEREFORE, Company employs Executive and Executive
accepts employment upon the terms and conditions of this Agreement and the
parties do covenant and agree as follows:

                  1.       Term.

                  The term of this Agreement ("Employment Term") shall begin on
September 26, 2003 ("Effective Date") and, subject to any early termination that
may occur pursuant to Articles 6 or 7, expire on September 25, 2006 (the
"Expiration Date").

                  2.       Positions and Duties.

                           2.1      Positions and Duties. During the Employment
         Term, the Executive will serve in the positions of Chairman of the
         Board, President and Chief Executive Officer of SPR, and Chairman of
         the Board and Chief Executive Officer of each of the Utility
         Subsidiaries and any other utility subsidiaries which the Company may
         come to own, and will have such powers, duties, functions,
         responsibilities and authority as are (i) consistent with the
         Executive's position as the Company's most senior executive officer and
         Chairman of the Board and Chief Executive Officer of

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         SPR and the Utility Subsidiaries; or (ii) assigned to his office in the
         SPR's and the Utility Subsidiaries' bylaws; or (iii) reasonably
         assigned to him by the Board of Directors of the Company. The Executive
         will report directly to the Board of Directors of the Company. SPR will
         use its best efforts to cause the Executive to continue to be elected
         as a member of the Board of Directors of SPR (the "Board") and, if so
         elected, will retain him as Chairman of the Board throughout the
         Employment Term and will use its best efforts to cause him to be
         included in the Board's slate for election as a director of SPR at
         every stockholders' meeting at which his term as a director would
         otherwise expire. In addition, SPR will cause the Executive to be
         elected a member of the board of directors, and as Chairman and Chief
         Executive officer, of each Utility Subsidiary throughout the Employment
         Term.

                           2.2      Commitment. During the Employment Term, the
         Executive will be SPR's full-time employee and, except as may otherwise
         be approved in advance in writing by the Board, and except during
         vacation periods and reasonable periods of absence due to sickness,
         personal injury, or other disability, the Executive will devote
         substantially all of his business time and attention to the performance
         of his duties hereunder. Notwithstanding the foregoing, the Executive
         may (i) serve as a director of a company or companies which are not
         engaged in "Competition" (as defined in Section 10.1) with the Company
         or any subsidiary entity owned or majority controlled by the Company,
         (ii) serve as an officer, director, or otherwise participate in
         educational, welfare, social, religious, and civic organizations, and
         (iii) manage personal and family investments and affairs; provided,
         however, that the Board may require the Executive to cease the
         activities he undertakes hereunder pursuant to clauses (i) and (ii)
         above if the Board determines that the Executive is unable to devote
         sufficient time and attention to the performance of his duties
         hereunder as a result of such activities.

                  3.       Place of Performance. In connection with his
employment during the Employment Term, unless otherwise agreed by the Executive,
the Executive will maintain his principal office in Las Vegas, Nevada, and shall
also have an office at the principal SPR/SPPC offices in the Reno/Sparks area
and shall maintain an office at any other place reasonably determined by the
Board to be necessary or appropriate for the discharge of his duties. The
Executive will undertake normal business travel on behalf of the Company from
office to office and/or to other places appropriate to conduct the business and
affairs of the Company, at Company expense as set forth more fully below. The
Company shall continue to provide a housing allowance and local transportation
on the terms and conditions afforded to date in office locations other than the
Las Vegas offices.

                  4.       Compensation and Related Matters.

                  4.1      Compensation

                           (i)      Annual Base Salary. During the Employment
                  Term, the Company will pay to the Executive an annual base
                  salary ("Base Salary") in such amount as shall be commensurate
                  with his position and level of responsibility as set forth in
                  Article 2 as determined by the Board in its reasonably
                  exercised discretion from time to time; provided, however,
                  that in no event shall such Base Salary be less than the
                  Executive's current annual base salary, except under
                  extraordinary circumstances (including, without

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                  limitation, a natural disaster or general economic downturn
                  which significantly and adversely affects the Company's
                  operations) which directly results in an across-the-board
                  reduction of the annual base salary of all or substantially
                  all other senior executives of the Company. Base Salary shall
                  be payable at the time and in the manner consistent with the
                  Company's general policies regarding compensation of executive
                  employees.

                           (ii)     Annual Incentive Compensation. During the
                  Employment Term, the Executive shall be eligible to receive an
                  annual cash incentive award and shall be entitled to receive
                  such an award based on the extent to which the Company
                  achieves criteria or performance targets, reasonably selected
                  by the Compensation Committee of the Board at or before the
                  commencement of the annual performance period, on an annual
                  target level of not less than 70% percent of Base Salary.
                  Subject to the foregoing, nothing in this Section 4.1(ii)
                  shall guarantee to the Executive any specific amount of
                  incentive compensation.

                  4.2      Employee and Executive Benefits. In addition to the
         compensation described in Section 4.1 and subject to all the provisions
         of this Article 4, the Company will make or cause to be made available
         to the Executive and his eligible dependents, subject to the terms and
         conditions of the applicable plans, including, without limitation, the
         eligibility rules, participation in all employee pension, health,
         welfare and benefit plans, including all 401(k) plans, employee
         retirement income and welfare benefit policies, plans, programs, or
         arrangements, in which senior executives of the Company participate
         from time to time, including any stock purchase, savings, pension,
         supplemental executive retirement or other retirement income or welfare
         benefit, disability, salary continuation, and any other deferred
         compensation, group and/or executive life, health, medical/hospital, or
         other insurance (whether funded by actual insurance or self-insured by
         the Company or an affiliate), expense reimbursement, or other employee
         benefit policies, plans, programs, or arrangements. As part of these
         benefits, but not in addition thereto, the Company, during the
         Employment Term, shall continue to maintain a minimum of $2,000,000
         life insurance policy for the Executive, who shall have the right to
         designate his beneficiaries, as well as an additional $1,000,000 life
         insurance policy should the Executive die while traveling on Company
         business, and Directors and Officers insurance coverage in
         substantially the same amounts and with substantially the same coverage
         as exists immediately prior to the Effective Date.

                  4.3      Vacation and Fringe Benefits. During the Employment
         Term, the Executive shall be entitled to vacation in such amounts as
         would be available under the Company's normal vacation policies
         applicable to senior executives, as in effect from time to time, to an
         employee who as of the Effective Date would have service with the
         Company equal to the Executive's years of professional service, as
         credited under Company policy (which, as of the Effective Date, was
         37), such vacation to be taken in accordance with such normal vacation
         policies; and the Executive shall be entitled to the perquisites and
         other fringe benefits made available to senior executives of the
         Company, commensurate with his position and level of responsibility
         with the Company.

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                  4.4      Expenses. The Company will promptly reimburse the
         Executive for all travel and other business expenses the Executive
         incurs in order to perform his duties to the Company under this
         Agreement in a manner commensurate with the Executive's position and
         level of responsibility with the Company, and in accordance with the
         Company's policy regarding substantiation of expenses. In addition, the
         Executive shall receive not less than $30,000 annually as and for a
         perquisite allowance to cover expenses including a car, tax
         preparation, club memberships, and to facilitate participation in
         certain community activities. In addition, Company will, subject to
         Board approval at its discretion, bear the expense of memberships in
         other appropriate clubs and facilities at appropriate locations for the
         purpose of advancing and protecting the business interests of the
         Company.

                  4.5      Supplemental Executive Retirement Plan ("SERP") and
         Other Benefits. The Executive is currently vested, and shall remain
         eligible for a benefit under the SERP heretofore established by the
         Company for executives. The benefit to which the Executive is entitled
         under the SERP will (1) be payable at the time and in such forms as are
         set forth in the SERP, (2) be calculated in accordance with the terms
         and conditions of the SERP and (3) remain subject to all the terms and
         conditions of the SERP as it is currently stated, except that Executive
         shall be entitled to all years of service performed for the Company at
         any time and additional years of credit under the SERP for each year of
         service (as defined by the Company's SERP) with AGL Resources or
         Louisville Gas & Electric Company. Any additional benefit provided
         under the SERP resulting from such additional years of credited service
         with AGL Resources or Louisville Gas & Electric Company shall be
         reduced by any amount of qualified benefit received from AGL Resources
         or Louisville Gas & Electric Company under their qualified pension
         plans. In addition, if the Executive is employed by the Company on the
         Expiration Date (or as provided in the last sentence of Section
         6.5(f)), SERP and retiree medical benefits and all other benefits at
         retirement shall be calculated as though Executive had reached age 62
         on the Expiration Date and had accrued service time as of the
         Expiration Date as if he had worked continuously from his first date of
         service with SPR (including time served with AGL Resources or
         Louisville Gas & Electric Company) until he had reached in the normal
         course of time age 62.

                  5.       Special Compensation.

                  5.1      Long-Term Incentive Plan. Executive shall continue
         for fiscal year 2003 to be included in the regular Executive Long-Term
         Incentive Plan grants appropriate to the position of the Chief
         Executive Officer.

                  5.2      Previous Long-Term Incentive Plan Grants. Stock
         options, performance shares, and restricted stock granted to Executive
         under the Prior Employment Agreement, and all other stock options,
         performance shares, and Phantom Shares subsequently granted to
         Executive, as may have been modified by subsequent actions of the Board
         pursuant to the Long-Term Incentive Plan, shall continue in full force
         and, to the extent granted under the Prior Employment Agreement, shall
         remain subject to the terms and conditions set forth thereunder.

                  5.3      Phantom Shares. On the Effective Date of this
         Agreement, the Company shall grant Executive 600,000 shares of SPR
         common stock (the

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         "Phantom Shares"). Executive shall not take physical possession of any
         of said Phantom Shares nor shall Executive be permitted to sell,
         transfer, or alienate any of said Phantom Shares until they become
         vested. Any unvested Phantom Shares shall vest and be delivered to
         Executive in cash, or at the discretion of the Board and if legally
         permissible, stock without restriction on the sixth anniversary of the
         Effective Date, provided Executive is still employed by the Company on
         such date. If, on the Expiration Date, this Agreement is not renewed on
         mutually acceptable terms and conditions, then Executive shall be
         entitled to receive the number of remaining unvested Phantom Shares in
         cash, or at the discretion of the Board and if legally permissible,
         stock, multiplied by a fraction, the numerator of which shall be the
         number of days between the Effective Date and the Expiration Date, and
         the denominator of which shall be the number of days between the
         Effective Date and the sixth anniversary thereof; provided, however,
         that the payment under this Section 5.3 shall only be made upon the
         Expiration Date if the Board of Directors determines, in good faith, at
         such time that there is a reasonable opportunity for the performance
         goals and measures set forth in Exhibit A to be achieved by the
         respective target dates. Such cash or stock shall be delivered to him
         without restriction within ten (10) days of the expiration of this
         Agreement. Vesting of Phantom Shares herein will be accelerated and
         Company will deliver to Executive such cash or, at the discretion of
         the Board if legally permissible, shares free of restriction in such
         amounts as Executive shall be entitled to receive not later than seven
         (7) days after the Company achieves the performance goals and measures
         set forth in Exhibit A. Until such time as the Phantom Shares are
         distributed to the Executive as shares of stock, the Executive shall
         have the right to receive dividend equivalents with respect thereto,
         with all such dividend equivalents being credited to the Executive as
         additional Phantom Shares. Notwithstanding the foregoing, if restricted
         shares become available for grant under the Company's equity-based
         incentive plans, the Phantom Shares shall be replaced, in whole or in
         part, by shares of restricted stock to the extent available (and all
         references to dividend equivalents shall be deemed to refer to actual
         dividends).

                  5.4      Cash Retention. On the Effective Date, and on each of
         the second and third anniversaries of the Effective Date, the Company
         shall pay Executive $333,333, to the extent the Executive remains in
         the employ of the Company on such dates. Retention payments provided in
         this Agreement in no way affect the Executive's eligibility for any
         cash short-term incentive programs which the Board may put into place
         for the Company's executive officers. If, prior to the first
         anniversary of the Effective Date, the Executive's employment is
         terminated by (i) the Company for Cause (as defined in Section 6.3) or
         (ii) the Executive without Good Reason (as defined in Section 6.4),
         then the Executive shall repay to the Company, within five (5) days of
         such termination of employment, a lump sum amount equal to the product
         of (x) and (y), where (x) is the after-tax amount received from the
         Company in respect of the first retention payment and (y) is a
         fraction, the numerator of which shall be the number of days between
         the date of the Executive's termination of employment and the first
         anniversary of the Effective Date and the denominator of which shall be
         365.

                  6.       Termination. Notwithstanding the Employment Term, the
termination of the Executive's employment hereunder will be governed by the
following provisions. If at the time the Executive's employment terminates for
any reason, other than by reason of his

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death, the Executive is a member of the Board, or a member of the board of
directors of the Utility Subsidiaries, or any Affiliate of the Company, the
Executive shall execute and deliver to the Company the Executive's resignation
from membership on the Board and from membership on all such other boards of
directors and, notwithstanding any other provision of this Agreement, no benefit
or amount will be paid or made available to the Executive under Section 6.5(d),
(e), (f) or (g) until the Executive executes and delivers to the Company such
resignation.

                  6.1      Death. In the event of the termination of Executive's
         employment during the Employment Term by reason of the Executive's
         death, the Company will pay to the Executive's designated beneficiaries
         or estate, as appropriate, promptly after the Executive's death, (a)
         any unpaid Base Salary to which the Executive is entitled, through the
         date of the Executive's death; (b) any accrued but unused vacation
         days; (c) a number of Phantom Shares in cash, or at the discretion of
         the Board and if legally permissible, stock, equal to the number of
         Phantom Shares then remaining unvested multiplied by a fraction, the
         numerator of which shall be the number of days between the Effective
         Date and the date of the Executive's death and the denominator of which
         shall be the number of days between the Effective Date and the sixth
         anniversary thereof; provided, however, that the payment under this
         Section 6.1(c) shall only be made if the Board determines, in good
         faith, that there is a reasonable opportunity for the performance goals
         and measures set forth in Exhibit A to be achieved by the respective
         target dates, and (iv) except for the cash retention payment set forth
         in Section 5.4, any other cash payment or stock payment or other award
         or benefit which Executive would earn if he were employed by the
         Company on a certain date, in the full amount of such payment or stock
         award at target award multiplied by a fraction, the numerator of which
         shall be the number of days from the effective date of such award to
         the date of the Executive's death and the denominator of which shall be
         the number of days from the effective date of such award to the date
         the award would have been paid assuming target level performance had
         the Executive lived to that date. This Section 6.1 will not limit the
         entitlement of the Executive's estate or beneficiaries to any death,
         disability, health, welfare or pension, or other benefits then
         available to the Executive under any pension, SERP, life insurance,
         stock ownership, stock options, or other health, welfare, or pension
         benefit plan or policy that is maintained by the Company or its
         affiliates for the Executive's benefit or in which the Executive
         participated.

                  6.2      Disability.

                           (i)      If the Executive has incurred a Disability
                  (as defined below) during the Employment Term, the Company may
                  give the Executive written notice of its intention to
                  terminate the Executive's employment. In such event, the
                  Executive's employment with the Company will terminate
                  effective on the 30th calendar day after receipt of such
                  notice by the Executive, provided that within the 30 calendar
                  days after such receipt, the Executive will not have returned
                  to full-time performance of his duties. The Executive will
                  continue to receive his Base Salary (less any amounts payable
                  to the Executive for such period under any short- or long-term
                  disability plan maintained by the Company or an affiliate) and
                  benefits until the date of termination. In the event of the
                  Executive's Disability, the Company will pay the Executive or
                  his legal guardian or representative as appropriate, promptly

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                  after the Executive's termination, (a) any unpaid Base Salary
                  to which he is entitled through the date of the Executive's
                  termination (less any amounts payable to the Executive for
                  such period under any short- or long-term disability plan
                  maintained by the Company or an affiliate); (b) any accrued
                  but unused vacation days; (c) a number of Phantom Shares in
                  cash, or at the discretion of the Board and if legally
                  permissible, stock, equal to the number of Phantom Shares then
                  remaining unvested multiplied by a fraction, the numerator of
                  which shall be the number of days between the Effective Date
                  and the date of the Executive's termination of employment and
                  the denominator of which shall be the number of days between
                  the Effective Date and the sixth anniversary thereof;
                  provided, however, that the payment under this Section 6.2(c)
                  shall only be made if the Board determines, in good faith, at
                  such time that there is a reasonable opportunity for the
                  performance goals and measures set forth in Exhibit A to be
                  achieved by the respective target dates, and (d) except for
                  the cash retention payment set forth in Section 5.4, any other
                  cash payment or stock payment or other award or benefit which
                  Executive would earn if he were employed by the Company on a
                  certain date, in the full amount of such payment or stock
                  award at target award multiplied by a fraction, the numerator
                  of which shall be the number of days from the effective date
                  of such award to the date of the Executive's termination of
                  employment and the denominator of which shall be the number of
                  days from the effective date of such award to the date the
                  award would have been paid assuming target level performance
                  had the Executive lived to that date. This Section 6.2 will
                  not limit the entitlement of the Executive's estate or
                  beneficiaries to any death, disability, health, welfare or
                  pension, or other benefits then available to the Executive
                  under any pension, SERP, life insurance, stock ownership,
                  stock options, or other health, welfare, or pension benefit
                  plan or policy that is maintained by the Company or its
                  affiliates for the Executive's benefit or in which the
                  Executive participated.

                           (ii)     For purposes of this Agreement, "Disability"
                  will mean the Executive's incapacity due to physical or mental
                  illness or injury substantially to perform his duties on a
                  full-time basis for six consecutive months and within 30
                  calendar days after a notice of termination is thereafter
                  given by the Company the Executive will not have returned to
                  the full-time performance of the Executive's duties; provided,
                  however, if the Executive disagrees with a determination to
                  terminate him because of Disability, the question of the
                  Executive's Disability will be subject to the certification of
                  a qualified medical doctor agreed to by the Company and the
                  Executive or, in the event of the Executive's incapacity to
                  designate a doctor, the Executive's legal representative. In
                  the absence of agreement between the Company and the
                  Executive, each party will nominate a qualified medical doctor
                  and the two doctors will select a third doctor, who will make
                  the determination as to Disability. In order to facilitate
                  such determination, the Executive will, as reasonably
                  requested by the Company, (a) make himself available for
                  medical examinations by a doctor in accordance with this
                  Section 6.2(ii), and (b) grant the Company and any such doctor
                  access to all relevant medical information concerning him,
                  arrange to furnish copies of medical records to such doctor
                  and use his best efforts to cause his own doctor to be
                  available to discuss his health with such doctor.

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                  6.3      Cause.

                           (i)      The Company may terminate the Executive's
                  employment hereunder for Cause (as defined below) during the
                  Employment Term by written notice as provided in Section 13.6.
                  In the event of the Executive's termination for Cause, the
                  Company will promptly pay to the Executive (or his
                  representative) any unpaid Base Salary and unpaid vacation and
                  any unpaid fully vested award or benefit to which he is
                  entitled through the date the Executive is terminated and the
                  Executive will be entitled to no other compensation or
                  benefits, except as otherwise may be due or payable to him
                  under applicable law or pursuant to any agreement, benefit
                  plan or policy that is maintained by the Company or its
                  affiliates for the Executive or in which the Executive
                  participated.

                           (ii)     For purposes of this Agreement, "Cause"
                  means that, at any time prior to the Expiration Date
                  (including, but not limited to, periods prior to the Effective
                  Date),

                  (a) the Executive shall have committed or engaged in:

                                    (1)      An act of fraud, embezzlement, or
                           theft in connection with the Executive's duties or in
                           the course of the Executive's employment with the
                           Company;

                                    (2)      An intentional breach of any of the
                           express covenants set forth in Sections 10.1, 10.2,
                           or 10.3;

                                    (3)      Gross negligence or gross
                           misconduct against the Company or another employee,
                           or in carrying out the Executive's duties and
                           responsibilities and any such act shall have been
                           materially harmful to the company;

                  (b) the Executive shall have engaged in intentional and
                  repeated failure substantially to carry out the Executive's
                  duties and/or responsibilities (other than any such failure
                  resulting from the Executive's incapacity due to physical or
                  mental illness or injury that qualifies as a Disability or
                  would qualify as a Disability if such incapacity continued for
                  the required length of time), which failure is not or cannot
                  be cured within ten calendar days after the Company has given
                  written notice to the Executive specifying in detail the
                  particulars of the acts or omissions deemed to constitute such
                  failure; or

                  (c) the Executive shall have been convicted of a felony or
                  entered a plea of nolo contendere in respect of a felony
                  charge (in each case, other than a traffic-related felony).

                  For purposes of this Section, no act or failure to act on the
                  part of the Executive shall be deemed intentional" if it was
                  due primarily to an error in judgment or negligence, but shall
                  be deemed "intentional" only if done or omitted to be done by
                  the Executive not in good faith and without reasonable

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                  belief that the Executive's action or omission was in the best
                  interest of the Company. Notwithstanding the foregoing, the
                  Executive shall not be deemed to have been terminated for
                  Cause hereunder unless and until (1) there shall have been
                  delivered to the Executive a written notice from the Company
                  stating that it has determined that the Executive had
                  committed an act constituting Cause as herein defined and
                  specifying the particulars thereof in detail, (2) the
                  Executive shall have had the opportunity to appear before the
                  Board (with counsel if he so elects) to respond to such
                  particulars and (3) at least 75% of the members of the Board
                  (not including the Executive) shall have voted to terminate
                  his employment for Cause. Nothing herein will limit the right
                  of the Executive or the Executive's beneficiaries to contest
                  the validity or propriety of any such determination. The
                  Company hereby acknowledges it has no knowledge of any fact,
                  event or circumstance that would provide the Company with
                  grounds to terminate the Executive's employment hereunder for
                  Cause and the Executive hereby represents that he has not
                  committed or engaged in any activity that would provide the
                  Company with grounds to terminate his employment hereunder for
                  Cause.

                  6.4      Termination.

                           (i)      Involuntary Termination. The Executive's
                  employment hereunder may be terminated during the Employment
                  Term by the Company for any reason other than Death,
                  Disability, or for Cause by written notice as provided in
                  Section 13.6. In the event of such a termination, the
                  Executive will be entitled to the payments and benefits
                  provided in Section 6.5, subject to the second sentence of
                  this Article 6. This Section 6.4(i) and Section 6.5, however,
                  will not limit the entitlement of the Executive to any other
                  benefits then available to the Executive under any benefit
                  plan or policy that is maintained by the Company or its
                  affiliates for the Executive's benefit or in which the
                  Executive participated. The Executive will be treated for
                  purposes of this Section 6.4(i) as having been terminated by
                  the Company for reasons other than Death, Disability, or for
                  Cause if the Executive terminates his employment with the
                  Company for any of the following reasons (each, a "Good
                  Reason") prior to the date of the Executive's Death,
                  Disability, or the date on which the Executive has committed
                  or engaged in an act constituting Cause: (a) the Company has
                  materially breached any provision of this Agreement and within
                  ten (10) calendar days after notice thereof from the
                  Executive, the Company fails to cure such breach; (b) a
                  successor or assign (whether direct or indirect, by purchase,
                  merger, consolidation, operation of law, or otherwise) to all
                  or substantially all of the business and/or assets of the
                  Company fails to expressly assume and agree to perform this
                  Agreement pursuant to Section 13.2(i); (c) a reduction in the
                  scope or value of the aggregate benefits and incentive
                  compensation described in Sections 4.1(iii), 4.2, 4.3, 4.5,
                  and 4.6 provided to the Executive or the termination or denial
                  of the Executive's rights to such benefits or incentive
                  compensation, any of which is not remedied by the Company
                  within 10 calendar days after receipt by the Company of
                  written notice from the Executive of such reduction or
                  termination; (d) the Executive is not nominated for election
                  to the Board or is removed from the Board; (e) the Board fails
                  to appoint the Executive as Chief Executive Officer of the
                  Company, or if the Executive is elected to the Board,

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                  he is not elected as Chairman of the Board of the Company, or
                  the Executive is removed from any such position; (f) the
                  Executive is not elected to or is removed from any of the
                  boards of directors of the Utility Subsidiaries or the
                  position of Chairman of the boards of directors of any of the
                  Utility Subsidiaries; (g) a reduction in the Executive's Base
                  Salary (except under extraordinary circumstances as described
                  in Section 4.1(i) hereof) or the opportunity to earn annual
                  incentive compensation under Section 4.1(ii) on a basis at
                  least as favorable to the Executive (in terms of each of the
                  amounts of benefits, levels of coverage, and performance
                  measures and levels of required performance) as the benefits
                  payable thereunder prior to the reduction or the failure to
                  pay the Executive Base Salary or incentive compensation earned
                  when due; (h) a significant adverse change in the nature or
                  scope of authorities, powers, functions, responsibilities, or
                  duties attached to the positions held by the Executive from
                  those authorities, powers, functions, responsibilities, or
                  duties which the Executive holds in accordance with this
                  Agreement; (i) a change in circumstances has occurred,
                  including, without limitation, a change in the scope of the
                  business or other activities for which the Executive was
                  responsible immediately prior to the change, which has
                  rendered the Executive substantially unable to carry out, has
                  substantially hindered the Executive's performance of, or has
                  caused the Executive to suffer a substantial reduction in, any
                  of the authorities, powers, functions, responsibilities, or
                  duties attached to any of the Executive's positions
                  immediately prior to such change, which situation is not
                  remedied within 10 calendar days after written notice to the
                  Company from the Executive of such determination; or (j) the
                  relocation of the Company's principal executive offices to
                  other than Reno or Las Vegas if the Executive's principal
                  location of work is then in such offices, or any requirement
                  that the Executive's principal location of work change to any
                  location that is in excess of 50 miles from the location
                  thereof immediately preceding the relocation, or the Company
                  requires that the Executive travel away from the Executive's
                  office in the course of discharging the Executive's
                  responsibilities or duties hereunder at least 20% more (in
                  terms of aggregate days in any calendar year or in any
                  calendar quarter when annualized for purposes of comparison to
                  any prior year) than was required of Executive in any of two
                  full years immediately prior to such change without, in either
                  case, the Executive's prior written consent. Notwithstanding
                  the foregoing, change in the Executive's title or titles or
                  positions required by law, rule, order, or regulation of any
                  agency with competent jurisdiction shall not be deemed Good
                  Reason for purposes of this Agreement. In addition,
                  notwithstanding anything in this Agreement to the contrary,
                  the Executive shall not have Good Reason to terminate his
                  employment hereunder pursuant to clauses (a), (h) or (i) of
                  this Section 6.4(i) as a result of increased Board (or any
                  committee thereof) involvement in the Company if the Board
                  determines in good faith that such increased involvement is
                  warranted in light of issues facing the Company.

                           (ii)     Voluntary Termination. The Executive may
                  terminate his employment hereunder without Good Reason at any
                  time upon ninety (90) days' notice to the Company as provided
                  in Section 13.6. The Company may, prior to the date the
                  Executive's voluntarily termination of employment becomes
                  effective, accelerate the date upon which such termination
                  shall

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<PAGE>

                  become effective by providing notice to the Executive as
                  provided in Section 13.6 If the Company accelerates the date
                  upon which the Executive's voluntary termination of employment
                  becomes effective, the Company shall continue to pay the
                  Executive his Base Salary in accordance with regular payroll
                  practice until the earlier to occur of (i) the date the
                  Executive's voluntary termination of employment would
                  otherwise have become effective or (ii) the date the Executive
                  commences new employment or enters into an agreement to
                  commence new employment. In addition, in the event of any such
                  termination, the Company will also promptly pay the Executive
                  any unpaid Base Salary to which the Executive is entitled,
                  pursuant to Section 4.1, through the date of the Executive's
                  termination, and any accrued but unused vacation days and any
                  fully vested unpaid benefit. This Section 6.4(ii) will not
                  limit the entitlement of the Executive to any other benefits
                  then available to the Executive under any agreement, benefit
                  plan, or policy that is maintained by the Company or its
                  affiliates for the Executive's benefit or in which the
                  Executive participated. If the Company accelerates the date
                  upon which the Executive's voluntary termination of employment
                  becomes effective, prior to receiving any Base Salary
                  attributable to such acceleration, the Executive shall, if
                  requested by the Company, certify in writing that he has not
                  commenced new employment or entered into an agreement to
                  commence new employment.

                  6.5      Termination Payments and Benefits.

                           If the Executive's employment is terminated other
                  than by reason of Death, Disability, Voluntary Termination
                  under Section 6.4(ii), or for Cause as provided in Section
                  6.4(i), the Company will promptly pay or provide to the
                  Executive:

                                    (a)      the unpaid Base Salary to which the
                           Executive is entitled as well as any earned but
                           unpaid incentive plan payments, pursuant to Section
                           4.1, through the date of the Executive's termination;

                                    (b)      any accrued but unused vacation
                           days;

                                    (c)      any fully vested but unpaid
                           benefit;

                                    (d)      a lump sum payment within five (5)
                           business days after termination in an amount equal to
                           the sum of (A) one year's Base Salary (prior to any
                           deferrals or reductions under qualified or
                           non-qualified plans) being paid to the Executive
                           immediately prior to termination (or immediately
                           prior to any reduction therein occurring prior to
                           termination, if greater), plus (B) one year's annual
                           incentive compensation at target payment; plus

                                    (e)      (1) a number of Phantom Shares in
                           cash, or at the discretion of the Board and if
                           legally permissible, stock, equal to the number of
                           Phantom Shares then remaining unvested multiplied by
                           a fraction, the numerator of which shall be the
                           number of days between

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<PAGE>

                           the Effective Date and the date of the Executive's
                           termination of employment and the denominator of
                           which shall be the number of days between the
                           Effective Date and the sixth anniversary thereof;
                           provided, however, that the payment under this
                           Section 6.5(e)(1) shall only be made if the Board of
                           Directors determines, in good faith, at such time
                           that there is a reasonable opportunity for the
                           performance goals and measures set forth in Exhibit A
                           to be achieved by the respective target dates and (2)
                           except for the cash retention payment set forth in
                           Section 5.4, any other cash payment or stock payment
                           or other award or benefit which Executive would earn
                           if he were employed by the Company on a certain date,
                           in the full amount of such payment or stock award at
                           target award multiplied by a fraction, the numerator
                           of which shall be the number of days from the
                           effective date of such award to the date of the
                           Executive's termination of employment and the
                           denominator of which shall be the number of days from
                           the effective date of such award to the date the
                           award would have been paid assuming target level
                           performance had the Executive lived to that date.

                                    (f)      For a period of 36 months following
                           the termination (the "Continuation Period"), the
                           Company will, at its expense, arrange to provide the
                           Executive and his eligible dependents with health
                           (including medical/hospital, dental, and vision) and
                           life benefits substantially similar to those that the
                           Executive and his eligible dependents were receiving
                           or entitled to receive immediately prior to
                           termination. Such benefits will be provided to the
                           Executive on the same terms and conditions (including
                           employee contributions toward the premium payments)
                           under which the Executive was entitled to participate
                           immediately prior to the Executive's termination (or,
                           if more favorable to the Executive, immediately prior
                           to the reduction, termination, or denial described in
                           Section 6.4(i)(c)). To the extent the coverage or
                           benefits provided during the Continuation Period
                           under this Section 6.5(f) results in the Executive or
                           any dependent or beneficiary thereof incurring
                           additional federal, state, or local taxes that would
                           otherwise not have been incurred in connection with
                           the provision of such coverage or benefits had the
                           Executive's employment not been terminated, the
                           Company shall promptly pay the Executive, dependent,
                           or beneficiary, as the case may be, on an after-tax
                           basis, an additional payment in an amount equal to
                           all taxes, including interest and penalties thereon,
                           imposed as the result of such coverage or benefits.
                           On or after the Termination Date, Executive will be
                           eligible to receive all the benefits he would have
                           been entitled to receive pursuant to the last
                           sentence of Section 4.5 if Executive had remained
                           employed until the Expiration Date. Benefits
                           otherwise receivable by the Executive pursuant to
                           this Section 6.5(f) during the Continuation Period
                           will be reduced to the extent comparable benefits are
                           actually received by or in respect of the Executive
                           from another employer during the Continuation Period,
                           and any such benefits actually received shall be
                           reported by the Executive or other recipient to the
                           Company.

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<PAGE>

                                    (g)      Director and Officer Coverage. For
                  a period of four years following the Executive's termination
                  of employment, the Company shall maintain or obtain Directors
                  and Officers Coverage ("D&O Coverage"), which covers the
                  Executive as an insured on the policy in the same amounts and
                  with equivalent coverage protection as covered the Executive
                  immediately prior to such termination. Thereafter, the Company
                  will continue to indemnify Executive for actions undertaken by
                  Executive during his employment.

                  7.       Change in Control Provisions.

                  7.1      Impact of Change in Control. Notwithstanding anything
         in this Agreement to the contrary, if the Executive's employment is
         terminated within two years following a Change in Control and during
         the Term, other than (A) by the Company for Cause, (B) by reason of
         death or Disability, or (C) by the Executive without Good Reason, then
         (a) the provisions of Section 10.1, 10.3, and 11 will be inapplicable
         to the Executive and (b) the Company shall pay the Executive the
         amounts, and provide the Executive the benefits, described in Section
         7.3, below, in lieu of any payments or benefits under Article 6 hereof.

                  7.2      Definition of Change in Control. For purposes of this
         Agreement, a "Change in Control" will be deemed to occur if any of the
         following events occur:

                  (i) any Person (as defined below) is or becomes the Beneficial
                  Owner (within the meaning set forth in Rule 13d-3 under the
                  Securities Exchange Act of 1934), directly or indirectly, of
                  securities of SPR (not including in the securities
                  beneficially owned by such Person any securities acquired
                  directly from SPR or its Affiliates (within the meaning set
                  forth in Rule 12b-2 under the Securities Exchange Act of
                  1934)) representing 30% or more of the combined voting power
                  of SPR's then outstanding securities, excluding any Person who
                  becomes such a Beneficial Owner in connection with a
                  transaction described in clause (A) of paragraph (iii) below;
                  or

                  (ii) the following individuals cease for any reason to
                  constitute a majority of the number of directors then serving:
                  individuals who, on the Effective Date, constitute the Board
                  and any new director (other than a director whose initial
                  assumption of office is in connection with an actual or
                  threatened election contest, including but not limited to a
                  consent solicitation, relating to the election of directors of
                  SPR) whose appointment or election by the Board or nomination
                  for election by SPR's shareholders was approved or recommended
                  by a vote of at least two-thirds (2/3) of the directors then
                  still in office who either were directors on the date hereof
                  or whose appointment, election or nomination for election was
                  previously so approved or recommended; or

                  (iii) there is consummated a merger or consolidation of SPR or
                  any direct or indirect subsidiary of SPR with any other
                  corporation, other than (A) a merger or consolidation which
                  would result in the voting securities of SPR outstanding
                  immediately prior to such merger or consolidation continuing
                  to

                                                                        13 of 26
<PAGE>

                  represent (either by remaining outstanding or by being
                  converted into voting securities of the surviving entity or
                  any parent thereof), in combination with the ownership of any
                  trustee or other fiduciary holding securities under an
                  employee benefit plan of the Company, at least 65% of the
                  combined voting power of the securities of SPR or such
                  surviving entity or any parent thereof outstanding immediately
                  after such merger or consolidation, or (B) a merger or
                  consolidation effected to implement a recapitalization of SPR
                  (or similar transaction) in which no Person is or becomes the
                  Beneficial Owner, directly or indirectly, of securities SPR
                  (not including in the securities Beneficially Owned by such
                  Person any securities acquired directly from SPR or its
                  Affiliates) representing 30% or more of the combined voting
                  power of SPR's then outstanding securities; or

                  (iv) SPR stockholders or a court or regulatory agency having
                  jurisdiction over the matter approves a plan of complete
                  liquidation or dissolution of SPR or there is consummated an
                  agreement for or a court or regulatory agency having
                  jurisdiction over the matter approves the sale or disposition
                  by SPR of all or substantially all of SPR's assets, other than
                  a sale or disposition by SPR of all or substantially all of
                  SPR's assets to an entity, at least 65% of the combined voting
                  power of the voting securities of which are owned by
                  stockholders of SPR in substantially the same proportions as
                  their ownership of SPR immediately prior to such sale.

Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of SPR immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of SPR immediately
following such transaction or series of transactions. For purposes of this
Article 7, "Person" shall have the meaning given in Section 3(a)(9) of the
Securities Exchange Act of 1934, as modified and used in Sections 13(d) and
14(d) thereof, except that such term shall not include (i) SPR or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
stockholders of SPR in substantially the same proportions as their ownership of
stock of SPR.

                  7.3      Severance Payments. If the Executive's employment is
         terminated within two years following a Change in Control and during
         the Term, other than (A) by the Company for Cause, (B) by reason of
         death or Disability, or (C) by the Executive without Good Reason, then
         the Company shall pay the Executive the amounts, and provide the
         Executive the benefits, described in this Section 7.3 ("Severance
         Payments"), in lieu of any payments and benefits to which the Executive
         would otherwise have been entitled under Article 6 hereof. For purposes
         of this Agreement, the Executive's employment shall be deemed to have
         been terminated following a Change in Control by the Company without
         Cause or by the Executive with Good Reason, if (i) the Executive's
         employment is terminated by the Company without Cause prior to a Change
         in Control (whether or not a Change in Control ever occurs) and such
         termination was at the request or direction of a Person who has entered
         into an agreement with the Company the consummation of which would

                                                                        14 of 26
<PAGE>

         constitute a Change in Control, (ii) the Executive terminates his
         employment for Good Reason prior to a Change in Control (whether or not
         a Change in Control ever occurs) and the circumstance or event which
         constitutes Good Reason occurs at the request or direction of such
         Person, or (iii) the Executive's employment is terminated by the
         Company without Cause or by the Executive for Good Reason and such
         termination or the circumstance or event which constitutes Good Reason
         is otherwise in connection with or in anticipation of a Change in
         Control (whether or not a Change in Control ever occurs). For purposes
         of any determination regarding the applicability of the immediately
         preceding sentence, any position taken by the Executive shall be
         presumed to be correct unless the Company establishes to the Board by
         clear and convincing evidence that such position is not correct.

                           (A) In lieu of any further salary payments to the
                  Executive for periods subsequent to the Date of Termination
                  and in lieu of any severance benefit otherwise payable to the
                  Executive under or pursuant to any contract or plan, except
                  for any benefits relating to or resulting from the SERP,
                  whether as a consequence of a Change in Control or otherwise,
                  the Company shall pay to the Executive a lump sum severance
                  payment, in cash, equal to three times the sum of (i) the
                  Executive's base salary as in effect immediately prior to the
                  Date of Termination or, if higher, in effect immediately prior
                  to the first occurrence of an event or circumstance
                  constituting Good Reason, and (ii) the target annual incentive
                  award applicable to the Executive pursuant to any annual bonus
                  or incentive plan maintained by the Company in respect of the
                  fiscal year ending immediately prior to the fiscal year in
                  which occurs the Date of Termination or, if higher,
                  immediately prior to the fiscal year in which occurs the first
                  event or circumstance constituting Good Reason.

                           (B) For the thirty-six (36) month period immediately
                  following the Date of Termination, the Company shall arrange
                  to provide the Executive and his dependents life, disability,
                  accident and health insurance benefits substantially similar
                  to those provided to the Executive and his dependents
                  immediately prior to the Date of Termination or, if more
                  favorable to the Executive, those provided to the Executive
                  and his dependents immediately prior to the first occurrence
                  of an event or circumstance constituting Good Reason, at no
                  greater cost to the Executive than the cost to the Executive
                  immediately prior to such date or occurrence; provided,
                  however, that, unless the Executive consents to a different
                  method (after taking into account the effect of such method on
                  the calculation of "parachute payments" pursuant to Section 8
                  hereof), such health insurance benefits shall be provided
                  through a third-party insurer. Benefits otherwise receivable
                  by the Executive pursuant to this Section 7.3(B) shall be
                  reduced to the extent benefits of the same type are received
                  by or made available to the Executive during the thirty-six
                  (36) month period following the Executive's termination of
                  employment (and any such benefits received by or made
                  available to the Executive shall be reported to the Company by
                  the Executive); provided, however, that the Company shall
                  reimburse the Executive for the excess, if any, of the cost of
                  such benefits to the Executive over such cost immediately
                  prior to the Date of Termination or, if more favorable to the
                  Executive, the first occurrence of an event or circumstance
                  constituting Good Reason.

                                                                        15 of 26
<PAGE>

                           (C) Notwithstanding any provision of any annual or
                  long-term incentive plan to the contrary, the Company shall
                  pay to the Executive a lump sum amount, in cash, equal to the
                  sum of (i) any unpaid incentive compensation which has been
                  allocated or awarded to the Executive for a completed fiscal
                  year or other measuring period preceding the Date of
                  Termination under any such plan and which, as of the Date of
                  Termination, is contingent only upon the continued employment
                  of the Executive to a subsequent date, and (ii) a pro rata
                  portion to the Date of Termination of the aggregate value of
                  all contingent incentive compensation awards to the Executive
                  for all then uncompleted periods under any such plan,
                  calculated as to each such award by multiplying the award that
                  the Executive would have earned on the last day of the
                  performance award period, assuming the achievement, at the
                  target level of the individual and corporate performance goals
                  established with respect to such award, by the fraction
                  obtained by dividing the number of full months and any
                  fractional portion of a month during such performance award
                  period through the Date of Termination by the total number of
                  months contained in such performance award period.

                           (D) In addition to the retirement benefits to which
                  the Executive is entitled under each Company pension plan or
                  any successor plan thereto, the Company shall pay the
                  Executive a lump sum amount, in cash, equal to the excess of
                  (i) the actuarial equivalent of the aggregate retirement
                  pension (taking into account any early retirement subsidies
                  associated therewith and determined as a straight life annuity
                  commencing at the date (but in no event earlier than the third
                  anniversary of the Date of Termination) as of which the
                  actuarial equivalent of such annuity is greatest) which the
                  Executive would have accrued under the terms of all such
                  pension plans (without regard to any amendment to any such
                  pension plan made subsequent to a Change in Control and on or
                  prior to the Date of Termination, which amendment adversely
                  affects in any manner the computation of retirement benefits
                  thereunder), determined as if the Executive were fully vested
                  thereunder and had accumulated (after the Date of Termination)
                  thirty-six (36) additional months of service credit thereunder
                  (except in the case of the SERP, in which case benefits shall
                  be calculated by the amount provided for in the last sentence
                  of Section 4.5, or 36 months, whichever is greater) and had
                  been credited under each such pension plan during such period
                  with compensation equal to the Executive's compensation (as
                  defined in each such pension plan) during the twelve (12)
                  months immediately preceding the Date of Termination or, if
                  higher, during the twelve months immediately prior to the
                  first occurrence of an event or circumstance constituting Good
                  Reason, over (ii) the actuarial equivalent of the aggregate
                  retirement pension (taking into account any early retirement
                  subsidies associated therewith and determined as a straight
                  life annuity commencing at the date (but in no event earlier
                  than the Date of Termination) as of which the actuarial
                  equivalent of such annuity is greatest) which the Executive
                  had accrued pursuant to the provisions of the pension plans as
                  of the Date of Termination. For purposes of this Section
                  7.3(D), "actuarial equivalent" shall be determined using the
                  same assumptions utilized under the Sierra Pacific Power
                  Company Retirement Plan immediately prior to the Date of
                  Termination. or, if more favorable to the

                                                                        16 of 26
<PAGE>

                  Executive, immediately prior to the first occurrence of an
                  event or circumstance constituting Good Reason.

                  8.       Certain Additional Payments by the Company.

                           (i)      If it is determined (as hereafter provided)
                  that any payment or distribution by the Company, any person
                  whose actions result in a Change in Control or any affiliate
                  of the Company or such persons, to or for the benefit of the
                  Executive, whether paid or payable or distributed or
                  distributable pursuant to the terms of this Agreement or
                  otherwise pursuant to or by reason of any other agreement,
                  policy, plan, program, or arrangement, including, without
                  limitation, any stock option, stock appreciation right, or
                  similar right, or the lapse or termination of any restriction
                  on or the vesting or exercisability of any of the foregoing
                  (each a "Payment", and all such Payments, excluding the
                  Gross-Up Payments (as defined below), the "Total Payments")),
                  would be subject to the excise tax imposed by Section 4999 of
                  the Code (or any successor provision thereto) by reason of
                  being considered "contingent on a change in ownership or
                  control" of the Company, within the meaning of Section 280G of
                  the Code (or any successor provision thereto) or to any
                  similar tax imposed by state or local law, or any interest or
                  penalties with respect to such tax such tax or taxes, together
                  with any such interest and penalties, are hereafter
                  collectively referred to as the "Excise Tax"), then the
                  Executive will be entitled to receive an additional payment or
                  payments (collectively, a "Gross-Up Payment") in an amount
                  such that, after payment by the Executive of all taxes
                  (including any interest or penalties imposed with respect to
                  such taxes), including any Excise Tax imposed upon the
                  Gross-Up Payment, the Executive retains an amount of the
                  Gross-Up Payment equal to the Excise Tax imposed upon the
                  Payments.

                           (ii)     Subject to the provisions of Section 8(vi)
                  hereof, all determinations required to be made under this
                  Article 8, including whether an Excise Tax is payable by the
                  Executive and the amount of such Excise Tax and whether a
                  Gross-Up Payment is required to be paid by the Company to the
                  Executive and the amount of such Gross-Up Payment, will be
                  made by a nationally recognized firm of certified public
                  accountants (the "Accounting Firm") selected by the Executive
                  in his sole discretion. The Executive will direct the
                  Accounting Firm to submit its determination and detailed
                  supporting calculations to both the Company and the Executive
                  within 15 calendar days after the Executive's termination, if
                  applicable, and any other such time or times as may be
                  requested by the Company or the Executive. If the Accounting
                  Firm determines that any Excise Tax is payable by the
                  Executive, the Company will pay the required Gross-Up Payment
                  to the Executive within five business days after receipt of
                  such determination and calculations with respect to any
                  Payment to the Executive. If the Accounting Firm determines
                  that no Excise Tax is payable by the Executive, it will, at
                  the same time as it makes such determination, furnish the
                  Company and the Executive an opinion that the Executive has
                  substantial authority not to report any Excise Tax on the
                  Executive's federal, state, local income or other tax return.
                  Any determination by the Accounting Firm as to the amount of
                  the Gross-Up Payment will be binding upon the Company and the
                  Executive. As a result of

                                                                        17 of 26
<PAGE>

                  the uncertainty in the application of Section 4999 of the Code
                  (or any successor provision thereto) and the possibility of
                  similar uncertainty regarding applicable state or local tax
                  law at the time of any determination by the Accounting Firm
                  hereunder, it is possible that Gross-Up Payments that will not
                  have been made by the Company should have been made (an
                  "Underpayment"), consistent with the calculations required to
                  be made hereunder. In the event that the Company exhausts or
                  fails to pursue its remedies pursuant to Section 8(vi) hereof
                  and the Executive thereafter is required to make a payment of
                  any Excise Tax, the Executive will direct the Accounting Firm
                  to determine the amount of the Underpayment that has occurred
                  and to submit its determination and detailed supporting
                  calculations to both the Company and the Executive as promptly
                  as possible. Any such Underpayment will be promptly paid by
                  the Company to, or for the benefit of, the Executive within
                  five business days after receipt of such determination and
                  calculations.

                           (iii)    The Company and the Executive will each
                  provide the Accounting Firm access to and copies of any books,
                  records, and documents in the possession of the Company or the
                  Executive, as the case may be, reasonably requested by the
                  Accounting Firm, and otherwise cooperate with the Accounting
                  Firm in connection with the preparation and issuance of the
                  determinations and calculations contemplated by Section 8(ii)
                  hereof.

                           (iv)     The federal, state, and local income or
                  other tax returns filed by the Executive will be prepared and
                  filed on a consistent basis with the determination of the
                  Accounting Firm with respect to the Excise Tax payable by the
                  Executive. The Executive will make proper payment of the
                  amount of any Excise Tax, and at the request of the Company,
                  provide to the Company true and correct copies (with any
                  amendments) of the Executive's federal income tax return as
                  filed with the Internal Revenue Service and corresponding
                  state and local tax returns, if relevant, as filed with the
                  applicable taxing authority, and such other documents
                  reasonably requested by the Company, evidencing such payment.
                  If prior to the filing of the Executive's federal income tax
                  return, or corresponding state or local tax return, if
                  relevant, the Accounting Firm determines that the amount of
                  the Gross-Up Payment should be reduced, the Executive will
                  within five business days pay to the Company the amount of
                  such reduction.

                           (v)      The fees and expenses of the Accounting Firm
                  for its services in connection with the determinations and
                  calculations contemplated by Sections 8(ii) and (iv) hereof
                  will be borne by the Company.

                           (vi)     The Executive will notify the Company in
                  writing of any claim by the Internal Revenue Service or other
                  taxing authority that, if successful, would require the
                  payment by the Company of a Gross-Up Payment. Such
                  notification will be given as promptly as practicable but no
                  later than ten (10) business days after the Executive actually
                  receives notice of such claim and the Executive will further
                  apprise the Company of the nature of such claim and the date
                  on which such claim is requested to be paid (in each case, to
                  the extent known by the Executive). The Executive will not pay
                  such claim

                                                                        18 of 26
<PAGE>

                  prior to the earlier of (a) the expiration of the
                  30-calendar-day period following the date on which the
                  Executive gives such notice to the Company, and (b) the date
                  that any payment of amount with respect to such claim is due.
                  If the Company notifies the Executive in writing prior the
                  expiration of such period that it desires to contest such
                  claim, the Executive will:

                                    (a)      provide the Company with any
                           written records or documents in the Executive's
                           possession relating to such claim reasonably
                           requested by the Company;

                                    (b)      take such action in connection with
                           contesting such claim as the Company will reasonably
                           request in writing from time to time, including,
                           without limitation, accepting legal representation
                           with respect to such claim by an attorney competent
                           in respect of the subject matter and reasonably
                           selected by the Company;

                                    (c)      cooperate with the Company in good
                           faith in order to effectively contest such claim; and

                                    (d)      permit the Company to participate
                           in any proceedings relating to such claim;

                  provided, however, that the Company will bear and pay directly
                  all costs and expenses (including interest and penalties)
                  incurred in connection with such contest and will indemnify
                  and hold harmless the Executive, on an after-tax basis, from
                  and against any Excise Tax or income tax, including interest
                  and penalties with respect thereto, imposed as a result of
                  such representation and payment of costs and expenses. Without
                  limiting the foregoing provisions of this Section 8(vi), the
                  Company will control all proceedings taken in connection with
                  the contest of any claim contemplated by this Section 8(vi)
                  and, at its sole option, may pursue or forego any and all
                  administrative appeals, proceedings, hearings and conferences
                  with the taxing authority in respect of such claim (provided,
                  however, that the Executive may participate therein at the
                  Executive's own cost and expense) and may, at its option,
                  either direct the Executive to pay the tax claimed and sue for
                  a refund or contest the claim in any permissible manner, and
                  the Executive agrees to prosecute such contest to a
                  determination before any administrative tribunal, in a court
                  of initial jurisdiction, and in one or more appellate courts,
                  as the Company will determine; provided, however, that if the
                  Company directs the Executive to pay the tax claimed and sue
                  for a refund, the Company will advance the amount of such
                  payment to the Executive on an interest-free basis and will
                  indemnify and hold the Executive harmless, on an after-tax
                  basis, from any Excise Tax or income or other tax, including
                  interest or penalties with respect thereto, imposed with
                  respect to such advance; and provided further, however, that
                  any extension of the statute of limitations relating to
                  payment of taxes for the taxable year of the Executive with
                  respect to which the contested amount is claimed to be due is
                  limited solely to such contested amount. Furthermore, the
                  Company's control of any such contested claim will be limited
                  to issues with respect to which a Gross-Up Payment would be
                  payable hereunder and the Executive will be entitled to

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                  settle or contest, as the case may be, any other issue raised
                  by the Internal Revenue Service or any other taxing authority.

                           (vii)    If, after the receipt by the Executive of an
                  amount advanced by the Company pursuant to Section 8(vi)
                  hereof, the Executive receives any refund with respect to such
                  claim, the Executive will (subject to the Company's complying
                  with the requirements of Section 8(vi) hereof) promptly pay to
                  the Company the amount of such refund (together with any
                  interest paid or credited thereon after any taxes applicable
                  thereto). If, after the receipt by the Executive of an amount
                  advanced by the Company pursuant to Section 8(vi) hereof, a
                  determination is made that the Executive will not be entitled
                  to any refund with respect to such claim and the Company does
                  not notify the Executive in writing of its intent to contest
                  such denial or refund prior to the expiration of thirty (30)
                  calendar days after such determination, then such advance will
                  be forgiven and will not be required to be repaid and the
                  amount of such advance will offset, to the extent thereof, the
                  amount of the Gross-Up Payment required to be paid by the
                  Company to the Executive pursuant to this Article 8.

                           (viii)   Notwithstanding the foregoing provisions of
                  this Section 8, if it shall be determined that the Executive
                  is entitled to a Gross-Up Payment, but the Total Payments do
                  not exceed 110% of the greatest amount (the "Reduced Amount")
                  that could be paid to the Executive such that the receipt of
                  the Total Payments would not give rise to any Excise Tax, then
                  no Gross-Up Payment shall be made to the Executive and the
                  Total Payments, in the aggregate, shall be reduced to the
                  Reduced Amount. If a reduction is required, the Executive and
                  the Company shall determine, after consultation, which
                  payments and or benefits shall be waived, reduced or forfeited
                  to accomplish the reduction.

                  9.       Mitigation and Offset. The payment of severance
compensation by the Company to the Executive in accordance with the terms of the
Agreement is hereby acknowledged by the Company to be reasonable, and the
Executive is under no obligation to mitigate damages or the amount of any
payment provided for hereunder by seeking other employment or otherwise. Any
amounts payable to the Executive by the Company upon termination of employment
shall be offset by any amounts then owed by the Executive to the Company or any
entity that is then an Affiliate (within the meaning set forth in Rule 12b-2
under the Securities Exchange Act of 1934) of the Company.

                  10.      Competition; Confidentiality; Nonsolicitation

                  10.1     (i)      Subject to Section 7.1(i), the Executive
                  hereby covenants and agrees that during the Employment Term
                  and for one year following the end of the Employment Term he
                  will not, without the prior written consent of the Company,
                  engage in Competition (as defined below) with the Company. For
                  purposes of this Agreement, if the Executive takes any of the
                  following actions he will be engaged in "Competition:"
                  engaging in or carrying on, directly or indirectly, any
                  enterprise, whether as an advisor, principal, agent, partner,
                  officer, director, employee, stockholder, associate or
                  consultant to any person, partnership, corporation, or any
                  other business entity, that is

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                  principally engaged in the business of generation, purchase,
                  transmission, distribution, or sale of electricity, the
                  provision of natural gas, in each case to customer segments
                  being served or pursued in its business plans by the Company
                  or its Subsidiaries, in states in which the Company or its
                  Subsidiaries has significant operations; provided, however,
                  that "Competition" will not include ownership by the Executive
                  of stocks, bonds or other securities of any corporation or
                  other entity (but without participating in the business
                  thereof) if such stocks, bonds, or other securities are listed
                  for trading on a national securities exchange or
                  NASDAQ-National Market and the Executive's investment does not
                  exceed 1% of the issued and outstanding shares of capital
                  stock, or in the case of bonds or other securities, 1% of the
                  aggregate principal amount thereof issued and outstanding. For
                  purposes of applying the preceding sentence, operations of the
                  Company or its Subsidiaries in the State of California will be
                  deemed not to be significant if they are not materially
                  greater than the operations in the aggregate of the Company
                  and its respective Subsidiaries in the State of California as
                  of the date of this Agreement.

                           (ii)     Subject to Section 7.1(i), the Executive
                  hereby covenants and agrees that during the Employment Term
                  and for three years following the end of the Employment Term
                  he will not assist a third party in preparing or making an
                  unsolicited bid for the Company, engaging in a proxy contest
                  with the Company, or engaging in any other similar activity.

                  10.2     During the Employment Term, the Company agrees that
         it will disclose to Executive its confidential or proprietary
         information (as defined in this Section 10.2) to the extent necessary
         for Executive to carry out the Executive's obligations under this
         Agreement. The Executive hereby covenants and agrees that he will not,
         without the prior written consent of the Company, during the Employment
         Term or at any time thereafter disclose to any person not employed by
         the Company or a Subsidiary, or use in connection with engaging in
         Competition with the Company or a Subsidiary, any confidential or
         proprietary information of the Company or its Subsidiaries. For
         purposes of this Agreement, the term "confidential or proprietary
         information" will include all information of any nature and in any form
         that is owned by the Company or a Subsidiary and that is not publicly
         available or generally known to persons engaged in businesses similar
         or related to those of the Company or a Subsidiary. Confidential
         information will include, without limitation, the Company's or a
         Subsidiary's financial matters, customers, employees, industry
         contracts, and all other secrets and all other information of a
         confidential or proprietary nature. The foregoing obligations imposed
         by this Section 10.2 will cease if such confidential or proprietary
         information will have become, through no fault of the Executive,
         generally known to the public or the Executive is required by law to
         make disclosure (after giving the Company notice and an opportunity to
         contest such requirement).

                  10.3     Subject to Section 7.1(i), the Executive hereby
         covenants and agrees that during the Employment Term and for one year
         thereafter the Executive will not attempt to influence, persuade or
         induce, or assist any other person in so persuading or inducing, any
         employee of the Company or a Subsidiary to give up, or to not commence,
         employment or a business relationship with the Company or a Subsidiary.

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<PAGE>

                  11.      Post-Termination Assistance. Subject to Section
7.1(i), the Executive agrees that after the Executive's employment with the
Company has terminated the Executive will provide, upon reasonable notice, such
information and assistance to the Company as may reasonably be requested by the
Company in connection with any litigation in which it or any of its affiliates
is or may become a party; provided, however, that the Company agrees to promptly
reimburse the Executive for any related out-of-pocket expenses, including travel
expenses as well as reasonable compensation for any time expended,
portal-to-portal, at a rate which approximates the Executive's gross cash income
(base plus target incentive) at the time of termination.

                  12.      Survival. The expiration or termination of the
Employment Term will not impair the rights or obligations of any party hereto
that accrue hereunder prior to such expiration or termination, except to the
extent specifically stated herein. In addition to the foregoing, the Executive's
covenants contained in Sections 5.4, , 6,4(ii), 10.1, 10.2, 10.3, and 11, and
the Company's obligations under Articles Sections 6 and 8, and Section 13.1 will
survive the expiration or termination of this Agreement or the termination of
the Executive's employment for any reason whatsoever.

                  13.      Miscellaneous Provisions.

                  13.1     Legal Fees and Expenses. If it should appear to the
         Executive that the Company has failed to comply with any of its
         obligations under this Agreement or in the event that the Company or
         any other person takes or threatens to take any action to declare this
         Agreement void or unenforceable, or institutes any litigation or other
         action or proceeding designed to deny, or to recover from, the
         Executive the benefits provided or intended to be provided to the
         Executive hereunder, the Company irrevocably authorizes the Executive
         from time to time to retain counsel of Executive's choice (other than
         any counsel with whom the Company has any existing or prior
         attorney-client relationship), at the expense of the Company as
         hereafter provided, to advise and represent the Executive in connection
         with any such interpretation, enforcement, or defense, including,
         without limitation, the initiation or defense of any litigation or
         other legal action, whether by or against the Company or any director,
         officer, stockholder, or other person affiliated with the Company, in
         any jurisdiction. If the facts or circumstances relating to such
         interpretation, enforcement or defense arise prior to a Change in
         Control and the Executive prevails, in whole or in part, in any
         material issue in dispute, the Company will pay and be solely
         financially responsible for any and all reasonable attorneys' fees and
         related fees and expenses incurred by the Executive in good faith in
         connection with such dispute. If the facts or circumstances relating to
         such interpretation, enforcement or defense arise on or after a Change
         in Control, the Company will reimburse the Executive for any and all
         reasonable attorneys' fees and related fees and expenses incurred by
         the Executive in good faith in connection with such interpretation,
         enforcement or defense as such fees and expenses are incurred;
         provided, however, that the Executive shall be required to reimburse
         the Company for the amounts advanced to the Executive pursuant to this
         sentence if the Executive does not prevail, in whole or in part, in any
         material issue in dispute.

                  13.2     Successors and Binding Agreement. (i) The Company
         will require any successor (whether direct or indirect, by purchase,
         merger, consolidation,

                                                                        22 of 26
<PAGE>

         reorganization, operation of law, or otherwise) to all or substantially
         all of the business or assets of the Company, by agreement in form and
         substance reasonably satisfactory to the Executive, expressly to assume
         and agree to perform this Agreement in the same manner and to the same
         extent the Company would be required to perform if no such succession
         had taken place. This Agreement will be binding upon and inure to the
         benefit of the Company and any successor to the Company, including,
         without limitation, any persons acquiring directly or indirectly all or
         substantially all of the business or assets of the Company, whether by
         purchase, merger, consolidation, reorganization, operation of law, or
         otherwise (and such successor shall thereafter be deemed the Company
         for the purposes of this Agreement), but will not otherwise be
         assignable, transferable, or delegable by the Company.

                           (ii)     This Agreement will inure to the benefit of
                  and be enforceable by the Executive's personal or legal
                  representatives, executors, administrators, successors, heirs,
                  distributes, and legatees.

                           (iii)    This Agreement is personal in nature and
                  neither of the parties hereto shall, without the consent of
                  the other, assign, transfer, or delegate this Agreement or any
                  rights or obligations hereunder except as expressly provided
                  in Sections 13.2(i) and 13.2(ii). Without limiting the
                  generality or effect of the foregoing, the Executive's right
                  to receive payments hereunder will not be assignable,
                  transferable, or delegable, whether by pledge, creation of a
                  security interest, or otherwise, other than by a transfer by
                  Executive's will or by the laws of descent and distribution
                  and, in the event of any attempted assignment or transfer
                  contrary to this Section 13.2(iii), the Company shall have no
                  liability to pay any amount so attempted to be assigned,
                  transferred, or delegated.

                  13.3     Governing Law. This Agreement will be governed,
         construed, interpreted, and enforced in accordance with the substantive
         laws of the State of Nevada, without regard to conflicts of law
         principles.

                  13.4     Withholding of Taxes. The Company may withhold from
         any amounts payable under this Agreement all federal, state, city, or
         other taxes as the Company is required to withhold pursuant to any law
         or government regulations or ruling.

                  13.5     Severability. Any provision of this Agreement that is
         deemed invalid, illegal, or unenforceable in any jurisdiction will, as
         to that jurisdiction be ineffective to the extent of such invalidity,
         illegality, or unenforceability, without affecting in any way the
         remaining provisions hereof in such jurisdiction or rendering that or
         any other provisions of this Agreement invalid, illegal, or
         unenforceable in any other jurisdiction. If any covenant should be
         deemed invalid, illegal, or unenforceable because its scope is
         considered excessive, such covenant will be modified so that the scope
         of the covenant is reduced only to the minimum extent necessary to
         render the modified covenant valid, legal, and enforceable.

                  13.6     Notices. For all purposes of this Agreement, all
         communications, including, without limitation, notices, consents,
         requests or approvals, required or permitted to be given hereunder will
         be in writing and will be deemed to have been

                                                                        23 of 26
<PAGE>

         duly given when hand delivered or dispatched by electronic facsimile
         transmission (with receipt thereof confirmed), or five business days
         after having been mailed by United States registered or certified mail,
         return receipt requested, postage prepaid, or three business days after
         having been sent by a nationally recognized overnight courier service
         such as Federal Express, UPS, or Purolator, addressed to the Company
         (to the attention of the Secretary of the Company) at its principal
         executive offices and to the Executive at his principal residence, or
         to such other address as any party may have furnished to the other in
         writing and in accordance herewith, except that notices of changes of
         address will be effective only upon receipt.

                           (i)      To the Company: If to the Company, addressed
                  to the attention of the Secretary; 6100 Neil Road, Reno,
                  Nevada 89511, or to 6226 West Sahara Avenue, Las Vegas,
                  Nevada, 89146.

                           (ii)     To the Executive: If to the Executive, at
                  his address on file with SPR.

                  13.7     Counterparts. This Agreement may be executed in
         several counterparts, each of which will be deemed to be an original,
         but all of which together will constitute one and the same Agreement.

                  13.8     Effectiveness; Prior Agreement; Entire Agreement.
         This Agreement shall become effective on the Effective Date and shall
         have no force or effect prior thereto. On the Effective Date, the terms
         of this Agreement are intended by the parties to be the final
         expression of their agreement with respect to the Executive's
         employment by the Company, may not be contradicted by evidence of any
         prior or contemporaneous agreement, and shall supersede in all respects
         any prior or other agreement or understanding between the Company, any
         Subsidiary, and the Executive, including, but not limited to, the Prior
         Employment Agreement, which, except for any specific provisions
         included or carried forward herein, will terminate and be without
         further effect immediately upon the effectiveness of this Agreement
         without further action, and the Prior Change in Control Agreement,
         which will terminate and be without further effect immediately upon the
         effectiveness of this Agreement without further action. The parties
         further intend that this Agreement will constitute the complete and
         exclusive statement of its terms and that no extrinsic evidence
         whatsoever may be introduced in any judicial, administrative, or other
         legal proceeding to vary the terms of this Agreement.

                  13.9     Amendments; Waivers. This Agreement may not be
         modified, amended, or terminated except by an instrument in writing,
         signed by the Executive and the Company. Failure on the part of either
         party to complain of any action or omission, breach, or default on the
         part of the other party, no matter how long the same may continue, will
         never be deemed to be a waiver of any rights or remedies hereunder, at
         law, or in equity. The Executive or the Company may waive compliance by
         the other party with any provision of this Agreement that such other
         party was or is obligated to comply with or perform only through an
         executed writing; provided, however, that such waiver will not operate
         as a waiver of, or estoppel with respect to, any other or subsequent
         failure.

                                                                        24 of 26
<PAGE>

                  13.10    Headings and Section References. The headings used in
         this Agreement are intended for convenience or reference only and will
         not in any manner amplify, limit, modify, or otherwise be used in the
         construction or interpretation of any provision of this Agreement. All
         section references are to sections of this Agreement, unless otherwise
         noted.

                  13.11    Interest. Without limiting the rights of the
         Executive at law or in equity, if the Company fails to make any payment
         or provide any benefit required to be made or provided hereunder on a
         timely basis, the Company will pay interest on the amount or value
         thereof at an annualized rate of interest equal to the so-called
         composite "prime rate" as quoted from time to time during the relevant
         period in the Northeast Edition of The Wall Street Journal. Such
         interest will be payable as it accrues on demand. Any change in such
         prime rate will be effective on and as of the date of such change.

                                                                        25 of 26
<PAGE>

                  IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the ____ day of September, 2003, but effective as provided in Article 1.

                                        By_____________________________________
                                          Walter M. Higgins

                                        SIERRA PACIFIC RESOURCES,
                                        a Nevada corporation

                                        By_____________________________________
                                          James R. Donnelley, Chair
                                          Compensation Committee, as directed by
                                           and approved by
                                          The Board of Directors

                                        SIERRA PACIFIC POWER COMPANY,
                                        a Nevada corporation

                                        By_____________________________________
                                         James R. Donnelley, Chair
                                         Compensation Committee, as directed by
                                          and approved by
                                         The Board of Directors

                                        NEVADA POWER COMPANY,
                                        a Nevada corporation

                                        By_____________________________________
                                          James R. Donnelley, Chair
                                          Compensation Committee, as directed by
                                           and approved by
                                          The Board of Directors

WMH-EMPLAGRMT-03

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