February 11, 2000



            Cap Rock Energy Corporation
            500 West Wall
            Suite 400
            Midland, Texas 79701

            Attn:   David W. Pruitt
                    President and Chief Executive Officer

            Gentlemen:

            National  Cooperative  Services  Corporation  ("NCSC") is pleased to
            offer Cap Rock Energy  Corporation  (the "Borrower") this commitment
            to  provide  certain  credit   facilities  in  connection  with  the
            Borrower's  proposed  purchase of certain  electric  assets owned by
            Citizens   Utilities  Company  (the  "Seller")  located  in  Arizona
            (collectively,  the  "Assets"),  subject to the terms and conditions
            set forth below:

            1.  AMOUNT AND PURPOSE:

                    The credit facilities (hereinafter  collectively referred to
                     as the "Credit Facilities") shall consist of the following:

A.   Long  Term  Secured  Loan  No.  A-900l  in the  principal  amount  of up to
     $191,000,000 which shall be used for the acquisition of the Assets.

B.   Long  Term  Secured  Loan  No.  A-9002  in the  principal  amount  of up to
     $37,649,000  which shall be used for capital additions for the Assets for a
     period of not more than three years.

C.   Letter of Credit No,  L-9003 in the face amount of up to  $9,550,000  to be
     delivered  by the  Borrower  as the  deposit  under the  purchase  and sale
     agreement for the Assets.

D.   Secured Line of Credit No.  R-9900 in the principal  amount of  $25,000,000
     which shall be used for general corporate purposes after acquisition of the
     Assets. -


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                2.  LOAN SECURITY:

                    First  Mortgage  lien  on  all  assets  and  revenue  of the
                    Borrower  securing Loan No. A-9001,  A-9002 and R-9900.  The
                    Borrower's  repayment  obligation  of any  amounts  drawn on
                    Letter of Credit No. L-9003 shall be unsecured.

                3.  GUARANTY:

                    The   Credit    Facilities    shall   be   irrevocably   and
                    unconditionally guaranteed by Cap Rock Electric Cooperative,
                    Inc.

                4.  INTEREST RATE OPTIONS:

                    Match funded  rates shall be available  for Loans A-9001 and
                    A-9002 at the Borrower's option, subject to NCSC policies of
                    general  application  in effect at the time of  funding  the
                    Credit Facilities.  Any amounts drawn under Letter of Credit
                    No.  L-9003  and the Line of  Credit  No.  R-9900  will bear
                    interest at the NCSC variable  associate rate. The amount of
                    interest  rate  risk  assumed  by  the  Borrower   shall  be
                    satisfactory to NCSC.

                5.  FEES:

                    NCSC  will  charge  no  commitment  or  up-front  fees  as a
                    condition to the closing of the Credit Facilities. NCSC will
                    not charge for NCSC staff time or expenses  incurred  during
                    the credit process.

                    NCSC's  standard  recission  fees will apply to Loans A-9001
                    and A-9002 in the event those  loans close but the  Borrower
                    does not advance the full principal amounts thereof.

                    The annual fee for Letter of Credit No.  L-9003  shall be 25
                    basis  points,  regardless  of whether the letters of credit
                    remains  outstanding for the full term, and shall be payable
                    at the time of issuance.

                    Borrower  will  reimburse  NCSC for the expenses of external
                    consultants and legal counsel,  if any,  incurred during the
                    credit process.

                    6.   LOAN TERMS, PAYMENTS AND AMORTIZATION:


                    Loan Nos.  A-9001 and  A-9002  will  amortize  over 30 years
                    using a level  debt  service  repayment  schedule  or  other
                    amortization  agreed upon by the Borrower and NCSC,  subject
                    to  Section  7 below.  Debt  service  payments  will be made
                    quarterly on Loan Nos. A-900 I and A-9002.

                    Letter  of Credit  No.  L-9003  shall be issued to  Citizens
                    Utilities Company concurrently with the Borrower's execution
                    of the  purchase  and sale  agreement  of the  Assets  for a
                    period  extending from the date of issuance to and including
                    April 30, 2001. Any amounts drawn under Letter of Credit No.
                    L-9003  shall be  repaid in full by the  Borrower  12 months
                    from


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the  date of any such draw. Interest only shall be payable monthly on the amount
     of any such draws.  Secured Line of Credit No. R-9900 shall be repayable in
     full  in  12  months.  Interest  shall  be  payable  quarterly  on  amounts
     outstanding under the line of credit.

               7.    PRINCIPAL DEFERRAL:

                    At the Borrower's option,  repayment of the principal amount
                    of Loan No.  A-9001 may be deferred  for a period of up to 4
                    years and the  Borrower  shall be required  to pay  interest
                    only during that period.  Thereafter,  Loan No. A-9001 shall
                    amortize  over a 26 year period in the manner  described  in
                    Section 6 above.

                8. PREPAYMENTS AND CONVERSIONS:

                    The loan documents will contain standard provisions relating
                    to  prepayment  of the  Credit  Facilities  or  any  portion
                    thereof and conversion of interest  rates,  including  "make
                    whole" provisions on fixed-rate loans.

                9. COVENANTS:

                    The loan documents shall contain, among other covenants, the
following covenants:

                    After  the  closing  of Loan Nos.  A-9001  and  A-9002,  the
                    Borrower  shall  achieve a modified  debt  service  coverage
                    ratio  ("MDSC") of at least 1.35,  based upon  averaging the
                    two  highest  annual  ratios  during the most  recent  three
                    calendar years.  The Borrower shall design its rates so that
                    such ratios shall be achieved

                    The  Borrower  shall  not  in any  calendar  year  make  any
                    distributions   of  patronage   refunds,   dividends,   cash
                    distributions  or any other  return of equity to its members
                    or   shareholders   if,   after   giving   effect   to  such
                    distribution, the Borrower's equity will be less than 20% of
                    its total assets.

                    The Borrower shall not incur any indebtedness of any kind or
                    nature,  including  subordinated  indebtedness,  without the
                    prior  written  consent  of NCSC,  except  for  trade  debts
                    payable in the ordinary course.

                    Payment of principal on any subordinated  indebtedness  will
                    be contingent  upon NCSC's  approval if, after giving effect
                    to such payment, the Borrower's equity will be less than 20%
                    of its total assets.

                    The purchase and sale agreement executed by the Borrower and
                    the  Seller,   together  with  all  schedules   thereto  and
                    contracts  and  agreements   described  therein,   shall  be
                    satisfactory to NCSC in its sole discretion, it being agreed
                    that the  purchase and sale  agreement  dated as of February
                    11,  2000  is  satisfactory  to NCSC  in all  respects  (the
                    "Approved  Purchase and Sale Agreement").  Prior to funding,
                    all of the conditions precedent to Borrower's obligations to


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                    close in the  purchase  and sale  agreement  shall have been
                    completed  in a manner  satisfactory  to NCSC.  The Borrower
                    shall  not  amend or  modify  or waive  any of the terms and
                    conditions  of the purchase and sale  agreement  without the
                    prior written consent of NCSC.

                    The Borrower shall perform all of its obligations  under the
                    documentation  executed by the Borrower in  connection  with
                    the purchase of the Assets,  including,  but not limited, to
                    any  indemnification  obligations  inuring to the benefit of
                    the Seller.

                    The Borrower  shall  prepare and furnish to NCSC: a full and
                    complete report of its financial  condition and statement of
                    its  operations  within 45 days of the close of each  fiscal
                    quarter of the Borrower,  annual  audited  statements of the
                    Borrower  within  120  days  after  the end of,  each of the
                    Borrower's  fiscal  years,  and  such  other  financial  and
                    operational  information  as NCSC may  request  from time to
                    time.  Borrower  shall be subject to an annual,  on-site due
                    diligence meeting with NCSC staff, which will be arranged at
                    the convenience of the Borrower within 180 days of the close
                    of Borrower's fiscal year.

                    The Guaranty  from Cap Rock  Electric  Cooperative  shall be
                    accompanied  by evidence  that the  execution  and  delivery
                    thereof has been duly  authorized and is a valid and binding
                    obligation of Cap Rock Electric Cooperative,  including such
                    opinions of counsel,  regulatory  approvals  and third party
                    consents as NCSC shall require.

                10.CONDITIONS OF CLOSING:

                    NCSC's obligation to close the Credit Facilities (other than
                    the  issuance  of  Letter  of Credit  No.  L-9003)  shall be
                    subject to the following conditions precedent:

--   NCSC shall have  received  all  permits,  consents,  waivers and  approvals
     required by any federal,  state or local governmental boards,  commissions,
     authorities or other  regulatory  bodies in connection with the acquisition
     of the  Assets by the  Borrower  and  approval  of such  Credit  Facilities
     contemplated  by this  commitment  letter,  including,  but not limited to,
     those  required by any state public service  commissions,  other than those
     the failure of which to obtain would not have a material  adverse effect on
     the  operation,  financial  position or results of operation of the Assets,
     and none of such  approvals  shall  materially  and  adversely  impact  the
     Borrower's  ability  to  repay  such  Credit  Facilities  and  perform  the
     covenants  set forth in `the loan  documents,  as determined by NCSC in its
     sole  discretion.  None of such approvals shall contain a term or condition
     that would require a net reduction in the existing  tariffed rates relating
     to  the  Assets.  The  requests  for  State  regulatory  approvals  of  the
     transaction  shall  expressly  make clear that  Borrower  is  required as a
     condition and covenant of its indebtedness to meet and maintain  Borrower's
     MDSC  requirements  (regardless of whether  Borrower is a cooperative or an
     investor-owned  utility),  and the State regulatory  order(s) approving the
     transaction  shall indicate,  as determined by a prudent lender acting in a
     commercially  reasonable  manner, the regulatory body's recognition of this
     requirement.

--                          The Borrower  shall  execute and deliver  promissory
                            notes,   loan   agreements,   security   agreements,
                            assignments,  mortgages, pledge agreements, and such
                            other  documents  as required  by NCSC,  in form and
                            substance reasonably satisfactory to NCSC and its


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              counsel, it being agreed that the form of loan agreement and other
              loan  documents that are attached to this  commitment  letter (the
              "Approved Loan  Documents") are satisfactory in form and substance
              to NCSC and its counsel.

--   The  Borrower  shall cause its legal  counsel to deliver  such  opinions of
     counsel  covering such matters as NCSC may require in  connection  with the
     acquisition  of  the  Assets  and  the  financing   contemplated   by  this
     commitment.

This  commitment is subject to further  negotiation  and completion of agreeable
financing  terms  and  documentation  which  will  include  terms,   provisions,
representations,   warranties,   covenants,   conditions  precedent,   defaults,
indemnities,  remedies, and waiver of jury trial provisions,  that are customary
in acquisition financing transactions,  although not expressly described in this
letter,  it being agreed that the Approved Loan Documents include all conditions
precedent to NCSC's obligation to close such Credit Facilities.

This commitment is delivered to you with the express  understanding that NCSC or
its affiliates may provide financing and other financial or consulting  services
to other  entities  and their  affiliates,  and that  these  companies  may have
conflicting or competing interests with you regarding the proposed  acquisition.
However, in providing such financing and other financial or consulting services,
neither  NCSC nor any of its  affiliates  will  share  with any other  entity or
person any  confidential  information  you disclose to us in connection with the
transaction described in this letter.  Similarly, you acknowledge and agree that
neither NCSC nor any of its  affiliates  has any  obligation  to disclose to you
confidential  information  that NCSC  receives  from any other  entity or person
regarding the subject acquisition or financing.

This commitment is delivered to you with the further understanding that you will
not disclose its contents or the  financing  terms of the  transaction  with any
party  other  than   governmental  or  regulatory   bodies  which  require  such
disclosure,  or to  those  who are in a  confidential  relationship  with you in
connection with this transaction, such as your legal counsel, consultants, Board
of Directors, and the Seller, or as otherwise required by law.

All of the provisions of this  conditional  commitment shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and  assigns,  except that the  Borrower  may not assign or transfer  any of its
rights or  obligations  under  this  conditional  commitment  and any  purported
assignment or transfer by the Borrower  shall be void. No rights are intended to
be created under this commitment for the benefit of any third party.

The Borrower shall indemnify and hold harmless NCSC and its officers, directors,
employees,  agents  and  affiliates  from and  against  any and all  liabilities
arising out of the transaction contemplated by this commitment letter.

If the  terms of this  commitment  are  acceptable  to you,  please  sign  where
indicated  below and return the executed  copy to NCSC.  This  commitment  shall
become  effective  only upon your  signature  below and  receipt  by NCSC of the
signed commitment,

NCSC's  obligations  under this  commitment  shall terminate upon the earlier to
occur of (i) the rejection by the Seller of the  Borrower's  bid to purchase the
Assets,  (ii) the date the Borrower  consummates the closing of the acquisition,
and (iii) April 30, 2001.

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Concurrently  with the  issuance  by NCSC of this  conditional  commitment  (the
"Arizona Commitment") to finance the acquisition by the Borrower of the Seller's
assets  located in the State of Arizona (the  "Arizona  Assets"),  NCSC has also
issued the following conditional commitments:  (i) a conditional commitment (the
"Hawaii  Commitment") to finance the acquisition by the Borrower of the Seller's
assets  located in Kaua'i,  Hawaii (the "Hawaii  Assets") and (ii) a conditional
commitment  (the "Joint  commitment") to finance the acquisition by the Borrower
of the  Arizona  Assets and the Hawaii  Assets.  By  acceptance  of the  Arizona
Commitment,  the borrower acknowledges and agrees that all of NCSC's obligations
under  the  Hawaii   commitment  and  the  Joint  Commitment  are  automatically
terminated and the Hawaii  commitment and Joint Commitment are null and void and
of no further force or effect.

This letter  supercedes  that certain  commitment  letter dated January 10, 2000
from NCSC to the Borrower which is of o further force of effect.

We at NCSC look forward to working with you toward a  successful  completion  of
this transaction.


Very truly yours,

NATIONAL COOPERATIVE SERVICES CORPORATION


By: ____________________________
        Its: _______________________





ACKNOWLEDGED AND AGREED TO:

Borrower:



CAP ROCK ENERGY CORPORATION

By: ___________________________

           Its: _____________________

Date: _________________________











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