**EXHIBIT 10.6B**

**Schedulesand Exhibits to theCredit Sleeve and Reimbursement Agreement****Dated September 24, 2006,****As amended and restated December 1, 2006**

**(Portionsof this Exhibit have been omitted****Pursuant to a request for confidential treatment)**
| SCHEDULE  1.01(a) | ** ** | **-**      |       | Risk Management Policy Violations                                                      |
|-------------------|------------|------------|------------|----------------------------------------------------------------------------------------|
| SCHEDULE 1.01(b)  | ** ** | **-**      |       | Calculations Relating to Exchange Traded Contracts                                     |
| SCHEDULE 1.01(c)  | ** ** | **-**      |       | Determination of K and VaR                                                             |
| SCHEDULE 1.01(e)  | ** ** | **-**      |       | Trademarks                                                                             |
| SCHEDULE 1.01(f)  | ** ** | **-**      |       | Credit Limit Approval Guidelines                                                       |
| SCHEDULE 2.02(a)  | ** ** | **-**      |       | Counterparty Document Negotiation Provisions                                           |
| SCHEDULE 2.04     | ** ** | **-**      |       | C&I Contracts and Governmental Contracts  receiving ML Guarantee on Effective Date |
| SCHEDULE 3.04     | ** ** | **-**      |       | Calculation and Settlement of Monthly Sleeve Fee                                       |
| SCHEDULE 3.05     | ** ** | **-**      |       | Calculation of Make-whole Payment                                                      |
| SCHEDULE 3.07(a)  | ** ** | **-**      |       | Merrill Account                                                                        |
| SCHEDULE 5.13     | ** ** | **-**      |       | List of Subsidiaries                                                                   |
| SCHEDULE 7.14     | ** ** | **-**      |       | List of Retail Services                                                                |
| SCHEDULE 12.13    | ** ** | **-**      |       | List of Calculation Agents                                                             |
|              | ** ** | ** ** | ** ** | ** **                                                                             |
| EXHIBIT A1        | ** ** | **-**      |       | Form of ML Guarantee for Accepted Counterparties                                       |
| EXHIBIT A2        | ** ** | **-**      |       | Form of ML Guarantee for C&I Customers                                             |
| EXHIBIT B         | ** ** | **-**      |       | List of Accepted Counterparties                                                        |
| EXHIBIT C1        | ** ** | **-**      |       | Form of EEI Power Purchase and Hedging Contract                                        |
| EXHIBIT C2        | ** ** | **-**      |       | Form of ISDA Power Purchase and Hedging Contract                                       |
| EXHIBIT D1        | ** ** | **-**      |       | Form of EEI Collateral Annex                                                           |
| EXHIBIT D2        | ** ** | **-**      |       | Form of ISDA Credit Support Annex                                                      |
| EXHIBIT E1        | ** ** | **-**      |       | Reliant Energy Retail Risk Policy                                                      |
| EXHIBIT E2        | ** ** | **-**      |       | Reliant Energy Wholesale Risk Control Policy                                           |
| EXHIBIT F         | ** ** | **-**      |       | ERCOT Asset List                                                                       |
| EXHIBIT G         | ** ** | **-**      |       | Form of Joinder Agreement                                                              |
| EXHIBIT H         | ** ** | **-**      |       | Form of Compliance Certificate                                                         |
| EXHIBIT I1        | ** ** | **-**      |       | Sleeve Provider Employees with Access to Data                                          |
| EXHIBIT I2        | ** ** | **-**      |       | Reliant Employees with Access to Data                                                  |

 

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Schedule 1.01(a)To Credit Sleeve and Reimbursement AgreementRisk Management Policy Violations

[***]

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***                           Thecontent of this Schedule 1.01(a) (consisting of 3 pages) has been omitted andfiled separately with the Securities and Exchange Commission.  Confidential treatment has been requestedwith respect to the omitted portions.

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Schedule 1.01(b)To Credit Sleeve and Reimbursement AgreementCalculations Relating to Exchange Traded Contracts

**Adjusted Volume:**

For Exchange TradedContracts with the following delivery periods and volume quantities,
| Period (Month) | ** ** | **ETC Commodity Quantities** | ** ** |
|---------------------|------------|----------------------------------------|------------|
| 0                   |       | Q0                                     |       |
| 1                   |       | Q1                                     |       |
| 2                   |       | Q2                                     |       |
| 3                   |       | Q3                                     |       |
| —              |       | —                                 |       |
| —              |       | —                                 |       |
| N                   |       | QN                                     |       |

 

the “Adjusted Volume”of the Mirror OTC Contracts to be entered into between REPS and the SleeveProvider as part of the (EFS Transaction or ICE Block Transaction) under theCredit Sleeve and Reimbursement Agreement will be computed as follow:
| Period (Month) | ** ** | **Adjusted Volume** | ** ** |
|---------------------|------------|--------------------------|------------|
| 0                   |       | Q0 / AZP0           |       |
| 1                   |       | Q1 / AZP1           |       |
| 2                   |       | Q2 / AZP2           |       |
| 3                   |       | Q3 / AZP3           |       |
| —              |       | —                   |       |
| —              |       | —                   |       |
| N                   |       | QN / AZPN           |       |

 

“AZP” shall be theAdjusted Zero Prices that corresponds to the date on the Adjusted Zero Curvewhich is defined below.

The Adjusted Volume will be rounded off to the nearest full unit (mmbtuor mwh).

Calculation of AdjustedZero Curve:

The Credit SleeveProvider will calculate an adjusted LIBOR forward curve (the “Adjusted LIBORForward Curve”) each day by adding the marginal cost of capital adder (the “MCCAdder”) to the inputs used to calculate the Merrill Lynch & Co. standardLIBOR curve (the “Merrill LIBOR Curve”).

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“MCC Adder” shall be:

(a) [*******]; for purposes of calculatingthe Adjusted Volume of Mirror OTC Contracts executed in connection with (EFSTransactions or ICE Block Transactions) that are Effective Date Transactionsdescribed in Section 2.03(a) of the Credit Sleeve Reimbursement Agreement; and

(b) the marginal cost of capital relative to LIBOR that all MerrillLynch & Co.’s trading desks are charged for the use of funds by MerrillLynch & Co. (as of the date of such EFS Transaction or ICE BlockTransaction), which amount is relative to LIBOR that is the average cost ofcapital for Merrill Lynch & Co. across all maturities (such MCC Adder canbe positive or negative); for purposes of calculating the Adjusted Volume ofMirror OTC Contracts executed in connection with EFS Transactions or ICE BlockTransactions that are Ongoing Transactions described in Section 2.03(b) of theCredit Sleeve Reimbursement Agreement

As of the Effective Date, the MCC Adder described in subsection (b)above is [*******]; however, such amount may changein accordance with changes to Merrill Lynch & Co.’s marginal cost ofcapital as described above.

“Merrill LIBOR Curve” shall be the LIBOR curve used by MerrillLynch & Co. and its subsidiaries in their U.S. and world wide swap andfutures operations and business and used to mark its interest rate position tomarket.  It is understood that Merrill Lynch & Co. maymodify the inputs for how it determines this curve; however, it will continueto use the same curve for the Merrill LIBOR Curve as used in this Scheduleand for its other operations as described in the foregoing sentence.

Using the Adjusted LIBORForward Curve the Sleeve Provider will calculate a corresponding zero curve(the “Adjusted Zero Curve”), and provide such Adjusted Zero Curve toREPS on each Business Day, no later than 10:00 a.m. CST, and such curve shallbe applicable to the (EFS Transactions and ICE Block Transactions) that areexecuted on that day.  The Adjusted ZeroCurve will be a strip of monthly Adjusted Zero Prices, which represent thepresent value of $1.00 dollar received on a specific date in the future,assuming the Adjusted LIBOR Forward Curve for discounting purposes withdiscounting being computed utilizing the continuously compounding methodology.  The Adjusted Zero Curve provided will have 5places after the decimal point.

The term of the Adjusted LIBOR Forward Curve and thecorresponding Adjusted Zero Curve will be 72 months, including the then currentmonth; provided, however, that to the extent REPS currently has or in thefuture obtains an Exchange Traded Contract for a longer period, then the SleeveProvider will extend the Adjusted LIBOR Forward Curve

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*******                           Certain information on thispage has been omitted and filed separately with the Securities and ExchangeCommission.  Confidential treatment hasbeen requested with respect to the omitted portions.

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and the Adjusted ZeroCurve to match such longer period. Adjusted Zero Prices that correspond to dates that are between theMonthly Dates in the table below will be calculated using linearinterpolation.  The format utilized bythe Sleeve Provider in providing this information will include at a minimum thefollowing attributes:
| **Period (Month)** | ** ** | **Monthly Date** | ** ** | **Adjusted LIBOR  Forward Curve** | ** ** | **Adjusted Zero  Curve** | ** ** |
|-------------------------|------------|-----------------------|------------|---------------------------------------------|------------|-------------------------------|------------|
| 0                       |       |                  |       | AL0 = 0                                |       | AZP0 = 1                 |       |
| 1                       |       |                  |       | AL1                                         |       | AZP1                          |       |
| 2                       |       |                  |       | AL2                                         |       | AZP2                          |       |
| 3                       |       |                  |       | AL3                                         |       | AZP3                          |       |
| —                  |       |                  |       | —                                      |       | —                        |       |
| —                  |       |                  |       | —                                      |       | —                        |       |
| —                  |       |                  |       | —                                      |       | —                        |       |
| N                       |       |                  |       | ALN                                         |       | AZPN                          |       |

 

Treatment for Options:

For purposes ofclarification the Parties agree that no adjustment will be made to the volumesof options transactions which are transferred pursuant to EOO Transactionsunder the Credit Sleeve Reimbursement Agreement, or in other words the AdjustedVolume of any Mirror OTC Contract that is an option will be the exact samevolume as the volume of the corresponding Exchange Traded Contract.

**Physical Exposure Management Fee:**

For Exchange TradedContracts that provide for physical delivery, (both futures contracts andoptions that provide for physical delivery futures contracts) and aretransferred to the Sleeve Provider pursuant to an EFS or EOO Transaction, thefollowing will apply:  The Mirror OTCTransaction’s confirm will specify that REPS agrees to pay to Sleeve Provider(or Sleeve Provider agrees to pay to REPS) a fee (the “Physical ExposureManagement Fee” or “PhEM”) equal to: either (i) the actual EFS orEOO Transaction premium paid or received by Sleeve Provider to liquidate thephysical exposure or (ii) if Sleeve Provider takes the position in its ownbook, the average of two broker quotes on the day Sleeve Provider takes theposition (which quotes shall be of the applicable buy or sell side from theSleeve Provider’s perspective of the premium for the EFS or EOO of the sameproduct and delivery month), multiplied by the volume in the EFS or EOOTransaction.  Sleeve Provider willprovide REPS notice of the PhEM amount within 2 Business Days of eitherliquidating the physical exposure with a third party or taking the position onthe Sleeve Provider’s own book.  REPS mayrequest that the Sleeve Provider provide deal tickets as evidence of the actualpremium paid or received by Sleeve Provider or instant messaging prints ofbroker quotes.  PhEM shall be due andpayable by the applicable Party at the time of settlement of the Mirror OTCTransaction associated with such EOO or EFS Transaction.

 

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Schedule 1.01(c)To Credit Sleeve and Reimbursement AgreementDetermination of K and VaR

[***]

 

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***                           Thecontent of this Schedule 1.01(c) (consisting of 72 pages) has been omitted andfiled separately with the Securities and Exchange Commission.  Confidential treatment has been requestedwith respect to the omitted portions.

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Schedule 1.01(e)

To Credit Sleeve andReimbursement Agreement

Trademarks

*** ***
| NAME                  | ** ** | **OWNER** | ** ** | **GOODS/SERVICES**                                                                                                                                                                                                                                                                                       | ** ** | **REG.** | ** ** | **APPL. #** |
|-----------------------|------------|-----------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------|------------|-------------|
| Energy Commander      |       | RERH      |       | Class 9.Systems comprised of computer hardware and  integrated computer software for communications, and for monitoring,  controlling, and managing environmental conditions and energy usage.                                                                                                           |       | 2764995  |       | 76/263578   |
| Energy Commander      |       | RERH      |       | Class 42. Monitoring,  controlling and managing of energy usage for commercial, industrial and  institutional customers; providing information regarding environmental  conditions and energy usage to commercial, industrial and institutional  customers.                                              |       | 2813513  |       | 76/263577   |
| PowerZone             |       | RERH      |       | Class 35. Promoting events, sports competitions,  contests and award programs. Class 42. Sweepstake services.                                                                                                                                                                                            |       |     |       | 78/762804   |
| Your Houston Business |       | RERH      |       | Class 16. Business magazines. Class 41. Computer  services, namely, providing an on-line magazine in the field of business.                                                                                                                                                                              |       | 2865827  |       | 78/156502   |
| Power Card and Design |       | RERH      |       | Class 35. Promoting the services of public libraries  through sponsorship of library membership cards. Class 42. Promoting public  awareness of the availability of public library facilities and services by  sponsorship of library membership cards.                                                  |       | 2428481  |       | 75/940944   |
| Reliant               |       | IP Trust  |       | Class 36. Energy brokerage services; electricity  brokerage, namely, the brokerage of electric power and the sale of electric  power, both generated internally and purchased from electric utilities and  from other electric power producers, suppliers and sources, for sale and  transfer to others. |       | 3097811  |       | 78/622356   |
| Reliant               |       | IP Trust  |       | Class 39. Distribution and delivery of energy.                                                                                                                                                                                                                                                           |       | 2886710  |       | 78/311694   |
| Reliant               |       | IP Trust  |       | Class 40. Production and generation of energy.                                                                                                                                                                                                                                                           |       | 2886711  |       | 78/311695   |

 

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| Reliant Arena  |   | IP Trust |   | Class 35. Promoting the goods and services of others  by arranging for sponsors to affiliate their goods and services with  professional football; rental of advertising space; promoting sports  competitions and/or events of others; dissemination of advertising matter and  providing facilities for trade shows and conventions; promoting business and  tourism in the area of the Reliant Stadium in Houston, Texas.                                                                    |   | 2976601 |   | 76/195453 |
|----------------|--------|----------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|-----------|
| Reliant Arena  |   | IP Trust |   | Class 41. Providing stadium facilities for sports  and entertainment; arranging and conducting athletic competitions; providing  entertainment in the nature of sporting events and competitions, exhibitions  and expositions, public performances, concerts, conventions and rodeos;  information services, namely, providing a wide range of information relating  to sporting events and competitions, exhibitions and expositions, public  performances, concerts, conventions and rodeos. |   | 2896040 |   | 76/195451 |
| Reliant Arena  |   | IP Trust |   | Class 42. Restaurant and bar services; providing  general purpose facilities for exhibitions.                                                                                                                                                                                                                                                                                                                                                                                                   |   | 2943295 |   | 76/195450 |
| Reliant Center |   | IP Trust |   | Class 35. Promoting the goods and services of others  by arranging for sponsors to affiliate their goods and services with  professional football; rental of advertising space; promoting sports  competitions and/or events of others; dissemination of advertising matter and  providing facilities for trade shows and conventions; promoting business and  tourism in the area of the Reliant Stadium in Houston, Texas.                                                                    |   | 2897602 |   | 76/195564 |
| Reliant Center |   | IP Trust |   | Class 41. Providing stadium facilities for sports  and entertainment; arranging and conducting athletic competitions; providing  entertainment in the nature of sporting events and competitions, exhibitions  and expositions, public performances, concerts, conventions and rodeos;  information services, namely, providing a wide range of information relating  to sporting events and related activities by means of the Internet.                                                       |   | 2875207 |   | 76/195562 |
| Reliant Center |   | IP Trust |   | Class 42. Restaurant and bar services; providing  general purpose facilities for exhibitions.                                                                                                                                                                                                                                                                                                                                                                                                   |   | 2926480 |   | 75/981963 |
| Reliant Energy |   | IP Trust |   | Class 35. Billing services; energy generation  logistics services, namely, scheduling generation of energy for others, in  International Class                                                                                                                                                                                                                                                                                                                                                  |   | 3053512 |   | 78/451768 |

 

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| Reliant Energy              |   | IP Trust |   | Class 36. Energy brokerage services; electricity  brokerage, namely, the brokerage of electric power and the sale of electric  power, both generated internally and purchased from electric utilities and  from other electric power producers, suppliers and sources, for sale and  transfer to others.                                                                                                       |   | 3132302 |   | 78/622380 |
|-----------------------------|--------|----------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|-----------|
| Reliant Energy              |   | IP Trust |   | Class 39. Distribution and delivery of energy, in  International Class 39.                                                                                                                                                                                                                                                                                                                                     |   | 3053513 |   | 78/451803 |
| Reliant Energy              |   | IP Trust |   | Class 40. Production and generation of energy, in  International Class 40.                                                                                                                                                                                                                                                                                                                                     |   | 3045140 |   | 78/451815 |
| Reliant Energy & Design |   | IP Trust |   | Class 35. Business consultation services for the  energy industry; billing for energy suppliers; business marketing consulting  services in the energy industry; business support services for energy  suppliers, namely, providing billing information to energy consumers;  operation for others of facilities and infrastructure for energy generation,  gathering, transmission, storage and distribution. |   | 2747525 |   | 75/623509 |
| Reliant Energy & Design |   | IP Trust |   | Class 36. Brokerage in the field of commodities,  namely, buying, selling, and trading of energy commodities; financial risk  management services; financing of energy services projects; telephone calling  card services.                                                                                                                                                                                    |   | 2681501 |   | 75/623512 |
| Reliant Energy & Design |   | IP Trust |   | Class 39. Public utility services, namely,  gathering, transmission, distribution, transportation, and storage of energy  commodities.                                                                                                                                                                                                                                                                         |   | 2895973 |   | 75/623308 |
| Reliant Energy & Design |   | IP Trust |   | Class 42. Providing temporary use of online,  non-downloadable software for use in the field of energy information systems  for tracking, monitoring, displaying, storing, and reporting actual,  projected, and historical energy storage, transmission, distribution or  consumption.                                                                                                                        |   | 2983403 |   | 75/623514 |
| Reliant Energy & Design |   | IP Trust |   | Class 42. Engineering design services of energy  generation facilities and infrastructure; providing information regarding the  energy industry and energy commodities; promoting public awareness of the  need for environmentally friendly energy.                                                                                                                                                           |   | 2666766 |   | 75/623309 |

 

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| Reliant Park    |   | IP Trust |   | Class 18. Textile shopping bags, attaché cases, book  bags, tote bags.                                                                                                                                                                                                                                                                                                                                                                                                     |   | 2897601 |   | 76/195468 |
|-----------------|--------|----------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|-----------|
| Reliant Park    |   | IP Trust |   | Class 25. Clothing, namely, caps, jackets, polo  shirts, shirts, sport shirts, sweaters, sweatshirts, t-shirts, rain-wear and  visors.                                                                                                                                                                                                                                                                                                                                          |   | 2897600 |   | 76/195465 |
| Reliant Park    |   | IP Trust |   | Class 35. Promoting the goods and services of others  by arranging for sponsors to affiliate their goods and services with  professional football; rental of advertising space; promoting sports  competitions and/or events of others; dissemination of advertising matter and  providing facilities for trade shows and conventions; tourism in the area of  the Reliant Stadium in Houston, Texas; promoting business and tourism in the  Reliant Stadium in Houston, Texas. |   | 2884611 |   | 76/195473 |
| Reliant Park    |   | IP Trust |   | Class 41. Providing stadium facilities for sports  and entertainment; arranging and conducting athletic competitions; providing  entertainment in the nature of sporting events and related activities;  information services, namely, providing a wide range of information relating  to sporting events and related activities by means of the Internet.                                                                                                                      |   | 2935264 |   | 76/195471 |
| Reliant Park    |   | IP Trust |   | Class 43. Restaurant and bar services; providing  general purpose facilities for exhibitions.                                                                                                                                                                                                                                                                                                                                                                                   |   | 2933500 |   | 76/195470 |
| Reliant Stadium |   | IP Trust |   | Class 16. Paper goods, paper materials and printed  matter, namely, posters, mounted photographs, postcards, pennants, books in  the field of football and related sporting events and activities; yearbooks,  paper napkins, and banners.                                                                                                                                                                                                                                      |   | 2955241 |   | 76/195558 |
| Reliant Stadium |   | IP Trust |   | Class 28. Toys, namely, action figures, balloons,  promotional game materials. sporting goods, namely, footballs and sports  balls.                                                                                                                                                                                                                                                                                                                                             |   | 2929142 |   | 76/195448 |
| Reliant Stadium |   | IP Trust |   | Class 35. Promoting the goods and services of others  by arranging for sponsors to affiliate their goods and services with  professional football; rental of advertising space; promoting sports  competitions and/or events of others; dissemination of advertising matter and  providing facilities for trade shows and conventions; promoting business and  tourism in the area of the Reliant Stadium in Houston, Texas.                                                    |   | 2929141 |   | 76/195445 |

 

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| Reliant Stadium |   | IP Trust |   | Class 41. Providing stadium facilities for sports  and entertainment; arranging and conducting athletic competitions; providing  entertainment in the nature of sporting events and competitions, exhibitions  and expositions, public performances, concerts, conventions and rodeos;  information services, namely, providing a wide range of information relating  to sporting events and related activities by means of the Internet. |   | 2896039 |   | 76/195443 |
|-----------------|--------|----------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|-----------|
| Reliant Stadium |   | IP Trust |   | Class 42. Restaurant and bar services; providing  general purpose facilities for exhibitions.                                                                                                                                                                                                                                                                                                                                             |   | 2729638 |   | 75/981391 |

 

 

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Schedule 1.01(f)

To Credit Sleeve andReimbursement Agreement

Credit LimitApproval Guidelines

[***]

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***                           Thecontent of this Schedule 1.01(f) (consisting of 1 page) has been omitted andfiled separately with the Securities and Exchange Commission.  Confidential treatment has been requestedwith respect to the omitted portions.

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Schedule 2.02(a)

To Credit Sleeve andReimbursement Agreement

Counterparty DocumentNegotiation Provisions

[***]

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***                           Thecontent of this Schedule 2.02(a) (consisting of 3 pages) has been omitted andfiled separately with the Securities and Exchange Commission.  Confidential treatment has been requestedwith respect to the omitted portions.

 

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Schedule 2.04

To Credit Sleeve and Reimbursement Agreement

C&I Contracts and Governmental Contracts

Receiving ML Guarantee onEffective Date

[***]

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***                           Thecontent of this Schedule 2.04 (consisting of 2 pages) has been omitted andfiled separately with the Securities and Exchange Commission.  Confidential treatment has been requestedwith respect to the omitted portions.

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Schedule 3.04

To Credit Sleeve and Reimbursement Agreement

Calculation andSettlement of Monthly Sleeve Fee

(a)           For the period from the EffectiveDate through the Unwind Start Date, on each Monthly Payment Date, REPS shallpay to the Sleeve Provider a monthly fee in arrears equal to the Sleeve FeeFactor as in effect from time to time for each MWh that the Reliant RetailObligors deliver to their C&I Customers, Residential Mass Customers andBusiness Services Mass Customers (excluding any load provided to EquistarChemicals, LP in connection with the Channelview Services Agreement), in eachcase, in connection with the Retail Energy Business during such period, asdetermined by the Sleeve Provider based on settled load data provided fromERCOT (such MWHs, the “ERCOT MWHs” and such monthly fee as adjusted fromtime to time, the “Sleeve Fee”). Payments of the Sleeve Fee will be determined and made in accordancewith the procedures set forth below.

As used in thisSchedule 3.04, the term “Sleeve Fee Factor” means $0.40 per MWh *provided* that such amount shall be adjusted from time totime as follows: (a) under the circumstances, in the amount, at the times andfor the periods set forth in Annex A hereto and (b) in the event that the MerrillParties receive an indemnity contemplated by Section 9.03(a) of the CSRA, by anadditional $0.40 per MWh during the period while such indemnity is in effect(cumulative with the effect of any adjustment referred to in clause (a)(if any)from time to time), commencing with first day of the month following the monthduring which such indemnity was received and ending on the last day of themonth during which such indemnity is terminated or expires.

(b)           REPS shall deliver to the SleeveProvider for each delivery month the following information and associated datarelating to the Sleeve Fee as follows:

(i)            MonthlyInitial Settlement Calculation:

(A)          The settlement ERCOT MWHs shall bebased on the ERCOT Initial Statement as defined by Section 9.2.3 of the ERCOTprotocols issued on or about the 10th calendar day of the month following delivery;

(B)           REPS shall provide to the SleeveProvider a summary of the ERCOT MWHs from the ERCOT Initial Statement by the 15th calendar day of the month following delivery or,if such date is not a Business Day, the immediately succeeding BusinessDay.  In the event that data provided byERCOT is omitted or incomplete for any day(s) of the subject month REPS shallprovide an Omission Estimate for each day to be used for settlement calculationsubject to review and approval by the Sleeve Provider.  The Sleeve Provider shall be notified of anyOmission Estimate as an explicit notation included as part of the summary ofvolumes;

(C)           The “Initial Monthly Sleeve FeeAmount” for each delivery month shall be the ERCOT MWHs per Schedule3.04(b)(i)(B) for such month multiplied by the Sleeve Fee Factor in effect forsuch month; and

(D)          Payment of the Initial Monthly SleeveFee Amount for each delivery month under Schedule 3.04(b)(i)(C) shall be due onthe next Monthly Payment Date.

(ii)           MonthlyFinal Settlement Calculation:

(A)          The settlement ERCOT MWHs shall bebased on the ERCOT Final Statement as defined by Section 9.2.4 of the ERCOTprotocols issued on or about the 59th calendar day of the month followingdelivery;

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(B)           REPS shall provide to the SleeveProvider a summary of ERCOT MWHs from the ERCOT Final Statement by the 15thcalendar day of the third month following delivery (i.e. January 2007 shall bedue by April 15, 2007) or, if such date is not a Business Day, the immediatelysucceeding Business Day.  In the eventthat data provided by ERCOT is omitted or incomplete for any day(s) of thesubject month REPS shall provide an Omission Estimate for each day to be usedfor settlement calculation subject to review and approval by the SleeveProvider.  The Sleeve Provider shall benotified of any Omission Estimate as an explicit notation included as part ofthe summary of volumes;

(C)           The “Monthly Sleeve Fee Amount”for each delivery month shall be the difference between (i) the ERCOT MWHs perSchedule 3.04(b)(ii)(B) for such month multiplied by the Sleeve Fee Factor ineffect for such month less (ii) the Initial Monthly Sleeve Amount in accordancewith Schedule 3.04(b)(i) for such month.  If the difference is positive an amount equalto the difference shall be due to the Sleeve Provider.  If the difference is negative an amount equalto the absolute value of the difference shall be due to REPS; and

(D)          Payment of the Monthly Sleeve Fee Amountfor each delivery month under Schedule 3.04(b)(ii)(C) shall be due on the nextMonthly Payment Date.

(iii)          Monthly True-Up StatementCalculation:

(A)          REPS shall provide to the SleeveProvider a summary of the ERCOT MWHs from the ERCOT True-Up Statement asdefined by Section 9.2.6 of the ERCOT protocols that have been received by REPSfor each delivery month by the 15th calendar day of the month during which suchinformation is received or, if such date is not a Business Day, the immediatelysucceeding Business Day;

(B)           The “True-Up Sleeve Fee Amount”for each delivery month shall be equal to the product of (i) the ERCOT MWHs perthe ERCOT True-Up Statement provided per Schedule 3.04(b)(iii)(A) for suchdelivery month minus the ERCOT MWHs per the ERCOT Final Statement per Schedule3.04(b)(ii)(B) for such delivery month multiplied by (ii) the Sleeve Fee Factorin effect for such month.  If the productis positive an amount equal to the product shall be due to the SleeveProvider.  If the product is negative anamount equal to the absolute value of the product shall be due to REPS; and

(C)           Payment of the True-Up Sleeve FeeAmount for each delivery month under Schedule 3.04(b)(iii)(B) shall be due onthe next Monthly Payment Date.

(iv)          MonthlyInvoice:  The Sleeve Provider shallprovide an invoice to REPS within two Business Days of the receipt from REPS ofthe summary of ERCOT MWhs in accordance with Schedule 3.04(b)(i), (ii) and(iii) with respect to each relevant delivery month; *provided*that if REPS does not furnish such information in a timely manner, such invoicemay be prepared on the basis of reasonable estimates of such informationprepared by the Sleeve Provider.  Theinvoice shall include the following if applicable for each delivery month:  (A) the Initial Monthly Sleeve Fee Amount perSchedule 3.04(b)(i), (B) the Monthly Sleeve Fee Amount per Schedule 3.04(b)(ii)and (C) the True-Up Sleeve Fee Amount per Schedule 3.04(b)(iii).  The Sleeve Provider will be the invoicingparty regardless of whether the invoice amount is a receivable or payableamount with respect to the Sleeve Provider

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(c)           During the Unwind Period, until thetake-out of the Sleeve Provider in accordance with Section 10.01(a)(i), (ii),(iv) or (v) of the CSRA (the date of such take-out, the “Take-Out Date”)or the Unwind Conclusion Date, REPS shall pay to the Sleeve Provider a monthlyfee in arrears equal to the Sleeve Fee Factor in effect from time to time foreach ERCOT MWh that the Reliant Retail Obligors:

(i)            deliverto their C&I Customers starting on the Unwind Start Date in connection withthe Retail Energy Business during such period, to the extent such deliveriesare under contractual delivery commitments in effect on the Unwind Start Date,as determined and invoiced by the Sleeve Provider based on contracted load dataprovided by REPS; and

(ii)           areprojected, with those projections being those in effect on the Unwind StartDate, to deliver to their Residential Mass Customers and Business Services MassCustomers starting on the Unwind Start Date in connection with the RetailEnergy Business during such period, to the extent the supply for such MWHs washedged under the CSRA on the Unwind Start Date, as determined and invoiced bythe Sleeve Provider based on monthly projected load data provided by REPSconsistent with the data provided in the daily reporting, as adjusted by thefollowing:

(A)          for Residential Mass Customers, to theextent there is a greater than 10% migration between current customer count andcustomer count as projected on the Unwind Start Date for the current period (asdetermined by ESID count), the projected load data (in effect on the UnwindStart Date) will be adjusted on a pro-rata basis from the start of the monthduring which such migration threshold occurred and going forward to reflect thecustomers that have migrated; and

(B)           for Business Services Mass Customersload, to the extent there is a greater than 10% migration between BusinessServices Mass Customers load and Business Services Mass Customers load as projectedon the Unwind Start Date for the current period (as determined by annualizedvolume (adjusted for seasonality)), the projected load data (in effect on theUnwind Start Date) will be adjusted on a pro-rata basis from the start of themonth during which such migration threshold occurred and going forward toreflect the customers that have migrated;

(such monthly fee asadjusted from time to time, the “Unwind Sleeve Fee”).

(d)           REPS shall provide the SleeveProvider a summary of volumes in MWhs as defined in Schedule 3.04(c)(i) and(ii) and any other data and computations including ESID counts and annualizedload (adjusted for seasonality) needed by the Sleeve Provider by the 15th calendar day of each month following eachdelivery month or, if such day is not a Business Day, the immediatelysucceeding Business Day.  The SleeveProvider shall provide an invoice with respect to the Unwind Sleeve Fee to REPSwithin two Business Days of the receipt from REPS of the summary of volumes inaccordance with Schedule 3.04(c) (i) and (ii); *provided*that if REPS does not furnish such information in a timely manner, such invoicemay be prepared on the basis of reasonable estimates of such informationprepared by the Sleeve Provider.  TheSleeve Provider will be the invoicing party regardless of whether the invoiceamount is a receivable or payable amount with respect to the SleeveProvider.  Payment with respect to theUnwind Sleeve Fee shall be due and payable in arrears for each delivery monthon the next Monthly Payment Date after invoicing and on the Take-Out Date andthe Unwind Conclusion Date.

----

Annex A to

Schedule 3.04

To Credit Sleeve andReimbursement Agreement

CertainAdjustments to the Sleeve Fee Factor

***SleeveFee Increase Zones***

Zone 1.  If there shall occur 1, but not more than 1,Level III Violation during any 60 consecutive month period beginning after theEffective Date the Sleeve Fee or Unwind Sleeve Fee, as applicable, shall beincreased by $0.10 per MWh beginning on the 1st day of the month following the month duringwhich the Level III Violation occurs through the earlier to occur of (a) thelast day of the 6th month during which no Level III Violationshave occurred, (b) an increase in the Sleeve Fee or Unwind Sleeve Fee undereither Zone 2 or Zone 3 below applies, or (c) the Credit Sleeve TerminationDate.

Zone 2.  If there shall occur 2, but not more than 2,Level III Violations during any 60 consecutive month period beginning after theEffective Date the Sleeve Fee or Unwind Sleeve Fee, as applicable, shall beincreased by $0.20 per MWh beginning on the 1st day of the month following the month duringwhich the second Level III Violation occurs through the earlier to occur of (a)the last day of the 12th month during which no Level III Violationshave occurred, (b) an increase in the Sleeve Fee or Unwind Sleeve Fee underZone 3 below applies, or (c) the Credit Sleeve Termination Date.

Zone 3.  If there shall occur 3or more Level III Violations during any 60 consecutive month period beginningafter the Effective Date the Sleeve Fee or Unwind Sleeve Fee, as applicable,shall be increased by $0.30 per MWh beginning on the 1st day of the month following the month duringwhich the third Level III Violation occurs through the Credit SleeveTermination Date.

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Schedule 3.05

To Credit Sleeve and Reimbursement Agreement

Calculation of Make-wholePayment

“Make-wholePayment” means, as of any date of determination, an amount equal to thegreater of (i) $50 million less the sum of (A) the Structuring Fee (as defined inSection 3.06 of the CSRA) and (B) the aggregate amounts of the Monthly SleeveFees that have been paid to the Sleeve Provider as of such date and (ii) $0,determined by the Sleeve Provider on such date.

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Schedule 3.07(a)To Credit Sleeve and Reimbursement AgreementMerrill Account

JP Morgan ChaseABA 021000021Account Number# [***]Account Name Merrill Lynch Commodities, Inc.

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***                           Certaininformation on this page has been omitted and filed separately with theSecurities and Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.

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Schedule 5.13To Credit Sleeve and Reimbursement AgreementList of Subsidiaries

##### Equity investment

1.                                       RERHHoldings, LLC’s ownership of 1,000 units of the membership interest of ReliantEnergy Retail Holdings, LLC

2.                                       ReliantEnergy Retail Holdings, LLC’s ownership ofa.             1,000 units of themembership interest of Reliant Energy Retail Services, LLCb.             1,000 units of themembership interest of Reliant Energy Power Supply, LLC

3.                                       ReliantEnergy Retail Services, LLC’s ownership of 1,000 units of the membershipinterest of RE Retail Receivables, LLC

 

|                                     | ** ** | **Jurisdiction of Organization** | ** ** | **Organizational/Taxpayer   Identification Number** |
|-------------------------------------|------------|----------------------------------|------------|-----------------------------------------------------|
| RERH Holdings, LLC                  |       | Delaware                         |       | 4191623/20-5222227                                  |
| Reliant Energy Retail Holdings, LLC |       | Delaware                         |       | 3279845/76-0655580                                  |
| Reliant Energy Retail Services, LLC |       | Delaware                         |       | 3279840/76-0655567                                  |
| R E Retail Receivables, LLC         |       | Delaware                         |       | 3531400/41-2046596                                  |
| Reliant Energy Power Supply, LLC    |       | Delaware                         |       | 4142914/20-4823108                                  |

 

Address ofprincipal place of business for all of the above:

1000 Main StreetHouston, Texas  77002

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Schedule 7.14To Credit Sleeve and Reimbursement AgreementList of Retail Services

[***]

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***                           Thecontent of this Schedule 7.14 (consisting of 3 pages) has been omitted andfiled separately with the Securities and Exchange Commission.  Confidential treatment has been requestedwith respect to the omitted portions.

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Schedule 12.13To Credit Sleeve and Reimbursement AgreementList of Calculation Agents

[***]

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***                           Thecontent of this Schedule 12.13 (consisting of 1 page) has been omitted andfiled separately with the Securities and Exchange Commission.  Confidential treatment has been requested withrespect to the omitted portions.

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Exhibit A1To Credit Sleeve and Reimbursement AgreementForm of ML Guarantee for Accepted Counterparties

**GUARANTEE OF MERRILL LYNCH& CO., INC.**

WHEREAS,Reliant Energy Power Supply, LLC, a Delaware limited liability company (“REPS”),and certain of its affiliates have entered into an agreement with Merrill LynchCommodities, Inc., a corporation duly organized and existing under the laws ofthe State of Delaware (“MLCI”), and its parent, Merrill Lynch & Co., Inc.,a corporation duly organized and existing under the laws of the State ofDelaware (“ML & CO.”), related to an enhanced credit structure for theretail electric business of REPS and its affiliates;

WHEREAS,as part of the consideration for the above described agreement, ML & Co.has agreed to issue this Guarantee, guarantying the obligations of REPS underthe Agreement described below, consistent with the terms and conditions setforth below.

FORVALUE RECEIVED, receipt of which is hereby acknowledged, ML & CO. herebyunconditionally guarantees to                   (the“Company”), the due and punctual payment of any and all amounts payable byREPS, its successors and permitted assigns, to the extent such successors orpermitted assigns are direct or indirect subsidiaries of RERH Holdings, LLC, aDelaware limited liability company, under the terms of the **[EEI/ISDA]****Master Agreement** between theCompany and REPS, dated as of                      ,2006 (the “Agreement”), including, in case of default, interest on any amountdue, when and as the same shall become due and payable, whether on thescheduled payment dates, at maturity, upon declaration of termination orotherwise, according to the terms thereof. In case of the failure of REPS punctually to make any such payment, ML& Co. hereby agrees to make such payment, or cause such payment to be made,promptly upon demand made by the Company to ML & Co.; provided, howeverthat delay by the Company in giving such demand shall in no event affect ML& Co.’s obligations under this Guarantee. This Guarantee shall remain in full force and effect or shall bereinstated (as the case may be) if at any time any payment guaranteedhereunder, in whole or in part, is rescinded or must otherwise be returned bythe Company upon the insolvency, bankruptcy or reorganization of REPS orotherwise, all as though such payment had not been made.

ML& Co. hereby agrees that its obligations hereunder shall be unconditional,irrespective of the validity, regularity or enforceability of the Agreement;the absence of any action to enforce the same; any waiver or consent by theCompany concerning any provisions thereof; the rendering of any judgmentagainst REPS or any action to enforce the same; or any other circumstances thatmight otherwise constitute a legal or equitable discharge of a guarantor or adefense of a guarantor.  ML & Co.covenants that this guarantee will not be discharged except by complete paymentof the amounts payable under the Agreement. This Guarantee shall continue to be effective if REPS merges orconsolidates with or into another entity, loses its separate legal identity orceases to exist.

ML& Co. hereby waives diligence; presentment; protest; notice of protest,acceleration, and dishonor; filing of claims with a court in the event ofinsolvency or bankruptcy of REPS; all demands whatsoever, except as noted inthe first paragraph hereof; and any right to require a proceeding first againstREPS.

ML& Co. hereby certifies and warrants that this Guarantee constitutes thevalid obligation of ML & Co. and complies with all applicable laws.  This Guarantee guarantees only paymentobligations of REPS and does not guarantee the performance of any other obligationsof, including, but not limited to, physical delivery or, to the extentapplicable, reporting obligations of REPS. This Guarantee constitutes a guarantee of payment and not of collection.

ThisGuarantee shall be governed by, and construed in accordance with, the law ofthe State of New York.

----

ThisGuarantee may be terminated at any time by notice by ML & Co. to theCompany given in accordance with the notice provisions of the Agreement,effective upon receipt of such notice by the Company or such later date as maybe specified in such notice; provided, however, that this Guarantee shallcontinue in full force and effect, and shall be irrevocable, with respect toany payment obligation of REPS arising under any Transaction under and asdefined in the Agreement entered into prior to the effectiveness of such noticeof termination.

ThisGuarantee becomes effective upon written notice to such effect from ML &Co., or MLCI on its behalf, to the Company given in accordance with the noticeprovisions of the Agreement making specific reference to this Guarantee and theAgreement.

INWITNESS WHEREOF, ML & Co. has caused this Guarantee to be executed in itscorporate name by its duly authorized representative.
|        | **MERRILL LYNCH & CO., INC.**

  |   |
|--------|-------------------------------------------|--------|
|   | By:                                       |   |
|   |                                      |
|   | Name:                                     |   |
|   |                                      |
|   | Title:                                    |   |
|   |                                      |
|   | Date:                                     |   |
|        |                                           |        |  |

 

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Exhibit A2To Credit Sleeve and Reimbursement AgreementForm of ML Guarantee for C&I Customers

**GUARANTEE OF MERRILL LYNCH& CO., INC.**

WHEREAS,Reliant Energy Retail Services, LLC, a Delaware limited liability company (“RERS”),and certain of its affiliates have entered into an agreement with Merrill LynchCommodities, Inc., a corporation duly organized and existing under the laws ofthe State of Delaware (“MLCI”), and its parent, Merrill Lynch & Co., Inc.,a corporation duly organized and existing under the laws of the State ofDelaware (“ML & CO.”), related to an enhanced credit structure for theretail electric business of RERS and its affiliates;

WHEREAS,as part of the consideration for the above described agreement, ML & Co.has agreed to issue this Guarantee, guarantying the obligations of RERS underthe Agreement described below, consistent with the terms and conditions setforth below.

FORVALUE RECEIVED, receipt of which is hereby acknowledged, ML & CO. herebyunconditionally guarantees to **                               **(the “Company”), the due and punctual payment of any and all amounts payable byRERS, its successors and permitted assigns, to the extent such successors orpermitted assigns are direct or indirect subsidiaries of RERH Holdings, LLC, aDelaware limited liability company, under the terms of the **[Contract]**betweenthe Company and RERS, dated as of                     ,2006 (the “Agreement”), including, in case of default, interest on any amountdue, when and as the same shall become due and payable, whether on thescheduled payment dates, at maturity, upon declaration of termination orotherwise, according to the terms thereof. In case of the failure of RERS punctually to make any such payment, ML& Co. hereby agrees to make such payment, or cause such payment to be made,promptly upon demand made by the Company to ML & Co.; provided, howeverthat delay by the Company in giving such demand shall in no event affect ML& Co.’s obligations under this Guarantee. This Guarantee shall remain in full force and effect or shall bereinstated (as the case may be) if at any time any payment guaranteedhereunder, in whole or in part, is rescinded or must otherwise be returned bythe Company upon the insolvency, bankruptcy or reorganization of RERS orotherwise, all as though such payment had not been made.

ML& Co. hereby agrees that its obligations hereunder shall be unconditional,irrespective of the validity, regularity or enforceability of the Agreement;the absence of any action to enforce the same; any waiver or consent by theCompany concerning any provisions thereof; the rendering of any judgmentagainst RERS or any action to enforce the same; or any other circumstances thatmight otherwise constitute a legal or equitable discharge of a guarantor or adefense of a guarantor.  ML & Co.covenants that this guarantee will not be discharged except by complete paymentof the amounts payable under the Agreement. This Guarantee shall continue to be effective if REPS merges orconsolidates with or into another entity, loses its separate legal identity orceases to exist.

ML& Co. hereby waives diligence; presentment; protest; notice of protest,acceleration, and dishonor; filing of claims with a court in the event ofinsolvency or bankruptcy of RERS; all demands whatsoever, except as noted inthe first paragraph hereof; and any right to require a proceeding first againstRERS.

ML& Co. hereby certifies and warrants that this Guarantee constitutes thevalid obligation of ML & Co. and complies with all applicable laws.  This Guarantee guarantees only paymentobligations of RERS and does not guarantee the performance of any otherobligations of, including, but not limited to, physical delivery or, to theextent applicable, reporting obligations of RERS.  This Guarantee constitutes a guarantee ofpayment and not of collection.

ThisGuarantee shall be governed by, and construed in accordance with, the law ofthe State of New York.

----

ThisGuarantee becomes effective upon written notice to such effect from ML &Co., or MLCI on its behalf, to the Company (which notice may be given bye-mail) making specific reference to this Guarantee and the Agreement.

INWITNESS WHEREOF, ML & Co. has caused this Guarantee to be executed in itscorporate name by its duly authorized representative.
|        | **MERRILL LYNCH & CO., INC.**

  |   |
|--------|-------------------------------------------|--------|
|   | By:                                       |   |
|   |                                      |
|   | Name:                                     |   |
|   |                                      |
|   | Title:                                    |   |
|   |                                      |
|   | Date:                                     |   |
|        |                                           |        |  |

 

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Exhibit BTo Credit Sleeve and Reimbursement AgreementList of Accepted Counterparties

[***]

----

***                           Thecontent of this Exhibit B (consisting of 6 pages) has been omitted and filedseparately with the Securities and Exchange Commission.  Confidential treatment has been requestedwith respect to the omitted portions.

 

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**ExhibitC1To Credit Sleeve and Reimbursement AgreementForm of EEI Power Purchase and Hedging Contract**

***EXECUTION VERSION***

**MASTER POWER PURCHASE AND SALE AGREEMENT**

**COVERSHEET**

This *Master Power Purchase and Sale Agreement* (“*Master Agreement*”) dated             shall not become effective until the date on which the Guaranty issued byMerrill Lynch & Co., Inc. becomes effective (“Effective Date”).  The *Master Agreement*,together with the exhibits, schedules and any written supplements hereto, theParty A Tariff, if any, the Party B Tariff, if any, any designated collateral,credit support or margin agreement or similar arrangement between the Partiesand all Transactions (including any confirmations accepted in accordance withSection 2.3 hereto) shall be referred to as the “Agreement.”  The Parties to this *MasterAgreement* are the following:
| **Name:**Reliant Energy Power Supply, LLC (“REPS” or   “Party A”) | ** **      | **Name:              **(“          ”  or “Party B”)                                                                                                                             | ** **                                                                                                                                                                                                                                                               |
|---------------------------------------------------------------------------------------|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                                                            | ** **      | ** **                                                                                                                                                                                                                                                                                                             | ** **                                                                                                                                                                                                                                                               | ** ** | ** ** | ** ** |
| **All Notices:**                                                                      | ** **      | **All Notices:**                                                                                                                                                                                                                                                                                                       | ** **                                                                                                                                                                                                                                                               | ** ** | ** ** | ** ** |
|                                                                                  |            |                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
| Street: 1000 Main St., Suite 1100, Houston, 77002                                     |            | Street:                                                                                         |                                                                                                                                                                                                                                                                     |   |   |   |
|                                                                                  |            |                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
| P. O. Box 4455                                                                        |            |                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
|                                                                                  |            |                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
| City: Houston, TX                                                                     | Zip: 77210-4455 |                                                                                                                                                                                                                                                                                                                   | City:                                             | Zip:                      |
|                                                                                  |            |                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
| Attn: Contract Administration                                                         |            | Attn: Contract Administration                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                     |   |   |   |
| Phone: (713) 497-5855 or 4138                                                         |            | Phone:                                                                                               |                                                                                                                                                                                                                                                                     |   |   |   |
| Facsimile: (713) 497-9562                                                             |            | Facsimile:                                                                                                                         |                                                                                                                                                                                                                                                                     |   |   |   |
| Duns: 623988644                                                                       |            | Duns:                                                                                      |                                                                                                                                                                                                                                                                     |   |   |   |
| Federal Tax ID Number: 204823108                                                      |            | Federal Tax ID Number:                                                 |
|                                                                                  |            |                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
| With a copy to:                                                                       |            |                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
|                                                                                  |            |                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
| Merrill Lynch Commodities, Inc.                                                       |            |                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
| 20 East Greenway Plaza, 7th Floor                                                     |            |                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
| Houston, Texas 77253-3327                                                             |            |                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
| Attn: Legal                                                                           |            |                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
| Phone: 713-544-4975                                                                   |            |                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
| Facsimile: 713-544-5551                                                               |            |                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
|                                                                                  |            |                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
| **Invoices:**                                                                         | ** **      | **Invoices:**                                                                                                                                                                                                                                                                                                          | ** **                                                                                                                                                                                                                                                               | ** ** | ** ** | ** ** |
| Attn: ERCOT  Settlement Accounting, 11th Floor                                        |            | Attn:                                                                                                     |                                                                                                                                                                                                                                                                     |   |   |   |
| Phone: (713)  497-4402                                                                |            | Phone:                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
| Facsimile: (713)  497-0098                                                            |            | Facsimile:                                                                                                                                             |                                                                                                                                                                                                                                                                     |   |   |   |
| ** **                                                                            | ** **      | ** **                                                                                                                                                                                                                                                                                                             | ** **                                                                                                                                                                                                                                                               | ** ** | ** ** | ** ** |
| **Scheduling:**                                                                       | ** **      | **Scheduling:**                                                                                                                                                                                                                                                                                                        | ** **                                                                                                                                                                                                                                                               | ** ** | ** ** | ** ** |
| Attn: ERCOT 24  Hour Scheduling                                                       |            | Attn:                                                                                                     |                                                                                                                                                                                                                                                                     |   |   |   |
| Phone: (713)  497-1144                                                                |            | Phone:                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
| Facsimile: (713)  497-0098                                                            |            | Facsimile:                                                                                                                                             |                                                                                                                                                                                                                                                                     |   |   |   |
| ** **                                                                            | ** **      | ** **                                                                                                                                                                                                                                                                                                             | ** **                                                                                                                                                                                                                                                               | ** ** | ** ** | ** ** |
| **Payments:**                                                                         | ** **      | **Payments:**                                                                                                                                                                                                                                                                                                          | ** **                                                                                                                                                                                                                                                               | ** ** | ** ** | ** ** |
| Attn:ERCOT  Settlement Accounting, 11th Floor                                         |            | Attn:                                                                                                     |                                                                                                                                                                                                                                                                     |   |   |   |
| Phone:(713)  497-4402                                                                 |            | Phone:                                                                                                                   |                                                                                                                                                                                                                                                                     |   |   |   |
| Facsimile: (713)  497-0098                                                            |            | Facsimile:                                                                                                                                             |                                                                                                                                                                                                                                                                     |   |   |   |
|                                                                                       |                 |                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                          |  |  |  |  |

** **

1

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** **
| **Wire Transfer:**                                                                        | ** ** | **Wire Transfer:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|-------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| BNK:                                                                                      | ** ** | BNK:                                                                                                   |
| ABA:[Insert  Collateral Account Info]                                                     | ** ** | ABA:                                                                                                   |
| ACCT**:**                                                                                 | ** ** | ACCT**:                                                                                         **          |
|                                                                                      | ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **Credit and Collections:**                                                               | ** ** | **Credit and Collections:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Attn: Credit  Risk Management                                                             | ** ** | Attn:                                                                                             |
| Phone: (713)  497-1052                                                                    |       | Phone:                                                                                                           |
| Facsimile: (713)  497-1058                                                                | ** ** | Facsimile:                                                                                                                           |
|                                                                                      | ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **With additional Notices of an Event  of Default or Potential Event of Default to:****** |       | **With additional Notices of an Event of Default  or Potential Event of Default to:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Attn: Vice  President and General Counsel —Trading,                                  |       | Attn:                                                                                             |
| Suite 2100                                                                                |       | Phone:                                                                                                           |
| Phone: (713)  497-5361                                                                    |       | Facsimile:                                                                                                                           |
| Facsimile: (713)  537-7063                                                                |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

 

The Parties hereby agreethat the General Terms and Conditions are incorporated herein, and to thefollowing provisions as provided for in the General Terms and Conditions:
| Party A Tariff: [TO BE SUPPLIED] |   | Dated                             |   | Docket Number                                 |
|----------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                             |   |                                                                                                                                                                          |   |                                                                                                                                                                                                          |
| Party B Tariff: Tariff           |   | Dated                             |   | Docket Number                                 |

 
| **Article Two**                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                 |
|---------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|
| Transaction Terms and Conditions            |   | x  Optional provision in Section 2.4. If not checked, inapplicable.                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                 |
|                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                 |
| **Article Four**                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                 |
| Remedies for Failure

to Deliver or Receive |   | x  Accelerated Payment of Damages. If not checked, inapplicable.                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                                                 |
|                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                 |
| **Article Five**                            |   | x  Cross Default for Party A:                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                 |
| Events of Default; Remedies                 |   | o  Party A:                                                                                                                                                                                                                              |   | Cross Default Amount $                      |
|                                        |   | x  Other Entity: Merrill Lynch &

Co., Inc.                                                                                                                                                                                                                                                                                                                                                                                                                      |   | Cross Default Amount   $100,000,000                                                                                                                  |
|                                        |   | o  Cross Default for Party B:                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                 |
|                                        |   | o  Party B:                                                                                                                                                                                                                         |   | Cross Default Amount                                                                                                                                 |
|                                        |   | o  Other Entity:                                                                                                                                                                                                                                                            |   | $                                           |
|                                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Cross Default Amount $                      |
|                                        |   | 5.6  Closeout Setoff                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                 |
|                                        |   | x  Option A (Applicable if no other selection is made.) As amended in Paragraph  10.

o  Option B — Affiliates shall have the meaning set forth in the Agreement  unless otherwise specified as follows: With respect to Party A,                ;  with respect to Party B,                  . |   |                                                                                                                                                 |

2

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|                                    | o  Option C (No Setoff)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **Article 8**                      | 8.1 Party A Credit Protection:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Credit and Collateral Requirements | (a) Financial Information:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                               | o  Option A

o  Option B Specify:                     

o  Option C Specify:                     

So long as such Financial Information is publicly  available through the Securities Exchange Commission’s EDGAR database or such  similar database maintained by the Securities Exchange Commission, Party B  shall not be required to deliver such Financial Information directly to Party  A.                                                                                                                                                                                                                       |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                               | (b) Credit Assurances:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                               | x  Not Applicable

o  Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                               | (c) Collateral Threshold: See Attached  Collateral Annex                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                               | o  Not Applicable

x  Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                               | (d) Downgrade Event:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                               | x  Not Applicable

o  Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                               | (e)  Guarantor for Party B:                                                                                                                                                                                                                                                                                                                                                                            |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                               | Guarantee  Amount:                                                                                                                                                                                                                                                                                                                                                                                                              |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                               | 8.2 Party B Credit Protection:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                               | (a) Financial Information:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                               | o  Option A

x  Option B Specify: Merrill Lynch & Co., Inc.

o  Option C Specify:                                                                       

So long as such Financial Information is publicly  available through the Securities Exchange Commission’s EDGAR database or such  similar database maintained by the Securities Exchange Commission, Party A  shall not be required to deliver such Financial Information directly to Party  B. |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                               | (b) Credit Assurances:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                               | x  Not Applicable

o  Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

 

3

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|            | (c) Collateral Threshold: See attached  Collateral Annex                                                             |
|-----------------|----------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                 |
|            | o  Not Applicable

x  Applicable                                                                                     |
|            |                                                                                                                 |
|            | (d) Downgrade Event:                                                                                                 |
|            |                                                                                                                 |
|            | x  Not Applicable

o  Applicable                                                                                     |
|            |                                                                                                                 |
|            | (e)  Guarantor for Party A: Merrill Lynch & Co., Inc.                                                            |
|            |                                                                                                                 |
|            | Guarantee  Amount:$           ,  as amended from time to time |
|            |                                                                                                                 |
| **Article 10**  |                                                                                                                 |
| Confidentiality | x  Confidentiality Applicable                                                                                        | If not checked, inapplicable. |
|            |                                                                                                                 |   |
| **Schedule M**  |                                                                                                                 |
|            | o  Party A is a Governmental Entity or Public Power System                                                           |
|            | o  Party B is a Governmental Entity or Public Power System                                                           |
|            | o  Add Section 3.6. If not checked, inapplicable                                                                     |
|            | o  Add Section 8.6. If not checked, inapplicable                                                                     |

 
| **Other Changes:** | Yes    |   |
|--------------------|--------|--------|
| ** **         |   |

ArticleOne: General Definitions

## Section 1.12, “CreditRating” shall be deleted. “Credit Rating” shall have the meaning given in theCollateral Annex.

## The followingdefinitions are amended as set forth below:

1. Section 1.1 is revisedto add the following at the end of such section: Notwithstanding the foregoing,“Affiliate” means, with respect to Party A, Reliant Energy Retail Holdings,LLC, and any subsidiary thereof, including Reliant Energy Retail Services, LLC,and Reliant Energy Retail Receivables, LLC, and with respect to Party B,                [if we know fill in blank and if not use “Affiliate” shall have the meaninggiven in the first two sentences of this definition.]

2. Section 1.50 isamended to delete the reference to Section “2.4” and add “2.5”.

3. Section 1.51 isamended to add the phrase “for delivery” immediately before the phrase “at theDelivery Point” in the second line.

4. Section 1.53 isamended to (i) delete the phrase “at the Delivery Point” from the second lineand (ii) insert after the phrase “commercially reasonable manner” in the sixthline, the following phrase “; provided, however if the Seller is unable afterusing commercially reasonable efforts to resell all or a portion of the Productnot received by Buyer, the Sales Price with respect to such unsold Productshall be deemed equal to zero (0)”.

The followingshall be added as a new definition:

““1.62 Merger Event”means, with respect to a Party or its Guarantor, as applicable, that such Partyor its Guarantor consolidates or amalgamates with, or merges with or into, or transfersall or substantially all its assets to, or reorganizes, reincorporates orreconstitutes into or as, another entity and, at the time of suchconsolidation, amalgamation, merger, transfer, reorganization, reincorporationor reconstitution:

(l)    the resulting, surviving or transfereeentity fails to assume all the obligations of such Party or its Guarantor underthis Agreement to which it or its predecessor was a party; or

4

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(2) the benefitsof any Guaranty fails to extend (without the consent of the other party) to theperformance by such resulting, surviving or transferee entity of itsobligations under this Agreement.”

Article Two: Transaction Terms and Conditions

Section 2.4 is amended bydeleting the words “either orally or” after the words “agreed to” in lineseven.

Section 2.5 isamended by adding the words “regarding any Transaction and the terms thereof”after the word “Parties” in line three.

Article Four: Remediesfor Failure to Deliver/Receive

The following is added asa new Section 4.3:

“4.3 Suspension ofPerformance. Notwithstanding, and in addition to the remedies providedpursuant to Sections 4.1 and 4.2, if Seller or Buyer fails to schedule and/ordeliver/receive all or part of the Product pursuant to a Transaction, and suchfailure is not excused under the terms of the Product or by the other Party’sfailure to perform, then upon one (1) Business Day prior notice, and for solong as the non-performing Party fails to perform, the performing Party shallhave the right to suspend its performance under any or all Transactions.”

Article Five: Eventsof Default; Remedies

Section 5.1(e) isamended by deleting “hereof;” and replacing it with the following: “and theCollateral Annex if such failure is not remedied within two (2) Business Daysafter written notice”.

Section 5.1(f) isamended in its entirety as follows: “a Merger Event occurs with respect to suchParty or its Guarantor;”.

Section 5.1(h)(ii)is amended to delete the following phrase from the third and fourth linethereof: “and such failure shall not be remedied within three (3) Business Daysafter written notice”.

Thefollowing is added as an additional Event of Default under Section 5.1:

“Section 5.1(i) an event of default occurs (howsoever determined) withrespect to such Party under any agreement between Party A and Party B under anyforward contract, swap agreement or commodities contract (whether financiallyor physically settled) (collectively a “Specified Transaction”), in each caseas defined in the United States Bankruptcy Code, and after giving effect to anyapplicable notice requirement or grace period, there occurs a liquidation of,an acceleration of obligations under, or an early termination of that SpecifiedTransaction.”

Section 5.2 isamended to (i) reverse the placement of “(i)” and “to” in line three, (ii)delete the following phrase from lines eleven and twelve “are commerciallyimpracticable to liquidate and terminate or” and (iii) delete the followingphrase from lines thirteen and fourteen “under applicable law on the EarlyTermination Date, as soon thereafter as is reasonably practicable).” Thefollowing shall be added to the end of Section 5.2: “under applicable law onthe Early Termination Date, then each such Transaction (individually, an “ExcludedTransaction” and collectively, the “Excluded Transactions”) shall be terminatedas soon thereafter as reasonably practicable), and upon termination shall bedeemed to be a Terminated Transaction and the Termination Payment payable inconnection with all such Transactions shall be calculated in accordance withSection 5.3 below. The Gains and Losses for each Terminated Transaction shallbe determined by calculating the amount that would be incurred or realized toreplace or to provide the economic equivalent of the remaining payments ordeliveries in respect of that Terminated Transaction. The Non-Defaulting Party(or its agent) may determine its Gains and Losses by reference to informationeither available to it internally or supplied by one or more third partiesincluding, without limitation, quotations (either firm or indicative) ofrelevant rates, prices, yields, yield curves, volatilities, spreads or otherrelevant market data in the relevant markets. Third parties supplying suchinformation may include, without limitation, dealers in the relevant markets,information vendors and other sources of market information.”

The followingshall be added to the end of Section 5.4: “To secure its obligations under thisAgreement, each Party hereby grants to the other Party a present and continuingsecurity interest in, lien on, and right to setoff against, its paymentobligations to the other Party under this Agreement. Each Party acknowledgesand agrees that the pledge of its payment obligations to the other Party underthis Agreement shall serve to “margin,” “guaranty” or “secure” such obligationswithin the meaning of the Bankruptcy Code, as defined in Section 10.2 herein.”

5

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Article Seven: Limitations

Section 7.1 shallbe amended by: (a) deleting “Except as set forth herein” from the firstsentence and “Unless expressly herein provided” from the fifth sentence, (b)adding “Notwithstanding anything in this Agreement to the contrary” to thebeginning of the fifth sentence, and “set forth in this Agreement” after “indemnityprovision” and before “or otherwise”, also in the fifth sentence, and (c)adding the following language after the word “Equity” in the fourth sentence: “(exceptfor the remedies provided by the Uniform Commercial Code for claims ofanticipatory repudiation)”.

Article Ten: Miscellaneous

Section 10.2 (vi) is amended to add the phrase “except as disclosed ineach parties’ or its Guarantor’s, as applicable, SEC filing” at the end of thesentence in Section 10.2.

Section 10.2 (ix) is amended to read in its entirety as follows:

“(ix) it acknowledges and agrees that (A)Transaction(s) constitute “forward contracts” within the meaning of title 11 ofthe United States Code (the “**BankruptcyCode**”); (B) each of Party A and Party B is a “forward contractmerchant” within the meaning of the Bankruptcy Code with respect to anyTransactions that constitute “forward contracts”; (C) all payments made or tobe made by one Party to the other Party pursuant to this Agreement constitute “settlementpayments” within the meaning of the Bankruptcy Code; (D) all transfers ofPerformance Assurance by one Party to the other Party under this Agreementconstitute “margin payments” within the meaning of the Bankruptcy Code; (E)each Party’s rights under Section 5.2, “Declaration of an Early TerminationDate and Calculation of Settlement Amounts”, of this Agreement constitutes a “contractualright to liquidate” the Transactions within the meaning of the Bankruptcy Code;and (F) the other party is not a “utility” as such term is used in Section 366of the Bankruptcy Code, and each party agrees to waive and not to assert theapplicability of the provisions of Section 366 in any bankruptcy proceedingwherein such Party is a debtor. In any such proceeding, each party furtheragrees to waive the right to assert that the other party is a provider of lastresort;”

Section 10.4 is amended to add the phrase “unless a Claim is due tosuch Party’s gross negligence, willful misconduct or bad faith” at the end ofthe first sentence of Section 10.4.

Section 10.5 is amended to(i) add the words “shall not be unreasonably withheld or delayed” afterthe words “which consent” in the second line; (ii) delete the words “may bewithheld in the exercise of its sole discretion” in the second and third line;(iii) delete subparagraphs (i) and (ii) in their entirety from the fourththrough sixth lines; and (iv) delete “or (iii)” from the eighth line.”

Section 10.8 is amended to delete the following sentence on line twenty“Any provision declared or rendered unlawful by any applicable court of lawParties.” and replace with the following sentence “If performance of thisAgreement is declared or rendered unlawful by any applicable court or law orregulatory agency or deemed unlawful because of a statutory change(individually or collectively, such events being referred to herein as a “RegulatoryEvent”), such Regulatory Event will not otherwise affect the remaining lawfulobligations that arise under this Agreement; and provided, further, that if aRegulatory Event occurs, the Parties shall use their best efforts to reformthis Agreement in order to give effect to the original intention of theParties.”

Section 10.11 is amended to (i) add the following word“Guarantor,” after the word “Party’s” in line three; (ii) add the following phraseafter the word “lenders”: “and their counsel and advisors”; and (iii) add thefollowing to the end of the paragraph: “The Parties hereby acknowledge that the disclosure of price data onlywithout counterparty name does not contravene this Section 10 so long as thedata is disclosed to an index publisher that publishes the data in aggregatedform and does not identify the Parties.”

The following shall beadded as a new Section 10.12:

“10.12 Withrespect to any suit, action or proceedings relating to this Agreement, eachParty irrevocably submits to the non-exclusive jurisdiction of the courts ofthe State of New York and the United States District Court located in theborough of Manhattan in New York City and waives any objection it may have atany time to the laying of venue of any such proceedings brought in any suchcourt, waives any claim that such proceedings have been brought in anyinconvenient forum and further waives the right to object, with respect to suchproceedings, that such court does not have any jurisdiction over such Party. EACHPARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT ITMAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION, CLAIM OR PROCEEDINGRELATING TO THIS AGREEMENT OR ANY CREDIT SUPPORT DOCUMENT.”

6

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The following shall beadded as a new Section 10.13:

“10.13 From the date of entering into a Transaction under this MasterAgreement and throughout the term of such Transaction, the Parties each warrantand covenant as follows:

(a)     Absent the agreement of all Parties to theproposed change, the standard of review for changes to any section of thisMaster Agreement (including all Transactions and/or Confirmations) specifyingthe rate(s) or other material economic terms and conditions agreed to by theParties herein, whether proposed by a Party, a non-party or FERC acting suasponte, shall be the “public interest” standard of review set forth in UnitedGas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and FederalPower Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956)(the “Mobile-Sierra”doctrine).

(b)     The Parties, for themselves and theirsuccessors and assigns, (i) agree that this “public interest” standard shallapply to any proposed changes in any other documents, instruments or otheragreements executed or entered into by the Parties in connection with thisMaster Agreement and (ii) hereby expressly and irrevocably waive any rightsthey can or may have to the application of any other standard of review,including the “just and reasonable” standard.”

### The following shall be added as a new Section10:14:

### “10.14 Credit Sleeve Provisions:

(a)     Consent to Assignment. Party B herebyconsents to the assignment by Party A to Merrill Lynch Commodities, Inc. andMerrill Lynch & Co., Inc (together, the “Merrill Parties”) of all of Party A’srights under this Agreement, including all rights to receive payments fromParty B under this Agreement (any such payment, a “***Receivable***”),as collateral security for Party A’s obligations to the Merrill Parties inconnection with an enhanced credit structure for Party A’s retail electricbusiness provided by the Merrill Parties (the “Collateral Assignment”).

(b)     Collateral Account. Party A herebyunconditionally and irrevocably authorizes and directs Party B to make, and,unless and until otherwise required by law or this agreement is terminated,Party B hereby agrees to make, any and all payments in respect of Receivablesdirectly by wire transfer to the account specified in this Cover Sheet (the “Collateral Account”).All such payments by Party B to the Collateral Account shall be free and clearof any deduction, set-off, netting arrangements or counterclaim, except asexpressly provided in this Agreement.

(c)     Notice & Right to Cure Events of Default.As set forth above, the Merrill Parties shall be provided with all noticesunder this Agreement, including notices of any Potential Event of Default orEvent of Default hereunder. In the event of a Potential Event of Default orEvent of Default in which Party A is, or may become, the Defaulting Party, theMerrill Parties shall be permitted, at their option, to cure such default ortermination event***,* [(if such event of default ortermination event is capable of being cured by either Merrill Party [TO BE USEDAS FALLBACK])]** within any grace period applicable to Party A for******such Potential Event of Default orEvent of Default.”

AdditionalProvisions:

The followingprovisions shall be added to Schedule P: Products and Related Definitions:

“1.    Other Products and Service Levels.

If the Partiesagree to a service level defined by a different agreement (i.e., the WSPPagreement, the ERCOT agreement, etc.) for a particular Transaction, then,unless the Parties expressly state and agree that all the terms and conditionsof such other agreement will apply, such reference to a service level/productdefined by such other agreement means that the service level for thatTransaction is subject to the applicable regional reliability requirements andguidelines as well as the excuses for performance, Force Majeure,Uncontrollable Forces, or other such excuses applicable to performance undersuch other agreement, to the extent inconsistent with the terms of thisAgreement, but all other terms and conditions of this Agreement remainapplicable including, without limitation, Section 2.2.

 2.   Index Transactions. If theContract Price for a Transaction is determined by reference to a third-partyinformation source, then the following provisions shall be applicable to suchTransaction.

(a)   Market Disruption. If a MarketDisruption Event occurs during a Determination Period, the Floating Price forthe affected Trading Day(s) shall be the fallback reference price specified bythe Parties if the Parties have specified 

7

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such a fallback reference price. If the Parties did not specify afallback reference price the Floating Price shall be determined by reference tothe Floating Price specified in the Transaction for the first Trading Daythereafter on which no Market Disruption Event exists; provided, however, ifthe Floating Price is not so determined within three (3) Business Days afterthe first Trading Day on which the Market Disruption Event occurred or existed,then the Parties shall negotiate in good faith to agree on a Floating Price (ora method for determining a Floating Price), and if the Parties have not soagreed on or before the twelfth Business Day following the first Trading Day onwhich the Market Disruption Event occurred or existed, then the Floating Priceshall be determined in good faith by taking the average of two dealer quotesobtained from dealers of the highest credit standing which satisfy all thecriteria that the Seller applies generally at the time in deciding to offer orto make an extension of credit.

 

“DeterminationPeriod” means each calendar month a part or all of which is within theDelivery Period of a Transaction.

“Exchange”means, in respect of a Transaction, the exchange or principal trading marketspecified in the relevant Transaction.

“FloatingPrice” means a Contract Price specified in a Transaction that is based upona Price Source.

“MarketDisruption Event” means, with respect to any Price Source,any of the following events: (a) the failure of the Price Source to announce orpublish the specified Floating Price or information necessary for determiningthe Floating price; (b) the failure of trading to commence or the permanentdiscontinuation or material suspension of trading in the relevant optionscontract or commodity on the Exchange or in the market specified fordetermining a Floating Price; (c) the temporary or permanent discontinuance orunavailability of the Price Source; (d) the temporary or permanent closing ofany Exchange specified for determining a Floating Price; or (e) a materialchange in the formula for or the method of determining the Floating Price.

“PriceSource” means, in respect of a Transaction, the publication(or such other origin of reference, including an Exchange) containing (orreporting) the specified price (or prices from which the specified price iscalculated) specified in the relevant Transaction.

“TradingDay” means a day in respect of which the relevant PriceSource published the Floating Price.

(b)   Correctionsto Published Prices. For purposes of determining a Floating Price for anyday, if the price published or announced on a given day and used or to be usedto determine a relevant price is subsequently corrected and the correction ispublished or announced by the person responsible for that publication orannouncement within two (2) years of the original publication or announcement,either Party may notify the other Party of (i) that correction and (ii) theamount (if any) that is payable as a result of that correction. If, not laterthan thirty (30) days after publication or announcement of that correction, aParty gives notice that an amount is so payable, the Party that originallyeither received or retained such amount will, not later than three (3) BusinessDays after the effectiveness of that notice, pay, subject to any applicableconditions precedent, to the other Party that amount, together with interest atthe Interest Rate for the period from and including the day on which paymentoriginally was (or was not) made to but excluding the day of payment of the refundor payment resulting from that correction.

(c)   Calculationof Floating Price. For the purposes of the calculation of a Floating Price,all numbers shall be rounded to three (3) decimal places. If the fourth (4th) decimal number is five (5)or greater, then the third (3rd)decimal number shall be increased by one (1), and if the fourth (4th) decimal number is less than five (5),then the third (3rd)decimal number shall remain unchanged.”

8

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IN WITNESSWHEREOF, the Parties have caused this Master Agreement to be duly executed asof the date first above written.
| **RELIANT ENERGY POWER SUPPLY, LLC** | ** ** |
|--------------------------------------|------------|
| ** **                           | ** ** |
| By:                                  |       | By: |   |
| Name:                                |       | Name: |   |
| Title:                               |       | Title: |   |
|                                      |            |  |  |  |  |  |  |

 

**DISCLAIMER:This Master Power Purchase and Sale Agreement was prepared by a committee ofrepresentatives of Edison Electric Institute (“EEI”) and National EnergyMarketers Association (“NEM”) member companies to facilitate orderly trading inand development of wholesale power markets. Neither EEI nor NEM nor any membercompany nor any of their agents, representatives or attorneys shall beresponsible for its use, or any damages resulting therefrom. By providing thisAgreement EEI and NEM do not offer legal advice and all users are urged toconsult their own legal counsel to ensure that their commercial objectives willbe achieved and their legal interests are adequately protected.**

** **

9

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**Exhibit C2**

**To Credit Sleeve and Reimbursement Agreement**

**Form ofISDA Power Purchase and Hedging Contract**

***EXECUTION VERSION***

**ISDA**®

InternationalSwaps and Derivatives Association, Inc.

### **SCHEDULE**

**to the**

**2002Master Agreement**

dated as of      T.B.D.           

between

RELIANT ENERGYPOWER SUPPLY, LLC (“Party A”)

and

                                                      (“Party B”)

**Part 1**

**TERMINATIONPROVISIONS**

In this Agreement:

(a)           ***“SpecifiedEntity”*** means in relation to Party A for the purpose of:

###### Section 5(a)(v):                                     NotApplicable

###### Section 5(a)(vi):                                    NotApplicable

###### Section 5(a)(vii):                                   NotApplicable

###### Section 5(b)(v):                                     Not Applicable

in relation toParty B for the purpose of:

###### Section 5(a)(v):                                     NotApplicable

###### Section 5(a)(vi):                                    NotApplicable

###### Section 5(a)(vii):                                   NotApplicable

###### Section 5(b)(v):                                     Not Applicable

(b)                                 The“***Default Under Specified Transaction***”provision of Section 5(a)(v) of this Agreement and the definition of “***Specified Transaction***” of thisAgreement will apply only to each of Party A, Party B, and Party B’s CreditSupport Provider but will not apply to Party A’s Credit Support Provider.

(c)                                  The***“Cross Default”***provisions of Section 5(a)(vi) of this Agreement will apply to both Party A andParty B provided, however, that Section 5(a)(vi)(1) shall be amended as follows:

The words “or other similar condition or event(however described)” in the first  lineof the provision are deleted and the comma in the second line is replaced with “or”.

1

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***“Threshold Amount”***means (i) with respect to Party A, $100,000,000 (or its equivalent inanother currency) and (ii) with respect to Party B, $            (or its equivalent in another currency).

(d)                                 The***“Automatic Early Termination”***provision of Section 6(a) of this Agreement will not apply.

(e)           ***“TerminationCurrency”*** means United States Dollars.

(f)                                    ***“Additional Termination Event(s)”***will not apply.

### **Part 2**

### **TAX REPRESENTATIONS**

(a)                                  **Payer Tax Representation.** For the purpose of Section 3(e) of thisAgreement, each of Party A and Party B will make the following representation:

It is not required by any applicable law, as modifiedby the practice of any relevant governmental revenue authority, of any RelevantJurisdiction to make any deduction or withholding for or on account of any Taxfrom any payment (other than interest under Section 9(h) of this Agreement) tobe made by it to the other party under this Agreement.  In making this representation, it may rely on(i) the accuracy of any representations made by the other party pursuant toSection 3(f) of this Agreement, (ii) the satisfaction of the agreementcontained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the accuracyand effectiveness of any document provided by the other party pursuant toSection 4(a)(i) or 4(a)(iii) of this Agreement and (iii) the satisfaction ofthe agreement of the other party contained in Section 4(d) of this Agreement;provided that it shall not be a breach of this representation where reliance isplaced on clause (ii) herein and the other party does not deliver a form ordocument under Section 4(a)(iii) by reason of material prejudice to its legalor commercial position.

(b)                                 **Payee Tax Representations. **Forthe purpose of Section 3(f) of this Agreement, Party A and Party B make therepresentation(s) specified below, if any:

**Party A**: Party A is a limitedliability company organized under the laws of the State of Delaware and is aresident of the United States of America for U.S. tax purposes.  Party A’s Federal Tax I.D. number is20-4823108.

**Party B**: Party B is a[corporation] organized under the laws of the State of            and is a resident of the United States of America for U.S. tax purposes.  Party B’s Federal Tax I.D. number is               .

### **Part 3**

### **AGREEMENT TO DELIVER DOCUMENTS**

For the purpose ofSections 4(a)(i) and (ii) of this Agreement, each party agrees to deliver thefollowing documents, as applicable:

2

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** **
| Party Required to  Deliver Document                         | ** ** | **Form/  Document/  Certificate**                                                                                                                                                                                                                                                                                                                                                                        | ** ** | **Date By Which  To Be  Delivered**                                                                                                                                                                                                                                                                                                                                               | ** ** | **Covered By  Section 3(d)  Representation** |
|-------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------|
| Each party and  its Credit Support Provider, as applicable. |       | Copies of documents evidencing necessary corporate  or equivalent authorizations and approvals regarding execution, delivery and  performance of this Agreement and any Credit Support Document.                                                                                                                                                                                                         |       | Upon request.                                                                                                                                                                                                                                                                                                                                                                     |       | Yes.                                         |
| Each party and  its Credit Support Provider, as applicable. |       | Certificate of Authority and specimen signatures of  individuals executing this Agreement and any Credit Support Document.                                                                                                                                                                                                                                                                               |       | Upon request.                                                                                                                                                                                                                                                                                                                                                                     |       | Yes.                                         |
| Each party.                                                 |       | Specimen signatures or other confirming evidence of  individuals authorized to execute Confirmations.                                                                                                                                                                                                                                                                                                    |       | Upon request.                                                                                                                                                                                                                                                                                                                                                                     |       | Yes.                                         |
| Each party and  its Credit Support Provider, as applicable. |       | A duly executed original of the Credit Support  Annex, and, if specified in Part 4 below, a guarantee in the form specified  below, executed by such party’s Credit Support Provider specified below.                                                                                                                                                                                               |       | Upon execution.                                                                                                                                                                                                                                                                                                                                                                   |       | Yes.                                         |
| Each party and  its Credit Support Provider, as applicable. |       | Audited annual financial statements of such party’s  Credit Support Provider, or, if no Credit Support Provider, such party for  each fiscal year prepared in accordance with generally accepted accounting  principles in the country in which such entity is organized and on a basis  consistent with that of the audited annual financial statements of such entity  for its prior fiscal year. |       | As soon as  practicable after demand but no earlier than 120 days after the end of each  fiscal year of a party’s Credit Support Provider if such financial statement  is not available on “EDGAR” or its home page on the World Wide Web at  http://www.ml.com/, with respect to Party A` and [Insert Counterparty’s Web  Address], with respect to Party B. |       | Yes.                                         |
| Each party and  its Credit Support Provider, as applicable. |       | Unaudited financial statements of such party’s  Credit Support Provider, or, if no Credit Support Provider, such party for  each quarter prepared in accordance with generally accepted accounting  principles in the country in which such entity is organized and on a basis  consistent with that of the annual financial statements of such entity.                                             |       | As soon as  practicable after demand if such financial statement is not available on  “EDGAR” or its home page on the World Wide Web at http://www.ml.com/,  with respect to Party A and [Insert Counterparty’s Web Address], with respect  to Party B.                                                                                                            |       | Yes.                                         |
|                                                        |       |                                                                                                                                                                                                                                                                                                                                                                                                     |       |                                                                                                                                                                                                                                                                                                                                                                              |       |                                         |

 

3

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**Part 4**

**MISCELLANEOUS**

(a)           ***Address for Notices***. For the purpose of Section 12(a) of this Agreement:

Address fornotices or communications to Party A:
|   | Street Address:  | 1000 Main, Houston, TX 77002          |
|--------|------------------|---------------------------------------|
|   | Mailing Address: | P.O. Box 4455, Houston, TX 77210-4455 |
|   | Attention:       | Contract Administration               |
|   | Facsimile No.:   | (713) 497-9561                        |
|   | Telephone No.:   | (713) 497-4138                        |
|   | Confirmations:   | (713) 497-9562 (Facsimile)            |

With a copy to:
|        | Merrill Lynch Commodities, Inc. |
|--------|---------------------------------|
|   | 20 East Greenway Plaza          |
|   | 7th Floor                       |
|   | Houston, Texas 77253-3327       |
|   | Attn:                           | Legal |
|   | Fax:                            | 713-544-5551 |
|   | Phone:                          | 713-544-4975 |

With additionalnotices of an Event of Default or Potential Event of Default to:
|        | Street Address: | 1000 Main, Houston, TX 77002       |
|--------|-----------------|------------------------------------|
|   | Attention:      | Vice President and General Counsel |
|   | Facsimile No.:  | (713) 497 - 5361                   |
|   | Telephone No.:  | (713) 537 - 7063                   |

Address fornotices or communications to Party B:
|        | Address:       |        |
|--------|----------------|-------------|
|   | Attention:     |        |
|   | Facsimile No.: |        |
|   | Telephone No.: |        |
|   | Confirmations: | (Facsimile) |

(b)                                 ***Process Agent***.  For the purpose of Section 13(c) of thisAgreement:

Party A appoints as itsProcess Agent: CT Corporation Systems, 111 Eighth Avenue, New York, New York10011.

Party B appoints as its Process Agent:                           

(c)                                  ***Offices***.  The provisions of Section 10(a) of thisAgreement will apply to this Agreement.

(d)                                 ***Multibranch Party***.  For the purpose of Section 10(b) neitherParty A nor Party B is a Multibranch Party.

(e)                                  ***Calculation Agent***.  The Calculation Agent is Party A unlessotherwise specified in a Confirmation in relation to the relevantTransaction.  If Party A is theDefaulting Party, the Calculation Agent shall be Party B until such time asParty A is no longer a Defaulting Party. All determinations by the Calculation Agent are subject to agreement byParty A and Party B.  If the Parties areunable to agree on a calculation made by a

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particularCalculation Agent, then the parties shall appoint another mutually acceptableCalculation Agent that is a 

recognized dealerin the relevant market.  Each partyagrees to submit invoices on a monthly basis for amounts due 

from the other party.

(f)            ***Credit Support Document***.

(i)            With respect to Party A and Party B,the Credit Support Annex attached hereto, which constitutes a Credit SupportDocument is incorporated by reference in, and made part of this Agreement  (unless provided otherwise in a Confirmation)as set forth in full in this Agreement.

(ii)           With respect to Party A, a Guarantyexecuted by Party A’s Credit SupportProvider in the form of Exhibit A.

(iii)          With respect to Party B, a Guarantyexecuted by Party B’s Credit SupportProvider in form and substance reasonablysatisfactory to Party A.

(g)                                 ***Credit Support Provider***.

Credit SupportProvider means in relation to Party A: Merrill Lynch & Co., Inc.

Credit SupportProvider means in relation to Party B:                                             

(h)                                 ***Governing Law***.  This Agreement will be governed by andconstrued in accordance with the laws of the State of New York (withoutreference to choice of law doctrine), as provided in Section 5-1401 of the NewYork General Obligations Law.

(i)                                     ***Jurisdiction***.  Section 13(b) of this Agreement is herebydeleted in its entirety and replaced with the following:

“(b)         ***Jurisdiction***.  With respect to any suit, action orproceedings relating to this Agreement (“Proceedings”), each party irrevocably:

submits to thenon-exclusive jurisdiction of the courts of the State of New York and theUnited States District Court located in the borough of Manhattan in New YorkCity in accordance with the provisions of Section 5-1402 of the New YorkGeneral Obligations Law.”

(j)                                     ***Waiver of Jury Trial***.  Section 13 of this Agreement is herebyamended to add the following as a new Section 13(e) of this Agreement:

“(e)         **WAIVER OF JURY TRIAL.  EACH PARTY WAIVES, TO THE FULLEST EXTENTPERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY INRESPECT OF ANY SUIT, ACTION, CLAIM OR PROCEEDING RELATING TO THIS AGREEMENT ORANY CREDIT SUPPORT DOCUMENT AND CLAIM OR RECOVER IN ANY SUCH SUIT, ACTION,CLAIM OR PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.EACH PARTY (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHERPARTY OR ANY CREDIT SUPPORT PROVIDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE,THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH A SUIT, ACTION, CLAIM ORPROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT ITAND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND PROVIDEFOR ANY CREDIT SUPPORT DOCUMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THEMUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.”**

5

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(k)                                  ***Netting of Payments***.  Subparagraph (ii) of Section 2(c) of thisAgreement will not apply and therefore, the Multiple Transaction PaymentNetting specified in Section 2(c) of this Agreement will apply to allTransactions[, except Power Transactions and Gas Transactions.   Power Transactions and Gas Transactionsshall be netted together in accordance with Parts 7 and 8 of the Schedule.]******REVISE ACCORDINGLY, IFUSING THE GAS AND/OR POWER ANNEX**

(l)                                     ***“Affiliate*”**withrespect to Party A, will mean Reliant Energy Retail Holdings, LLC, and anysubsidiary thereof, including Reliant Energy Retail Services, LLC, and ReliantEnergy Retail Receivables, LLC, and with respect to Party B, will have themeaning specified in Section 14 of this Agreement.

(m)                               ***No Agency***.  The provisions of Section 3(g) will apply tothis Agreement.

### **Part 5**

### **OTHER PROVISIONS**

(a)                                  ***Absence of Litigation***.  Section 3(c) of this Agreement is herebyamended by: (i) adding in the third line thereof after the word, “governmental”the words “or regulatory”; (ii) adding the words “in any material respectexcept as disclosed in each parties’ or its Credit Support Provider’s, asapplicable, SEC filing” immediately prior to the end thereof; and (iii)deleting “, to its knowledge,” after “or” in the first line and reinsertingsuch phrase before “pending” in the first line of such section.

(b)                                 ***Accuracy of SpecifiedInformation*. **Section 3(d)of this Agreement is hereby deleted in its entirety and replaced with thefollowing:

“All information that isfurnished in writing by or on behalf of it to any of the other parties heretois, as of the date of the information, true accurate and complete in everymaterial respect, or, in the case of audited or unaudited financial statements,fairly present the financial condition of the relevant entity and have beprepared in accordance with generally accepted accounting principles,consistently applied, except as otherwise indicated in the notes of suchfinancial statements.”

(c)                                  ***Additional Representations*. **Section 3 of this Agreement is herebyfurther amended by adding at the end thereof the following subsections (h),(i), (j), and (k):

“(h)                           ***Eligible Contract Participant*. **It constitutes an “Eligible CommercialEntity” and an “Eligible Contract Participant” as such terms are defined inSections 1a(11) and 1a(12) (respectively) of the Commodity Exchange Act, asamended (7 U.S.C. §§ 1a (11), 1a (12) (2000).

(i)                                     ***Standardization, Creditworthiness, andTransferability***.  Theeconomic terms of this Agreement, any Credit Support Document to which it is aparty and each Transaction have been individually tailored and negotiated byit.  It has received and reviewedfinancial information concerning the other party and has had a reasonableopportunity to ask questions of and receive answers and information from theother party concerning such other party, this Agreement, such Credit SupportDocument, and such Transaction, and the creditworthiness of the other party wasa material consideration in its entering into or determining the terms of thisAgreement, such Credit Support Document, and such Transaction.  The transferability of this Agreement, suchCredit Support Document, and such Transaction is restricted as provided hereinand therein.

6

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(j)                                     ***Line of Business***.  Each party has entered into this Agreement(including each Transaction hereunder) in conjunction with its line of business(including financial intermediation services) or the financing of its business.

(k)                                  ***No Reliance*. **In connection with the negotiation of,the entering into, and the confirming of the execution of, this Agreement, anyCredit Support Document to which it is a party, and each Transaction: (i) it isnot relying upon any advice, statements, recommendations or representations(whether written or oral) of the other party other than the writtenrepresentations expressly set forth in this Agreement, in such Credit SupportDocument or in the Confirmation of such Transaction; (ii) the other party hasnot given to it (directly or indirectly through any other person) any advice,counsel, assurance, guarantee, or representation whatsoever as to the expectedor projected success, profitability, return, performance, result, effect,consequence, or benefit (either legal, regulatory, tax, financial, accounting,or otherwise) of this Agreement, such Credit Support Document, or suchTransaction; (iii) it has consulted with its own legal, regulatory, tax,business, investment, financial, and accounting advisors to the extent it hasdeemed necessary, and it has made its own investment, hedging, and tradingdecisions based upon its own judgment and upon any advice from such advisors asit has deemed necessary, and not upon any view expressed by the other party;(iv) all trading decisions have been the result of arm’s length negotiationsbetween the parties and are not intended to preclude either Party (or any ofsuch party’s Affiliates) from undertaking proprietary trading activities,including hedging and other transactions relating, directly or indirectly, togeneration capacity owned or controlled by such party or its Affiliates; (v) itis entering into this Agreement, such Credit Support Document, and suchTransaction with a full understanding of all of the risks hereof and thereof(economic and otherwise) and it is capable of assuming and willing to assume(financially and otherwise) those risks and (vi) it has the capacity toevaluate (internally or through independent professional advice) thisAgreement, any such Credit Support Document and each such Transaction(including decisions regarding the appropriateness or suitability thereof) andhas made its own decision to enter into this Agreement, such Credit SupportDocument and each such Transaction.”

(d)                               ***Provisions Relating to Bankruptcy Code***.

(A)                                    Each Party acknowledges and agrees that (i)Power Transaction(s) and Gas Transaction(s) constitute “forward contracts”within the meaning of title 11 of the United States Code (the “**Bankruptcy Code**”); (ii) each of Party Aand Party B is a “forward contract merchant” within the meaning of theBankruptcy Code with respect to any Transactions that constitute “forward contracts”;(iii) all payments made or to be made by one Party to the other Party pursuantto this Agreement constitute “settlement payments” within the meaning of theBankruptcy Code; (iv) all transfers of Credit Support by one Party to the otherParty under this Agreement constitute “margin payments” within the meaning ofthe Bankruptcy Code; and (v) each Party’s rights under Section 6, “EarlyTermination”, of this Agreement constitutes a “contractual right to liquidate”the Transactions within the meaning of the Bankruptcy Code.

(B)                                      To secure its obligations under thisAgreement, each Party hereby grants the other Party a present and continuingsecurity interest in, lien on, and right to setoff against, its respectivepayment obligations to the other Party under this Agreement.  Each Party acknowledges and agrees that the

7

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pledge of its payment obligations to the other Partyunder this Agreement shall serve to 

“margin,”“guaranty” or “secure” such obligations within the meaning of the BankruptcyCode.

(C)                                  Each Party acknowledges and agrees that, for purposes of thisAgreement, the other Party is not a “utility” as such term is used in Section366 of the Bankruptcy Code, and each Party agrees to waive and not to assertthe applicability of the provisions of Section 366 in any bankruptcy proceedingwherein such Party is a debtor. In any such proceeding, each Party furtheragrees to waive the right to assert that the other Party is a provider of lastresort.

(e)                                  ***Accounts*. **Payments shall be made in United StatesDollars to the following accounts:

**Party A**

Pay:                          [INSERT COLLATERAL ACCOUNT INFO]

Bank:

Fed. ABA No.:

Account No/CHIPSUID:

**Party B**

Pay:                                                                                                                           

Bank:                                                                                                                        

Fed. ABA No.:                                                                                                         

Account No/                                                                                                             

CHIPS UID:                                                                                                             

(f)                                    ***Confirmations*.**  Section 9(e)(ii) is hereby amended bydeleting in its entirety and replacing with the following:

“(ii) The parties intendthat they are legally bound by the terms of each Transaction from the momentthey agree to those terms (whether orally or otherwise).   Party A shall send to Party B within three(3) Local Business Days after the Transaction is entered into a Confirmationsetting forth the terms of such Transaction. Party B shall execute and return the Confirmation to Party A or requestcorrection in writing of any error within two (2) Local Business Days ofreceipt.  Failure of Party B to respondwithin such period shall not affect the validity or enforceability of suchTransaction and shall be deemed to be an affirmation of such terms sent.  If Party A fails to send a Confirmationwithin three (3) Local Business Days after the Transaction is entered into, aConfirmation may be forwarded by Party B to Party A.  If Party A objects to any term(s) of suchConfirmation, Party A shall notify Party B in writing of such objections withintwo (2) Local Business Days of Party A’s receipt thereof, failing which Party Ashall be deemed to be an affirmation of such terms sent.  If Party A and Party B each send aConfirmation and neither party objects to the other party’s Confirmation withintwo (2) Local Business Days of receipt, Party A’s Confirmation shall be deemedto be accepted and shall be the controlling Confirmation, unless (i) Party A’sConfirmation was sent more than three (3) Local Business Days after theTransaction was entered into and (ii) Party B’s Confirmation was sent prior toParty A’s Confirmation, in which case Party B’s Confirmation shall be deemed tobe accepted and shall be the controlling Confirmation.  Failure by either party to send or eitherparty to return an executed Confirmation or any objection by either party shallnot invalidate the Transaction agreed to by the parties.” However, notwithstanding the prior paragraph,in the event that any Confirmation for any Transaction contains  provisions not relating to the commercialterms of the Transaction,

8

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whichmodify or supplement the general terms and conditions of this Agreement, suchprovisions shall not be deemed accepted unless agreed to in writing by theparties. Failure to send or to return an executed Confirmation or any objectionregarding a Confirmation by either party shall not invalidate the Transactionagreed to by the parties.”

(g)**                                 *Tax Event***.  For purposes of this Agreement, Section5(b)(iii) is hereby amended to delete the words, “or there is a substantiallikelihood that it will”, as they appear after the word “will” and before theword “on” in the fourth line thereof.

(h)                                 ***Severability*. **Any provision of this Agreement(including any Transaction hereunder or any Credit Support Document) which isprohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,be ineffective to the extent of such prohibition or unenforceability withoutinvalidating the remaining provisions of this Agreement, such Transaction orsuch Credit Support Document or affecting the validity or enforceability ofsuch provision in any other jurisdiction unless such severance shallsubstantially impair the benefits of the remaining portions of this Agreement,such Transaction or such Credit Support Document or changes the reciprocalobligations of the parties. The parties hereto shall endeavor in good faithnegotiations to replace the prohibited or unenforceable provision with a validprovision, the economic effect of which comes as close as possible to that ofthe prohibited or unenforceable provision.

(i)                                     ***Telephone Recording*. **Each party to this Agreement acknowledgesand agrees to the taping or electronic recording (“Recording”) of conversationsbetween the parties regarding any Transaction and the terms thereof to thisAgreement whether by one or the other or both parties, and that any suchRecordings will be retained in confidence, secured from improper access, andmay be submitted as evidence in any suit, action or proceedings relating tothis Agreement or any actual or potential Transaction hereunder.  In the event of any dispute between theparties relating to an actual or potential Transaction, the parties may useRecordings and any other “sufficient evidence” (as such term is defined inSection 5-701(b)(3) of the New York General Obligations Law) that a contracthas been made between the parties as *prima facie*evidence of the terms and conditions of such Transaction until such time (ifany) as a written Confirmation has been executed.  Each party waives any further notice of suchmonitoring or Recording, and agrees to notify its personnel of such monitoringor recording and to obtain any necessary consent of such personnel.

(j)                                     ***Confidentiality*.**  Unless otherwise agreed, the contents of this Agreement,  the Confirmations, and all Transactions,hereunder,  as well as all otherdocuments relating thereto and any information pertaining thereto made availableby either party or its Credit Support Provider(s) to the other party or itsCredit Support Provider(s) is confidential and shall not be disclosed to anythird party (other than the Credit Support Providers), except for suchinformation (a) as is or may become generally available to the public, (b) asmay be required in response to any regulatory authority or any lawful summons,subpoena, or otherwise in connection with any litigation or to comply with anyapplicable law, order, regulation, ruling, or accounting disclosure rule orstandard, (c) as may be obtained from a non-confidential source that disclosedsuch information in a manner that did not, to such party’s knowledge, violateits obligations to the non-disclosing party or its Credit Support Provider(s)in making such disclosure, (d) as may be furnished to the disclosing party’sAffiliates, and to each of such Person’s auditors, attorneys, advisors, lendersand their counsel and advisors, or prospective purchasers which are required tokeep the information that is disclosed in confidence or that is disclosed inconnection with communications between the parties under the terms of Section7, (e) regarding price, volume or delivery point(s) of a particularTransaction(s),  as may be disclosed toan energy pricing information aggregator, provided that the name or any otheridentifying information relating to the other party, including uniqueattributes or requirements thereof, is redacted and/or otherwise not disclosed,or (f) as may have been disclosed prior to the effective date of thisAgreement.

9

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(k)                                  ***Transfer***.  Section 7 shall be amended by adding “whichconsent shall not be unreasonably withheld or delayed” between “of the Party”and “,except that” in the first sentence of such Section.

(l)                                     ***Netting*. **In the event that any TerminatedTransaction cannot be aggregated and netted against all other TerminatedTransactions under Section 6(e) of the Agreement, such excluded TerminatedTransactions shall be aggregated and netted amongst themselves to the fullestextent permitted by law.

(m)                               ***Limitation ofLiability. ***UNLESS EXPRESSLY HEREIN PROVIDED, NOPARTY SHALL BE LIABLE UNDER THIS AGREEMENT FOR CONSEQUENTIAL, INCIDENTAL,PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, INCLUDING CONSEQUENTIAL LOST PROFITSOR OTHER CONSEQUENTIAL BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACTOR OTHERWISE.  IT IS THE INTENT OF THEPARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OFDAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THENEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENTOR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDERARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT ORIMPOSSIBLE TO DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT,AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OFTHE HARM OR LOSS.

(n)           ***Method of Notice.*** Section 12(a)(ii) of the Agreement isdeleted in its entirety.

**Part 6**

**ADDITIONALPROVISIONS FOR**

**COMMODITYDERIVATIVE TRANSACTIONS**

(a)           **Amendments to ISDA Commodity Definitions**

**Definitions.**  This Agreement and eachTransaction are subject to the 2005 ISDA Commodity Definitions (the “2005Definitions”), (collectively, the “Definitions”), each as published by theInternational Swaps and Derivatives Association, Inc. (“ISDA”), and will begoverned in all respects by the Definitions. The Definitions are incorporated herein by reference in and made a partof, this Agreement as if set forth in full herein.  In the event of any inconsistency between theprovisions of this Master Agreement (including the Schedule) and theDefinitions, this Master Agreement (including the Schedule) will prevail.  In the event of any inconsistency between theprovisions of a Confirmation and this Master Agreement (including the Schedule)or the Definitions, the Confirmation will prevail for the purpose of suchTransaction.

(b)                                 The*******“Market Disruption Events”*** specified in Section 7.4(d)(i) of theCommodity Definitions shall apply, except as otherwise specifically provided ina Confirmation.

(c)                                  ***“Additional Market DisruptionEvents”***shall apply only if so specified in the relevantConfirmation.

 

10

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[(d)                             Thefollowing ***“Disruption Fallback”*** specified in Section 7.5 of the 2005 ISDACommodity Definitions shall be deleted and replaced with the following, exceptas otherwise specified in the relevant Confirmation, with respect to GasTransactions only:

**“Postponement”**means that if there is no single price published for suchlocation for such day, but there is published a range of prices, then the priceshall be the average of such high and low prices.  If no price or range of prices is publishedfor such day, then the price shall be the average of the following: (i) theprice for the first day for which a price or range of prices is published thatnext precedes the relevant day; and (ii) the price for the first day for whicha price or range of prices is published that next follows the relevant day.”] [**DELETE IF NOT USING THE GAS ANNEX**]

### **Part 7Physically Settled Power Transactions**

Pursuant toARTICLE XIV of the 2005 ISDA Commodity Definitions, Sub-Annex F (“Power Annex”)is incorporated into, the Agreement as a new Part 7 to the Agreement; provided,however, that the following elections set forth in “(j) Elective Provisions”and “(k) Other Provisions” below shall be applicable to such Part 7.  All references to “Part[6]” in Sub-Annex F shall be replaced with “Part7.”

(j)            **Elective Provisions**

1.                                       (a)(i) oApplicability of Part 7 to Outstanding Power Transactions.  If not checked, not applicable.**[IF REPS TRANSACTIONS GOING UNDER THIS CONTRACT CHECK BOX AND ADD THEFOLLOWING LANGUAGE: “**For the avoidance of doubt, this Agreementshall govern all Outstanding Power Transactions entered into under the MasterPower Purchase and Sale Agreement dated [insert date] in accordance with Part7(a)(ii).”  ALSO, DELETE “IF NOT CHECKED,NOT APPLICABLE” LANGUAGE ABOVE IF BOX CHECKED.**]**

2.                                       (a)(ii) oApplicability of Outstanding Credit Support held by a party in connection withOutstanding Power Transactions.  If notchecked, not applicable.

3.**                                      **(c) x  Accelerated Payment Damages.  If not checked, not applicable.

4.                                       (d)(ii): Timeliness of Payment

o  Option A

o  Option B[CHECK THIS BOX IF NOT USING GAS ANNEX]

x   See Gas Annex[DELETE THIS BOX IF NOT USING GAS ANNEX]

If neither is checked, Option B shall be deemed toapply.

5.                                       (h)(i):  Wholesale Power Tariffs

x   Party A Electric Tariff.  **[TO BESUPPLIED]**

o  Party B Electric Tariff.  **[**Tariff/Date/Docket**]**

If not checked, not applicable.

6.                                       (h)(ii)xApplicabilityof Severability provision.  If notchecked, not applicable.

7.                                       (h)(iii)xApplicabilityof FERC Standard of Review and Certain Covenants and Waivers.  If not checked, not applicable.

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**(k)**                                  Other Provisions. Notwithstandinganything in the Agreement to the contrary, including the Power Annex herebyincorporated as Part 7 to the Agreement and the Schedule to the MasterAgreement, the following provisions shall be deemed to amend and/or supplementthe provisions of the ISDA Power Annex set forth as a new Part 7 to theAgreement:

(i)                                     Part 7(b)(iii) ***ForceMajeure*** is amended by deleting the last sentence of thatprovision and replacing it with the following:

“If the pre-printed form portion of this Agreement isthe 2002 ISDA Master Agreement form, Section 5(b)(ii) of this Agreement and theconcept of “Force Majeure Event” as used elsewhere in this Agreement shall notapply to any Power Transaction.”

(ii)                                  Part 7(c)(iii) ***Limitationon Condition Precedent*** is amended by deleting the section ininverted commas and replacing it with the following:

“(provided, however, that in relation to anyTransaction that is a Power Transaction, the Non-Defaulting Party may suspendperformance of any or all Power Transactions only after providing writtennotice to the Defaulting Party and provided further that if an Event of Defaultor a Potential Event of Default has occurred and is continuing for longer thanten (10) NERC Business Days without an Early Termination Date being designated,then the condition specified in this clause (1) shall cease to be a conditionprecedent to the obligations under Section 2(a)(i)).”

(iii)                               Part 7(c)(iv) ***Suspensionof Performance*** shall be added as a new section as follows:

“(iv) ***Suspension of Performance***.  Notwithstanding, and in addition to theremedies provided pursuant to Part 7(c)(i) and 7(c)(ii), if Seller or Buyerfails to schedule and/or deliver/receive all or part of the Product pursuant toa Transaction, and such failure is not excused under the terms of the Productor by the other party’s failure to perform, then upon one (1) Local BusinessDay prior notice, and for so long as the non-performing party fails to perform,the performing party shall have the right to suspend its performance under anyor all Transactions.”

(iv)                              Part 7(d)(v) ***Disputesand Adjustments of Invoices*** shall be added as a newsection as follows:

“(v) ***Disputes and Adjustments ofInvoices***.  With respectto any Power Transaction, a party may, in good faith, dispute the correctness of any invoice orany adjustment to an invoice, rendered under this Agreement or adjust anyinvoice for any arithmetic or computational error within twelve (12) months ofthe date the invoice, or adjustment to an invoice, was rendered.  In the event an invoice or portion thereof,or any other claim or adjustment arising hereunder, is disputed, payment of theundisputed portion of the invoice shall be required to be made when due, withnotice of the objection given to the other party.  Any invoice dispute or invoice adjustmentshall be in writing and shall state the basis for the dispute oradjustment.  Payment of the disputedamount shall not be required until the dispute is resolved.  Upon resolution of the dispute, any requiredpayment shall be made within two (2) Business Days of such resolution alongwith interest accrued at the Interest Rate from and including the due date tobut excluding the date paid.  Inadvertentoverpayments shall be returned upon request or deducted by the party receivingsuch overpayment from subsequent payments, with interest accrued at theInterest Rate from and including the date of such overpayment to but excludingthe date repaid or deducted by the party receiving such overpayment.  Any dispute with respect to an invoice iswaived unless the other party is notified in accordance with this sectionwithin twelve (12) months after the invoice is rendered or any specificadjustment to the invoice is made.  If an

12

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invoice is not rendered within twelve (12) months after the close ofthe month during which performance of a Transaction occurred, the right topayment for such performance is waived.”

(iv)                              Part 7(h)(ii)*******Severability***is amended by deleting the firstsentence of that provision and replacing it with the following:

“If elected underclause (j) as being applicable with respect to Power Transactions only, ifperformance of this Agreement is declared or rendered unlawful by anyapplicable court or law or regulatory agency or deemed unlawful because of astatutory change (individually or collectively, such events being referred toherein as a “Regulatory Event”), such Regulatory Event will not otherwiseaffect the remaining lawful obligations that arise under this Agreement.”

(v)           Part 7(i)(ii)(B) shall be deleted andreplaced with the following:

“(B) With respect to allPower Transactions, the words “(or to deliver or receive the Product, theexclusive remedy for which is provided in clause (c) of Part 7 of the Schedule)”are hereby added at the end of the parenthetical of Section 5(a)(ii)(1) of thisAgreement.”

(vi)                              Part 7(i)(iv) ***Definitions*** isamended by adding the following definitions:

 “Claims” meansall third party claims or actions, threatened or filed and, whether groundless,false, fraudulent or otherwise, that directly or indirectly relate to thesubject matter of an indemnity, and the resulting losses, damages, expenses,attorney’s fees and court costs whether incurred by settlement or otherwise,and whether such claims or actions are threatened or filed prior to or afterthe termination of this Agreement.

  “WSPPAgreement” means the Western Systems Power Pool Agreement as amended from timeto time.

(vii)                           Part 7(i) Certain Modifications to this Agreement**isamended by inserting the following as new subparagraphs:

 (v)**         *****Tax Event: Section 5(b)(iii).***  With respect to any Power Transaction,Section 5(b)(iii) is hereby deleted, and the concept of “Tax Event” as usedelsewhere in this Agreement shall not apply to any Power Transactions.

(vi)**         *****Miscellaneous***:  ***Section 9***.  Section 9 of this Agreement is hereby amendedby adding the following as a new subsection:

“ (i)         OtherProducts and Service Levels.

Ifthe Parties agree to a service level defined by a different agreement (i.e.,the WSPP agreement, the ERCOT agreement, etc.) for a particular Transaction,then, unless the Parties expressly state and agree that all the terms andconditions of such other agreement will apply, such reference to a service level/productdefined by such other agreement means that the service level for thatTransaction is subject to the applicable regional reliability requirements andguidelines as well as the excuses for performance, Force Majeure,Uncontrollable Forces, or other such excuses applicable to performance undersuch other agreement, to the extent inconsistent with the terms of thisAgreement, but all other terms and conditions of this Agreement remainapplicable.”

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### **[Delete if not using Gas Annex]Part 8********Physically Settled Natural Gas Transactions**

Pursuant to ARTICLE XIII of the 2005 ISDA Commodity Definitions,Sub-Annex E (“Gas Annex”) is hereby deemed to be part of, and incorporatedinto, the Agreement as a new Part 8 to the Agreement; provided, however, thatthe following elections set forth in “(l) Elective Provisions” “(m) Notices forGas Transactions” and “(n) “Other Provisions/Modifications to this Gas Annex”.  All references to “Part [6]” in Sub-Annex Eshall be replaced with “Part 8”.

(l)            **Elective Provisions**

1. (a)(ii) — Outstanding Gas Transactions.****This Gas Annex shall apply to thefollowing pre-existing Gas Transactions pursuant to clause (a)(ii):

o  OptionA: All Gas Transactions outstanding between the parties as of the date this GasAnnex becomes effective.

o Option B: The Gas Transactions listed in Schedule 1 to this Gas Annex.

o  Option C: None of the Gas Transactions betweenthe parties that were executed prior to the date this Gas Annex becomeseffective.

x  OptionD: Not applicable.

If none of the above optionsis selected, Option A shall apply.

**2. (a)(iii)— Outstanding Gas Credit Support**

o  OutstandingGas Credit Support held by a party in connection with Outstanding GasTransactions shall be deemed to have been delivered under and in connectionwith this Agreement pursuant to clause (a)(iii).

If not checked, not applicable.

**3. (b)(ii) —Performance Obligation**(remedyfor breach of Firm obligation)

x  OptionA: Cover Standard

o  Option B: Spot Price Standard

If neither option isselected, Option A shall apply.

**4. (e) —Taxes**

x  OptionA: Buyer Pays At and After Delivery Point

o  Option B: Seller Pays Before and At DeliverPoint

If neither option isselected, Option A shall apply.

**5. (f)(ii) —Payment Date**

o Option A: the later of the 25th Day of Monthfollowing Month of delivery or 10 Days after receipt of the invoice by Buyer(provided that if the Payment Date is not a Local Business Day, payment is dueon the next Local Business Day following that date).

o Option B: the later of the         Day of Month following Month of delivery or 10 Days after receipt of theinvoice by Buyer (provided that if the Payment Date is not a Local BusinessDay, payment is due on the next Local Business Day following that date).

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o Option C: Notwithstanding anything to the contraryin the Schedule, payments with respect to both Gas Transactions and PowerTransactions (as defined separately in the Schedule) will be netted and payableon or before the later of the 20th Day of Month following Month of delivery or10 Days after receipt of the invoice by Buyer (provided that if the PaymentDate is not a Local Business Day, payment is due on the next Local Business Dayfollowing that date).

x Option D: Notwithstanding anything tothe contrary in the Schedule, payments with respect to both Gas Transactionsand Power Transactions (as defined separately in the Schedule) will be nettedand payable on or before the later of the 25th Day of Month following Month ofdelivery or 10 Days after receipt of the invoice by Buyer (provided that if thePayment Date is not a Local Business Day, payment is due on the next LocalBusiness Day following that date).

If none of the above optionsis selected, Option A shall apply.

**6. (k)(xxii) — Alternative to SpotPrice Index.**Theparties have selected the following alternative index as the Spot Price Index:                       . If no index isspecified, the Spot Price Index specified in clause (l)(xxi) applies.

**(m)          Notices for Gas Transactions**
| **PARTY A**                                                               | ** ** | **PARTY B**                                                               |
|---------------------------------------------------------------------------|------------|---------------------------------------------------------------------------|
| **Invoices:**                                                             | ** ** | **Invoices:**                                                             |
| As set forth in Part 4 of the Schedule unless  otherwise set forth below: |       | As set forth in Part 4 of the Schedule unless  otherwise set forth below: |
| Attn: Gas Accounting                                                      |       | Attn:                                                                     |
| Phone: 713-497-4143                                                       |       | Phone:                                                                    |
| Facsimile: 713-497-9663                                                   |       | Facsimile:                                                                |
| ** **                                                                | ** ** | ** **                                                                |
| **Nominations:**                                                          | ** ** | **Nominations:**                                                          |
| As set forth in Part 4 of the Schedule unless  otherwise set forth below: |       | As set forth in Part 4 of the Schedule unless  otherwise set forth below: |
| Attn:                                                                     |       | Attn:                                                                     |
| Phone:                                                                    |       | Phone:                                                                    |
| Facsimile:                                                                |       | Facsimile:                                                                |
| ** **                                                                | ** ** | ** **                                                                |
| **Confirmations:**                                                        | ** ** | **Confirmations:**                                                        |
| As set forth in Part 4 of the Schedule unless  otherwise set forth below: |       | As set forth in Part 4 of the Schedule unless  otherwise set forth below: |
| Attn: Contract Administration                                             |       | Attn:                                                                     |
| Phone: 713-497-3639                                                       |       | Phone:                                                                    |
| Facsimile: 713-497-9562                                                   |       | Facsimile:                                                                |
| ** **                                                                | ** ** | ** **                                                                |
| **Option Exercise:**                                                      | ** ** | **Option Exercise:**                                                      |
| As set forth in Part 4 of the Schedule unless  otherwise set forth below: |       | As set forth in Part 4 of the Schedule unless  otherwise set forth below: |

 

15

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| Attn:                                               |   | Attn:                                               |
|-----------------------------------------------------|--------|-----------------------------------------------------|
| Phone:                                              |   | Phone:                                              |
| Facsimile:                                          |   | Facsimile:                                          |
|                                                |   |                                                |
| **oWire Transfer - or -****oACH  (check one box):** |   | **oWire Transfer - or -****oACH  (check one box):** |
| Bank:                                               |   |                                                | Bank: |   |
| ABA:                                                |   |                                                | ABA: |   |
| Account:                                            |   |                                                | Account: |   |
| Other Details:                                      |   |                                                | Other Details: |   |
|                                                     |        |                                                     |  |  |  |  |  |  |

 

**(n)    ****                 ****OtherProvisions/Modifications to this Gas Annex.**

(i)                           Part 8(b)(ii) Option A CoverStandard is amended by adding the following phrase after the phrase   “and no such replacement or sale isavailable”: “or the non-breaching party elects, at its sole option not toreplace Gas or sell Gas”.

(ii)                                  Part8(b)(iv)***Fixed PriceContracts*** shall be added as a new section:

“(iv)                        ***Fixed PriceContracts***.  From time-to-time the parties may agree tofix the Contract Price paid for a certain Contract Quantity under a transaction(“Fixed Price Contract”).  A Fixed PriceContract shall mean any transaction with a Firm performance obligation in whichthe agreed price (per unit volume) for the delivery of the Contract Quantity isexpressed either as: (i) a flat dollar amount, or (ii) a range of dollaramounts, which is limited either at the lowest value or the highest value, orboth.  For any Fixed Price Contract, theContract Quantity must be nominated by Buyer and shall be deemed to be thefirst Gas purchased at the Delivery Point. If more than one Fixed Price Contract is applicable between the partiesat the same Delivery Point for any period, then the first Gas purchased duringsuch period shall be attributed to the Fixed Price Contract that was executedearliest, followed by any additional Contract Quantities in chronological orderof Fixed Price Contract execution.

In consideration of the foregoing premises, theparties agree that, should performance of a Fixed Price Contract be interruptedor reduced due to Force Majeure or for any other reason which excuses performanceof a “Firm” obligation for more than three (3) consecutive Days or for five (5)Days in any Month, then the party which has received the Force Majeure or othernon-performance notice may, at its sole discretion, elect to terminate theFixed Price Contract for the remainder of the term of the Fixed Price Contractfor the termination payment provisions of the Master Agreement shall apply tosuch remaining term of the terminated transaction.  Such termination right may be exercisedwithin the ten (10) Business Days immediately following the interruption orreduction by delivery of a written termination notice.”

(iii)                               Part8(b)(v) ***Limitation onCondition Precedent*** shall be added as a new section.

“(iv)        ***Limitation on Condition Precedent***.  Section 2(a)(iii) of this Agreement is herebyamended by adding the following phrase at the end of clause (1) immediatelybefore the last comma of such phrase:

“(provided, however, thatin relation to any Transaction that is a Gas Transaction, if an Event ofDefault or a Potential Event of Default has occurred and is continuing forlonger than ten (10) Business Days without an Early Termination 

16

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Date being designated,then the condition specified in this clause (1) shall cease to be a conditionprecedent to the obligations under Section 2(a)(i).”

(iv)                              Part8(f)(vi) shall be added as a new section.

“(vi)        In addition, for so long asnon-performance under Part 8(b) is continuing, the performing party may, uponone (1) Local Business Day notice, suspend its performance under any or alltransactions between the parties for the purchase and sale of Gas.”

(v)                           Part 8(g)(i) shall be amendedby adding the words “at and” after the word “Gas” in line three.

(vi)                              Part8 (j) shall be amended by adding the following as new provisions:

“(iv)  ***Tax Event:***Section 5(b)(iii).  With respect to any Gas Transaction, Section5(b)(iii) is hereby deleted, and the concept of “Tax Event” as used elsewherein this Agreement shall not apply to any Gas Transactions.”

### **Part 9[change to Part 8 if not using GasAnnex]**

(a)                                  Notwithstanding anything to the contrary,this Agreement shall not become effective until the date on which theGuaranty issued by Merrill Lynch & Co., Inc. becomes effective.

(b)                                 ***Consent to Assignment***.  Party B hereby consents to the assignment byParty A to Merrill Lynch Commodities, Inc. and Merrill Lynch & Co., Inc(together, the “***Merrill Parties***”) of all ofParty A’s rights under this Agreement, including all rights to receive paymentsfrom Party B under this Agreement (any such payment, including payments underSection 2 and Section 6 of the Agreement, a “***Receivable***”),as collateral security for Party A’s obligations to the Merrill Parties inconnection with an enhanced credit structure for Party A’s retail electricbusiness provided by the Merrill Parties (the “Collateral Assignment”).

(c)                                  ***Collateral Account***.  Party A hereby unconditionally andirrevocably authorizes and directs Party B to make, and, unless and untilotherwise required by law or this agreement is terminated, Party B herebyagrees to make, any and all payments in respect of Receivables directly by wiretransfer to the account specified in Part 5(e) of this Schedule (the “***Collateral Account***”).  All such payments by Party B to theCollateral Account shall be free and clear of any deduction, set-off, nettingarrangements or counterclaim, except as expressly provided pursuant to thisAgreement.

(d)                                 ***Notice & Right to Cure Events of Default***.  Pursuant to Part 4(a) of this Schedule, theMerrill Parties shall be provided with all notices under this Agreement,including notices of any Potential Event of Default, Event of Default orTermination Event hereunder.  In theevent of a Potential Event of Default or Event of Default in which Party A is,or may become, the Defaulting Party, or a Termination in respect of which PartyA is the Affected Party, the Merrill Parties shall be permitted, at theiroption, to cure such default or termination event***,*[(if such event of default or termination event is capable of being cured byeither Merrill Party [TO BE USED AS FALLBACK])]** within any grace periodapplicable to Party A for******suchPotential Event of Default, Event of Default or Termination Event.

17

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** **
| **SIGNATURE PAGE**                                                                                                                                                                                                                                                                                                                     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **OF THE**                                                                                                                                                                                                                                                                                                                             |
| **SCHEDULE**                                                                                                                                                                                                                                                                                                                           |
| **TO THE**                                                                                                                                                                                                                                                                                                                             |
| **2002  MASTER AGREEMENT**                                                                                                                                                                                                                                                                                                             |
| **BETWEEN**                                                                                                                                                                                                                                                                                                                            |
| **RELIANT  ENERGY POWER SUPPLY, LLC (“PARTY A”)**                                                                                                                                                                                                                                                                            |
| **AND**                                                                                                                                                                                                                                                                                                                                |
| **                         (“PARTY  B”)                         ** |

 

IN WITNESS WHEREOF, the parties hereto haveexecuted this document as of the date specified on the first page hereof.
| **Reliant Energy Power Supply, LLC** | ** ** | ** ** | ** ** |
|--------------------------------------|------------|------------|------------|
| ** **                           | ** ** | ** ** | ** ** |
| **By:**                              | ** ** | ** ** | **By:**    | ** ** |
| **Name:**                            | ** ** | ** ** | **Name:**  | ** ** |
| **Title:**                           | ** ** | ** ** | **Title:** | ** ** |
|                                      |            |            |            |  |  |  |  |

 

 

18

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**ExhibitD1**

**To Credit Sleeve and Reimbursement Agreement**

**Form ofEEI Collateral Annex**

***Draft for Discussion Purposes Only***

***Notice:  This proposeddraft of the Collateral Annex has been modified from***

***the version posted on the EEI Website as of January 1, 2005as marked below.***

**PARAGRAPH 10**

**to the**

**COLLATERAL ANNEX**

**to the**

**EEIMASTER POWER PURCHASE** AND SALE AGREEMENT

**CREDITELECTIONS COVER SHEET**

# **DATED ASOF**

**[    T.B.D.    ]**

**BETWEEN**

**RELIANTENERGY POWER SUPPLY, LLC (“Party A”)**

**AND**

                                                                                       **(“Party B”)**

 

**AND**

**MERRILLLYNCH COMMODITIES, INC. (“MLCI”)**

**Paragraph10.    Elections and Variables**

**I.              Collateral Threshold.**

**A.****                                    PartyA Collateral Threshold.**

**o****          **$                          (the “Threshold Amount”); provided, however, that the CollateralThreshold for Party A shall be zero upon the occurrence and during thecontinuance of an Event of Default or a Potential Event of Default with respectto Party A; and provided further that, in the event that, and on thedate that, Party A cures the Potential Event of Default on or prior to the datethat Party A is required to post Performance Assurance to Party B pursuant to ademand made by Party B pursuant to the provisions of the Collateral Annex on orafter the occurrence of such Potential Event of Default, (i) the CollateralThreshold for Party A shall automatically increase from zero to the ThresholdAmount and (ii) Party A shall be relieved of its obligation to post PerformanceAssurance pursuant to such demand.

1

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**o****          **The amount (the “Threshold Amount”)equal to the lower of (i) the maximum amount payable under the guarantyprovided by Party A’s Guarantor guaranteeing Party A’s payment obligationshereunder, if any, and (ii) the amount set forth below under the heading “PartyA Collateral Threshold” opposite the Credit Rating for Party A’s Guarantor onthe relevant date of determination, and if Party A’s Guarantor’s Credit Ratingsshall not be equivalent, the [lower/higher] Credit Rating shall govern; provided,however, that the Collateral Threshold for Party A shall be zero if (i) on therelevant date of determination Party A’s Guarantor does not have a CreditRating from any rating agency specified below or (ii) an Event of Default or aPotential Event of Default with respect to Party A has occurred and iscontinuing; and provided further that, in the event that, and on thedate that, Party A cures the Potential Event of Default on or prior to the datethat Party A is required to post Performance Assurance to Party B pursuant to ademand made by Party B pursuant to the provisions of the Collateral Annex on orafter the occurrence of such Potential Event of Default, (i) the CollateralThreshold for Party A shall automatically increase from zero to the ThresholdAmount and (ii) Party A shall be relieved of its obligation to post PerformanceAssurance pursuant to such demand.

| Party A  Collateral Threshold                                                                                                                                                                                                                                                                                                                                             | ** ** | **S&P Credit Rating** | ** ** | **Moody’s_Credit Rating** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------|------------|--------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                      |       |                      |       |                           |
| $                                                             |       | AA- (or above)            |       | Aa3 (or above)                 |
| $                                                             |       | A+ thru A-                |       | A1 thru A3                     |
| $                                                             |       | BBB+                      |       | Baa1                           |
| $                                                             |       | BBB                       |       | Baa2                           |
| $                                                             |       | BBB-                      |       | Baa3                           |
| $                                                             |       | BB+                       |       | Ba1                            |
| $                                                             |       | BB                        |       | Ba2                            |
| $                                                             |       | BB-                       |       | Ba3                            |
| $                                                             |       | B+                        |       | B1                             |
| $                                                             |       | B                         |       | B2                             |
| $                                                             |       | Below B                   |       | Below B2                       |
| $                                                             |       | Unrated                   |       | Unrated                        |

 

**o**           Theamount (the “Threshold Amount”)  setforth below under the heading “Party A Collateral Threshold” opposite theCredit Rating for [Party A][Party A’s Guarantor] on the relevant date ofdetermination, and if [Party A’s][Party A’s Guarantor’s] Credit Ratings shallnot be equivalent, the lower Credit Rating shall govern or (b) zero if on therelevant date of determination [Party A][its Guarantor] does not have a CreditRating from the rating agency(ies) specified below or an Event of Default or aPotential Event of Default with respect to Party A has occurred and iscontinuing; provided, however, in the event that, and on the date that,Party A cures the Potential Event of Default on or prior to the date that PartyA is required to post Performance Assurance to Party B pursuant to a demandmade by Party B pursuant to the provisions of the Collateral Annex on or afterthe occurrence of such Potential Event of Default, (i) the Collateral Thresholdfor Party A shall automatically increase from zero to the Threshold Amount and(ii) Party A shall be relieved of its obligation to post Performance Assurancepursuant to such demand.

| Party A  Collateral Threshold                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | ** ** | **Credit Rating**                                                                                           | ** ** | **Credit Rating**                                                                                           |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |       |                                                                                                        |       |                                                                                                        |
| $                                                                                      |       |                                                                                                        | (or above) |                                                                                                        |   | (or above) |
| $                                                                                      |       |                                                                                                        |       |                                                                                                        |
| $                                                                                      |       |                                                                                                        |       |                                                                                                        |
| $                                                                                      |       |                                                                                                        |       |                                                                                                        |
| $                                                                                      |       | Below                  |       | Below                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |            |                                                                                                             |            |                                                                                                             |  |  |

 

**o****                                  **The amount ofthe Guaranty Agreement dated         from         ,as amended from time to time but in no event shall Party A’s CollateralThreshold be greater than $              .

2

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**o****                                  **Other — seeattached****threshold terms

**B.****                                    PartyB Collateral Threshold.**

**o****                                  **$                   (the“Threshold Amount”); provided, however, that the Collateral Thresholdfor Party B shall be zero upon the occurrence and during the continuance of anEvent of Default or a Potential Event of Default with respect to Party B; andprovided further that, in the event that, and on the date that, Party Bcures the Potential Event of Default on or prior to the date that Party B isrequired to post Performance Assurance to Party A pursuant to a demand made byParty A pursuant to the provisions of the Collateral Annex on or after theoccurrence of such Potential Event of Default, (i) the Collateral Threshold forParty B shall automatically increase from zero to the Threshold Amount and (ii)Party B shall be relieved of its obligation to post Performance Assurancepursuant to such demand.

**o****                                  **The amount (the “ThresholdAmount”) equal to the lower of (i) the maximum amount payable under theguaranty provided by Party B’s Guarantor guaranteeing Party B’s paymentobligations hereunder, if any and (ii) the amount set forth below under theheading “Party B Collateral Threshold” opposite the Credit Rating for Party B[‘sGuarantor] on the relevant date of determination, and if Party B’s [Guarantor’s]Credit Ratings shall not be equivalent, the [lower/higher] Credit Rating shallgovern provided, however, that the Collateral Threshold for Party B shall bezero if (i) on the relevant date of determination Party B[‘s Guarantor] doesnot have a Credit Rating from any rating agency specified below or (ii) anEvent of Default or a Potential Event of Default with respect to Party B hasoccurred and is continuing; and provided, further that, in the eventthat, and on the date that, Party B cures the Potential Event of Default on orprior to the date that Party B is required to post Performance Assurance toParty A pursuant to a demand made by Party A pursuant to the provisions of theCollateral Annex on or after the occurrence of such Potential Event of Default,(i) the Collateral Threshold for Party B shall automatically increase from zeroto the Threshold Amount and (ii) Party B shall be relieved of its obligation topost Performance Assurance pursuant to such demand.

 

| Party B  Collateral Threshold                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | ** ** | **Credit Rating** | ** ** | **Credit Rating** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-------------------|
| $                                                                                        |       | AA- (or above)    |       | Aa3 (or above)    |
| $                                                                                        |       | A+ thru A-        |       | A1 thru A3        |
| $                                                                                        |       | BBB+              |       | Baa1              |
| $                                                                                        |       | BBB               |       | Baa2              |
| $                                                                                        |       | BBB-              |       | Baa3              |
| $                                                                                        |       | BB+               |       | Ba1               |
| $                                                                                        |       | BB                |       | Ba2               |
| $                                                                                        |       | BB-               |       | Ba3               |
| $                                                                                        |       | B+                |       | B1                |
| $                                                                                        |       | B                 |       | B2                |
| $                                                                                        |       | Below B           |       | Below B2          |
| $                                                                                        |       | Unrated           |       | Unrated           |

 

**o****                                  **The amount (the “ThresholdAmount”) set forth below under the heading “Party B Collateral Threshold”opposite the Credit Rating for [Party B][Party B’s Guarantor] on the relevantdate of determination, and if [Party B’s][Party B’s Guarantor’s] Credit Ratingsshall not be equivalent, the lower Credit Rating shall govern or (b) zero if onthe relevant date of determination [Party B][its Guarantor] does not have aCredit Rating from the rating agency(ies) specified below or an Event ofDefault or a Potential Event of Default with respect to Party B has occurredand is continuing; provided, however, in the event that, and on the datethat, Party B cures the Potential Event of Default on or prior to the date thatParty B is required to post Performance Assurance to Party A pursuant to a 

3

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demand made by Party A pursuant to the provisions ofthe Collateral Annex on or after the occurrence of such Potential Event ofDefault, (i) the Collateral Threshold for Party B shall automatically increasefrom zero to the Threshold Amount and (ii) Party B shall be relieved of itsobligation to post Performance Assurance pursuant to such demand:

| Party B  Collateral Threshold                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | ** ** | **Credit Rating**                                                                                           | ** ** | **Credit Rating**                                                                               |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |       |                                                                                                        | (or above) |                                                                                            |   | (or above) |
| $                                                                                      |       |                                                                                                        |       |                                                                                            |
| $                                                                                      |       |                                                                                                        |       |                                                                                            |
| $                                                                                      |       |                                                                                                        |       |                                                                                            |
| $                                                                                      |       | Below                  |       | Below                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |            |                                                                                                             |            |                                                                                                 |  |  |

 

**o****                                  **The amount ofthe Guaranty Agreement dated         from        , as amended from timeto time but in no event shall Party B’s Collateral Threshold be greater than $         .

**o****                                  **Other — seeattached****threshold terms.

**II.            Eligible Collateral and ValuationPercentage.**

Thefollowing items will qualify as “Eligible Collateral” for the Party specified:
|                                                                                                                                                                                                                                                                                                                                                                                 | ** ** | MLCI  (on behalf  of Party A  and itself) | ** ** | **Party B** | ** ** | **Valuation %** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------|------------|-------------|------------|-----------------|
| ***(A)****Cash*                                                                                                                                                                                                                                                                                                                                                                 |       | x                                         |       | x           |       | 100%            |
| ***(B) Letters of Credit***. 100% of  the undrawn portion of such Letter of Credit unless either (i) a Letter of  Credit Default shall have occurred and be continuing with respect to such  Letter of Credit, or (ii) twenty (20) or fewer Business Days remain prior to  the expiration of such Letter of Credit, in which cases the Valuation  Percentage shall be zero (0). |       | x                                         |       | x           |       | 100%            |
| ***(C)*** Negotiable debt obligations issued  by the U.S. Treasury Department having an original maturity at issuance of  not more than one year (“Treasury Bills”)                                                                                                                                                                                                   |       | x                                         |       | x           |       | 99%             |
| ***(D)*** Negotiable debt obligations issued  by the U.S. Treasury Department having an original maturity at issuance of  more than one year but not more than ten years (“Treasury Notes”)                                                                                                                                                                           |       | x                                         |       | x           |       | 98%             |
| ***(E)*** Negotiable debt obligations issued  by the U.S. Treasury Department having an original maturity at issuance of  more than ten years (“Treasury Bonds”)                                                                                                                                                                                                      |       | x                                         |       | x           |       | 95%             |

 

**III.           Independent Amount.       (NOT APPLICABLE)**

**A.****                                    PartyA Independent Amount.     (NOTAPPLICABLE)**

4

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**o****                                  **Party A shall have a Fixed IndependentAmount of $                  .   If the Fixed Independent Amount option isselected for Party A, then Party A (which shall be a Pledging Party withrespect to the Fixed IA Performance Assurance) will be required to Transfer orcause to be Transferred to Party B (which shall be a Secured Party with respectto the Fixed IA Performance Assurance) Performance Assurance with a CollateralValue equal to the amount of such Independent Amount (the “Fixed IA PerformanceAssurance”).   The Fixed IA PerformanceAssurance shall not be reduced for so long as there are any outstanding obligationsbetween the Parties as a result of the Agreement, and shall not be taken intoaccount when calculating Party A’s Collateral Requirement pursuant to theCollateral Annex.  Except as expresslyset forth above, the Fixed IA Performance Assurance shall be held andmaintained in accordance with, and otherwise be subject to, Paragraphs 2, 5(b),5(c), 6, 7 and 9 of the Collateral Annex.

**o****                                  **Party A shall have a Full FloatingIndependent Amount of $                  .    If the Full Floating Independent Amountoption is selected for Party A, then for purposes of calculating Party A’sCollateral Requirement pursuant to Paragraph 3 of the Collateral Annex, suchFull Floating Independent Amount for Party A shall be added by Party B to itsExposure Amount for purposes of determining Net Exposure pursuant to Paragraph3(a) of the Collateral Annex.

**o****                                  **Party A shall have a Partial FloatingIndependent Amount of $                  .   If the Partial Floating Independent Amountoption is selected for Party A, then Party A will be required to Transfer orcause to be Transferred to Party B Performance Assurance with a CollateralValue equal to the amount of such Independent Amount (the “Partial Floating IAPerformance Assurance”) if at any time Party A otherwise has a CollateralRequirement (not taking into consideration the Partial Floating IndependentAmount) pursuant to Paragraph 3 of the Collateral Annex.   The Partial Floating IA PerformanceAssurance shall not be reduced so long as Party A has a Collateral Requirement(not taking into consideration the Partial Floating Independent Amount).   The Partial Floating Independent Amountshall not be taken into account when calculating a Party’s CollateralRequirements pursuant to the Collateral Annex. Except as expressly set forth above, the Partial Floating IndependentAmount shall be held and maintained in accordance with, and otherwise besubject to, the Collateral Annex.

**B.****                                    PartyB Independent Amount.       [ (NOTAPPLICABLE)  ]**

**o****                                  **Party B shall have a Fixed IndependentAmount of $                  .    If the Fixed Independent Amount Option isselected for Party B, then Party B (which shall be a Pledging Party withrespect to the Fixed IA Performance Assurance) will be required to Transfer orcause to be Transferred to Party A (which shall be a Secured Party with respectto the Fixed IA Performance Assurance) Performance Assurance with a CollateralValue equal to the amount of such Independent Amount (the “Fixed IA PerformanceAssurance”).   The Fixed IA PerformanceAssurance shall not be reduced for so long as there are any outstandingobligations between the Parties as a result of the Agreement, and shall not betaken into account when calculating Party B’s Collateral Requirement pursuantto the Collateral Annex.  Except asexpressly set forth above, the Fixed IA Performance Assurance shall be held andmaintained in accordance with, and otherwise be subject to, Paragraphs 2, 5(b),5(c), 6, 7 and 9 of the Collateral Annex.

**o****                                  **Party B shall have a Full FloatingIndependent Amount of $                  .     If the Full Floating Independent AmountOption is selected for Party B then for purposes of calculating Party B’sCollateral Requirement pursuant to Paragraph 3 of the Collateral Annex, suchFull Floating Independent Amount for Party B shall be added by Party A to itsExposure Amount for purposes of determining Net Exposure pursuant to Paragraph3(a) of the Collateral Annex.

**o****                                  **Party B shall have a Partial FloatingIndependent Amount of $                  .     If the Partial Floating Independent Amountoption is selected for Party B, then Party B will be required to Transfer orcause to be Transferred to Party A Performance Assurance with a 

5

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Collateral Value equal to the amount of suchIndependent Amount (the “Partial Floating IA Performance Assurance”) if at anytime Party B otherwise has a Collateral Requirement (not taking intoconsideration the Partial Floating Independent Amount) pursuant to Paragraph 3of the Collateral Annex.   The PartialFloating IA Performance Assurance shall not be reduced for so long as Party Bhas a Collateral Requirement (not taking into consideration the PartialFloating Independent Amount).   ThePartial Floating Independent Amount shall not be taken into account whencalculating a Party’s Collateral Requirements pursuant to the CollateralAnnex.   Except as expressly set forthabove, the Partial Floating Independent Amount shall be held and maintained inaccordance with, and otherwise be subject to, the Collateral Annex.

**IV.           Minimum Transfer Amount.**

**A.            Party A Minimum Transfer Amount:**             $1

**B.            Party B Minimum Transfer Amount:**             $1

**V.            Rounding Amount.**

**A.            PartyA Rounding Amount:**               $250,000

**B.            Party B Rounding Amount:**               $250,000

**VI.           Administration of Cash Collateral.**

**A.            Party A Eligibility to Hold Cash.**

**o****                                  **Party A shall not be entitled to holdPerformance Assurance in the form of Cash.  Performance Assurance in the form of Cash shall be held in a QualifiedInstitution in accordance with the provisions of Paragraph 6(a)(ii)(B) of theCollateral Annex.  Party A shall pay toParty B in accordance with the terms of the Collateral Annex the amount ofinterest it receives from the Qualified Institution on any PerformanceAssurance in the form of Cash posted by Party B.

x**                                 **MLCI and its Custodian****shall be entitled to hold (and, for theavoidance of doubt, use in accordance with Paragraph 6(a)(ii)) PerformanceAssurance in the form of Cash on behalf of Party A and the Merrill Parties providedthat the following conditions are satisfied: (1) it is not a Defaulting Party and (2) Cash shall be held only in anyjurisdiction within the United States.   To the extent Party A is entitled to hold Cash, the Interest Ratepayable to Party B on Cash shall be as selected below:

**Party AInterest Rate.**

x          The “***Interest Rate***”will be at a rate per annum equal to the one month London Interbank OfferedRate for Dollar deposits as may from time to time be in effect as reported inThe Wall Street Journal.  Such interestshall be calculated on the basis of the actual number of days elapsed and onthe basis of a year of 360 days.

**o           **Other-                                                                                                  

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**B.            Party BEligibility to Hold Cash.**

**o****                                  **Party B shall not be entitled to holdPerformance Assurance in the form of Cash. Performance Assurance in the form of Cash shall be held in a QualifiedInstitution in accordance with the provisions of Paragraph 6(a)(ii)(B) of theCollateral Annex.  Party B shall pay toParty A in accordance with the terms of the Collateral Annex the amount ofinterest it receives from the Qualified Institution on any PerformanceAssurance in the form of Cash posted by Party A.

x**                                 **Party B shall be entitled to hold PerformanceAssurance in the form of Cash provided that the following conditions aresatisfied:  (1) it is not a DefaultingParty and (2) Cash shall be held only in any jurisdiction within the UnitedStates.    To the extent Party B isentitled to hold Cash, the Interest Rate payable to Party A on Cash shall be asselected below:

**Party BInterest Rate.**

x**                                 **The“***Interest Rate***” will be at a rate perannum equal to the one month London Interbank Offered Rate for Dollar depositsas may from time to time be in effect as reported in The Wall StreetJournal.  Such interest shall becalculated on the basis of the actual number of days elapsed and on the basisof a year of 360 days.

**o           **Other-                                                                                                  

**C.****                                   **Notwithstandingthe foregoing Party A Eligibility to Hold Cash or Party B Eligibility to HoldCash, MLCI, Party A and Party B hereby covenant and agree that, except at suchtimes as, in the case of Party A, MLCI or ML&Co., or, in the case of PartyB, it or its Guarantor, as the case may be, has a Credit Rating of at leastBaa2 (Moody’s) or BBB (S&P), in the case of Party A, MLCI, and in the caseof Party B, Party B will cause all Performance Assurance received from theother Party to be entered in one or more accounts (each, a “CA CollateralAccount”) with a Qualified Institution, each of which accounts may includeproperty of other parties, but will bear a title indicating the Pledging Party’sinterest in said account and the Performance Assurance in said account.  In the event the Credit Ratings shall not beequivalent, the lower Credit Rating shall govern.  In addition, the Secured Party may direct thePledging Party to deliver Eligible Collateral directly into the Secured Party’sCA Collateral Account(s).  The SecuredParty may move the CA Collateral Accounts from one Qualified Institution toanother upon reasonable notice to the Pledging Party.  The Secured Party shall cause statementsconcerning the Performance Assurance to be sent to the Pledging Party onrequest, which may not be made more frequently than once in each calendarmonth.

**VII.         Notification Time.**

x**          **Other— 12:00 p.m. Central Standard Time

**VIII.        General.**

**With respect to the Collateral Threshold,Independent Amount, Minimum Transfer Amount and Rounding Amount, if noselection is made in this Cover Sheet with respect to a Party, then theapplicable amount in each case for such Party shall be zero (0).  In addition, with respect to the “Administrationof Cash Collateral” section of this Paragraph 10, if no selection is made withrespect to a Party, then such Party shall not be entitled to hold PerformanceAssurance in the form of Cash and such Cash, if any, shall be held in aQualified Institution pursuant to Paragraph 6(a)(ii)(B) of the CollateralAnnex.    If a Party is eligible to holdCash pursuant to a selection in this Paragraph 10 but no Interest Rate isselected, then the Interest Rate for such Party shall be the Federal FundsEffective Rate as defined in Section VI of this Paragraph 10.**

** IX.          AdditionalAmendments to Collateral Annex.**

Introductory Paragraph.

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Delete “Paragraph 10 Elections” in the firstintroductory paragraph and replace it with “Paragraph 10 Cover Sheet”.

Paragraph 1.   Definitions.

The following definitions are amended as set forth below:

The definition of “Letter of Credit” is deleted in its entiretyand replaced with the following:

***“***Letterof Credit***”*** shall mean an irrevocable,transferable, standby Letter of Credit, issued by a Qualified Institution, withsuch changes to the terms in a form as the issuing bank may require and whichis acceptable to the Party in whose favor the Letter of Credit is issued.

The definition of “Notification Time”is amended to add “a.m.” after “11:00”.

The definition of “Performance Assurance”is amended by replacing “6(a)(iv)” with 6(a)(iii)”.

The definition of “Qualified Institution” isdeleted in its entirety and replaced with the following:

***“***QualifiedInstitution***”*******means a****major U.S. commercial bank or a foreignbank that is not an affiliate of any Party to this Agreement with a U.S. branchoffice which is not the Pledgor (or a subsidiary or Affiliate of the Pledgor)and with a Credit Rating of at least “A-” by S&P and “A3” by Moody’s.

The definition of “Reference Market-maker” is deleted in itsentirety and replaced with the following:

***“***Reference Market-maker***”*** means a leadingbroker, dealer or published index in the relevant market selected by a Partydetermining its Exposure in a commercially reasonable manner.  Such leading dealers shall not be parties tothis Agreement or Affiliates of a Party to this Agreement.

The definition of “Secured Party” is amended by replacing “3(b)”with “3(a)”.

Paragraph 5. Reduction and Substitution of Performance Assurance.

Subparagraph 5(a) shall be amended by addingthe word “Local” before the words “Business Day in line eighteen.

Paragraph 6.  Administration of Performance Assurance.

Paragraphs 6(a)(i), 6(a)(ii)(A), and 6(a)(ii)(B) are amended bydeleting such paragraphs in their entirety.

Paragraph 6(a)(ii) is amended by deleting the last sentence of suchsection with the words beginning “provided however” and ending “then:” andreplacing such words with a period.

The following subparagraph 6(a)(iv) shall be added followingsubparagraph 6(a)(iii):

(iv)          Distributions.  So long as no Event of Default or  Potential Event of Default with respect tothe Pledging Party has occurred and is continuing, and no Early TerminationDate for which any unsatisfied payment Obligations of the Pledging Party existhas occurred or been designated as the result of an Event of Default withrespect to the Pledging Party, and to the extent that an obligation to TransferPerformance Assurance would not be created or increased by the Transfer, in theevent that the Secured Party or its Custodian is holding Treasury Bills,Treasury Notes, or Treasury Bonds (“Treasury PA”) and Secured Party receives oris deemed to receive Distributions on a Local Business Day, the Secured Partywill Transfer (or caused to be Transferred) to the Pledging Party suchDistributions not later than the following Local Business Day.  On or after the occurrence of a PotentialEvent of Default or an Event of Default with respect to the Pledging Party oran Early Termination Date as a result of an Event of Default with respect tothe Pledging Party, the Secured Party or its Custodian shall retain any suchDistributions as additional Performance Assurance hereunder until theobligations of the Pledging Party under the Agreement have been satisfied inthe case of an Early Termination Date or for so long as such Event of Defaultis continuing in the case of an 

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Event of Default. For purposes of this paragraph, “Distributions” meanswith respect to Treasury PA, all principal, interest and other payments anddistributions of cash or other property with respect thereto, regardless ofwhether the Secured Party has disposed of that Treasury PA under Paragraph6(ii).  Distributions will not includeany item of property acquired by the Secured Party upon any disposition orliquidation of Treasury PA.

Subparagraph 6(b)(iii) is amended by deleting the words “occurrencethereof” and replacing them with the words “Pledging Party’s receipt of noticehereunder” in the fourth line.

Subparagraph 6(c) shall be deleted in itsentirety and replaced with the following:

“(c) Without limiting the Secured Party’s rights under Paragraph 6(c),the Secured Party will exercise reasonable care to assure the safe custody ofall Performance Assurance to the extent required by applicable law, and in anyevent the Secured Party will be deemed to have exercised reasonable care if itexercises at least the same degree of care as it would exercise with respect toits own property.  Except as specified inthe preceding sentence, the Secured Party will have no duty with respect toPerformance Assurance, or enforce or preserve any rights pertaining thereto.”

“SCHEDULE 1 to Collateral Annex” shall be deleted in its entirety.

Demands and Notices.  All demands, specifications and notices underthis Annex will be made pursuant to the Notices Section of this Agreement,unless otherwise specified here:

| Party A: | Attn: Credit Risk Management                                                                   | Telephone: | (713) 497-1052 |
|----------|------------------------------------------------------------------------------------------------|------------|----------------|
|     |                                                                                           | Facsimile: | (713) 497-1058 |
|     | Street Address:                                                                                |       |           |
|     | 1000 Main St., 11th Floor                                                                 |       |           |
|     | Houston, TX 77002                                                                              |       |           |
|     |                                                                                           |       |           |
|     | Mailing Address:                                                                               |       |           |
|     | P O Box 4455                                                                                   |       |           |
|     | Houston, TX 77210-4455                                                                         |       |           |
|     |                                                                                           |       |           |
|     |                                                                                           |       |           |
|     | With a copy to (other than copies of notices in  respect of demands under Paragraphs 4 and 5): |       |           |
|     |                                                                                           |       |           |
|     | Merrill Lynch Commodities, Inc.                                                                | Telephone: | (713) 544-4975 |
|     | 20 East Greenway Plaza, 7th Floor                                                              | Facsimile: | (713) 544-5551 |
|     | Houston, Texas 77253-3327                                                                      |       |           |
|     | Attn:Legal                                                                                     |       |           |
|     |                                                                                           |       |           |
| Party B: |                                                                                           | Telephone: |           |
|     |                                                                                           | Facsimile: |           |

 

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Addresses for Transfers.

| Party A:

U. S. Dollars |   | Payment to:

For Account of:

Account #:

Federal ABA#: |   | JP Morgan Chase Bank,

New York, NY

Merrill Lynch Commodities, Inc.

323009980

021000021 |
|-------------------------|--------|---------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|
| Party B:

U.S. Dollars  |   | Payment to:

For Account of:

Account #:

Federal ABA#: |   |                                                                                       |

 

Other Provisions***.***

UCC**. **Each Party agrees that theprovisions of this Agreement supersede and replace in their entirety anyrequirements of law relating to adequate assurance of future performance,including without limitation Article 2 of the Uniform Commercial Code.  This Collateral Annex is a Security Agreementunder the provisions of the Uniform Commercial Code of the State of New York.

CreditSleeve Provisions.

(i)                                     Inconnection with the Collateral Assignment described in “Credit SleeveProvisions” on the Cover Sheet, Party A, Party B and MLCI agree that:

(A)                              PartyB shall Transfer all Eligible Collateral required to be Transferred hereunderby Party B directly to the account provided above (“Addresses for Transfer”)for Party A and, any such Transfer, to the extent thereof, shall satisfy PartyB’s obligations to make Transfers to Party A hereunder;

(B)                                MLCIshall Transfer all Eligible Collateral required to be Transferred hereunder byParty A directly to the account provided above (“Addresses for Transfer”) forParty B and, any such Transfer, to the extent thereof, shall satisfy Party A’sobligations to make Transfers to Party B hereunder;

(C)                                PartyA hereby unconditionally and irrevocably authorizes and directs MLCI to makeand receive, on behalf of Party A and the Merrill Parties, and MLCI hereby unconditionallyagrees to make and receive, on behalf of Party A and the Merrill Parties, theTransfers described in clauses (A) and (B) above;

(D)                               PartyA has pledged and assigned to the Merrill Parties its rights under thisCollateral Annex to receive, hold and use the Eligible Collateral transferredto MLCI hereunder in accordance with the terms of this Collateral Annex onbehalf of Party A and on behalf of the Merrill Parties in connection with theCollateral Assignment;

(E)                                 PartyA and Party B consent to the Collateral Assignment, and agree to perform theirobligations, under the Cover Sheet, “Credit Sleeve Provisions”, for the benefitof the Merrill Parties; and

(F)                                 Anyamendment, supplement, waiver or other modification of, or any forbearance fromexercising any rights with respect to the terms or provisions contained in thisCollateral Annex requires the express written consent of Party A, Party B andMLCI.

(ii)                                  MLCIagrees to comply with the confidentiality obligations set forth in Section10.11, as amended.

(iii)                               Allinformation that is furnished in writing by or on behalf of it to any of theother Parties hereto is, as of the date of the information, true, accurate andcomplete in every material respect, or, in the case of audited or unauditedfinancial statements, fairly present the financial condition of the 

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relevant entityand have been prepared in accordance with generally accepted accountingprinciples, consistently applied, except as otherwise indicated in the notes ofsuch financial statements.

(iv)                              Paragraph5.6 of the Agreement shall be deleted in its entirety and replaced with thefollowing:  “Party B shall make eachpayment due under this Agreement without deduction, set-off or counterclaim,except (A) as specifically provided in Article 6 of the Agreement, and (B) thatParty B, if it is the Non-defaulting Party shall be entitled to set off theTermination Payment owed by Party B to Party A under this Agreement (whetherpursuant to Article 6 or under any other provision under this Agreement)against amounts owed by Party A to Party B under this Agreement (whetherpursuant to Article 6 or under any other provision under this Agreement).  Party A, or MLCI on its behalf, shall makeeach payment due under this Agreement without deduction, set-off counterclaim,except (A) as specifically provided in Article 6 of the Agreement, and (B) thatParty A, or MLCI on its behalf, if Party A is the Non-defaulting Party shall beentitled to set off the Termination Payment owed by Party A to Party B under thisAgreement (whether pursuant to Article 6 or under any other provision underthis Agreement) against amounts owed by Party B to Party A under this Agreement(whether pursuant to Article 6 or under any other provision under thisAgreement).  For the avoidance of doubt:

(A)           the term “Party A” means ReliantEnergy Power Supply, LLC (and any other Person that succeeds to all of therights and obligations of Reliant Energy Power Supply, LLC under this Agreementin accordance with its terms), and Party A and shall in no event include any ofits affiliates or any other Person except as stated above; and

(B)            the term “Party B” means [insertlegal name of Party B] (and any other Person that succeeds to all of the rightsand obligations of [insert legal name of Party B] under this Agreement inaccordance with its terms), and Party B and shall in no event include any ofits affiliates or any other Person except as stated above.

(v)                                 Exceptas provided in the Cover Sheet under “Credit Sleeve Provisions”, the onlyrights, covenants and obligations in the Agreement that shall be applicable toMLCI are those that are set forth in provisions that either specifically referto MLCI by name, or that specifically refer to “each of the three parties”.  All of the other provisions in the Agreementthat refer to: “Pledging Party”, “Secured Party”, “Defaulting Party”, “AffectedParty”, “a Party”, “appropriate party”, “other party”, “the parties”, “bothparties”, “each Party”, “either Party” or “neither Party” shall not beinterpreted as references to MLCI, but shall be interpreted as references to:Party A; Party B; both Party A and Party B; each of Party A and Party B; eitherParty A or Party B; or neither Party A nor Party B as is indicated by thecontext.

(vi)***                             ***MLCI TerminationRight.  Each of MLCI’s rights andobligations hereunder, including its rights and obligations to Transfer andreceive Performance Assurance, may be terminated at any time by notice by MLCIto Party A and Party B given in accordance with the notice provisions of theAgreement, effective upon receipt of such notice by Party A and Party B or suchlater date as may be specified in such notice; provided that MLCI’s rights andobligations hereunder shall continue in full force and effect, and shall beirrevocable, with respect to any obligation, including its rights andobligations to Transfer and receive Performance Assurance, arising under anyTransaction under and as defined in the Agreement entered into prior to theeffectiveness of such notice of termination.

**INWITNESS WHEREOF, the parties hereto have executed this document as of the datespecified on the first page hereof.**

 
| **RELIANT ENERGY POWER SUPPLY, LLC** | ** ** | ** ** |       |
|--------------------------------------|------------|------------|------------|
| ** **                           | ** ** | ** ** |       |
| **By:**                              | ** ** | ** ** | **By:**    | ** ** |   |
| **Name:**                            | ** ** | ** ** | **Name:**  | ** ** |
| **Title:**                           | ** ** | ** ** | **Title:** | ** ** |   |
|                                      |            |            |            |  |  |  |  |  |  |  |  |

 

11

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| **MERRILL LYNCH COMMODITIES, INC.** | ** ** |       |
|-------------------------------------|------------|------------|
| ** **                          | ** ** |       |
| **By:**                             | ** ** | ** ** |   |
| **Name:**                           | ** ** | ** ** |
| **Title:**                          | ** ** | ** ** |   |
|                                     |            |            |  |  |  |  |

 

12

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**Exhibit D2**

**To Credit Sleeve and Reimbursement Agreement**

**Form ofISDA Credit Support Annex**

**PARAGRAPH13**

**OF THE**

**CREDITSUPPORT ANNEX**

# **DATED ASOF**

**[    T.B.D.    ]**

**BETWEEN**

**RELIANTENERGY POWER SUPPLY, LLC (“Party A”)**

**AND**

**                                                           (“PartyB”)**

**AND**

**MERRILL LYNCH COMMODITIES, INC. (“MLCI”)**

**Paragraph 13.  Elections and Variables**

***(a)******                                 SecurityInterest.***  The term “*Obligations”*as used in this Annex includes the followingadditional obligations:

Withrespect to Party A:  **None**

Withrespect to Party B:  **None**

***(b)           Credit Support Obligations.***

(i)            ***Delivery Amount, ReturnAmount and Credit Support Amount.***

(A)          **“*DeliveryAmount”*** has the meaning specified in Paragraph 3(a).

(B)                                **“*Return Amount”*** has themeaning specified in Paragraph 3(b).

(C)                                **“*Credit Support Amount”*** hasthe meaning specified in Paragraph 3.

(ii)                                  ***Eligible Collateral***. The followingitems will qualify as **“*EligibleCollateral”*** for the party specified:

1

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|                                                                                                                                                                                                        |   | **MLCI  (on behalf of Party A and  itself)** |   | **Party B** |   | **Valuation %** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|--------|-------------|--------|-----------------|
| ***(A)****Cash*                                                                                                                                                                                        |   | x                                            |   | x           |   | 100%            |
| ***(B)*****Negotiable debt obligations issued by the  U.S. Treasury Department having an original maturity at issuance of not more  than one year (“Treasury Bills”)                         |   | x                                            |   | x           |   | 99%             |
| ***(C****)*Negotiable debt obligations issued by  the U.S. Treasury Department having an original maturity at issuance of more  than one year but not more than ten years (“Treasury Notes”) |   | x                                            |   | x           |   | 98%             |
| ***(D)*****Negotiable debt obligations issued by the  U.S. Treasury Department having an original maturity at issuance of more than  ten years (“Treasury Bonds”)                            |   | x                                            |   | x           |   | 95%             |
|                                                                                                                                                                                                   |   |                                         |   |        |   |            |
|                                                                                                                                                                                                   |   |                                         |   |        |   |            |

 

(iii)***                               OtherEligible Support***. The following items will qualify as **“*Other Eligible Support”*** forthe party specified:

|                                                   | **Party A** | ** ** | **Party B** |
|---------------------------------------------------|-------------|------------|-------------|
| Letter of Credit (as  defined in Paragraph 13(j)) | x           |       | x           |

 

The Valuation Percentage shall be 100% of the Value ofthe Other Eligible Support unless (i) a Letter of Credit Default shall applywith respect to such Letter of Credit, or (ii) twenty (20) or fewer BusinessDays remain prior to the expiration of such Letter of Credit, in either ofwhich case the Valuation Percentage shall be zero (0).

(iv)          ***Thresholds***.

(A)                              **“*Independent Amount”*** meanswith respect to Party A:             None

***“IndependentAmount”*** means with respect to Party B:              None

(B)                                ***“Threshold”***

For Party A, **“*Threshold”***shall mean theamount (the “Credit Amount”) equal to the lower of (i) the maximum amountpayable under guaranty provided by Party A’s Credit Support Provider guaranteeingParty A’s payment obligations hereunder, if any, and (ii) the amount set forthbelow under the heading “Party A Threshold” opposite the Credit Rating forParty A’s Credit Support Provider on the relevant date of determination, and ifParty A’s Credit Support Provider’s Credit Ratings shall not be equivalent, the[lower/higher] Credit Rating shall govern; provided, however, that theThreshold for Party A shall be zero if (i) on the relevant date ofdetermination Party A’s Credit Support Provider does not have a Credit Ratingfrom any rating agency specified below or (ii) an Event of

2

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Default, Potential Event ofDefault with respect to Party A has occurred and is continuing; and providedfurther that, in the event that, and on the date that, Party A cures thePotential Event of Default on or prior to the date that Party A is required topost a Credit Support Amount to Party B pursuant to a demand made by Party Bpursuant to the provisions of the Credit Support Annex on or after theoccurrence of such Potential Event of Default, (i) the Threshold for Party Ashall automatically increase from zero to the Credit Amount and (ii) Party Ashall be relieved of its obligation to post the Credit Support Amount pursuantto such demand.
| **Party A  Threshold** | ** ** | **S&P Credit  Rating** | ** ** | **Moody’s Credit  Rating** | ** ** |
|-----------------------------|------------|---------------------------------|------------|--------------------------------------|------------|
|                        |       | AA-(or  above)                  |       | Aa3  (or above)                      |       |
|                        |       | A+  thru A-                     |       | A1  thru A3                          |       |
|                        |       | BBB+                            |       | Baa1                                 |       |
|                        |       | BBB                             |       | Baa2                                 |       |
|                        |       | BBB-                            |       | Baa3                                 |       |
|                        |       | BB+                             |       | Ba1                                  |       |
|                        |       | BB                              |       | Ba2                                  |       |
|                        |       | BB-                             |       | Ba3                                  |       |
|                        |       | B+                              |       | B1                                   |       |
|                        |       | B                               |       | B2                                   |       |
|                        |       | Below  B                        |       | Below  B2                            |       |
|                        |       | Unrated                         |       | Unrated                              |       |

 

For Party B, **“*Threshold”***shall mean theamount (the “Credit Amount”) equal to the lower of (i) the maximum amountpayable under guaranty provided by Party B’s Credit Support Providerguaranteeing Party B’s payment obligations hereunder, if any, and (ii) theamount set forth below under the heading “Party B Threshold” opposite theCredit Rating for Party B’s Credit Support Provider on the relevant date ofdetermination, and if Party B’s Credit Support Provider’s Credit Ratings shallnot be equivalent, the [lower/higher] Credit Rating shall govern; provided,however, that the Threshold for Party B shall be zero if (i) on the relevantdate of determination Party B’s Credit Support Provider does not have a CreditRating from any rating agency specified below or (ii) an Event of Default,Potential Event of Default with respect to Party B has occurred and iscontinuing; and provided further that, in the event that, and on thedate that, Party B cures the Potential Event of Default on or prior to the datethat Party B is required to post a Credit Support Amount to Party A pursuant toa demand made by Party A pursuant to the provisions of the Credit Support Annexon or after the occurrence of such Potential Event of Default, (i) theThreshold for Party B shall automatically increase from zero to the CreditAmount and (ii) Party B shall be relieved of its obligation to post the CreditSupport Amount pursuant to such demand.

3

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| **Party B  Threshold** | ** ** | **S&P Credit  Rating** | ** ** | **Moody’s Credit  Rating** |
|------------------------|------------|----------------------------|------------|---------------------------------|
|                   |       | AA- (or above)             |       | Aa3 (or above)                  |
|                   |       | A+ thru A-                 |       | A1 thru A3                      |
|                   |       | BBB+                       |       | Baa1                            |
|                   |       | BBB                        |       | Baa2                            |
|                   |       | BBB-                       |       | Baa3                            |
|                   |       | BB+                        |       | Ba1                             |
|                   |       | BB                         |       | Ba2                             |
|                   |       | BB-                        |       | Ba3                             |
|                   |       | B+                         |       | B1                              |
|                   |       | B                          |       | B2                              |
|                   |       | Below B                    |       | Below B2                        |
|                   |       | Unrated                    |       | Unrated                         |

 
| (C)          |       | **“*Minimum Transfer Amount”***  means with respect to Party A: $1                                                                                                 |
|--------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *** *** |       | ***“Minimum Transfer Amount”***  means with respect to Party B: $1                                                                                                 |
| *** *** |       | *** ***                                                                                                                                                                 |
| (D)          | ** ** | ***“Rounding”***.  The Delivery Amount will be rounded up, and the Return Amount will be rounded  down, in each case to the nearest integral multiple of $250,000. |

 

***(c)           Valuation and Timing.***

(i)                                     “***Valuation Agent***” means , forpurposes of Paragraphs 3 and 5, the party making the demand under Paragraph 3;for purposes of Paragraph 4(d), the Secured Party for purposes of calculatingthe Value of the Substitute Credit Support and Posted Credit Support involvedin the substitution; and for purposes of Paragraph 6(d), the Secured Partyreceiving or deemed to receive the Distributions or the Interest Amount, asapplicable; provided that in all cases, if an Event of Default or PotentialEvent of Default has occurred and is continuing with respect to the partydesignated as the Valuation Agent, then in such case, and for so long as theEvent of Default or Potential Event of Default continues, the other party shallbe the Valuation Agent

(ii)                                  **“*Valuation Date”*** means eachday which is a Local Business Day for Party A, Party B and MLCI.

(iii)                               **“*Valuation Time”*** means theclose of business on the Local Business Day before the Valuation Date or dateof calculation, as applicable; provided that the calculations of Value andExposure will be made as of approximately the same time on the same date.

(iv)                              **“*Notification Time”*** means12:00 p.m., Central time, on a Local Business Day.

***(d)******                                 ConditionsPrecedent and Secured Party’s Rights and Remedies***. There shall be no “SpecifiedCondition” with respect to Party A or Party B.

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***(e)           Substitution***.

(i)            **“*SubstitutionDate”*** has the meaning specified in Paragraph 4(d)(ii).

(ii)                                  **“*Consent”***. If specified hereas applicable, then the Pledgor must obtain the Secured Party’s consent for anysubstitution pursuant to Paragraph 4(d): Applicable, unless Eligible CreditSupport is being substituted.

***(f)            Dispute Resolution.***

(i)                                     **“*Resolution Time”*** means 12:00p.m., Central time, on second Local Business Day following the date on whichthe notice is given that gives rise to a dispute under Paragraph 5.

(ii)                                  **“*Value”***.  For the purpose of Paragraphs 5(i)(C) and5(ii), the Value of Posted Credit Support will be calculated as follows: (i) inthe case of Cash, the face amount thereof; (ii) in the case of Letters ofCredit, the undrawn currently-available amount thereunder, unless a Letter ofCredit Default exists with respect to such Letter of Credit, in which case theValue of such Letter of Credit shall be zero.

(iii)                               **“*Alternative”***.  The provisions of Paragraph 5 will apply,except that (i)(B) shall be deleted and the following substituted therefor:

(B) calculating the Exposure for the Transaction(s) indispute by each party seeking quotations at mid-market from four ReferenceMarket-makers.  Each party shalldisregard the “highest” and the “lowest” quotations obtained and take thearithmetic average of the remaining two, to come up with an average “MarketPrice” for the disputed Transaction(s). Each party’s average Market Price shallthen be averaged to obtain an “Average Market Price” which shall be the priceused to calculate the Exposure related to the disputed Transaction(s). If lessthan four (but at least one) quotations are available to a party with respectto a disputed Transaction(s), then such party shall take the arithmetic averageof the obtained quotations to calculate such party’s average Market Price. Ifno quotations are available for a particular Transaction(s), then the ValuationAgent’s original calculations will be used for such Transaction(s);

***(g)           Holding and Using Posted Collateral.***

(i)                                     **“*Eligibility to Hold Posted Collateral; Custodians”***.

MLCI and itsCustodian (if any) will be entitled to hold Posted Collateral pursuant toParagraph 6(b) on behalf of Party A and the Merrill Parties; provided that thefollowing conditions applicable to it are satisfied:

(A)          Party A is not aDefaulting Party.

(B)                                PostedCollateral may be held only in the United States.

Party B and itsCustodian (if any) will be entitled to hold Posted Collateral pursuant toParagraph 6(b); provided that the following conditions applicable to it aresatisfied:

(A)          Party B is not a Defaulting Party.

(B)           Posted Collateral may be held only inthe United States.

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Notwithstanding the foregoing, MLCI, Party A and PartyB hereby covenant and agree that, except at such times as, in the case of PartyA, MLCI or ML&Co., or, in the case of Party B, it or its Credit SupportProvider, as the case may be, has a Credit Rating of at least Baa2 (Moody’s) orBBB (S&P), in the case of Party A, MLCI, and in the case of Party B, PartyB will cause all Posted Collateral received from the other party to be enteredin one or more accounts (each, a “CSA Collateral Account”) with a QualifiedInstitution, each of which accounts may include property of other parties, butwill bear a title indicating the Pledgor’s interest in said account and thePosted Collateral in said account.  Inthe event the Credit Ratings shall not be equivalent, the lower Credit Ratingshall govern.  In addition, the SecuredParty may direct the Pledgor to deliver Eligible Collateral directly into theSecured Party’s CSA Collateral Account(s). The Secured Party may move the CSA Collateral Accounts from oneQualified Institution to another upon reasonable notice to the Pledgor.  The Secured Party shall cause statementsconcerning the Posted Collateral to be sent to the Pledgor on request, whichmay not be made more frequently than once in each calendar month.

(ii)                                  **“*Use of Posted Collateral”***.Unless Posted Collateral is required to be held in a CSA Collateral Accountpursuant to clause (i) above, the provisions of Paragraph 6(c) will apply to(A) MLCI as “Secured Party” on behalf of Party A and the Merrill Parties and(B) Party B.

***(h)           Distributions and Interest Amount.***

(i)                                     **“*Interest Rate”***.  The “***Interest Rate***”will be at a rate per annum equal to the one month London Interbank OfferedRate for Dollar deposits as may from time to time be in effect as reported inThe Wall Street Journal.  Such interestshall be calculated on the basis of the actual number of days elapsed and onthe basis of a year of 360 days.

(ii)                                  “***Transfer of Interest Amount***”. TheTransfer of the Interest Amount will be made on the second Local Business Dayfollowing each calendar month, and on any Local Business Day that PostedCollateral in the form of Cash is transferred to the Pledgor pursuant toParagraph 3(b), upon receipt of an invoice.

(iii)          ***Alternative to Interest Amount***.  The provisions of Paragraph 6(d)(ii) willapply.

***(i)******                                    AdditionalRepresentation(s)***.  Each partyrepresents to the other in accordance with Paragraph 9 that it is not and willnot become a party to or otherwise be bound by any agreement, other than thisAgreement, or any Master Netting Agreement or similar Agreement thereto (towhich the three parties hereto are parties thereto), which restricts in anymanner the rights of any present or future holder of any of the PostedCollateral with respect hereto.

***(j)******                                    OtherEligible Support and Other Posted Support.***

(i)                                     **“*Value*”** with respect to OtherEligible Support and Other Posted Support means the stated amount (undrawnportion) of any Letter of Credit maintained by the Pledgor (or its CreditSupport Provider) for the benefit of the Secured Party, unless a Letter ofCredit Default exists with respect to such Letter of Credit, in which case theValue of such Letter of Credit shall be zero.

(ii)                                  **“*Transfer*”** with respect toOther Eligible Support and Other Posted Support means:

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(A)                              Forpurposes of Paragraph 3(a), delivery of the Letter of Credit by the Pledgor orissuer of the Letter of Credit to the Secured Party at the address of theSecured Party specified in the Notices Section of this Agreement, or deliveryof an executed amendment to such Letter of Credit (extending the term orincreasing the amount available to the Secured Party thereunder) by the Pledgoror the issuer of the Letter of Credit to the Secured Party at the address ofthe Secured Party specified in the Notices Section of this Agreement; and,

(B)                                Forpurposes of Paragraph 3(b), by the return of an outstanding Letter of Credit bythe Secured Party to the Pledgor, at the address of the Pledgor specified inthe Notices Section of this Agreement, or delivery of an executed amendment tothe Letter of Credit in form and substance satisfactory to the Pledgor(reducing the amount available to the Secured Party thereunder) by the Pledgoror the issuer of the Letter of Credit to the Secured Party at the Secured Party’saddress specified in the Notices Section of this Agreement. If a Transfer is tobe effected by a reduction in the amount of an outstanding Letter of Creditpreviously issued for the benefit of the Secured Party, the Secured Party shallnot unreasonably withhold its consent to a commensurate reduction in the amountof such Letter of Credit and shall take such action as is reasonably necessaryto effectuate such reduction.

(iii)          **“Letter of CreditProvisions”.**

Other EligibleSupport and Other Posted Support in the form of a Letter of Credit shall besubject to the following provisions:

(A)                              Unlessotherwise agreed in writing by the parties, each Letter of Credit shall beTransferred in accordance with the provisions of this Annex, and the SecuredParty shall be the named beneficiary under each Letter of Credit.  The Pledgor shall (i) cause the renewalof each Transferred Letter of Credit on a timely basis as provided in therelevant Letter of Credit in order to maintain the then-applicable CreditSupport Amount requirements, (ii) if the issuer of a Letter of Creditpreviously Transferred to the Secured Party has indicated its intent not torenew such Letter of Credit, Transfer a substitute Letter of Credit or otherEligible Collateral having the same Value, and (iii) if the issuer of a Letterof Credit shall commit a Letter of Credit Default of the type specified in clause(ii) or (iii) of the definition thereof (including but not limited to suchissuer’s failure to honor the Secured Party’s properly documented request todraw thereon), Transfer for the benefit of the Secured Party EligibleCollateral within one (1) Local Business Day after the Pledgor receives noticeof such dishonor, provided that, at the time the Pledgor is required to performin accordance with (i), (ii), or (iii) above, the Delivery Amount applicable tothe Pledgor equals or exceeds the Pledgor’s Minimum Transfer Amount.

(B)                                ThePledgor may, at its option, Transfer a Letter of Credit by (A) causing theissuing bank to execute an amendment increasing the outstanding amountavailable for drawing under a previously Transferred Letter of Credit or (B) establishingone or more additional Letters of Credit. If (i) the Pledgor shall fail to cause the issuing bank to renew,substitute, or sufficiently increase the amount of a Transferred Letter ofCredit, Transfer one or more additional Letters of Credit, or otherwiseTransfer sufficient Eligible Credit Support and (ii) the Delivery Amountapplicable to the Pledgor equals or exceeds the

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Pledgor’s MinimumTransfer Amount as a result of such failure, then the Secured Party may draw onthe entire, undrawn portion of any Transferred Letter of Credit upon submissionto the bank issuing such Letter of Credit an L/C Certificate specifying theamounts due and owing to the Secured Party in accordance with the statedrequirements of the Letter of Credit. The Pledgor shall remain liable for anyamounts due and owing to the Secured Party and remaining unpaid after theapplication of the amounts so drawn by the Secured Party.

(C)                                Uponthe occurrence of a Letter of Credit Default solely of the type specified inclause (i) of the definition thereof, the Pledgor agrees to deliver asubstitute Letter of Credit or other Eligible Credit Support to the SecuredParty in an amount at least equal to that of the Letter of Credit to besubstituted on or before the first (1st) Business Day after written demand bythe Secured Party.

(D)                               NotwithstandingParagraph 10, in all cases, the costs and expenses (including but not limitedto the reasonable costs, expenses, and external attorney’s fees of the SecuredParty) of (i) causing an issuing bank to establish, renew, substitute,cancel, increase or reduce the amount available for drawing under (as the casemay be) one or more Letters of Credit or (ii) the Secured Party inexercising any of its rights, powers or obligations under Paragraph 13(m) shallbe borne by the Pledgor.

(iv)          **“*CertainRights and Remedies”***.

***SecuredParty’s Rights and Remedies***. For purposes of Paragraph8(a)(ii), the Secured Party may draw on any Transferred Letter of Credit in anaggregate amount equal to any amounts payable by the Pledgor with respect toany Obligations and hold or apply the proceeds thereof in accordance with theAgreement.

(v)                                 ***“Additional Definitions”***.  As used in this Annex:

**“*Credit Rating*”**shall mean, with respect to a party or entity on any date of determination, therespective rating then assigned to such party’s or entity’s unsecured, seniorlong-term debt or deposit obligations (not supported by third-party creditenhancement) by S&P or Moody’s, as applicable; and if no rating is assignedto such party’s or entity’s unsecured, senior, long-term debt or depositobligations by any of S&P or Moody’s, the general issuer credit rating orlong-term issuer rating, as applicable, assigned by such rating agencies tosuch party or entity.

**“*Letter of Credit*”**shall mean an irrevocable, transferable, standby Letter of Credit, issued by aQualified Institution, with such changes to the terms in a form as the issuingbank may require and which is acceptable to the party in whose favor the Letterof Credit is issued.

**“*Letter of Credit Default*”** shall mean withrespect to an outstanding Letter of Credit, the occurrence of any of thefollowing events: (i) the issuer of such Letter of Credit shall fail tomaintain a Credit Rating of at least “A-” by S&P or “A3” by Moody’s; (ii)the issuer of the Letter of Credit shall fail to comply with or perform itsobligations under such Letter of Credit if such failure shall be continuingafter the lapse of any applicable grace period; (iii) the issuer of such Letterof Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part,or challenge the validity of, such Letter of Credit; (iv) such Letter of Creditshall expire or terminate, or shall fail or cease to be in full force andeffect, prior to the stated expiration date on the Letter of Credit; or (v) anyevent analogous to an event specified in Section 5(a)(vii)

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of this Agreementshall occur with respect to the issuer of such Letter of Credit provided,however, that no Letter of Credit Default shall occur in any event withrespect to a Letter of Credit after the time such Letter of Credit is requiredto be canceled or returned to the Pledgor in accordance with the terms of thisAnnex.

***“Moody’s”*** means Moody’s InvestorsServices, Inc. or its successor.

***“******Qualified Institution”*******means a****majorU.S. commercial bank or a foreign bank that is not an affiliate of any party tothis Agreement with a U.S. branch office which is not the Pledgor (or asubsidiary or Affiliate of the Pledgor) and with a Credit Rating of at least “A-”by S&P or “A3” by Moody’s.

***“Reference Market-maker”*** means aleading broker, dealer or published index in the relevant market selected by aparty determining its Exposure in a commercially reasonable manner.  Such leading dealers shall not be parties tothis Agreement or Affiliates of a party to this Agreement.

***“SecurityAgreement*”**shall mean an agreement which creates orprovides for a security interest.

***“S&P”*** means the Standard &Poor’s Rating Services, a Division of The McGraw-Hill Companies, Inc., or itssuccessor.

***(k)******                              Demandsand Notices***. All demands, specifications and notices under this Annexwill be made pursuant to the Notices Section of this Agreement, unlessotherwise specified here:
|        | Party A: | Attn: Credit Risk Management                                                            | Telephone: | (713) 497-1052 |
|--------|----------|-----------------------------------------------------------------------------------------|------------|----------------|
|   |     |                                                                                    | Facsimile: | (713) 497-1058 |
|   |     | Street Address:                                                                         |       |           |
|   |     | 1000 Main St., 11th Floor                                                          |       |           |
|   |     | Houston, TX 77002   Mailing Address:                                                    |       |           |
|   |     | P O Box 4455                                                                            |       |           |
|   |     | Houston, TX 77210-4455                                                                  |       |           |
|   |     |                                                                                    |       |           |
|   |     | With a copy to (other than copies of notices in  respect of demands under Paragraph 3): |       |           |
|   |     |                                                                                    | Telephone: |           |
|   |     |                                                                                    | Facsimile: |           |
|   |     | Merrill Lynch Commodities, Inc                                                          |       |           |
|   |     | 20 East Greenway Plaza, 7th Floor                                                       |       |           |
|   |     | Houston, Texas 77253-3327 Attn: Legal                                                   |       |           |
|   |     | Fax: 713-544-5551                                                                       |       |           |
|   |     | Phone: 713-544-4975                                                                     |       |           |
|   | Party B: |                                                                                    | Telephone: |           |
|   |     |                                                                                    | Facsimile: |           |

 

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***(l)******                                    Addressesfor Transfers.***
|        | Party A: | Payment to:       | JP Morgan Chase Bank,           |
|--------|----------|-------------------|---------------------------------|
|   |     | U. S. Dollars     | New York, NY                    |
|   |     | For Account of:   | Merrill Lynch Commodities, Inc. |
|   |     | Account #:        | 323009980                       |
|   |     | Federal ABA#:     | 021000021                       |
|   |     |              |                            |
|   | Party B: | Payment to:  |                            |
|   |     | U.S. Dollars      |                            |
|   |     | For Account of:   |                            |
|   |     | Account #:        |                            |
|   |     | Federal ABA#:     |                            |
|        |          |                   |                                 |  |

 

***(m)          Other Provisions.***

*(i)**                                 *Paragraph6(d)(i)is hereby amended by adding the following sentence:

“Subject toParagraph 4(a) and only to the extent contemplated in the previous sentence, ifa Secured Party receives or is deemed to receive Distributions on a day that isnot a Local Business Day, or after its close of business on a Local BusinessDay, it will Transfer Distributions to the Pledgor on the second followingLocal Business Day.”

*(ii)**                             *Paragraph7 is amended as follows: In clause (i), the words “and/or Other EligibleSupport” are inserted on line 1 after the words “of Eligible Collateral”.

*(iii)*                          ThisCredit Support Annex is a Security Agreement under the provisions of theUniform Commercial Code of the State of New York.

*(iv)**                         **Power of Attorney.*** If the Pledgor fails (i) to execute anddeliver to the Secured Party such financing statements, specific assignments,or other documents as provided in Paragraph 11(b) or (ii) to do such otherthings relating to any Posted Collateral as the Secured Party may reasonablyrequest in order to protect and maintain its security interest in such PostedCollateral and to protect, preserve, and realize upon such Posted Collateral,then the Secured Party is hereby authorized (but not required) by the Pledgorto complete and execute such financing statements, specific assignments, andother documents as the Secured Party deems necessary or appropriate for suchpurposes. The Pledgor hereby appoints the Secured Party, during the term ofthis Agreement, as the Pledgor’s agent and attorney-in-fact to complete andexecute such financing statements, specific assignments and other documents andto perform all other acts which the Secured Party may deem necessary orappropriate to protect and maintain its security interest in any PostedCollateral and to protect, preserve, and realize upon such Posted Collateral.The power-of-attorney granted herein to the Secured Party is coupled with aninterest and is irrevocable during the term of this Agreement.

*(v)*                                ***UCC*. **Each party agrees that the provisions of this Agreement supersedeand replace in their entirety any requirements of law relating to adequateassurance of future performance, including without limitation Article 2 of theUniform Commercial Code.

 

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*(vi)**                            Referencesthroughout this Credit Support Annex to “Swap Transactions” are deleted.*

*(vii)*                        Thedefinition of “Exposure” in Paragraph12 of the Annex is hereby amended to read in its entirety as follows:

***‘Exposure’***means for any Valuation Date or other date for which Exposure is calculated andsubject to Paragraph 5 in the case of a dispute, the amount, if any, thatwould be payable to a party that is the Secured Party by the other party(expressed as a positive number) or by a party that is the Secured Party to theother party (expressed as a negative number) pursuant to Section 6(e)(ii)(1) ofthis Agreement if all Transactions were being terminated as of the relevantValuation Time, on the basis that (i) that party is not the Affected Party and(ii) United States Dollars is the Termination Currency; *providedthat* for purposes ofdetermining Exposure,**the Close-outAmount will be determined by the Valuation Agent on behalf of that party usingits estimates at mid-market of the amounts that would be paid for transactionsproviding the economic equivalent of (x) the material terms of theTransactions, including the payments and deliveries by the parties underSection 2(a)(i) in respect of the Transactions that would, but for theoccurrence of the relevant Early Termination Date, have been required afterthat date (assuming satisfaction of the conditions precedent in Section2(a)(iii)); and (y) the option rights of the parties in respect of theTransactions.

***(n)           Credit Sleeve Provisions***.

*(i)**                                 *Inconnection with the enhanced credit structure provided by MLCI and MerrillLynch & Co., Inc (together with MLCI, the “***MerrillParties***”) to Party A described in Part 9 of the Schedule, PartyA, Party B and MLCI agree that:

(A)                              PartyB shall Transfer all Eligible Credit Support required to be Transferredhereunder by Party B directly to the account provided in paragraph 13(l) forParty A and, any such Transfer, to the extent thereof, shall satisfy Party B’sobligations to make Transfers to Party A hereunder;

(B)                                MLCIshall Transfer all Eligible Credit Support required to be Transferred hereunderby Party A directly to the account provided in paragraph 13(l) for Party B and,any such Transfer, to the extent thereof, shall satisfy Party A’s obligationsto make Transfers to Party B hereunder;

(C)                                PartyA hereby unconditionally and irrevocably authorizes and directs MLCI to makeand receive, on behalf of Party A and the Merrill Parties, and MLCI herebyunconditionally agrees to make and receive, on behalf of Party A and the MerrillParties, the Transfers described in clauses (A) and (B) above;

(D)                               PartyA has pledged and assigned to the Merrill Parties its rights under this CreditSupport Annex to receive, hold and use the Eligible Credit Support transferredto MLCI hereunder in accordance with the terms of this Credit Support Annex onbehalf of Party A and on behalf of the Merrill Parties in connection with theCollateral Assignment;

(E)                                 PartyA and Party B consent to the Collateral Assignment, and agree to perform theirobligations, under Part 9 of the Schedule for the benefit of the MerrillParties;

(F)                                 Anyamendment, supplement, waiver or other modification of, or any

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forbearancefrom exercising any rights with respect to the terms or provisions contained inthis 

Credit Support Annexrequires the express written consent of Party A, Party B and MLCI; and

(G)                                Eachof MLCI and Party B makes the representations to the other party set forth inParagraph 9 of this Credit Support Annex.

*(ii)**                             *MLCIagrees to comply with the confidentiality obligations described in Part 5(j) ofthe Schedule.

*(iii)**                         *All information that is furnished in writingby or on behalf of it to any of the other parties hereto is, as of the date ofthe information, true, accurate and complete in every material respect, or, inthe case of audited or unaudited financial statements, fairly present thefinancial condition of the relevant entity and have been prepared in accordancewith generally accepted accounting principles, consistently applied, except asotherwise indicated in the notes of such financial statements. [Note: Thisprovisions should be consistent with Section 3(d) of the ISDA Master Agreementas modified by the Schedule.]

*(iv)**                            **Set-off***. Paragraph 6(f) of the Agreement shall be deleted in its entirety and replacedwith the following: “Party B shall make each payment due under this Agreementwithout deduction, set-off or counterclaim, except (A) as specifically providedin Section 2 of the Agreement, and (B) that Party B, if it is theNon-defaulting or Non-affected Party, shall be entitled to set off the EarlyTermination Amount owed by Party B to Party A under this Agreement (whetherpursuant to Section 6 or under any other provision under this Agreement)against amounts owed by Party A to Party B under this Agreement (whetherpursuant to Section 6 or under any other provision under this Agreement).  Party A, or MLCI on its behalf, shall makeeach payment due under this Agreement without deduction, set-off or counterclaim,except (A) as specifically provided in Section 2 of the Agreement, and (B) thatParty A, or MLCI on its behalf, if Party A is the Non-defaulting orNon-affected Party, shall be entitled to set off the Early Termination Amountowed by Party A to Party B under this Agreement (whether pursuant Section 6 orunder any other provision under this Agreement) against amounts owed by Party Bto Party A  under this Agreement (whetherpursuant to Section 6 or under any other provision under this Agreement).  For the avoidance of doubt:

(A)                              theterm “Party A” means Reliant Energy Power Supply, LLC (and any other Personthat succeeds to all of the rights and obligations of Reliant Energy PowerSupply, LLC under this Agreement in accordance with its terms), and ‘Party A’and shall in no event include any of its affiliates or any other Person exceptas stated above; and

(B)                                theterm “Party B” means [insert legal name of Party B] (and any other Person thatsucceeds to all of the rights and obligations of [insert legal name of Party B]under this Agreement in accordance with its terms), and ‘Party B’ and shall inno event include any of its affiliates or any other Person except as statedabove.

*(v)**                               *Exceptas provided in Part 9(a) of the Schedule, the only rights, covenants andobligations in the Agreement that shall be applicable to MLCI are those thatare set forth in provisions that either specifically refer to MLCI by name, orthat specifically refer to “each of the three parties”.  All of the other provisions in the Agreementthat refer to: “Pledgor”, “Secured Party”, “Valuation Agent”, “Defaulting Party”,“Affected Party”, “Disputing Party”, “a party”, “appropriate party”, “otherparty”, “the

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parties”, “bothparties”, “each party”, “either party” or “neither party” shall not beinterpreted as references 

to MLCI, but shallbe interpreted as references to: Party A; Party B; both Party A and Party B;each of 

Party A and PartyB; either Party A or Party B; or neither Party A nor Party B as is indicated bythe 

context.

*(vi)**                            **MLCI Termination Right***. Each of MLCI’s rights and obligations hereunder, including its rightsand obligations to Transfer and receive Eligible Credit Support, may beterminated at any time by notice by MLCI to Party A and Party B given inaccordance with the notice provisions of the Agreement, effective upon receiptof such notice by MLCI or such later date as may be specified in such notice;provided that MLCI’s rights and obligations hereunder shall continue in fullforce and effect, and shall be irrevocable, with respect to any obligation, includingits rights and obligations to Transfer and receive Eligible Credit Support,arising under any Transaction under and as defined in the Agreement enteredinto prior to the effectiveness of such notice of termination.

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**SIGNATURE PAGE**

**TO**

**PARAGRAPH 13**

**OF THE**

**CREDIT SUPPORT ANNEX**

**AMONG**

**RELIANT ENERGY POWER SUPPLY, LLC (PARTY “A”)**

**AND**

**                                                    (PARTY“B”)**

**AND**

**MERRILL LYNCH COMMODITIES, INC. (“Merrill”)**

**IN WITNESS WHEREOF, the parties hereto haveexecuted this document as of the date specified on the first page hereof.**
| **RELIANT  ENERGY POWER SUPPLY, LLC** | ** ** | ** ** |
|---------------------------------------|------------|------------|
| ** **                            | ** ** | ** ** |
| **By:**                               | ** ** | ** ** | **By:** | ** ** |
| ** **                            | ** ** | ** ** |
| **Name:**                             | ** ** | ** ** | **Name:** | ** ** |
| ** **                            | ** ** | ** ** |
| **Title:**                            | ** ** | ** ** | **Title:** | ** ** |
| ** **                            | ** ** | ** ** |
| **MERRILL  LYNCH COMMODITIES, INC.**  | ** ** | ** ** |
| ** **                            | ** ** | ** ** |
| **By:**                               | ** ** | ** ** | ** ** |
| ** **                            | ** ** | ** ** |
| **Name:**                             | ** ** | ** ** | ** ** |
| ** **                            | ** ** | ** ** |
| **Title:**                            | ** ** | ** ** | ** ** |
|                                       |            |            |  |  |  |  |  |  |  |

** **

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Exhibit E1To Credit Sleeve and Reimbursement AgreementReliant Energy — Retail Risk Policy

[***]

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***      Thecontent of this Exhibit E1 (consisting of 16 pages) has been omitted and filed separatelywith the Securities and Exchange Commission. Confidential treatment has beenrequested with respect to the omitted portions.

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Exhibit E2To Credit Sleeve and Reimbursement AgreementReliant Energy-Wholesale Risk Control Policy

[***]

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***      Thecontent of this Exhibit E2 (consisting of 35 pages) has been omitted and filed separatelywith the Securities and Exchange Commission. Confidential treatment has beenrequested with respect to the omitted portions.

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Exhibit FTo Credit Sleeve and Reimbursement AgreementERCOT Asset List

[***]

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***      Thecontent of this Exhibit F (consisting of 1 page) has been omitted and filedseparately with the Securities and Exchange Commission. Confidential treatmenthas been requested with respect to the omitted portions.

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ExhibitGTo Credit Sleeve and Reimbursement AgreementJoinder Agreement

**FORM OF JOINDER AGREEMENT**([Subsidiary])

This JOINDERAGREEMENT dated as of [date] (this “Agreement”), is among theundersigned and the other parties to each of the agreements listed on ScheduleA attached hereto (each a “Joined Agreement” and together the “JoinedAgreements”).  With respect to eachJoined Agreement, the undersigned hereby agrees with the parties thereto asfollows:

Effective as ofthe date hereof, the undersigned by itssignature below hereby becomes a party to each Joined Agreement in thecapacity indicated on Schedule A attached hereto, in each case inaccordance with the applicable provisions of such Joined Agreement for partiesjoining such Joined Agreement, if any, and, without limiting the joinderrequirements of any Joined Agreement, the undersigned hereby (a) assumes allthe obligations under each Joined Agreement applicable to the undersigned inthe capacity in which it is joining thereunder, (b) agrees to be bound by theprovisions of each Joined Agreement applicable to the undersigned in thecapacity in which it is joining thereunder as if the undersigned had been anoriginal party thereto, and (c) confirms that, after joining each JoinedAgreement as set forth above, the representations and warranties set forth ineach Joined Agreement applicable to the undersigned in the capacity in which itis joining thereunder are true and correct in all material respects as of thedate hereof; provided however, that the undersigned shall have noliability for the observance and performance of the terms, conditions, andobligations under any Joined Agreement applicable to the undersigned in itscapacity thereunder which accrue prior to the date hereof to the extent thesame is expressly set forth on Schedule A attached hereto with respect to suchJoined Agreement.

To the extentrequired by the terms of each Joined Agreement, the joinder of the undersignedto such Joined Agreement as provided herein is acknowledged and agreed below bythe applicable parties thereto.  ThisAgreement shall be construed as a separate agreement with the parties to eachJoined Agreement, and no party to this Agreement that is not a party to suchJoined Agreement shall have any rights with respect to such Joined Agreement byvirtue of this Agreement.

This Agreement maybe executed by one or more of the parties hereto on any number of separatecounterparts, and all of said counterparts taken together shall be deemed toconstitute one and the same instrument. As expressly supplemented hereby, each Joined Agreement shall remain infull force and effect.

THIS JOINDERAGREEMENT AND THE JOINED AGREEMENTS REPRESENT THE FINAL AGREEMENT AMONG THEAPPLICABLE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO ORALAGREEMENTS AMONG THE PARTIES TO ANY JOINED AGREEMENT.

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[signaturesfollow]

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IN WITNESS WHEREOF this Joinder Agreement is executedand delivered as of the      day of       ,      .
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|   | By:          |   |
|   | Name:        |   |
|   | Title:       |   |
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| Acknowledged and Agreed:                                                                                                                                                               |
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| By:                                                                                                                                                                                    |   |   |
| Name:                                                                                                                                                                                  |   |   |
| Title:                                                                                                                                                                                 |   |   |
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Signature Page toJoinder Agreement

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**ScheduleA**

**JoinedAgreements**

 
| Counterparties                                                                                                                                                                                                                                                                                                                            | ** ** | **Agreement**                                                                                                                                                                                                                                                                                                                                                                                              | ** ** | **Capacity Joined**          | ** ** | **Liability**                                                                                                                                                                                                                                     |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Merrill Lynch  & Co., Inc. (“ML&Co”), a Delaware corporation, and Merrill Lynch  Commodities, Inc. (“MLCI”), a Delaware corporation.                                                                                                                                                                          |       | Credit Sleeve and Reimbursement Agreement dated as of  September 24, 2006 (the “CSRA”), among Reliant Energy Power Supply, LLC, and  the Other Reliant Retail Obligors listed on the signature pages thereto, on  one hand, and ML&Co and MLCI, on the other hand, as the same may be  amended, supplemented, restated, renewed, replaced, waived or otherwise modified  from time to time . |       | Other Reliant Retail Obligor |       | The undersigned shall have no liability for the  observance and performance of the terms, conditions, and obligations under  applicable to the undersigned in its capacity under the CSRA which accrue prior  to the date hereof.                 |
| Merrill Lynch  Capital Corporation, a Delaware corporation (“MLCC”).                                                                                                                                                                                                                                                            |       | Working Capital Facility dated as of September 24,  2006 (the “WCF”), among MLCC, as Lender, REPS, as Borrower, and the Other  Reliant Retail Obligors, as Guarantors, as the same may be amended,  supplemented, restated, renewed, replaced, waived or otherwise modified from  time to time.                                                                                                  |       | Additional Guarantor         |       | The undersigned shall have no liability for the  observance and performance of the terms, conditions, and obligations under  applicable to the undersigned in its capacity under the WCF which accrue  prior to the date hereof.                  |
| Reliant Energy,  Inc., a Delaware corporation (“REI”), Reliant Energy Corporate Services, LLC,  a Delaware limited liability company) (“RECS”), Reliant Energy Solutions  East, LLC, a Delaware limited liability company (“RESE” and together with REI  and RECS, the “Reliant Counterparties”), |       | Master Services Agreement dated as of September 24,  2006 (the “MSA”), among the Reliant Counterparties and the Retail Companies  listed on the signature pages thereto, as the same may be amended,  supplemented, restated, renewed, replaced, waived or otherwise modified from  time to time.                                                                                                |       | Retail Company               |       | The undersigned shall have no liability for the  observance and performance of the terms, conditions, and obligations under  applicable to the undersigned in its capacity under the MSA which accrue  prior to the date hereof.                  |
| Reliant  Counterparties                                                                                                                                                                                                                                                                                                                   |       | Transition Agreement dated as of December 1, 2006  (the “Transition Agreement”), among the Reliant Counterparties and the Retail  Companies listed on the signature pages thereto, as the same may be amended,  supplemented, restated, renewed, replaced, waived or otherwise modified from  time to time.                                                                                      |       | Retail Company               |       | The undersigned shall have no liability for the  observance and performance of the terms, conditions, and obligations under  applicable to the undersigned in its capacity under the Transition Agreement  which accrue prior to the date hereof. |

 

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ExhibitHTo Credit Sleeve and Reimbursement Agreement Form of Compliance Certificate

**FORMOF COMPLIANCE CERTIFICATE**

To:          Merrill Lynch Commodities, Inc., aDelaware corporation, as Sleeve Provider

This ComplianceCertificate is furnished pursuant to that certain Credit Sleeve and ReimbursementAgreement, dated as of September 24, 2006, as amended and restated inconnection with the occurrence of the Effective Date as of December 1, 2006 (asthe same may be further amended or otherwise modified from time to time, the “Agreement”),among Reliant Energy Power Supply, LLC, a Delaware limited liability company (“REPS”),the Other Reliant Retail Obligors specified therein (together with REPS, the “ReliantRetail Obligors”), Merrill Lynch Commodities Inc., a Delaware corporation,as Sleeve Provider, and MerrillLynch & Co., Inc., a Delaware corporation (“ML&Co.”, andtogether with the Sleeve Provider, the “Merrill Parties”).  Capitalized terms used herein but nototherwise defined shall have the meanings given to such terms in the Agreement.

THE UNDERSIGNEDHEREBY CERTIFIES THAT:

1.                                       Iam the duly elected                   of RERH Holdings, LLC.

2.             I have reviewed the terms of theAgreement and I have made, or have caused to be made under my supervision, adetailed review of the transactions and conditions of the Reliant RetailObligors during the accounting period covered by the attached financialstatements.

3.             The examinations described inparagraph 2 did not disclose, and I have no knowledge of, the existence of anycondition or event constituting a Default with respect to a Reliant Event ofDefault, as such term is defined under the Agreement.

4.             Exhibit A attached hereto includescertain financial statements required under the terms of the Agreement, all ofwhich financial statements are true, complete and correct in all materialrespects.

5.             The aggregate amount of allindividual asset sales with gross cash proceeds in an amount greater than$500,000, but less than $5,000,000, is $                        for the quarter ending                         .The aggregate amount of all such individual asset sales since December 1, 2006,is $                              .

The foregoingcertifications, together with the financial statements attached as Exhibit Ahereto, are made and delivered this                day of                  ,20      .

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|        |
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|   | RERH Holdings,  LLC |
|   |   |
|   | Name: |   |
|   | Title: |   |
|        |  |  |  |

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**EXHIBIT ATO COMPLIANCE CERTIFICATE****FINANCIAL STATEMENTS**

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Exhibit I1To Credit Sleeve and Reimbursement Agreement Sleeve Provider Employees with Accessto Data

[***]

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***      Thecontent of this Exhibit I1 (consisting of 2 pages) has been omitted and filed separatelywith the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.

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Exhibit I2To Credit Sleeve and Reimbursement Agreement Reliant Employees with Access to Data

[***]

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***      Thecontent of this Exhibit I2 (consisting of 7 pages) has been omitted and filed separatelywith the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.

 

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