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                      UNITED STATES SECURITIES AND EXCHANGE
                                   COMMISSION
                             WASHINGTON, D.C. 20549
                             ----------------------
                                    FORM 10-K

(MARK ONE)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934
         FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO ________

                        COMMISSION FILE NUMBER: 333-91391

                              AES IRONWOOD, L.L.C.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            DELAWARE                                   54-1457537
(STATE OR OTHER JURISDICTION OF           (I.R.S. EMPLOYER IDENTIFICATION NO.)
 INCORPORATION OR ORGANIZATION)

 305 PRESCOTT ROAD, LEBANON, PENNSYLVANIA                    17042
 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                  (ZIP CODE)

       Registrant's telephone number, including area code: (717) 228-1328

        Securities Registered Pursuant To Section 12(b) of The Act: NONE

        Securities Registered Pursuant To Section 12(g) of The Act: NONE

                          -----------------------------

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K [X]

As of March 26, 2001, there was one membership interest outstanding, which was
held by AES Ironwood, Inc., the Company's parent and a wholly owned subsidiary
of The AES Corporation.

All of the Registrant's equity securities are indirectly owned by The AES
Corporation. Registrant meets the conditions set forth in General Instruction
I(1)(a) and (b) of Form 10-K and is therefore filing this Form 10-K with the
reduced disclosure format authorized by General Instruction I of the Form 10-K.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      NONE

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                                TABLE OF CONTENTS



<TABLE>
<S>                                                                                                             <C>
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS..............................................................2
PART I ...........................................................................................................3
         ITEM 1. Business.........................................................................................3
         ITEM 2. Properties......................................................................................39
         ITEM 3. Legal Proceedings.............................................................................. 39
         ITEM 4. Submission of Matters to a Vote of Security Holders............................................ 39
PART II..........................................................................................................40
         ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters...........................40
         ITEM 6. Selected Financial Data........................................................................ 40
         ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations...........40
         ITEM 7A. Quantitative and Qualitative Disclosure About Market Risk......................................42
         ITEM 8. Financial Statements and Supplemental Data..................................................... 43
         ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure........... 56
PART III.........................................................................................................57
         ITEM 10. Directors and Executive Officers of the Registrant.............................................57
         ITEM 11. Executive Compensation........................................................................ 59
         ITEM 12. Security Ownership of Certain Beneficial Owners and Management.................................59
         ITEM 13. Certain Relationships And Related Transactions.................................................59
PART IV..........................................................................................................60
         ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K...............................60
</TABLE>




                                       1
<PAGE>


              CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

         Some of the statements in this Form 10-K, as well as statements made
by us in periodic press releases and other public communications, constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Certain, but not necessarily all, of such
forward-looking statements can be identified by the use of forward-looking
terminology, such as "believes," "estimates," "plans," "projects," "expects,"
"may," "will," "should," "approximately," or "anticipates" or the negative
thereof or other variations thereof or comparable terminology, or by
discussion of strategies, each of which involves risks and uncertainties. We
have based these forward-looking statements on our current expectations and
projections about future events based upon our knowledge of facts as of the
date of this Form 10-K and our assumptions about future events.

         All statements other than of historical facts included herein,
including those regarding market trends, our financial position, business
strategy, projected plans and objectives of management for future operations,
are forward-looking statements. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors outside of our control that
may cause our actual results or performance to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements. These risks, uncertainties and other factors
include, among others, the following:

         -        unexpected construction delays;
         -        unexpected problems relating to the start-up, commissioning
                  and performance of the facility;
         -        the financial condition of third parties on which we depend;
         -        an adequate merchant market after the expiration of the power
                  purchase agreement;
         -        capital shortfalls and access to additional capital on
                  reasonable terms;
         -        inadequate insurance coverage;
         -        unexpected expenses or lower than expected revenues once
                  commercial operations have begun;
         -        environmental and regulatory compliance; and
         -        the additional factors that are unknown to us or beyond our
                  control.

         We have no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.






                                       2
<PAGE>


                                     PART I



ITEM 1. BUSINESS

GENERAL

         We are a Delaware limited liability company formed to develop,
construct, own, operate and maintain a 705-megawatt (MW) gas-fired electric
generating power plant in Lebanon County, Pennsylvania, and to manage the
production of electric generating capacity, ancillary services and energy at our
facility. We are in the developmental stage and currently have no operating
revenues. Although there can be no assurances, we expect to become commercially
operational by approximately June 30, 2001. After the commercial operation date,
our sole business will be the ownership and operation of our project.

         We own the land on which our facility will be located. Our facility
will be designed, engineered, procured and constructed for us by Siemens
Westinghouse Power Corporation on a fixed-price, turnkey basis under the
construction agreement. Siemens Westinghouse will provide combustion turbine
maintenance services and spare parts with respect to our facility for an initial
term of between eight and 10 years, depending on the timing of scheduled
outages, under the maintenance services agreement. AES Prescott, L.L.C. (AES
Prescott), an indirect wholly-owned subsidiary of The AES Corporation, will
provide development, construction management and operations and maintenance
services for the project under an operations agreement.

         We have entered into a power purchase agreement for a term of 20 years
under which Williams Energy, Inc. has committed to purchase all of the net
capacity, fuel conversion and ancillary services of our facility. Net capacity
is the maximum amount of electricity generated by our facility net of
electricity used at our facility. Fuel conversion services consist of the
combustion of natural gas and fuel oil in order to generate electric energy.
Ancillary services consist of services necessary to support the transmission of
capacity and energy. Williams Energy is obligated to supply us with all natural
gas and/or fuel oil necessary to provide net capacity, fuel conversion services
and ancillary services under the power purchase agreement. We anticipate that
during the term of the power purchase agreement substantially all of our
revenues will be derived from payments made under the power purchase agreement.

         ORGANIZATIONAL STRUCTURE

         All of the equity interests in our company are owned by AES Ironwood,
Inc., a wholly-owned subsidiary of The AES Corporation. The AES Corporation will
provide funds to AES Ironwood, Inc. so that AES Ironwood, Inc. can make an
equity contribution to us to fund project costs. AES Ironwood, Inc. currently
has no operations outside of its activities in connection with our project and
does not anticipate undertaking any operations not associated with our project.
AES Ironwood, Inc. has no assets other than its membership interests in us and
AES Prescott, L.L.C. AES Prescott has no operations outside of its activities in
connection with our project. Under a services agreement, The AES Corporation
will supply to AES Prescott all of the personnel and services necessary for AES
Prescott to comply with its obligations under the operations agreement.


                                       3
<PAGE>

         The AES Corporation is a leading global power company committed to
supplying electricity in a socially responsible way. As of December 31, 2000,
The AES Corporation currently had assets of approximately $31 billion and
employed approximately 27,000 people around the world. The AES Corporation is a
public company and is subject to the informational requirements of the
Securities Exchange Act of 1934 and, in accordance therewith, files reports,
proxy statements and other information, including financial reports, with the
SEC.

         The following organizational chart illustrates the relationship among
our company, AES Ironwood, Inc., AES Prescott and The AES Corporation:



                               THE AES CORPORATION





                               AES IRONWOOD, INC.





                AES IRONWOOD, L.L.C.          AES PRESCOTT, L.L.C.



         Our principal executive offices are located at 305 Prescott Road,
Lebanon, Pennsylvania 17042. Our telephone number is (717) 228-1328.

COMPETITION

         Under the power purchase agreement, Williams Energy will be required to
purchase all of our facility's capacity and energy. Therefore, during the term
of the power purchase agreement, competition from other capacity and energy
providers will only become an issue if Williams Energy breaches its agreement
and ceases to purchase our capacity and energy or the power purchase agreement
is otherwise terminated or not performed in accordance with its terms. Following
the term of the power purchase agreement, we anticipate selling our facility's
net capacity, ancillary services and energy under a new power purchase agreement
or into the Pennsylvania-New Jersey-Maryland (PJM) power pool market. At that
time, we will face competition from other generating facilities selling into the
PJM power pool market including, possibly, other facilities owned by The AES
Corporation or its affiliates.

EMPLOYEES

         Other than the officers listed in the "Directors and Executive Officers
of the Registrant" section of this Form 10-K, we have no employees and do not
anticipate having any employees in the future. Under the operations agreement,
AES Prescott will manage the development and construction of and will


                                       4
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operate and maintain our facility. The direct labor personnel and the plant
operations management will be employees of The AES Corporation provided to AES
Prescott under the services agreement.

INSURANCE

         As owner of our facility, we will maintain a comprehensive insurance
program as required under our various project contracts and the indenture
governing our senior secured bonds and underwritten by recognized insurance
companies. Among other insurance policies, we will maintain commercial general
liability insurance, permanent property insurance for full replacement value of
our facility and business interruption insurance covering at least 12 months of
debt service and fixed operation and maintenance expenses. We have obtained
title insurance in an amount equal to the principal amount of the bonds.

         AES Prescott, as operator of our facility, will maintain, among other
insurance policies, workers' compensation insurance, or evidence of
self-insurance, if required, and comprehensive automobile bodily injury and
property damage liability insurance.

PERMITS AND REGULATORY APPROVALS

         AES Prescott, as operator of our facility, and us, as owner of our
facility, must comply with numerous federal, state and local regulatory
requirements including environmental requirements in the operation of our
facility.

         On March 31, 1999, we received a certification from the Federal Energy
Regulatory Commission (FERC) that we are an Exempt Wholesale Generator.
Certification as an Exempt Wholesale Generator exempts us from regulation under
the Public Utility Holding Company Act of 1935. We will maintain this status so
long as we continue to make only wholesale sales of electricity, which we intend
to do. Prior to commercial operation, we will be required to file the power
purchase agreement with FERC and obtain approval for the rates contained
therein. We may also need to obtain FERC approval for sales of electricity at
market-based rates after the power purchase agreement is no longer in effect.

         On March 29, 1999, we received our Prevention of Significant
Deterioration Permit, or "air permit," from the Pennsylvania Department of
Environmental Protection. The appeal period in respect of the air permit expired
on May 3, 1999 and no appeal was filed. The air permit requires that our
facility be constructed in a manner that will allow it to meet specified
limitations on emissions of air pollutants. Under the construction agreement,
Siemens Westinghouse is required to construct our facility to meet these
requirements.

         We are subject to a number of statutory and regulatory standards and
required approvals relating to energy, labor and environmental laws. Although
the necessary environmental permits for the commencement of construction of our
facility have been obtained, we are required to comply with the terms of our
environmental permits and to obtain other permits for the construction and
operation of our facility. Several of the permits have not yet been obtained,
and some cannot be obtained until operation of our facility has commenced. Under
specific circumstances, delay in receipt of or failure to obtain the permits
could delay completion of the construction of our facility or prevent the
operation of our facility; however, we do not expect any delay or failure to
obtain these permits to materially delay completion of construction or operation
of the facility.

         Some permits that we have obtained in connection with our facility will
require amendment prior to commercial operation of our facility and others will
require renewal or reissuance during the life of our


                                       5
<PAGE>

facility. While we have no reason to believe that the permits cannot be amended
or will not be renewed or reissued, our inability to amend, renew or obtain
reissuance of these permits in the future could cause the suspension of
construction or operation of our facility.

         The permits that have been obtained and that will be obtained contain
ongoing requirements. Failure to satisfy and maintain any of the permit
conditions or other applicable requirements could delay or prevent completion of
the construction of our facility, prevent the operation of our facility and/or
result in additional costs.

         SUMMARY OF PRINCIPAL PROJECT CONTRACTS

         While the Company believes that the following summaries contain the
material terms of the principal project contracts, such summaries may not
include all of the provisions of each agreement that each individual investor
may feel is important. These summaries do not restate each agreement discussed
herein and exclude certain definitions and complex legal terminology that may be
contained in each relevant agreement. You should carefully read each agreement
discussed herein, each of which is filed as an exhibit to this Form 10-K.

                            POWER PURCHASE AGREEMENT

         We have entered into an Amended and Restated Power Purchase Agreement,
dated as of February 5, 1999, with Williams Energy for the sale to Williams
Energy of all of the electric energy and capacity produced by our facility as
well as ancillary services and fuel conversion services.

TERM

         The term of the power purchase agreement extends for 20 years after the
first contract anniversary date, which is the last day in the month in which the
commercial operation date occurs. The commercial operation date occurs when

         -        the initial start-up testing of our facility has been
                  successfully completed,

         -        we have received all approvals from PJM Interconnection,
                  L.L.C., which is the independent system operator that operates
                  the transmission system to which our facility will
                  interconnect, and

         -        we have obtained all required permits and authorizations for
                  operation of our facility.

         If the commercial operation date has not occurred by June 30, 2001 for
any reason, including the continued existence of or delay caused by a force
majeure event affecting us, other than any delay caused by any act or failure to
act by Williams Energy or any of its affiliates where the action is required
under the power purchase agreement, Williams Energy will have the right to
terminate the power purchase agreement. We, however, can extend the commercial
operation date to December 31, 2001 (1) if we provide an opinion from a
third-party engineer that the commercial operation date will occur no later than
December 31, 2001 (the "Free Extension Option"), or (2) by giving Williams
Energy written notice of such extension no later than April 30, 2001, and paying
to Williams Energy a specified amount (for which we believe we have made
adequate provisions in the project budget) by no later than June 30, 2001 (the
"First Paid Extension Option").


                                       6
<PAGE>

         If we qualify for the Free Extension Option or elect the First Paid
Extension Option, if the commercial operation date has not occurred by the final
commercial operation date for any reason, other than as a result of a delay in
exercising an interconnection agreement or any act or failure to act by Williams
Energy or any of its affiliates, where the action is required under the power
purchase agreement, Williams Energy will have the right to terminate the power
purchase agreement. We, however, can extend the final commercial operation date
to and including December 31, 2002 by giving Williams Energy written notice of
the estimated extension required no later than October 31, 2001 and paying to
Williams Energy certain specified amounts for each day of such extension (the
"Second Paid Extension Option").

         If we elect the Second Paid Extension Option and the commercial
operation date does not occur by December 31, 2002 for any reason whatsoever,
including the continued existence of or delay caused by a force majeure event
affecting us, other than as a result of a delay in exercising an interconnection
agreement or any act or failure to act by Williams Energy or any of its
affiliates where the action is required under the power purchase agreement,
Williams Energy will have the absolute right to terminate the power purchase
agreement.

PURCHASE AND SALE OF CAPACITY AND SERVICES

         During the term, commencing with the commercial operation date, we must
sell and make available to Williams Energy on an exclusive basis, and Williams
Energy must purchase and pay for, our facility's net capacity and ability to
generate electric energy. In addition, during the term, commencing with the
commercial operation date, we must perform for Williams Energy on an exclusive
basis, and Williams Energy must purchase and pay for fuel conversion services,
which consist of the generation of electric energy from fuel provided by
Williams Energy.

FUEL CONVERSION AND OTHER SERVICES

         As instructed by us, Williams Energy must deliver or cause to be
delivered to us at the gas delivery point and oil delivery point on an exclusive
basis all quantities of natural gas and fuel oil, respectively, as we required:

         -        to generate net electric energy and/or ancillary services,

         -        to perform start-ups,

         -        to perform shutdowns, and

         -        to operate our facility during any period other than a
                  start-up, shutdown or dispatch period for any reason.

         Williams Energy will be responsible for the construction of all gas
interconnection facilities. If the gas interconnection facilities have not been
constructed and/or Williams Energy is unable for any reason to deliver natural
gas to our facility by the date that our facility would otherwise be prepared to
begin initial start-up testing, and but for the failure to provide the natural
gas our facility is otherwise ready, or would otherwise have been ready, to
begin the testing, then Williams Energy must commence making payments to us for
each day of delay beginning on the start-up testing date and continuing until
the date that natural gas is delivered to our facility for initial start-up
testing, in an amount for each day of delay which is equal to one-thirtieth of
the applicable total fixed payment. Upon the expiration of the



                                       7
<PAGE>

power purchase agreement or any termination of the power purchase agreement as
the result of Williams Energy's default, we will have the right to purchase the
gas interconnection facilities from Williams Energy, or if Williams Energy does
not own the gas interconnection facilities, Williams Energy must assign to us
all of its rights to transportation services using the gas interconnection
facilities.

         Williams Energy will be responsible for the cost of procurement and
installation of the oil metering equipment. Williams Energy will be solely
responsible for all costs and expenses related to the supply and transportation
of natural gas and fuel oil to the gas delivery point and oil delivery point,
respectively. We will be responsible for all costs and expenses related to the
transportation of natural gas and fuel oil at and from the gas delivery point
and oil delivery point to our facility. At our request, instead of delivering
fuel oil to the applicable oil delivery point, Williams Energy must deliver or
cause to be delivered the quantities of fuel oil as requested to any off-site
storage facility approved by Williams Energy and delivery to that site will be
deemed delivery to the oil delivery point. We will be responsible for all costs
and expenses related to the transportation of the fuel oil from the off-site
storage facility to our facility.

         We will be responsible for the installation, operation and maintenance
at the facility site, at our sole cost and expense, of fuel oil storage tank(s)
capable of storing a volume of usable fuel oil sufficient to operate our
facility at maximum facility capacity output for two continuous days. We will
not be obligated to operate our facility on fuel oil for more than an operating
hour equivalent that is consistent with our air permit.

PRICING AND PAYMENTS

         For each month of the term after the commercial operation date,
Williams Energy must pay us for our facility's net capacity, successful
start-ups and associated shutdowns, other services and fuel conversion services
at the applicable rates described in the power purchase agreement. Each monthly
payment by Williams Energy will consist of a total fixed payment, a fuel
conversion payment and a start-up payment. The total fixed payment, which is
payable regardless of facility dispatch by Williams Energy but is subject to
adjustment based on facility availability, is calculated by multiplying a fixed
capacity rate for each contract year by our facility's net capacity in the
billing month and is anticipated to be sufficient to cover our debt service and
fixed operating and maintenance costs and to provide us a return on equity. The
fuel conversion payment is intended to cover our variable operating and
maintenance costs and escalates annually based on an escalation index described
in the power purchase agreement. In addition, we may receive heat rate bonuses
or be required to pay heat rate penalties.

         Prior to the commercial operation date, and during specific facility
tests thereafter, we will purchase natural gas from Williams Energy. Williams
Energy will sell to us the natural gas at prices specified in the power purchase
agreement, and we will sell to Williams Energy at the electric delivery point
any net electric energy produced during those periods at 90% of the energy
market clearing price.

         Williams Energy will be entitled to an annual fuel conversion volume
rebate if its dispatch of our facility exceeds specified levels and specified
monthly non-dispatch payments if, under specific circumstances, our facility is
not available for dispatch. All fuel conversion volume rebate payments and
non-dispatch payments must be made to Williams Energy after debt service and
specified other payments but prior to any distribution to holders of the equity
interests in our company. Fuel conversion volume rebate payments must be paid to
Williams Energy within 30 days after the end of the contract year in which the
payments have been earned and non-dispatch payments must be paid to Williams
Energy within 20 days after the end of the month on which a payment obligation
arises. Fuel conversion volume


                                       8
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rebate payments and any non-dispatch payments owed to Williams Energy and not
paid when due must be paid, together with interest, when funds become available
to us at the priority level described above.

PROJECT DEVELOPMENT

         We must provide to Williams Energy within 10 days after the completion
of initial start-up testing, pertinent written data substantiating our
facility's capability to provide net capacity.

         We must, at our own cost and expense, obtain as and when required all
approvals, permits, licenses and other authorizations from governmental
authorities as may be required to construct, operate and maintain our facility,
the interconnection facilities and protective gas apparatus and to perform our
obligations under the power purchase agreement, and during the term, we must
obtain all additional governmental approvals, permits, licenses and
authorizations as may be required with respect to our facility as soon as
practicable.

INITIAL START-UP TESTING; COMMERCIAL OPERATION

         We must provide to Williams Energy (1) written notice, at least 30 days
in advance, of the expected commercial operation date and (2) a copy of the
notice of commercial operation within five days after the commercial operation
date. Williams Energy will have the right to be present at initial start-up
testing of our facility.

INTERCONNECTION AND METERING EQUIPMENT

         At our sole cost and expense, we will own and design, construct,
install and maintain, or be responsible for the design, construction,
installation and maintenance of our facility, the Interconnection Facilities and
Protective Gas Apparatus needed to generate and deliver Net Electric Energy
and/or ancillary services to the Electric Delivery Point in order to fulfill our
obligations under the power purchase agreement, including all Interconnection
Facilities and Protective Gas Apparatus that may be located at any switchyard
and/or substation to be built at our facility. Our facility, the Interconnection
Facilities and Protective Gas Apparatus must be designed, constructed and
completed in a good and workmanlike manner and in accordance with accepted
electrical practices, with respect to our facility and Interconnection
Facilities, or in accordance with standard gas industry practices, with respect
to Protective Gas Apparatus, so that the expected useful life of our facility,
the Interconnection Facilities and Protective Gas Apparatus will be not less
than the term of the power purchase agreement.

         At our cost and expense as of December 31, 2000, the interconnection
facilities and protective gas apparatus needed to generate and deliver net
electric and/or ancillary services to the electric delivery point have been
completed as required under the power purchase agreement. The interconnection
facilities and protective gas apparatus have been designed, constructed and
completed in a good and workmanlike manner and in accordance with accepted
electrical practices, with respect to our facility and interconnection
facilities or in accordance with standard gas industry practices, with respect
to protective gas apparatus, so that the expected useful life of our facility,
the interconnection facilities and protective gas apparatus will be not less
than the term of the power purchase agreement.

         We will have been solely responsible for the negotiation and execution
of the interconnection agreement with GPU Energy under which GPU Energy will own
and be responsible for the electric metering equipment and the design,
installation, construction and maintenance of the electrical facilities and
protective apparatus, including any transmission equipment and related
facilities, necessary to


                                       9
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interconnect GPU Energy's electrical system with our facility at the electric
delivery point. Williams Energy must reimburse us for the reasonable GPU Energy
costs (i.e., transmission facility upgrades, GPU Energy protective apparatus and
other equipment, GPU Energy electric meters, and GPU Energy costs for PJM and
other required interconnection-related studies) incurred, or to be reimbursed,
by us under the interconnection agreement up to a maximum amount which is in
excess of the costs anticipated to be incurred by us under the interconnection
agreement.

         Williams Energy will be responsible for the installation, maintenance
and testing of the gas metering equipment, to the extent not otherwise
installed, maintained and tested by the supplier of gas transportation services,
and oil metering equipment, as reasonably approved by us.

         All electric metering equipment, gas metering equipment and oil
metering equipment, whether owned by us or by a third party, must be operated,
maintained and tested in accordance with accepted electrical practices, in the
case of the electric metering equipment, and in accordance with applicable
industry standards, in the case of the gas metering equipment and oil metering
equipment.

OPERATION / DISPATCH

         Our facility, the interconnection facilities and the protective gas
apparatus must be operated in accordance with accepted electrical practices and
applicable requirements and guidelines reasonably adopted by GPU Energy from
time to time and applied consistently to GPU Energy's electric generating
facilities, with respect to our facility and interconnection facilities, or in
accordance with standard gas industry practices, with respect to protective gas
apparatus. If there is a conflict between the terms and conditions of the power
purchase agreement and GPU Energy requirements, GPU Energy requirements will
control.

         We must operate our facility in parallel with GPU Energy's electrical
system with governor control and the net electric energy to be delivered by us
under the power purchase agreement must be three-phase, 60 hertz, alternating
current at a nominal voltage acceptable to GPU Energy at the Electric Delivery
Point, must not adversely affect the voltage, frequency, waveshape or Power
Factor of power at the Electric Delivery Point and must be delivered to the
Electric Delivery Point in a manner acceptable to GPU Energy.

         The power purchase agreement acknowledges that GPU Energy has the right
to require us to disconnect our facility from GPU Energy's electrical system, or
otherwise curtail, interrupt or reduce deliveries of net electric energy, for
specific safety or emergency reasons. If our facility has been disconnected for
these reasons, Williams Energy will continue to be obligated to make total fixed
payments for at least 24 hours after the occurrence of the disconnection of our
facility by GPU Energy.

         We must use commercially reasonable efforts to promptly correct any
condition at our facility which necessitates the disconnection of our facility
from GPU Energy's electrical system or the reduction, curtailment or
interruption of electrical output of our facility. Williams Energy will have the
exclusive right to schedule the operation of our facility or a unit in
accordance with the provisions of the power purchase agreement so long as the
scheduling is consistent with the design limitations of our facility, applicable
law, regulations and permits, and manufacturers' reasonable recommendations for
operating limits with respect to our facility and major components.

         During initial start-up testing and up to two times each year
thereafter, we must demonstrate, in accordance with the then-applicable criteria
of PJM, applicable generally to independent power and GPU


                                       10
<PAGE>

Energy generating facilities in PJM of similar technology, the capability of our
facility to produce and maintain, as required for the demonstration, our
facility's net capacity.

FORCE MAJEURE

         A party will be excused from performing its obligations under the power
purchase agreement and will not be liable in damages or otherwise to the other
party if and to the extent the party declares that it is unable to perform or is
prevented from performing an obligation under the power purchase agreement by a
force majeure condition, except for any obligations and/or liabilities under the
power purchase agreement to pay money, which will not be excused, and except to
the extent an obligation accrues prior to the occurrence or existence of a force
majeure condition so long as:

         -        the party declaring its inability to perform by virtue of
                  force majeure, as promptly as practicable after the occurrence
                  of the force majeure condition, but in no event more than five
                  days later, gives the other party written notice describing,
                  in detail, the nature, extent and expected duration of the
                  force majeure condition;

         -        the suspension of performance is of no greater scope and of no
                  longer duration than is reasonably required by the force
                  majeure condition;

         -        the party declaring force majeure uses all commercially
                  reasonable efforts to remedy its inability to perform; and

         -        once the party declaring force majeure is able to resume
                  performance of its obligations excused as a result of the
                  force majeure condition, it promptly gives written notice to
                  the other party.

         Irrespective of whether the force majeure condition is declared by
Williams Energy or us, the time period of a force majeure will be excluded from
the calculation of all payments under the power purchase agreement and Williams
Energy must be under no obligation to pay us any of the payments described in
the power purchase agreement. If Williams Energy declares a force majeure,
however, it must, subject to its right to terminate the power purchase agreement
if the force majeure has not been fully corrected or alleviated within 18 months
of the declaration, continue to pay us only the applicable monthly total fixed
payment as described in the power purchase agreement until the earlier of (1)
the termination of the force majeure condition or (2) the termination of the
power purchase agreement. Furthermore, if we declare a force majeure due to an
action or inaction of GPU Energy that prevents us from delivering net electric
energy to the electric delivery point, Williams Energy must continue to pay the
applicable portion of the total fixed payment for the first 24 hours of the
period. Notwithstanding anything to the contrary contained in the power purchase
agreement, except as may expressly be provided in the power purchase agreement,
the term force majeure will not include the following nor will the following
excuse a party's performance:

         -        The failure to complete our facility by or to achieve the
                  commercial operation date as extended under the power purchase
                  agreement, which failure is caused by, arises out of or
                  results from the acts or omissions of us, and/or from the acts
                  or omissions of any third party, unless, and then only to the
                  extent that, any acts or omissions of the third party (1)
                  would itself be excused under the power purchase agreement by
                  virtue of a force majeure condition, or (2) is the result of a
                  failure of Williams Energy to provide fuel to our facility
                  under the power purchase agreement; or


                                       11
<PAGE>

         -        Any reduction, curtailment or interruption of generation or
                  operation of our facility, or of the ability of Williams
                  Energy to accept or transmit net electric energy, whether in
                  whole or in part, which reduction, curtailment or interruption
                  is caused by or arises from the acts or omissions of any third
                  party providing services or supplies to the party claiming
                  force majeure, including any vendor or supplier to either
                  party of materials, equipment, supplies or services, or any
                  inability of GPU Energy to deliver net electric energy to
                  Williams Energy, unless, and then only to the extent that, any
                  acts or omissions would itself be excused under the power
                  purchase agreement as a force majeure; or

         -        Any outage, whether or not due to the fault or negligence of
                  us, of our facility attributable to a defect or inadequacy in
                  the manufacture, design or installation of our facility that
                  prevents, curtails, interrupts or reduces the ability of our
                  facility to generate net electric energy or the ability of us
                  to perform our obligations under the power purchase agreement;
                  or

         -        To the extent that the party claiming force majeure failed to
                  prevent or remedy the force majeure condition by taking all
                  commercially reasonable acts, short of litigation if the
                  remedy requires litigation, and, except as otherwise provided
                  in the power purchase agreement, failed to resume performance
                  under the power purchase agreement with reasonable dispatch
                  after the termination of the force majeure condition; or

         -        To the extent that the claiming party's failure to perform was
                  caused by lack of funds; or

         -        To the extent Williams Energy is unable to perform due to a
                  shortage of natural gas or fuel oil supply not caused by an
                  event of force majeure; or

         -        Because of an increase or decrease in the market price of
                  electric energy/capacity, natural gas or fuel oil, or because
                  it is uneconomic for the party to perform its obligations
                  under the power purchase agreement.

         Neither party will be required to settle any strike, walkout, lockout
or other labor dispute on terms which, in the sole judgment of the party
involved in the dispute, are contrary to its interest. Williams Energy will have
the right to terminate the power purchase agreement if a force majeure has been
declared by us and the effect of the force majeure has not been fully corrected
or alleviated within 18 months after the date the force majeure was declared.
Williams Energy, however, will not have the right to terminate the power
purchase agreement if (1) the force majeure was caused by Williams Energy or (2)
the force majeure event does not prevent or materially limit Williams Energy's
ability to sell our facility's net capacity into or through the PJM power pool
market or to a third party.

EVENTS OF DEFAULT; TERMINATION; REMEDIES

         The following will constitute events of default under the power
purchase agreement:

         -        breach of any term or condition of the power purchase
                  agreement, including, but not limited to, (1) any failure to
                  maintain or to renew any security, (2) any breach of a
                  representation, warranty or covenant or (3) failure of either
                  party to make a required payment to the other party;


                                       12
<PAGE>

         -        our facility is not available to provide fuel conversion
                  services to Williams Energy during any period of 180
                  consecutive days after the commercial operation date, except
                  as may be excused by force majeure or the absence of available
                  natural gas, or if the non-availability is caused by act or
                  failure by Williams Energy where the action is required by the
                  power purchase agreement;

         -        we sell or supply net electric energy, ancillary services or
                  capacity from our facility, or agree to do the same, to any
                  person or entity other than Williams Energy, without the prior
                  approval of Williams Energy;

         -        failure by us for 30 consecutive days to perform regular and
                  required maintenance, testing or inspection of the
                  interconnection facilities, our facility and/or other electric
                  equipment and facilities;

         -        failure by us for 30 consecutive days to correct or resolve a
                  material violation of any code, regulation and/or statute
                  applicable to the construction, installation, operation or
                  maintenance of our facility, the interconnection facilities,
                  protective gas apparatus or any other electric equipment and
                  facilities required to be constructed and operated under the
                  power purchase agreement when the violation impairs our
                  continued ability to perform under the power purchase
                  agreement;

         -        involuntary bankruptcy or insolvency of either party and
                  continues for more than 60 days;

         -        voluntary bankruptcy or insolvency by either party;

         -        any modifications, alterations or other changes to our
                  facility by or on behalf of us which prevent us from
                  fulfilling, or materially diminishes our ability to fulfill,
                  our obligations, duties, rights and responsibilities under the
                  power purchase agreement and which after reasonable notice and
                  opportunity to cure, are not corrected;

         -        there will be outstanding for more than 60 days any
                  unsatisfied final, non-appealable judgment against us in an
                  amount exceeding $500,000, unless the existence of the
                  unsatisfied judgment does not materially affect our ability to
                  perform our obligations under the power purchase agreement;
                  and

         -        (1) The AES Corporation will cease to own, directly or
                  indirectly, beneficially and of record, at least 50 percent of
                  the equity interests in our company or will cease to possess
                  the power to direct or cause the direction of our management
                  or policies or (2) any person or an affiliate, other than The
                  AES Corporation or an affiliate, authorized to act as a power
                  marketer by FERC will own, directly or indirectly,
                  beneficially or of record, any of the equity interests in our
                  company.

         Upon the occurrence of any event of default, other than an event of
default for voluntary bankruptcy or insolvency, for which no notice will be
required or opportunity to cure permitted, the party not in default, to the
extent the party has actual knowledge of the occurrence of the event of default,
must give prompt written notice of the default to the defaulting party. The
notice must describe, in reasonable detail, the nature of the default and, where
known and applicable, the steps necessary to cure the default. The defaulting
party must have 30 days, but only two business days in the case of a default for
failure to


                                       13
<PAGE>

make a requested payment to the non-defaulting party under the power purchase
agreement, following receipt of the notice either to cure the default or
commence in good faith all the steps as are necessary and appropriate to cure
the default if the default cannot be completely cured within the 30-day period.
If the defaulting party fails to cure the default or take the steps as provided
under the preceding paragraph, and immediately upon the occurrence of any event
of default for voluntary bankruptcy or insolvency, the power purchase agreement
may be terminated by the non-defaulting party, without any liability or
responsibility whatsoever, by written notice to the party in default. The
non-defaulting party may exercise all the rights and remedies as are available
to it to recover damages caused by the default.

SECURITY

         We agreed to compensate Williams Energy for any actual damages it
suffers or incurs as the result of its reliance upon the delivery of our
facility's net capacity, ancillary services and fuel conversion services, to the
extent the damages cannot be mitigated fully. We further agreed that the damages
Williams Energy may suffer under these circumstances will be any and all
reasonable costs incurred by Williams Energy in excess of costs that would have
been incurred had the commercial operation date occurred on or before June 30,
2001, as the date may be extended under the power purchase agreement. As
required by the power purchase agreement, we have provided to Williams Energy a
guaranty of our performance and payment obligations under the power purchase
agreement from The AES Corporation in the amount of $30 million, which guaranty
must terminate on the commercial operation date. At any time that The AES
Corporation's senior unsecured debt is no longer rated investment grade by
Standard & Poor's or Moody's, or at any time at our option, we must provide the
financial security for the guaranty amount as specified in the following
paragraph. Upon the provision of the guaranty or other financial security
referred to in this paragraph, the guaranty provided by The AES Corporation
under the provisions of the original power purchase agreement must be canceled
and returned to us.

         We must provide to Williams Energy, within 30 days after a reduction in
the unsecured debt rating of The AES Corporation as described above, or at any
time if payment is so secured at our option, security in the form of a single
letter of credit, satisfactory to Williams Energy in form and substance, upon
which Williams Energy may draw if our facility does not achieve the commercial
operation date by the date specified in the power purchase agreement, as the
date may be extended. If the security contains an expiration date, either
express or implied, we must renew the security not later than 30 days prior to
the expiration date and must contemporaneously provide written notice of the
renewal to Williams Energy. If we fail to renew the security as described above,
Williams Energy is entitled to demand and receive payment thereunder on or after
three days after written notice of the failure is provided to us, and in the
event the amount so drawn must be deposited in an interest bearing escrow
account and must be returned to us at the commercial operation date unless
otherwise drawn on by Williams Energy in satisfaction of our obligations under
the preceding security provisions. The requirement for the security must
terminate upon the commercial operation date.

         Williams Energy has provided to us a guarantee, issued by The
Williams Companies, Inc., of Williams Energy's performance and payment
obligations under the power purchase agreement. If The Williams Companies,
Inc. is no longer rated investment grade, however, the guarantee must, within
30 days after the loss of the rating, be replaced by a guarantee from another
affiliate of Williams Energy that is rated investment grade or by other
security acceptable to us, including a letter of credit which meets the
requirements of the power purchase agreement.

                                       14
<PAGE>

ASSIGNMENT

         Generally, neither the power purchase agreement nor any rights, duties,
interests or obligations thereunder may be assigned, transferred, pledged or
otherwise encumbered or disposed of, by operation of law or otherwise without
the prior written consent of the other party.

         We agreed that we will not sell, transfer, assign, lease or otherwise
dispose of our facility or any substantial portion thereof or interest therein
necessary to perform our obligations under the power purchase agreement to any
person that is a FERC-authorized power marketer or an affiliate without the
prior written consent of Williams Energy, which consent must not be unreasonably
withheld.

                             CONSTRUCTION AGREEMENT

         We, as assignee of AES Ironwood, Inc., have entered into an Agreement
for Engineering, Procurement and Construction Services, dated as of September
23, 1998, as amended, with Siemens Westinghouse for Siemens Westinghouse to
perform services in connection with the design, engineering, procurement, site
preparation and clearing, civil works, construction, start-up, training and
testing and to provide all materials and equipment (excluding operational spare
parts), machinery, tools, construction fuels, chemicals and utilities, labor,
transportation, administration and other services and items (collectively and
separately, the "services") for our facility.

SIEMENS WESTINGHOUSE'S SERVICES AND OTHER OBLIGATIONS

         Siemens Westinghouse must complete our project by performing or causing
to be performed all of the services. The required services will include:
engineering and design; construction and construction management; providing
design documents, instruction manuals, a project procedures manual and quality
assurance plan; procuring all materials, equipment and supplies and all
contractor and subcontractor labor and manufacturing and related services;
providing a spare parts list; providing all labor and personnel; obtaining some
applicable permits and providing information to assist us in obtaining other
applicable permits; performing inspection, expediting, quality surveillance and
traffic services; transporting, shipping, receiving and marshalling all
materials, equipment and supplies and other items; providing storage for all
materials, supplies and equipment and procurement or disposal of all soil and
gravel (including remediation and disposal of specific hazardous materials);
providing for design, construction and installation of electrical
interconnection facilities (including electric metering equipment, automatic
regulation equipment, protective apparatus and control system equipment) and
reviewing other GPU Energy interconnections to our facility (including gas and
water pipelines); performing performance tests and power purchase agreement
output tests; providing for start-up and initial operation functions; and
providing specified spare parts, waste disposal services, chemicals,
consumables and utilities.

         The services will also include: training our personnel prior to
provisional acceptance; providing us and our designee with access to the
facility site; obtaining additional necessary real estate rights; clean-up and
waste disposal (including hazardous materials brought to the facility site by
Siemens Westinghouse or the subcontractors); submitting a construction schedule
and progress reports; payment of contractor taxes; employee identification and
security arrangements; protecting adjoining utilities and public and private
lands from damage; paying appropriate royalties and license fees; providing
final releases and waivers to us; posting collateral or providing other
assurances if major subcontractors fail to furnish final waivers; maintaining
labor relations and project labor agreements; providing further


                                       15
<PAGE>


assurances; coordinating with other contractors; and causing Siemens Corporation
to execute and deliver the related guaranty.

CONSTRUCTION AND START-UP

         Siemens Westinghouse must perform certain services in accordance with
prudent utility practices, generally accepted standards of professional care,
skill, diligence and competence applicable to engineering, construction and
project management practices, all applicable laws, all applicable permits, the
real estate rights, the quality assurance plan, GPU Energy electrical
interconnection requirements, the environmental requirements and safety
precautions described in the construction agreement, and all of the requirements
necessary to maintain the warranties granted by the subcontractors under the
construction agreement. Siemens Westinghouse must perform the services in
accordance with our construction schedule and must cause

         -        each construction progress milestone to be achieved on or
                  prior to the applicable construction progress milestone date,

         -        either provisional acceptance or interim acceptance of our
                  facility to occur on or prior to the guaranteed provisional
                  acceptance date, and

         -        final acceptance of our facility to occur on or before the
                  guaranteed final acceptance date.

         Siemens Westinghouse must perform the services so that our facility,
when operated in accordance with the instruction manual and the power purchase
agreement operating requirements, regardless of whether our facility is operated
at 705 megawatts or at a different output, on natural gas and on fuel oil,
respectively, as of provisional acceptance, interim acceptance and final
acceptance, will comply with all applicable laws and applicable permits, GPU
Energy electrical interconnection requirements and the guaranteed emissions
limits in accordance with the completed performance test requirements.

CONTRACT PRICE AND PAYMENT

         The adjusted contract price, including base scope changes through the
date of the construction agreement, is $241 million and commencing on the
construction commencement date is to be paid in installments in accordance with
the payment and milestone schedule. The contract price may be adjusted as a
result of scope changes. We must make scheduled payments to Siemens Westinghouse
upon receipt of Siemens Westinghouse's payment request unless the independent
engineer fails to confirm the matters certified to by Siemens Westinghouse in
the request, in which case we may defer the scheduled payments until the
condition is satisfied. We must withhold from each scheduled payment 5%, other
than our project completion payment, of the payment until after final
acceptance. At final acceptance, we must pay all retainage except for $1,000,000
and 150% of the cost of completing all punch list items. We must pay our project
completion payment, including all remaining retainage within 30 days after
project completion. Upon the termination of the construction agreement, Siemens
Westinghouse will be entitled to a termination payment equal to the scheduled
payments due and owing, retainage and termination costs incurred by Siemens
Westinghouse and subcontractors. We are not obligated to make any payment to
Siemens Westinghouse at any time Siemens Westinghouse is in material breach of
the construction agreement, unless Siemens Westinghouse is diligently pursuing a
cure. All payments are subject to release of claims.


                                       16
<PAGE>

OUR REQUIRED SERVICES

         Our responsibilities include: designating a representative for our
project; furnishing Siemens Westinghouse access to the facility site; securing
specified applicable permits and real estate rights; providing specified
start-up personnel; furnishing water, water delivery facilities, specified spare
parts, water disposal services and consumables; providing permanent utilities
for the start-up, testing and operation of our facility; providing fuel supply
arrangements; providing electrical interconnection facilities arrangements;
furnishing approvals; administering third-party contracts; and causing The AES
Corporation to provide a pre-financial closing guaranty.

         If we fail to meet any of our obligations under the construction
agreement, then, to the extent that Siemens Westinghouse was reasonably delayed
in the performance of the services as a direct result thereof, an equitable
adjustment to one or more of the contract price, the guaranteed completion
dates, the construction progress milestone dates, the payment and milestone
schedule and our construction schedule, and, as appropriate, the other
provisions of the construction agreement that may be affected thereby, will be
made by agreement between us and Siemens Westinghouse.

COMPLETION AND ACCEPTANCE OF OUR PROJECT

MECHANICAL COMPLETION

         MECHANICAL COMPLETION WILL BE ACHIEVED WHEN:

         -        All equipment and facilities necessary for the full, safe and
                  reliable operation of our facility have been properly
                  constructed, installed, insulated and protected where
                  required, and correctly adjusted, and can be safely used for
                  their intended purposes in accordance with the instruction
                  manual and all applicable laws and applicable permits;

         -        The tests required for mechanical completion that are
                  identified in the construction agreement have been
                  successfully completed;

         -        Our facility is fully and properly interconnected and
                  synchronized with the electrical system of GPU Energy in
                  accordance with GPU Energy electrical interconnection
                  requirements, and all features and equipment of our facility
                  are capable of operating simultaneously; and

         -        The complete performance by Siemens Westinghouse of all the
                  services relating to our facility under the construction
                  agreement, except for any remaining punch list items,
                  performance tests, power purchase agreement output tests and
                  reliability run, in compliance with the standards of
                  performance described in the construction agreement, so that
                  our facility meets all of the applicable requirements
                  described in the construction agreement but excluding the
                  achievement of the guaranteed emission limits and the
                  performance guarantees.

         When Siemens Westinghouse believes that it has achieved mechanical
completion, it must deliver to us the notice of mechanical completion. Within 10
days of receipt of the notice of mechanical completion, if it is satisfied that
the mechanical completion requirements have been met, we must deliver to Siemens
Westinghouse a mechanical completion certificate. If reasonable cause exists for
doing so, we must notify Siemens Westinghouse in writing that mechanical
completion has not been achieved,



                                       17
<PAGE>

stating the reasons therefor. If mechanical completion has not been achieved as
so determined by us, Siemens Westinghouse must promptly do so or perform the
additional services that will achieve mechanical completion of our facility and
must issue to us another notice of mechanical completion. The procedure must be
repeated as necessary until mechanical completion of our facility has been
achieved.

PERFORMANCE TESTS AND POWER PURCHASE AGREEMENT OUTPUT TESTS

         Once mechanical completion has been achieved, Siemens Westinghouse must
perform the performance tests and power purchase agreement output tests in
accordance with criteria described in the construction agreement. Siemens
Westinghouse must give us notice of the performance tests and power purchase
agreement output tests. We must arrange for the disposition of output during
start-up and testing. Siemens Westinghouse may declare the performance test or
the power purchase agreement output test to be a completed performance test or a
completed power purchase agreement output test, respectively, if during the
tests the operation of our facility complies with applicable laws, applicable
permits, guaranteed emissions limits and other required standards.

PROVISIONAL ACCEPTANCE

         Provisional acceptance will be achieved when:

         -        Siemens Westinghouse has concluded a completed performance
                  test in which our facility, while operating on natural gas,
                  demonstrates during a minimum of two 2-hour tests an average
                  net electrical output and a net heat rate of 95% (or higher)
                  of the natural gas-based electrical output guarantee and 108%
                  (or lower) of the natural gas-based heat rate guarantee;

         -        Siemens Westinghouse has concluded a completed power purchase
                  agreement output test in which our facility demonstrates (1) a
                  level of achievement of 95% (or higher) of the natural
                  gas-based electrical output guarantee, while operating on
                  natural gas, and (2) to our reasonable satisfaction, the other
                  capabilities required to be demonstrated under the
                  construction agreement; and

         -        Our facility has achieved, and continues to satisfy, the
                  requirements of mechanical completion.

         When Siemens Westinghouse believes that it has achieved provisional
acceptance of our facility, it must deliver to us a notice of provisional
acceptance. If we are satisfied that the provisional acceptance requirements
have been met, we must deliver to Siemens Westinghouse a provisional acceptance
certificate. If reasonable cause exists for doing so, we must notify Siemens
Westinghouse in writing that provisional acceptance of our facility has not been
achieved, stating the reasons therefor. If we determine that provisional
acceptance of our facility has not been achieved, Siemens Westinghouse must
promptly do so or perform the additional services as will achieve provisional
acceptance and, if Siemens Westinghouse believes that provisional acceptance of
our facility has been achieved, must issue to us another notice of provisional
acceptance. Unless interim acceptance or final acceptance of our facility has
previously occurred, the procedure must be repeated as necessary until
provisional acceptance of our facility has been achieved. Upon the earliest to
occur of provisional acceptance, interim acceptance and final acceptance of our
facility, we must take possession and control our facility and will thereafter
be solely responsible for its operation and maintenance. After we take
possession and control of our facility, Siemens Westinghouse must have
reasonable access to our facility to complete the services. At


                                       18
<PAGE>

December 31, 2000, provisional acceptance had not been achieved. Although there
can be no assurances, we expect to achieve provisional acceptance by
approximately June 30, 2001.

INTERIM ACCEPTANCE

         Interim  acceptance will be achieved when:

         -        Siemens Westinghouse has concluded a completed performance
                  test in which our facility, while operating on natural gas,
                  demonstrates during the performance test an average net
                  electrical output and a net heat rate (each as measured and
                  corrected to the design operating conditions, all in
                  accordance with the procedures described in the construction
                  agreement) of 95% (or higher) of the natural gas-based
                  electrical output guarantee (but in no event lower than the
                  percentage of the natural gas-based electrical output
                  guarantee demonstrated by the applicable completed performance
                  test and completed power purchase agreement output test at
                  provisional acceptance, if applicable) and 104% (or lower) of
                  the natural gas-based heat rate guarantee;

         -        If neither provisional acceptance nor interim acceptance of
                  our facility has occurred, Siemens Westinghouse has concluded
                  a completed power purchase agreement output test in accordance
                  with the construction agreement to be concluded in which our
                  facility demonstrates (1) a level of achievement of 95% (or
                  higher) of the natural gas-based electrical output guarantee,
                  while operating on natural gas, and (2) to GPU Energy's
                  reasonable satisfaction, the other capabilities required to be
                  so demonstrated under the construction agreement;

         -        Our facility has achieved, and continues to satisfy the
                  requirements for the achievement of, mechanical completion;
                  and

         -        Siemens Westinghouse has completed performance of the services
                  except for (1) punch list items and (2) services that are
                  required by the terms of the construction agreement to be
                  completed after the achievement of interim acceptance.

         When Siemens Westinghouse believes that it has achieved interim
acceptance of our facility, it must deliver to us a notice of interim
acceptance. If we are satisfied that the interim acceptance requirements have
been met, we must deliver to Siemens Westinghouse an interim acceptance
certificate. If reasonable cause exists for doing so, we must notify Siemens
Westinghouse in writing that interim acceptance of our facility has not been
achieved, stating the reasons therefor. If we determine that interim acceptance
has not been achieved, Siemens Westinghouse must promptly take the action or
perform the additional services as will achieve interim acceptance and, if
Siemens Westinghouse believes that interim acceptance of our facility has been
achieved, must issue to us another notice of interim acceptance. Unless final
acceptance of our facility must have previously occurred, the procedure must be
repeated as necessary until interim acceptance of our facility has been
achieved.

FINAL ACCEPTANCE

         Final acceptance will be achieved when:

         -        Siemens Westinghouse has concluded a completed performance
                  test in which our facility, while operating separately on
                  natural gas and on fuel oil, demonstrates during the


                                       19
<PAGE>

                  performance test an average net electrical output and a net
                  heat rate of 100% (or higher) of each of the corresponding
                  natural gas-based and fuel oil-based electrical output
                  guarantees and 100% (or lower) of each of the corresponding
                  natural gas-based and fuel oil-based heat rate guarantees;

         -        If neither provisional acceptance nor interim acceptance of
                  our facility has occurred or if we have requested that a new
                  completed power purchase agreement output test be conducted in
                  connection with final acceptance of our facility, Siemens
                  Westinghouse has concluded a completed power purchase
                  agreement output test in which our facility demonstrates (1) a
                  level of achievement of 100% (or higher) of the natural
                  gas-based electrical output guarantee, while operating on
                  natural gas, and (2) to GPU Energy's reasonable satisfaction,
                  the other capabilities required to be so demonstrated under
                  the construction agreement;

         -        our facility has achieved, and continues to satisfy the
                  requirements for the achievement of, mechanical completion;

         -        the reliability guarantee has been achieved under the
                  construction agreement; and

         -        Siemens Westinghouse has completed performance of the services
                  except for (1) punch list items and (2) services that are
                  required by the terms of the construction agreement to be
                  completed after the achievement of final acceptance, such as
                  Siemens Westinghouse's warranty obligations.

         The reliability guarantee will have been achieved if and only if our
facility demonstrates an average equivalent availability of not less than 92%
while operating over a period of at least 45 consecutive days in accordance with
applicable laws, applicable permits, GPU Energy electrical interconnection
requirements, the power purchase agreement operating requirements, the
guaranteed emissions limits, the instruction manual and the power purchase
agreement.

         When Siemens Westinghouse believes that it has achieved final
acceptance of our facility, it must deliver to us a notice of final acceptance.
If we are satisfied that the final acceptance requirements have been met, we
must deliver to Siemens Westinghouse a final acceptance certificate. If
reasonable cause exists for doing so, we must notify Siemens Westinghouse in
writing that final acceptance has not been achieved, stating the reasons
therefor. If we determine that final acceptance has not been achieved, Siemens
Westinghouse must promptly do so or perform the additional services as will
achieve final acceptance and must issue to us another notice of final
acceptance. The procedure must be repeated as necessary until final acceptance
has been achieved or deemed to have occurred.

         At any time, by giving notice to Siemens Westinghouse, we, in our sole
discretion, may elect to effect final acceptance, in which case final acceptance
will be deemed effective as of the date of the notice, and Siemens Westinghouse
will have no liability to us for any amounts thereafter arising as performance
guarantee payments, other than any interim period rebates that arose prior to
the election by us, for failure of our facility to achieve any or all of the
applicable performance guarantees.

         At any time after provisional acceptance or interim acceptance of our
facility has been achieved, Siemens Westinghouse may, after exhausting all
reasonable repair and replacement alternatives in order to achieve the
applicable performance guarantees for final acceptance, so long as the
reliability guarantee will have been achieved, give to us notice of its
intention to elect to declare final acceptance. In that


                                       20
<PAGE>

event, Siemens Westinghouse may elect to use the results of the most recent
eligible completed performance test for the purpose of determining our
facility's level of achievement of the performance guarantees. Final acceptance
will be deemed effective as of the last to occur of (1) the date of our receipt
of the declaration and report of the final completed performance test, or, as
applicable, the most recent completed performance test, (2) the date of our
receipt of the declaration and report of any additional completed power purchase
agreement output test required by us in connection with final acceptance and (3)
the effective date of the achievement of the reliability guarantee.

         If on or before the guaranteed final acceptance date (1) our facility
has achieved either provisional acceptance or interim acceptance, (2) the most
recent completed performance test has satisfied the relevant provisions of the
construction agreement and (3) the reliability guarantee has been achieved, then
final acceptance of our facility will be deemed to occur on the guaranteed final
acceptance date. If (1) on or before the guaranteed final acceptance date, our
facility has achieved at least provisional acceptance or interim acceptance and
has achieved all other requirements for final acceptance except for the
reliability guarantee and (2) within 90 days after the guaranteed final
acceptance date, the reliability guarantee has been achieved and all other
requirements for final acceptance continue to be satisfied at that time, then
final acceptance of our facility will be deemed to occur on the date on which
the reliability guarantee is achieved.

PROJECT COMPLETION

         Project completion will be achieved under the construction agreement
when:

         -        Final acceptance of our facility will have occurred and the
                  performance guarantees with respect to our facility will have
                  been achieved, or in lieu of achievement of the performance
                  guarantees, applicable rebates under the construction
                  agreement will have been paid, we will have elected final
                  acceptance;

         -        The reliability guarantee will have been achieved;

         -        Siemens Westinghouse will have demonstrated during the
                  completed performance test that the operation of our facility
                  does not exceed the guaranteed emissions limits;

         -        The requirements for achieving mechanical completion of our
                  facility will continue to be met;

         -        The punch list items will have been completed in accordance
                  with the construction agreement; and

         -        Siemens Westinghouse will have performed all of the services,
                  other than those services, such as Siemens Westinghouse's
                  warranty obligations, which by their nature are intended to be
                  performed after project completion.

         When Siemens Westinghouse believes that it has achieved project
completion, it must deliver to us a notice of project completion. If we are
satisfied that the final acceptance requirements have been met, we must
deliver to Siemens Westinghouse a project completion certificate. If
reasonable cause exists for doing so, we must notify Siemens Westinghouse in
writing that project completion has not been achieved, stating the reasons
therefor. If our project completion has not been achieved as so determined by
us, Siemens Westinghouse must promptly take such action or perform the
additional services as will achieve

                                       21
<PAGE>

project completion and must issue to us another notice of project completion.
The procedure must be repeated as necessary until project completion is
achieved.

         Siemens Westinghouse will be obligated to achieve project completion
within 180 days after final acceptance of our facility. If Siemens Westinghouse
does not achieve our project completion on or before our project completion
deadline or if we determine that Siemens Westinghouse is not proceeding with all
due diligence to complete the services in order to achieve project completion by
the deadline, we may retain another contractor to complete the work at the
contractor's expense.

PRICE REBATE FOR FAILURE TO MEET GUARANTEES

COMPLETION DATES

         Siemens Westinghouse guarantees that (1) at least one of provisional
acceptance, interim acceptance or final acceptance of our facility will be
achieved on or before the guaranteed provisional acceptance date and (2) final
acceptance of our facility will be achieved on or before the guaranteed final
acceptance date.

         If none of provisional acceptance, interim acceptance or final
acceptance of our facility occurs by the date that is 45 days after the
guaranteed provisional acceptance date, Siemens Westinghouse must pay us
$110,000 per day for each day provisional acceptance, interim acceptance or
final acceptance is later than the guaranteed provisional acceptance date, but
in no event will the aggregate amount of the payments be greater than the Delay
LD SubCap (the aggregate amount of which is equal to 20% of the contract price).

         If none of provisional acceptance, interim acceptance and final
acceptance of our facility occurs on or before the date that is 40 days after
the guaranteed provisional acceptance date, Siemens Westinghouse must, on the
date, submit for approval by us and the independent engineer a plan to
accelerate the performance of the services as necessary in order to achieve (1)
at least one of provisional acceptance, interim acceptance and final acceptance
of our facility by the date that is 12 months after the guaranteed provisional
acceptance date and (2) final acceptance of our facility by the guaranteed final
acceptance date. If the plan is not approved by us and the independent engineer,
Siemens Westinghouse must revise the plan and resubmit a revised plan for
approval by us and the independent engineer.

         If provisional acceptance, interim acceptance and final acceptance,
whichever is the earlier to occur, of our facility occurs prior to the
guaranteed provisional acceptance date, we must pay Siemens Westinghouse $50,000
per day as an early completion bonus, for each day by which provisional
acceptance, interim acceptance and final acceptance precedes the guaranteed
provisional acceptance date, but in no event will the aggregate amount of the
bonus exceed $3,000,000.

PERFORMANCE GUARANTEES

ELECTRICAL OUTPUT

         If the average net electrical output of our facility at provisional
acceptance or interim acceptance, whichever is the earlier to occur, is less
than the natural gas-based electrical output guarantee, then Siemens
Westinghouse must pay us, as a rebate, for each day during the interim period,
an amount equal to $0.22 per day for each kilowatt by which the average net
electrical output is less than the natural gas-based electrical output
guarantee.


                                       22
<PAGE>

         Upon final acceptance, if (1) the average net electrical output of our
facility during the natural gas-fired portion of the completed performance test
is less than the natural gas-based electrical output guarantee, then we must pay
Siemens Westinghouse, as a rebate, an amount equal to $550 for each kilowatt by
which the average net electrical output is less than the natural gas-based
electrical output guarantee and (2) the fuel oil-based portion of the completed
performance test is less than the fuel oil-based electrical output guarantee,
then Siemens Westinghouse must pay us, as a rebate, an amount equal to $30 for
each kilowatt by which the average net electrical output is less than the fuel
oil-based electrical output guarantee.

         Upon final acceptance, if the average net electrical output of our
facility during the natural gas-fired portion of the completed performance test
is greater than the natural gas-based electrical output guarantee, then Siemens
Westinghouse must pay us as a bonus, an amount equal to 50% of the net
incremental revenues received by us during the period of the first three years
following the commercial operation date as a result of (1) any power purchase
agreement concluded with a utility whereby the utility purchases the excess
output, (2) any short-term sales of the excess output, and (3) any spot sales of
the excess output, in each of the cases (1) through (3) above after subtracting
all incremental costs and taxes associated with the excess output, so long as
the aggregate amount of any bonus does not in any event exceed $275 per kilowatt
of excess capacity.

HEAT RATE GUARANTEES

         If the average net heat rate of our facility at provisional acceptance
and/or interim acceptance, if having occurred before final acceptance, exceeds
the natural gas-based heat rate guarantee, then Siemens Westinghouse must pay
us, as a rebate, for each day during the interim period, an amount equal to $44
per day for each BTU/KwH by which the measured net heat rate is greater than the
natural gas-based heat rate guarantee.

         Upon final acceptance, if the net heat rate of our facility during (1)
the natural gas-fired portion of the completed performance test exceeds the
natural gas-based heat rate guarantee, then Siemens Westinghouse must pay us, as
a rebate, an amount equal to $162,300 for each BTU/KwH by which the measured
heat rate is greater than the natural gas-based heat rate guarantee, and (2) the
fuel oil-fired portion of the completed performance test exceeds the natural
gas-based heat rate guarantee, then Siemens Westinghouse must pay us, as a
rebate, an amount equal to $17,000 for each BTU/KwH by which the measured heat
rate is greater than the fuel oil-based heat rate guarantee.

         Upon final acceptance, if the average net heat rate during the natural
gas-fired portion of the completed performance test is less than the natural
gas-based heat rate guarantee, then we must pay Siemens Westinghouse, as a
bonus, an amount equal to $40,000 for each BTU/KwH by which the measured heat
rate is less that the natural gas-based heat rate guarantee so long as the
aggregate amount of any bonus does not in any event exceed $3,000,000.

LIABILITY AND DAMAGES

LIMITATION OF LIABILITY

         In no event will Siemens Westinghouse's liability exceed (1) the Delay
LD SubCap and (2) the Total LD SubCap (the aggregate amount of which is equal to
45% of the contract price).


                                       23
<PAGE>

CONSEQUENTIAL DAMAGES

         Neither party nor any of its contractors, subcontractors or other
agents providing equipment, material or services for our project will be liable
for any indirect, incidental, special or consequential loss or damage of any
type.

AGGREGATE LIABILITY OF CONTRACTOR

         The total aggregate liability of Siemens Westinghouse and any of its
subcontractors, including liabilities covered by the Delay LD SubCap and the
Total LD SubCap, to us will not in any event exceed an amount equal to the
contract price so long as the limitation of liability will not apply to
obligations to remove liens or to make indemnification payments.

WARRANTIES AND GUARANTEES

         Siemens Westinghouse warrants and guarantees that during the applicable
warranty period

         -        all machinery, equipment, materials, systems, supplies and
                  other items comprising our project must be new and of
                  first-rate quality which satisfies GPU Energy grade standards
                  and in accordance with prudent utility practices and the
                  specifications described in the construction agreement,
                  suitable for the use in generating electric energy and
                  capacity under the climatic and normal operating conditions
                  and free from defective workmanship or materials,

         -        it will perform all of its design, construction, engineering
                  and other services in accordance with the construction
                  agreement,

         -        our project and its components must be free from all defects
                  caused by errors or omissions in engineering and design, as
                  determined by reference to prudent utility practices, and must
                  comply with all applicable laws, all applicable permits, GPU
                  Energy electrical interconnection requirements, the power
                  purchase agreement operating requirements and the guaranteed
                  emissions limits; and

         -        the completed project must perform its intended functions of
                  generating electric energy and capacity as a complete,
                  integrated operating system as contemplated in the
                  construction agreement. If we notify Siemens Westinghouse
                  within 30 days after the expiration of the applicable warranty
                  period of any defects or deficiencies discovered during the
                  applicable warranty period, Siemens Westinghouse must promptly
                  reperform any of the services at its own expense to correct
                  any errors, omissions, defects or deficiencies and, in the
                  case of defective or otherwise deficient machinery, equipment,
                  materials, systems supplies or other items, replace or repair
                  the same at its own expense. Siemens Westinghouse warrants and
                  guarantees that, to the extent we have made all payments then
                  due to Siemens Westinghouse, title to our facility and all
                  work, materials, supplies and equipment must pass to us free
                  and clear of all liens, other than any permitted liens. Other
                  than the warranties and guarantees provided in the
                  construction agreement, there are no other warranties of any
                  kind, whether statutory, express or implied relating to the
                  services.

         During the applicable warranty period, Siemens Westinghouse must
promptly notify us of any engineering and design defects which are manifested in
any of Siemens Westinghouse's fleet of 501G


                                       24
<PAGE>

combustion turbines under construction, start-up or testing or in operation
during the warranty period and which could reasonably be expected to be common
to the fleet or this facility. Upon the notification from Siemens Westinghouse
of a fleet-wide or common defect and otherwise upon notification from us no
later than 30 days after the expiration of the applicable warranty period of any
defects or deficiencies in our project or any component, we must, subject to the
provisions of the construction agreement, make our facility or the subject
equipment available to Siemens Westinghouse for Siemens Westinghouse to
re-perform, replace or, at its option, repair the same at its expense so that it
is in compliance with the standards warranted and guaranteed, all in accordance
with the construction agreement.

FORCE MAJEURE

FORCE MAJEURE EVENT

         A force majeure event means any act or event that prevents the affected
party from performing its obligations, other than the payment of money, under
the construction agreement or complying with any conditions required to be
complied with under the construction agreement if the act or event is beyond the
reasonable control of and not the fault of the affected party and the party has
been unable by the exercise of due diligence to overcome or mitigate the effects
of the act or event. Force majeure events include, but are not limited to, acts
of declared or undeclared war, sabotage, landslides, revolution, terrorism,
flood, tidal wave, hurricane, lightning, earthquake, fire, explosion, civil
disturbance, insurrection or riot, act of God or the public enemy, action
(including unreasonable delay or failure to act) of a court or public authority,
or strikes or other labor disputes of a regional or national character that are
not limited to only the employees of Siemens Westinghouse or its subcontractors
and that are not due to the breach of a labor contract or applicable law by the
party claiming force majeure or any of its subcontractors. Force majeure events
do not include (1) strikes, work stoppages and labor disputes or unrest of any
kind that involve only employees of Siemens Westinghouse or any subcontractors,
except as expressly provided in the preceding sentence, (2) late delivery of
materials or equipment, except to the extent caused by a force majeure event and
(3) economic hardship.

EXCUSED PERFORMANCE

         If either party is rendered wholly or partly unable to perform its
obligations because of a force majeure event, that party will be excused from
whatever performance is affected by the force majeure event to the extent
affected so long as:

         -        the non-performing party gives the other party prompt notice
                  describing the particulars of the occurrence;

         -        the suspension of performance is of no greater scope and of no
                  longer duration than is reasonably required by the force
                  majeure event;

         -        the non-performing party exercises all reasonable efforts to
                  mitigate or limit damages to the other party;

         -        the non-performing party uses its best efforts to continue to
                  perform its obligations under the construction agreement and
                  to correct or cure the event or condition excusing
                  performance; and


                                       25
<PAGE>

         -        when the non-performing party is able to resume performance of
                  its obligations, that party must give the other party written
                  notice to that effect and must promptly resume performance
                  under the construction agreement.

SCOPE CHANGES

         We may order scope changes to the services, in which event one or more
of the contract price, the construction progress milestone dates, the guaranteed
completion dates, the payment and milestone schedule, our construction schedule
and the performance guarantees will be adjusted accordingly, if necessary. All
scope changes must be authorized by a scope change order and only we or our
representative may issue scope change orders. As soon as Siemens Westinghouse
becomes aware of any circumstances which it has reason to believe may
necessitate a scope change, Siemens Westinghouse must issue to us a scope change
order notice at its expense. If we desire to make a scope change, in response to
a scope change order notice or otherwise, we must submit a scope change order
request to Siemens Westinghouse. Siemens Westinghouse must promptly review the
scope change order request and notify us in writing of the options for
implementing the proposed scope change and the effect, if any, each option would
have on the contract price, the guaranteed completion dates, the construction
progress milestone dates, the payment and milestone schedule, our construction
schedule and the performance guarantees. No scope change order will be issued
and no adjustment of the contract price, the guaranteed completion dates, the
construction progress milestone dates, the payment and milestone schedule, our
construction schedule or the performance guarantees will be made in connection
with any correction of errors, omission, deficiencies, or improper or defective
work on the part of Siemens Westinghouse or any subcontractors in the
performance of the services. Changes due to changes in applicable laws or
applicable permits occurring after the date of the construction agreement must
be treated as scope changes.

EFFECT OF FORCE MAJEURE EVENT

         If and to the extent that any force majeure events affect Siemens
Westinghouse's ability to meet the guaranteed completion dates, or the
construction progress milestone dates, an equitable adjustment in one or more of
the dates, the payment and milestone schedule and our construction schedule must
be made by agreement between us and Siemens Westinghouse. No adjustment to the
performance guarantees and, except as otherwise expressly described below, the
contract price must be made as a result of a force majeure event. If Siemens
Westinghouse is delayed in the performance of the services by a force majeure
event, then:

         -        to the extent that the delay(s) are, in the aggregate, six
                  months or less, Siemens Westinghouse must absorb all of its
                  costs and expenses resulting from the delay(s); and

         -        to the extent that the delay(s) are, in the aggregate, more
                  than six months, Siemens Westinghouse must be reimbursed by us
                  for those incremental costs and expenses resulting from the
                  delay(s) which are incurred by Siemens Westinghouse after the
                  six-month period.

PRICE CHANGE

         An increase or decrease in the contract price, if any, resulting from a
scope change requested by us or made under the construction agreement must be
determined, upon the mutual agreement of the parties.


                                       26
<PAGE>

CONTINUED PERFORMANCE PENDING RESOLUTION OF DISPUTES

         If a dispute arises regarding the amount of any increase or decrease in
Siemens Westinghouse's costs with respect to a scope change, Siemens
Westinghouse must proceed with the performance of the scope change promptly
following our execution of the corresponding scope change order.

         If hazardous materials were not identified in an environmental site
assessment report delivered by us to Siemens Westinghouse prior to the
construction commencement date and were not brought onto the facility site by
Siemens Westinghouse or any of its subcontractors, then Siemens Westinghouse
will be entitled to a scope change under the construction agreement.

RISK OF LOSS

         With respect to our facility, until the risk transfer date, which is
the date at which provisional acceptance is achieved, Siemens Westinghouse must
bear the risk of loss and full responsibility for the costs of replacement,
repair or reconstruction resulting from any damage to or destruction of our
facility or any materials, equipment, tools and supplies, which are purchased
for permanent installation in or for use during construction of our facility.
After the risk transfer date with respect to our facility, we must bear all risk
of loss and full responsibility for repair, replacement or reconstruction with
respect to any loss, damage or destruction to our facility which occurs after
the risk transfer date.

TERMINATION

TERMINATION FOR COMPANY'S CONVENIENCE

         We may for its convenience terminate any part of the services or all
remaining services at any time upon 30 days' prior written notice to Siemens
Westinghouse specifying the part of the services to be terminated and the
effective date of termination. We may elect to suspend completion of all or any
part of the services upon 10 days' prior written notice to Siemens Westinghouse
or, in emergency situations, upon prior notice as circumstances permit.

TERMINATION BY CONTRACTOR

         If we fail to pay to Siemens Westinghouse any payment and our failure
continues for 20 days, then (1) Siemens Westinghouse may suspend its performance
of the services upon 10 days' prior written notice to us, which suspension may
continue until the time as the payment, plus accrued interest, is paid to
Siemens Westinghouse, and/or (2) if the payment has not been made prior to the
commencement of a suspension by Siemens Westinghouse under clause (1) above,
Siemens Westinghouse may terminate the construction agreement upon 60 days'
prior written notice to us so long as the termination does not become effective
if the payment, plus accrued interest, is made to Siemens Westinghouse prior to
the end of the notice period. In the event of a suspension, an equitable
adjustment to one or more of the contract price, the guaranteed completion
dates, the construction progress milestone dates, the payment and milestone
schedule and our construction schedule, and, as appropriate, the other
provisions of the construction agreement that may be affected thereby, must be
made by agreement between us and Siemens Westinghouse. If we have suspended
completion of all or any part of the services in accordance with the
construction agreement for a period in excess of two years in the aggregate,
Siemens Westinghouse may, at its option, at any time thereafter so long as the
suspension continues, give written notice to us that Siemens Westinghouse
desires to terminate the suspended services. Unless we order Siemens
Westinghouse to resume performance of the suspended services within 10 days of
the receipt of


                                       27
<PAGE>

the notice from Siemens Westinghouse, the suspended services will be deemed to
have been terminated by us for its convenience. If the occurrence of one or more
force majeure events prevents Siemens Westinghouse from performing the services
for a period of 365 consecutive days, Siemens Westinghouse may, at its option,
give written notice to us of its desire to terminate the construction agreement.

CONSEQUENCES OF TERMINATION

         -        Upon any termination, we may, unless the termination is
                  pursuant to any default, Siemens Westinghouse will be paid all
                  amounts due and owing to it under the construction agreement
                  and it is not deemed to constitute a waiver by Siemens
                  Westinghouse of any rights to payment it may have as a result
                  of a non-default related termination in the event of a
                  termination pursuant to a default, at its option elect to have
                  itself, or its designee, which may include any other affiliate
                  of The AES Corporation or any third-party purchaser, (1)
                  assume responsibility for and take title to and possession of
                  our project and any or all work, materials or equipment
                  remaining at the facility site and (2) succeed automatically,
                  without the necessity of any further action by Siemens
                  Westinghouse, to the interests of Siemens Westinghouse in any
                  or all items procured by Siemens Westinghouse for our project
                  and in any and all contracts and subcontracts entered into
                  between Siemens Westinghouse and any subcontractor with
                  respect to the equipment specified in the construction
                  agreement with respect to any or all other subcontractors
                  selected by us which are materially necessary to the timely
                  completion of our project, Siemens Westinghouse must use all
                  reasonable efforts to enable us, or our designee, to succeed
                  to Siemens Westinghouse's interests thereunder.

         -        If any termination occurs, we may, without prejudice to any
                  other right or remedy it may have, at its option, finish the
                  services by whatever method we may deem expedient.

DEFAULT AND REMEDIES

CONTRACTOR'S DEFAULT

         Siemens Westinghouse's events of default include: voluntary bankruptcy
or insolvency; involuntary bankruptcy or insolvency; materially adverse
misleading or false representation or warranty; improper assignment; failure to
maintain required insurance; failure to comply with applicable laws or
applicable permits; cessation or abandonment of the performance of services;
termination or repudiation of, or default under the related guaranty; failure to
supply sufficient skilled workers or suitable material or equipment; failure to
make payment when due for labor, equipment or materials; non-occurrence of
provisional acceptance, interim acceptance, final acceptance and construction
progress milestones; and failure to remedy non-performance or non-observance of
any provision in the construction agreement.

COMPANY'S RIGHTS AND REMEDIES

         If Siemens Westinghouse is in default of its obligations, we will have
any or all of the following rights and remedies, in addition to any other rights
and remedies that may be available to us under the construction agreement or at
law or in equity, and Siemens Westinghouse will have the following obligations:

         -        We may, without prejudice to any other right or remedy we may
                  have under the construction agreement or at law or in equity,
                  terminate the construction agreement in


                                       28
<PAGE>


                  whole or in part immediately upon delivery of notice to
                  Siemens Westinghouse. In case of partial termination, the
                  parties must mutually agree upon a scope change order to make
                  equitable adjustments, including the reduction and/or deletion
                  of obligations of the parties commensurate with the reduced
                  scope Siemens Westinghouse must have after taking into account
                  the partial termination, to one or more of the guaranteed
                  completion dates, the construction progress milestone dates,
                  the contract price, the payment and milestone schedule, our
                  construction schedule, the performance guarantees and the
                  other provisions of the construction agreement which may be
                  affected thereby, as appropriate. If the parties are unable to
                  reach mutual agreement as to the scope change order and the
                  dispute resolution procedures described in the construction
                  agreement are invoked, the procedures must give due
                  consideration to customary terms and conditions under which
                  Siemens Westinghouse has entered subcontracts with third party
                  prime contractors covering services substantially similar to
                  those services which are not being terminated.

         -        If requested by us, Siemens Westinghouse must withdraw from
                  the facility site, must assign to us its subcontracts, to the
                  extent permitted therein, as we may request, and must remove
                  the materials, equipment, tools and instruments used by, and
                  any debris and waste materials generated by, Siemens
                  Westinghouse in the performance of the services as we may
                  direct, and we, without incurring any liability to Siemens
                  Westinghouse (other than the obligation to return to Siemens
                  Westinghouse at the completion of our project the materials
                  that are not consumed or incorporated into our project, solely
                  on an "as is, where is" basis without any representation or
                  warranty of any kind whatsoever) may take possession of any
                  and all designs, drawings, materials, equipment, tools,
                  instruments, purchase orders, schedules and facilities of
                  Siemens Westinghouse at the facility site that we deem
                  necessary to complete the services.

ASSIGNMENT

CONSENT REQUIRED

         Generally, neither we nor Siemens Westinghouse will have any right to
assign or delegate any of their respective rights or obligations under the
construction agreement either voluntarily or involuntarily or by operation of
law.

                         MAINTENANCE SERVICES AGREEMENT

         We, as assignee of AES Ironwood, Inc., have entered into the
Maintenance Program Parts, Shop Repairs and Scheduled Outage TFA Services
Contract, dated as of September 23, 1998, with Siemens Westinghouse by which
Siemens Westinghouse will provide us with, among other things, combustion
turbine parts, shop repairs and scheduled outage technical field assistance
services.

         The maintenance services agreement became effective on the date of
execution and unless terminated early, must terminate upon completion of shop
repairs performed by Siemens Westinghouse following the eighth scheduled outage
of the applicable combustion turbine or 10 years from initial synchronization of
the applicable combustion turbine, whichever occurs first.


                                       29
<PAGE>

SCOPE OF WORK

         During the term of the maintenance services agreement, and in
accordance with the scheduled outage plan, Siemens Westinghouse is required to
do the following:

         -        deliver the type and quantity of new program parts for
                  installation of the combustion turbine; repair/refurbish
                  program parts and equipment for the combustion turbine;

         -        provide miscellaneous hardware;

         -        provide us with material safety data sheets for all hazardous
                  materials Siemens Westinghouse intends to bring/use on the
                  facility site;

         -        provide the services of a maintenance program engineer to
                  manage the combustion turbine maintenance program; and

         -        provide TFA Services.

         We are responsible for, among other things:

         -        storing and maintaining parts, materials and tools to be used
                  in or on the combustion turbine;

         -        maintaining and operating the combustion turbine consistently
                  with the warranty conditions;

         -        ensuring that its operator and maintenance personnel are
                  properly trained;

         -        transporting program parts in need of repair/refurbish; and

         -        providing Siemens Westinghouse, on a monthly basis, with the
                  required equivalent starts and equivalent base load hours
                  ("EBHs").

         We and Siemens Westinghouse will jointly develop the scheduled outage
plan. The scheduled outage plan will be consistent with the terms and conditions
of the power purchase agreement.

EARLY REPLACEMENT

         If it is determined that due to normal wear and tear a program part(s)
for the combustion turbine has failed or will not last until the next scheduled
outage, and the part has to be repaired before the scheduled replacement period,
Siemens Westinghouse will replace the program part by moving up a new program
part which is otherwise scheduled to be delivered at a later date. The contract
price for the replacement will not be affected if the replacement date is less
than or equal to one year earlier than the scheduled outage during which the
program part was scheduled to be replaced. If the actual replacement date for a
program part is more than one year earlier than the scheduled outage at which
point the program part was scheduled to be replaced, the early replacement will
result in an adjustment to the payment schedule. Siemens Westinghouse has the
final decision with regard to the replacement or refurbishment associated with
any program part. If we dispute Siemens Westinghouse's decision, we may seek to
resolve the dispute in accordance with the dispute resolution procedures
discussed below.


                                       30
<PAGE>

PARTS LIFE CREDIT

         After applicable warranty periods described in the maintenance services
agreement and the construction agreement, Siemens Westinghouse will provide a
parts life credit if a program part requires replacement due to normal wear and
tear prior to meeting its expected useful life. Siemens Westinghouse has the
final decision with regard to actual parts life and the degree of repair or
refurbishment associated with any program parts. The parts life credit will be
calculated in terms of EBHs and equivalent starts. The price of the replacement
part will be adjusted for inflation. If we dispute Siemens Westinghouse's
decision, we may seek to resolve the dispute in accordance with the dispute
resolution procedures discussed below.

CONTRACT PRICE AND PAYMENT TERMS

         Siemens Westinghouse will invoice us monthly and payments are then due
within 25 days. The fees assessed by Siemens Westinghouse will be based on the
number of EBHs accumulated by the applicable combustion turbine as adjusted for
inflation. The contract price will be the aggregate number of fees as adjusted
plus any additional payment amount mutually agreed to by the parties under a
change order.

UNSCHEDULED OUTAGES AND UNSCHEDULED OUTAGE WORK

         If during the term of the maintenance services agreement an unscheduled
outage occurs resulting from (1) the non-conformity of new program parts; (2)
the failing of a shop repair; (3) a program part requiring replacement due to
normal wear and tear prior to achieving its expected life in terms of EBHs or
equivalent starts; or (4) the failure of a service, performed by Siemens
Westinghouse, we must hire Siemens Westinghouse, to the extent not supplied by
Siemens Westinghouse as a warranty remedy under Siemens Westinghouse's
warranties under the maintenance services agreement to supply any additional
parts, miscellaneous hardware, shop repairs and TFA Services under a change
order. We will be entitled to any applicable parts life credit with respect to
program parts as well as a discount for TFA services. If the unscheduled outage
occurs within a specified number of EBHs of a scheduled outage and it was
anticipated that the additional parts, miscellaneous hardware, shop repairs and
TFA services to be used in the unscheduled outage were to be used during the
upcoming scheduled outage, the upcoming Scheduled outage must be moved up in
time to become the unscheduled outage/moved-up scheduled outage. We will not be
required to pay any additional money for the program parts, miscellaneous
hardware, shop repairs and TFA Services.

         If any program parts are delivered by Siemens Westinghouse within 15
days of receipt of the change order, we will pay to Siemens Westinghouse the
price for the program part described in the maintenance services agreement plus
a specified percentage. Any program part delivered after 30 days of the change
order will cost us the price described in the maintenance services agreement
minus a specified percentage.

CHANGES IN OPERATING RESTRICTIONS

         The maintenance services agreement requires that each combustion
turbine will be operated in accordance with the requirements of the power
purchase agreement and prudent utility practices, with 8,000 EBH/year and 100
equivalent starts per year by using natural gas fuel or liquid fuel and water.
Should the actual operations differ from these operating parameters which causes
a scheduled outage to




                                       31
<PAGE>

be planned/performed earlier or later than as expected, then, under a change
order, an adjustment in the scope, schedule, and price must be made.

WARRANTIES

         Siemens Westinghouse warrants that the new program parts, miscellaneous
hardware and any shop repairs must conform to standards of design, materials and
workmanship consistent with generally accepted practices of the electric utility
industry. The warranty period with respect to program parts, hardware and shop
repair is until the earlier of one year from the date of installation of the
original program part or hardware, a specific number of starts or fired hours
after installation of the program parts and hardware, or three years from the
date of delivery of the original program part, hardware, and in the case of shop
repair, three years from completion of the work. Warranties on the program parts
and hardware must not expire more than one year after the conclusion of the
maintenance services agreement.

         Siemens  Westinghouse  will repair or replace any program  part or
hardware,  at its cost,  if notified of any failure or  non-conformity  of
the program part or hardware during the warranty  period.  Siemens
Westinghouse also  warrants  that the services of its personnel  and
technical  information  transmitted  will be competent and consistent  with
prudent  utility  practices  and the services  will comply in all material
respects with laws and will be free from  defects  in  workmanship  for a
period of one year from the date of  completion  of that item of services.
The  warranties on the services must expire no later than one year after the
termination  or end of the term of the maintenance services agreement.

         In addition, Siemens Westinghouse warrants any program part removed
during a scheduled outage and delivered by us to the designated facility for
repair will be repaired and delivered by Siemens Westinghouse within 26 weeks.
If Siemens Westinghouse does not deliver the program part within this time frame
or does not provide a new program part in lieu of the program part being shop
repaired and an outage occurs which requires a program part, Siemens
Westinghouse will pay us liquidated damages for each day the program part is not
repaired and delivered the aggregate of which liquidated damage payments must
not exceed a maximum annual cap. If upon reaching the maximum cap on aggregate
liquidated damages, Siemens Westinghouse still has not repaired and delivered
the program part, we may elect to terminate the maintenance services agreement
because Siemens Westinghouse will be considered to have failed to perform its
material obligations.

         Except for the express warranties described in the maintenance services
agreement, Siemens Westinghouse makes no other warranties or representations of
any kind. No implied statutory warranty of merchantibility or fitness for a
particular purpose applies.

         The warranties provided by Siemens Westinghouse are conditioned upon
(1) our receipt, handling, storage, operation and maintenance of our project,
including any program parts and miscellaneous hardware, being done in accordance
with the terms of the combustion turbine instruction manuals; (2) operation of
the combustion turbine in accordance with the terms of the maintenance services
agreement; (3) repair of accidental damage done consistently with the equipment
manufacturer's recommendations; (4) us providing Siemens Westinghouse with
access to the facility site to perform its services under the maintenance
services agreement; and (5) hiring Siemens Westinghouse to provide TFA services,
program parts, shop repairs and miscellaneous hardware required to dissemble,
repair and reassemble the combustion turbine.


                                       32
<PAGE>

TERMINATION

         We may terminate the maintenance services agreement if:

         -        specific bankruptcy events affecting Siemens Westinghouse
                  occur;

         -        Siemens Westinghouse fails to perform or observe in any
                  material respect any provision in the maintenance services
                  agreement and fails to (1) promptly commence to cure and
                  diligently pursue the cure of the failure or (2) remedy the
                  failure within 45 days after Siemens Westinghouse receives
                  written notice of the failure;

         -        we terminate the construction agreement due to the
                  contractor's default thereunder or due to our inability to
                  obtain construction financing or environmental operating
                  permits; or

         -        the contractor terminates the construction agreement for any
                  reason other than our default thereunder.

         Notwithstanding the preceding, we may terminate the maintenance
services agreement at any time for its convenience following the completion of
the first major outage of both combustion turbines. In addition, the maintenance
services agreement will automatically terminate if:

         -        we terminate the construction agreement for reasons other than
                  (1) the default of the contractor and (2) our inability to
                  obtain permits for our project; or

         -        the contractor terminates the construction agreement for our
                  default thereunder. If the termination occurs, Siemens
                  Westinghouse must discontinue any work or services being
                  performed and continue to protect our property. Siemens
                  Westinghouse must transfer title to and deliver any new
                  program parts and miscellaneous hardware already purchased by
                  us. We must pay Siemens Westinghouse those amounts owed at the
                  time of termination.

LIMITATION OF LIABILITY

         We agreed that the remedies provided in the maintenance services
agreement are exclusive and that under no circumstances must the total aggregate
liability of Siemens Westinghouse during a given year exceed 100% of the
contract price payable to Siemens Westinghouse for that given year under the
maintenance services agreement. We further agreed that under no circumstances
must the total aggregate liability of Siemens Westinghouse for liquidated
damages during a given year exceed a specified percentage of the contract price
payable to Siemens Westinghouse for that given year under the maintenance
services agreement. We further agreed that under no circumstances must the total
aggregate liability of Siemens Westinghouse exceed a specified percentage of the
contract price payable to Siemens Westinghouse under the maintenance services
agreement.

FORCE MAJEURE

         Neither party will be liable for failure to perform any obligation or
delay in performance, excluding payment, to the extent the failure or delay is
caused by any act or event beyond the reasonable control of the affected party
or Siemens Westinghouse's suppliers so long as the act or event is not the fault
or the result of negligence of the affected party and the party has been unable
by exercise of reasonable diligence to overcome or mitigate the effects of the
act or event. Force majeure includes: any


                                       33
<PAGE>

act of God; act of civil or military authority; act of war whether declared or
undeclared; act (including delay, failure to act, or priority) of any
governmental authority; civil disturbance; insurrection or riot; sabotage; fire;
inclement weather conditions; earthquake; flood; strikes, work stoppages or
other labor difficulties of a regional or national character which are not
limited to only the employees of Siemens Westinghouse or its subcontractors or
suppliers and which are not due to the breach of an applicable labor contract by
the party claiming force majeure; embargo; fuel or energy shortage; delay or
accident in shipping or transportation to the extent attributable to another
force majeure; changes in laws which substantially prevents a party from
complying with its obligations in conformity with its requirements under the
maintenance services agreement or failure or delay beyond its reasonable control
in obtaining necessary manufacturing facilities, labor, or materials from usual
sources to the extent attributable to another force majeure; or failure of any
principal contractor to provide equipment to the extent attributable to another
force majeure. Force majeure does not include: (1) economic hardship, (2)
changes in market conditions or (3) except due to an event of force majeure,
late delivery of program parts or other equipment.

         If a delay in performance is excusable due to a force majeure, the date
of delivery or time for performance of the work will be extended by a period of
time reasonably necessary to overcome the effect of the force majeure and if the
force majeure lasts for a period longer than 30 days and the delay directly
increases Siemens Westinghouse's costs or expenses, we, after reviewing Siemens
Westinghouse's additional direct costs and expenses, will reimburse Siemens
Westinghouse for its reasonable additional direct costs and expenses incurred
after 30 days from the beginning of the force majeure resulting from the delay.

                            INTERCONNECTION AGREEMENT

         We have entered into a Generation Facility Transmission Interconnection
Agreement, dated as of March 23, 1999, with GPU Energy for the installation,
operation and maintenance of the facilities necessary to interconnect our
facility to the transmission system of GPU Energy. Under the interconnection
agreement, we and GPU Energy will construct, own, operate and maintain the
interconnection facilities. We will be responsible for all of the costs of
construction, operation and maintenance of the interconnection facilities,
including those owned by GPU Energy.

         At December 31, 2000, the interconnection facilities and protective gas
apparatus needed to generate and deliver net electric and/or ancillary services
to the electric delivery point have been completed as required under the power
purchase agreement.

SCOPE

         The interconnection agreement will become effective on the effective
date established by FERC and will continue in full force and effect until a
mutually agreeable termination date not to exceed the retirement date for our
facility.

COMPANY'S OBLIGATIONS

         At December 31, 2000, interconnection facilities have been installed
and we will install, own, operate and maintain a portion of the interconnection
facilities, including, but not limited to, a 230 kV switchyard, including
generator step up transformers, instrument transformers, revenue metering, power
circuit breakers, control and protective relay panels, supervisory control and
data acquisition equipment, and protective relaying equipment.


                                       34
<PAGE>

         We will reimburse GPU Energy for its actual costs of installing the
interconnection facilities. Our payments to GPU Energy consist of an advance
payment of $500,000 on the execution date of the interconnection agreement,
another payment of $40,000 within 30 days of the execution date of the
interconnection agreement (for work undertaken by GPU Energy prior to December
17, 1998), a payment of $1,000,000 at financial closing and monthly invoices for
the work performed.

         We are obligated to modify our portion of the interconnection
facilities as may be required to conform to changes in good utility practice or
as required by PJM.

         We are obligated to keep our facility insured against loss or damage in
accordance with the minimum coverages specified in the interconnection
agreement.

OPERATION AND MAINTENANCE OF INTERCONNECTION FACILITIES

         The parties are obligated to operate and maintain their respective
portions of the interconnection facilities in accordance with good utility
practices and the requirements and guidelines of PJM and GPU Energy.

         GPU Energy will have the right to disconnect our facility from its
transmission system and/or curtail, interrupt or reduce the output of our
facility when operation of our facility or the interconnection facilities
adversely affects the quality of service rendered by GPU Energy or interferes
with the safe and reliable operation of its transmission system or the regional
transmission system. GPU Energy, however, is obligated to use reasonable efforts
to minimize any disconnection, curtailment, interruption or reduction in output.

         In accordance with good utility practice, GPU Energy may remove the
interconnection facilities from service as necessary to perform maintenance or
testing or to install or replace equipment on the interconnection facilities or
the transmission system. GPU Energy is obligated to use due diligence to restore
the interconnection facilities to service as promptly as practicable.

         In addition, if we fail to operate, maintain, administer, or insure our
facility or its portion of the interconnection facilities, GPU Energy may,
following 30 days' notice and opportunity to cure the failure, disconnect our
facility from the transmission system.

FORCE MAJEURE

         If either party is delayed in or prevented from performing or carrying
out its obligations under the interconnection agreement by reason of force
majeure, the party will not be liable to the other party for or on account of
any loss, damage, injury or expense resulting from or arising out of the delay
or prevention so long as the party encountering the delay or prevention uses due
diligence to remove the cause or causes thereof.

DEFAULT

         The events of default under the interconnection agreement are:

         -        breach of a material term or condition and uncured failure to
                  provide a required schedule, report or notice;


                                       35
<PAGE>

         -        failure or refusal of a party to permit the representatives of
                  the other party access to maintenance records, or its
                  interconnection facilities or protective apparatus;

         -        appointment by a court of a receiver or liquidator or trustee
                  that is not discharged within 60 days, issuance by a court of
                  a decree adjudicating a party as bankrupt or insolvent or
                  sequestering a substantial part of its property that has not
                  been discharged within 60 days after its entry, or filing of a
                  petition to declare a party bankrupt or to reorganize a party
                  under the Federal Bankruptcy Code or similar state statute
                  that has not been dismissed within 60 days;

         -        voluntary filing by a party of a petition in bankruptcy or
                  consent to the filing of a bankruptcy or reorganization
                  petition, an assignment for the benefit of creditors, an
                  admission by a party in writing of its inability to pay its
                  debts as they come due, or consent to the appointment of a
                  receiver, trustee, or liquidator of a party or any part of its
                  property; and

         -        failure to provide the other party with reasonable written
                  assurance of the party's ability to perform any of the
                  material duties and responsibilities under the interconnection
                  agreement within 60 days of a reasonable request for the
                  assurance.

         Upon an event of default, the non-defaulting party may give notice of
the event of default to the defaulting party. The defaulting party will have 60
days following the receipt of the notice to cure the default or to commence in
good faith the steps necessary to cure a default that cannot be cured within
that 60-day period. If the defaulting party fails to cure its default within 60
days or fails to take the steps necessary to cure a default that cannot be cured
within a 60-day period, the non-defaulting party will have the right to
terminate the interconnection agreement. GPU Energy will have the right to
operate and/or to purchase specific equipment, facilities and appurtenances from
us that are necessary for GPU Energy to operate and maintain its transmission
system if (1) we commence bankruptcy proceedings or petitions for the
appointment of a trustee or other custodian, liquidator, or receiver, (2) a
court issues a decree for relief of us or appoints a trustee or other custodian,
liquidator, or receiver for us or a substantial part of our assets and the
decree is not dismissed within 60 days or (3) we cease operation for 30
consecutive days without having an assignee, successor, or transferee in place.

                              OPERATIONS AGREEMENT

         We have entered into a Development and Operations Services Agreement,
dated as of June 1, 1999, with AES Prescott by which AES Prescott will provide
development and construction management services and, after the commercial
operation date, operating and maintenance services for our facility for a period
of 27 years. Under the operations agreement, AES Prescott will be responsible
for, among other things, preparing plans and budgets related to start-up and
commercial operation of our facility, providing qualified operating personnel,
making repairs, purchasing consumables and spare parts (not otherwise provided
under the maintenance services agreement) and providing other services as needed
according to industry standards. AES Prescott will be compensated for the
services on a cost plus fixed-fee basis. Under the services agreement between
AES Prescott and The AES Corporation, The AES Corporation will provide to AES
Prescott all of the personnel and services necessary for AES Prescott to comply
with its obligations under the operations agreement.


                                       36
<PAGE>

                            EFFLUENT SUPPLY AGREEMENT

         We, as assignee of AES Ironwood, Inc., have entered into an Effluent
Supply Agreement, dated as of March 3, 1998, with the City of Lebanon Authority,
by which City of Lebanon Authority will provide effluent to be used by us at the
electric generating facility to be constructed in South Lebanon Township,
Pennsylvania.

SUPPLY OF EFFLUENT

EFFLUENT SUPPLY

         Subsequent to completion of the pipeline connecting our facility with
the wastewater treatment facility owned and operated by City of Lebanon
Authority and throughout the term of the effluent supply agreement, City of
Lebanon Authority must make available to us a supply of effluent not less than
2,160,000 gallons per day. In the event of a shortfall, we may elect to accept
potable water from City of Lebanon Authority in accordance with the effluent
supply agreement. We will not be obligated to purchase any minimum amount of
effluent and will be entitled to seek and obtain water from other available
sources. City of Lebanon Authority must use its best efforts to comply with
requests by us for excess effluent, which must not exceed (1) 4,600,000 gallons
per day or (2) 1,679,000,000 gallons per calendar year. In addition, City of
Lebanon Authority must use its best efforts to meet our minimum effluent
requirements.

COMPENSATION

         We will pay City of Lebanon Authority monthly for all effluent
delivered to the point of delivery during the prior month. The base rate for
effluent supplied will be: (1) for 0-2,160,000 gallons per day, $0.29 per
thousand gallons and (2) for 2,160,000 or greater gallons per day, $0.21 per
thousand gallons, which rates will be subject to annual adjustments for
inflation.

PIPELINE AND REAL ESTATE RIGHTS

CONCERNING THE PIPELINE

         We will be solely responsible, at its cost and expense, for
constructing and installing the pipeline.

         We and City of Lebanon Authority must cooperate in good faith to
obtain the necessary real estate rights for constructing, operating,
maintaining and accessing the pipeline.

OPERATION AND MAINTENANCE

         The City of Lebanon Authority must operate and maintain the pipeline in
accordance with the effluent supply agreement, and as compensation, we must pay
to City of Lebanon Authority $18,250 per year, which amount will be subject to
annual adjustment for inflation.

CAPITAL IMPROVEMENTS

         The effluent supply agreement provides for capital improvements.


                                       37
<PAGE>

POTABLE WATER

         The City of Lebanon Authority must make available to us on a continuous
basis a potable water supply of not less than 50 gallons per minute. We will not
be obligated to purchase a minimum amount of potable water, but must pay the
City of Lebanon Authority for potable water accepted at the potable delivery
point at the rate applicable to us described in City of Lebanon Authority's
applicable rate schedule.

FORCE MAJEURE

         If either party is unable to carry out any obligation under the
effluent supply agreement due to force majeure, the effluent supply agreement
must remain in effect, but the obligation will be suspended for the period
necessary as a result of the force majeure so long as: (1) the non-performing
party gives the other party written notice not later than 48 hours after the
occurrence of the force majeure describing the particulars of the force majeure;
(2) the suspension of performance is of no greater scope and of longer duration
than is required by the force majeure; and (3) the non-performing party uses its
best efforts to remedy its inability to perform. Notwithstanding the preceding,
the settlement of strikes, lockouts, and other labor disputes will be entirely
within the discretion of the affected party, and the party will not be required
to settle any strike, lockout or other labor dispute on terms which it deems
inadvisable.

TERM

         The term of the effluent supply agreement will be 25 years unless
terminated early as a result of (1) our inability to obtain financing for our
project; (2) our inability to obtain necessary approvals to construct and
operate our project; (3) failure by us to deliver the commencement notice by
December 31, 2004, or (4) the occurrence of any event of default.

EARLY TERMINATION FOR EVENT OF DEFAULT

         A party may terminate the effluent supply agreement (1) upon a
bankruptcy event of the other party or (2) if the other party fails to perform
or observe any of its material obligations under the effluent supply agreement
within the time contemplated by the effluent supply agreement and the failure
continues for a period of time greater than 30 days from the defaulting party.

                            PENNSY SUPPLY AGREEMENTS

         We, as assignee of AES Ironwood, Inc., have entered into an Agreement
Relating to Real Estate, dated as of October 22, 1998, with Pennsy Supply, Inc.
under which Pennsy Supply has agreed to grant to us specific easements and the
right to pump water from Pennsy Supply-owned property. The easements, which are
primarily for access and utility purposes, would run from property owned by us,
on which it will develop and construct its electric generating facility, across
property owned by Pennsy Supply and require that our property be used as a power
plant. Pennsy Supply has also agreed to grant to us easements with respect to
storm-water facilities and construction of a rail spur. Pennsy Supply will make
water available to us during construction and testing of our facility and for as
long as we operate our facility. We will bear all costs and expenses with
respect to water-pumping. In consideration for the easements and the
water-pumping rights, we have agreed to convey to Pennsy Supply title to a
parcel of land adjacent to the property owned by us.


                                       38
<PAGE>

         We have also entered into an Easement and Right of Access Agreement,
dated as of April 15, 1999, with Pennsy Supply under which Pennsy Supply has
granted us the rights and easements referred to in the prior paragraph as well
as specific other rights and easements required by us for the construction and
operation of our facility.

ITEM 2. PROPERTIES

         Since we are a development stage company, our principal property is the
land for the facility site, which we own and the construction in progress. The
facility site is located in South Lebanon Township, Lebanon County, Pennsylvania
on an approximately 35-acre parcel of land. We have access, utility, drainage
and construction easements across neighboring property. We are able to use these
easements as long as there is no default under the agreements with the owner of
the adjacent property and we are using the facility site for a power plant. We
have constructed a railspur to facilitate the transportation of heavy equipment
to the facility site, but will not maintain rights in the railspur after
construction has been completed. We have title insurance in connection with our
property rights.

         Under certain financing documents, our rights and interests in our
property rights are encumbered by mortgages, security agreements, collateral
assignments and pledges for the benefit of the bondholders and other senior
creditors.

         Our facility, which is still under construction, consists of a 705
megawatt (net) gas-fired combined cycle electric generating facility with
oil-firing capability. We expect our facility to become operational by
approximately June 30, 2001. We will not receive any revenues under the power
purchase agreement before our facility becomes operational.

         Our facility will be located in South Lebanon Township, Lebanon County,
Pennsylvania on property owned by us. Our facility will be designed, engineered,
procured and constructed for us by Siemens Westinghouse under a fixed-price
construction agreement. Among other components, our facility will use two
Siemens Westinghouse model 501G combustion turbines with hydrogen-cooled
generators, two unfired heat recovery steam generators and one multicylinder
steam turbine with a hydrogen-cooled generator. Siemens Westinghouse will
provide us with specific combustion turbine maintenance services and spare parts
for an initial term of between eight and 10 years, depending on the timing of
scheduled outages, under a maintenance services agreement. Under the power
purchase agreement, Williams Energy or its affiliates will supply fuel necessary
to allow us to provide capacity, fuel conversion and ancillary services to
Williams Energy. AES Prescott, the operator, will provide development,
construction management and operations and maintenance services for our facility
under an operations agreement. We will provide installation, operation and
maintenance of facilities necessary to interconnect our facility to the
transmission system of GPU Energy, under an interconnection agreement.

ITEM 3. LEGAL PROCEEDINGS

         We are not party to any legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not applicable pursuant to General Instruction I of the Form 10-K.



                                       39
<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         There is no market for our equity interests. All of our member
interests are owned by our parent, AES Ironwood, Inc., a subsidiary of The AES
Corporation.

ITEM 6. SELECTED FINANCIAL DATA

         Not applicable pursuant to General Instruction I of the Form 10-K.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

         The following discussion and analysis should be read in conjunction
with our financial statements and the notes thereto included elsewhere in this
annual report. The following discussion involves forward-looking statements. Our
actual results may differ significantly from the results suggested by these
forward-looking statements.

GENERAL


         We were formed on October 30, 1998 to develop, construct, own, operate
and maintain its facility. We were dormant until June 25, 1999, the date of the
sale of the senior secured bonds. We are in the development stage and have no
operating revenues. We obtained $308,500,000 of project financing from the sale
of the senior secured bonds. The total cost of the construction of our facility
is estimated to be approximately $359 million, which will be financed by the
proceeds from the sale of the senior secured bonds and the equity contribution
described below. In May 2000, we consummated an exchange offer whereby the
holders of the senior secured bonds exchanged their privately placed senior
secured bonds for registered senior secured bonds.

         Our facility is still under construction and is expected to be
completed and operational by approximately June 30, 2001. We cannot assure that
these expectations will be met. See "Cautionary Note Regarding Forward-Looking
Statements."

EQUITY CONTRIBUTIONS

         Under an equity subscription agreement, AES Ironwood, Inc. is obligated
to contribute up to approximately $50.1 million to us to fund project costs. AES
Ironwood, Inc.'s obligation to make the contributions is supported by an
acceptable bond.

RESULTS OF OPERATIONS

         As of December 31, 2000 and December 31, 1999, Construction in
Progress, which includes capitalized facility construction costs, was $298.0
million and $243.7 million, respectively. Construction in Progress also includes
the capitalization of construction related interest cost incurred on the portion
of the bond proceeds expended during the construction period, which amounts were
$33.1 million and $8.4 million


                                       40
<PAGE>

as of December 31, 2000 and December 31, 1999, respectively, and are included as
assets on the Balance Sheets. Additionally, the cost of purchasing land for
construction of our facility has been separately identified on the Balance
Sheets.

         For the year ended December 31, 2000, the period from June 25, 1999
(inception) through December 31, 1999 and the period from June 25, 1999
(inception) through December 31, 2000, interest cost incurred on the bond
proceeds not spent on construction of our facility was approximately $2.9
million, $5.8 million and $8.7 million respectively, and is included as interest
expense in the Statement of Operations.

         A portion of the proceeds from the sale of the senior secured bonds
have not yet been expended on construction and were invested by the trustee. For
the year ended December 31, 2000, the period from June 25, 1999 (inception)
through December 31, 1999 and the period from June 25, 1999 (inception) through
December 31, 2000, the interest income earned on these invested funds was
approximately $2.7 million, $3.3 million and $5.9 million, respectively, and is
included in the Statement of Operations.

         For the year ended December 31, 2000, the period from June 25,1999
(inception) through December 31, 1999 and the period from June 25, 1999
(inception) through December 31, 2000, general and administrative costs of
$257,000, $169,000 and $426,000, respectively, were incurred. These costs did
not directly relate to construction and are included as expenses in the
Statement of Operations.

         For the year ended December 31, 2000, the period from June 25,1999
(inception) through December 31, 1999 and the period from June 25, 1999
(inception) through December 31, 2000, non-capitalizable costs plus interest
cost and less interest income resulted in a net (loss) of approximately,
($0.5 million), ($2.6 million) and ($3.1 million), respectively. These net
losses resulted in a deficiency of earnings to fixed charges for the periods
ended December 31, 2000 and December 31, 1999 of approximately $30.3 million
and $17.4 million, respectively. The results of operations may not be
comparable with the results of operations during future periods, especially
when our facility commences commercial operations.

LIQUIDITY AND CAPITAL RESOURCES

         We believe that the net proceeds from the sale of the senior secured
bonds, together with the equity contribution, will be sufficient to (1) fund the
engineering, procurement, construction, testing and commissioning of our
facility until it is placed in commercial operation, (2) pay certain fees and
expenses in connection with the financing and development of our project and (3)
pay project costs, including interest on the senior secured bonds. After our
facility is placed in commercial operation, we will depend on revenues under the
power purchase agreement, and after the power purchase agreement expires, we
will depend on market sales of electricity.

         In order to provide liquidity in the event of cash flow shortfalls, the
debt service reserve account will contain an amount equal to the debt service
reserve account required balance through cash funding, issuance of the debt
service reserve letter of credit or a combination of the two.

         As of December 31, 2000, we had commitments totaling $241 million
arising from the construction of our facility of which $222 million had been
paid.

BUSINESS STRATEGY AND OUTLOOK

         Our overall business strategy is to market and sell all of our net
capacity, fuel conversion and ancillary services to Williams Energy during the
20-year term of the power purchase agreement. After


                                       41
<PAGE>

expiration of the power purchase agreement, we anticipate selling our facility's
capacity, ancillary services and energy under a power purchase agreement or into
the Pennsylvania/New Jersey/Maryland power pool market. We intend to cause its
facility to be managed, operated and maintained in compliance with the project
contracts and all applicable legal requirements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         The bonds have an aggregate principal amount of $308,500,000. The bonds
bear interest at a fixed rate per annum of 8.857% and are due 2025. Interest on
these bonds is payable quarterly in arrears on February 28, May 31, August 31
and November 30 of each year. The bonds are secured ratably by a lien on and
security interest in shared collateral, which consists of substantially all of
our assets. In addition, the indenture accounts, the debt service reserve
account and the debt service reserve letter of credit (other than to the extent
of the debt service reserve letter of credit provider's right to specific
proceeds there under) are separate collateral solely for the benefit of the
holders of the bonds. The fair value of these bonds at December 31, 2000 was
approximately $306.7 million. We are not subject to interest rate risk as the
interest rates associated with our outstanding indebtedness are fixed over the
life of the bonds. We currently have no other financial or derivative financial
instruments. We do not believe that we face other material risks requiring
disclosure pursuant to Item 305 of Regulation S-K.





                                       42
<PAGE>


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA


                              AES IRONWOOD, L.L.C.
                       AN INDIRECT WHOLLY OWNED SUBSIDARY
            OF THE AES CORPORATION AND A DEVELOPMENT STAGE ENTERPRISE



                          INDEX TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                            <C>
Independent Auditors' Report.....................................................................................44

Balance Sheets...................................................................................................45

Statements of Operations.........................................................................................46

Statements of Changes in Member's  Deficit.......................................................................47

Statements of Cash  Flows........................................................................................48

Notes to Financial  Statements...................................................................................49

</TABLE>















                                       43
<PAGE>








INDEPENDENT AUDITORS' REPORT



To the Member of
AES Ironwood, L.L.C.:

         We have audited the accompanying balance sheets of AES Ironwood, L.L.C.
(an indirect wholly owned subsidiary of The AES Corporation and a development
stage enterprise) (the Company) as of December 31, 2000 and 1999, and the
related statements of operations, changes in member's deficit and cash flows for
the year ended December 31, 2000, the period from June 25, 1999 (inception) to
December 31, 1999, and the period from June 25, 1999 (inception) to December 31,
2000. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

         In our opinion, such financial statements present fairly, in all
material respects, the financial position of AES Ironwood, L.L.C., as of
December 31, 2000 and 1999, and the results of its operations and its cash flows
for the year then ended December 31, 2000, the period from June 25, 1999
(inception) to December 31, 1999, and the period from June 25, 1999 (inception)
to December 31, 2000, in conformity with accounting principles generally
accepted in the United States of America.


/s/ Deloitte & Touche LLP
McLean, Virginia

January 19, 2001


                                       44
<PAGE>





                              AES IRONWOOD, L.L.C.
                       AN INDIRECT WHOLLY OWNED SUBSIDIARY
            OF THE AES CORPORATION AND A DEVELOPMENT STAGE ENTERPRISE

                                 BALANCE SHEETS,
                     DECEMBER 31, 2000 AND DECEMBER 31, 1999
                             (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                               December 31,           December 31,
                                                                                   2000                   1999
                                                                            -------------------    --------------------
<S>                                                                         <C>                    <C>
ASSETS:

Current Assets:
    Cash...............................................................      $        445            $        633
    Interest receivable................................................                93                     437
    Accounts receivable - other........................................               299                     ---
    Accounts receivable - affiliates...................................                73                     ---
    Investments held by trustee-at cost, which approximates
       market value....................................................           16,263                  22,568
                                                                            -------------------    --------------------

         Total current assets..........................................            17,173                  23,638

Land...................................................................               528                     528
Construction in progress...............................................           297,969                 243,742
Restricted cash-certificate of deposit.................................               385                     385
Deferred financing costs-net of accumulated amortization of $218 and
    $44, respectively..................................................             3,417                   2,447
Investments held by trustee-at cost, which approximates market value...               ---                  68,145
Other assets...........................................................             1,138                   1,138
                                                                            -------------------    --------------------

        Total assets...................................................      $    320,610            $    340,023
                                                                            ===================    ====================

LIABILITIES AND MEMBER'S DEFICIT:

Current Liabilities:
    Accounts payable...................................................      $        159            $     20,139
    Accrued interest...................................................             2,277                   2,429
    Payable to affiliates..............................................               970                     918
    Payable to parent..................................................               754                     442
    Retention payable..................................................            11,122                     ---
                                                                            -------------------    --------------------

         Total current liabilities.....................................            15,282                  23,928

Retention payable......................................................               ---                  10,236
Bonds payable..........................................................           308,500                 308,500
                                                                            -------------------    --------------------

         Total liabilities.............................................           323,782                 342,664
                                                                            ===================    ====================

Commitments and Contingencies (Notes 4,5,6 and 7)

Member's deficit:
    Common stock, $1 par value-10 shares authorized, none issued or
    outstanding........................................................               ---                     ---
    Deficit accumulated during the development stage...................           (3,172)                 (2,641)
                                                                            -------------------    --------------------

    Total member's deficit.............................................           (3,172)                 (2,641)
                                                                            -------------------    --------------------

    Total liabilities and member's deficit.............................      $    320,610            $    340,023
                                                                            ===================    ====================

</TABLE>

                       See notes to financial statements.



                                       45
<PAGE>


                              AES IRONWOOD, L.L.C.
                       AN INDIRECT WHOLLY OWNED SUBSIDIARY
            OF THE AES CORPORATION AND A DEVELOPMENT STAGE ENTERPRISE

                            STATEMENTS OF OPERATIONS,
                  YEAR ENDED DECEMBER 31, 2000, THE PERIOD FROM
          JUNE 25, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999, AND THE
         PERIOD FROM JUNE 25, 1999 (INCEPTION) THROUGH DECEMBER 31, 2000
                             (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                            June 25, 1999              June 25, 1999
                                                                             (inception)                (inception)
                                                   Year Ended                  through                    through
                                                December 31, 2000         December 31, 1999          December 31, 2000
                                              ----------------------    -----------------------     --------------------
<S>                                           <C>                       <C>                         <C>
OPERATING EXPENSES
   General and Administrative Costs           $          (257)          $          (169)            $         (426)
                                              ----------------------    -----------------------     --------------------

   Operating Loss                                        (257)                     (169)                      (426)

OTHER INCOME/EXPENSE
   Interest income                                       2,661                     3,283                      5,944
   Interest expense                                    (2,935)                   (5,755)                    (8,690)
                                              ----------------------    -----------------------     --------------------

NET LOSS                                      $          (531)          $        (2,641)            $       (3,172)
                                              ======================    =======================     ====================
</TABLE>


                       See notes to financial statements.







                                       46
<PAGE>


                              AES IRONWOOD, L.L.C.
                       AN INDIRECT WHOLLY OWNED SUBSIDIARY
            OF THE AES CORPORATION AND A DEVELOPMENT STAGE ENTERPRISE

    STATEMENTS OF CHANGES IN MEMBER'S DEFICIT, YEAR ENDED DECEMBER 31, 2000,
      THE PERIOD FROM JUNE 25, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999,
     AND THE PERIOD FROM JUNE 25, 1999 (INCEPTION) THROUGH DECEMBER 31, 2000

                             (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                    COMMON STOCK
                                         ------------------------------------        ACCUMULATED
                                              SHARES              AMOUNT              DEFICIT             TOTAL
                                         ------------------    --------------      --------------     ---------------
<S>                                      <C>                   <C>                 <C>                <C>
BALANCE, JUNE 25, 1999                             ---         $       ---         $       ---        $        ---
Net Loss                                           ---                 ---             (2,641)             (2,641)
                                         ------------------    --------------      --------------     ---------------

BALANCE, DECEMBER 31, 1999                         ---                 ---             (2,641)             (2,641)
Net Loss                                           ---                 ---               (531)               (531)
                                         ------------------    --------------      --------------     ---------------

BALANCE, DECEMBER 31, 2000                         ---         $       ---         $   (3,172)        $    (3,172)
                                         ==================    ==============      ==============     ===============
</TABLE>



                       See notes to financial statements.



                                       47
<PAGE>


                              AES IRONWOOD, L.L.C.
                       AN INDIRECT WHOLLY OWNED SUBSIDIARY
            OF THE AES CORPORATION AND A DEVELOPMENT STAGE ENTERPRISE

         STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2000,
      THE PERIOD FROM JUNE 25, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999,
     AND THE PERIOD FROM JUNE 25, 1999 (INCEPTION) THROUGH DECEMBER 31, 2000

                             (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                            June 25, 1999              June 25, 1999
                                                                             (inception)                (inception)
                                                   Year Ended                  through                    through
                                                December 31, 2000         December 31, 1999          December 31, 2000
                                              ----------------------    -----------------------     --------------------
<S>                                           <C>                       <C>                         <C>
OPERATING ACTIVITIES:
   Net loss.............................       $          (531)          $        (2,641)            $       (3,172)
   Amortization of deferred financing
      costs.............................                   174                        44                        218
   Change in:
      Interest receivable...............                   344                      (437)                       (93)
      Accrued interest..................                  (152)                    2,429                      2,277
      Other receivables.................                  (372)                      ---                       (372)
                                              ----------------------    -----------------------     --------------------

   Net cash used in operating activities                  (537)                     (605)                    (1,142)

INVESTING ACTIVITIES:
   Payments for construction in progress               (54,227)                 (243,742)                  (297,969)
   Change in construction related
      payables..........................               (18,730)                   31,735                     13,005
   Payments for land....................                   ---                      (528)                      (528)
   Change in debt service reserve.......                74,450                   (91,098)                   (16,648)
   Purchase of other assets.............                   ---                    (1,138)                    (1,138)
                                              ----------------------    -----------------------     --------------------

   Net cash provided by (used in)
   investing activities.................                 1,493                  (304,771)                  (303,278)

FINANCING ACTIVITIES:
   Proceeds from project debt issuance..                   ---                   308,500                    308,500
   Payments for deferred financing costs                (1,144)                   (2,491)                    (3,635)
                                              ----------------------    -----------------------     --------------------

   Net cash (used in) provided by
   financing activities.................                (1,144)                  306,009                    304,865
                                              ----------------------    -----------------------     --------------------

NET (DECREASE) INCREASE IN CASH AND CASH
   EQUIVALENTS..........................                  (188)                      633                        445

CASH AND CASH EQUIVALENTS, BEGINNING OF
   PERIOD...............................                   633                       ---                        ---
                                              ----------------------    -----------------------     --------------------

CASH AND CASH EQUIVALENTS,
    END OF PERIOD.......................      $            445          $            633            $           445
                                              ----------------------    -----------------------     --------------------

SUPPLEMENTAL DISCLOSURE
Interest paid (net of amounts capitalized)    $          3,093          $          3,326            $         6,419
                                              ====================== == ======================= === ====================
</TABLE>


                       See notes to financial statements.





                                       48
<PAGE>


                              AES IRONWOOD, L.L.C.
                       AN INDIRECT WHOLLY OWNED SUBSIDARY
            OF THE AES CORPORATION AND A DEVELOPMENT STAGE ENTERPRISE


                          NOTES TO FINANCIAL STATEMENTS
 YEAR ENDED DECEMBER 31, 2000, THE PERIOD FROM JUNE 25,1999 (INCEPTION) THROUGH
                        DECEMBER 31,1999 AND THE PERIOD
             FROM JUNE 25,1999 (INCEPTION) THROUGH DECEMBER 31,2000



1.       ORGANIZATION

AES Ironwood, L.L.C. (the Company) was formed on October 30, 1998, in the state
of Delaware to develop, construct, and operate a 705-megawatt (MW) gas-fired,
combined cycle electric generating facility in South Lebanon Township,
Pennsylvania (the Plant). The Company was considered dormant until June 25,
1999, at which time the Project Financing and certain related agreements were
consummated (hereinafter, Inception). The Plant, currently under construction,
will consist of two Westinghouse 501 G combustion turbines, two heat recovery
steam generators, and one steam turbine. The Plant will produce and sell
electricity, as well as provide fuel conversion and ancillary services, solely
to Williams Energy Marketing and Trading Company (Williams) under a power
purchase agreement (the PPA) with a term of 20 years that will commence on the
Plant's anticipated commercial operation date, June 30, 2001 (see Note 5).

The Company is in the development stage and is not expected to generate any
operating revenues until the Plant achieves commercial operations. As with any
new business venture of this size and nature, operation of the Plant could be
affected by many factors. Management of the Company believes that the assets of
the Company are realizable.

The Company is a wholly owned subsidiary of AES Ironwood, Inc. (Ironwood), which
is a wholly owned subsidiary of The AES Corporation (AES). Ironwood has no
assets other than its ownership interests in the Company and AES Prescott,
L.L.C. (Prescott), another wholly owned subsidiary of Ironwood (see Note 7).
Ironwood has no operations and is not expected to have any operations. Its only
income will be from distributions it receives from the Company and AES Prescott,
L.L.C., once the Company achieves commercial operation. The equity that Ironwood
is to provide to the Company will be provided to Ironwood by AES, which owns all
of the stock of Ironwood. AES files quarterly and annual audited reports with
the Securities and Exchange Commission under the 1934 Exchange Act, which are
publicly available. Ironwood's equity contribution obligations are required to
be supported by either an insurance bond or letter of credit. Currently those
obligations are supported by an insurance bond issued to the collateral agent
(see Note 6).

On June 25, 1999, the Company issued $308.5 million in senior secured bonds (see
Note 4) for the purpose of providing financing for the construction of the Plant
and to fund, through the construction period, interest payments to the
bondholders. On May 12, 2000, the Company consummated an exchange offer whereby
the holders of the senior bonds exchanged their privately placed senior secured
bonds for registered senior secured bonds.

Pursuant to an Equity Subscription Agreement, Ironwood has agreed to contribute
up to approximately $50.1 million to the Company to fund construction after the
bond proceeds have been fully utilized (see


                                       49
<PAGE>

Note 4).


2.       SIGNIFICANT ACCOUNTING POLICIES

         BASIS OF PRESENTATION - These financial statements have been prepared
         in accordance with accounting principles generally accepted in the
         United States of America and with the instructions to Form 10-K and
         Regulation S-X.

         CASH AND CASH EQUIVALENTS - The Company considers unrestricted cash on
         hand, deposits in banks, and investments with original maturities of
         three months or less to be cash and cash equivalents for the purpose of
         the statement of cash flows.

         INVESTMENTS HELD BY TRUSTEE - The Company is required to maintain a
         construction funding account for the payment of certain qualifying
         construction costs and a construction interest account from which
         quarterly interest payments are to be made. As of December 31, 2000,
         these amounts were invested in a combination of money market funds and
         commercial paper. The balance in the construction funding account was
         approximately $1.9 million and $50.3 million as of December 31, 2000,
         and December 31, 1999, respectively. The balance in the construction
         interest account was $14.4 million and $40.4 million as of December 31,
         2000, and December 31, 1999, respectively.

         CONSTRUCTION IN PROGRESS - Costs incurred in developing the Plant,
         including progress payments, engineering costs, management and
         development fees, interest, and other costs related to construction are
         capitalized. Total interest capitalized on the project financing debt
         was approximately $33.1 million and $8.4 million as of December 31,
         2000, and December 31, 1999, respectively. Certain costs related to
         construction activities were paid by AES prior to the issuance of the
         bonds. These amounts include approximately $105.4 million of
         construction progress payments and $20.1 million in other incurred
         costs. These cost are reflected within construction in progress, and
         were reimbursed to AES out of the bond proceeds.

         OTHER ASSETS - Pursuant to the provisions of 25 Pa.Code Section 123,
         NOx Allowance Requirements, which establishes a NOx budget and a NOx
         allowance trading program for NOx affected sources for the purpose of
         achieving air quality standards, the Company purchased approximately
         $1,138,000 in NOx allowances. The NOx allowances were purchased for NOx
         emissions during the ozone seasons for the first two full years of
         operations. These amounts are reported as other assets and will be
         amortized as they are utilized.

         DEFERRED FINANCING COSTS - Financing costs are deferred and are being
         amortized using the straight-line method over approximately 26 years,
         which does not differ materially from the effective interest method of
         amortization.

         ACCOUNTS PAYABLE AND CONTRACT RETENTION PAYABLE - Amounts currently
         payable for construction billings and those amounts billed by Siemens
         Westinghouse Power Corporation (the Contractor) in accordance with the
         engineering, procurement, and construction contract (the EPC) but
         retained by the Company until construction is complete are included in
         accounts payable and contract retention payable, respectively. These
         liabilities are expected to be paid from the investment balances (bonds
         proceeds) or equity funding from Ironwood.

         USE OF ESTIMATES - The preparation of financial statements in
         conformity with generally accepted


                                       50
<PAGE>

         accounting principles requires the Company to make estimates and
         assumptions that affect reported amounts of assets and liabilities and
         disclosures of contingent assets and liabilities as of the date of the
         financial statements, as well as the reported amounts of revenues and
         expenses during the reporting period. Actual results could differ from
         those estimates.

         INCOME TAXES - The Company is a limited liability corporation and is
         treated as a partnership for tax purposes. Therefore, it does not pay
         income taxes, and no provision for income taxes has been reflected in
         the accompanying financial statements.

         RECLASSIFICATIONS - Certain reclassifications have been made to 1999
         amounts to conform with the 2000 presentation.

         START-UP COSTS - In 1999, the Company adopted AICPA Statement of
         Position (SOP) 98-5, REPORTING ON THE COSTS OF START-UP ACTIVITIES,
         which requires that start-up and organizational costs be expensed as
         incurred. As such, no costs to which the Statement applies have been
         capitalized in the accompanying balance sheet.

3.       NEW ACCOUNTING PRONOUNCEMENTS

         On January 1, 2001, the Company adopted SFAS No. 133, ACCOUNTING FOR
         DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, which, as amended,
         established new accounting and reporting standards for derivative
         instruments and hedging activities. SFAS No. 133 requires that an
         entity recognize all derivatives (including derivatives embedded in
         other contracts) as either assets or liabilities on the balance sheet
         and measure those instruments at fair value. Changes in the
         derivative's fair value are to be recognized currently in earnings
         unless specific hedge accounting criteria are met. Hedge accounting
         allows a derivative's gains or losses in fair value to offset related
         results of a hedged item in the statement of operations and requires
         that a company formally document, designate, and assess the
         effectiveness of transactions that receive hedge accounting.

         SFAS No. 133 allows hedge accounting for fair value and cash flow
         hedges. SFAS No. 133 provides that the gain or loss on a derivative
         instrument designated and qualifying as a fair value hedge, as well as
         the offsetting gain or loss on the hedged item attributable to the
         hedged risk, be recognized currently in earnings in the same accounting
         period. SFAS No. 133 provides that the effective portion of the gain or
         loss on a derivative instrument designated and qualifying as a cash
         flow hedge be reported as a component of other comprehensive income in
         stockholder's equity and be reclassified into earnings in the same
         period or periods during which the hedged transaction affects earnings.
         The remaining loss on the derivative, if any, must be recognized
         currently in earnings.

         As explained in Note 1, the Company will produce and sell electricity,
         as well as provide fuel conversion and ancillary services, solely to
         Williams under the PPA. The Company believes the PPA, although meeting
         the definition of a derivative under SFAS No. 133, qualifies for the
         normal purchase and sales exception and thus is not required to be
         accounted for as a derivative. The Derivatives Implementation Group
         (DIG) of the Financial Accounting Standards Board is currently
         discussing the accounting treatment under SFAS No. 133 for contracts
         similar to the PPA. The DIG may conclude that such contracts are
         required to be accounted for as derivatives. The Company has no other
         contracts that meet the definition of a derivative or an embedded
         derivative under SFAS No. 133. Therefore, there is no impact on the
         Company's financial statements as of December 31, 2000.


                                       51
<PAGE>

4.       BONDS PAYABLE

         On June 25, 1999, the Company issued $308.5 million of 8.857% senior
         secured bonds due 2025 (the Bonds) to qualified institutional buyers
         and/or institutional accredited investors, pursuant to a transaction
         exempt from registration under the Securities and Exchange Act of 1933
         (the Act) in accordance with Rule 144A of the Act. On May 12, 2000, the
         Company consummated an exchange offer whereby the holders of the senior
         secured bonds exchanged their privately placed senior secured bonds for
         registered senior secured bonds.

         REGISTRATION RIGHTS - The Company was obligated to register the Bonds
         under the Act with the Securities and Exchange Commission within 220
         days of the initial sale of the Bonds. The registration was not
         completed within the required time frame. As a result, effective
         January 30, 2000, the interest rate payable on the Bonds, previously
         fixed at 8.857%, increased by 50 basis points until the consummation of
         the exchange offer on May 12, 2000, when such interest rate was reduced
         back to 8.857%.

         The net proceeds of the bonds (after deferred financing costs),
         approximately $306 million, are to be used to fund the construction of
         the Plant and, during the construction period, for interest payments to
         bondholders.

         Interest on the Bonds is payable quarterly in arrears. Quarterly
         principal payments on the Bonds will commence on February 28, 2002. The
         final maturity date for the Bonds is November 30, 2025.

<TABLE>
<CAPTION>
         PRINCIPAL & INTEREST REPAYMENT SCHEDULE (IN THOUSANDS)

YEAR                                 PRINCIPAL       INTEREST          TOTAL
<C>                                          <C>         <C>             <C>

2001                                     $      -        $ 27,324        $ 27,324
2002                                        1,974          27,259          29,233
2003                                        4,751          26,991          31,742
2004                                        6,355          26,425          32,780
2005                                        7,034          26,078          33,112
2006-2025                                 288,386         296,002         584,388
                                    -------------   -------------   -------------

Total payments                           $308,500        $430,079        $738,579
                                    ==============  =============   =============
</TABLE>


         OPTIONAL REDEMPTION - The Bonds are subject to optional redemption, in
         whole or in part, at any time at a redemption price equal to 100% of
         the principal amount plus accrued interest, together with a premium
         calculated using a discount rate equal to the interest rate on
         comparable U.S. Treasury securities plus 50 basis points.

         MANDATORY REDEMPTION - The Bonds are subject to mandatory redemption,
         in whole or in part, at a redemption price equivalent to 100% of the
         principal amount plus accrued interest under certain situations
         pursuant to receiving insurance proceeds or liquidated damages from
         failure under the EPC with the Contractor, or in certain instances in
         which payments are received under the PPA with Williams under the event
         of default, at which time the Company has terminated the PPA.

         Collateral for the Bonds consists of the Plant and related facilities,
         all agreements relating to the operation of the project, the bank and
         investment accounts of the Company, and all ownership


                                       52
<PAGE>

         interests in the Company as prescribed under the trust indenture (the
         Indenture). The Company is also bound by a collateral agency agreement
         (the Collateral Agency Agreement) and an equity subscription agreement
         (the Equity Subscription Agreement).

         INDENTURE - The Indenture contains limitations on the Company incurring
         additional indebtedness; granting liens on the Company's property;
         distributing equity and paying subordinated indebtedness issued by
         affiliates of the Company; entering into transactions with affiliates;
         amending, terminating, or assigning any of the Company's contracts and
         fundamental changes or disposition of assets.

         COLLATERAL AGENCY AGREEMENT - The Collateral Agency Agreement requires
         the Company to fund or provide the funding for a debt service reserve
         fund. The Company has therefore entered into a Debt Service Reserve
         Letter of Credit Agreement dated June 1, 1999, which is expected to
         commence on June 30, 2001. The amount required for funding the debt
         service reserve fund is equal to six months scheduled payments of
         principal and interest on the Bonds.

         EQUITY SUBSCRIPTION AGREEMENT - The Company, along with Ironwood, has
         entered into an Equity Subscription Agreement, pursuant to which
         Ironwood has agreed to contribute up to approximately $50.1 million to
         the Company to fund project costs. This amount is secured by an
         acceptable bond issued by Ironwood. Ironwood will fund these amounts as
         they come due upon the earlier of (a) expenditure of all funds that
         have been established for construction or (b) the occurrence and during
         the continuation of an event of default, as defined under the
         Indenture. A portion of this equity requirement may be made in the form
         of affiliate debt between Ironwood and the Company, which is
         subordinate to the Bonds.

         COVENANTS - The Indenture, Collateral Agency Agreement, and Equity
         Subscription Agreement contain specific covenants and requirements to
         be met by the Company. These covenants primarily entail the restriction
         of payments, reporting requirements, and the creation and maintenance
         of debt service reserve and construction related accounts.

5.       POWER PURCHASE AGREEMENT

         The Company and Williams have entered into a PPA for the sale of all
         electric energy and capacity produced by the Plant, as well as
         ancillary services and fuel conversion services. The term of the PPA is
         20 years, commencing when the construction of the Plant is complete and
         the Plant is commercially viable to produce electricity and related
         capacity, as well as to provide ancillary and fuel conversion services.
         Payment obligations to the Company are guaranteed by The Williams
         Companies, Inc. Such payment obligations under the guarantee are capped
         at an amount equal to 125% of the sum of the principal amounts of the
         bonds plus the maximum debt service reserve account required balance.
         The Company provided Williams a guaranty issued by AES of specific
         payment obligations should the Plant not achieve commercial operation
         by June 30, 2001. AES's liability under the guaranty is capped at $30
         million. The Company replaced the guaranty issued by AES with a letter
         of credit issued by a commercial bank. In such case, the repayment
         obligations with respect to drawings under the letter of credit are to
         be a senior debt obligation of the Company.

         FUEL CONVERSION AND OTHER SERVICES - As instructed by the Company,
         Williams has the obligation to deliver, on an exclusive basis, all
         quantities of natural gas and fuel oil required by the Plant to
         generate electricity or ancillary services, to start up or shut down
         the Plant, and to operate the

                                       53
<PAGE>

         Plant during any period other than a start-up, shut-down, or required
         dispatch by Williams for any reason.

6.       COMMITMENTS AND CONTINGENCIES

         CONSTRUCTION - The Company has entered into a fixed-price turnkey
         agreement with Siemens Westinghouse (the Contractor) for the design,
         engineering, procurement, and construction of the Plant. The Contractor
         will provide the Company with specific combustion turbine maintenance
         services and spare parts for an initial term of between eight and ten
         years under a maintenance service agreement. The fees assessed by
         Siemens Westinghouse will be based on the number of Equivalent Base
         Load Hours accumulated by the applicable Combustion Turbine as adjusted
         for inflation.

         As of December 31, 2000, and December 31, 1999, the Company was liable
         to the Contractor for a retention payment as part of the total contract
         price due at the completion of the contract for approximately $11.1
         million and $10.2 million, respectively.

         WATER SUPPLY - The Company has entered into a contract with the City of
         Lebanon Authority (the Authority) for the purchase of 50 percent of the
         water use of the Plant. The contract has a term of 25 years. Costs
         associated with the use of water by the Plant under this contract are
         based on gallons used per day at prices specified under the contract
         terms. The Company has also entered into an agreement with Pennsy
         Supply, Inc. (Pennsy), which will provide the remaining 50 percent of
         the water use of the Plant.

         INTERCONNECTION AGREEMENT - The Company has entered into an
         interconnection agreement with GPU Energy (GPU) to transmit the
         electricity generated by the Plant to the transmission grid so that it
         may be sold as prescribed under the Company's PPA. The agreement is in
         effect for the life of the Plant, yet may be terminated by mutual
         consent of both GPU and the Company under certain circumstances as
         detailed in the agreement. Costs associated with the agreement are
         based on electricity transmitted via GPU at a variable price, the PJM
         (Pennsylvania/New Jersey/Maryland) Tariff, as charged by GPU to the
         Company, which is comprised of both service cost and asset recovery
         cost, as determined by GPU and approved by the Federal Energy
         Regulatory Committee (FERC).

         LETTER OF CREDIT - The Company also has a letter of credit agreement
         outstanding to fund the construction of an access road to the plant
         during construction. In connection with this letter of credit, the
         Company has made a collateral deposit into a certificate of deposit
         account of approximately $385,000, which equals the amount available
         under this agreement.

         SURETY BOND AGREEMENT - Ironwood has a surety bond agreement for $50.1
         million in relation to its equity subscription agreement. Annual
         commitment fees will be assessed based on the amount outstanding during
         the year. As of December 31, 2000, and December 31, 1999, no amounts
         have been drawn and no amounts are outstanding under the surety bond
         agreement.

7.       RELATED PARTY TRANSACTIONS

         Effective June 1999, the Company entered into a 27-year development and
         construction management agreement with Prescott to provide certain
         support services required by the Company for the development and
         construction of the Plant. Under this agreement Prescott will


                                       54
<PAGE>

         also provide operations management services for the Plant once
         commercial operation is attained. Minimum amounts payable under the
         contract during the construction period are $125,000 per month. Once
         commercial operation is achieved, payments for operations management
         services will be approximately $400,000 per month.

         During the construction period, the construction management fees are
         paid to Prescott from the investment balances or from equity funding.
         As of December 31, 2000, $2.4 million in construction management fees
         were incurred and charged to construction in progress, and $246,500 was
         payable to Prescott. Through December 31, 1999, $875,000 in
         construction management fees were incurred, were charged to
         construction in progress, and were payable to Prescott.

8.       FAIR VALUE OF FINANCIAL INSTRUMENTS

         The estimated fair values of the Company's financial instruments have
         been determined using available market information. The estimates are
         not necessarily indicative of the amounts the Company could realize in
         a current market exchange. The use of different market assumptions
         and/or estimation methodologies may have a material effect on the
         estimated fair value amounts.

         The fair value of the Company's restricted investments approximates
         their carrying value. The Bonds had a carrying amount of $308.5 million
         with a fair value of approximately $306.7 million at December 31, 2000.
         The estimated fair value of the Bonds at December 31, 1999 and based on
         quoted market prices of similarly rated bonds with similar maturities,
         did not differ materially from their carrying value.

9.       SEGMENT INFORMATION

         Under the provisions of Statement of Financial Accounting Standards No.
         131, DISCLOSURE ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
         INFORMATION, the Company's business is expected to be operated as one
         reportable segment, with operating income or loss being the measure of
         performance evaluated by the chief operating decision-maker. As
         described in Notes 1 and 5, the Company's primary customer will be
         Williams, which is expected to provide all of the revenues of the
         Company during the term of the PPA.






                                       55
<PAGE>


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         None.



                                       56
<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         We are a Delaware limited liability company and have no employees other
than our officers. Our officers receive no compensation for their services to us
or for any transaction between us and any of our affiliates. We are managed by
our Board of Directors under the terms of our Limited Liability Company
Agreement, dated as of November 1, 1998. The following table sets forth the
names, ages and positions of our directors and executive officers and their
positions with us. Our directors are elected annually and each elected director
holds office until the director's successor is elected and qualified or the
director resigns or is removed. Our officers are elected from time to time by
vote of the Board of Directors.

<TABLE>
<CAPTION>
        NAME                                  AGE       POSITION
        ----                                  ---       --------
<S>                                           <C>       <C>
        Roger Naill,                           53       Director
        John Ruggirello                        50       Director and Vice President
        Barry Sharp                            41       Director, Vice President and Chief Financial Officer
        Patricia Rollin                        39       Vice President
        Maureen Shearer                        37       Secretary
        Peter Norgeot                          35       President
        Ginger Beamesderfer                    34       Vice President
        Larry Cantrell                         48       Vice President
        Russell Cochran                        41       Vice President
        Scott Miller                           31       Vice President
        Keith Moss                             35       Vice President
        Ron Rodrique                           33       Vice President
        Lyle Woodard                           49       Vice President
        Michael Romaniw                        32       Vice President and Treasurer
        Leith Mann                             47       Assistant Secretary
</TABLE>


Roger Naill, 53, has served as one of our directors since November 1998. He is
Vice President of The AES Corporation and heads The AES Corporation Corporate
Strategic Planning Group. He assumed that position in 1981. Mr. Naill spends
approximately 95% of his time in his capacity as Senior Vice President of The
AES Corporation.

John Ruggirello, 50, has served as one of our Directors and Vice Presidents
since November 1998. He is Senior Vice President of The AES Corporation. Mr.
Ruggirello also serves as the President of AES Enterprise, a business
development and plant operations division serving the Mid-Atlantic United States
since 1994. Prior to his current position, Mr. Ruggirello was plant manager of
AES Beaver Valley. Mr. Ruggirello spends approximately 20% of his time in his
capacity as Senior Vice President of The AES Corporation.

Barry Sharp, 41, has served as one of our Directors, Vice Presidents and as our
Chief Financial Officer since November 1998. He is currently Senior Vice
President and Chief Financial Officer of The AES Corporation. He joined The AES
Corporation as Director of Finance and Administration in 1986. Prior to The AES
Corporation, he held various positions with Arthur Anderson & Company and
Marriott. Mr. Sharp spends approximately 95% of his time in his capacity as
Senior Vice President and Chief Financial Officer of The AES Corporation.


                                       57
<PAGE>

Patricia Rollin, 39, has served as one of our Vice Presidents since November
1998. She is also a Vice President of AES Enterprise. She served as Director of
Investor Relations of The AES Corporation from 1994 through 1995. She joined The
AES Corporation Corporate Strategic Planning in 1984.

Maureen B. Shearer, 37, has served as our Secretary since November 1998. She is
currently Corporate Paralegal of The AES Corporation and has held that position
since 1995. She joined The AES Corporation as an Executive Assistant in 1989.
Prior to joining The AES Corporation, Ms. Shearer served active duty with the
U.S. Coast Guard.

Peter Norgeot, 35, has served as our President since November 2000. Mr Norgeot
joined AES Ironwood us in October 1999 as Plant Manager. He was previously Plant
Manager at AES Barry, UK. Prior to this he worked at AES Thames and AES Medway.
He joined The AES Corporation in 1989.

Ginger Beamesderfer, 34, has served as one of our Vice Presidents since November
2000. She joined The AES Corporation in 1997,working on the development of the
AES Ironwood Project.

Larry Cantrell, 48, has served as one of our Vice Presidents since November
2000. He joined The AES Corporation in 1990 and has worked at AES Shady Point
and AES Lal Pir prior to joining AES Ironwood.

Russell Cochran, 41, has served as one of our Vice Presidents since November
2000. He joined The AES Corporation in 1994 and has worked at AES Medway and AES
Barry prior to joining AES Ironwood.

Scott Miller, 31, has served as one of our Vice Presidents since November 2000.
He joined The AES Corporation in 1991 and has worked at AES Thames, AES Barry
and development work for AES Haripur and AES Meghnaghat prior to joining AES
Ironwood.

Keith Moss, 35, has served as one of our Vice Presidents since November 2000. He
joined The AES Corporation in 1997 working at AES Barry prior to joining AES
Ironwood.

Ron Rodrique, 33, has served as one of our Vice Presidents since November 2000.
He joined The AES Corporation in 1990 working at AES Placerita prior to joining
AES Ironwood.

Lyle Woodard, 49, has served as one of our Vice Presidents since November 2000.
Prior to joining AES Ironwood he worked at AES Somerset.

Michael Romaniw, 32 has served as our Treasurer of AES Ironwood , L.L.C. since
April 2000. He is also Vice President of AES Ironwood, Inc and AES Prescott
L.L.C. He joined The AES Corporation in 1999 previously working as a tax
consultant for Ernst & Young LLP.

Leith Mann, 47 has served as our Assistant Secretary since April 2000. She is
also Vice President of AES Ironwood, Inc and AES Prescott L.L.C. She has also
served as Assistant Secretary for The AES Corporation since February 2000. She
joined The AES Corporation in 1981.


                                       58
<PAGE>


ITEM 11. EXECUTIVE COMPENSATION

         Not applicable pursuant to General Instruction I of the Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Not applicable pursuant to General Instruction I of the Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Not applicable pursuant to General Instruction I of the Form 10-K.



                                       59
<PAGE>


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

a)       The following documents are filed as part of this report:

         1.       Financial Statements Filed:
                  Please refer to Item 8 - Financial Statement and
                  Supplementary Data.

         2.       Financial Statement Schedules Filed:
                  Please refer to Item 8 - Financial Statement and
                  Supplementary Data.

         3.       Exhibits Filed:

Unless otherwise indicated, all exhibits to this Form 10-K are incorporated
herein by reference from the identically numbered exhibit of AES Ironwood,
L.L.C.'s Registration Statement of Form S-4 (333-91391).

<TABLE>
<CAPTION>
  Exhibit Number    Description
<S>                 <C>
        3           Amended and Restated Limited  Liability Company Agreement, dated as of October 4, 1999, of our
                    Company.
       4.1          Indenture and the First Supplemental Indenture, dated as of June 1, 1999, by and among our
                    Company, the Trustee and the Depositary Bank.
       4.2          Collateral Agency and Intercreditor Agreement, dated as of June 1, 1999, by and among our
                    Company, the Trustee, the Collateral Agent, the DSR LOC Provider, the CP LOC Provider and the
                    Depositary Bank.
       4.3          Debt Service Reserve Letter of Credit and Reimbursement Agreement, dated as of June 1, 1999, by
                    and among our Company, the DSR LOC Provider and the Banks named therein.
       4.4          Construction Period Letter of Credit and Reimbursement Agreement, dated as of June 1, 1999,
                    by and among our Company, the CP LOC Provider and the Banks named therein.
       4.5          Global Bonds, dated June 25, 1999, evidencing 8.857% Senior Secured Bonds of our Company due
                    2025 in the principal amount of $308,500,000.
       4.6          Equity Subscription  Agreement, dated as of June 1, 1999, by and among our Company, AES Ironwood
                    and the Collateral Agent.
       4.7          Security Agreement, dated as of June 1, 1999, by and between our Company and the Collateral
                    Agent.
       4.8          Pledge and Security Agreement, dated as of June 1, 1999, by and between AES Ironwood and the
                    Collateral Agent.
       4.9          Consent to  Assignment, dated as of June 1, 1999, by and between the Power Purchaser and the
                    Collateral Agent, and consented to by our Company.
       4.10         Consent to Assignment, dated as of June 1, 1999, by and between the PPA Guarantor and our
                    Company, and consented to by our Company.
       4.11         Consent to Assignment, dated as of June 1, 1999, by and between the Contractor and the
                    Collateral Agent, and consented to by our Company (with respect to the EPC Contract).

</TABLE>


                                       60
<PAGE>

<TABLE>
<CAPTION>
  Exhibit Number    Description
<S>                 <C>
       4.12         Consent to Assignment, dated as of June 1, 1999, by and between the Contractor and the
                    Collateral Agent and consented to by our Company (with respect to the Maintenance Services
                    Agreement).
       4.13         Consent to Assignment, dated as of June 1, 1999,  by and between Siemens Corporation and the
                    Collateral Agent, and consented to by our Company.
       4.14         Consent to Assignment, dated as of June 1, 1999, by and between Prescott and the Collateral
                    Agent, and consented to by our Company.
       4.15         Consent to Assignment, dated as of June 1, 1999, by and between Metropolitan Edison Company
                    d/b/a GPU Energy and the Collateral Agent, and consented to by our Company.
       4.16         Consent to Assignment, dated as of June 1, 1999, by and between City of Lebanon Authority and
                    the Collateral Agent, and consented to by our Company.
       4.17         Consent to  Assignment, dated as of June 1, 1999, by and between Pennsy Supply, Inc. and the
                    Collateral Agent, and consented to by our Company.
       4.18         Assignment and Assumption Agreement, dated June 25, 1999, by and between AES Ironwood, Inc. and
                    AES Ironwood, L.L.C. (with respect to the EPC Contract).
       4.19         Assignment and Assumption Agreement, dated June 25, 1999, by and between AES Ironwood, Inc. and
                    AES Ironwood, L.L.C. (with respect to the Maintenance Services Agreement).
       10.1         Guaranty, dated as of February 5, 1999, by and between the PPA Guarantor and our Company.
       10.2         Amended and Restated Power Purchase Agreement, dated as of February 5, 1999, and Amendment No. 1
                    to Amended and Restated Power Purchase Agreement,  dated as of June 18, 1999, between our Company
                    and the Power Purchaser. (Portions of this exhibit have been omitted pursuant to a request for
                    confidential treatment.)
       10.3         Engineering, Procurement and Construction Services Agreement, dated as of September 23, 1998
                    (the "EPC Contract"), as amended, by and between our Company and the Contractor. (Portions of
                    this exhibit have been omitted pursuant to a request for confidential treatment.)
       10.4         Guaranty, dated as of September 23, 1998, by and between Siemens Corporation and our Company.
       10.5         Maintenance Program Parts, Shop Repairs and Scheduled Outage TFA Services Contract, dated as of
                    September 23, 1998, and Amendment No. 1 to Maintenance Program Parts, Shop Repairs and Scheduled
                    Outage  TFA  Services  Contract,  dated  as  of  January  13,  1999  (the  "Maintenance  Services
                    Agreement"), by and between our Company and the Contractor. (Portions of this exhibit have been
                    omitted pursuant to a request for confidential treatment.)
       10.6         Development and Operations Services Agreement, dated as of June 1, 1999, by and between our
                    Company and Prescott.
       10.7         Effluent Supply Agreement, dated as of March 3, 1998, by and between our Company and City of
                    Lebanon Authority.
       10.8         Generation Facility Transmission Interconnection Agreement, dated as of March 23, 1999, by and
                    between our Company and Metropolitan Edison Company d/b/a GPU Energy.
       10.9         Agreement  Relating to Real Estate, dated as of October 23, 1998, by and between our Company and
                    Pennsy Supply, Inc.
      10.10         Easements and Right of Access Agreement, dated as of April 15, 1999, by and between our Company
                    and Pennsy Supply, Inc.
</TABLE>


                                       61
<PAGE>

<TABLE>
<CAPTION>
  Exhibit Number    Description
<S>                 <C>
       12*          Computation of Ratios of Earnings / (Deficiency) to Fixed Charges
</TABLE>


----------------

* Filed herewith.


    b)   Reports on Form 8-K

         No current reports on Form 8-K were filed by the registrant during the
fourth quarter of the fiscal year ended December 31, 2000.


                                       62
<PAGE>




    SUPPLEMENTARY INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
        SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED
                  SECURITIES PURSUANT TO SECTION 12 OF THE ACT.

         No annual report or proxy materials have been sent to security holders
during the fiscal year ended December 31, 2000. No annual report or proxy
materials will be sent to security holders subsequent to the filing of this
annual report on Form 10-K.






                                       63
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                 AES IRONWOOD, L.L.C.


                                 /s/ BARRY SHARP
                                 -----------------------------------------------
                                 By:    Barry Sharp
                                 Title: Vice President, Chief Financial Officer

Date:    March 28, 2001


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE                                                 TITLE                                DATE
---------                                                 -----                                ----
<S>                                                       <C>                                  <C>
/s/ BARRY SHARP                                 Director, Vice President, Chief           March 28, 2001
---------------------------                     Financial Officer (and principal
Barry Sharp                                     accounting officer)


/s/ PETER NORGEOT                               President                                 March 28, 2001
---------------------------
Peter Norgeot

/s/ JOHN RUGGIRELLO                             Director, Vice President                  March 28, 2001
---------------------------
John Ruggirello

/s/ ROGER NAILL                                 Director                                  March 28, 2001
----------------
Roger Naill

</TABLE>



                                       64