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                                                                   EXHIBIT 10.26

                        HOUSTON INDUSTRIES INCORPORATED
                           DEFERRED COMPENSATION PLAN

              (As Amended and Restated Effective January 1, 1989)

                                    Recitals

     Houston Industries Incorporated, a Texas corporation (the "Company"), with
its principal place of business in Houston, Harris County, Texas, established a
Deferred Compensation Plan effective September 1, 1985 (the "Prior Plan") for
the benefit of its eligible salaried employees and retained the right to amend
the Prior Plan under Section 7.1 thereof. The Prior Plan, as thereafter
amended, has been continued up to December 31, 1988.

     Effective as of January 1, 1989, the Board of Directors of the Company has
authorized the amendment and restatement of the Prior Plan, as amended and in
effect on December 31, 1988, so as to alter the manner in which earnings are
credited on deferred payments and to make certain other changes therein.

     There shall be no termination and no gap or lapse in time or effect
between the Prior Plan, as in effect on December 31, 1988, and this Plan. The
amendment and restatement of the Prior Plan, as in effect on December 31, 1988,
in the form of this Plan shall not operate to exclude, diminish, limit or
restrict the payments or continuation of payments of benefits to Participants
under the terms of the


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Prior Plan as in effect on December 31, 1988. Except to the extent otherwise
required to reflect the fact that such Prior Plan Participants' benefits
accrued under the Prior Plan are continued under this Plan, the provisions of
this Plan shall apply only to an Employee or a Director eligible to participate
under this Plan on or after January 1, 1989.

     NOW, THEREFORE, the Company hereby amends, restates in its entirety and
continues the Prior Plan, as in effect on December 31, 1988, in the form of
this Houston Industries Incorporated Deferred Compensation Plan, effective
January 1, 1989, which shall read as follows:

                                   ARTICLE I

                    PURPOSES OF PLAN; DEFINITIONS; DURATION

     1.1  Purposes. This Deferred Compensation Plan of Houston Industries
Incorporated for selected management and highly compensated employees is
intended to provide greater incentives to Participants to attain and maintain
the highest standards of performance.

     1.2  Definitions. Each term below shall have the meaning assigned thereto
for all purposes of this Plan unless the context requires a different
construction.

          (a)  "Agreement" means the Deferred Compensation Agreement between
     the Employer and the Participant which, for this Plan, specifies the



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     amount of Compensation being deferred, the method of payment for benefits
     payable under this Plan at normal retirement, and the election of any early
     distribution. Deferrals for each separate Participation Year will be
     covered by a separate Agreement.

          (b)  "Beneficiary" means a person or persons designated by the
     Participant, as provided in Section 4.1, to receive any amounts
     distributed under the Plan after a Participant's death.

          (c)  "Bonus" means a formula or discretionary bonus or incentive
     compensation paid by an Employer, including, but not limited to, a vested
     award under the Houston Industries Incorporated Executive Incentive
     Compensation Plan ("EIC Plan"), granted after January 1, 1989.

          (d)  "Code" means the Internal Revenue Code of 1986, as amended.

          (e)  "Company" means Houston Industries Incorporated, or any
     successor thereto.

          (f)  "Commencement Date" means the first day of the Participation
     Year with respect to which a Compensation deferral occurs.

          (g)  "Committee" means the Compensation and Benefits Committee of the
     Company, which shall


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     consist of five (5) or fewer persons, as shall be appointed by the Board of
     Directors of the Company ("Board") to administer the Plan pursuant to
     Article II hereof. The Board may remove a Committee member for any reason
     by giving him ten (10) days' written notice, and shall fill any vacancy
     thus created.

          (h)  "Compensation" means the salary and Bonus which an Employer pays
     its Employees, and the meeting attendance fees and retainer fee paid to a
     Director by an Employer.

          (i)  "Director" means a member of the Board of Directors of an
     Employer. A Director who is also an Employee shall be considered an
     Employee for all purposes with respect to salary and Bonus deferrals and
     shall be considered a Director for all purposes with respect to deferrals
     of meeting attendance fees.

          (j)  "Disability" means a physical or mental condition which
     qualifies as a total and permanent disability under the Houston Industries
     Incorporated Long-Term Disability Plan, as amended from time to time.


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        (k)  "Early Distribution" means the benefit payment option available to
a Participant under Section 5.1(a) hereof.

        (1)     "Early Retirement Date" means with respect to an Employee the
first day of the month coincident with or next following his sixtieth (60th)
birthday or an earlier age as may be authorized by the Committee in its sole
discretion; and means with respect to a director the first day of the month
coincident with or next following his resignation or removal as a Director
before his Normal Retirement Date.

        (m)     "Employee" means any person, including an officer of any
Employer (whether or not he is also a director thereof), who, at the time such
person is designated a Participant hereunder, is employed by the Employer on a
full-time basis, who is compensated for such employment by a regular salary, and
who, in the opinion of the Committee, is one of the officers or other key
employees of the Employer in a position to contribute materially to the
continued growth and development and to the future financial success of the
Employer. Any Participant who is an Employee of a Subsidiary shall be deemed to
have terminated employment with


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an Employer for purposes of this Plan as of the date upon which the Participant
is no longer employed by an entity which would be considered a "Subsidiary"
hereunder.

        (n)     "Employer" means the Company and each Subsidiary which has
adopted or which adopts this Plan.

        (o)     "Employment" means employment with an Employer as an Employee or
the current holding of a position as a Director of an Employer. Neither the
transfer of an Employee Participant from employment by the Company to employment
by a Subsidiary nor the transfer of an Employee Participant from employment by a
Subsidiary to employment by the Company shall be deemed to be a termination of
Employment of such Participant. Moreover, the Employment of a Participant shall
not be deemed to have been terminated because of his absence from active
employment on account of temporary illness or during authorized vacation or
during temporary leaves of absence, granted by the Employer for reasons of
professional advancement, education, health, or government service, or during
military leave for any period if the Participant returns to active employment
within



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ninety (90) days after the termination of his military leave, or during any
period required to be treated as a leave of absence by virtue of any valid law
or agreement.

        (p)     "Interest Crediting Rate" means, for a given Plan Year, a rate
of interest equivalent to the average Moody's Rate for such year plus two
percentage points (2%).

        (q)     "Moody's Rate" means a rate of interest equal to the composite
yield on Moody's Long-Term Corporate Bond Index for the calendar month as
determined from Moody's Bond Record published by Moody's Investors Service,
Inc. (or any successor thereto), or, if such yield is no longer published, a
substantially similar average selected by the Committee.

        (r)     "Normal Retirement Distribution" means the benefit payment
options available to a Participant under Section 5.1(b) hereof.

        (s)     "Normal Retirement Date" means with respect to an Employee the
first day of the month coincident with or next following his sixty-fifth (65th)
birthday, and means with respect to a Director the first day of the month
coincident


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     with or next following his seventieth (70th) birthday.

          (t)  "Participant" means an Employee or a Director who has been
     designated by the Committee to participate in the Plan pursuant to Section
     3.2 hereof and who has elected in writing to participate in the Plan
     pursuant to Section 3.3.

          (u)  "Participation Year" means (i) with respect to Compensation in
     the form of a Bonus, the Plan Year during which the Bonus would have been
     paid if not deferred, (ii) with respect to Compensation in the form of
     salary, the Plan Year during which a Participant performs services for the
     Employer for a salary, and (iii) with respect to Compensation in the form
     of a Director's meeting attendance fees and a Director's retainer fee, the
     Plan Year during which a Participant performs services for the Company or
     a Subsidiary for such fees.

          (v)  "Plan" means the Houston Industries Incorporated Deferred
     Compensation Plan, as amended and restated effective January 1, 1989 and
     as set forth herein, as the same may hereafter be amended from time to
     time.


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          (w)  "Plan Year" means the calendar year.

          (x)  "Prior Agreement" means the Deferred Compensation Agreement
     entered into between the Employer and Participant pursuant to provisions
     of the Prior Plan and which, under the Prior Plan's terms, specified the
     Compensation deferred, the benefits payable and the interest rates to be
     used.

          (y)  "Prior Plan" means the Houston Industries Incorporated Deferred
     Compensation Plan as in effect before this restatement of the Plan and for
     the period commencing with the inception date of the Prior Plan on
     September 1, 1985 and continuing through December 31, 1988, and is
     incorporated herein by reference for purposes of its applicability under
     this Plan as to Compensation deferred with respect to Participation Years
     commencing before January 1, 1989. A copy of the Prior Plan is attached
     hereto as Exhibit A.

          (z)  "Subsidiary" means a subsidiary corporation with respect to the
     Company as defined in Section 425(f) of the Code.

Words used in this Plan in the singular shall include the plural and in the
plural the singular, and the gender of words used shall be construed to
include whichever may be



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appropriate under any particular circumstances of the masculine, feminine or
neuter genders.

     1.3 Term. The effective date of the Plan is January 1, 1989. The Plan
shall continue until terminated by the Committee. The Committee, in its sole
discretion, may or may not authorize deferral of Compensation during the term
of the Plan.

                                   ARTICLE II

                                 ADMINISTRATION

     The Plan shall be administered by the Committee, which shall represent the
Company and other Employers in all matters concerning the administration of the
Plan. Members of the Committee may be Participants under the Plan, but no
Member may vote on any matter relating to his benefits under the Plan. The
Committee shall have primary responsibility for the administration and
operation of the Plan and shall have all powers necessary to carry out the
provisions of the Plan, including the power to determine which Employees and
Directors shall be Participants under the Plan and which Compensation may be
subject to deferral. The determination of the Committee as to the construction,
interpretation, or application of any terms and provisions of the Plan,
including whether and when there has been a termination of an Em-


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ployee's employment, shall be final, binding, and conclusive upon all persons.

                                  ARTICLE III

                                 PARTICIPATION
                                 -------------

     3.1  Eligibility of Employees and Directors. An Employee must be a manager
or a highly compensated (within the meaning of Section 414(q) of the Code)
salaried employee of an Employer to be eligible to participate in the Plan. All
Directors shall be eligible to participate in the Plan. The Committee may from
time to time establish additional eligibility requirements for participation in
the Plan.

     3.2  Designation of Participants. Prior to the commencement of any
Participation Year after 1988 the Committee shall designate and notify in
writing the Employees and/or Directors who are eligible to elect to defer
Compensation under this Plan. A designation of an Employee or Director to
participate with respect to Compensation for a particular Participation Year
shall not automatically entitle such Participant to participate with respect to
any other Participation Year. The Committee may, in its sole discretion, notify
a Participant that he is entitled to participate with respect to all future
Compensation for all Participation Years beginning after the date of
notification by the Committee, in which event the Participant may continue to
par-



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<PAGE>   12
ticipate and elect to defer Compensation awarded in respect of future
Participation Years until such time as the Committee notifies the Participant
in writing that he may not participate for future Participation Years.

     3.3  Election to Participate. After an Employee or Director has been
notified by the Committee that he is eligible to participate in the Plan he
must notify the Committee in writing that he chooses to participate in the
Plan. An election to participate in the Plan shall be effective upon its
receipt by the Committee. A Participant's written election (i) shall specify
the type or types and the amount or amounts of Compensation that he wishes to
defer and the manner of such deferral pursuant to Sections 3.4 through 3.7
hereof; (ii) shall specify, if the Participant so elects, that he wishes to
receive an Early Distribution of benefits with respect to some or all deferrals
for such Participation Year under Section 5.1(a) hereof; and (iii) shall
specify the manner of Normal Retirement Distribution the Participant chooses
with respect to such deferrals under Section 5.1(b) hereof.

     3.4  Salary Deferral. A Participant's election to defer the payment of
salary for 1989 and subsequent Plan Years must be made prior to December 1 (or
a later date determined by the Committee) of the Plan Year preceding the Plan
Year in which the salary is earned by the Participant.

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Such election will be irrevocable as of December 31 of the calendar year
preceding the calendar year in which the salary is earned.

          For any Participation Year, a Participant who has not had his
fiftieth (50th) birthday on the date he elects to defer Compensation for a
Participation Year may elect to defer no less than $2,000 and no more than
twenty-five percent (25%) of his annual salary in any Participation Year. A
Participant who is age fifty (50) or older at the time he elects to defer
Compensation for a Participation Year may elect to defer up to forty percent
(40%) of his annual salary in any Participation Year, but not less than $2,000.

          The amount of Compensation elected to be deferred under this Section
3.4 shall be withheld from the Participant's salary during a Plan Year in equal
amounts. Any interest which accrues on such deferrals pursuant to Article V
shall accrue from January 1 of each Participation Year on the total amount of
salary deferred during the Participation Year under this Section 3.4.

     3.5  Bonus Deferral. A Participant's election to defer the payment of a
Bonus for 1989 and subsequent Plan Years must be made prior to December 1 (or a
later date determined by the Committee) of the Plan Year preceding the Plan
Year in which the Bonus is payable. Such election will be irrevocable as of
December 31 of the calendar year preceding

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the calendar year in which the Bonus is paid. For the Plan Year commencing
January 1, 1989, any deferral of Bonus consisting of a vested award under the
EIC Plan shall be accomplished under the terms of the Prior Plan.

          A Participant may not elect to defer more than one hundred percent
(100%) of his annual cash Bonus award with respect to a particular
Participation Year, nor less than $2,000 for such Participation Year.

          The amount of Compensation elected to be deferred under this Section
3.5 shall be withheld from the Participant's Bonus otherwise payable during the
Plan Year. If the amount of Bonus awarded to the Participant with respect to a
Participation Year is less than the amount of Bonus which the Participant had
elected to defer for such Participation Year, the entire amount of the Bonus
awarded shall be deferred in accordance with Section 3.5, and no further
deferral shall be made with respect to such election for such Participation
Year. Any interest which accrues on such deferrals pursuant to Article V shall
accrue from January 1 of each Participation Year on the total amount of the
Bonus deferred during the Participation Year under this Section 3.5.

     3.6  Retainer Fee Deferral. A Director Participant's election to defer the
payment of the retainer fee for 1989 and subsequent Plan Years must be made
prior to December 1

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(or a later date determined by the Committee) of the Plan Year preceding the
Participation Year in which the retainer fee will be paid. Such election will
be irrevocable as of December 31 of the Plan Year preceding the Participation
Year with respect to which the retainer fee is payable.

     A Participant may not elect to defer more than one hundred percent (100%)
of his annual retainer fee with respect to a particular Participation Year, nor
less than $2,000 for such Participation Year.

     The amount of Compensation elected to be deferred under this Section 3.6
shall not be paid but shall be withheld from the Participant's retainer fee
otherwise payable during the Plan Year. Any interest which accrues on such
deferrals pursuant to Article V shall accrue from January 1 of each
Participation Year on the total amount of Compensation elected to be deferred
under this Section 3.6.

     3.7 Meeting Attendance Fees Deferral. A Director Participant's election to
defer the payment of meeting attendance fees for 1989 and subsequent Plan Years
must be made prior to December 1 (or a later date determined by the Committee)
of the Plan Year preceding the Participation Year in which the meeting
attendance fees will be paid. Such election will be irrevocable as of December
31 of the Plan Year preceding the Participation Year with respect to which the
meeting attendance fees are payable.

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     A Participant may not elect to defer more than one hundred percent (100%)
of the total meeting attendance fees payable in any Participation Year.

     The amount of Compensation elected to be deferred pursuant to this Section
3.7 shall be withheld from each meeting attendance fee earned by a Director
during a Participation Year in equal percentages. Any interest which accrues on
such deferrals pursuant to Article V shall accrue from January 1 of each
Participation Year on the total amount of Compensation elected to be deferred
under this Section 3.7.

     3.8 Waiver or Suspension of Deferral. The Committee may, in its sole
discretion, grant a waiver or suspension of a Participant's irrevocable
deferral election under this Article III for such time as the Committee may
deem to be necessary upon a finding that the Participant has suffered a
financial hardship. The Committee may also, in its sole discretion, permit a
Participant to take prospective remedial action within the same year in order
to bring his total Compensation deferral for the Participation Year in which
the event resulting in a waiver or suspension occurred to the level of his
original deferral election, provided that the limits of this Article III are
not thereby exceeded.

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                                   ARTICLE IV

                     BENEFICIARY DESIGNATIONS; WITHHOLDING

     4.1 Beneficiary Designations. Each person becoming a Participant shall file
with the Committee a designation of one or more Beneficiaries to whom
distributions otherwise due the Participant shall be made in the event of his
death while in the employ of the Company or after termination of Employment but
prior to the complete distribution of the benefits payable with respect to the
Participant. Such designation shall be effective when received in writing by the
Committee. The Participant may from time to time revoke or change any such
designation of a Beneficiary by written document delivered to the Committee. If
there is no valid designation of the Beneficiary on file with the Committee at
the time of the Participant's death, or if all of the Beneficiaries designated
therein shall have predeceased the Participant or otherwise ceased to exist, the
Beneficiary shall be, and any payment hereunder shall be made to, the
Participant's spouse, if he or she survives the Participant, or otherwise to the
Participant's estate. If the Beneficiary, whether under a valid beneficiary
designation or under the preceding sentence, shall survive the Participant but
die before receiving all payments hereunder, the balance of the benefits which
would have been paid to the Beneficiary had he or she lived shall, unless the
Participant's designa-


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tion provided otherwise, be distributed to the Beneficiary's estate.

     4.2  Withholding of Taxes. The Committee shall cause the Employer to
deduct from the amount of all benefits paid under the Plan any taxes required
to be withheld by the Federal Government or any state or local government.

                                   ARTICLE V

                                    BENEFITS

     5.1  Benefit Payments. The benefit payments with respect to deferrals of
Compensation for a specific Participation Year will be determined as set forth
below:

     (a)  Early Distribution. At the time a Participant elects to defer
          Compensation for a Participation Year pursuant to Section 3.3 hereof,
          he may elect to receive an Early Distribution of benefits attributable
          to such Compensation. The Early Distribution will represent either (i)
          fifty percent (50%) or (ii) one hundred percent (100%) of the
          Compensation deferred for that Participation Year, and will include
          interest amounts accrued thereon at the applicable Interest Crediting
          Rates. The Participant shall receive such Early Distribution within
          ninety-five (95) days of the beginning of any year selected by the
          Participant,


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          which year may not commence earlier than three (3) years from the end
          of the Plan Year in which the Participant deferred such Compensation.
          A Participant may make only one Early Distribution election under
          this Plan.

               (b)  Normal Retirement Distribution. At the time a Participant
          elects to defer Compensation for a Participation Year pursuant to
          Section 3.3 hereof, he must elect to receive a Normal Retirement
          Distribution of benefits attributable to such Compensation, taking
          into account any Early Distribution election made by him under
          Section 5.1(a). The Participant may elect to receive a Normal
          Retirement Distribution equal either to (i) a lump-sum distribution
          of the amounts of Compensation deferred with interest thereon,
          compounded annually, at the applicable Interest Crediting Rates,
          minus any Early Distributions, or (ii) a benefit in the form of
          fifteen (15) annual installment payments of such Compensation,
          including interest thereon, compounded annually, at the applicable
          Interest Crediting Rates, minus any Early Distributions. Payment of a
          Normal Retirement Distribution will be made, if payable in a lump
          sum, in the January following the

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Participant's termination of employment on or after his Normal Retirement Date.
Payment of a Normal Retirement Distribution will be made, if payable in fifteen
(15) annual installments, commencing the month following the month in which the
Participant terminates employment on or after his Normal Retirement Date, and
will be paid in that same month in each remaining year. The Interest Crediting
Rate in effect for the Plan Year in which an Employee Participant attains age
sixty-five (65) or a Director Participant attains age seventy (70) will
constitute the applicable Interest Crediting Rate for all years thereafter in
which the Normal Retirement Distribution is paid or payable.

        (c)     Failure to Elect Method of Distribution. If a Participant fails
to make an election as to the manner in which a Normal Retirement Distribution
will be paid, such Normal Retirement Distribution will be made in the form of a
lump-sum distribution in accordance with Section 5.1(b) above, as if the
Participant had specifically so elected.


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        (d)     Termination After Normal Retirement Date and Prior to Normal
Retirement Date. Any Participant who terminates employment after his Early
Retirement Date but prior to his Normal Retirement Date, will (if he is living
on the date of payment) receive a lump-sum distribution or fifteen (15) annual
installment payments, in accordance with his election under Section 5.1(b)
above, commencing once he has attained his Normal Retirement Date. Such
commencement date may be accelerated by the Committee in its sole discretion,
but may not occur before a Participant's termination of employment.

        (e)     Benefits Stated in Agreement. The form of benefit payments
elected will be stated in the Agreement between the Employer and the
Participant, based on the Company's administrative guidelines under the Plan.

        (f)     Commutation of Benefit Payments. Any benefit payable in
installments, upon petition by the Participant and in the discretion of the
Committee, or at the Committee's sole discretion, may be commuted to a lump-sum
payment or may be paid over a shorter period of time, with interest accrued to
such date at the applicable Interest Crediting Rate.

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5.2     Death

        (a)     Death Prior to Commencement of Normal Retirement Distribution.
If a Participant dies (i) prior to his Normal Retirement Date and prior to his
termination of employment or (ii) after his termination of employment after his
Early Retirement Date, but prior to the commencement of a Normal Retirement
Distribution payable in fifteen (15) annual installments, the payments
otherwise described in Section 5.1 not theretofore made shall not be made, but
the Employer shall pay Participant's Beneficiary the sum or sums of
Compensation actually deferred with interest thereon from the Commencement Date
through the date of payment at the applicable Interest Crediting Rates less an
amount equal to any Early Distributions or other benefits paid prior to
Participant's death. Payments made pursuant to this Section 5.2(a) shall be
made within approximately ninety-five (95) days following the date of
Participant's death.

        (b)     Death After Normal Retirement Date. If Participant dies (i)
after his Normal Retirement Date but prior to his termination of employment,
(ii) after his termination of employment provided the Participant had attained
his Normal Retirement


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     Date on or before the date of such termination, or (iii) after
     commencement of a Normal Retirement Distribution in the form of
     fifteen (15) annual installment payments pursuant to Section 5.1
     but prior to completion of all such payments, the Employer shall
     make (or continue to make) such payments provided for in Section
     5.1 to the Participant's Beneficiary.

          (c) Commutation of Death Benefit. Any death benefit payable
     in installments, in the discretion of the Committee and at a
     Beneficiary's request, or in the Committee's sole discretion, may
     be commuted to a lump-sum payment or may be paid over a shorter
     period of time, with interest accrued to such date at the
     applicable Interest Crediting Rate.

     5.3 Disability. In the event of the Disability of a Participant while in
the employ of an Employer, the Participant shall be considered to have remained
in the continuous employment of the Employer during such Disability until his
Normal Retirement Date or earlier death. The benefits payable to such
Participant under the Plan shall be paid in the amounts and at the times
otherwise provided in Section 5.1, all in accordance with Participant's
initial election under Section 3.3, except that the Committee, in its
discretion,


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<PAGE>   24
may commute any such payments to a lump-sum payment or may pay any such
payments over a shorter period of time, with interest accrued to such date at
the applicable Interest Crediting Rate.

     5.4  Payment Upon Termination of Employment. If the employment of an
Employee Participant is terminated for any reason other than death, retirement
at or after the Normal Retirement Date, or early retirement in accordance with
the provisions of Section 5.1(d), a Normal Retirement Distribution payable in
fifteen (15) annual installments as described in Section 5.1 shall not be made,
but the Employer shall pay the Participant the sum or sums of Compensation
actually deferred, with interest thereon, compounded annually, at the
applicable Moody's Rate for each Participation Year, from the Commencement Date
through the date of payment. Notwithstanding the foregoing, the amount payable
under this Section 5.4 shall be reduced by amounts equal to any Early
Distribution or other benefit paid prior thereto, with adjustments for
interest. Payments under this Section 5.4 shall be made within ninety-five (95)
days following the date of Participant's termination of employment or as soon
as practicable thereafter.

     5.5  Termination of Employment During Participation Year. If Participant
terminates his employment with an Employer for any reason during the
Participation Year for

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<PAGE>   25
which Compensation is to be deferred, the amount of deferral specified in his
Agreement for that Participation Year shall be adjusted to reflect the amount
actually deferred for the Participation Year prior to such termination. If
Participant terminates employment with an Employer for any reason during the
Participation Year for which he has elected to defer the payment of a Bonus,
such election shall become null and void with respect to any Bonus which has
not become payable to the Participant as of the date the Participant terminates
his employment with an Employer.

     5.6  Benefits for Prior Participation Years, Including the Participation
Year Ending December 31, 1988. Notwithstanding any other provision of the Plan
to the contrary, for prior Participation Years and for the Participation Year
ending December 31, 1988, benefits awarded under the Prior Plan shall be
distributed in accordance with, and governed by the terms of, the Prior Plan and
any Prior Agreements. The interest rates used for determination of benefits
payable under the Prior Plan shall be those set out in a Participant's Prior
Agreement. (See Exhibit A attached hereto.)

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<PAGE>   26
                                   ARTICLE VI

                             RIGHTS OF PARTICIPANTS

     6.1  Limitation of Rights. Nothing in this Plan shall be construed to:

          (a)  Give any Employee of an Employer or any Director any right to be
     designated a Participant in the Plan other than in the sole discretion of
     the Committee;

          (b)  Limit in any way the right of the Employer to terminate a
     Participant's employment at any time; or

          (c)  Be evidence of any agreement or understanding, express or
     implied, that the Company or any other Employer will employ a Participant
     in any particular position or at any particular rate of remuneration.

     6.2  Non-Alienation of Benefits. No right or benefit under this Plan shall
be subject to anticipation, alienation, sale, assignment, pledge, encumbrance,
or charge, and any attempt to anticipate, alienate, sell, assign, pledge,
encumber, or charge the same will be null and void. No right or benefit
hereunder shall in any manner be liable for or subject to any debts, contracts,
liabilities, or torts of any Participant or other person entitled to such
benefits. The foregoing provisions of this Section 6.2 shall not apply

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<PAGE>   27
to a domestic relations order awarding any benefits under the Plan to the
divorced spouse of a Participant.

     6.3  Prerequisites to Benefits. No Participant, nor any Beneficiary or
other person claiming through a Participant, shall have any right or interest
in the Plan, or any benefits hereunder, unless and until all the terms,
conditions, and provisions of the Plan which affect such Participant or such
other person shall have been complied with as specified herein.

     6.4  Nature of Employer's Obligation. This Plan is intended to be, and
shall be construed as, an unfunded plan maintained by each Employer primarily
for the purpose of providing deferred compensation for a select group of its
management or highly compensated salaried employees. The benefits provided
under this Plan shall be a general, unsecured obligation of the Employer
payable solely from the general assets of the Employer, and neither the
Participant nor the Participant's Beneficiary or estate shall have any interest
in any assets of the Employer by virtue of this Plan. No fund or other assets
will ever be set aside or segregated for the benefit of the Participant or the
Participant's Beneficiary under this Plan. The adoption of the Plan and any
setting aside of amounts by an Employer with which to discharge its obligations
hereunder shall not be deemed to create a trust; legal and equitable title to
any

                                      -27-
<PAGE>   28
funds so set aside shall remain in the Employer and any funds so set aside
shall remain subject to the general creditors of the Employer.

                                  ARTICLE VII

                                 MISCELLANEOUS

     7.1 Amendment or Termination of the Plan. The Committee may amend or
terminate this Plan at any time. Any such amendment or termination shall not,
however, affect the rights of any Participant to any accrued benefits payable
under the Plan.

     7.2 Reliance Upon Information. The Committee shall not be liable for any
decision or action taken in good faith in connection with the administration of
this Plan. Without limiting the generality of the foregoing, any such decision
or action taken by the Committee in reliance upon any information supplied to
it by an officer of the Company, the Company's legal counsel, or the Company's
independent accountants in connection with the administration of this Plan
shall be deemed to have been taken in good faith.

     7.3 Effective Date. The Plan shall become effective as of January 1, 1989.

     7.4 Governing Law. The Plan shall be construed, administered, and governed
in all respects under the laws of the State of Texas.


                                      -28-

<PAGE>   29
     7.5 Severability. If any term, provision, covenant, or condition of the
Plan is held to be invalid, void, or otherwise unenforceable, the rest of the
Plan shall remain in full force and effect and shall in no way be affected,
impaired, or invalidated.

     7.6 Notice. Any notice or filing required or permitted to be given to the
Committee under this Plan shall be sufficient if in writing and hand delivered,
or sent by registered or certified mail, to the principal office of the
Company. Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the dates shown on the postmark on the receipt
for registration or certification.

     IN WITNESS WHEREOF, the Company has executed these presents as evidenced
by the signatures affixed hereto of its officers hereunto duly authorized and
by its corporate seal being affixed hereto, in a number of copies, all of which
shall constitute but one and the same instrument which may be sufficiently
evidenced by any executed copy hereof, this 20th day of January, 1989, but
effective as of January 1, 1989.

                                   HOUSTON INDUSTRIES INCORPORATED
                                   By /s/ WILLIAM A. COOPER
                                      -----------------------------------
                                      Vice President



ATTEST:
/s/ [SIGNATURE ILLEGIBLE]
-------------------------------
Assistant Secretary
[SEAL]

                                      -29-

<PAGE>   30
                                   EXHIBIT A

                        HOUSTON INDUSTRIES INCORPORATED
                           DEFERRED COMPENSATION PLAN

                                  ARTICLE ONE
                    PURPOSES OF PLAN; DEFINITIONS; DURATION

          1.1 Purposes. This Deferred Compensation Plan of Houston Industries
Incorporated for selected management and highly compensated employees is
intended to provide greater incentives to attain and maintain their highest
standards of performance.

          1.2 Definitions. Each term below shall have the meaning assigned
thereto for all purposes of this Plan unless the context requires a different
construction.

          (a) "Affiliate" means any corporation in which the shares owned or
     controlled, directly or indirectly, by the Company represent eighty percent
     (80%), or more, of the voting power of the issued and outstanding capital
     stock of such corporation, and a corporation which owns or controls,
     directly or indirectly, eighty percent (80%), or more, of the voting power
     of the issued and outstanding capital stock of the Company, and any
     corporation in which eighty percent (80%), or more, of the voting power of
     the issued and outstanding capital stock is owned or controlled, directly
     or indirectly, by any corporation which owns or controls,


<PAGE>   31
     directly or indirectly, eighty percent (80%), or more, of the voting power
     of the issued and outstanding capital stock of the Company.

          (b) "Age" means the Participant's age on his birthday nearest the
     applicable Commencement Date.

          (c) "Agreement" means the Deferred Compensation Agreement between the
     Employer and the Participant describing the Benefits payable to the
     Participant under the Plan with respect to salary deferrals and Bonus
     deferrals for a Participation Year. Deferrals for each separate
     Participation Year will be covered by a separate Agreement.

          (d) "Beneficiary" means a person or persons designated by the
     Participant, as provided in Section 4.1, to receive any amounts distributed
     under the Plan after Participant's death.

          (e) "Bonus" means a formula or discretionary bonus or incentive
     compensation paid by an Employer, including, but not limited to, a vested
     award under Houston Lighting & Power Company's Executive Incentive
     Compensation Plan, granted after September 1, 1985.

          (f) "Company" means Houston Industries Incorporated, or any successor
     thereto.

          (g) "Commencement Date" means the first day of the Participation Year
     with respect to which a


                                      -2-

<PAGE>   32
Compensation deferral occurs, except that for the 1985 Participation Year, the
Commencement Date is October 1, 1985.

     (h)  "Committee" means the Compensation and Benefits Committee of the
Company or such other committee, which shall consist of five (5) or fewer
persons, as shall be appointed by the Board of Directors of the Company to
administer the Plan pursuant to Article Two hereof. The Board of Directors of
the Company may remove a Committee member for any reason by giving him ten (10)
days, written notice, and shall fill any vacancy thus created.

     (i)  "Compensation" means the salary and Bonus which an Employer pays its
Employees, and the retainer fee paid to a Director by an Employer.

     (j)  "Director" means a member of the Board of Directors of an Employer
who is not an Employee of the Company or an Affiliate.

     (k)  "Early Retirement Date" means with respect to an Employee the first
day of the month coincident with or next following his 60th birthday; and means
with respect to a Director the first day of the month coincident with or next
following his resignation or removal as a Director before his Normal Retirement
Date.

                                      -3-
<PAGE>   33
     (l)  "Employee" means any person, including an officer of any Employer
(whether or not he is also a director thereof), who, at the time such person is
designated a Participant hereunder, is employed by the Employer on a full-time
basis, who is compensated for such employment by a regular salary, and who, in
the opinion of the Committee, is one of the officers or other key employees of
the Employer in a position to contribute materially to the continued growth and
development and to the future financial success of the Employer.

     (m)  "Employer" means the Company and each Affiliate which has adopted
this Plan.

     (n)  "Employment" means employment with an Employer or currently acting as
a Director of an Employer. Neither the transfer of a Participant from
employment by the Company to employment by an Affiliate nor the transfer of a
Participant from employment by an Affiliate to employment by the Company shall
be deemed to be a termination of Employment of the Participant. Moreover, the
Employment of a Participant shall not be deemed to have been terminated because
of his absence from active employment on account of temporary illness or during
authorized vacation or during temporary leaves of absence, granted by the
Employer for reasons

                                      -4-
<PAGE>   34
of professional advancement, education, health, or government service, or during
military leave for any period if the Participant returns to active employment
within 90 days after the termination of his military leave, or during any period
required to be treated as a leave of absence by virtue of any valid law or
agreement.

     (o)  "Moody's Rate" means a rate of interest equal to the composite yield
on Moody's Seasoned Corporate Bond Yield Index for the calendar month as
determined from Moody's Bond Record published by Moody's Investors Service,
Inc. (or any successor thereto), or, if such yield is no longer published, a
substantially similar average selected by the Committee.

     (p)  "Normal Retirement Date" means with respect to an Employee the first
day of the month coincident with or next following his 65th birthday or the
date of his termination of employment, if later, and means with respect to a
Director the first day of the month coincident with or next following his 70th
birthday.

     (q)  "Participant" means an Employee or a Director who has been designated
by the Committee to participate in the Plan pursuant to Section 3.2 or 3.6
hereof.

     (r)  "Participation Year" means (i) with respect to Compensation in the
form of a Bonus, the Plan Year

                                      -5-
<PAGE>   35
     during which the Bonus would have been paid if not deferred, and (ii) with
     respect to Compensation in the form of salary, the Plan Year during which a
     Participant performs services for the Employer for a salary.

          (s) "Plan" means the Houston Industries Incorporated Deferred
     Compensation Plan set forth herein, as the same may hereafter be amended
     from time to time.

          (t) "Plan Year" means the calendar year.

          (u) "Disability" means a physical or mental condition which qualifies
     as a total and permanent disability under the Houston Industries
     Incorporated Long Term Disability Plan.

          1.3 Term. The effective date of the Plan is September 1, 1985. The
Plan shall continue until terminated by the Board of Directors of the Company.
The Committee, in its sole discretion, may or may not authorize deferral of
Compensation during the term of the Plan.

                                  ARTICLE TWO

                                 ADMINISTRATION

          The Plan shall be administered by the Compensation and Benefits
Committee of the Company (the "Committee"). The Committee shall represent the
Company and other Employers in all maters concerning the administration of the
Plan. Members of the Committee may be Participants under the Plan, but no
Member may vote on any matter

                                      -6-
<PAGE>   36
relating to his benefits under the Plan. The Committee shall have primary
responsibility for the administration and operation of the Plan and shall have
all powers necessary to carry out the provisions of the Plan, including the
power to determine which Employees and Directors shall be Participants under
the Plan and which Compensation may be subject to deferral. The determination
of the Committee as to the construction, interpretation, or application of any
terms and provisions of the Plan, including whether and when there has been a
termination of an Employee's employment, shall be final, binding, and
conclusive upon all persons.

                                 ARTICLE THREE

                                 PARTICIPATION

          3.1 Eligibility of Employees and Directors. An Employee must be a
manager or a highly compensated salaried employee of an Employer to be eligible
to participate in the Plan. All Directors shall be eligible to participate in
the Plan. The Committee may from time to time establish additional eligibility
requirements for participation in the Plan.

          3.2 Designation of Participants. Prior to the commencement of any
Participation Year after 1985 the Committee shall designate and notify in
writing the Employees and/or Directors who are eligible to elect to defer
Compensation as provided in Section 5.1 hereof. A

                                      -7-
<PAGE>   37
designation of an Employee or Director to participate with respect to
Compensation for a particular Participation Year shall not automatically
entitle such Participant to participate with respect to any other Participation
Year. The Committee may, in its sole discretion, notify a Participant that he
is entitled to participate with respect to all future Compensation for all
Participation Years beginning after the date of notification by the Committee
in which event the Participant may continue to participate and elect to defer
Compensation awarded in respect of future Participation Years until such time
as the Committee notifies the Participant in writing that he may not
participate for particular future Participation Years.

     3.3 Election to Participate. After a Participant has been notified by the
Committee that he is eligible to participate in the Plan, he must, in order to
participate in the Plan, notify the Committee in writing of his election to so
participate. The election to participate in the Plan shall be effective upon
the receipt by the Committee of the Participant's written election to defer
Compensation which specifies the type or types and the amount or amounts of his
Compensation that he wishes to defer and the manner of such deferral pursuant
to Section 3.4, 3.5, or 3.6 hereof.

     3.4 Salary Deferral. A Participant's election to defer the payment of
salary for 1986 and subsequent Plan



                                      -8-

<PAGE>   38
Years must be made prior to December 1st of the Plan Year preceding the Plan
Year in which the salary is earned by the Participant. Such election will be
irrevocable as of December 31 of the calendar year preceding the calendar year
in which the salary is earned.

        A Participant may not elect to defer less than $2,000 for any
Participation Year and may not elect to defer more than 40% of his annual salary
in any Participation Year in which the Participant is Age 50 or older, and may
not elect to defer more than 25% of his annual salary in any Participation Year
in which the Participant is Age 49 or younger.

        The amount of Compensation elected to be deferred pursuant to this
Section 3.4 shall be withheld from the Participant's salary during a Plan Year
in equal semi-monthly amounts.

        3.5     Bonus Deferral. A Participant's election to defer the payment of
a Bonus must be made prior to, and will become irrevocable on, the earlier of
(a) December 1st of the Plan Year before the Participation Year with respect to
which the Bonus is paid, or (b) the date on which the amount of Bonus to be paid
to the Participant for such Participation Year is determined or determinable by
the Board.


                                      -9-
<PAGE>   39
        A Participant may not elect to defer more than 100% of his annual cash
Bonus award with respect to a particular Participation Year, nor less than
$2,000 for each Participant Year.

        The amount of Compensation elected to be deferred under this Section 3.5
shall not be paid but shall be deemed to have been deferred in one lump sum on
the Commencement Date of the applicable Participation Year. If the amount of
Bonus awarded to the Participant with respect to a Participation Year is less
than the amount of Bonus which the Participant had elected to defer for such
Participation Year, the entire amount of the Bonus awarded shall be deferred in
accordance with this Section 3.5, and no further deferral shall be made with
respect to such election for such Participation Year.

        3.6     Participation for the Participation Year Ending December 31,
1985. Notwithstanding any other provision of the Plan to the contrary, for the
Participation Year ending December 31, 1985, the Committee may select and
notify eligible Participants, in accordance with the provisions of Section 3.2
hereof, at any time on or before September 1, 1985.

        Any such eligible Participant may elect in writing, in accordance with
the provisions of Section 3.3 hereof, at any time on or before the date which
follows by


                                      -10-
<PAGE>   40
thirty days the date on which such Participant is so notified to defer the
payment of any portion of his Compensation earned subsequent to October 1, 1985
and prior to December 31, 1985, up to the maximum salary deferral authorized
under Section 3.4. Such election shall be irrevocable as of the date which
follows by thirty days the date on which the Participant is so notified that he
is eligible to participate in the Plan. The amount of Compensation elected to be
deferred pursuant to this paragraph shall be withheld from the Participant's
salary received subsequent to October 1, 1985 during the calendar year ending
December 31, 1985, in equal semi-monthly amounts.

        3.7     Waiver or Suspension of Deferral. The Committee may, in its sole
discretion, grant a waiver or suspension of a Participant's irrevocable deferral
election under this Article Three for such time as the Committee may deem to be
necessary upon a finding that the Participant has suffered a financial hardship.

                                  ARTICLE FOUR

                     BENEFICIARY DESIGNATIONS; WITHHOLDING

        4.2     Beneficiary Designations. Each person becoming a Participant
shall file with the Committee a designation of one or more Beneficiaries to whom
distributions otherwise due the Participant shall be made in the


                                      -11-

<PAGE>   41
event of his death while in the employ of the Company or after termination of
employment but prior to the complete distribution of the benefits payable with
respect to the Participant. Such designation shall be effective when received
in writing by the Committee. The Participant may from time to time revoke or
change any such designation of the Beneficiary by written document delivered to
the Committee. If there is no valid designation of the Beneficiary on file with
the Committee at the time of the Participant's death, or if all of the
Beneficiaries designated therein shall have predeceased the Participant or
otherwise ceased to exist, the Beneficiary shall be, and any payment hereunder
shall be made to, the Participant's spouse, if she survives the Participant,
otherwise to the Participant's estate. If the Beneficiary, whether under a
valid beneficiary designation or under the preceding sentence, shall survive
the Participant but die before receiving all payments hereunder, the balance of
the benefits which would have been paid to the Beneficiary had he or she lived
shall, unless the Participant's designation provided otherwise, be distributed
to the Beneficiary's estate.

     4.2 Withholding of Taxes. The Committee shall cause the Employer to deduct
from the amount of all benefits paid under the Plan any taxes required to be
withheld by the Federal Government or any state or local government.



                                      -12-


<PAGE>   42
                                  ARTICLE FIVE

                                    BENEFITS

          5.1 Benefit Payments. The benefit payments with respect to deferrals
for a specific Participation Year will be determined by the amount of
Compensation deferred during that Participation Year and the Participant's Age
on the Commencement Date, as set forth below:

               (a) A Participant who has attained Age 58 or older on the
Commencement Date of a Participation Year during which part of his Compensation
is deferred will receive 15 annual installment payments from his Employer
commencing on the first day of the month following his termination of employment
on or after his Normal Retirement Date. A Participant who has attained Age 55,
56 or 57 on the Commencement Date of a Participation Year during which part of
his Compensation is deferred will receive equal annual installments for three
years if Age 55, or for two years if Age 56, or will receive a single payment if
Age 57, to commence or to be paid on the seventh anniversary of the Commencement
Date, provided he remains in the continuous employ of his Employer from the
Commencement Date through the dates of payment of such annual installments or
such single payment. Each such Participant Age 55, 56 or 57


                                      -13-
<PAGE>   43
on any such Commencement Date will also receive annual installment payments for
15 years commencing on the first of the month following his termination of
employment on or after his Normal Retirement Date. In any case where payments
pursuant to this Section 5.1(a) are to commence later than the Participant's
Normal Retirement Date, the amount of such payments otherwise payable commencing
on the Participant's Normal Retirement Date shall be increased by application of
the interest rate specified in his Agreement, compounded annually from his
Normal Retirement Date until the date of the first such payment.

     (b)  A Participant who has not attained Age 55 on the Commencement Date of
a Participation Year during which part of his Compensation is deferred will
receive equal annual installments for four years commencing on the seventh
anniversary of the Commencement Date, provided he remains in the continuous
employ of his Employer from the Commencement Date through the dates of payment
of such annual installments. Such a Participant will also receive annual
installment payments for 15 years commencing on the first of the month following
his termination of employment on or after his Normal Retirement Date. In any
case where such 15 annual installment payments pursuant to this

                                      -14-
<PAGE>   44
Section 5.1(b) are to commence later than the Participant's Normal Retirement
Date, the amount of such payments otherwise payable commencing on his Normal
Retirement Date shall be increased by application of the interest rate
specified in his Agreement, compounded annually, from his Normal Retirement
Date until the date of the first such payment.

     (c)  Any Participant who terminates employment after his Early Retirement
Date (or an earlier date if authorized by the Committee in its discretion) but
prior to his Normal Retirement Date, will (if he is living on the date of
payment) receive 15 equal annual installment payments commencing on the first
of the month following his Normal Retirement Date. Such commencement date may
be accelerated by the Committee, in its sole discretion, but could not occur
before a Participant's termination of employment. In any case where 15 annual
installment payments pursuant to this Section 5.1(c) are to commence earlier
than the Participant's Normal Retirement Date, the amount of such payments
otherwise payable commencing on the Participant's Normal Retirement Date shall
be reduced and discounted to reflect early receipt by application of the
interest rate specified in the Participant's

                                      -15-
<PAGE>   45
Agreement, compounded annually, for the period from the date of payment to the
Participant's Normal Retirement Date.

     (d)  The amount of benefit payments will be stated in the Agreement
between the Employer and the Participant, based on the Company's administrative
guidelines under the Plan.

     (e)  Any benefit payable in installments, in the discretion of the
Committee, may be commuted to a lump sum payment or may be paid over a shorter
period of time on the basis of the interest rate specified in the Participant's
Agreement, compounded annually.

     5.2  Death
     (a)  If a Participant dies (i) prior to his Normal Retirement Date and
prior to his termination of employment, or (ii) after his termination of
employment having met the requirements for 15 annual installment payments
pursuant to Section 5.1(c) as of the date of such termination, but prior to the
commencement of such 15 annual installments payments, the payments otherwise
described in Section 5.1 not theretofore made shall not be made, but the
Employer shall pay Participant's Beneficiary the sum or sums actually deferred
with interest thereon compounded annually from the Commencement Date through
the date of payment at the

                                      -16-
<PAGE>   46
annual percentage rate specified in the Participant's Agreement, less an amount
equal to the benefits paid prior to Participant's death with interest thereon
at such annual rate compounded annually from the date of such prior benefit
payment through the date of payment of the death benefit pursuant to this
Section 5.2(a). The payment pursuant to this Section 5.2(a) shall be made
within 90 days following the date of Participant's death.

     (b)  If Participant dies (i) after his Normal Retirement Date but prior to
his termination of employment, (ii) after his termination of employment,
provided he had attained his Normal Retirement Date on or before the date of
such termination, or (iii) after commencement of 15 annual installment
payments pursuant to Section 5.1 but prior to completion of all such payments,
the Employer shall make (or continue to make) such payments provided for in
Section 5.1 to the Participant's Beneficiary.

     (c)  Any death benefit payable in installments, in the discretion of the
Committee, may be commuted to a lump sum payment or may be paid over a shorter
period of time on the basis of the interest rate specified in the Participant's
Agreement, compounded annually.

                                      -17-
<PAGE>   47
     5.3 Disability. In the event of the Disability of a Participant while in
the employ of an Employer, the Participant shall be considered to have remained
in the continuous employment of the Employer during his Disability until his
Normal Retirement Date or earlier death. The benefits payable to such
Participant under the Plan shall be paid in the amounts and at the times
otherwise provided in Section 5.1, except that the Committee, in its
discretion, may commute any such payments to a lump sum payment or may pay any
such payments over a shorter period of time on the basis of the interest rate
specified in the Participant's Agreement, compounded annually.

     5.4 Payment Upon Termination of Employment. If the employment of a
Participant who is an Employee of an Employer is terminated for any reason
other than death, retirement at or after his Normal Retirement Date, or early
retirement in accordance with the provisions of Section 5.1(c), the 15 annual
installment payments described in Section 5.1 shall not be made, but the
Employer shall pay the Participant the sum or sums actually deferred with
interest thereon compounded annually from the Commencement Date through the
date of payment, at a rate determined as follows:

          (a) If the date of Participant's termination of employment occurs
     prior to the seventh anniversary of




                                      -18-





<PAGE>   48
     the Commencement Date, the interest rate shall be the lesser of (i) Moody's
     Rate, or (ii) the annual percentage rate specified in Participant's
     Agreement.

          (b) If the date of Participant's termination of employment occurs
     after the seventh anniversary of the Commencement Date, the interest rate
     shall be the annual percentage rate specified in Participant's Agreement.

Notwithstanding the foregoing, the amount payable under this Section 5.4 shall
be reduced by an amount equal to any benefits paid prior thereto with interest
thereon at the rate determined in accordance with the foregoing compounded
annually from the date of such prior benefit payment through the date of the
termination payment pursuant to this Section 5.4. The payment pursuant to this
Section 5.4 shall be made on the first of the month coincident with or next
following the expiration of 90 days following the date of Participant's
termination of employment.

          5.5 Termination of Employment During Participation Year. If
Participant terminates his employment with Employer for any reason during the
Participation Year for which Compensation is to be deferred, the amount of
deferral specified in his Agreement for that Participation Year shall be
adjusted to equal the actual deferral amount for the Participation Year prior
to such


                                      -19-



<PAGE>   49
termination. In addition, any Benefits payable in accordance with this Plan
shall be proportionately reduced to reflect such actual deferral amount.

                                   ARTICLE SIX
                             RIGHTS OF PARTICIPANTS

          6.1 Limitation of Rights. Nothing in this Plan shall be construed to:

          (a) Give any Employee of an Employer any right to be designated a
     Participant in the Plan other than in the sole discretion of the Committee;

          (b) Limit in any way the right of the Employer to terminate a
     Participant's employment at any time; or

          (c) Be evidence of any agreement or understanding, express or implied,
     that the Company or any other Employer will employ a Participant in any
     particular position or at any particular rate of remuneration.

          6.2 Nonalienation of Benefits. No right or benefit under this Plan
shall be subject to anticipation, alienation, sale, assignment, pledge,
encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign,
pledge, encumber, or charge the same will be void. No right or benefit
hereunder shall in any manner be liable for or subject to any debts, contracts,
liabilities, or torts of any Participant or other person entitled to such
benefits. The foregoing provisions of this Section 6.2


                                      -20-

<PAGE>   50
shall not apply to a domestic relations order awarding any benefits under the
Plan to the divorced spouse of a Participant.

          6.3 Prerequisites to Benefits. No Participant, nor any Beneficiary or
     other person claiming through a Participant, shall have any right or
     interest in the Plan, or any benefits hereunder, unless and until all the
     terms, conditions, and provisions of the Plan which affect such Participant
     or such other person shall have been complied with as specified herein.

          6.4 Nature of Employer's Obligation. This Plan is intended to be, and
shall be construed as, an unfunded plan maintained by each Employer primarily
for the purpose of providing deferred compensation for a select group of its
management or highly compensated employees. The benefits provided under this
Plan shall be a general, unsecured obligation of the Employer payable solely
from the general assets of the Employer, and neither the Participant nor the
Participant's Beneficiary or estate shall have any interest in any assets of
the Employer by virtue of this Plan. No fund or other assets will ever be set
aside or segregated for the benefit of the Participant or the Participant's
Beneficiary under this Plan. The adoption of the Plan and any setting aside of
amounts by an Employer with which to discharge its obligations hereunder shall
not be deemed to


                                      -21-

<PAGE>   51
create a trust; legal and equitable title to any funds so set aside shall remain
in the Employer and any funds so set aside shall remain subject to the general
creditors of the Employer. If it becomes necessary for a Participant to
institute a claim, by litigation or otherwise, to enforce his rights under the
Plan, the Employer shall indemnify Participant from and against all costs and
expenses, including legal fees, incurred by him instituting and maintaining such
claim.

                                 ARTICLE SEVEN
                                 MISCELLANEOUS

          7.1 Amendment or Termination of the Plan. The Board of Directors of
the Company may amend or terminate this Plan at any time. Any such amendment or
termination shall not, however, affect the rights of any Participant to any
accrued benefits payable under the Plan.

          7.2 Reliance Upon Information. The Committee shall not be liable for
any decision or action taken in good faith in connection with the
administration of this Plan. Without limiting the generality of the foregoing,
any such decision or action taken by the Committee in reliance upon any
information supplied to it by an officer of the Company, the Company's legal
counsel, or the Company's independent accountants in connection with the
administration of this Plan shall be deemed to have been taken in good faith.


                                      -22-

<PAGE>   52


        7.3 Effective Date. The Plan shall become effective as of September 1,
1985.

        7.4 Governing Law. The Plan shall be construed, administered, and
governed in all respects under the laws of the State of Texas.

        7.5 Severability. If any term, provision, covenant, or condition of the
Plan is held to be invalid, void, or otherwise unenforceable, the rest of the
Plan shall remain in full force and effect and shall in no way be affected,
impaired, or invalidated.

        7.6 Notice. Any notice or filing required or permitted to be given to
the Committee under this Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the principal office of
the Company. Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the dates shown on the postmark on the receipt
for registration or certification.

        IN WITNESS WHEREOF, the Company has executed these presents as evidenced
by the signatures affixed hereto of its officers hereunto duly authorized and by
its corporate seal being affixed hereto, in a number of copies, all of which
shall constitute but one and the same instrument which



                                      -23-
<PAGE>   53




may be sufficiently evidenced by any executed copy hereof, as of September 1,
1985.



                             HOUSTON INDUSTRIES INCORPORATED



                             By        [Signature Illegible]
                                ------------------------------------
                                President

ATTEST:


[Signature Illegible]
------------------------------
Secretary


[SEAL]




                                      -24-

<PAGE>   54




                        HOUSTON INDUSTRIES INCORPORATED
                           DEFERRED COMPENSATION PLAN


              (As Amended and Restated Effective January 1, 1989)


                                First Amendment

          Houston Industries Incorporated, a Texas corporation (the "Company"),
established the Houston Industries Incorporated Deferred Compensation Plan,
effective as of January 1, 1985 (the "Prior Plan"), and amended, restated in its
entirety and continued the Prior Plan effective as of January 1, 1989 (the
"Plan"). Section 7.1 of the Plan reserves the right to amend the Plan to the
Compensation and Benefits Committee of the Company (the "Committee"). Pursuant
thereto, the Committee hereby amends the Plan, effective as of January 1, 1989,
as follows:

          1. Paragraph (p) of Section 1.2 of the Plan is hereby amended to read
as follows:

          "(p) 'Interest Crediting Rate' means, for a given Plan Year, a rate of
     interest equivalent to the average Moody's Rate for such year plus two
     percentage points (2%) or, with respect to a Participant who is designated
     to receive a higher rate of interest by the Personnel Committee of the
     Board, such higher rate as determined by the Personnel Committee of the
     Board and communicated to such Participant."

          2. As amended hereby, the Company hereby ratifies and reaffirms the
Plan.
<PAGE>   55
     IN WITNESS WHEREOF, the Company has executed this amendment to the Plan
this 6th day of December, 1989, but effective as of January 1, 1989.

                                        HOUSTON INDUSTRIES INCORPORATED


                                        By: /s/ [Signature Illegible]
                                            ------------------------------
                                            Chairman, Compensation and
                                            Benefits Committee


ATTEST:


/s/ [Signature Illegible]
--------------------------------
Assistant Secretary

                                      -2-

<PAGE>   56
                        HOUSTON INDUSTRIES INCORPORATED
                           DEFERRED COMPENSATION PLAN

              (As Amended and Restated Effective January 1, 1989)

                                Second Amendment

     Houston Industries Incorporated, a Texas corporation (the "Company"),
having amended and restated the Houston Industries Incorporated Deferred
Compensation Plan, effective January 1, 1989 (the "Plan"), and having reserved
the right to amend the Plan under Section 7.1 thereof, does hereby amend
Article V of the Plan by adding the following Section 5.7 thereto, effective
March 30, 1992:

     "5.7 Terminations Under the Separation Program.
     (a) Voluntary Terminations. (i) Prior to Early Retirement Date.
     Notwithstanding any other provision of the Plan to the contrary, if the
     employment of a Participant is terminated voluntarily under the Voluntary
     Early Retirement Program adopted by the Board of Directors of the Company
     on January 8, 1992 and prior to the first day of the month coincident with
     or next following the Participant's sixtieth (60th) birthday, a Normal
     Retirement Distribution as described in Section 5.1 shall not be made, but
     the Employer (x) shall pay the Participant the sum or sums of Compensation
     actually deferred, with interest thereon, compounded annually, at the
     applicable Interest Crediting Rate for each Participation Year, from the
     Commencement Date through the date of payment, (y) shall make a lump sum
     distribution or fifteen (15) annual installment payments, in accordance
     with the Participant's election under Section 5.1(b) above, and if payable
     in a lump sum, in the January following the Participant's termination of
     employment or if payable in installments, commencing the month following
     the month in which the Participant terminates employment and payable
     thereafter in that same month in each remaining year, and (z) shall not
     make any Early Distributions to such Participant.

     (ii) After Early Retirement Date. If the employment of a Participant is
     terminated voluntarily as described in (a)(i) above but after the first day
     of the month coincident with or next following the Participant's sixtieth
     (60th) birthday, distributions (including Early Distributions) shall be
     made as otherwise provided in the preceding Sections of this Article V.
<PAGE>   57
        (b) Involuntary Terminations. (i) Prior to Early Retirement Date.
        Notwithstanding any other provision of the Plan to the contrary, if the
        employment of a Participant is terminated involuntarily under the
        severance program adopted by the Board of Directors of the Company on
        January 8, 1992 and prior to the first day of the month coincident with
        or next following the Participant's sixtieth (60th) birthday, a Normal
        Retirement Distribution as described in Section 5.1 shall not be made,
        but the Employer (x) shall pay the Participant the sum or sums of
        Compensation actually deferred, with interest thereon, compounded
        annually, at the applicable Interest Crediting Rate for each
        Participation Year, from the Commencement Date through the date of
        payment, (y) shall pay such amount in a lump sum (regardless of any
        election previously made by the Participant) within ninety-five (95)
        days following the date of Participant's termination of employment or as
        soon as practicable thereafter, and (z) shall not make any Early
        Distributions to such Participant.

        (ii) After Early Retirement Date. If the employment of a Participant is
        terminated involuntarily as described in (b)(i) above but after the
        first day of the month coincident with or next following the
        Participant's sixtieth (60th) birthday, distributions (including Early
        Distributions) shall be made as otherwise provided in the preceding
        Sections of this Article V.

        (c) Commutation. Any installment payments hereunder may be commuted as
        provided in Section 5.1(f)."

        IN WITNESS WHEREOF, Houston Industries has caused these presents to be
executed by its duly authorized officers, in a number of copies, all of which
shall constitute but one and the same instrument which may be sufficiently
evidenced by any executed copy hereof, this 27th day of March, 1992, but
effective March 30, 1992.


                                        HOUSTON INDUSTRIES INCORPORATED

                                        By /s/ [SIGNATURE ILLEGIBLE]
                                          -----------------------------------
                                               Vice President


ATTEST:

[SIGNATURE ILLEGIBLE]
-------------------------------
Assistant Corporate Secretary


                                      -2-

<PAGE>   58
                        HOUSTON INDUSTRIES INCORPORATED
                           DEFERRED COMPENSATION PLAN

              (As Amended and Restated Effective January 1, 1989)

                                Third Amendment

        Houston Industries Incorporated, a Texas corporation (the "Company"),
having amended and restated the Houston Industries Incorporated Deferred
Compensation Plan, effective January 1, 1989 (the "Plan"), and having reserved
the right to amend the Plan under Section 7.1 thereof, does hereby amend
Article V of the Plan by adding the following Section 5.8 thereto, effective
June 2, 1993:

        "5.8 Terminations Under the UFI Severance Program. (a) Prior to Early
        Retirement Date. Notwithstanding any other provision of the Plan to the
        contrary, if the employment of a Participant is terminated under the
        Utility Fuels, Inc. severance program, on or after July 26, 1993, and
        prior to the first day of the month coincident with or next following
        the Participant's sixtieth (60th) birthday, a Normal Retirement
        Distribution as described in Section 5.1 shall not be made, but the
        Employer (i) shall pay the Participant the sum or sums of Compensation
        actually deferred, with interest thereon, compounded annually, at the
        applicable Interest Crediting Rate for each Participation Year, from the
        Commencement Date through the date of payment (ii) shall pay such amount
        in a lump sum (regardless of any election previously made by the
        Participant) within ninety-five (95) days following the date of
        Participant's termination of employment or as soon as practicable
        thereafter, and (iii) shall not make any Early Distributions to such
        Participant after the date of termination.

        (b) After Early Retirement Date. If the employment of a Participant is
        terminated as described in (a) above but after the first day of the
        month coincident with or next following the Participant's sixtieth
        (60th) birthday, distributions (including Early Distributions) shall be
        made as otherwise provided in the preceding Sections of this Article V.

        (c) Commutation. Any installment payments hereunder may be commuted as
        provided in Section 5.1(f)."

<PAGE>   59
        IN WITNESS WHEREOF. Houston Industries Incorporated has caused these
presents to be executed by its duly authorized officers in a number of copies,
all of which shall constitute but one and the same instrument which may be
sufficiently evidenced by any executed copy hereof, this 23rd day of November,
1993, but effective June 2, 1993.


                                        HOUSTON INDUSTRIES INCORPORATED


                                        [SIGNATURE ILLEGIBLE]
                                        ------------------------------------

ATTEST:

[SIGNATURE ILLEGIBLE]
---------------------------------
Assistant Corporate Secretary

<PAGE>   60
                         HOUSTON INDUSTRIES INCORPORATED
                           DEFERRED COMPENSATION PLAN

                    (As Amended and Restated January 1, 1989)


                                Fourth Amendment


               Houston Industries Incorporated, a Texas corporation (the
"Company"), having amended and restated the Houston Industries Incorporated
Deferred Compensation Plan, effective January 1, 1989 (the "Plan"), and having
reserved the right under Section 7.1 thereof to amend the Plan, does hereby
amend Section 6.2 of the Plan, effective September 7, 1994, to read as follows:

               "6.2 Non-Alienation of Benefits. No right or benefit under this
        Plan shall be subject to anticipation, alienation, transfer, sale,
        assignment, pledge, encumbrance or charge, whether voluntary,
        involuntary, direct or indirect, by operation of law or otherwise,
        including, without limitation, a change in beneficial interest of any
        trust and a change in ownership of a corporation or partnership, but not
        including a change of legal and beneficial title of a right or benefit
        resulting from the death of any Participant or the spouse of any
        Participant (any such proscribed transaction hereinafter a
        'Disposition') and any attempted Disposition will be null and void. No
        right or benefit hereunder shall in any manner be liable for or subject
        to any debts, contracts, liabilities, or torts of any Participant or
        other person entitled to such benefits. The foregoing provisions of this
        Section 6.2 shall not apply to a domestic relations order awarding any
        benefits under the Plan to the divorced spouse of a Participant. The
        foregoing provisions of this Section 6.2 shall also not apply to an
        irrevocable Disposition of a right or benefit under this Plan to a
        'Permitted Assignee,' as defined below, by (i) a Participant age 55 or
        older (an 'Eligible Participant'), or (ii) a 'Permitted Assignee,' as
        defined below, who has received an assignment from an Eligible
        Participant pursuant to this sentence.

                      (a) Permitted Assignee. The term 'Permitted Assignee'
               shall mean:

                             (i) The Eligible Participant;

                             (ii) A spouse of the Eligible Participant;

<PAGE>   61

                             (iii) Any person who is a lineal ascendant or
                      descendant of the Eligible Participant or the Eligible
                      Participant's spouse;

                             (iv) Any brother or sister of the Eligible
                      Participant;

                             (v) Any spouse of any individual described in
                      subparagraph (iii) or (iv);

                             (vi) A trustee of any trust which, at the
                      applicable time, is 100% Actuarially Held for a Permitted
                      Assignee or Assignees (as defined in Section 6.2(c));

                             (vii) Any corporation in which, at the applicable
                      time, each class of stock is 100% owned by a Permitted
                      Assignee or Permitted Assignees;

                             (viii) Any partnership in which, at the applicable
                      time, each class of partnership interest is 100% owned by
                      a Permitted Assignee or Permitted Assignees; or

                             (ix) Any limited liability company or other form of
                      incorporated or unincorporated business organization in
                      which each class of stock, membership or other equity
                      interest is 100% owned by a Permitted Assignee or
                      Assignees.

                      (b) Subsequent Assignees. This Section 6.2 shall be fully
               applicable to all Permitted Assignees, and the provisions of this
               Section 6.2 shall be fully applicable to any right or benefit
               transferred by an Eligible Participant to any Permitted Assignee
               as if such Permitted Assignee were an Eligible Participant;
               provided, however, that no Permitted Assignee shall be deemed an
               Eligible Participant for determining the persons who constitute
               Permitted Assignees under Section 6.2(a). Any Permitted Assignee
               acquiring a right or benefit under this Plan shall execute and
               deliver to the Committee an Agreement pursuant to which such
               Permitted Assignee agrees to be bound by all of the terms and
               provisions of the Plan, provided that the failure to execute and
               deliver such an Agreement shall not be deemed to relieve such
               Permitted Assignee of the restrictions imposed by the Plan. Any
               attempted Disposition of a right or benefit under this Plan in
               breach of this Section 6.2, whether voluntary, involuntary, by
               operation of law or otherwise shall be null and void.



                                      -2-
<PAGE>   62

                      (c) Actuarially Held. In making the determination whether
               a trust is 100% Actuarially Held for Permitted Assignee(s), a
               trust, at the applicable point in time, is 100% Actuarially Held
               for Permitted Assignee or Assignees when 100% of the actuarial
               value of the beneficial interests of the trust, except as
               provided in the following sentence, are held for a Permitted
               Assignee or Permitted Assignees. For purposes of making the
               determination described above, the possibility that an interest
               in a trust may be appointed pursuant to a special or general
               power of appointment shall be ignored; provided, that the actual
               exercise of any such power of appointment shall not be ignored."

               IN WITNESS WHEREOF, Houston Industries Incorporated has caused
these presents to be executed by its duly authorized officer in a number of
copies, all of which shall constitute one and the same instrument, which may be
sufficiently evidenced by any executed copy hereof, this 16th day of November,
1994, but effective as of the date specified herein.

                                        HOUSTON INDUSTRIES INCORPORATED



                                        By /s/ D. D. SYKORA
                                          --------------------------------------
                                           D. D. Sykora
                                           Chairman and Chief Operating Officer

ATTEST


/s/ [Signature Illegible]
--------------------------------------
Assistant Corporate Secretary



                                       -3-

<PAGE>   63

                         HOUSTON INDUSTRIES INCORPORATED
                           DEFERRED COMPENSATION PLAN

               (As Amended and Restated Effective January 1, 1989)


                                 Fifth Amendment


               Houston Industries Incorporated, a Texas corporation (the
"Company"), having amended and restated the Houston Industries Incorporated
Deferred Compensation Plan, effective January 1, 1989 (the "Plan"), and having
reserved the right under Section 7.1 thereof to amend the Plan, does hereby
amend the Plan, effective August 1, 1995, as follows:

               1. Section 5.1(f) of the Plan is hereby amended to read as
follows:

               "(f) Any installment benefits, at the request of the Participant
        and in the sole discretion of the Committee, may be commuted to a
        lump-sum payment or may be paid over a shorter period of time, with
        interest accrued to such date at the applicable Interest Crediting
        Rate."

               2. Section 5.2(c) of the Plan is hereby amended to read as
follows:

               "(c) Any installment death benefits, at the request of the
        Beneficiary and in the sole discretion of the Committee, may be commuted
        to a lump-sum payment or may be paid over a shorter period of time, with
        interest accrued to such date at the applicable Interest Crediting
        Rate."

               3. The second sentence of Section 5.3 of the Plan is hereby
amended to read as follows:

        "The benefits payable to such Participant under the Plan shall be paid
        in the amounts and at the times otherwise provided in Section 5.1, all
        in accordance with the Participant's initial election under Section 3.3,
        except that at the request of the Participant and in the sole discretion
        of the Committee any such payments may be commuted to a lump-sum payment
        or may be paid over a shorter period of time, with interest accrued to
        such date at the applicable Interest Crediting Rate."

<PAGE>   64

               4. Article V of the Plan is hereby amended by adding the
following Section 5.8 thereto:

               "5.8 Terminations under the 1995 Voluntary Early Retirement
Program.

                      (a) Prior to Early Retirement Date. Notwithstanding any
               other provision of the Plan to the contrary, if the employment of
               a Participant who fulfills the requirements for the Voluntary
               Early Pension for 1995 Program participants under Section 9.7(a)
               of the Houston Industries Incorporated Retirement Plan is
               terminated prior to the first day of the month coincident with or
               next following the date of the Participant's 60th birthday, a
               Normal Retirement Distribution as described in Section 5.1 or a
               distribution as described in Section 5.4 shall not be made, but
               the Employer (x) shall pay the Participant the sum or sums of
               Compensation actually deferred, with interest thereon, compounded
               annually, at the applicable Interest Crediting Rate for each
               Participation Year, from the Commencement Date through the date
               of payment, minus any Early Distributions, (y) shall make a
               lump-sum distribution or 15 annual installment payments in
               accordance with the Participant's election under Section 5.1(b)
               and, if payable in a lump sum, in the January following the
               Participant's termination of employment or, if payable in
               installments, commencing the month following the month in which
               the Participant terminates employment and payable thereafter in
               that same month in each remaining year, and (z) shall not make
               any Early Distributions to such Participant.

                      (b) After Early Retirement Date. If the employment of a
               Participant is terminated voluntarily as described in subsection
               (a) above but after the first day of the month coincident with or
               next following the date of the Participant's 60th birthday,
               distributions (including Early Distributions) shall be made as
               otherwise provided in this Article V.

                      (c) Commutation. Any installment payments hereunder may be
               commuted as provided in Section 5.1(e)."

               IN WITNESS WHEREOF, Houston Industries Incorporated has caused
these presents to be executed by its duly authorized officer in a number of
copies, all of which shall



                                       -2-

<PAGE>   65

constitute one and the same instrument, which may be sufficiently evidenced by
any executed copy hereof, this 18th day of May, 1995, but effective as of the
date stated herein.

                                            HOUSTON INDUSTRIES INCORPORATED



                                        By /s/ D. D. SYKORA
                                          --------------------------------------
                                           D. D. Sykora
                                           President and Chief Operating Officer

ATTEST


/s/ [Signature Illegible]
--------------------------------------
Assistant Corporate Secretary



                                       -3-

<PAGE>   66

                         HOUSTON INDUSTRIES INCORPORATED
                           DEFERRED COMPENSATION PLAN

               (As Amended and Restated Effective January 1, 1989)


                                 Sixth Amendment


               Houston Industries Incorporated, a Texas corporation (the
"Company"), having established the Houston Industries Incorporated Deferred
Compensation Plan, as amended and restated effective January 1, 1989 and as
amended (the "Plan"), and having reserved the right under Section 7.1 thereof to
amend the Plan, does hereby amend the last sentence of Section 7.1 of the Plan,
effective as of December 1, 1995, to read as follows:

        "Any such amendment or termination shall not, however, without the
        written consent of the affected Participant, reduce the interest rate
        applicable to, or otherwise adversely affect the rights of a Participant
        with respect to, Compensation with respect to which a Participant made
        an irrevocable deferral election before the later of the date that such
        amendment is executed or effective."

               IN WITNESS WHEREOF, Houston Industries Incorporated has caused
these presents to be executed by the duly authorized Chairman of the Benefits
Committee in a number of copies, all of which shall constitute one and the same
instrument, which may be sufficiently evidenced by any executed copy hereof,
this 18th day of June, 1996, but effective as of the date stated herein.


                                        HOUSTON INDUSTRIES INCORPORATED



                                        By /s/ D. D. SYKORA
                                          --------------------------------------
                                           D. D. Sykora
                                           Chairman of the Benefits Committee

ATTEST


/s/ [Signature Illegible]
--------------------------------------
Assistant Corporate Secretary

<PAGE>   67

                         HOUSTON INDUSTRIES INCORPORATED
                           DEFERRED COMPENSATION PLAN

               (As Amended and Restated Effective January 1, 1989)


                                Seventh Amendment


               Houston Industries Incorporated, a Texas corporation (the
"Company"), having established the Houston Industries Incorporated Deferred
Compensation Plan, as amended and restated effective January 1, 1989 and as
amended (the "Plan"), and having reserved the right under Section 7.1 thereof to
amend the Plan, does hereby amend the Plan, effective as of January 1, 1997, to
read as follows:

               1. Section 1.2(b) of the Plan is hereby amended in its entirety
to read as follows:

               "(b) 'Beneficiary' means a person or persons, a trustee or
        trustees of a trust, or a partnership, corporation, limited liability
        partnership, limited liability company, or other entity designated
        by the Participant, as provided in Section 4.1, to receive any amounts
        distributed under the Plan after a Participant's death."

               2. Section 1.2(g) of the Plan is hereby amended in its entirety
to read as follows:

               "(g) 'Committee' means the Benefits Committee or such other
        committee, which shall consist of five (5) or fewer persons, as shall be
        appointed by the Board of Directors of the Company to administer the
        Plan pursuant to Article II hereof."

               IN WITNESS WHEREOF, Houston Industries Incorporated has caused
these presents to be executed by its duly authorized officers in a number of
copies, all of which shall

<PAGE>   68



constitute one and the same instrument, which may be sufficiently evidenced by
any executed copy hereof, this 5th day of June, 1997, but effective as of the
date stated herein.


                                        HOUSTON INDUSTRIES INCORPORATED


                                        By /s/ R.S. Letbetter
                                          --------------------------------------

ATTEST:


/s/ [Signature Illegible]
--------------------------------------

<PAGE>   69

                         HOUSTON INDUSTRIES INCORPORATED
                           DEFERRED COMPENSATION PLAN

               (As Amended and Restated Effective January 1, 1989)


                                Eighth Amendment


               Houston Industries Incorporated, a Texas corporation (the
"Company"), having established the Houston Industries Incorporated Deferred
Compensation Plan, as amended and restated effective January 1, 1989 and as
thereafter amended (the "Plan"), and having reserved the right under Section 7.1
thereof to amend the Plan, does hereby amend the Plan, effective as of the dates
specified therein as follows:

               1. Section 1.2(o) of the Plan is hereby amended, effective
October 1, 1997, by adding the following to the end thereof:

        "From and after October 1, 1997, employment with STP Nuclear Operating
        Company shall be deemed to constitute 'Employment' with an Employer
        hereunder for all purposes except any such Employee shall not be
        eligible to make any additional deferrals of Compensation under the
        Plan."

               2. Section 5.1(b) of the Plan is hereby amended, effective
January 1, 1998, by striking the last sentence and inserting the following in
lieu thereof:

        "For purposes of determining a benefit payable in the form of fifteen
        (15) installment payments under this Section 5.1(b), the Interest
        Crediting Rate shall be the greater of (i) the Interest Crediting Rate
        in effect for the Plan Year in which an Employee Participant attains age
        sixty-five (65) or a Director Participant attains age seventy (70) or
        (ii) the Interest Crediting Rate in effect for the Plan Year immediately
        prior to which an Employee Participant attains age sixty-five (65) or a
        Director Participant attains age seventy (70). This Interest Crediting
        Rate will constitute the applicable Interest Crediting Rate for all
        years thereafter in which the Normal Retirement Distribution is paid or
        payable."

               IN WITNESS WHEREOF, Houston Industries Incorporated has caused
these presents to be executed by its duly authorized officer in a number of
copies, all of which shall constitute one

<PAGE>   70



and the same instrument, which may be sufficiently evidenced by any executed
copy hereof, this 13th day of November, 1997, but effective as of the dates
stated herein.

                                        HOUSTON INDUSTRIES INCORPORATED


                                        By /s/ [Signature Illegible]
                                          --------------------------------------

ATTEST:


/s/ [Signature Illegible]
--------------------------------------

<PAGE>   71

                         HOUSTON INDUSTRIES INCORPORATED
                           DEFERRED COMPENSATION PLAN

               (As Amended and Restated Effective January 1, 1989)


                                 Ninth Amendment


               Houston Industries Incorporated, a Texas corporation (the
"Company"), having amended and restated the Houston Industries Incorporated
Deferred Compensation Plan, effective January 1, 1989, and as thereafter amended
(the "Plan"), and having reserved the right under Section 7.1 thereof to amend
the Plan, does hereby amend the Plan, effective as of September 3, 1997, as
follows:

               1. Sections 5.2(a), 5.2(b), and 5.2(c) of the Plan are hereby
amended, by adding the following sentence at the end of each section:

        "Notwithstanding the foregoing, if there is a conflict between the
        provisions of this section and the terms of the Participant's Severance
        Agreement (as further described in Section 5.4), the terms of the
        Severance Agreement shall control."

               2. Section 5.4 of the Plan is hereby amended by inserting the
following paragraph at the end thereof which shall read as follows:

               "If any Participant who has entered into a Severance Agreement,
        as defined in the Houston Industries Incorporated Executive Severance
        Benefits Plan, effective as of September 3, 1997, experiences a
        termination giving rise to a right to benefits under his Severance
        Agreement and complies with the conditions set forth in his Severance
        Agreement for the receipt of benefits thereunder, then such Participant
        shall be treated as if his termination did not occur until after his
        Early Retirement Date, and the provisions of Section 5.1(d) shall
        apply."

<PAGE>   72


               IN WITNESS WHEREOF, Houston Industries Incorporated has caused
these presents to be executed by its duly authorized officers in a number of
copies, all of which shall constitute one and the same instrument, which may be
sufficiently evidenced by any executed copy hereof, this 26th day of February,
1998, but effective as of the date specified herein.

                                        HOUSTON INDUSTRIES INCORPORATED



                                        By /s/ LEE W. HOGAN
                                          --------------------------------------
                                           Name: Lee W. Hogan
                                           Title: Executive Vice President

ATTEST:


/s/ [Signature Illegible]
--------------------------------------
Assistant Corporate Secretary



                                       -2-