Exhibit 10.03

                        RIGHT OF FIRST REFUSAL AGREEMENT


                                    Recitals

This Right of First Refusal Agreement (Agreement) is made as of this 24th day of
May, 2002  (Effective  Date),  between AES  Huntington  Beach,  L.L.C.,  and AES
Alamitos, L.L.C. (collectively, Grantor) and Mid-Power Corporation, (Grantee).

A.       Grantor  is the owner of gas  turbine  generating  units  described  in
         Exhibit A,  attached and  incorporated  by reference  (Equipment).  The
         Equipment  does not include any real property,  the main  transformers,
         adjoining  streets,  rights of ways,  easements,  all other appurtenant
         rights, permits and contracts.

B.       Grantor desires to grant to Grantee, and Grantee desires to obtain from
         Grantor,  a right of first  refusal to purchase  from  Grantor one or 2
         (two) gas turbine  generating units commonly known as AES Alamitos Unit
         7 and AES  Huntington  Beach Unit 5  (collectively,  Equipment)  on the
         terms and conditions in this Agreement.

                        Section 1. Right of Fist Refusal

For good and  valuable  consideration  the  receipt  and  adequacy  of which are
acknowledge, the parties agree as follows:

(a)      Before  Grantor  sells or agrees to sell the  Equipment,  Grantor shall
         offer to sell the  Equipment  to  Grantee,  in writing and on terms and
         conditions  substantially  identical to those  proposed for the sale of
         the Equipment to a third party, The offer shall, at a minimum,  include
         the following information: (i) the purchase price proposed for the sale
         to the third party;  (ii) the method of purchase price  payment;  (iii)
         the amount and terms of any proposed  Grantor  financing in  connection
         with the  proposed  purchase;  (iv) the  amount  of any  earnest  money
         deposit;  (v) the time and location  for the close of escrow;  (vi) the
         name of the proposed purchaser;  and (vii) the other material terms and
         conditions of the proposed sale of the Equipment.

(b)      Grantee  shall  have  fifteen  (15)  days from the date of the offer to
         accept the offer  (Acceptance  Period)  by  delivering  to Grantor  the
         acceptance  on or before  5:00 p.m.  on the last day of the  Acceptance
         Period.  If Grantee  fails to accept the offer on or before the last of
         the Acceptance Period, the offer shall be deemed to be rejected.

(c)      If  Grantee   responds  to  the  offer  with  anything  other  than  an
         unequivocal,  acceptance  accompanied  with an earnest deposit equal to
         ten percent (10%) of the offer price, or rejection,  the right of first
         refusal  with  respect to such offer shall  terminate  and the response
         shall be deemed an offer to  purchase  the  Equipment  on the terms and
         conditions in the response  (Counter Offer).  Grantor shall be entitled
         to accept or reject the Counter Offer at Grantors sole discretion.

(d)      If  Grantee  accepts  the  offer,  Grantee  shall  have sixty (60) days
         following  acceptance of the offer  (Closing  Period) to consummate the
         purchase of the Equipment  pursuant to the terms and  conditions of the
         offer.  If Grantee  fails to  consummate  the purchase of the Equipment
         within the Closing Period,  any earnest money paid by Grantee  pursuant
         to the  acceptance  shall be paid to  Grantor as  Grantor's  liquidated
         damages.

<PAGE>

(e)      In the event an Offer to purchase has been  communicated to Grantee and
         thereafter Grantee declines or fails to meet such offer and thereafter,
         for  whatever  reason  the  sale to  such  Offeree  is not  consummated
         pursuant to the terms communicated to Grantee, then and in that event a
         like procedure shall be followed as set forth above with respect to any
         new offers  received by Grantor.  It is the intention of this provision
         that  Grantee is hereby  granted a  continuing  First  Right of Refusal
         until a sale is  consummated  pursuant  to the terms set forth above or
         this agreement has expired by its terms.

                            Section 2. Consideration

The  consideration for this Agreement is the purchase of the Equipment for which
the  purchase  price  shall be paid by Grantee to  Grantor  concurrent  with the
execution of this Agreement.

                                 Section 3. Term

(a)      Grantee's  right of first  refusal  shall  begin  with the date of this
         Agreement and continue for  one-hundred  twenty days (120) days for the
         AES  Huntington  Beach Unit 5 Equipment,  unless  terminated  sooner in
         accordance with the terms of this Agreement.

(b)      Grantee's  right of first  refusal  shall  begin  with the date of this
         Agreement and continue for  one-hundred  eighty days (180) days for the
         AES Alamitos Unit 7 Equipment,  unless  terminated sooner in accordance
         with the terms of this Agreement.

                             Section 4. Termination

This  Agreement  shall  automatically  terminate  on the first of the  following
events to occur:

(a)      Grantee,  in  contravention  of this Agreement,  assigns or attempts to
         assign  Grantee's  rights under this  Agreement  without  prior written
         consent of Grantor;

(b)      Grantee  declines  to exercise  its right of first  refusal and Grantor
         subsequently  consummates  a sale of the  Equipment  to a  third  party
         pursuant to the terms of the offer;

(c)      The expiration of the term;

(d)      The purchase of the Equipment by Grantee.

                           Section 5. Litigation Costs

If any legal action or any other proceeding,  including an arbitration or action
for  declaratory  relief,  is brought for the  enforcement  of this Agreement or
because of a dispute,  breach,  default, or misrepresentation in connection with
any of the provisions of this Agreement,  the prevailing party shall be entitled
to recover  reasonable  attorney fees and other costs incurred in that action or
proceeding, in addition to any other relief to which the prevailing party may be
entitled.  Prevailing  party  shall  include  without  limitation  (i)  a  party
dismissing an action in exchange for sums allegedly due; (ii) a party  receiving
performance  from the other  party of an alleged  breach of covenant or a desire
remedy where the performance is  substantially  equal to the relief sought in an
action; of (iii) the prevailing party as determined by a court of law.

                                       2
<PAGE>

                              Section 6. Assignment

Grantee's  rights and  obligations  under this  Agreement  shall not be assigned
without  Grantor's  prior written  consent,  which may be granted or withheld at
Grantor's sole and unfettered  discretion,  and any assignment  without  consent
shall be void.

                        Section 7. Successors and Assigns

Subject to the  restrictions  on assignment,  this Agreement  shall inure to the
benefit of and be binding on the parties and their respective successors, heirs,
and assigns.

                               Section 8. Notices

All notices  required or permitted to be given under this Agreement  shall be in
writing and mailed,  postage prepaid,  by certified or registered  mail,  return
receipt requested, or by personal delivery, to the address indicated below or at
other  places  that  Grantor or Grantee  may,  form time to time,  designate  by
written  notice  given to the other.  The address  change shall not be effective
until seven (7)days after notice of the change.

Notices  shall be deemed  sufficiently  served  three (3) days after the date of
mailing or upon personal delivery.

AES Huntington Beach, L.L.C.

AES Alamitos, L.L.C.

Mid- Power Service Corporation

                   Section 9. Counterpart or Duplicate Copies

This Agreement may be signed in counterpart or duplicate copies,  and nay signed
counterpart or duplicate  copy shall be equivalent to a signed  original for all
purposes.


                          Section 10. Time of Essence.

Time is of the essence in this Agreement.

                     Section 11. Memorandum for Recordation.


It is specifically understood and agreed, and an integral part of this contract,
that a memorandum of this Agreement in a form and content  acceptable to grantee
shall be  executed  by Grantor  and  delivered  to Grantee  for the  recordation
thereof.  Such document shall contain necessary language and  acknowledgement as
may be necessary to be accepted for recordation.

                              Section 12. Captions.

Captions and headings in this Agreement,  including the title of this Agreement,
are for  convenience  only  and  are not to be  considered  in  construing  this
Agreement.

                                       3
<PAGE>

                          Section 13. Entire Agreement.

This Agreement and the Exhibits  contain the entire agreement of the parties and
supersede any prior agreements or understandings of the parties, whether written
or oral, regarding the subject matter of this Agreement.

                     Section 14. Modification and Amendment.

This  Agreement  may not be  modified  or amended  except in  writing  signed by
Grantor and Grantee.

                             Section 15. Arbitration

Any controversy or claims arising out of or relating to this  agreement,  or the
making,  performance or interpretation hereof, shall be submitted to arbitration
before the American Arbitration  Association in Los Angeles County,  California,
in accordance with its then current  commercial  arbitration rules. Any decision
of the  arbitrator  shall be final and binding  upon the  parties,  and shall be
enforceable as a final judgment in all jurisdictions. Grantee expressly consents
to venue in Los Angeles County, California.

                           Section 16. Governing Law.

This Agreement shall be governed by California law, and construed under the laws
of the State of California, without reference to principals of conflicts of law.

The parties have executed this Agreement as of the date first written above.

AES Huntington Beach, L.L.C.

AES Alamitos, L.L.C.

Mid- Power Service Corporation


AGREED and ACCEPTED this 24th days of May, 2002 (the "Effective Date")


Grantor:                                          Grantee:
AES Alamitos, L.L.C.                              Mid-Power Services Corporation
AES Huntington Beach, L.L.C.

By:  /s/ Donald C. Vawter                         By:  /s/ James W. Scott
     --------------------                              ------------------
Signature                                             Signature

Printed Name: Donald C. Vawter                    Printed Name: James W. Scott
Title: Vice President, AES Southland, L.L.C.      Title: President

                                       4
<PAGE>

                                    EXHIBIT A


AES Alamitos Unit 7 is a Gas Turbine Unit located in AES Alamitos  L.L.C.  whose
address is 690 N. Studebaker Road, Long Beach,  California.  AES Alamitos Unit 7
consists of eight (8) Pratt and Whitney  Aircraft model GG4A-7 gas generators to
produce  high  velocity  gases that expands  through four (4) expander  turbines
mechanically  coupled with  electric  generator and major  auxiliary  equipment:
lubricating oil reservoir and pumps, cooling and filtering  equipment,  hydrogen
seal oil pumps, control equipment,  hydraulic engine starting pumps. Accumulator
units, neutral grounding cubicles,  generator potential transformer cubicle, 480
- volt electrical switchgear, batteries, battery charges and other miscellaneous
equipment and control devices.  Estimated installed megawatt output is 133 MW at
ISO conditions.  In short,  the Alamitos Unit 7 Equipment  includes the building
housing, and only the equipment located within the building housing.

AES  Huntington  Beach Unit 5 is a Gas Turbine  Unit  located in AES  Huntington
Beach L.L.C. whose address is 21730 Newland Street, Huntington Beach, California
92646.  AES  Huntington  Beach Unit 5,  consists  of eight (8) Pratt and Whitney
Aircraft model GG4A-7 gas generators to produce high velocity gases that expands
through four (4) expander turbines  mechanically coupled with electric generator
and major auxiliary equipment:  lubricating oil reservoir and pumps, cooling and
filtering  equipment,  hydrogen  seal oil pumps,  control  equipment,  hydraulic
engine starting pumps, accumulator units, neutral grounding cubicles,  generator
potential  transformer  cubicle,  480 - volt electrical  switchgear,  batteries,
battery charges and other miscellaneous equipment and control devices. Estimated
installed megawatt output is 133 MW at ISO conditions.  In short, the Huntington
Beach Unit 5 Equipment  includes the building  housing,  and only the  equipment
located within the building housing.