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                                  Exhibit 1.3

                           HL&P CAPITAL TRUST _____

                 ____% Trust Preferred Securities, Series ___
            guaranteed to the extent set forth in the Guarantee by

                       Houston Lighting & Power Company
                    -------------------------------------

                            Underwriting Agreement
                            ----------------------
                                                             __________ __, 19__
Goldman, Sachs & Co.
Merrill Lynch, Pierce, Fenner
 & Smith Incorporated
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York  10004

Ladies and Gentlemen:

     HL&P Capital Trust ____, a statutory business trust created under the laws
of the State of Delaware (the "Trust"), and Houston Lighting & Power Company, a
Texas corporation, as depositor of the Trust and as guarantor (the "Guarantor"),
propose, subject to the terms and conditions stated herein, that the Trust issue
and sell to the Underwriters named in Schedule 1 hereto (the "Underwriters") an
aggregate of [$___________] liquidation amount of ______% Cumulative Trust
Preferred Securities, Series ___ (liquidation amount $25 per capital security)
(the "Securities") representing undivided beneficial interests in the assets of
the Trust, guaranteed by the Guarantor as to the payment of distributions, and
as to payments on liquidation or redemption, to the extent set forth in a
guarantee agreement (the "Guarantee") among the Guarantor and The Bank of New
York, as trustee (the "Guarantee Trustee"). The proceeds of the sale of the
Securities and an aggregate of [$__________] liquidation amount of its Common
Securities (liquidation amount $25 per common security) (the "Common
Securities") by the Trust are to be invested in Junior Subordinated Debentures,
Series ___ (the "Subordinated Debentures") of the Guarantor to be issued
pursuant to an Indenture (the "Indenture") among the Guarantor and The Bank of
New York, as trustee (the "Debenture Trustee").

     1.  Representations and Warranties of the Guarantor and the Trust. 
(a) The Guarantor and the Trust jointly and severally represent and warrant to,
and agree with, each of the Underwriters that:
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        (i) A registration statement on Form S-3 with respect to the
            Securities, the Subordinated Debentures and the Guarantee (File 
            Nos. 333-____ and 333-____) including a prospectus (any preliminary
            prospectus included in such registration statement being hereinafter
            referred to as a "Preliminary Prospectus"), copies of which have
            been delivered to you, has been prepared and filed by the Guarantor
            and the Trust with the Securities and Exchange Commission (the
            "Commission") and has been declared effective under the Securities
            Act of 1933, as amended (the "Act").  No stop order suspending the
            effectiveness of such registration statement has been issued and no
            proceeding for that purpose has been initiated or, to the best
            knowledge of the Guarantor and the Trust, threatened by the
            Commission. Such registration statement (including all documents
            filed as part thereof or incorporated by reference therein, but
            excluding any Forms T-1, as amended), as amended and supplemented at
            the date of this Agreement is hereinafter referred to as to the
            "Registration Statement." The Prospectus contained in the
            Registration Statement at the time that the Registration Statement
            was declared effective is hereinafter referred to as the "Basic
            Prospectus."

               The prospectus included in the Registration Statement, as amended
            and supplemented to the date of this Agreement (including all
            documents then incorporated by reference therein and including the
            Preliminary Supplemented Prospectus (hereinafter defined) as further
            supplemented by the Final Supplemented Prospectus (hereinafter
            defined)), is hereinafter referred to as the "Prospectus".  Any
            reference herein to the Registration Statement, the Prospectus, a
            Preliminary Prospectus, the Basic Prospectus, the Preliminary
            Supplemented Prospectus or the Final Supplemented Prospectus shall
            be deemed to refer to and include the documents incorporated by
            reference therein, or deemed to be incorporated by reference
            therein, and filed under the Securities Exchange Act of 1934, as
            amended (the "Exchange Act"), on or before the date of such
            Registration Statement, Prospectus, Preliminary Prospectus, the
            Basic Prospectus, the Preliminary Supplemented Prospectus or the
            Final Supplemented Prospectus.  Any reference herein to the terms
            "amend", "amendment" or "supplement" with respect to the
            Registration Statement or the Prospectus shall be deemed to refer to
            and include, without limitation, the filing of any document under
            the Exchange Act deemed to be incorporated therein by reference
            after the date of such Registration Statement or Prospectus.

               A prospectus supplement, dated, subject to completion, 
            January __, 1997, as supplemented and amended, is hereinafter called
            the "Preliminary Supplemented Prospectus". A prospectus supplement,
            dated the date hereof, setting forth the terms of the Securities and
            of their sale and distribution (the "Final Supplemented Prospectus")
            has been prepared and will be filed pursuant to Rule 424(b) under
            the Act ("Rule 424(b)").

                                       2
<PAGE>
 
      (ii)  On the effective date of the Registration Statement, the
            Registration Statement, as amended and supplemented at that time,
            conformed in all material respects to the requirements of the Act
            and the Trust Indenture Act of 1939, as amended (the "TIA"), and the
            applicable rules and regulations of the Commission thereunder, and
            did not include any untrue statement of a material fact or omit to
            state any material fact required to be stated therein or necessary
            to make the statements therein not misleading; on the date of the
            Preliminary Supplemented Prospectus, the Preliminary Supplemented
            Prospectus conformed in all material respects to the requirements of
            the Act and the TIA and the applicable rules and regulations of the
            Commission thereunder, and did not include any untrue statement of a
            material fact or omit to state any material fact required to be
            stated therein or necessary to make the statements therein not
            misleading; and on the date of this Agreement, the Registration
            Statement and the Prospectus conform, and at the Time of Delivery
            (hereinafter defined) they will conform, in all material respects to
            the requirements of the Act and the TIA and the applicable rules and
            regulations of the Commission thereunder, and on the date of this
            Agreement do not, and on the Time of Delivery will not, contain any
            untrue statement of a material fact or omit to state any material
            fact required to be stated therein or necessary to make the
            statements therein not misleading;

     (iii)  Each document filed or to be filed pursuant to the Exchange Act
            and incorporated by reference, or deemed to be incorporated by
            reference in the Prospectus (including any document to be filed
            pursuant to the Exchange Act which will constitute an amendment to
            the Prospectus) conformed or, when so filed, will conform in all
            material respects to the requirements of the Exchange Act and the
            applicable rules and regulations of the Commission thereunder, and
            none of such documents included or, when so filed, will include any
            untrue statement of a material fact or omitted or, when so filed,
            will omit to state any material fact required to be stated therein
            or necessary to make the statements therein, in the light of the
            circumstances under which they were made, not misleading;

      (iv)  The Trust has been duly created and is validly existing as a
            business trust in good standing under the laws of the State of
            Delaware, with power and authority to own, lease and operate its
            properties and conduct its business as described in the Prospectus
            and, based on expected operations and law in effect on the date 
            hereof, the Trust will be classified as a grantor trust and will 
            not be classified as an association taxable as a corporation for
            United States federal income tax purposes;

       (v)  This Agreement has been duly authorized, executed and delivered by
            the Guarantor and the Trust;

      (vi)  The Securities have been duly authorized by the Trust Agreement,
            and, when issued and delivered pursuant to this Agreement, such

                                       3
<PAGE>
 
            Securities will be duly and validly issued and, subject to the
            qualifications set forth herein, fully paid and non-assessable
            undivided beneficial interests in the assets of the Trust entitled
            to the benefits provided by the Amended and Restated Trust Agreement
            (the "Trust Agreement") among the Guarantor and the Trustees named
            therein (the "Trustees") (subject to the terms of the Trust
            Agreement); provided that the holders of securities ("the
            Securityholders") may be obligated, pursuant to the Trust Agreement,
            to (a) provide indemnity and/or security in connection with and pay
            taxes or governmental charges arising from transfers or exchanges of
            Securities certificates and the issuance of replacement Securities
            certificates and (b) provide security and indemnity in connection
            with requests of or directions to the Property Trustee (as defined
            in the Trust Agreement) to exercise its rights and remedies under
            the Trust Agreement; and the Securities conform to the description
            thereof contained in the Final Supplemented Prospectus;

     (vii)  The Securityholders will be entitled to the same limitation of
            personal liability extended to stockholders of private corporations
            for profit organized under the General Corporation Law of the State
            of Delaware;

    (viii)  The Common Securities of the Trust have been duly authorized
            by the Trust Agreement, and upon delivery by the Trust to the
            Guarantor against payment therefor as set forth in the Trust
            Agreement, will be duly and validly issued and undivided beneficial
            interests in the assets of the Trust and conform to the description
            thereof contained in the Final Supplemented Prospectus; the issuance
            of the Common Securities of the Trust is not subject to preemptive
            or other similar rights; and at the Time of Delivery, all of the
            issued and outstanding Common Securities of the Trust will be
            directly owned by the Guarantor free and clear of any security
            interest, mortgage, pledge, lien, encumbrance, claim or equity;

      (ix)  The Guarantee, the Trust Agreement, the Subordinated Debentures,
            the Indenture and the Agreement as to Expenses and Liabilities
            between the Guarantor and the Trust (the "Expense Agreement") (the
            Guarantee, the Trust Agreement, the Subordinated Debentures, the
            Indenture and the Expense Agreement being collectively referred to
            as the "Guarantor Agreements") have each been duly authorized by the
            Guarantor and when validly executed and delivered by the Guarantor
            and, in the case of the Guarantee, by the Guarantee Trustee, in the
            case of the Trust Agreement, by the Trustees and, in the case of the
            Indenture, by the Debenture Trustee, and, in the case of the
            Subordinated Debentures, when validly issued by the Guarantor and
            duly authenticated and delivered by the Debenture Trustee, will
            constitute valid and legally binding obligations of the Guarantor
            and the respective trustees, enforceable in accordance with their
            respective terms, subject, as to enforcement, to bankruptcy,
            insolvency, reorganization and other laws of general applicability
            relating to or

                                       4
<PAGE>
 
            affecting creditors' rights and to general equity principles 
            (regardless of whether such enforceability is considered in a
            proceeding in equity or at law); the Subordinated Debentures when
            validly issued by the Guarantor and duly authenticated and delivered
            by the Deberture Trustee, will be entitled to the benefits of the
            Indenture; and the Guarantor Agreements conform to the descriptions
            thereof in the Final Supplemented Prospectus;

        (x) The issue and sale of the Securities by the Trust, the compliance
            by the Trust with all of the provisions of this Agreement, the
            Securities and the Trust Agreement, the purchase of the Subordinated
            Debentures by the Trust, the execution, delivery and performance by
            the Trust of the Trust Agreement and the consummation of the
            transactions contemplated herein and therein will not conflict with
            or result in a breach or violation of any of the terms or provisions
            of, or constitute a default under, any indenture, mortgage, deed of
            trust, loan agreement or other agreement or instrument to which the
            Trust is a party or by which the Trust is bound or to which any of
            the property or assets of the Trust is subject, nor will such action
            result in any violation of the provisions of the Trust Agreement or
            any existing statute or any order, rule or regulation of any court
            or governmental agency or body having jurisdiction over the Trust or
            any of its properties; the Commission has issued an order under the
            Act declaring the Registration Statement effective and qualifying
            the Guarantee, the Trust Agreement and the Indenture under the TIA
            and no other consent, approval, authorization, order, registration
            or qualification of or with any such court or governmental agency or
            body is required for the issue and sale of the Securities and the
            Common Securities by the Trust, the purchase of the Subordinated
            Debentures by the Trust or the consummation by the Trust of the
            transactions contemplated by this Agreement, except such consents,
            approvals, authorizations, registrations or qualifications as may be
            required under state securities or Blue Sky laws in connection with
            the purchase and distribution of the Securities by the Underwriters;

       (xi) The issuance by the Guarantor of the Guarantee and the
            Subordinated Debentures, the compliance by the Guarantor with all of
            the provisions of this Agreement, the Guarantee, the Subordinated
            Debentures, the Trust Agreement, the Indenture and the Expense
            Agreement, the execution, delivery and performance by the Guarantor
            of the Guarantor Agreements, and the consummation of the
            transactions contemplated herein and therein will not conflict with
            or result in a breach or violation of any of the terms or provisions
            of, or constitute a default under, any indenture, mortgage, deed of
            trust, loan agreement or other agreement or instrument for borrowed
            money to which the Guarantor or any Significant Subsidary ( as
            defined by Regulation S-X) is a party or by which the Guarantor or
            any Significant Subsidiary is bound or to which any of the property
            or assets of the Guarantor or any Significant Subsidiary is subject,
            nor will such action result in any violation of the provisions of
            the Restated Articles of Incorporation or Amended and Restated By-
            laws of the Guarantor or any existing statute or any order, rule or
            regulation of any court or governmental agency or body having
            jurisdiction over the Guarantor or any of its or its Significant
            Subsidiaries' properties; the Commission has issued an order under
            the Act declaring the Registration Statement effective and
            qualifying the Guarantee, the Trust Agreement and the Indenture
            under the TIA


                                       5
<PAGE>
 
            and no other consent, approval, authorization, order, registration
            or qualification of or with any such court or governmental agency or
            body is required for the issue of the Guarantee or the Subordinated
            Debentures or the consummation by the Guarantor of the other
            transactions contemplated by this Agreement or the Guarantor
            Agreements, except such consents, approvals, authorizations,
            registrations or qualifications as may be required under state
            securities or Blue Sky laws in connection with the issuance by the
            Guarantor of the Guarantee and the Subordinated Debentures;

     (xii)  The Trust is not and, after giving effect to the offering and
            sale of the Securities, will not be an "investment company", or an
            entity "controlled" by an "investment company", as such terms are
            defined in the Investment Company Act of 1940, as amended (the
            "Investment Company Act");

       2.   Sale and Delivery.  (a)  Subject to the terms and conditions
            -----------------                                           
herein set forth, the Guarantor and the Trust agree to issue and sell to each of
the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Trust, at a purchase price of 100% of the
liquidation amount thereof, the liquidation amount of Securities set forth
opposite the name of such Underwriters in Schedule I hereto.

       (b) As compensation to the Underwriters for their commitments
hereunder, and in view of the fact that the proceeds of the sale of the
Securities will be issued by the Trust to purchase the Subordinated Debentures
of the Guarantor, the Guarantor hereby agrees to pay at the Time of Delivery to
Goldman, Sachs & Co., for the accounts of the several Underwriters, an amount
equal to $[   ] per Security for the Securities to be delivered at the Time of
Delivery by wire transfer of Federal (same-day) funds.  The total aggregate
amount of the Underwriters' compensation is $_______________.

       (c) Except as set forth in the next paragraph, the Securities to be
purchased by each Underwriter hereunder will be represented by one or more
definitive global Securities in book-entry form which will be deposited by or on
behalf of the Trust with The Depository Trust Company ("DTC") or its designated
custodian.  The Trust will deliver the Securities to Goldman, Sachs & Co., for
the account of each Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of Federal (same
day) funds to a commercial bank account located in the United States and
designated in writing at least forty-eight hours prior to the Time of Delivery
by the Guarantor to Goldman, Sachs & Co., by causing DTC to credit the
Securities to the account of Goldman, Sachs & Co. at DTC. The Trust will cause
the global certificates representing the Securities to be made available to
Goldman, Sachs & Co. for checking at least twenty-four hours prior to the Time
of Delivery at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be 9:30 a.m., New
York City time, on ________ __, 19__ or such other time and date as Goldman,
Sachs & Co. and the Guarantor may agree upon in writing. Such time and date are
herein called the "Time of Delivery".

                                       6
<PAGE>
 
          (d) The documents to be delivered at the Time of Delivery by or on
behalf of the parties hereto pursuant to Section 5 hereof, including the cross-
receipt for the Securities and any additional documents requested by the
Underwriters pursuant to Section 5(k) hereof, will be delivered at such time and
date at the offices of Dewey Ballantine, 1301 Avenue of the Americas, New York,
New York 10019 or such other location as Goldman Sachs & Co. and the Guarantor
may agree in writing (the "Closing Location"), and the Securities will be
delivered at the Designated Office, all at the Time of Delivery. A meeting will
be held at the Closing Location at 1:00 p.m., New York City time or at such
other time as the Goldman, Sachs & Co. and the Guarnator may agree in writing ,
on the New York Business Day next preceding the Time of Delivery, at which
meeting the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For the
purposes of this Section 2, "New York Business Day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York are generally authorized or obligated by law or
executive order to close.

          3.   Covenants and Agreements.  The Guarantor and the Trust jointly
               ------------------------                                      
and severally covenant and agree with each of the Underwriters:

          (a)  That the Guarantor will furnish without charge to the
Underwriters a copy of the Registration Statement, including all documents
incorporated by reference therein and exhibits filed with the Registration
Statement (other than exhibits which are incorporated by reference and have
previously been so furnished), and, during the period mentioned in paragraph (c)
below, as many copies of the Prospectus, the Preliminary Supplemented Prospectus
and the Final Supplemented Prospectus, any documents incorporated by reference
therein at or after the date thereof (including documents from which information
has been so incorporated) and any supplements and amendments thereto as each
Underwriter may reasonably request so long as such Underwriter is required to
deliver a prospectus;

          (b)  That the Guarantor will cause the Final Supplemented Prospectus
to be filed pursuant to, and in compliance with, Rule 424(b) and will promptly
advise the Underwriters (i) when any amendment to the Registration Statement
shall have been filed; provided, that, with respect to documents filed pursuant
                       --------                                                
to the Exchange Act and incorporated by reference into the Registration
Statement, such notice shall only be required during such time as the
Underwriters are required in the reasonable opinion of Dewey Ballantine, counsel
for the Underwriters, to deliver a prospectus, (ii) of any request by the
Commission for any amendment of the Registration Statement, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding for
that

                                       7
<PAGE>
 
purpose, and (iv) of the receipt by the Guarantor or the Trust of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose.  So long as any Underwriter is required in the
reasonable opinion of Dewey Ballantine to deliver a prospectus, the Guarantor
will not file any amendment to the Registration Statement or supplement to the
Prospectus unless the Guarantor has furnished one copy of such amendment or
supplement to Goldman, Sachs & Co. and to Dewey Ballantine, and, if such
amendment or supplement is to be filed on or prior to the Time of Delivery, or
under circumstances where the Underwriters are required in the reasonable
opinion of Dewey Ballantine, to deliver a Prospectus, the Underwriters or Dewey
Ballantine, shall not reasonably have objected thereto.  If the Commission shall
issue a stop order suspending the effectiveness of the Registration Statement,
the Guarantor will take such steps to obtain the lifting of that order as in the
best judgment of the Guarantor are not contrary to the interests of the
Guarantor;

          (c) That if, at any time when in the reasonable opinion of Dewey
Ballantine the Prospectus is required by law to be delivered by an Underwriter
or a dealer, any event shall occur as a result of which it is necessary, in the
reasonable opinion of Dewey Ballantine or counsel for the Guarantor, to amend or
supplement the Prospectus or modify the information incorporated by reference
therein in order to make the statements therein, in light of the circumstances
existing when the Prospectus is delivered to a purchaser, not misleading, or if
it shall be necessary in the reasonable opinion of any such counsel, to amend or
supplement the Prospectus or modify such information to comply with law, the
Guarantor will forthwith (i) prepare and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses the Underwriters will
furnish to the Guarantor) to whom Securities may have been sold by the
Underwriters and to any other dealers upon reasonable request, either amendments
or supplements to the Prospectus or (ii) file with the Commission documents
incorporated by reference in the Prospectus, which shall be so supplied to the
Underwriters and such dealers, in either case so that the statements in the
Prospectus as so amended, supplemented or modified will not, in light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus will comply with law;

          (d) That the Guarantor will endeavor to qualify, at its expense, the
Securities, and, to the extent required or advisable, the Guarantee and the
Junior Subordinated Notes, for offer and sale under the securities or Blue Sky
laws of such jurisdictions as the Underwriters shall reasonably request and to
pay all filing fees, reasonable expenses and legal fees in connection therewith
and in connection with the determination of the eligibility for investment of
the Securities; provided, that the Guarantor shall not be required to qualify as
                --------                                                        
a foreign corporation or a dealer in securities or to file any consents to
service of process under the laws of any jurisdiction;

          (e) That the Guarantor will make generally available to its security
holders and the Securityholders as soon as practicable an earnings statement of
the Guarantor covering a twelve-month period beginning after the Time of
Delivery which shall satisfy the provisions of Section 11(a) of the Act and the
rules and regulations of the Commission thereunder (including Rule 158 under the
Act).

                                       8
<PAGE>
 
          (f)  That during the period beginning on the date of this Agreement
and continuing to and including the Time of Delivery, the Guarantor and the
Trust will not offer, sell, contract to sell or otherwise dispose of any
Securities, any security convertible into or exchangeable into or exercisable
for Securities or Subordinated Debentures or any debt securities substantially
similar to the Subordinated Debentures or equity securities substantially
similar to the Securities (except for the Subordinated Debentures and the
Securities issued pursuant to this Agreement), without the prior written consent
of the Underwriters.

          (g)  That the Guarantor and the Trust will use best efforts to effect
the listing of the Securities on the New York Stock Exchange; if the Securities
are exchanged for Subordinated Debentures, the Guarantor will use its best
efforts to effect the listing of the Subordinated Debentures on any exchange on
which the Securities are then listed.

          4.   Expenses.  The Guarantor and the Trust jointly and severally
               --------                                                    
covenant and agree with the several Underwriters that the Guarantor and the
Trust will pay or cause to be paid the following: (i) all expenses in connection
with the preparation, printing and filing of the Registration Statement as
originally filed and of each amendment thereto; (ii) the fees, disbursements and
expenses of the Guarantor's or the Trust's counsel and accountants in connection
with the issue of the Securities and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, the Prospectus,
the Preliminary Supplemented Prospectus, the Final Supplemented Prospectus and
any amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (iii) all reasonable expenses in
connection with the qualification of the Securities, the Guarantees and the
Subordinated Debentures issuable upon exchange of the Securities, for offering
and sale under state securities laws as provided in Section 3(d) hereof,
including the reasonable fees and disbursements of counsel for the Underwriters
in connection with such qualification and in connection with the Blue Sky and
legal investment surveys; (iv) any fees charged by securities rating services
for rating the Securities and the Subordinated Debentures; (v) the cost of
preparing the Securities and the Subordinated Debentures; (vi) the fees and
expenses of the Trustees, the Guarantee Trustee and the Debenture Trustee and
any agent of the Trustees, the Guarantee Trustee and the Debenture Trustee and
the fees and disbursements of counsel for the Trustees in connection with the
Trust Agreement and the Securities, counsel for the Guarantee Trustee in
connection with the Guarantee and counsel for the Debenture Trustee in
connection with the Indenture and the Subordinated Debentures; (vii) the fees
and disbursements of Delaware counsel to the Trust; (viii) the fees and expenses
incurred in connection with the listing of the Securities and, if applicable,
the Junior Subordinated Notes on the New York Stock Exchange; and (ix) all other
costs and expenses incident to the performance of its obligations hereunder
which are not otherwise specifically provided for in this Section.  It is
understood, however, that, except as provided in this Section, and Sections 6
and 9 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel and any advertising expenses connected with
any offers they may make.

          5.  Conditions of Underwriters' Obligations.  The obligations of the
              ---------------------------------------                         
Underwriter hereunder shall be subject to the accuracy, at and (except as
otherwise stated herein) as of the date hereof and at and as of the Time of
Delivery, of the

                                       9
<PAGE>
 
representations and warranties made herein by the Guarantor and the Trust, to
compliance at and as of the Time of Delivery by the Guarantor and the Trust with
their covenants and agreements herein contained and the other provisions hereof
to be satisfied at or prior to the Time of Delivery, and to the following
additional conditions:

          (a) (i)  No stop order suspending the effectiveness of the
Registration Statement shall be in effect, and no proceeding for such purpose
shall be pending before or threatened by the Commission, and the Underwriters
shall have received on and as of the Time of Delivery, a certificate dated such
date, signed by an executive officer of the Guarantor or an authorized agent of
the Guarantor designated as such by the Board of Directors of the Guarantor to
the foregoing effect, and (ii) there shall have been no material adverse change
in or affecting the business, properties or financial condition of the Guarantor
or the Trust from that set forth in or contemplated by the Registration
Statement at the time it became effective, except as set forth in or
contemplated by the Prospectus, and the Underwriters shall have received on and
as of the Time of Delivery, a certificate dated such date, signed by an
executive officer of the Guarantor or an executive officer of Houston Industries
Incorporated ("Houston Industries") to the foregoing effect.  The officers or
agents making such certificates may rely upon the best of his knowledge as to
proceedings pending or threatened.

          (b) Dewey Ballantine, counsel for the Underwriters, shall have
furnished to you such opinion or opinions, dated the Time of Delivery, with
respect to such matters as you may reasonably request, and such counsel shall
have received such papers and information as they may reasonably request to
enable them to pass upon such matters.  In giving such opinion, such counsel may
rely (i) as to matters of Texas law and the exemption of Houston Industries
under the 1935 Act (as defined herein) upon the opinions of Baker & Botts L.L.P.
referred to in (d) below and Hugh Rice Kelly or such other counsel referred to
in (c) below and (ii) as to matters of Delaware law upon the opinion of
Richards, Layton & Finger referred to in (e) below.

          (c) Hugh Rice Kelly, Senior Vice President, General Counsel, and
Corporate Secretary for the Guarantor, shall have furnished to you his written
opinion, dated the Time of Delivery, in form and substance satisfactory to you,
to the effect that:

          (i) The Guarantor has been duly incorporated and is validly existing
              in good standing under the laws of the State of Texas and has
              corporate power and authority to enter into and perform its
              obligations under this Agreement and the Guarantor Agreements;

         (ii) No consent, approval, authorization or other order of, or
              registration with, any governmental regulatory body (other than
              such as may be required under applicable securities laws, as to
              which such counsel need not express an opinion) is required for
              the issuance and sale of the Securities being delivered at the
              Time of Delivery or the issuance of the Guarantee and the
              Subordinated Debentures or the consummation by the Trust or the
              Guarantor of the transactions contemplated by this Agreement and
              the Guarantor Agreements;

                                       10
<PAGE>
 
          (iii)  To the best of such counsel's knowledge and other than as set
                 forth or contemplated in the Prospectus, there are no legal or
                 governmental proceedings pending or threatened to which
                 Guarantor is subject, which, individually or in the aggregate,
                 are expected to have a material adverse effect on the financial
                 position, shareholders' equity or results of operations of the
                 Guarantor;

          (iv)   The issuance by the Guarantor of the Guarantee and the
                 Subordinated Debentures and the execution, delivery and
                 performance by the Guarantor of this Agreement and the
                 Guarantor Agreements will not result in the breach or violation
                 of, or constitute a default under, the Restated Articles of
                 Incorporation or the Amended and Restated Bylaws of the
                 Guarantor, each as amended to date, any indenture, mortgage,
                 deed of trust or other agreement or instrument for borrowed
                 money to which the Guarantor is a party or by which it is bound
                 or to which its property is subject or any law, order, rule or
                 regulation of any court or governmental agency or body having
                 jurisdiction over the Guarantor or its property, in any manner
                 which would have a material adverse effect on the business of
                 the Guarantor; and

          (v)    The description of statutes and regulations set forth in Part I
                 of the Guarantor's Annual Report on Form 10-K for the fiscal
                 year ended December 31, 1995 under the captions "Business--
                 Regulatory Matters -- Rates and Services" and "-- Environmental
                 Quality" fairly describe in all material respects the portions
                 of the statutes and regulations addressed thereby.

          (d)        Baker & Botts L.L.P., counsel for the Guarantor and the
Trust, shall have furnished to you their written opinion, dated the Time of
Delivery, in form and substance satisfactory to you, to the effect that:

          (i)    Such counsel does not know of any contracts or documents of a
                 character required to be described in the Registration
                 Statement or Prospectus or to be filed as exhibits to the
                 Registration Statement which are not described and filed;

          (ii)   The statements set forth in the Final Supplemental Prospectus
                 under the captions "Description of Capital Securities",
                 "Description of Junior Subordinated Debentures", "Description
                 of Guarantees", "The Expense Agreement" and "Relationship Among
                 the Capital Securities, the Corresponding Junior Subordinated
                 Debentures, the Expense Agreement and the Guarantees",
                 accurately summarize in all material respects the terms of the
                 Securities, the Trust Agreement, the Subordinated Debentures,
                 the Expense Agreement and the Guarantee, and the statements
                 under the caption "Certain ERISA Considerations" insofar as
                 they purport to describe the provisions of the laws and
                 regulations referred to therein are accurate summaries in all
                 material respects thereof;

                                      11
<PAGE>
 
          (iii)  The Securities, the Subordinated Debentures and the Guarantee
                 conform as to legal matters in all material respects to the
                 descriptions thereof contained in the Final Supplemented
                 Prospectus under the captions "Certain Terms of Series ___
                 Capital Securities", "Certain Terms of Series ___ Subordinated
                 Debentures", and "Certain Terms of Series ___ Guarantee" and in
                 the Basic Prospectus under the captions "Description of Junior
                 Subordinated Debentures", "Description of Securities",
                 "Description of Guarantees", and "Relationship Among
                 Securities, The Corresponding Junior Subordinated Debentures,
                 The Expense Agreement and The Guarantees", respectively;


          (iv)   The Subordinated Debentures are in the form prescribed in or
                 pursuant to the Indenture, have been duly and validly
                 authorized by all necessary corporate action on the part of the
                 Guarantor and, when executed and delivered by the Guarantor and
                 authenticated by the Trustee as specified in or pursuant to the
                 Indenture, will be valid and binding obligations of the
                 Guarantor, enforceable in accordance with their terms, except
                 as such enforceability is subject to the effect of any
                 applicable bankruptcy, insolvency, reorganization or other law
                 relating to or affecting creditors' rights generally and to
                 general principles of equity (regardless of whether such
                 enforceability is considered in a proceeding in equity or at
                 law); the Guarantee has been duly and validly authorized by all
                 necessary corporate action on the part of the Guarantor; the
                 Guarantee has been duly and validly executed and delivered by
                 the Guarantor and (assuming due authorization, execution and
                 delivery by the Trustee thereunder) constitutes the valid and
                 binding obligation of the Guarantor, enforceable in accordance
                 with its terms, except as such enforceability is subject to the
                 effect of any applicable bankruptcy, insolvency, reorganization
                 or other law relating to or affecting creditors' rights
                 generally and to general principles of equity (regardless of
                 whether such enforceability is considered in a proceeding in
                 equity or at law); the Trust Agreement, the Indenture and the
                 Expense Agreement have each been duly authorized, executed and
                 delivered by the Guarantor and, when executed and delivered by
                 the other parties thereto, will constitute valid and binding
                 obligations of the Guarantor, enforceable in accordance with
                 their respective terms, except as such enforceability is
                 subject to the effect of any applicable bankruptcy, insolvency,
                 reorganization or other law relating to or affecting creditors'
                 rights generally and to general principles of equity
                 (regardless of whether such enforceability is considered in
                 proceeding in equity or at law);

          (v)    The Guarantee, the Trust Agreement and the Indenture have been
                 duly qualified under the TIA;

          (vi)   Based upon the timely filing by Houston Industries with the
                 Commission of an exemption statement pursuant to Rule 2 under
                 the Public Utility Holding Company Act of 1935 ("1935 Act")
                 which, to the best of the

                                      12
<PAGE>
 
                 knowledge of such counsel, is not the subject of any
                 notification provided for in Rule 6 under the 1935 Act, Houston
                 Industries is exempt from the provisions of the 1935 Act except
                 Sections 9(a)(2), 32 and 33 thereof;

          (vii)  The Trust is not and, after giving effect to the offering and
                 sale of the Securities, will not be an "investment company" or
                 an entity "controlled" by an "investment company", as such
                 terms are defined in the Investment Company Act (in giving such
                 opinion counsel may reference specified "no-action" letters);

          (viii) The Registration Statement has become effective under the Act,
                 and, to the best of such counsel's knowledge, no stop order
                 suspending the effectiveness of the Registration Statement or
                 any part thereof has been issued and no proceedings for that
                 purpose have been instituted and are pending or are threatened
                 by the Commission under the Act; the Registration Statement, as
                 of its effective date, and the Final Supplemented Prospectus,
                 as of ________ ___, 19__, (except for (A) the operating
                 statistics, financial statements and financial statement
                 schedules contained or incorporated by reference therein or
                 omitted therefrom (including the auditors' reports on the
                 financial statements and the notes to the financial
                 statements), (B) the other financial and statistical
                 information contained or incorporated by reference therein or
                 omitted therefrom and (C) the exhibits thereto, as to which
                 such counsel need not express an opinion) complied as to form
                 in all material respects with the requirements of Form S-3
                 under the Act and the applicable rules and regulations of the
                 Commission thereunder, and each document incorporated by
                 reference therein as originally filed pursuant to the Exchange
                 Act (except for (A) the operating statistics, financial
                 statements and financial statement schedules contained or
                 incorporated by reference therein or omitted therefrom
                 (including the auditors' reports on the financial statements
                 and the notes to the financial statements), (B) the other
                 financial and statistical information contained or incorporated
                 by reference therein or omitted therefrom and (C) the exhibits
                 thereto, as to which such counsel need not express an opinion)
                 when so filed complied as to form in all material respects with
                 the Exchange Act and the applicable rules and regulations of
                 the Commission thereunder; and

          (ix)   The execution, delivery and performance by the Guarantor of
                 this Agreement have been duly authorized by all necessary
                 corporate action on the part of the Guarantor, and this
                 Agreement has been duly executed and delivered by the
                 Guarantor.

          In addition, such counsel shall state that no facts have come to the
attention of such counsel that lead them to believe that the Registration
Statement (except for (A) the operating statistics, financial statements and
financial statement schedules contained or incorporated by reference therein
(including

                                      13
<PAGE>
 
the auditors' reports on the financial statements and the notes to the financial
statements, except to the extent that such notes describe legal or governmental
proceedings to which the Company is a party and are incorporated by reference
into one or more items of a report that is incorporated by reference in the
Registration Statement or the Prospectus, other than an item that requires that
financial statements be provided), (B) the other financial and statistical
information contained or incorporated by reference therein and (C) the exhibits
thereto, as to which such counsel need not comment) as of the time such
Registration Statement became effective, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus, as amended, supplemented or modified by the filing of a document
incorporated by reference therein if so amended, supplemented or modified
(except for (A) the operating statistics, financial statement and financial
statement schedules contained or incorporated by reference therein (including
the auditors' reports on the financial statements and the notes to the financial
statements, except to the extent that such notes describe legal or governmental
proceedings to which the Guarantor is a party and are incorporated by reference
into one or more items of a report that is incorporated by reference in the
Prospectus, other than an item that requires that financial statements be
provided), (B) the other financial and statistical information contained or
incorporated by reference therein and (C) the exhibits thereto, as to which such
counsel need not comment), as of the date of the Final Supplemented Prospectus
contained, or as of the Time of Delivery contains, any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

          (e)    Richards, Layton & Finger, special Delaware counsel for the
Guarantor and the Trust, shall have furnished to you their written opinion,
dated the Time of Delivery, in form and substance satisfactory to you, to the
effect that:

          (i)    The Trust has been duly created and is validly existing in good
                 standing as a business trust under the Delaware Business Trust
                 Act, and all filings required under the laws of the State of
                 Delaware with respect to the creation and valid existence of
                 the Trust as a business trust have been made;

          (ii)   Under the Delaware Business Trust Act and the Trust Agreement,
                 the Trust has the trust power and authority to own property and
                 conduct its business, all as described in the Prospectus;

          (iii)  The Trust Agreement constitutes a valid and legally binding
                 obligation of the Guarantor and the Trustees, and is
                 enforceable against the Guarantor and the Trustees, in
                 accordance with its terms, subject, as to enforcement, to the
                 effect upon the Trust Agreement of (i) bankruptcy, insolvency,
                 fraudulent transfer and conveyance, reorganization, moratorium,
                 receivership, liquidation and similar laws of general
                 applicability relating to or affecting creditors' rights, 
                 (ii) principles of equity, including applicable law relating to
                 fiduciary duties,

                                      14
<PAGE>
 
                 and (iii) the effect of applicable public policy on the
                 enforceability of provisions relating to indemnification or
                 contribution;

          (iv)   Under the Delaware Business Trust Act, the Original Trust
                 Agreement (as defined in the Trust Agreement) and the Trust
                 Agreement, the Trust has the trust power and authority to
                 (a) execute and deliver, and to perform its obligations under
                 this Agreement and (b) issue and perform its obligations under
                 the Securities and the Common Securities;

          (v)    Under the Delaware Business Trust Act, the Original Trust
                 Agreement and the Trust Agreement, the execution and delivery
                 by the Trust of this Agreement, and the performance by the
                 Trust of its obligations hereunder, have been duly authorized
                 by all necessary trust action on the part of the Trust;
     
          (vi)   Under the Delaware Business Trust Act,the Original Trust
                 Agreement and the Trust Agreement, the Agreement has been duly
                 executed by the Trust;

          (vii)  The Securities have been duly authorized by the Trust Agreement
                 and are duly and validly issued and, subject to the
                 qualifications set forth herein, fully paid and non-assessable
                 undivided beneficial interests in the assets of the Trust and
                 are entitled to the benefits provided by the Trust Agreement
                 (subject to the terms of the Trust Agreement); provided that
                 such counsel may note that the Securityholders may be
                 obligated, pursuant to the Trust Agreement, to (a) provide
                 indemnity and/or security in connection with and pay taxes or
                 governmental charges arising from transfers or exchanges of
                 Capital Securities Certificates and the issuance of replacement
                 Capital Securities Certificates and (b) provide security and
                 indemnity in connection with requests of or directions to the
                 Property Trustee (as defined in the Trust Agreement) to
                 exercise its rights and remedies under the Trust Agreement. The
                 Securityholders, as beneficial owners of the Trust, are
                 entitled to the same limitation of personal liability extended
                 to stockholders of private corporations for profit organized
                 under the General Corporation Law of the State of Delaware;

          (viii) The Common Securities of the Trust have been duly authorized by
                 the Trust Agreement and are validly issued and fully paid
                 undivided beneficial interests in the assets of the Trust;

          (ix)   Under the Delaware Business Trust Act and the Trust Agreement,
                 the issuance of the Securities and the Common Securities is not
                 subject to preemptive rights;

          (x)    The issuance and sale by the Trust of the Securities and the
                 Common Securities, the execution, delivery and performance by
                 the Trust of this Agreement, the consummation by the Trust of
                 the transactions contemplated by this Agreement and the Trust
                 Agreement and compliance by the Trust with its obligations
                 thereunder do not violate (a) any of the provisions of the
                 Certificate of Trust of the Trust or the Trust Agreement, or
                 (b) any applicable Delaware law or administrative regulation;

          (xi)   Such counsel has reviewed the statements in the Basic
                 Prospectus under the caption "The Issuers" and the statements
                 in the Preliminary

                                      15
<PAGE>
 
                 Supplemented Prospectus and Final Supplemented Prospectus under
                 the caption "HL&P Capital Trust ___" and, insofar as they
                 contain statements of Delaware law, such statements are fairly
                 presented;

          (xii)  No authorization, approval, consent or order of any Delaware
                 court or Delaware governmental authority or Delaware agency is
                 required to be obtained by the Trust solely in connection with
                 the issuance and sale of the Securities and the Common
                 Securities. (In rendering the opinion expressed in this
                 paragraph (xii), such counsel need express no opinion
                 concerning the securities laws of the State of Delaware.); and

          (xiii) Assuming that (i) the Trust derives no income from or connected
                 with sources within the State of Delaware and has no assets,
                 activities (other than maintaining the Delaware Trustee and the
                 filing of documents with the Secretary of State of the State of
                 Delaware) or employees in the State of Delaware, and (ii) the
                 Trust is treated as a grantor trust for federal income tax
                 purposes, the Securityholders (other than those holders of the
                 Securities who reside or are domiciled in the State of
                 Delaware) will have no liability for income taxes imposed by
                 the State of Delaware solely as a result of their participation
                 in the Trust, and the Trust will not be liable for any income
                 tax imposed by the State of Delaware.

          (f)      Baker & Botts L.L.P., special tax counsel for the Guarantor
and the Trust, shall have furnished to you their written opinion, dated the Time
of Delivery, in form and substance satisfactory to you, to the effect that such
firm confirms its opinion set forth in the Final Supplemented Prospectus under
the caption "Certain Federal Income Tax Consequences".

          (g)      At the time of execution of this Agreement, Deloitte & Touche
LLP shall have furnished to you a letter dated the date of such execution,
substantially in the form heretofore supplied and deemed satisfactory to you.

          (h)      At the Time of Delivery, Deloitte & Touche LLP shall have
furnished you a letter, dated the Time of Delivery, to the effect that such
accountants reaffirm, as of the Time of Delivery and as though made on the Time
of Delivery, the statements made in the letter furnished by such accountants
pursuant to paragraph (g) of this Section 5, except that the specified date
referred to in such letter will be a date not more than five business days prior
to the Time of Delivery.

          (i)      A Special Event (as defined in the Final Supplemented
Prospectus, except that the reference to effectiveness or announcement on or
after the date of issuance of the Securities shall be deemed a reference to
effectiveness or announcement on or after the date of this Agreement) shall not
have occurred and be continuing.

          (j)      The Guarantor and the Trust shall have furnished or caused to
be furnished to you at the Time of Delivery certificates of officers of the
Guarantor and of administrators of the Trust satisfactory to you as to the
accuracy of the representations and warranties of the Guarantor and the Trust
herein at and as of the Time of Delivery, as to the performance by the Guarantor
and the Trust of all of their respective obligations hereunder to be performed
at or prior to the Time of Delivery, as to the matters set forth


                                      16
<PAGE>
 
in the introductory paragraph to this Section 5 and subsection (a) of this
Section and as to such other matters as you may reasonably request.

          6.   Indemnification and Contribution.  (a)  The Guarantor and the
               --------------------------------                             
Trust, jointly and severally, agree to indemnify and hold harmless each
Underwriter, and each person, if any, who controls each Underwriter within the
meaning of the Act or the Exchange Act, against any losses, claims, damages,
liabilities or expenses (including the reasonable cost of investigating and
defending against any claims therefore and counsel fees incurred in connection
therewith), joint or several, which may be based upon either the Act, or the
Exchange Act, or any other statute or at common law, on the ground or alleged
ground that any Preliminary Supplemented Prospectus, Final Supplemented
Prospectus, Preliminary Prospectus, the Registration Statement, the Basic
Prospectus or the Prospectus (or any such document, as from time to time
amended, or deemed to be amended, supplemented or modified) includes or
allegedly includes an untrue statement of material fact or omits to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, unless such statement or omission was made in
reliance upon, and in conformity with, written information furnished to the
Guarantor or the Trust by any Underwriter through Goldman, Sachs & Co.
specifically for use in the preparation thereof; provided that in no case is the
Guarantor or the Trust to be liable with respect to any claims made against any
Underwriter or any such controlling person unless such Underwriter or such
controlling person shall have notified the Guarantor in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Underwriter or such controlling person, but failure to notify the Guarantor or
Trust of any such claim shall not relieve it from any liability which it may
have to such Underwriter or such controlling person otherwise than on account of
the indemnity agreement contained in this paragraph; and provided, further, that
the foregoing indemnity with respect to the Preliminary Prospectus, the Basic
Prospectus, the Prospectus, the Preliminary Supplemented Prospectus and the
Final Supplemented Prospectus shall not inure to the benefit of any Underwriter
if a copy of the Preliminary Prospectus, the Basic Prospectus, the Prospectus,
the Preliminary Supplemented Prospectus or the Final Supplemented Prospectus as
amended or supplemented, had not been sent or given by or on behalf of such
Underwriter to the person asserting any such losses, claims, damages or
liabilities concurrently with or prior to delivery of the written confirmation
of the sale of Securities to such person and the untrue statement or omission of
a material fact contained in any such Preliminary Prospectus, Basic Prospectus,
Prospectus, Preliminary Supplemented Prospectus or Final Supplemented Prospectus
was corrected in the Preliminary Prospectus, Basic Prospectus, Prospectus,
Preliminary Supplemented Prospectus or Final Supplemented Prospectus, as amended
or supplemented.

          The Guarantor and the Trust will be entitled to participate at their
own expense in the defense, or, if they so elect, to assume the defense of any
suit brought to enforce any such liability, but, if the Guarantor or the Trust
elects to assume the defense, such defense shall be conducted by counsel chosen
by it.  In the event that the Guarantor or the Trust elects to assume the
defense of any such suit and retains such counsel, the Underwriter or
Underwriters or controlling person or persons, defendant or defendants in the
suit, may retain additional counsel but shall bear the fees and expenses of such
counsel unless (i) the Guarantor or the Trust shall have specifically


                                      17
<PAGE>
 
authorized the retaining of such counsel or (ii) the parties to such suit
include the Underwriter or Underwriters or controlling person or persons and the
Underwriter or Underwriters or controlling person or persons have been advised
by such counsel that one or more legal defenses may be available to it or them
which may not be available to the Guarantor or the Trust, in which case the
Guarantor or the Trust shall not be entitled to assume the defense of such suit
on behalf of such Underwriter or Underwriters or controlling person or persons,
notwithstanding their obligation to bear the reasonable fees and expenses of
such counsel, it being understood, however, that the Guarantor and the Trust
shall not, in connection with any one such suit or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for all such Underwriters and their controlling persons, which firm shall
be designated in writing by Goldman, Sachs & Co.  The Guarantor and the Trust
shall not be liable to indemnify any person for any settlement of any such claim
effected without the Guarantor's or the Trust's consent.  This indemnity
agreement will be in addition to any liability which the Guarantor and the Trust
might otherwise have.

          (b)   Each Underwriter agrees to indemnify and hold harmless the
Guarantor and the Trust, each of the Guarantor's directors, each of the
Guarantor's officers who have signed the Registration Statement, each of the
Trustees who have signed the Registration Statement and each person, if any, who
controls the Guarantor and the Trust within the meaning of the Act or the
Exchange Act, against any losses, claims, damages, liabilities or expenses
(including the reasonable cost of investigating and defending against any claims
therefor and counsel fees incurred in connection therewith), joint or several,
which may be based upon the Act, or any other statute or at common law, on the
ground or alleged ground that any Preliminary Supplemented Prospectus, Final
Supplemented Prospectus, Preliminary Prospectus, the Registration Statement, the
Basic Prospectus or the Prospectus (or any such document, as from time to time
amended, or deemed to be amended, supplemented or modified) includes or
allegedly includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, but only insofar as any such statement or
omission was made in reliance upon, and in conformity with, written information
furnished to the Guarantor or the Trust by such Underwriter through Goldman
Sachs & Co. specifically for use in the preparation thereof; provided that in no
case is such Underwriter to be liable with respect to any claims made against
the Guarantor or the Trust or any such director, officer, trustee or controlling
person unless the Guarantor or the Trust or any such director, officer, trustee
or controlling person shall have notified such Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the Guarantor
or the Trust or any such director, officer, trustee or controlling person, but
failure to notify such Underwriter of any such claim shall not relieve it from
any liability which it may have to the Guarantor or the Trust or any such
director, officer, trustee or controlling person otherwise than on account of
the indemnity agreement contained in this paragraph. Such Underwriter will be
entitled to participate at its own expense in the defense, or, if it so elects,
to assume the defense of any suit brought to enforce any such liability, but, if
such Underwriter elects to assume the defense, such defense shall be conducted
by counsel chosen by it. In the event that such Underwriter elects to assume the
defense of any such suit and retain such counsel,


                                      18
<PAGE>
 
the Guarantor or the Trust or such director, officer, trustee or controlling
person, defendant or defendants in the suit, may retain additional counsel but
shall bear the fees and expenses of such counsel unless (i) such Underwriter
shall have specifically authorized the retaining of such counsel or (ii) the
parties to such suit include the Guarantor or the Trust of any such director,
officer, trustee or controlling person and such Underwriter and the Guarantor or
the Trust of such director, officer, trustee or controlling person have been
advised by such counsel that one or more legal defenses may be available to it
or them which may not be available to such Underwriter, in which case such
Underwriter shall not be entitled to assume the defense of such suit on behalf
of the Guarantor or the Trust of such director, officer, trustee or controlling
person, notwithstanding its obligation to bear the reasonable fees and expenses
of such counsel, it being understood, however, that such Underwriter shall not,
in connection with any one such suit or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys at any time for
all of the Guarantor or the Trust and any such director, officer, trustee or
controlling person, which firm shall be designated in writing by the Guarantor.
Such Underwriter shall not be liable to indemnify any person for any settlement
of any such claim effected without such Underwriter's consent.  This indemnity
agreement will be in addition to any liability which such Underwriter might
otherwise have.

          (c) If recovery is not available under Section 6(a) or 6(b) hereof,
for any reason other than as specified therein, the parties entitled to
indemnification by the terms thereof shall be entitled to contribution for
liabilities and expenses, except to the extent that contribution is not
permitted under Section 11(f) of the Act.  In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered the relative benefits received by each party from the offering of the
Securities (taking into account the portion of the proceeds of the offering
realized by each), the parties' relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, the
opportunity to correct and prevent any statement or omission, and any other
equitable considerations appropriate under the circumstances.  The Guarantor and
the Trust and the Underwriters agree that it would not be equitable if the
amount of such contribution were determined by pro rata or per capita allocation
(even if the Underwriters were treated as one entity for such purpose).  No
Underwriters or any person controlling such Underwriters shall be obligated to
make contribution hereunder which in the aggregate exceeds the total public
offering price of the Securities purchased by such Underwriters under this
Agreement, less the aggregate amount of any damages which such Underwriters and
its controlling persons have otherwise been required to pay in respect of the
same claim or any substantially similar claim.  The Underwriters' obligations to
contribute are several in proportion to their respective underwriting
obligations, and not joint.

          7.  Substitution of Underwriters.  If any Underwriter shall default in
              ----------------------------                                      
its obligation to purchase the Securities which it has agreed to purchase
hereunder and the aggregate principal amount of such Securities which such
defaulting Underwriter agreed but failed to purchase does not exceed 10% of the
aggregate principal amount of all the Securities, the non-defaulting
Underwriters may make arrangements satisfactory to the Guarantor and Trust for
the purchase of the aggregate principal amount of such Securities by other
persons, including the non-defaulting Underwriters, but if no such


                                      19
<PAGE>
 
arrangements are made prior to the Time of Delivery, the non-defaulting
Underwriters shall be obligated severally in proportion to their respective
commitments hereunder, to purchase the Securities which such defaulting
Underwriter agreed but failed to purchase. If any Underwriter or Underwriters
shall so default and the aggregate principal amount of such Securities with
respect to which such default or defaults occur is more than 10% of the
aggregate principal amount of all the Securities and arrangements satisfactory
to the non-defaulting Underwriters and the Guarantor and the Trust for the
purchase of such Securities by other persons are not made within 48 hours after
such default, this agreement will terminate.

          If the non-defaulting Underwriter or substituted underwriter or
underwriters are required hereby or agree to take up all or part of the
Securities of the defaulting Underwriter as provided in this Section 7, (i) the
Guarantor and the Trust shall have the right to postpone the Time of Delivery
for a period of not more than five full business days, in order that the
Guarantor and the Trust may effect whatever changes may thereby be made
necessary in the Registration Statement or Prospectus or in any other documents
or arrangements, and the Guarantor and the Trust agree to promptly file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be made necessary, and (ii) the respective aggregate principal
amount of Securities which the non-defaulting Underwriters or substituted
purchaser or purchasers shall thereafter be obligated to purchase shall be taken
as the basis of their underwriting obligation for all purposes of this
Agreement.  Nothing herein contained shall relieve any defaulting Underwriter of
its liability to the Guarantor and the Trust or the non-defaulting Underwriters
for damages occasioned by its default hereunder.  Any termination of this
Agreement pursuant to this Section 7 shall be without liability on the part of
the non-defaulting Underwriters or the Guarantor or the Trust, other than as
provided in Sections 6 and 9.

          8.   Survival of Indemnities, Representations, Warranties, etc.  The
               ----------------------------------------------------------     
respective indemnities, agreements, representations, warranties and other
statements of the Guarantor and the Trust and the several Underwriters, as set
forth in this Agreement or made by or on behalf of them, respectively, pursuant
to this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the
Guarantor or the Trust, or any officer or director or controlling person of the
Guarantor or the Trust, and shall survive delivery of and payment for the
Securities.

          9.   Termination.  If this Agreement shall be terminated by the
               -----------                                               
Underwriters, because of any failure or refusal on the part of the Guarantor or
the Trust to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Guarantor or the Trust shall be unable to
perform its obligations under this Agreement, the respective indemnities shall
remain in full force and effect and the Guarantor or the Trust will reimburse
the Underwriter or such Underwriters as have so terminated this Agreement with
respect to themselves for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by them in connection with
the transactions contemplated by this Agreement.


                                      20
<PAGE>
 
          10.  Notices.  In all dealings hereunder, you shall act on behalf of
               -------                                                        
each of the Underwriters, and the parties hereto shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by you.

          All statements, requests, notices and agreements hereunder shall be in
writing, and (i) if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to you in care of Goldman, Sachs & Co., 85 Broad
Street, New York, New York 10004, Attention: Registration Department; (ii) if to
the Guarantor shall be delivered or sent by mail, telex or facsimile
transmission to the Guarantor in care of Houston Industries Incorporated, 1111
Louisiana, Houston, Texas 77002, Attention, Assistant Treasurer; and (iii) if to
the Trust shall be delivered or sent by mail, telex or facsimile transmission to
the Trust, 200 West 9th Street Plaza, Box 2105, Wilmington, Delaware 19899. Any
such statements, requests, notices or agreements shall take effect upon receipt
thereof.

          11.  Successors.  This Agreement shall inure to the benefit of and be
               ----------                                                      
binding upon the several Underwriters, the Guarantor and the Trust and their
respective successors and the directors, trustees, officers and controlling
persons referred to in Section 6 of this Agreement. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person
other than the persons mentioned in the preceding sentence any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained; this Agreement and all conditions and provisions
hereof being intended to be, and being, for the sole and exclusive benefit of
such persons and for the benefit of no other person; except that the
representations, warranties, covenants, agreements and indemnities of the
Guarantor and the Trust contained in this Agreement shall also be for the
benefit of the person or persons, if any, who control any Underwriter within the
meaning of the Act or the Exchange Act, and the representations, warranties,
covenants, agreements and indemnities of the several Underwriters shall also be
for the benefit of each Trustee, each director of the Guarantor, each person who
has signed the Registration Statement and the person or persons, if any, who
control the Guarantor and the Trust within the meaning of the Act.

          12.  Applicable Law.  This Agreement shall be governed by and
               --------------                                          
construed in accordance with the laws of the State of New York.

          13.  Counterparts.  This Agreement may be executed by any one or more
               ------------                                                    
of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such respective counterparts shall together
constitute one and the same instrument.


                                      21
<PAGE>
 
          If the foregoing is in accordance with your understanding, please sign
and return to us seven counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement between each of the Underwriters and
the Guarantor and the Trust. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Guarantor and the Trust for examination upon request, but
without warranty on your part as to the authority of the signers thereof.

                    Very truly yours,


                    HL&P Capital Trust ___
                    By: Houston Lighting & Power Company, as Depositor



                    By:__________________________________________________
                       Name:
                       Title:


                    Houston Lighting & Power Company



                    By:__________________________________________________
                       Name:
                       Title:



Accepted as of the date hereof:
Goldman, Sachs & Co.
Merrill Lynch, Pierce, Fenner
 & Smith Incorporated



By: ___________________________
      (Goldman, Sachs & Co.)

     On behalf of each of the Underwriters

                                      22
<PAGE>
 
<TABLE>
<CAPTION>
                             SCHEDULE I
                                                                   Liquidation
                                                                    Amount of
                                                                    Securities
                                                                      to be
                    Underwriters                                    Purchased
                    ------------                                    ---------
<S>                                                               <C>
Goldman, Sachs & Co. .........................................      $
Merrill Lynch, Pierce, Fenner & Smith Incorporated............
          Total ..............................................    [____________]
 
</TABLE>



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