When Recorded, Return to: Greg R. Nielsen, Esq.
                          Snell & Wilmer
                          3100 Valley Bank Center
                          Phoenix, Arizona 85073

        CERTAIN RIGHTS OF THE LESSOR UNDER THE FACILITY LEASE AS AMENDED BY THIS
AMENDMENT  NO. 1 THERETO  HAVE BEEN  ASSIGNED  TO, AND ARE SUBJECT TO A SECURITY
INTEREST  IN  FAVOR  OF,  CHEMICAL  BANK,  AS  INDENTURE  TRUSTEE  UNDER A TRUST
INDENTURE,  MORTGAGE,  SECURITY  AGREEMENT  AND  ASSIGNMENT OF RENTS DATED AS OF
DECEMBER  15,  1986.   THIS   FACILIY LEASE  HAS  BEEN  EXECUTED  IN  SEVERAL
COUNTERPARTS. SEE SECTION 22(e) OF THIS AMENDMENT NO1 FOR INFORMATION CONCERNING
THE RIGHTS OF HOLDERS OF VARIOUS COUNTERPARTS HEREOF.

      THIS COUNTERPART IS NOT THE ORIGINAL COUNTERPART.

================================================================================

                                 FACILITY LEASE

                            Dated as of December 15, 1986

                                     between

                       THE FIRST NATIONAL BANK OF BOSTON,
                        not in its individual capacity ,a
                           but solely as Owner Trustee
                        under a Trust Agreement, dated as
                              of December 15, 1986,
                           with Chase Manhattan Realty
                              Leasing Corporation,

                                     Lessor
 
                                      and

                      PUBLIC SERVICE COMPANY OF NEW MEXICO,

                                     Lessee

================================================================================

             Sale and Leasebaaack of a 1.700000% Undivided Interest
              in Palo Verde Nuclear Generating Station Unit 1 and
                a 5.666667% Undivided Interest in Certain Common
                                   Facilities
================================================================================
6091 CHASEU1 LEASE 47:1


<PAGE>
                                TABLE OF CONTENTS

                                                                          Page
                                                                          ----

SECTION 1         Definitions............................................  1

SECTION 2         Lease of Undivided
                  Interest; Term; Personal
                  Property...............................................  1

           a      Lease of Undivided
                  Interest...............................................  1

           b      Term...................................................  1

           c      Personal Property......................................  2

           d      Description............................................  2

SECTION 3         Rent; Adjustments to
                  Rent...................................................  2

           a      Basic Rent.............................................  2

           b      Supplement Rent........................................  3

           c      Form of Payment........................................  4

           d      Adjustments to Rent....................................  4

           e      Further Adjustments....................................  5

           f      Computation of
                  Adjustments............................................  5

           g      Sufficiency of Basic
                  Rent and Supplemental
                  Rent...................................................  6

SECTION 4         Net Lease..............................................  7


                                     --i--
6091.CHASEU1.LEASE.47:1
<PAGE>
                         TABLE OF CONTENTS (Continued)
                                                                        Page
                                                                        ----

SECTION 5         Return of the Undivided
                  Interest............................................... 9

           a      Return of the Undivided
                  Interest............................................... 9

           b      Disposition Services................................... 11

SECTION 6         Warranty of the Lessor................................. 12

           a      Quiet Enjoyment........................................ 12

           b      Disclaimer of Other
                  Warranties............................................. 12

           c      Enforcement of Certain
                  Warranties............................................. 13

SECTION 7         Liens  ................................................ 13

SECTION 8         Operation and Maintenance;
                  Capital Improvements................................... 14

           a      Operation and
                  Maintenance............................................ 14

           b      Inspection............................................. 15

           c      Capital Improvements................................... 15

           d      Reports................................................ 16

           e      Title to Capital
                  Improvements........................................... 17

           f      Funding of the Cost of
                  Capital Improvements................................... 18


                                     --ii--

6091.CHASEU1.LEASE.47:1
<PAGE>
                         TABLE OF CONTENTS (Continued)
                                                                        Page
                                                                        ----

SECTION 9         Event of Loss; Deemed
                  Loss Event............................................. 20

           a      Damage or Loss......................................... 20

           b      Repair................................................. 21

           c      Payment of Casualty
                  Value.................................................. 21
 
           d      Payment of Special
                  Casualty Value......................................... 22 

           e      Requisition of Use..................................... 23

           f      Termination of
                  Obligation............................................. 23

           g      Application of Payments
                  on an Event of Loss.................................... 24

           h      Application of Payments
                  Not Relating to an Event
                  of Loss................................................ 24

           i      Other Dispositions..................................... 25

           j      Assumption of Notes;
                  Creation of Lien on
                  Undivided Interest .................................... 25

SECTION 10        Insurance.............................................. 25

           a      Required Insurance..................................... 25

           b      Permitted Insurance.................................... 27

SECTION 11        Rights to Assign or
                  Sublease............................................... 27

                                    --iii--
6091.CHASEU1.LEASE.47:1
<PAGE>
                         TABLE OF CONTENTS (Continued)
                                                                        Page
                                                                        ----

           a      Assignment or Sublease
                  by the Lessee.......................................... 27

           b      Assignment by Lessor as
                  Security for Lessor's
                  Obligations............................................ 28

SECTION 12        Lease Renewal.......................................... 28


SECTION 13        Notices for Renewal or
                  Purchase; Purchase
                  Options................................................ 29

           a      Notice, Determination of
                  Values, Appraisal
                  Procedure.............................................. 29

           b      Purchase Option at
                  Expiration of the Lease
                  Term................................................... 29

           c      Special Purchase Event................................. 30


SECTION 14        Termination for
                  Obsolescence........................................... 30

           a      Termination Notice..................................... 30

           b      Right of Lessor to
                  Retain Undivided
                  Interest upon
                  Termination............................................ 31

           c      Events on the
                  Termination Date....................................... 31

           d      Early Termination
                  Notice................................................. 32

                                     --iv--
6091.CHASEU1.LEASE.47:1
<PAGE>
                         TABLE OF CONTENTS (Continued)
                                                                        Page
                                                                        ----
           e      Events on the Early
                  Termination............................................ 32

SECTION 15        Events of Default...................................... 33

SECTION 16        Remedies............................................... 37

           a      Remedies............................................... 37

           b      No Release............................................. 42

           c      Remedies Cumulative.................................... 42

           d      Exercise of Other Rights
                  or Remedies............................................ 43

           e      Special Cure Right of
                  Lessee................................................. 43

SECTION 17        Notices................................................ 44

SECTION 18        Successors and Assigns................................. 45

SECTION 19        Right to Perform for
                  Lessee................................................. 46

SECTION 20        Additional Covenants................................... 46

SECTION 21        Lease of Real Property
                  Interest............................................... 46

SECTION 22        Amendments and
                  Miscellaneous.......................................... 46

           a      Amendments in Writing.................................. 46

           b      Survival............................................... 46

                                     --v--
6091.CHASEU1.LEASE.47:1
<PAGE>
                         TABLE OF CONTENTS (Continued)
                                                                        Page
                                                                        ----

           c      Severability of
                  Provisions............................................. 47

           d      True Lease............................................. 47

           e      Original Lease......................................... 47

           f      Governing Law.......................................... 48

           g      Headings............................................... 48

           h      Concerning the Owner Trustee........................... 48

           i      Disclosure............................................. 49

           j      Counterpart Execution.................................. 49

APPENDIX A Definitions

SCHEDULE 1 Casualty Values

SCHEDULE 2 Special Casualty Values

SCHEDULE 3 Termination Values

SCHEDULE 4 Real Property Interest Description

SCHEDULE 5 Undivided Interest Description


                                     --vi--
6091.CHASEU1.LEASE.47:1
<PAGE>


                FACILITY LEASE, dated as of December 15, 1986, between THE FIRST
NATIONAL BANK OF BOSTON, a national banking  association,  not in its individual
capacity,  but  solely as Owner  Trustee  under a Trust  Agreement,  dated as of
December 15, 1986, with Chase Manhattan Realty Leasing Corporation (the Lessor),
and PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation (the
Lessee).


                                   WITNESSETH:


                  WHEREAS,  the Lessor owns the undivided  Interest and the Real
Property Interest;

                  WHEREAS,  the Lessee  desires to lease the undivided  Interest
and the Real Property  Interest from the Lessor on the terms and  conditions set
forth herein; and

                  WHEREAS, the Lessor is willing to lease the Undivided interest
and the Real  Property  Interest to the Lessee on the terms and  conditions  set
forth herein;

                  NOW, THEREFORE,  in consideration of the premises and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                  SECTION 1. Definitions.

                  For purposes hereof,  capitalized terms used herein shall have
the  meanings  assigned to such terms in Appendix A hereto.  References  in this
Facility Lease to sections,  paragraphs and clauses are to sections,  paragraphs
and clauses in this Facility Lease unless otherwise indicated.

                SECTION 2. Lease of Undivided Interest; Term; Personal Property.

                  (a) Lease of Undivided Interest. Upon the terms and subject to
the conditions of this Facility  Lease,  the Lessor hereby leases to the Lessee,
and the Lessee hereby leases from the Lessor, the undivided Interest.

                  (b)  Term.  The term of this  Facility  Lease  shall  begin on
December 17, 1986, and shall end on the last day of the Lease Term.



6091.CHASEU1.LEASE.47:1

<PAGE>

                (c) Personal Property. It is the express intention of the Lessor
and the Lessee that title to the Undivided  Interest and every  portion  thereof
be, and hereby is, severed,  and shall be and remain severed,  from title to the
real estate  constituting  the Real  Property  Interest and the PVNGS Site.  The
Lessor  and the Lessee  intend  that the  Undivided  Interest  shall  constitute
personal property to the maximum extent permitted by Applicable Law.

                  (d)  Description.  The Real Property  Interest is described on
schedule 4 hereto. The Undivided Interest is described on Schedule 5 hereto.

                SECTION 3. Rent; Adjustments to Rent.

                  (a) Basic Rent.  The Lessee shall pay to the Lessor,  as basic
rent (herein referred to as Basic Rent) for the Undivided  Interest and the Real
Property Interest, the following amounts:

                        (i) on January 15, 1987,  an amount equal to  .02583079%
                  of the  Facility  Cost  for  each  day  from,  and  including,
                  December 17, 1986 to, but excluding, January 15, 1987;

                        (ii) on July 15,  1987 and on each  Basic  Rent  Payment
                  Date  thereafter to and including  January 15, 2015, an amount
                  equal to 4.649542% of Facility Cost: and

                        (iii) if the Lessee  shall  elect the  Renewal  Term1 on
                  July 15, 2015 and on each Basic Rent Payment flats  thereafter
                  during the  Renewal  Term,  an amount  equal to one-half of an
                  amount  determined  by dividing  the  aggregate  amount of all
                  payments of Basic Rent payable with respect to the Basic Lease
                  Term pursuant to clause (ii) of this Section 3(a) (taking into
                  account any  adjustments  pursuant to sections 3(d) and 3(e)),
                  by 56.

If an  interest  payment  on any Note  shall be due on a date other than a Basic
Rent Payment Date, the Lessee shall pay additional Basic Rent on such date equal
to such  interest  payment and such  payment of  additional  Basic Rent shall be
credited  against  the  Basic  Rent due on the  Basic  Rent  Payment  Date  next
succeeding the date that such additional Basic Rent shall have been paid.


                                       -2-

6091. CHASEUl. LEASE. 47:1


<PAGE>


                  (b)  supplemental  Rent.  The Lessee  shall pay the  following
amounts (herein referred to as supplemental Rent).

                         (i) when due or,  where  no due date is  specified,  on
                demand,  any amount  (other  than  Basic  Rent,  Casualty  Value
                Termination  Value and special  Casualty Value) which the Lessee
                assumes  the  obligation  to pay or agrees to pay to the Lessor,
                the Owner  Participant,  the indenture  Trustee,  the Collateral
                Trust Trustee or any indemnitee  under this Facility Lease,  any
                other  Transaction  Document or the Collateral  Trust indenture,
                any amount which is to be paid under section 6.9, 7.6, or 8.7 of
                the Indenture and any amount that the Lessee is required to pay,
                or  provide  for  the  payment  of,  under  Section  8.5  of the
                Indenture;

                       (ii) when due, any amount  payable  hereunder as Casualty
                Value,  Termination  Value or  special  Casualty  Value,  and an
                amount equal to any premium or  prepayment  penalty with respect
                to the Notes;

                       (iii)  on  demand  and in any  event  on the  Basic  Rent
                Payment Date next  succeeding the date such amounts shall be due
                and payable  hereunder,  to the extent  permitted by  Applicable
                Law,  interest  (computed  on the same basis as  interest on the
                Notes is  computed) at a rate per annum equal to (A) the Overdue
                interest  Rate,  on that portion of the payment of Basic Rent or
                Supplemental  Rent  distributable  pursuant to clause "first" of
                Section 5.1 or clause  "second" of Section 5.3 of the  Indenture
                (determined  prior to the  computation  of  interest  on overdue
                payments  referred  to in such  clauses)  , and (B) the  Penalty
                Rate,  on the  balance  of any such  payment  of  Basic  Rent or
                Supplemental Rent (including, in the case of both clause (i) and
                clause  (ii)  above,  but  without  limitation,  to  the  extent
                permitted by Applicable Law,  interest  payable pursuant to this
                clause (iii)) not paid when due (without regard to any period of
                grace) for any period for which the same shall be overdue.



                                       -3-

6091.CHASEU1.LEASE.47:1

<PAGE>


The Lessor  shall have all  rights,  powers and  remedies  provided  for in this
Facility  Lease,  at law, in equity or other-tie,  in the case of non-payment of
Basic Rent or supplemental Rent.

                (c) Form of Payment.  Subject to Section 11(b),  each payment of
Rent under this Facility Lease shall be made in immediately  available  funds no
later than 11:00 a.m., local time at the place of receipt, on the date each such
payment  shall be due and payable  hereunder and shall be paid either (A) in the
case of  payments  other than  Excepted  Payments,  to the Lessor at its address
determined in accordance with Section 17, or at such other address as the Lessor
may direct by notice in writing to the  Lessee,  or (B) in the case of  Excepted
Payments,  to such Person as shall be entitled to receive  such  payment at such
address as such  Person may  direct by notice in writing to the  Lessee.  If the
date on which any payment of Rent is due hereunder  shall not be a Business Day,
the  payment  otherwise  due thereon  shall be due and payable on the  preceding
Business  Day,  with the same  force and effect as if paid on the  nominal  date
provided in this Facility Lease.

                (d)  Adjustments  to  Rent.  Basic  Rent  and the  schedules  of
Casualty values,  Termination Values and Special Casualty Values attached hereto
shall be adjusted  (upward or downward) to preserve Net Economic Return if there
is any  Change  in Tax Law  other  than a change in  respect  of a minimum  tax;
provided,  however, that the aggregate amount of such downward adjustments shall
not exceed the aggregate amount of such upward  adjustments.  Adjustments  under
this  paragraph  (d) shall be (1) made not more than once a year and (2) limited
in the aggregate to the extent necessary such that the aggregate amount of Basic
Rent  theretofore  and  thereafter  payable  throughout  the  Basic  Lease  Term
(computed for such purposes only without regard to any  adjustments  theretofore
made  pursuant to Section  3(e)) shall not exceed by more than 4% the  aggregate
amount of Basic Rent which would have been  payable  throughout  the Basic Lease
Term (calculated as aforesaid) had no such adjustments been made.

                The   provisions   of  this   Section   3(d)  to  the   contrary
notwithstanding,  if any  Change in Tax Law is, or  becomes,  applicable  to the
transaction  contemplated  by this Facility Lease in consequence of the transfer



                                       -4-

6091. CHASEUl LEASE .47:1


<PAGE>

of the Owner  Participant's  beneficial  interest  in the Trust  (whether or not
permitted by section 15 of the Participation Agreement) or if such change in Tax
Law would not have been  applicable  to such  transaction  had no such  transfer
occurred,  then no  adjustment  shall be, or be required to be, made pursuant to
this Section 3.(d) ; provided,  however,  that this sentence  shall not apply to
the initial transfer of the owner Participant's beneficial interest in the Trust
to one of its Affiliates.

                (e)  Further  Adjustments.  Basic  Rent  and  the  schedules  of
Casualty Values,  Special Casualty Values and Termination Values attached hereto
shall be  appropriately  adjusted  (upward or downward) to preserve Net Economic
Return  if  there  is (i)  any  Supplemental  Financing,  (ii)  the  payment  of
Transaction Expenses in an amount which is other than 1.5% of the Purchase Price
or (iii) any other change (other than a change in items 4, 5, a (as to the basis
for amortization of Transaction  Expenses),  14, 15 and 17, but without limiting
the effect of Section 3(d) hereof) in the Pricing Assumptions.

                (f) Computation of Adjustments.  Upon the occurrence of an event
requiring an adjustment to Basic Rent payable pursuant to clause (ii) of Section
3(a),  and the  schedules  of  Casualty  Values,  Special  Casualty  Values  and
Termination  Values  attached  hereto,  pursuant to paragraph (d) or (e) of this
Section 3, the owner  Participant  shall  make the  necessary  computations  and
furnish to the  Lessee,  the Loan  Participant,  the  Lessor  and the  indenture
Trustee the revised amounts and percentages, which amounts and percentages shall
be implemented  upon delivery thereof and effective as of the date of occurrence
of the event requiring such adjustment (taking into account any payment of Basic
Rent already made) and shall remain  effective  until changed in  consequence of
any verification procedure set forth below. Such revised amounts and percentages
shall be subject to verification  (at the Lessee's  request within 90 days after
the Owner  Participant  furnishes  the revised  amounts to the Lessee,  the Loan
Participant,  the Lessor and the Indenture  Trustee) by the Owner  Participant's
nationally  recognized  independent  public  accountants,  in  which  case  such
accountants  shall either (i) confirm to the Lessee in writing that such revised
amounts were computed or' a basis consistent with the original calculations,  or
(ii) compute and provide to the Lessee, the Lessor,  the Owner Participant,  the



                                       -5-
6091.CHASEU1.LEASE.47:1

<PAGE>

Loan Participant and the Indenture Trustee revised amounts and percentages which
are on such a basis.  The revised  amounts and  percentages,  as so confirmed or
computed if applicable,  shall be conclusive and.  binding upon the Lessee,  the
Lessor, the Owner  Participant,  the Loan Participant and the Indenture Trustee.
The cost of any such  verification  shall be  borne by the  Lessee  unless  such
accountants  shall require an adjustment to the revised amounts arid percentages
originally provided by the owner Participant which differs by more than 10% from
the adjustment so provided, in which case such cost shall be divided and paid by
the Lessee and the Owner Participant in equal amounts.  Each adjustment pursuant
to paragraph (d) or (e) of this Section 3 may, but need not, be evidenced by the
execution  and  delivery  of a  supplement  to this  Facility  Lease in form and
substance  satisfactory  to the Lessee and the owner  Participant,  but shall be
effective as provided herein without regard to the date on which such supplement
to this Facility Lease is so executed and delivered.  Any adjustment referred to
in this  Section 3 shall  satisfy the  provisions  of Revenue  Procedure  75-21,
Revenue Procedure 75-28 and any other applicable  statute,  regulation,  revenue
procedure,  revenue  ruling or  technical  information  release  relating to the
subject matter of Revenue  Procedure 75-21 or Revenue  procedure 75-28,  but, in
the  case of any  upward  adjustment,  shall  be no  less  than  the  adjustment
otherwise required pursuant to this Section 3.

                  (g)   Sufficiency  of  Basic  Rant  and   supplemental   Rent.
Notwithstanding   any  other  provision  of  this  Facility  Lease,   any  other
Transaction  Document or any  Financing  Document,  (i) the amount of Basic Rent
payable on each Basic Rent Payment Date shall be at least equal to the aggregate
amount of principal,  premium, if any, and accrued interest payable on all Notes
then outstanding and (ii) each payment of Casualty Value, Special Casualty Value
and  Termination  Value  shall in no event  be.  less  (when  added to all other
amounts,  other than Excepted Payments,  required to be paid by the Lessee under
this  Facility  Lease in  respect  of any Event of Loss or Deemed  Loss Event or
termination of this Facility Lease) than an amount sufficient, as of the date of
payment, to pay in full all principal of, and premium, if any, and interest then
due on all Notes  outstanding  on and as of such date of  payment  (taking  into
account any assumption of the Notes by the Lessee).


                                       -6-

6091 CHASEUl. LEASE. 47:1


<PAGE>


                SECTION 4. Net Lease.

                  This Facility  Lease (as  originally  executed and as -a tied,
supplemented  and  amended  from time to time) is a net  lease,  and the  Lessee
hereby  acknowledges  and agrees that the  Lessee's  obligation  to pay all Rent
hereunder,  and the rights of the Lessor in and to such Rent, shall be absolute,
unconditional  and irrevocable and shall not be affected by any circumstances of
any  character,  including,  without  limitation,  (i) any  set-off,  abatement,
counterclaim,  suspension,  recoupment,  reduction, rescission, defense or other
right or claim  which  the  Lessee  may  have  against  the  Lessor,  the  Owner
Participant,  the Indenture  Trustee,  the Collateral  Trust  Trustee,  the Loan
Participant,   the  Operating  Agent,  any  ANPP  Participant,   any  vendor  or
manufacturer  of any.  equipment or assets  included in the Undivided  Interest,
Unit 1, any Capital  Improvement,  the Real Property  Interest,  the PVNGS Site,
PVNGS,  or any  part  of any  thereof,  or  any  other  Person  for  any  reason
whatsoever,  (ii)  any  defect  in or  failure  of the  title,  merchantability,
condition, design, compliance with specifications,  operation or fitness for use
of all or any part of the Undivided Interest,  Unit 1, any Capital  Improvement,
the Real  Property  Interest,  the PVNGS Site or PVNGS,  (iii) any damage to, or
removal,   abandonment,    decommissioning,    shutdown,   salvage,   scrapping,
requisition,  taking,  loss,  theft  or  destruction  of all or any  part of the
Undivided Interest, Unit 1, any Capital Improvement, the Real Property Interest,
the PVNGS Site or PVNGS; or any  interference,  interruption or cessation in the
use or possession  thereof or of the Undivided  Interest by the Lessee or by any
other Person  (including,  but without  limitation,  the Operating  Agent or any
other ANPF Participant) for any reason whatsoever or of whatever duration,  (iv)
any  restriction,  prevention or curtailment of or interference  with any use of
all or any part of the Undivided Interest, Unit 1, any Capital Improvement,  the
Real Property Interest, the PVNGS Site or PVNGS, (V) any insolvency, bankruptcy,
reorganization or similar  proceeding by or against the Lessee,  the Lessor, the
Owner Participant, the Indenture Trustee, the Collateral Trust Trustee, the Loan
Participant,  the  Operating  Agent,  any other  ANPP  Participant  or any other
Person,  (vi) the invalidity,  illegality or  unenforceability  of this Facility
Lease,  any  other  Transaction  Document,  any  Financing  Document,  the  ANPP
Participation Agreement or any other instrument referred to herein or therein or



                                       -7-

6091.CHASEU1.LEASE.47:1

<PAGE>

any other infirmity herein or therein or any lack of right, power or authority';
of the Lessor,  the Lessee, the Owner  Participant,  the Indenture Trustee,  the
Collateral Trust Trustee, the Loan Participant or any other Person to enter into
this Facility Lease, any other Transaction  Document or any Financing  Document,
or any  doctrine  of  force  majeure,  impossibility,  frustration,  failure  of
consideration,  or any similar  legal or  equitable  doctrine  that the Lessee's
obligation  to pay Rent is excused  because the Lessee has not  received or will
not receive the benefit for which the Lessee  bargained,  it being the intent of
the Lessee to assume all risks from all causes  whatsoever  that the Lessee does
not  receive  such  benefit,  (vii) the  breach or failure  of any  warranty  or
representation made in this Facility Lease or any other Transaction  Document or
any  Financing  Document by the Lessor,  the Owner  Participant,  the  Indenture
Trustee,  the!  Collateral  Trust  Trustee,  the Loan  Participant  or any other
Person,  (viii) any  amendment or other change of, or any  assignment  of rights
under,  this  Facility  Lease,  any other  Transaction  Document,  any Financing
Document or any ANPP Project Agreement,  or any waiver, action or inaction under
or in  respect of this  Facility  Lease,  any other  Transaction  Document,  any
Financing  Document  or  any  ANPP  Project   Agreement,   or  any  exercise  or
non-exercise  of any  right or  remedy  under  this  Facility  Lease,  any other
Transaction  Document,  any  Financing  Document or any ANPP Project  Agreement,
including,  without limitation,  the exercise of any foreclosure or other remedy
under the Indenture,  the Collateral  Trust Indenture or this Facility Lease, or
the sale of Unit 1, any Capital  Improvement,  the Undivided Interest,  the Real
Property Interest,  the PVNGS Site or PVNGS, or any part thereof or any interest
therein,  or (ix) any other circumstance or happening  whatsoever whether or not
similar to any of the foregoing.  The Lessee  acknowledges that by conveying the
leasehold estate created by this Facility Lease to the Lessee and by putting the
Lessee in possession of the Undivided  Interest and the Real Property  Interest,
the Lessor has performed all of the Lessor's obligations under and in respect of
this  Facility  Lease,  except the covenant  under  Section 6(a) hereof that the
Lessor and Persons  acting for the Lessor will not  interfere  with the Lessee's
quiet enjoyment of the Undivided  Interest and the Real Property  Interest.  The
Lessee hereby  waives,  to the extent  permitted by Applicable  Law, any and all
rights  which it may now have or which at any time  hereafter  may be  conferred



                                       -8-

6091.CHASEU1.LEASE.47:1

<PAGE>

upon it, by statute or otherwise,  to terminate,  cancel, quit or surrender this
Facility Lease or to effect or claim any diminution or reduction of Rent payable
by the Lessee hereunder,  including without limitation the provisions of Arizona
Revised  Statutes  section  32-343,  except in accordance with the express terms
hereof. If for any reason whatsoever this Facility Lease. shall be terminated in
whole  or in part by  operation  of law or  otherwise,  except  as  specifically
provided  herein,  the Lessee  nonetheless  agrees to pay to the Lessor or other
Person  entitled  thereto an amount equal to each  installment of Basic Rent and
all Supplemental Rent at the time such payment would have become due and payable
in accordance  with the terms hereof had this Facility Lease not been terminated
in whole or in part. Each payment of Rent made by the Lessee  hereunder shall be
final and the Lessee shall not seek or have any right to recover all or any part
of such payment  from the Lessor or any other Person for any reason  whatsoever.
All  covenants.,  agreements  and  undertakings  of the Lessee  herein  shall be
performed  at its cost,  expense and risk  unless  expressly  otherwise  stated.
Nothing in this  Section 4 shall be construed as a guaranty by the Lessee of any
residual  value in the  Undivided  Interest or as a guaranty  of the Notes.  Any
provisions  of Section  7(b) (2) or 9(c) of the  Participation  Agreement to the
contrary  notwithstanding,  if the Lessee shall fail to make any payment of Rent
to any Person when and as due (taking into account  applicable  grace  periods),
such  Person  shall have the right at all times,  to the  exclusion  of the ANPP
Participants,  to demand,  collect, sue for, enforce obligations relating to and
otherwise obtain all amounts due in respect of such Rent.

                SECTION 5. Return of the Undivided Interest.

                  (a) Return of the Undivided Interest. On the Lease Termination
Date, the Lessee will (1) surrender possession of the Undivided Interest and the
Real Property  Interest to the Lessor (or to a Person specified by the Lessor to
the  Lessee in  writing  not less than 6 months  prior to the Lease  Termination
Date) (i) with full  rights as a  Transferee"  and the sole  "Participant"  with
respect to the  Undivided  Interest and the Real  Property  Interest  within the
meaning of Section 15.10 of the ANPP Participation  Agreement and (ii) without a
Price-Anderson Event (as hereinafter defined) having arisen prior to, or arising
upon,  or  immediately  following,  such  surrender  and  (2)  furnish  to  the


                                       -9-

6091.CHASEUl.LEASE.47:l


<PAGE>


Lessor:  (i)  copies  certified  by a  senior  officer  of  the  Lessee  of  all
Governmental Action necessary to effect such surrender  (including,  but without
limitation, appropriate amendments to the License permitting the Lessor (without
the Lessor being  required to change its business) or such Person to possess the
Undivided  Interest and the Real Property Interest with or without the continued
involvement of the Lessee as Agent),  which Governmental Action shall be in full
force and  effect;  and (ii) an  opinion  of  counsel  (which  may be nudge Rose
Guthrie Alexander & Ferdon,  Snell & Wilmer or another counsel  experienced with
NRC and other nuclear matters reasonably  satisfactory to the Owner Participant)
to the effect  that (A) the  Lessee has  obtained  all  Governmental  Action and
action under the ANPP Participation Agreement necessary to effect such surrender
by the  Lessee  and  receipt  of  possession  by the Lessor (or by the Person so
specified by the Lessor) and (B) such  Governmental  Action is in full force and
effect. At the time of such return the Lessee shall pay or have paid all amounts
due and  payable,  or to become due and  payable,  by it as an ANPP  Participant
under each and every ANPP Project Agreement  allocable or chargeable (whether or
not  payable  during or after the Lease Term) to the  Undivided  Interest or the
Real Property Interest in respect of any period or periods ending on or prior to
the Lease  Termination  Date  (including,  but without  limitation,  all amounts
payable with respect to any and all discretionary Capital Improvements to Unit 1
or the PVNGS Site approved or authorized  (without the  concurrence of the owner
Participant)  within  the 3-year  period  preceding  the end of the Lease  Term,
whether or not  implementation  thereof  has been  completed  on or prior to the
Lease  Termination  Date),  and the  Undivided  Interest  and the Real  Property
Interest  shall be free and  clear of all  Liens  (other  than  Permitted  Liens
described in clauses (i), (v) (other than those arising by, through or under the
Lessee  alone) , (vi) , (vii) (other than as  aforesaid),  (viii) (other than as
aforesaid),  (ix) and (x) of the  definition  of such term) and in the condition
and state of repair  required by Section 8. In the event that on or prior to the
Lease  Termination  Date  there  shall  have  occurred  a  default  by any  ANPP
Participant (other than the Lessee) under the ANPP  Participation  Agreement and
such default shall not have been cured by the defaulting ANPP Participant,  then
(i) the Lessee  agrees to  indemnify  and hold the Lessor  (and each  successor,
assign and transferee  thereof)  harmless against any and all obligations  under



                                      -10-

6091.CHASEU1.LEASE.47:1

<PAGE>

the ANPP  Participation  Agreement  with  respect to  contributions  or payments
required to be made thereby as a result of such default and (ii) the Lessor (and
each  successor,  assign and transfered  thereof) agrees to reimburse the Lessee
for all amounts paid by the Lessee  pursuant to the foregoing  clause (i) to the
extent,  but only to the extent,  that the Lessor (or such successor,  assign or
transferee)  shall  have  actually  received  proceeds  from  the  sale  of  the
Generation  Entitlement  share of the defaulting ANPP Participant as a result of
the payment made by the Lessee pursuant to the foregoing  clause (i) and, to the
extent the Lessor (or such successor,  assign or transferee) shall have received
such proceeds, the amount to be reimbursed to the Lessee pursuant to this clause
(ii) shall  include  interest  at the Prime Rate from the date of any payment by
the  Lessee   pursuant  to  the  foregoing   clause  (i)  through  the  date  of
reimbursement  of such amount pursuant to this clause (ii). For purposes of this
Section  5(a)  a  "Price-Anderson  Event"  shall  mean  any  change  in,  or new
interpretation by Governmental Authority having jurisdiction of, Applicable Law,
including without limitation the  Price-Anderson  Act, the Atomic Energy Act and
the  regulations  of the NRC, in each case as in effect on the Closing Date, but
only if such  change  is  specified  in  clauses  (2)  (i)  through  (iv) of the
definition  of "Deemed  Loss Event"  (other than a change  which is specified in
clause (A) of the definition of "Acceptable Change).

                  (b)  Disposition  Services.  The Lessee agrees that if it does
not  exercise its option to renew or purchase as provided in Sections 12 and 13,
respectively,  then during the last  thirty-six  months of the Lease  Term,  the
Lessee will fully  cooperate  with the Lessor in  connection  with the  Lessor's
efforts to lease or  dispose of the  Undivided  Interest  and the Real  Property
Interest, including using the Lessee's reasonable efforts to lease or dispose of
the  Undivided  Interest and the Real  Property  Interest.  The Lessor agrees to
reimburse  the Lessee for  reasonable  out-of-pocket  costs and  expenses of the
Lessee  incurred  at the  request  of the  Lessor  or the Owner  Participant  in
connection with such cooperation and such efforts.








                                      -11-

6091.CHASEU1.LEASE.47:1

<PAGE>


                 SECTION 6. Warranty of the Lessor.

                  (a) Quiet Enjoyment.  The Lessor warrants that until the Lease
Termination  Date,  so long as no Event of Default  shall have  occurred  and be
continuing,  the Lessee's use and  possession of Unit 1, including the Undivided
Interest,  shall not be  interrupted  by the Lessor or any Person  claiming  by,
through or under the Lessor, and, their respective successors and assigns.

                  (b) Disclaimer. of Other Warranties. The warranty set forth in
Section  6(a) is in lieu of all  other  warranties  of the  Lessor  or the Owner
Participant,  whether  written,  oral or implied,  with respect to this Facility
Lease, Unit 1, any Capital Improvement,  the undivided Interest, PVNGS, the Real
Property  Interest or the PVNGS Site. As among the Owner  Participant,  the Loan
Participant, the Indenture Trustee, the Collateral Trust Trustee, the Lessor and
the Lessee,  execution by the Lessee of this Facility  Lease shall be conclusive
proof of the  compliance  of Unit 1 (including  any Capital  Improvement)  , the
Undivided  Intere5t and the Real Property Interest with all requirements of this
Facility  Lease,  and the Lessee  acknowledges  and agrees  that (i) NEITHER THE
LESSOR NOR THE OWNER  PARTICIPANT IS A  MANUFACTURER  OR A DEALER IN PROPERTY OF
SUCH KIND AND (ii) THE LESSOR LEASES AND THE LESSEE TAKES THE UNDIVIDED INTEREST
AND THE REAL PROPERTY INTEREST, AND SHALL TAKE EACH CAPITAL INPROVEENT,  AND ANY
PART  THEREOF,  AS IS AND  WHERE  IS,  and  neither  the  Lessor  nor the  Owner
Participant  shall  be  deemed  to have  made,  and  THE  LESSOR  AND THE  OWNER
PARTICIPANT EACH HERESY DISCLAIMS, ANY OTHER REPRESENTATION OR WARRANTY,  EITHER
EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER,  INCLUDING, WITHOUT LIMITATION,
THE  DESIGN OR  CONDITION  OF UNIT 1, ANY  CAPITAL  IMPROVEMENT,  THE  UNDIVIDED
INTEREST,  THE REAL  PROPERTY  INTEREST,  THE PVNGS  SITE OR PVNGS,  OR ANY PART
THEREOF,  THE MERCHANTABILITY  THEREOF OR THE FITNESS THEREOF FOR ANY PARTICULAR
PURPOSE,  TITLE TO UNIT 1, ANY CAPITAL IMPROVEMENT,  THE UNDIVIDED INTEREST, THE
REAL  PROPERTY  INTEREST,  THE PVNGS  SITE OR FINGS,  OR ANY PART  THEREOF,  THE
QUALITY  OF THE  MATERIAL  OR  WORKMANSHIP  THEREOF  OR  CONFORMITY  THEREOF  TO
SPECIFICATIONS,  FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT OR THE ABSENCE OF
ANY LATENT OR OTHER DEFECTS,  WHETHER OR NOT DISCOVERABLE,  NOR SHALL THE LESSOR
OR THE OWNER  PARTICIPANT  BE LIABLE FOR  INCIDENTAL  OR  CONSEQUENTIAL  DAMAGES
(INCLUDING  LIABILITY IN TORT,  STRICT OR  OTHERWISE) , it being agreed that all


                                      -12-

6091. CHASEUl LEASE. 47:1


<PAGE>

such risks, as among the Owner Participant, the Loan Participant, the Collateral
Trust Trustee, the Indenture Trustee, the Lessor and the Lessee, are to be borne
by the Lessee.  The provisions of this Section 6(b) have been  negotiated,  and,
except to the extent otherwise expressly provided in Section 6(a), the foregoing
provisions  are  intended  to  be a  complete  exclusion  and  negation  of  any
representations  or warranties by the Lessor,  the Owner  Participant,  the Loan
Participant,  the Collateral Trust Trustee or the Indenture Trustee,  express or
implied,  with  respect to Unit 1  (including  any  Capital  Improvement)  , the
Undivided Interest, PVNGS, the Real Property Interest or the PVNGS Site that may
arise pursuant to any law now or hereafter in effect, or otherwise.

                  (C) Enforcement of Certain  Warranties.  The Lessor authorizes
the Lessee (directly or through agents,  including the Operating  Agent), at the
Lessee's expense, to assert for the Lessor's account, during the Lease Term, all
of the  Lessor's  rights (if any) under any  applicable  warranty  and any other
claims (under this Facility  Lease or any Purchase  Document) that the Lessee or
the Lessor may have  against any vendor or  manufacturer  with respect to Unit 1
(including any Capital  Improvement) or the Undivided  Interest,  and the Lessor
agrees to cooperate,  at the Lessee's expense, with the Lessee and the Operating
Agent in asserting such rights. Any amount received (without regard to any right
of setoff or other similar right of any Person against the Lessee) by the Lessee
as  payment  under  any such  warranty  or other  claim  against  any  vendor or
manufacturer  (or, if such warranty or claim  relates to the Undivided  Interest
and the  Retained  Assets,  the portion of such  received  amount  appropriately
allocable  to the  Undivided  Interest)  shall be  applied  in  accordance  with
Sections 9(g), (h) and (i).

                 SECTION 7. Liens.

                  The Lessee will not  directly  or  indirectly  create,  incur,
assume or permit to exist any Lien on or with respect to the Undivided Interest,
the Real Property  Interest,  the Lessor's  title thereto or any interest of the
Lessor or Lessee therein (and the Lessee will promptly, at its own expense, take
such  action  as may be  necessary  duly to  discharge  any  such  Lien)  except
Permitted Liens.



                                      -13-

6091.CHASEU1.LEASE.47:1

<PAGE>


                  SECTION 8. operation and Maintenance; capital Improvements

                  (a) Operation and Maintenance.  The Lessee agrees that it will
exercise its rights, powers,  elections and options as an ANPP Participant under
the ANPP Project  Agreements to cause the Operating Agent to (A) maintain Unit 1
in such condition  that Unit 1 will have the capacity and functional  ability to
perform,  on a continuing  basis  (ordinary wear and tear  excepted),  in normal
commercial operation, the functions and substantially at the ratings at which it
is, from time to time, rated, (B) operate,  service,  maintain and repair Unit 1
and replace all  necessary  or useful parts and  components  thereof so that its
condition and operating  efficiency  will be maintained and preserved,  ordinary
wear and tear excepted,  in all material respects in accordance with (1) prudent
utility  practice  for items of  similar  size and  nature,  (2) such  operating
standards as shall be required to take  advantage  of and enforce all  available
warranties and (3) the terms and conditions of all insurance policies maintained
in  effect at any time with  respect  thereto,  (C) use,  possess,  operate  and
maintain Unit 1 in compliance with all material applicable  Governmental Actions
(including  the  License)  affecting  PVNGS  or Unit 1 or the  use,  possession,
operation and  maintenance  thereof and (D) otherwise act in accordance with the
standards set forth in the ANPP Participation  Agreement. The Lessee will comply
with all its  obligations  under  Applicable Law affecting Unit 1, the Undivided
Interest,  PVNGS,  the Real Property  Interest and the PVNGS Site,  and the use,
operation and maintenance  thereof. The Lessee agrees to (i) exercise its rights
under the ANPP Participation Agreement so that there will always be an operating
Agent under the ANPP Participation Agreement and (ii) maintain in full force and
effect a license from the NRC adequate to possess the Undivided Interest and the
Real  Property  Interest  under  the  circumstances  contemplated  by  the  ANPP
participation  Agreement.  The Lessee will keep and  maintain  proper  books and
records  (i)  relating  to  all.   Operating  Funds  (as  defined  in  the  ANPP
Participation  Agreement)  provided by it to the Operating  Agent under the ANPP
Participation  Agreement and (ii) upon receipt of the requisite information from
the Operating Agent, relating' to the application of such operating Funds to the
operation  and  maintenance  of Unit 1 and  the  acquisition,  construction  and
installation of capital Improvements, all in accordance with the Uniform System


                                      -14-

6091.CHASEU1.LEASE.47:1

<PAGE>


of  Accounts.  The Lessor  shall not be obliged in any way to  maintain,  alter,
repair,  rebuild or  replace  Unit 1, any  capital  Improvement,  the  Undivided
Interest or the Real  Property  Interest,  or any part  thereof,  or,  except as
provided  in  Section  8(f),  to  pay  the  cost  of   alteration,   rebuilding,
replacement,  repair  or  maintenance  of Unit l any  capital  Improvement,  the
Undivided Interest or the Real Property Interest,  or any part thereof,  and the
Lessee  expressly  waives the right to perform any such action at the expense of
the lessor pursuant to any law at any time in effect.

                  (b) inspection. The Lessor and the Owner Participant and their
respective  authorized  representatives  shall have the right to  inspect  PVNGS
(subject,  in each event, to the ANPP Participation  Agreement,  Applicable Law,
applicable  confidentiality  undertakings  and  procedures  established  by  the
Operating  Agent) at their  expense.  The Lessor and the owner  Participant  and
their respective authorized  representatives shall have the right to inspect, at
their expense,  the. books and records of the Lessee relating to PVNGS, and make
copies of and  extracts  therefrom  (subject  as  aforesaid)  and may,  at their
expense, discuss the Lessee's affairs,  finances and accounts with its executive
officers and its independent  public  accountants  (and by this  provision,  the
Lessee  authorizes such  accountants,  in the presence of the Lessee, to discuss
with the  Lessor  and the  Owner  Participant  and their  respective  authorized
representatives the affairs,  finances and accounts of the Lessee),  all at such
times and as often as may be reasonably requested. None of the Lessor, the owner
Participant,  the Indenture  Trustee and the Collateral Trust Trustee shall have
any duty  whatsoever  to make any  inspection  or  inquiry  referred  to in this
Section 8(b) and shall not incur any  liability or  obligation  by reason of not
making any such inspection or inquiry.

                  (a) Capital Improvements. If and to the extent required by the
ANPP Participation  Agreement,  the Lessee shall, at its sole expense,  promptly
participate  in the making of any  Capital  Improvement  to Unit 1 or the Common
Facilities. Of the net proceeds of (i) any sale or other disposition of property
removed from Unit 1 or the Common Facilities  receivable  (without regard to any
right of setoff or other similar right of any Person  against the Lessee) by, or
credited to the account of the Lessee in accordance with the ANPP  Participation



                                      -15-

6091. CHASEUl. LEASE. 47:1


<PAGE>

Agreement  and (ii) any insurance  proceeds  receivable  (without  regard to any
right of setoff or other similar right at any Person against the Lessee) for the
account of the Lessor or the Lessee in respect of the loss or destruction of, or
damage or casualty to, any such  property,  lo.6o6666% in the case of Unit 1, or
5.555555%  in the case off Common  Facilities,  of either such  amount  shall be
applied  as  provided  in  section  9(g),  (h) or (i),  as the  case  may be.  A
1.700000%, in the case of Unit 1, or .566667%, in the case of Common Facilities,
undivided  interest in property  at any time  removed  from Unit 1 or the Common
Facilities  shall  remain the property of the Lessor,  no matter where  located,
until such time as a Capital  improvement  constituting  a  replacement  of such
property  shall have been  installed in Unit 1 or the Common  Facilities or such
removed  property has been disposed of by the Operating Agent in accordance with
the ANPP Participation  Agreement.  Simultaneously  with such disposition by the
Operating Agent,  title to a 1.700000%,  in the case of Unit 1, or .566667%,  in
the case of Common Facilities,  undivided interest in the removed property shall
vest in the Person  designated by the operating Agent, free and clear of any and
all claims or rights of the  Lessor.  Unless  subparagraph  (3) of Section  8(e)
shall be applicable,  upon the incorporation of a Capital  Improvement in Unit 1
or the Common Facilities,  without further act, (i) title to a 1.700000%, in the
case of Unit  1, or  .566667%,  in the  case  of  Common  Facilities,  undivided
interest  in such  Capital  Improvement  shall  vest in the Lessor and (ii) such
applicable  undivided interest in such Capital  Improvement shall become subject
to this Facility  Lease and be deemed to be part of the  Undivided  Interest for
all  purposes  hereof to the same  extent  that the Lessor had a like  undivided
interest in the property  originally  incorporated or installed in Unit 1 or the
Common Facilities. The Lessee warrants and agrees that the Lessor's 1.700000% or
 .566667%,  as the case may be,  undivided  interest in all Capital  Improvements
shall be free and clear of all  Liens.,  except  Permitted  Liens other than the
type specified in clauses (ii), (iii) and (xii) of the definition thereof.

                (d) Reports. To the extent permissible, the Lessee shall prepare
and file in timely fashion,  or, where the Lessor shall be required to file, the
Lessee shall prepare and deliver to the Lessor within a reasonable time prior to
the date for filing, any reports with. respect to Unit 1, the Undivided Interest



                                      -16-

609l.CHASEUl.LEASE.47: 1


<PAGE>

or the Real Property  Interest or the condition or operation  thereof that shall
be requited to be filed with any  governmental  or regulatory  authority.  On or
before  March 1 of each  year  (commencing  on March 1,  1988)  and on the Lease
Termination  Date, the Lessee shall furnish the Lessor and the Owner Participant
with a report stating the total cost of all Capital  Improvements and describing
separately and in reasonable  detail each Capital  Improvement (or related group
of Capital Improvements) made during the period from the date hereof to December
31,  1987 in the case of the first such report or during the period from the end
of the period  covered by the last  previous  report to the December 31 prior to
such report in the case of subsequent reports. On or before March 1 in each year
(commencing  March 1, 1987) and at such  other  times as the Lessor or the Owner
Participant  shall reasonably  request in writing (which request shall provide a
reasonable period for response), the Lessee will report in writing to the Lessor
with respect to (i) the most recent annual capital  expenditure budget submitted
by the Operating Agent to the Lessee in accordance  with the ANPP  Participation
Agreement  and (ii) the then  plans (if any)  which the  Lessee may have for the
financing of the same under Section 8(f).

                  (e) Title to Capital  Improvements.  Title to a 1.700000%,  in
the case of Unit 1, or  .566667%,  in the case of Common  Facilities,  undivided
interest in each Capital Improvement to Unit 1 or the Common Facilities,  as the
case may be, shall vest as follows:

                (1)  In the  case  of  each  Nonseverable  Capital  Improvement,
        whether or not the Lessor shall have financed or provided  financing (in
        whole  or  in  part)  for  such  undivided   interest  in  such  Capital
        Improvement  by  an  Additional  Equity  Investment  or  a  Supplemental
        Financing, or both, effective on the date such Capital Improvement shall
        have been incorporated or installed in Unit 1 or the Common  Facilities,
        as the case may be, the Lessor shall, without further act, acquire title
        to such undivided interest in such Capital Improvement:

                  (2) in the case of each Severable Capital Improvement,  if the
        Lessor shall have  financed (by an  Additional  Equity  Investment  or a
        Supplemental  Financing,  or both) 1.700000%,  in the case of Unit 1, or
        .566667%, in the case of Common Facilities, of the cost of such


                                      -17-

6091.CHASEUl.LEASE.47:l


<PAGE>


         capital  improvement  the Lessor shall,  without further act,  acquire
         title to such undivided interest in such capital Improvement; and

                (3) in the case of each Severable  capital  Improvement,  if the
        Lessor shall not have financed (by an Additional  Equity investment or a
        supplemental  Financing,  or both) 1.700000%,  in the case of Unit 1, or
        .566667%, in the case of Common Facilities,  of the cost of such capital
        improvement, the Lessee shall retain title to such undivided interest in
        such capital Improvement.

                Immediately upon title to such 1.700000%, in the case of Unit 1,
or .566667%, in the case of Common Facilities, undivided interest in any capital
Improvement  vesting in the Lessor pursuant to subparagraph (1) or sub-paragraph
(2) of this Section 8(e),  such undivided  interest in such Capital  Improvement
shall,  without further act, become subject to this Facility Lease and be deemed
part of the undivided Interest for all purposes hereof.

                (f) Funding at the Cost of capital Improvements.  Before placing
in service any Capital  Improvement to Unit 1 or the Common  facilities the cost
of  which  exceeds  $100,000,000  in  respect  of  the  interests  of  all  ANPP
Participants,  the  Lessee  shall  give the  Lessor  and the  Owner  Participant
reasonable advance notice thereof.  The Owner Participant shall have the option,
in its sole discretion,  of financing through the Lessor 1.700000%,  in the case
of Unit 1, or  .566667%,  in the case of Common  Facilities,  of the cost of any
such Capital  Improvement,  or any other  Capital  Improvement  presented to the
Owner  Participant  for  financing,  including or not including the making of an
investment by the owner  Participant (an Additional  Equity  Investment) and the
issuance of one or more Additional  Notes, all on terms acceptable to the Lessee
and the Owner Participant. If the Owner Participant does not finance, or arrange
the financing of, 1.700000%,  in the case or Unit 1, or .566667%, in the case of
Common Facilities, of the cost of such Capital Improvement, the Lessee may cause
the Lessor to issue, if and to the extent permitted by the Indenture,  to one or
more  Persons  (other  than any Person  affiliated  with the  Lessee  within the
meaning of Section 318 of the Code) one or more Additional  Notes and to use the



                                      -18-
                                        
6091.CHASEUl.LEASE.47: 1


<PAGE>

                  proceeds thereof to pay the applicable  percentage of the cost
of such Capital Improvement, subject to satisfaction of the following conditions

                      (i) there shall be no more than one supplemental Financing
                it' any calendar year;

                      (ii) the sum of the Supplemental  Financing Amounts in any
                calendar year, shall equal or exceed 1.700000% of $5,000,000;

                      (iii)  the  Lessee  may  include  in  any  request  for  a
                supplemental  Financing only capital Improvements not previously
                financed  in any  Supplemental  Financing  and  which  have been
                installed or affixed no earlier than three calendar years before
                the  beginning of the calendar  year in which such  supplemental
                Financing occurs;

                      (iv)  the  total  amount  of all  supplemental  Financings
                during  the Basic  Lease Term  shall not  exceed  16.666666%  of
                $100,000,000;

                      (v)  unless  waived  by the Owner  Participant,  the Bonds
                issued and  outstanding  under the  Collateral  Trust  Indenture
                shall be rated no less than "investment grade", as determined by
                standard & Poor's  Corporation  and Moody's  Investors  Service,
                Inc.;

                       (vi) the  Supplemental  Financing Amount shall not exceed
                that  portion of the cost of Capital  Improvements  which,  when
                financed, will constitute an addition to the Owner Participant's
                basis under section 1012 of the Code;

                      (vii) in the  opinion of  independent  tax  counsel to the
                owner Participant,  such supplemental Financing shall not result
                in  adverse  tax  consequences  to  the  Owner   Participant  or
                adversely  affect the status of this  Facility  Lease as a "true
                lease"  for  Federal,  New  York  state  or New  York  city  tax
                purposes,  and the owner  Participant  and the Lessee shall have
                agreed  upon the amount  and manner of payment of the  indemnity
                (if  any)  payable  by  the  Lessee  as a  consequence  of  such
                supplemental Financing;


                                      -19-

6091.CHASEUl.LEASE.47.l


<PAGE>

                      (viii) the  Additional  Notes shall have a final  maturity
                date no later than January 15, 2015;

                      (ix) the  Lessee  shall  have made  such  representations,
                warranties and covenants  regarding the tax  characteristics  of
                the Lessor1s undivided  interest in each Capital  Improvement as
                the  Owner  Participant   reasonably   requests,   and  the  Tax
                Indemnification   Agreement   shall   have  been   appropriately
                modified;

                         (x)  appropriate  adjustments  to  Basic  Rent  and the
                schedules  of  casualty  Values,  Special  Casualty  Values  and
                Termination  Values  shall  have  been  agreed  to by the  Owner
                Participant to support the  amortization of the Additional Notes
                issued in respect of such Supplemental Financing and to preserve
                Net Economic Return;

                       (xi) the Lessee  shall pay to the Lessor an amount  equal
                to all out-of-pocket  costs and expenses  reasonably incurred by
                the Lessor or the Owner  Participant  and not financed as a part
                of such  supplemental  Financing or reflected in  adjustments to
                Basic Rent;

                      (xii) no Default or Event of Default  shall have  occurred
                and be continuing; and

                    (xiii) the Lessee shall enter into such agreements and shall
                have provided such tax indemnities, representations, warranties,
                covenants,  opinions,  certificates  and other  documents as the
                owner Participant shall reasonably request.

                SECTION 9. Event of Loss; Deemed Loss Event.

                (a) Damage or Loss.  In the event that  Section 16.2 of the ANPP
Participation  Agreement  (as  in  effect  on  the  date  hereof)  shall  become
applicable,  or an Event of Loss, a Requisition of Use or a Requisition of Title
shall occur, or Unit 1 or any substantial part thereof shall suffer destruction,



                                      -20-

6091.CHASEU1.LEASE.47:1

damage,  loss,  condemnation,  confiscation,  theft or  seizure  for any  reason
whatsoever,  such fact shall promptly, and in any case within five Business Days
following  such  event,  be  reported  by the Lessee to the Lessor and the Owner
Participants.

                  (b)  Repair.  The  Lessee  shall  promptly  make  any  and all
payments  required of the Lessee under the provisions of the ANPP  Participation
Agreement relating to damage or destruction or the like to Unit 1 or any portion
thereof;  provided,  however,  that the Lessee shall in no event be obligated to
make or join in any  agreement  under  Section  16.2 of the  ANPP  Participation
Agreement  (as  in  effect  on  the  date  hereof)   concerning  repairs  to  or
reconstruction of Unit 1.

                  (c) Payment of Casualty  value. On the Basic Rent Payment Date
next following receipt by the Lessee of a written notice from the Lessor that an
Event of Loss has  occurred,  the Lessee  shall pay to the Lessor all Basic Rent
due on such Basic Rent Payment  Date,  plus an amount equal to the excess of (i)
Casualty  value  determined  as of such  Basic Rent  Payment  Date over (ii) the
unpaid  principal  amount of the Notes  Outstanding  on such date  after  giving
effect to the payment,  if any, of the principal  installment due and payable on
such  date.  An Event of Loss  shall not be deemed to have  occurred  unless and
until the Lessor delivers the notice specified in the preceding  sentence.  Upon
compliance in full by the Lessee with the  foregoing  provisions of this Section
9(c) and assumption by the Lessee of all the  obligations and liabilities of the
Owner Trustee under the  Indenture and the Notes  pursuant to Section  3.9(b) of
the indenture, the Lessor shall (so long as no Default or Event of Default shall
have occurred and be  continuing)  , and at any time after the  occurrence of an
Event of Loss, the Lessor may:

                (1) in the  case  of an  Event  of  Loss  arising  from a  Final
        Shutdown,  if the  Lessee  shall have  declined,  but one or more of the
        other ANPP  Participants  shall have elected,  to reconstruct or restore
        unit 1, as permitted by the ANPP Participation  Agreement,  Transfer the
        Undivided  Interest and the Real Property interest to such electing ANPP
        Participants,  as  required by and in the  proportions  set forth in the
        ANPP Participation Agreement, in which case the Lessee shall be entitled
        to receive the portion of the salvage value" purchase price allocable
        to the Undivided interest; or


                                      -21-

6091.CHASEU1.LEASE.47:1

<PAGE>



                  (2) if  clause  (1)  shall  not be  applicable,  Transfer  the
         Undivided Interest and the Real Property Interest to the Lessee.

If the Lessee shall not have assumed all the  obligations and liabilities of the
Owner  Trustee  under the  Indenture  and the Notes in  accordance  with Section
3.9(b) of the  Indenture,  but the owner  Participant  shall have received under
Section  5.2 of the  Indenture  all  amounts  required  to be paid by the Lessee
pursuant to this Section 9(c) (including  interest,  if any, thereon pursuant to
Section 3(b)(iii)  hereof),  the Lessor shall retain the Undivided  Interest and
the Real  Property  Interest  subject  to the terms of this  Facility  Lease and
Section 7(b)(4) of the Participation Agreement;  provided, however, that (i) the
obligation of the Lessee to pay further Basic Rent shall be reduced to an amount
on each Basic Rent  Payment  Date equal to the  aggregate  amount of  principal,
premium, if any, and accrued interest then payable on all Notes then Outstanding
and (ii) this Facility Lease shall become a security  agreement for all purposes
of Applicable Law.

                  (d) Payment of special  casualty value. If a Deemed Loss Event
occurs,  the party hereto having  knowledge  thereof shall  promptly  notify the
other thereof  (provided that the failure by the Lessor to furnish to the Lessee
the foregoing  notification shall not impair the right of the Lessor to exercise
the option  referred to below)  and,  at the  Lessor's  option,  exercisable  by
delivery of written  notice to the Lessee,  on the day (specified in Schedule 2)
of the month next  following  the month during which such notice is delivered to
the Lessee,  the Lessee shall pay to the Lessor an amount equal to the excess of
(i) Special  Casualty  Value  determined as of the date such payment is due over
(ii) the  principal  amount of the Notes  Outstanding  on such date after giving
effect to the payment,  if any, of the principal  installment due and payable on
such day. Upon compliance in full by the Lessee with the foregoing provisions of
this  Section  9(d) and  assumption  by the  Lessee of all the  obligations  and
liabilities  of the Owner Trustee under the Indenture and the Notes  pursuant to
Section  3.9(b) of the  Indenture,  the  Lessor  shall (so long as no Default or
Event of Default shall have occurred and be  continuing) , and at any time after



                                      -22-

6091.CHASEU1.LEASE.47:1

<PAGE>

the  occurrence of a Deemed Loss Event,  the Lessor may,  Transfer the Undivided
Interest and the Real Property  Interest to the Lessee.  If the Lessee shall not
have assumed all the  liabilities and obligations of the Owner Trustee under the
Indenture and the Notes in accordance with Section 3.9(b) of the Indenture,  but
the Owner Participant shall have received under Section 5.2 of the Indenture all
amounts  required  to be paid  by the  Lessee  pursuant  to  this  Section  9(d)
(including  interest,  if any,  thereon  pursuant to Section  3(b)(iii))L,,  the
Lessor  shall  retain the  undivided  Interest  and the Real  Property  Interest
subject  to the  terms  of this  Facility  Lease  and  Section  7(b)  (4) of the
Participation  Agreement;  provided,  however,  that (i) the  obligation  of the
Lessee to pay  further  Basic  Rent  shall be reduced to an amount on each Basic
Rent Payment Date equal to the aggregate amount of principal,  premium,  if any,
and  accrued  interest  then  payable  on all  Notes  Outstanding  and (ii) this
Facility Lease shall become a security  agreement for a~1 purposes of Applicable
Law.

                  (e)  Requisition  of Use. In the case of a Requisition  of Use
not constituting an Event of Loss, this Facility Lease shall continue,  and each
and every obligation of the Lessee hereunder and under each Transaction Document
shall remain in full force and effect. So long as no Default or Event of Default
shall have occurred and be continuing,  the Lessee shall be entitled to all sums
received by reason of any such  Requisition  of Use for the period ending on the
Lease Termination Date, and the Lessor shall be entitled to all sums received by
reason of any such Requisition of Use for the period after the Lease Termination
Date.

                  (f)  Termination  of  obligation.  Until the Lessee shall have
made the payments  specified in Section 9(c) or 9(d),  the Lessee shall make all
payments of Rent when due; and the Lessee shall  thereafter  be required to make
all payments of Supplemental  Rent as and when due. In the event that the Lessee
shall assume all the  obligations and liabilities of the Owner Trustee under the
Indenture  and the Motes  pursuant  to  Section  3.9(b) of the  Indenture,  upon
receipt by the Owner  Participant  under  Section  5.2 of the  Indenture  of the
payments  specified  in  Section  9(c) or 9(d) and  payment by the Lessee of all
other Rent due and owing through and  including  the date of payment  (including
Basic Rent due on or accrued  through such date, as the case may be) , the Lease
Term  shall end and the  Lessee's  obligation  to pay  further  Basic Rent shall
cease.


                                      -23-

6091.CHASEUl.LEASE.47:l


<PAGE>


                  (g)  Application of Payments on an Event of Lass. Any payments
receivable  (without regard to any right of setoff or other similar right of any
Person  against the Lessee) at any time by the Lessor or the Lessee  (other than
insurance  placed by the Owner  Trustee  or the Owner  Participant  pursuant  to
Section 10(b)) from any Governmental Authority,  insurer or other Person (except
the  Lessee,  the Owner  Trustee  or the Owner  Participant)  as a result of the
occurrence of an Event of Loss shall be applied as follows:

                         (i)  all  such  payments  received  at any  time by the
                Lessee  shall be  promptly  paid to the Lessor  for  application
                pursuant  to the  following  provisions  of this  section  9(g),
                except that the Lessee may retain any amounts  that would at the
                time  be  payable  to the  Lessee  as  reimbursement  under  the
                provisions of clause (ii) below;

                       (ii) so much of such  payments  as shall not  exceed  the
                amount  required  to be paid by the Lessee  pursuant  to Section
                9(c)  (ignoring,  for  this  purpose  clause  (ii) of the  first
                sentence  thereof) shall be applied in reduction of the Lessee's
                obligation  to pay such amount if not already paid by the Lessee
                or, if already paid by the Lessee, shall be applied to reimburse
                the Lessee for its payment of such amount: and

                      (iii) the  balance,  if any,  of such  payments  remaining
                thereafter shall be divided between the Lessor and the Lessee as
                their interests may appear.

                  (h)  Application of Payments Not Relating to an Event of Loss.
Payments  receivable  (without  regard to any  right of setoff or other  similar
right of any Person  against the  Lessee) at any time by the Lessor  (other than
insurance  placed by the Owner  Trustee  or the Owner  Participant  pursuant  to
Section 10(b)) or the Lessee from any Governmental  Authority,  insurer or other
Person  with   respect  to  any   destruction,   damage,   loss,   condemnation,
confiscation,  theft or seizure of or  Requisition of Title to or Requisition of
Use of the undivided  Interest or any part thereof not  constituting an Event of
Loss shall be applied first to reimburse the Lessee for all amounts  expended in



                                      -24-

6091.CHASEU1.LEASE.47:1

<PAGE>

respect of the repair,  replacement or reconstruction of the undivided  Interest
or any cart  thereof as provided in Section  9(b) , and second the  balance,  if
any,  of such  payments  shall be divided  between  the Lessor and the Lessee as
their interests flay appear.

                  (i)  Other   Dispositions.   Notwithstanding   the   foregoing
provisions  of this  Section 9, so long as a Default  or Event of Default  shall
have occurred and be continuing,  any amount that would  otherwise be payable to
or for the  account  of, or that  would  otherwise  be  retained  by, the Lessee
pursuant to Section 10 or this Section 9 shall be paid to the Lessor as security
for the  obligations  of the Lessee under this Facility  Lease and, at such time
thereafter  as no Default or Event of Default shall be  continuing,  such amount
shall be paid  promptly  to the Lessee  unless  this  Facility  Lease shall have
therefore  been  declared to be in default,  in which event such amount shall be
disposed of in accordance  with the provisions  hereof,  of the Indenture and of
the Trust Agreement.

                  (1)  Assumption  of  Notes;  Creation  of  Lien  on  Undivided
Interest.  In  connection  with an  Event of Loss,  a Deemed  Loss  Event or the
exercise of the Cure  Option,  (i) the Lessee  agrees to use its best efforts to
comply with the conditions  respecting its assumption of all the obligations and
liabilities  of the Owner Trustee under the Indenture and the Notes set forth in
Section 3.9(b) of the Indenture,  and (ii) the Lessor agrees that, if the Lessee
fails to assume all the  obligations  and liabilities of the owner Trustee under
the Indenture and the Notes in accordance  with Section 3.9(b) of the Indenture,
not  later  than two  Business  Days  prior to the date on which  the  Lessee is
required to make the payments specified in Section 9(c) or 9(d), the Lessor will
cause the Undivided  Interest and the Real Property  Interest to be subjected to
the Lien of the Indenture by executing and  delivering to the Indenture  Trustee
the Undivided Interest Indenture Supplement.

                SECTION 10.  Insurance.

                  (a) Required  Insurance.  The Lessee will use its best efforts
to cause the Operating Agent to carry and maintain  insurance required under the
ANPP  Participation  Agreement and will make all payments required of the Lessee
under the ANPP Participation Agreement in respect of such insurance.  The Lessee


                                      -25-

6091. CHASEUl. LEASE. 47:1


<PAGE>


will at all times maintain, directly or through the  perating Agent, policies of
casualty and liability  insurance with respect to the undivided Interest and the
Real  Property  Interest  in such  amounts  and with such  coverage  as shall be
adequate in accordance with prudent utility practice.  Any policies of insurance
in  respect  of  destruction,  damage,  loss,  theft  or other  casualty  to the
Undivided Interest, the Real Property Interest, Unit 1 or any part thereof shall
name the Lessor (and, to the extent  practicable,  the Owner  Participant) as an
additional  insured,  as its interest (or their  interests) may appear,  and any
policies  with  respect  to  nuclear  liability  insurance  with  respect to the
Undivided  :interest,  the Real Property Interest,  Unit 1, or any part thereof,
shall  include all  Indemnitees  as insureds  through an omnibus  definition  of
"insured"  or through  endorsement;  provided,  however,  that if the  Operating
Agent,  as trustee,  shall  become the loss payee tinder any policy of insurance
constituting Project Insurance,  then the Lessor and the Owner Participant shall
be and be made  beneficiaries of the trust arrangement under which the operating
Agent acts as  trustee.  The Lessee  shall,  on or before  March 1 of each year,
commencing March 1, 1987,  furnish to the Lessor and the Owner Participant (A) a
report signed by the broker or brokers for the PVNGS  insurance (or if insurance
is placed directly by the Operating Agent, a certificate signed by the Operating
Agent) (i) showing the insurance then maintained by the ANPP  Participants  with
respect to PVNGS,  (ii) stating that no premiums are then delinquent,  and (iii)
stating that the insurance  maintained by the ANPP  Participants with respect to
PVNGS is in accordance  with the terms of (1) the ANPP  Participation  Agreement
and (2) this  Section  10, (3) a report  signed by the broker or brokers for the
Lessee's  insurance  (or if  insurance  is  placed  directly  by the  Lessee,  a
certificate signed by the Lessee) showing the separate  insurance,  if any, then
maintained  by the Lessee with respect to its interest in PVNGS and stating that
no premiums under such insurance are delinquent; (C) a certificate signed by the
Lessee stating that the insurance maintained by the ANPP Participants and by the
Lessee,  identified  on the reports to be delivered  pursuant to clauses (A) and
(B), is in accordance with prudent utility practice within the nuclear industry,
the ANPP Participation  Agreement and this Section 10; and (C) 'upon the request
of the Lessor or the Owner  Participant,  copies (to the extent permitted by the
issuers of such policies) of policies so maintained.  Any report by an insurance



                                      -26-

6091.CHASEU1.LEASE.47:1

<PAGE>

broker  with  respect  to clause  (A) (iii) (1) may be made in  reliance  upon a
schedule provided by the Lessee (a copy of which shall be attached)  identifying
the  insurance  (by  coverage,  limits,  insureds and other  pertinent  details)
required to be maintained  under the ANPP  Participation  Agreement.  Any report
with  respect  to clause  (A) (iii) (2) may be made in  reliance  upon a similar
schedule provided by the Lessee (a copy of which shall be attached)  identifying
the  insurance  required to be  maintained  under this Section 10. All insurance
proceeds paid in respect of damage,  destruction,  loss, theft or other casualty
to the  Undivided  Interest or the Real  Property  Interest  shall be applied as
provided in Section 9(g), (h) or (i), as the case may be, subject,  however,  to
any priority  allocations of such proceeds to decontamination and debris removal
set forth in the insurance  policies or required  under  Applicable  Law. In the
event that  either the  operating  Agent or the  Lessee  delivers a  certificate
pursuant to clause (A) or (B) of the foregoing,  the Owner  Participant shall be
entitled to receive (if it so requests and if the insurer will issue the same) a
report from any insurer listed in such certificate.

                (b)  Permitted  Insurance.  Nothing  in this  Section  10  shall
prohibit the Lessee from placing,  at its expense,  insurance on or with respect
to the cost of purchasing replacement power, naming the Lessee as insured and/or
loss payee,  unless such insurance  would  conflict with or otherwise  limit the
availability  of  insurance  to be provided or  maintained  in  accordance  with
Section 10(a). Nothing in this Section 10 shall prohibit the Lessor or the Owner
Participant  from placing at its expense  other  insurance on or with respect to
Unit 1, the Undivided interest or the Real Property Interest or the operation of
Unit 1, naming the Lessor or the Owner Participant as insured and/or loss payee,
unless such insurance would conflict with or otherwise limit the insurance to be
provided or maintained in accordance with Section 10(a).

                SECTION 11.  Rights to Assign or sublease.

                  (a)  Assignment  or Sublease by the Lessee.  Without the prior
written consent of the Lessor, the Lessee shall not assign.  sublease,  transfer
or encumber (except for Permitted Liens) its leasehold interest in the Undivided
Interest or the Real Property  Interest  under this Facility  Lease.  The Lessee



                                      -27-

6091.CHASEU1.LEASE.47:1

<PAGE>

shall  not,  without  the prior  written  consent  of the  Lessor  and the Owner
Participant,  part with the possession of, or suffer or allow to pass out of its
possession,  the Undivided Interest, the Real Property :interest or any interest
therein,  except  to the  extent  required  pursuant  to the ANPP  Participation
Agreement or expressly permitted by the provisions of this Facility Lease or any
other Transaction Document.

                (b)  Assignment by Lessor as security for Lessor's  Obligations.
To secure the indebtedness evidenced by the Notes, the Lessor will assign to the
Indenture  Trustee its right,  title and interest to receive certain payments of
Rent (not including, in any event, Excepted Payments), to the extent provided in
the  Indenture  and may assign to the  Indenture  Trustee  its right,  title and
interest  in  the  Undivided   Interest  and  the  Real  Property   Interest  as
contemplated  by Section 9(j). The Lessee hereby (a) consents to such assignment
pursuant  to the  terms of the  Indenture,  (b)  agrees to  pay-directly  to the
Indenture Trustee at the indenture  Trustee's Office (so long as the lien at the
Indenture  has not been  satisfied  and  discharged  and the Lessor is obligated
thereunder) all amounts of Rent (other than Excepted  Payments) due or to become
due to the Lessor  that shall be required  to be paid to the  Indenture  Trustee
pursuant to the Indenture, (c) agrees that the right of the Indenture Trustee to
any such payments shall be absolute and  unconditional and shall not be affected
by  any  circumstances   whatsoever,   including,   without  limitation,   those
circumstances set forth in Section 4 and (d) agrees that, to the extent provided
in the Indenture  and until the  Indenture is discharged in accordance  with its
terms,  the Indenture  Trustee shall have all the rights of the Lessor hereunder
with respect to Assigned  Payments as if the  Indenture  Trustee had  originally
been named herein as the Lessor.

                  SECTION 12.  Lease Renewal.

                Subject to the notice  requirements  set forth in Section 13(a),
at the end of the Basic Lease Term, provided that no Default,  Event of Default,
Event of Loss or Deemed Loss Event shall have occurred and be continuing and the
Notes shall have been paid in full, the Lessee shall have the right to renew the
term of this Facility Lease for a period commencing January 15, 2015, and ending
on the later of January 15, 2017 and the end of the Maximum  Option  Period (the



                                      -28-

6091. CHASEUl. LEASE .47:1


<PAGE>

Renewal Term),  during which the Basic Rent payable shall be the rental provided
in Section 3(a) (iii) and one-half of the rental provided in Section 21.

                  SECTION 13.Notices for Renewal or Purchase; Purchase Options.

                  (a)    Notice; Determination of values; Appraisal
Procedure.  Not later than three years nor earlier  than five years prior to the
expiration  date of the Basic  Lease  Term,  and not later than three  years nor
earlier than five years prior to the expiration date of the Renewal Term, as the
case may be, the Lessee shall give to the Lessor  written notice of its election
either to (A) return the Undivided  Interest and the Real  Property  Interest to
the Lessor pursuant to section 5., or (S) exercise the renewal option  permitted
by Section 12 (in the case of the notice  delivered in respect of the expiration
date of the Basic Lease Term) or the purchase option permitted by Section 13(b).
If the notice  specified in clause (B) of the preceding  sentence is given three
years prior to the  expiration of the Basic Lease Term,  then not later than two
years prior to 'the  expiration  date of the Basic  Lease Term,  the Lessee will
give the Lessor  written  notice of its election  either to exercise the renewal
option  permitted by Section 12 or the purchase  option  permitted by Section 13
(b) . Any such  election  shall be  irrevocable  as to the  Lessee,  but no such
election  shall be binding on the Lessor if, on the effective  date thereof,  an
Event of Default  shall have occurred and be continuing or an Event of Loss or a
Deemed Loss Event shall have occurred. Promptly after giving notice, (i) in case
the  renewal  option  has been  elected,  the  Maximum  Option  Period  shall be
determined  by the  Appraisal  Procedure,  or (ii) in case the  purchase  option
permitted  by  Section  13(b)  has  been  elected,  the  Lessee  and  the  Owner
Participant  shall  agree  upon the Fair  Market  Sales  Value of the  Undivided
Interest and the Real  Property  Interest,  or, if within three months after the
date of the Lessee's notice the Lessee and the Owner Participant shall be unable
so to agree, such value shall be determined by the Appraisal Procedure.

                  (b) Purchase  Option at Expiration of the Lease Term.  Subject
to the notice  requirements set forth in Section 13 (a) , unless a Default or an
Event of Default  shall have  occurred and be  continuing or an Event of Loss or
Deemed  Loss Event shall have  occurred,  on the date of the  expiration  of the



                                      -29-

6091.CHASEU1.LEASE.47:1

<PAGE>

Basic Lease Term or the Renewal  Term (if  elected),  the Lessee  shall have the
right. to purchase the Undivided  Interest and the Real Property  Interest for a
purchase price equal to the Fair Market sates Value thereof.

                (c) Purchase of the  Undivided  interest;  Payment,  Etc. If the
Lessee shall have elected or be required to purchase the Undivided  Interest and
the Real Property Interest  pursuant to Section 13(b),  payment by the Lessee of
the purchase  price for the Undivided  Interest and the Real  Property  Interest
shall  be made in  immediately  available  funds,  whereupon  the  Lessor  shall
Transfer the Undivided Interest and the Real Property Interest to the Lessee.

                SECTION 14.  Termination for Obsolescence.

                  (a) Termination  Notice.  Notwithstanding any provision herein
contained to the  contrary,  unless a Default or an Event of Default  shall have
occurred and be continuing or an Event of Loss or a Deemed Loss Event shall have
occurred,  the Lessee shall have the option (provided that the Lessee shall have
delivered to the Lessor an Officers1 Certificate to the effect that the Lessee's
Board of Directors  has adopted and there is in effect a resolution  determining
that Unit 1 is (A) uneconomic to the Lessee or (B) economically obsolete for any
reason;  and provided that the Lessee shall be disposing of all its other leased
interests in Unit 1), on at least 360 days' prior written  notice (a Termination
Notice) to the Lessor,  the Owner  Participant and the Indenture  Trustee (which
notice shall be irrevocable)) to terminate this Facility Lease on any Basic Rent
Payment  Date  after  January  15,  1998,  and prior to  January  15,  2012 (the
Termination  Date) . If the Lessee shall give the Lessor a  Termination  Notice,
the Lessee shall,  as agent for the Lessor,  use its best efforts to obtain cash
bids for the purchase of the Undivided  Interest and the Real Property Interest,
together with the interest of the Lessor under the  Assignment  and  Assumption.
The Lessor shall also have the right to obtain such cash bids,  either  directly
or through agents other than the Lessee.  The Lessee shall certify to the Lessor
within ten days after the Lessee's receipt of each bid (and, in any event, prior
to the  Termination  Date) the amount and terms thereof and the name and address
of the party  (which  shall not be the  Lessee or an  Affiliate  of the  Lessee)
submitting such bid.


                                      -30-

6091. CHASEUl. LEASE. 47:1


<PAGE>


                (b)  Right  of  Lessor  to  Retain   Undivided   Interest   upon
Termination.  If a  Termination  Notice has been  delivered  pursuant to Section
14(a), the Lessor may elect to retain,  rather than sell, the Undivided Interest
and the Real Property  Interest by giving notice to the Lessee and the Indenture
Trustee prior to the Termination Date. It shall be a condition  precedent to the
Lessor's right to retain the Undivided  Interest and the Real Property  Interest
that on or prior to the  Termination  Date the  Lessor  shall have paid (or made
provision for payment) to the Indenture Trustee,  the unpaid principal amount of
all Notes Outstanding on such date and all premium, if any, and interest accrued
and unpaid on the date of payment.  If the Lessor elects to retain the Undivided
Interest and the Real  Property  Interest  pursuant to this Section  14(b) , the
Lessee  shall pay to the Lessor on the  Termination  Date the Basic Rent and any
other Rent due or accrued,  as the case may be, to and including the Termination
Date,  together with an amount equal to the excess,  if any, of the  Termination
Value as of the  Termination  Date over the  highest  bona tide  offer  received
pursuant to Section 14(a).

                (C)  Events  on the  Termination  Date.  If the  Lessor  has not
elected to retain the  Undivided  Interest  and the Real  Property  Interest  as
provided  in Section 14 (b),  on the  Termination  Date the Lessor  shall  (upon
receipt  of the sale price and all  additional  payments  specified  in the next
sentence)  Transfer the Undivided'  Interest and the Real Property  Interest for
cash to the bidder (which shall not be the Lessee or an Affiliate of the Lessee)
that shall have submitted the highest bid on or before the Termination Date. The
total sale price realized at such sale shall be retained by the Lessor (subject,
however, to the terms of the Indenture and the requirement that there shall have
been paid, or provision  for payment  made, to the Indenture  Trustee the unpaid
principal  amount  of all  Notes  Outstanding  on the  Termination  Date and all
premium, if any, and interest accrued and unpaid on the date of payment) and, in
addition,  on the  Termination  Date the Lessee  shall pay to the Lessor (A) the
excess, if any, of the Termination Value as of the Termination Date over the net
sale price of the Undivided  Interest and the Real Property Interest and (B) any
Basic Rent due or accrued,  as the case may be, to and including the Termination
Date and shall pay to the Person or Persons  entitled  thereto all  Supplemental



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6091.CHASEU1.LEASE.47:1

<PAGE>

Rent (other than  Termination  Value).  Upon  compliance  by the Lessee with the
applicable  provisions  of this Section 14, the  obligation of the Lessee to pay
Basic Rent due hereunder for any period inter the  Termination  Date shall cease
and the Basic Lease Term shall end on the Termination Date:  provided,  however,
that,  in the event of  termination  of this  Facility  Lease  pursuant  to this
Section 14, the obligations of the Lessee under the ANPP Participation Agreement
(except as therein  expressly  provided) and the Assignment and Assumption shall
continue  in full force and effect  and shall not be  impaired  by reason of any
such termination.  If, other than as a result of the Lessor's election to retain
the  Undivided  Interest and the Real  Property  Interest as provided in Section
14(b), on or as of the  Termination  Date no such sale shall occur or the Lessee
shall not have complied in full with this Section 14, this Facility  Lease shall
continue  in full  force  and  effect  in  accordance  with its  terms  with-out
prejudice  to the  Lessee's  right to exercise  its rights under this Section 14
thereafter,  except that the Lessee  shall not be  entitled  to deliver  another
Termination Notice during the 3-year period following such Termination Date. The
Lessor  shall be under no duty to solicit  bids,  to inquire into the efforts of
the Lessee to obtain bids or otherwise  take any action in  connection  with any
such sale other  than,  if the Lessor  has not  elected to retain the  Undivided
Interest and the Real Property Interest,  to Transfer the Undivided Interest and
the Real Property  Interest to the purchaser  named in the highest bid certified
by the Lessee to the Lessor or obtained by the  Lessor,  against  receipt of the
payments  provided  for herein  (but only if such  purchaser  has  obtained  all
Governmental Action by the NRC necessary in connection therewith).

                (4) Early Termination Notice. In the event that the Lessee shall
fail to exercise  its renewal  option or purchase  option  within the time limit
provided by Section 13(a),  the Lessor shall have the option,  on any Basic Rent
Payment Date  thereafter,  on at least 120 days prior  written  notice (an Early
Termination  Notice) to the Lessee and the Indenture Trustee,  to terminate this
Facility  Lease on the Basic Rent  Payment  Date  specified  in such notice (the
Early  Termination  Date) . Any Early  Termination  Notice may be revoked by the
Lessor at any time on or prior to the Early Termination Date.




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<PAGE>

                  (e)  Events  on the  Early  Termination  Date.  On  the  Early
Termination  Date the Lessor  shall,  at its option,  (i) Transfer the undivided
Interest and the Real Property  Interest to the bidder (other than the Lessee or
an Affiliate of the Lessee)  selected by the Lessor or (ii) retain the undivided
Interest and the Real Property  Interest;  It shall be a condition  precedent to
the  Lessor's  right  to sell or  retain  the  Undivided  Interest  and the Real
Property  Interest  that on or prior to the Early  Termination  Date the  Lessor
shall have paid (or made  provision  for payment) to the  Indenture  Trustee the
unpaid principal  amount of all Votes  Outstanding on such date and all premium,
if any, and interest  accrued and unpaid on the date of payment.  The total sale
price  realized  at any such  sale  shall be  retained  by the  Lessor  and,  in
addition,  on the Early  Termination Date the Lessee shall pay to the Lessor any
Basic  Rent due or  accrued,  as the case may be,  to and  including  the  Early
Termination  Date, and shall pay to the Person or Persons  entitled  thereto all
Supplemental Rent (other than Termination  Value). Upon compliance by the Lessee
with the applicable  provisions of this Section 14, the obligation of the Lessee
to pay Basic Rent due hereunder for any period after the Early  Termination Date
shall  cease  and the  Lease  Term  shall  end on the  Early  Termination  Date;
provided,  however,  that in the event of the termination of this Facility Lease
pursuant  to this  Section  14, the  obligations  of the  Lessee  under the ANPP
Participation   Agreement  (except  as  therein  expressly   provided)  and  the
Assignment and Assumption  shall continue in full force and effect and shall not
be impaired by reason of any such termination.

                  SECTION 15.  Events of Default.

                The term Event of Default,  wherever used herein, shall mean any
of the  following  events  (whatever  the reason  for such Event of Default  and
whether it shall be  voluntary or  involuntary,  or come about or be effected by
operation of law, or be pursuant to or in compliance  with any Applicable Law or
Governmental Action).

                         (i) the Lessee shall fail to make, or cause to be made,
                (x)  payment  of  Casualty  Value,  Termination  Value,  Special
                Casualty  Value or payment due  pursuant to exercise of the Cure
                Option when due, (y) any payment of Basic Rent within 5 Business
                Days  after the same  shall  become  due or (z) any  payment  of



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<PAGE>

                  Supplemental  Rent (other  than  Casualty  Value,  Termination
                  Value,  Special  Casualty  Value or payment  due  pursuant  to
                  exercise  of the Cure  Option)  within 20 days  after the same
                  shall become due or demanded, as the case may be; or

                 (ii) the Lessee shall fail to perform or observe any  covenant,
                 condition  or agreement to be performed or observed by it under
                 Section 10(b) (3) (i) , 10(b) (3) (ii),. 10 (b ) C 3) (iii { or
                 10(b) (3) (V) of the  Participation  Agreement or Section 7, 10
                 (other than failure of the Lessee to cause to be delivered  the
                 insurance certificates (other than a certificate of the Lessee)
                 described therein) or 11 of this Facility Lease; or

                      (iii) the Lessee  shall  fail to  perform  or observe  any
                covenant or  agreement  to be  performed or observed by it under
                Section  10(b)(3)(viii) of the Participation  Agreement and such
                failure shall continue for a period of 30 days after there shall
                have  been  given  to the  Lessee  by the  Lessor  or the  owner
                Participant a notice specifying such failure and requiring it to
                be  remedied  and  stating  that such  notice  is a  "Notice  of
                Default" hereunder; or

                      (iv) the Lessee shall fail to perform its agreements set 
                forth in Section 5(a) hereof; or

                         (v) the Lessee  shall  fail to  perform or observe  any
                covenant,   condition  or  agreement   (other  than   covenants,
                conditions or agreements referred to in clauses (i) through (iv)
                above) to be  performed  or observed  by it under this  Facility
                Lease or any other Transaction Document,  and such failure shall
                continue  for a period of 30 days  after  there  shall have been
                given to the  Lessee by the  Lessor or the Owner  Participant  a
                notice  specifying  such failure and requiring it to be remedied
                and stating that such notice is a "Notice of Default" hereunder;
                or




                                      -34-

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<PAGE>
                      (vi) any  representation or warranty made by the Lessee in
                this Facility Lease, any other Transaction  Document (other than
                the Tax Indemnification Agreement) or any agreement, document or
                certificate  delivered by the Lessee in  connection  herewith or
                therewith  shall prove to have been  incorrect  in any  material
                respect  when any such  representation  or warranty  was made or
                given and shall remain material and materially  incorrect at the
                time in question; or

                      (vii) the Lessee shall  commence a voluntary case or other
                proceeding seeking liquidation,  reorganization or. other relief
                with  respect  to  itself or its  debts  under  any  bankruptcy,
                insolvency  or other  similar law now or  hereafter in effect or
                seeking  the  appointment  of a trustee,  receiver,  liquidator,
                custodian  or other  similar  official of it or any  substantial
                part of its property,  or shall consent to any such relief or to
                the  appointment of or taking of possession by any such official
                in an involuntary case or other proceeding commenced against it,
                or shall make a general assignment for the benefit of creditors,
                or shall  take any  corporate  action  to  authorize  any of the
                foregoing;  or an involuntary  case or other proceeding shall be
                commenced against the Lessee seeking liquidation, reorganization
                or other  relief  with  respect  to it or its  debts  under  any
                bankruptcy,  insolvency or other similar law now or hereafter in
                effect  or  seeking  the  appointment  of a  trustee,  receiver,
                liquidator,  custodian  or other  similar  official of it or any
                substantial  part of its property,  and such involuntary case or
                other  proceeding  shall  remain  undismissed  or unstayed for a
                period of 60 consecutive days; or

                      (viii)  final  judgment for the payment of money in excess
                of  $1,000,000  shall be  rendered  against  the Lessee and the.
                Lessee  shall not have  discharged  the same or provided for its
                discharge  in  accordance  with its terms or bonded  the same or
                procured  a stay of  execution  thereof  within 60 days from the
                entry thereof; or




                                      -35-

6091.CHASEU1.LEASE.47:1

<PAGE>

                      (ix)  (1)  a  default  by  the   Lessee   under  the  ANPP
                Participation  Agreement  in  consequence  of which the Lessee's
                right to receive its  Generation  Entitlement  Share in PVNGS is
                suspended by the other ANPP  Participants,  or (2) the giving by
                any ANPP  Participant  of a notice  'under  Section 23.2 (or any
                comparable   successor  provision)  of  the  ANPP  Participation
                Agreement  respecting a default thereunder by the Lessee and the
                lapse of 20 Business Days from the giving of such notice without
                the Lessee having cured such default; provided however, that for
                purposes  of this clause (2) if the Lessee  shall have,  in good
                faith,  disputed  the  existence or nature of a default and such
                dispute  shall have become the subject of an  arbitration  under
                section 24 (or any comparable  successor  provision) of the ANPP
                Participation  Agreement,  such 20  Business  Day  period  shall
                commence on the date of the final  determination of the board of
                arbitrators under such Section 24; or

                         (x) (1) the Lessee  shall fail to pay when due (whether
                  by  scheduled  maturity,  required  prepayment,  acceleration,
                  demand or  otherwise)  any Debt  (which  term  shall  mean (A)
                  indebtedness  for borrowed  money,  (B)  obligations as lessee
                  under  leases and (C)  obligations  under  direct or  indirect
                  guarantees  in respect  of,  and  obligations  (contingent  or
                  otherwise)  to purchase or  otherwise  acquire or otherwise to
                  assure a creditor against loss in respect of,  indebtedness or
                  obligations  of others of the kinds  referred to in clause (A)
                  or (B)  above,  in  each  case  if the  principal  amount  (or
                  equivalent) thereof (or in the case of any operating lease, an
                  equivalent on the assumption  such lease were a lease required
                  to  be  capitalized  in  accordance  with  generally  accepted
                  accounting principles) is greater than $20,000,000 ($5,000,000
                  in the case of any PVNGS operating lease)) of the Lessee,  and
                  such failure shall continue after the applicable grace period,
                  if any,  specified in the agreement or instrument  relating to
                  such Debt,  but only if the Lessee shall have received  notice
                  of such failure or a  Responsible  Officer of the Lessee shall
                  have  actual  knowledge  of such  failure;  or (2)  any  other
                  


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<PAGE>

                 default under any agreement or instrument  relating to any such
                 Debt, or any other event,  shall occur and shall continue after
                 the  applicable  grace  period,  if  any,   specified  in  such
                 agreement or instrument, if the effect of such default or event
                 is to  accelerate,  or  to  permit  the  acceleration  of,  the
                 maturity  of such  Debt,  but  only if the  Lessee  shall  have
                 received  notice  of such  default  or event  or a  Responsible
                 Officer  of the  Lessee  shall have  actual  knowledge  of such
                 default or event.

                  SECTION 16.  Remedies.

                (a) Remedies. Upon the occurrence of any Event of Default and so
long as the same shall be  continuing,  the Lessor may,  at its option,  declare
this Facility  Lease to be in default by written  notice to such effect given to
the Lessee, and may exercise one or more of the following remedies as the Lessor
in its sole discretion shall elect:

                      (i) the Lessor may,  by notice to the  Lessee,  rescind or
                terminate this Facility Lease;

                      (ii)  the  Lessor  may (x)  demand  that the  Lessee,  and
                thereupon the Lessee shall,  return  possession of the Undivided
                interest and the Real Property  Interest  promptly to the Lessor
                in the manner  and  condition  required  by,  and  otherwise  in
                accordance with the provisions of, this Facility Lease as if the
                Undivided  Interest and the Real  Property  Interest  were being
                returned  at the end of the Lease Term and the Lessor  shall not
                be liable for the  reimbursement of the Lessee for any costs and
                expenses incurred by the Lessee in connection  therewith and (y)
                subject to  Applicable  Law,  enter upon the PVNGS Site and take
                immediate  possession  of (to the  exclusion  of the Lessee) the
                Undivided  Interest and the Real Property  Interest,  by summary
                proceedings  or otherwise,  all without  liability to the Lessee
                for or by reason of such entry or taking of possession,  whether
                for the  restoration of damage to property caused by such taking
                or otherwise;


                                      -37-

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<PAGE>
                      (iii) the Lessor may sell the  Undivided  Interest and the
                Real Property Interest,  or any part thereof,  together with any
                interest of the Lessor under the Assignment and  assumption,  at
                public or private sale in a commercially  reasonable  manner, as
                the  Lessor may  determine,  free and clear of any rights of the
                Lessee in the Undivided  Interest and the Real Property Interest
                and without  any duty to account to the Lessee  with  respect to
                such action or inaction or any  proceeds  with  respect  thereto
                (except  to the extent  required  by clause (V) or (vi) below if
                the Lessor  shall elect to exercise its rights  thereunder),  in
                which event the Lessee's  obligation to pay Basic Rent hereunder
                for  periods  commencing  after the date of such  sale  shall be
                terminated  or  proportionately  reduced,  as  the  case  may be
                (except to the  extent  that  Basic  Rent is to be  included  in
                computations  under clause (v) or (vi) below if the Lessor shall
                elect to exercise its rights thereunder).

                      (iv) the Lessor may hold, keep idle or lease to others all
                or any part of the  Undivided  Interest  and the  Real  Property
                Interest,  as the Lessor in its sole  discretion  may determine,
                free and clear of any rights of the Lessee and  without any duty
                to account to the Lessee with respect to such action or inaction
                or for any  proceeds  with  respect to such action or  inaction,
                except  that  the  Lessee's  obligation  to pay  Basic  Rent for
                periods  commencing after the Lessee shall have been deprived of
                use of the  Undivided  Interest and the Real  Property  Interest
                pursuant to this clause (iv) shall be reduced by an amount equal
                to the net proceeds, if any, received by the Lessor from leasing
                the  Undivided  interest and the Real  Property  Interest to any
                Person other than the Lessee for the same periods or any portion
                thereof;

                         (v) except in the case of an Event of Default specified
                in clause (iv) of Section 15 (subject,  however, to the provisos
                to the first sentence of Section 16(c) hereof),  the Lessor may,
                whether  or  not  the  Lessor  shall  have  exercised  or  shall
                thereafter  at any time  exercise  its rights  under clause (i),
                


                                      -38-

6091.CHASEU1.LEASE.47:1

<PAGE>


                (ii),  (iii) or (iv)  above,  demand,  by written  notice to the
                Lessee  specifying  a payment  date which  shall be a Basic Rent
                Payment  Date not  earlier  than 10 days  after the date of such
                notice,  that the Lessee pay to the Lessor, and the Lessee shall
                pay to the Lessor,  on the Basic Rent Payment Date  specified in
                such notice, as liquidated damages for loss of a bargain and not
                as a penalty (in lieu Of the Basic Rent due after the Basic Rent
                Payment  Datespecified  in such  notice) , any  unpaid  Rent due
                through the Basic Rent  payment  Date  specified  in such notice
                plus whichever of the following  amounts the Lessor, in its sole
                discretion, shall specify in such notice (together with interest
                on such amount at the interest rate  specified in.  Section 3(b)
                (iii) from the Basic Rent Payment Date  specified in such notice
                to the date of actual  payment)  (and, in the case of (C) below,
                upon  receipt of such  payment the Lessor shall (or may prior to
                the  receipt  of  such  payment)  Transfer  to the  Lessee  the.
                Undivided Interest and the Real Property Interest):

                                (A) an amount  equal to the  excess,  if any, of
                           (1)  Casualty  Value,  computed  as of the Basic Rent
                           Payment Date  specified in such notice,  over (2) the
                           Fair Market  Rental Value of the  Undivided  Interest
                           and the Real  Property  Interest  (determined  on the
                           basis of the then actual  condition of 'Unit 1) until
                           the end of the remaining useful life of Unit 1, after
                           discounting    such   Fair   Market    Rental   Value
                           semi-annually  to present  value as of the Basic Rent
                           Payment  Date  specified  in such notice at a rate of
                           10% per annum:

                                (B) an amount  equal to the  excess,  if any, of
                         (1) such Casualty  Value over (2) the Fair Market Sales
                         Value of the  Undivided  interest and the Real Property
                         Interest  (determined  on the basis of the then  actual
                         condition  of Unit 1) as of the Basic Rent Payment Date
                         specified in such notice;



                                      -39-


6091.CHASEU1.LEASE.47:1

<PAGE>


                                (C) an amount  equal to the  excess,  if any, of
                           (1) the  present  value as of the Basic Rent  Payment
                           Date specified in such notice of all  installments of
                           Basic Rent  until the end of the Basic  Lease Term or
                           the  Renewal  Term,  as the case  may be,  discounted
                           semi-annually  at a rate of 10% per  annum,  over (2)
                           the present  value as of such Basic Rent Payment Date
                           of the Fair  Market  Rental  Value  of the  Undivided
                           Interest and the Real Property  interest  (determined
                           on the basis of the then actual  condition of Unit I)
                           until the end of the Basic  Lease Term or the Renewal
                           Term, as the case may be, discounted semi-annually at
                           a rate of 10% per annum; or

                                (D) an  amount  equal to the  higher  of (1) the
                         Casualty Value (special  casualty Value if the Event of
                         Default is an event  specified in clause (V), (viii) or
                         (x) (2) of-Section 15 hereof), computed as of the Basic
                         Rent Payment  Date  specified in such notice or (2) the
                         Fair Market Sales Value of the  Undivided  Interest and
                         the Real Property Interest;

                      (vi) if the  Lessor  shall  have  sold  all the  Undivided
                Interest and the Real Property Interest pursuant to clause (iii)
                above, the Lessor, in lieu of exercising its rights under clause
                (V) above with  respect to the  Undivided  Interest and the Real
                Property  Interest  may,  if it shall so elect,  demand that the
                Lessee pay to the Lessor and the Lessee  shall pay to the Lessor
                on the date of such sale,  as  liquidated  damages for loss of a
                bargain  and not as a  penalty  (in lieu of  Basic  Rent due for
                periods  commencing  after  the next  Basic  Rent  Payment  Date
                following  the date of such  sale),  any  unpaid  Basic Rent due
                through  such Basic Rent  Payment  Date,  plus the amount of any
                deficiency  of the  Sale  Proceeds  under  the  casualty  Value,
                computed  as of such  Basic Rent  Payment  Date,  together  with
                interest at the interest rate specified in Section 3(b) (iii) on
                the amount of such Rent and such deficiency from the date of 
                such sale until the date of actual payment; or



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6091.CHASEU1.LEASE.47:1


<PAGE>


                 (vii) in the case of an Event of  Default  specified  in clause
                 (iv) of Section 15, the Lessor may demand, by written notice to
                 the Lessee specifying a payment date which shall be not earlier
                 than the date 30 days after the last.  Basic Rent  Payment Date
                 of the Lease Term,  that the Lessee pay to the Lessor,  and the
                 Lessee shall pay to the Lessor,  on such last payment  date, as
                 liquidated  damages for loss of a bargain and not as a penalty,
                 any unpaid Rent due through  such last Basic Rent  Payment Date
                 plus an amount  (not less than zero)  equal to the Fair  Market
                 Sales value (determined without regard to the obligation of the
                 Lessee  under  Section   l0(b)(3)(xi)   of  the   participation
                 Agreement)  of the  Undivided  Interest  and the Real  Property
                 Interest  (determined  on the basis of the actual  condition of
                 Unit 1)  determined  as of such last  Basic Rent  Payment  Date
                 (together  with  interest on such amount at the  interest  rate
                 specified  in  Section  3(b)(iii)  from  such last  Basic  Rent
                 Payment Date to the date of actual payment) and upon receipt of
                 such  payment the Lessor  shall (or may prior to the receipt of
                 such payment) Transfer to the Lessee the Undivided Interest and
                 the Real Property Interest); provided, however, that the Lessor
                 may not exercise the foregoing  remedy if the Lessor shall have
                 failed to Transfer the undivided Interest and the Real Property
                 Interest  to the  bidder  (which  shall not be the Lessee or an
                 Affiliate of the Lessee) that shall have  submitted the highest
                 cash bid on or before  the date on which  such Event of Default
                 arose excluding, however, any such cash bid which the Lessor or
                 the Owner  Participant  determines  was not  submitted  in good
                 faith, or as to which the bidder fails to certify to the Lessor
                 such  information  as  the  Lessor  or  Owner  Participant  may
                 reasonably  request in order to  determine  whether or not such
                 bid was  submitted in good faith (and the Lessor agrees that it
                 will,  if and to the  extent so  requested  by the Lessee on or



                                      -41-

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<PAGE>

                 after the date 90 days  preceding  such last Basic rent payment
                 Date,  use  reasonable  efforts (at the expense off the Lessee)
                 for a period  ending :n the day 90 days  after  such last Basic
                 Rent Payment Date, to find a Person willing to submit such cash
                 bid; provided, however, that the failure of the Lessor to do so
                 shall not  relieve  the  Lessee of its  obligations  under this
                 clause (vii)).

                  (b) No Release.  No rescission or termination of this Facility
Lease,  in whole or in part, or  repossession  of the Undivided  Interest or the
Real  Property  Interest or exercise of any remedy under  paragraph  (a) of this
Section 16 shall, except as specifically provided therein, relieve the Lessee of
any of its liabilities and obligations hereunder.  In addition, the Lessee shall
be liable,  except as otherwise  provided above, for any and all unpaid Rent due
hereunder before, after or during the exercise of any of the foregoing remedies,
including all reasonable legal fees and other costs and expenses incurred by the
Lessor or the Owner  Participant  by  reason of the  occurrence  of any Event of
Default or the exercise of the Lessor's  remedies with respect  thereto.  At any
sale of the Undivided  Interest,  the Real Property Interest or any part thereof
pursuant to this Section 16, the Owner Participant,  the Lessor or the Indenture
Trustee may bid for and purchase such property.

                  (c) Remedies Cumulative. No remedy under paragraph (a) of this
Section 16 is  intended to be  exclusive,  but each shall be  cumulative  and in
addition to any other  remedy  provided  under such  paragraph  (a) or otherwise
available  to  the  Lessor  at  law  or  in  equity;  provided,   however,  that
notwithstanding  anything to the contrary set forth in this Facility Lease,  the
remedy set forth in Section 16(a) (vii) shall be. the sole and exclusive  remedy
under this  Section 16 in the case of an Event of  Default  specified  in clause
(iv) of Section 15,  unless the Lessee is in default of its payment  obligations
under  Section 16 (a) (vii),  in which  case the Lessor may  exercise  its other
remedies  under Section  16(a);  (except that the maximum  amount payable by the
Lessee  in the  event  of the  exercise  by the  Lessor  of any of the  remedies
provided  for in Section  16(a) (v) or (vi)  shall not  exceed the total  amount
payable by the Lessee  under  Section  16(a) (vii) minus the amount  provided in
subclause  (2) of  clause  (A),  (3) or (C) of such  Section  16(a) (v) , if the



                                      -42-

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<PAGE>

Lessor  elects  a  remedy  specified  in said  clause  (A) , (B) or (C),  or the
deficiency  referred to in Section  16(a) (vi),  if the Lessor elects the remedy
specified in Section  16(a) (vi)  hereto).  No express or implied  waiver by the
Lessor of any Default or Event of Default  hereunder  shall in any way be, or be
construed  to be, a waiver  of any  future  or  subsequent  Default  or Event of
Default.  The failure or delay of the Lessor in exercising  any right granted it
hereunder upon any occurrence of any of the contingencies set forth herein shall
not constitute a waiver of any such right upon the continuation or recurrence of
any such  contingencies  or  similar  contingencies  and any  single or  partial
exercise  of any  particular  right by the Lessor  shall not exhaust the same or
constitute a waiver of any other right provided herein.  To the extent permitted
by  Applicable  Law,  the Lessee  hereby  waives  any  rights  now or  hereafter
conferred by statute or otherwise which may require the Lessor to sell, lease or
otherwise  use the  Undivided  Interest or Unit 1 in  mitigation of the Lessor's
damages as set forth in paragraph  (a) of this Section 16 or which may otherwise
limit or modify any of the Lessor's rights and remedies provided in this Section
16.

                  (d) Exercise of Other  Rights or Remedies.  In addition to all
other rights and remedies provided in this Section 16, the Lessor may, except td
the extent  expressly  limited by  provisions  of this Section 16,  exercise any
other  right or  remedy  that may be  available  to it under  Applicable  Law or
proceed by  appropriate  court  action to enforce the terms hereof or to recover
damages for the breach hereof.

                  (e)  Special  Cure Right of Lessee.  In the event a "Notice of
Default  is given  under  Section  l5(iii)  the Lessee  may,  on or prior to the
occurrence of an Event of Default  resulting  therefrom,  give written notice to
the Lessor  stating that the Lessee has elected to exercise the option (the Cure
Option)  provided in this Section 16(e),  which election shall be irrevocable as
to the  Lessee.  Promptly  after the giving of such  notice,  the Lessee and the
Owner  Participant shall agree upon the Fair Market Sales Value of the Undivided
Interest and the Real Property  Interest or, if they shall be unable so to agree
within one month  after the date of the  Lessee's  notice,  such value  shall be
determined  by the  Appraisal  Procedure.  On the Basic Rent  Payment  Date next
following the date that such Fair Market Sales Value shall have been determined,



                                      -43-

6091.CHASEU1.LEASE.47:1

<PAGE>


the Lessee shall pay to the Lessor all Rent due on such Basic Rent Payment Date,
plus an amount  equal to the excess at (i) the greater of such Fair Market Sales
Value and the Casualty Value  determined as of such Basic Rent Payment Date over
(ii) the unpaid  principal  amount of the Notes  Outstanding  on such date after
giving  effect to the  payment,  if any, of the  principal  installment  due and
payable on such date.  Upon  compliance in full by the Lessee with the foregoing
provisions  of  this  paragraph  (a) and  assumption  by the  Lessee  of all the
obligations  and  liabilities  of the Owner  Trustee under the Indenture and the
Motes pursuant to Section 3.9(b) of the Indenture,  the Lessor shall (so long as
no Default or Event of Default shall have occurred and be  continuing)  Transfer
the  Undivided  Interest and the Real  Property  Interest to the Lessee.  If the
Lessee shall not have assumed all the  obligations  and liabilities of the Owner
Trustee under the Indenture and the Notes in accordance  with Section  3.9(b) of
the Indenture,  but the Owner  Participant shall have received under Section 5.2
of the Indenture all amounts  required to be paid by the Lessee pursuant to this
paragraph  (a)  (including  interest,   if  any,  thereon  pursuant  to  Section
3(b)(iii)), the Lessor shall retain the Undivided Interest and the Real Property
Interest subject to the terms of this Facility Lease and Section 7(b) (4) of the
Participation Agreement; provided, however, that the obligation of the Lessee to
pay further  Basic Rent shall be reduced to an amount on each Basic Rent Payment
Date equal to the aggregate  amount of principal,  premium,  if any, and accrued
interest  then payable on all Notes then  outstanding  and this  Facility  Lease
shall become a security agreement for all purposes of Applicable Law. The Lessee
agrees to use its best  efforts to comply  with the  conditions  respecting  its
assumption  set forth in  Section  3.9(b) of the  Indenture  and,  failing  such
assumption,  agrees to accept a transfer of the owner Participant's right, title
and  interest  in  the  Trust  Estate  pursuant  to  Section  7(b)  (4)  of  the
Participation Agreement.

                SECTION 17.  Notices.

                  All  communications  and notices provided for in this Facility
Lease shall be in writing and shall be given in person (with  signed  receipt of
an  officer  of the Owner  Participant  in the case of a  delivery  to the Owner
Participant)  or by means of telex,  telecopy,  or other wire  transmission,  or



                                      -44-
6091.CHASEU1.LEASE.47:1

<PAGE>

mailed by  registered  or  certified  mail,  or  delivered  by express  delivery
service,  addressed  as  provided  in  the  Participation  Agreement.  All  such
communications  and notices  given in such manner shall be effective on the date
of receipt of such communication or notice.

                SECTION 18.  Successors and Assigns.

                This  Facility  Lease,  including  all  agreements,   covenants,
indemnities,  representations and warranties, shall be binding upon and inure to
the benefit of the Lessor and its  successors  and  permitted  assigns,  and the
Lessee and its successors and, to the extent permitted hereby, assigns.

                  SECTION 19.  Right to Perform for Lessee.

                If the Lessee  shall fail to make any payment of Rent to be made
by it,  or shall  fail to  perform  or comply  with any of its other  agreements
contained  herein,  or fail to make any  payment to be made by it under any ANPP
Project  Agreement,  or shall fail to  perform  or comply  with any of its other
agreements  contained  in any ANPP Project  Agreement,  either the Lessor or the
owner  Participant  may, but shall not be obligated to, tender such payment,  or
effect such  performance or  compliance,  and the amount of such payment and the
amount of all costs and expenses (including, without limitation,  attorneys' and
other  professionals' fees and expenses) of the Lessor or the Owner Participant,
as the case may be,  incurred in connection with such payment or the performance
of or compliance with such agreement, as the case may be, together with interest
thereon at the Penalty Rate, shall be deemed  Supplemental  Rent, payable by the
Lessee upon demand.  In the event that the Lessor or the owner Participant shall
cure any default by the Lessee under the ANPP Participation Agreement,  then (so
long as an Event of Default has occurred and is continuing) the Lessor, together
with each other Person contributing to such cure, shall be entitled (to the full
extent  enforceable in accordance with Applicable Law) to receive the Generation
Entitlement  Share of the Lessee  under the ANPP  Participation  Agreement  (not
limited  to Unit 1),  with each  contributor  to  receive a  percentage  of such
Generation  Entitlement  Share equal to the  percentage of the cure  contributed
thereby.





                                      -45-


6091.CHASEU1.LEASE.47:1

<PAGE>


                  SECTION 20. Additional Covenants.

                  The Lessee  agrees to comply with and to pay, as  Supplemental
Rent,  all  amounts  payable  by it under the  provisions  of  Section 13 of the
Participation  Agreement  and under the  provisions  of the Tax  Indemnification
Agreement,  which provisions are incorporated  herein by this reference as fully
as if set forth in full at this  place.  The  Lessee  agrees to comply  with its
covenants  and  agreements  set  forth  in  Sections  10(b),  14  and  16 of the
Participation  Agreement  and Articles III, IV, V and VI of the  Assignment  and
Assumption,  which  covenants and  agreements  are  incorporated  herein by this
reference as fully as if set forth in full at this place.

                  SECTION 21.  lease of Real Property Interest.

                  Pursuant  to  the  Deed  and  the   Assignment  of  Beneficial
Interest,  the Lessee has sold to the Lessor  the Real  Property  Interest.  The
Lessor  hereby  grants to the Lessee a leasehold  interest in the Real  Property
Interest,  such  leasehold  to be  coterminous  with the lease of the  Undivided
Interest  hereunder  and to be at a  rent  per  annum  equal  to the  respective
percentages of the Real Estate Investment for the applicable period set forth or
derived from the  respective  percentages  of Facility Cost in clauses (i), (ii)
and (iii),  respectively,  of Section 3(a) hereof (which rent is incorporated as
part of Basic Rent payable pursuant to Section 3(a) hereof).

                  SECTION 22.  Amendments and Miscellaneous.

                  (a)  Amendments in Writing.  The terms of this Facility  Lease
may not be waived, altered, modified, amended, supplemented or terminated in any
manner  whatsoever  except by  written  instrument  signed by the Lessor and the
Lessee.

                  (b)  Survival.   (1)  All  indemnities,   representations  and
warranties contained in this Facility Lease and the other Transaction  Documents
and the  Financing  Documents  and in any  agreement,  document  or  certificate
delivered  pursuant  hereto or thereto or in  connection  herewith or  therewith
shall survive,  and continue in effect following,  the execution and delivery of
this Facility  Lease and the  expiration or other  termination  of this Facility
Lease.


                                      -46-

609l.CHASEUl. LEASE. 47:1


<PAGE>


                  (2) The obligations of the Lessee to pay supplemental Rent and
the  obligations  of the Lessee  under  sections  5, 16, 19 and 20 hereof  shall
survive the expiration or termination of this Facility  Lease.  The extension of
any  applicable  statute of  limitations  by the Owner  Trustee,  the  indenture
Trustee,  the  Lessee,  the  Owner  Participant,  the  Loan  Participant  or any
Indemnitee  shall not affect such survival.  The obligations of the Lessee under
Section 20 are expressly made for the benefit of, and shall be  enforceable  by,
any Indemnitee, separately or together, without declaring this Facility Lease to
be in default and  notwithstanding any assignment by the Lessor of this Facility
Lease or any of its rights  thereunder or any  disposition of all or any part of
any interest in the Undivided  interest,  the Real Property interest,  Unit 1 or
any other property  referred to in this Facility Lease or in this Facility Lease
or any other Transaction  Document or Financing Document.  All payments required
to be made  pursuant to Section 20 shall be made  directly  to, or as  otherwise
requested  by, the  Indemnitee  entitled  thereto  upon  written  demand by such
Indemnitee.

                  (a)  Severability of Provisions Any provision of this Facility
Lease  which may be  determined  by  competent  authority  to be  prohibited  or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining   provisions   hereof  or  thereof,   and  any  such   prohibition  or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.  To the extent permitted
by  Applicable  Law, the Lessee hereby waives any provision or law which renders
any provision hereof prohibited or unenforceable in any respect.

                  (d) True  Lease.  This  Facility  Lease  shall  constitute  an
agreement  of lease  and  nothing  herein or  elsewhere  shall be  construed  as
conveying  to the Lessee any right,  title or  interest  in or to the  Undivided
Interest or the Real Property Interest, except as lessee only.

                  (e)  Original  lease.  The single  executed  original  of this
Facility  Lease  marked  "THIS  COUNTERPART  IS THE  ORIGINAL  COUNTERPART"  and
containing the receipt of the Indenture  Trustee thereon shall be the "Original"
of this  Facility  Lease.  To the extent that this  Facility  Lease  constitutes
chattel  paper,  as such term is defined in the  Uniform  commercial  code as in
effect in any  applicable  jurisdiction,  no security  interest in this Facility
Lease may be created through the transfer or possession of any counterpart other
than the "Original".

                                      -47-

6091.CHASEU1. LEASE. 47:1


<PAGE>


(f) Governing  Law.  This  Facility  Lease shall be governed by and construed in
accordance  with the law of the state of flew York,  except to the  extent  that
pursuant  to the law of the State of Arizona  the law of the State of Arizona is
mandatorily applicable hereto.

                  (g)  Headings.  The  division  of  this  Facility  Lease  into
sections,  the  provision of a table of con-tents  and the insertion of headings
are for  convenience of reference only and shall not affect the  construction or
interpretation of this Facility Lease.

                  (h) Concerning  the Owner  Trustee.  FNB is entering into this
Facility Lease solely as Owner Trustee under the Trust  Agreement and not in its
individual capacity.  Anything herein to the contrary  notwithstanding,  all and
each of the representations, warranties, undertakings and agreements herein made
on the  part  of the  Owner  Trustee  are  made  and  intended  not as  personal
representations,  warranties,  undertakings and agreements by or for the purpose
or with the  intention of binding FNB  personally  but are made and intended for
the  purpose  of  binding  only the Trust  Estate,  and this  Facility  Lease is
executed and delivered by the Owner Trustee solely in the exercise of the powers
expressly  conferred  upon it as  trustee  under  the  Trust  Agreement;  and no
personal  liability or  responsibility  is assumed  hereunder by or shall at any
time  be  enforceable  against  FNB or  any  successor  in  trust  or the  Owner
Participant on account of any representation, warranty, undertaking or agreement
hereunder of the Owner Trustee,  either expressed or implied,  all such personal
liability,  if any, being expressly waived by the Lessee, except that the Lessee
or any Person claiming by, through or under it, making claim hereunder, may look
to the Trust Estate for  satisfaction  of the same and the owner  Trustee or its
successor interest, as applicable,  shall be personally liable for its own gross
negligence or  willful-misconduct.  If a successor owner trustee is appointed in
accordance with the terms of the Trust  Agreement,  such successor owner trustee
shall,  without any further act, succeed to all the rights,  duties,  immunities



                                      -48-

6091. CHASEUlLEASE. 47:1


<PAGE>


and obligations of the Owner Trustee hereunder and the predecessor owner trustee
shall be released from all further duties and obligations hereunder.

                  (i) Disclosure.  Pursuant to Arizona Revised  Statutes Section
33-401, the beneficiary of the Trust Agreement is Chase Manhattan Realty Leasing
Corporation,  a New York corporation  whose address is One Chase Manhattan Plaza
(20th Floor), New York, New York 10081, Attention of Leasing Administrator.  The
address  of the  beneficiary  is also  therein  described.  A copy of the  Trust
Agreement is available for inspection at the offices of the Owner Trustee at 100
Federal  Street,  Boston,  Massachusetts  02110,  Attention of  Corporate  Trust
Division.

                  (j) Counterpart Execution. This Facility Lease may be executed
in any number of  counterparts  and by each of the parties  hereto or thereto on
separate  counterparts,  all such counterparts together constituting but one and
the same instrument.


























                                      -49-

6091.CHASEU1.LEASE.47:1


<PAGE>


IN WITNESS WHEREOF, each of the parties hereto has caused this Facility Lease to
be duly executed in New York, New York by an officer thereunto duly authorized.

                                       THE FIRST NATIONAL BANK OF
                                         BOSTON,  not in its  individual
                                         capacity,  but  solely as Owner
                                         Trustee     under    a    Trust
                                         Agreement, dated as of December
                                         15, 1986,  with Chase Manhattan
                                         Realty Leasing Corporation

                                       By
                                           -----------------------------
                                              Assistant Vice President



                                       PUBLIC SERVICE COMPANY
                                         OF NEW MEXICO


                                       By
                                           -----------------------------
                                            Senior Vice President and 
                                             Chief Financial Officer
















6091.CHASEU1.LEASE.47:1

<PAGE>


State of New York    )
                     )  ss:
County of New York   )

The foregoing  instrument was acknowledged  before me this 15th day of December,
1986, by A.J.  Robison,  Senior Vice  President and Chief  Financial  Officer of
Public Service Company of New Mexico, a New Mexico Corporation, on behalf of the
corporation.

                                            /s/ Delia T. Santiago
                                           -----------------------
                                               Notary Public
                                               Delia T. Santago
                                       Notary Public State of New York
                                               No 41-3451160
                                         Qualified In Queens County
                                      Commission Expires March 30, 1987


State of New York    )
                     ) ss.
County of New York   )





The foregoing  instrument was acknowledged  before me this 15th day of December,
1986, by Martin F. Henry, Assistant Vice President of The First Natiohal Bank of
Boston, a national banking association,  on behalf of the banking association as
Owner Trustee under that certain Trust Agreement dated as of December 15, 1986.


                                             /s/ David A. Spivak
                                            ------------------------
                                                 Notary Public

                                                David A. Spivak
                                         Notary Public, State of New York
                                                 No. 31-4693488
                                          Qualified in New York County
                                        Commission Expires March 10, 1987


<PAGE>
                                                                   SCHEDULE 1
                                                                   TO FACILITY
                                                                   LEASE
                           SCHEDULE OF CASUALTY VALUES

 BASIC RENT                                             PERCENTAGE OF
PAYMENT DATE                                            FACILITY COST
------------                                            -------------

15JAN87                                                     105.94334
15JUL87                                                     104.82779

15JAN88                                                     106.20642
15JUL88                                                     105.17772

15JAN89                                                     108.21549
15JUL89                                                     107.07107

15JAN90                                                     109.47569
15JUL90                                                     108.31785

15JAN91                                                     110.15808
15JUL91                                                     108.97072

15JAN92                                                     110.21149
15JUL92                                                     108.95844

15JAN93                                                     109.62035
15JUL93                                                     108.26330

15JAN94                                                     108.30191
15JUL94                                                     106.80048

15JAN95                                                     106.29835
15JUL95                                                     104.89817

15JAN96                                                     104.18824
15JUL96                                                     102.85333

15JAN97                                                     102.10833
15JUL97                                                     100.70463

15JAN98                                                     99.83623
15JUL98                                                     98.33687

15JAN99                                                     97.32303
15JUL99                                                     95.71397

15JAN100                                                    94.53854
15JUL100                                                    92.80428

15JAN101                                                    91.45971
15JUL101                                                    89.82730

<PAGE>
                           SCHEDULE OF CASUALTY VALUES

 BASIC RENT                                             PERCENTAGE OF
PAYMENT DATE                                            FACILITY COST
------------                                            -------------

15JAN102                                                    88.14857
15JUL102                                                    86.22766

15JAN103                                                    84.62272
15JUL103                                                    82.60677

15JAN104                                                    80.88149
15JUL104                                                    78.76212

15JAN105                                                    76.90592
15JUL105                                                    74.67525

15JAN106                                                    72.67859
15JUL106                                                    70.32818

15JAN107                                                    68.18158
15JUL107                                                    65.70404

15JAN108                                                    63.39779
15JUL108                                                    60.78382

15JAN109                                                    58.30671
15JUL109                                                    55.54644

15JAN110                                                    52.88659
15JUL110                                                    49.96951

15JAN111                                                    47.11428
15JUL111                                                    44.02926

15JAN112                                                    40.96522
15JUL112                                                    37.70042

15JAN113                                                    34.41334
15JUL113                                                    30.95620

15JAN114                                                    27.43099
15JUL114                                                    23.76819

15JAN115                                                    20.00000


<PAGE>


                                                                      SCHEDULE 2
                                                                              TO
                                                                  FACILITY LEASE

                      SCHEDULE OF SPECIAL CASUALTY VALUES

BASIC RENT         PERCENTAGE OF            BASIC RENT          PERCENTAGE OF
PAYMENT DATE       FACILITY COST           PAYMENT DATE         FACILITY COST
------------       -------------           ------------         -------------

15JAN87             105.93953                15JUN90              107.84240
15FEB87             106.39611                15JUL90              107.91093
15MAR87             106.86087                15AUG90              107.97717
15APR87             105.85050                15SEP90              107.46000
15MAY87             106.19610                15OCT90              107.51432
15JUN87             104.47466                15NOV90              107.57126
15JUL87             104.79951                15DEC90              107.51733
15AUG87             105.11218
15SEP87             104.31547                15JAN91              109.64942
15OCT87             104.60756                15FEB91              109.69166
15NOV87             104.90548                15MAR91              109.73644
15DEC87             104.94556                15APR91              109.28655
                                             15MAY91              109.31183
15JAN88             106.14985                15JUN91              108.32723
15FEB88             106.38006                15JUL91              108.33966
15MAR88             106.61522                15AUG91              108.34874
15APR88             105.91697                15SEP91              107.86031
15MAY88             106.12748                15OCT91              107.85663
15JUN88             104.87501                15NOV91              107.85491
15JUL88             105.07218                15DEC91              107.76886
15AUG88             105.25702
15SEP88             104.66908                15JAN92              109.45422
15OCT88             104.84050                15FEB92              109.43576
15NOV88             105.01603                15MAR92              109.41913
15DEC88             105.02104                15APR92              109.03902
                                             15MAY92              109.00388
15JAN89             108.05718                15JUN92              108.10129
15FEB89             108.20650                15JUL92              108.05429
15MAR89             108.35960                15AUG92              108.00214
15APR89             107.74554                15SEP92              107.53770
15MAY89             107.87894                15OCT92              107.47373
15JUN89             106.71734                15NOV92              107.41103
15JUL89             106.83931                15DEC92              107.28985
15AUG89             106.95663
15SEP89             106.40377                15JAN93              108.56550
15OCT89             106.50984                15FEB93              108.48510
15NOV89             106.61914                15MAR93              108.40583
15DEC89             106.59029                15APR93              108.08086
                                             15MAY93              107.98296
15JAN90             109.16669                15JUN93              107.14780
15FEB90             109.26305                15JUL93              107.03709
15MAR90             109.36257                15AUG93              106.91991
15APR90             108.83335                15SEP93              106.46755
15MAY90             108.91403                15OCT93              106.33746


<PAGE>


                      SCHEDULE OF SPECIAL CASUALTY VALUES

BASIC RENT         PERCENTAGE OF            BASIC RENT          PERCENTAGE OF
PAYMENT DATE       FACILITY COST           PAYMENT DATE         FACILITY COST
------------       -------------           ------------         -------------

15NOV93             106.20789                15MAR97               98.92106
15DEC93             106.04267                15APR97               98.69482
                                             15MAY97               98.46857
15JAN94             106.90052                15JUN97               97.92681
15FEB94             106.75067                15JUL97               97.70056
15MAR94             106.60116                15AUG97               97.46285
15APR94             106.32122                15SEP97               97.13509
15MAY94             106.15192                15OCT97               96.89738
15JUN94             105.37730                15NOV97               96.65967
15JUL94             105.20324                15DEC97               96.42196
15AUG94             105.02141
15SEP94             104.58183                15JAN98               96.55907
15OCT94             104.40000                15FEB98               96.30932
15NOV94             104.21817                15MAR98               96.05956
15DEC94             104.02334                15APR98               95.80980
                                             15MAY98               95.56004
15JAN95             104.50146                15JUN98               95.01569
15FEB95             104.31151                15JUL98               94.76594
15MAR95             104.12156                15AUG98               94.50352
15APR95             103.92206                15SEP98               94.16087
15MAY95             103.73211                15OCT98               93.89845
15JUN95             103.07090                15NOV98               93.63604
15JUL95             102.88096                15DEC98               93.37362
15AUG95             102.68252
15SEP95             102.30494                15JAN99               93.45452
15OCT95             102.10651                15FEB99               93.17880
15NOV95             101.90807                15MAR99               92.90309
15DEC95             101.70963                15APR99               92.62737
                                             15MAY99               92.35165
15JAN96             101.94689                15JUN99               91.80293
15FEB96             101.73958                15JUL99               91.52721
15MAR96             101.53228                15AUG99               91.23752
15APR96             101.32498                15SEP99               90.87752
15MAY96             101.11768                15OCT99               90.58782
15JUN96             100.57447                15NOV99               90.29813
15JUL96             100.36717                15DEC99               90.00844
15AUG96             100.15060
15SEP96             99.83425                 15JAN100              90.02972
15OCT96             99.61768                 15FEB100              89.72534
15NOV96             99.40112                 15MAR100              89.42096
15DEC96             99.18455                 15APR100              89.11658
                                             15MAY100              88.81220
15JAN97             99.37356                 15JUN100              88.25712
15FEB97             99.14731                 15JUL100              87.95274


<PAGE>


                      SCHEDULE OF SPECIAL CASUALTY VALUES

BASIC RENT         PERCENTAGE OF            BASIC RENT          PERCENTAGE OF
PAYMENT DATE       FACILITY COST           PAYMENT DATE         FACILITY COST
------------       -------------           ------------         -------------

15AUG100            87.63464                 15JAN104             73.32182
15SEP100            87.25627                 15FEB104             72.92437
15OCT100            86.93817                 15MAR104             72.52692
15NOV100            96.62007                 15APR104             72.12947
15DEC100            86.30198                 15MAY104             71.73202
                                             15JUN104             71.15925
15JAN101            86.26162                 15JUL104             70.76180
15FEB101            85.93294                 15AUG104             70.35147
15MAR101            85.60426                 15SEP104             69.90958
15APR101            85.27558                 15OCT104             69.49925
15MAY101            84.94690                 15NOV104             69.08892
15JUN101            84.39059                 15DEC104             68.67859
15JUL101            84.06191
15AUG101            93.72136                 15JAN105             68.46113
15SEP101            83.33069                 15FEB105             68.03909
15OCT101            82.99014                 15MAR105             67.61705
15NOV101            82.64959                 15APR105             67.19500
15DEC101            82.30904                 15MAY105             66.77296
                                             15JUN105             66.18738
15JAN102            82.21225                 15JUL105             65.76533
15FEB102            81.86080                 15AUG105             65.32961
15MAR102            81.50935                 15SEP105             64.86454
15APR102            81.15790                 15OCT105             64.42882
15MAY102            80.80645                 15NOV105             63.99309
15JUN102            80.25110                 15DEC105             63.55736
15JUL102            79.89965
15AUG102            79.53619                 15JAN106             63.29973
15SEP102            79.13288                 15FEB106             62.85157
15OCT102            78.76943                 15MAR106             62.40341
15NOV102            78.40598                 15APR106             61.95525
15DEC102            78.04252                 15MAY106             61.50709
                                             15JUN106             60.90786
15JAN103            77.89921                 15JUL106             60.45970
15FEB103            77.52494                 15AUG106             59.99702
15MAR103            77.15066                 15SEP106             59.50733
15APR103            76.77639                 15OCT106             59.04465
15MAY103            76.40211                 15NOV106             58.58197
15JUN103            75.84136                 15DEC106             58.11930
15JUL103            75.46709
15AUG103            75.08068                 15JAN107             57.81968
15SEP103            74.66059                 15FEB107             57.34380
15OCT103            74.27418                 15MAR107             56.86793
15NOV103            73.88776                 15APR107             56.39205
15DEC103            73.50135                 15MAY107             55.91618


<PAGE>


                      SCHEDULE OF SPECIAL CASUALTY VALUES

BASIC RENT         PERCENTAGE OF            BASIC RENT          PERCENTAGE OF
PAYMENT DATE       FACILITY COST           PAYMENT DATE         FACILITY COST
------------       -------------           ------------         -------------

15JUN107            55.30241                 15NOV110             33.40813
15JUL107            54.82804                 15DEC110             32.82000
15AUG107            54.33674
15SEP107            53.82087                 15JAN111             32.33061
15OCT107            53.32957                 15FEB111             31.72573
15NOV107            52.83828                 15MAR111             31.12085
15DEC107            52.34698                 15APR111             30.51597
                                             15MAY111             29.91109
15JAN108            52.00389                 15JUN111             29.22912
15FEB108            51.49859                 15JUL111             28.63357
15MAR108            50.99328                 15AUG111             28.00911
15APR108            50.48798                 15SEP111             27.37107
15MAY108            49.98267                 15OCT111             26.74661
15JUN108            49.35342                 15NOV111             26.12215
15JUL108            48.85134                 15DEC111             25.49770
15AUG108            48.32967
15SEP108            47.78597                 15JAN112             24.95370
15OCT108            47.26430                 15FEB112             24.31147
15NOV108            46.74262                 15MAR112             23.66923
15DEC108            46.22095                 15APR112             23.02700
                                             15MAY112             22.38477
15JAN109            45.83185                 15JUN112             21.68291
15FEB109            45.29531                 15JUL112             21.05240
15MAR109            44.75877                 15AUG112             20.38938
15APR109            44.22223                 15SEP112             19.71588
15MAY109            43.68570                 15OCT112             19.05287
15JUN109            43.03996                 15NOV112             18.38985
15JUL109            42.50852                 15DEC112             17.72684
15AUG109            41.95461
15SEP109            41.38135                 15JAN113             17.12501
15OCT109            40.82744                 15FEB113             16.44313
15NOV109            40.27353                 15MAR113             15.76124
15DEC109            39.71962                 15APR113             15.07936
                                             15MAY113             14.39748
15JAN110            39.28180                 15JUN113             13.67445
15FEB110            38.71211                 15JUL113             13.00689
15MAR110            38.14242                 15AUG113             12.30295
15APR110            37.57273                 15SEP113             12.30295
15MAY110            37.00305                 15OCT113             10.88784
15JUN110            36.33976                 15NOV113             10.18390
15JUL10             35.77719                 15DEC113              9.47996
15AUG110            35.18906
15SEP110            34.58439                 15JAN114              8.81689
15OCT110            33.99626                 15FEB114              8.09292


<PAGE>


                      SCHEDULE OF SPECIAL CASUALTY VALUES

BASIC RENT         PERCENTAGE OF            BASIC RENT          PERCENTAGE OF
PAYMENT DATE       FACILITY COST           PAYMENT DATE         FACILITY COST
------------       -------------           ------------         -------------

15MAR114              7.36895
15APR114              6.64498
15MAY114              5.92101
15JUN114              5.17546
15JUL114              4.46863
15AUG114              3.72125
15SEP114              2.97008
15OCT114              2.22270
15NOV114              1.47531
15DEC114              0.72793

15JAN115              0.00000



<PAGE>


                                                                      Schedule 3
                                                                              to
                                                                  Facility Lease

                         SCHEDULE OF TERMINATION VALUES

BASIC RENT                                               PERCENTAGE OF
PAYMENT DATE                                             FACILITY COST
------------                                             -------------

15JAN87                                                     105.94334
15JUL87                                                     104.82779

15JAN88                                                     106.20642
15JUL88                                                     105.17772

15JAN89                                                     108.21549
15JUL89                                                     107.07107

15JAN90                                                     109.47569
15JUL90                                                     108.31785

15JAN91                                                     110.15808
15JUL91                                                     108.97072

15JAN92                                                     110.21149
15JUL92                                                     108.95844

15JAN93                                                     109.62035
15JUL93                                                     108.26330

15JAN94                                                     08.30191
15JUL94                                                     106.80048

15JAN95                                                     106.29835
15JUL95                                                     104.89817

15JAN96                                                     104.18824
15JUL96                                                     102.85333

15JAN97                                                     102.10833
15JUL97                                                     100.70463

15JAN98                                                     99.83623
15JUL98                                                     98.33687

15JAN99                                                     97.32303
15JUL99                                                     95.71397

15JAN100                                                    94.53854
15JUL100                                                    92.80428

15JAN101                                                    91.45971
15JUL101                                                    89.62720



<PAGE>


                         SCHEDULE OF TERMINATION VALUES

BASIC RENT                                               PERCENTAGE OF
PAYMENT DATE                                             FACILITY COST
------------                                             -------------

15JAN102                                                    88.14857
15JUL102                                                    86.22766

15JAN103                                                    84.62272
15JUL103                                                    82.60677

15JAN104                                                    80.88149
15JUL104                                                    78.76212

15JAN105                                                    76.90592
15JUL105                                                    74.67525

15JAN106                                                    72.67859
15JUL106                                                    70.32818

15JAN107                                                    68.18158
15JUL107                                                    65.70404

15JAN108                                                    63.39779
15JUL108                                                    60.78382

15JAN109                                                    58.30671
15JUL109                                                    55.54644

15JAN110                                                    52.88659
15JUL110                                                    49.96951

15JAN111                                                    47.11428
15JUL111                                                    44.02926

15JAN112                                                    40.96522
15JUL112                                                    37.70042

15JAN113                                                    34.41334
15JUL113                                                    30.95620

15JAN114                                                    27.43099
15JUL114                                                    23.76819

15JAN115                                                    20.0000


<PAGE>

                                   SCHEDULE 4
                                       to
                                 FACILITY LEASE


                     REAL PROPERTY INTEREST DESCRIPTlON

     The Real  Property  Interest is a (i) 0.5%  undivided  interest in the land
     described in I below, a (ii).566667%  undivided  interest in the rights and
     interests described in II below, and (iii) a .566667% undivided interest in
     the rights and interests described in III below.


    I.      PVNGS PLANT SITE

    PARCEL NO. 1: Lot Four (4); the Southwest quarter of the Northwest  quarter;
    and the West half of the Southwest quarter, all in Section Two (2), Township
    One (1)  South,  Range  Six (6) West of the Gila  and  Salt  River  Base and
    Meridian, Maricopa County, Arizona.

    PARCEL NO. 2: All of Section  Three (3),  Township One (1) South,  Range Six
    (6) West of the Gila and Salt  River  Base and  Meridian,  Maricopa  county,
    Arizona.

    PARCEL NO. 3: The East half of  Section  Four (4),  Township  One (l) South,
    Range Six (6) West of the Gila and Sa1t  River Base and  Meridian,  Maricopa
    County, Arizona.

    PARCEL NO.  4:The West half of Section  Twenty-six  (26),  Township  One (1)
    North,  Range  Six (6) West of the Gila and Salt  River  Base and  Meridian,
    Maricopa County, Arizona.

    PARCEL NO. 5: Section  Twenty-seven (27),  Township One (1) North, Range Six
    (6) West of the Gila and Salt  River  Base and  Meridian,  Maricopa  County,
    Arizona; EXCEPT the Northwest quarter of Section 27.

    PARCEL NO. 6: The Southeast quarter of Section  Twentyeight  (28),  Township
    One (1)  North,  Range  Six (6) West of the Gila  and  Salt  River  Base and
    Meridian,  Maricopa  County,  Arizona;  EXCEPT 50% of all oil, gas and other
    mineral deposits and geothermal resources recovered from or developed on the
    property,  as reserved in instrument  recorded May 10, 1974 in Docket 10647,
    page 136.



    6091. CHASEUl. LEASE.47:l


<PAGE>


    PARCEL No. 7: The East half of Section  Thirty-three (33),  Township One (1)
    North,  Range  Six (6) West of the Gila ant Salt  River  Base and  Meridian,
    Maricopa County, Arizona.

    PARCEL NO. 8: All of Section Thirty-four (34), Township One (1) North, Range
    Six (6) West of the Gila and Salt River Base and Meridian,  Maricopa County,
    Arizona.

    PARCEL NO. 9: The West half of Section  Thirty-five  (35),  Township One (1)
    North,  Range  Six (6) West of the Gila and Salt  River  Base and  Meridian,
    Maricopa County, Arizona.

    PARCEL NO. 10: The Southeast  quarter of Section Nine (9),  Township One (1)
    South,  Range  Six (6) West of the Gila and Salt  River  Base and  Meridian,
    Maricopa County, Arizona; EXCEPT the Northwest quarter thereof.

    PARCEL NO. 11: All of Section Ten (10),  Township  One (1) South,  Range Six
    (6) West of the Gila and Salt  River  Base and  Meridian,  Maricopa  County,
    Arizona;  EXCEPT the East half of the Southeast quarter thereof;  and EXCEPT
    the North half of the South half of the  Northwest  quarter of the Northwest
    quarter thereof.

    PARCEL  NO.  12:  That part of the East  half of the  Southwest  quarter  of
    Section Twenty-three (23), Township One (1) North, Range Six (6) West of the
    Gila and Salt  River  Base and  Meridian,  Maricopa  County,  Arizona,  more
    particularly described as follows:

                  BEGINNING at the Southeast corner of the said East half of the
        Southwest  quarter of Section 23; thence West, an assumed  bearing along
        the South line of the said East half of the Southwest quarter of Section
        23, for a distance of 762.04 feet; thence North. 0 degrees 03 minutes 39
        seconds  West;  parallel  to the East  line of the said East half of the
        Southwest  quarter of Section  23, for a distance  of 1946.46  feet to a
        point  on  the   South   right-of-way   line  of  the  200   foot   wide
        HASSAYAMPA-SALDME HIGHWAY, as recorded in Book 12 of Road Maps, page 82,
        Maricopa County Recorder,  Maricopa County,  Arizona;  thence continuing
        North 0 degrees 03 minutes 39 seconds West for a distance of 234.15 feet
        to a point on the North right-of-way line of said highway;  thence South



                                       -2-

609l.CHASEUl.LEASE.47:1

        58 degrees 43 minutes  35 seconds  East,  along said North  right-of-way
        line for a distance  of 892.17  feet to a point on the said East line of
        the East half of the  Southwest  quarter of Section 23;  thence  South 0
        degrees 03 minutes 39 seconds East,  along said East line for a distance
        of 234.15 feet to a point on the said South  right-of-way  line;  thence
        continuing  South 0 degrees On minutes 39 seconds East for a distance of
        1483.31 feet to the true point of beginning;

                  EXCEPT the East 305 feet of the South 305 feet thereof; and
                  EXCEPT one-half of the minerals and mineral rights and mineral
        estates  of every  kind and  nature,  as set forth in Deed  recorded  in
        Docket 11652, page 52, Maricopa County Records.

PARCEL NO. 13: The North half of the South half of the Northwest  quarter of the
Northwest  quarter of Section Ten (10),  Township  One (l) South,  Range Six (6)
West of the Gila and Salt River Base and Meridian, Maricopa County, Arizona.

II.       HASSAYAMA PUMPING STATION AND EFFLUENT PIPEINE

                All real property,  leases, licenses,  easements,  rights-of-way
and  other  property  held by  Title  USA  Company  of  Arizona  Trust  No.  530
established by that certain Trust  Agreement dated October 15, 1975, as amended,
but excluding therefrom all improvements.

III.       MISCELLANEOUS REAL PROPERTY INTERESTS

                Those  ANPP   Project   Agreements   (as  defined  in  the  ANPP
Participation  Agreement),  in  addition  to the Trust  Agreement  for Title USA
Company of Arizona Trust 530,  consisting of leases,  licenses,  easements,  and
permits, which provide land and land rights for (a) the pipeline to supply waste
water effluent to PVNGS from the 91st Avenue sewage  treatment plant serving the
Phoenix  Metropolitan area and (b) railroad access to the Nuclear Plant Site (as
defined in the ANPP Participation Agreement).





                                       -3-

6091. CHASEUl LEASE. 47:1


<PAGE>


                                   SCHEDULE 5
                                       to
                                 FACILITY LEASE


                     UNDIVIDED INTEREST DESCRIPTION


                  The Undivided  Interest is a (i) 1.700000%  undivided interest
in and to the  property  described  under A below and (ii) a .566667%  undivided
interest in and to the property described in B below

                  A.  Unit  1 of  the  Palo  Verde  Nuclear  Generating  Station
(PVNGS), located in Maricopa County, Arizona, approximately 55 miles west of the
City of  Phoenix,  Arizona,  and  approximately  16  miles  west of the  City of
Buckeye, Arizona, consisting of:

I. Unit 1 Combustion  Engineering  "System 80" pressurized water reactor nuclear
steam  supply  system  (the NSSS) . The NSSS is  comprised  of a reactor  vessel
containing 241 fuel assemblies with  approximately  100 tons of enriched uranium
(fuel  assemblies,  however,  are not part of Unit 1 and are not included in the
Undivided Interest being sold), two steam generators, four reactor coolant pumps
and various  additional  systems and subsystems.  The licensed thermal rating of
the NSSS is 3800 MW.

II.   Unit  1  GE  TC6F-43,   1800  RPM   tandem-compound,   six  flow,   reheat
turbine-generator  including turbine,  generator,  moisture  separator-reheater,
exciter,  controls, and auxiliary subsystems. The turbine-generator is conductor
cooled  and rated at 1,554 MVA at 24,000 V, 3 phase,  60 Hz,  1.5 in Hg ABS back
pressure, and approximately 1,363 MW maximum gross electric output.

III.  Unit  1  146  ft.  inside  diameter,  steel-lined,   prestressed  concrete
cylindrical containment building with a hemispherical dome designed for 60 psig.
The containment building houses the reactor system.



6091.CHASEUl.LEASE.47:1


<PAGE>



IV.  Unit 1 auxiliary  systems and  equipment  including  engineered  safeguards
systems,  reactor  auxiliary  systems and  turbine-generator  auxiliary  systems
associated with items I, II, and III above,  extending to and including the Unit
1 start-up transformer.

V. Unit 1 cooling tower system  consisting of three (3) mechanical draft cooling
towers, including a closed cycle circulating water system, make-up water systems
and essential spray ponds.

VI. Unit 1 radioactive waste treatment system,  including liquid,  gaseous,  and
solid  waste  subsystems,  controls,  instrumentation,   storage,  handling  and
shipment facilities.

VII.  Unit 1 emergency  diesel-generator  system,  including a  diesel-generator
building which contains two diesel generators,  fuel oil systems, storage tanks,
control and instrumentation systems and other equipment.

VIII.   Unit   1   internal   communication   systems,    including   associated
interconnections and computer data links.

BUT EXCLUDING:

        I.          Nuclear fuel for Unit 1, includinq spare fuel assemblies.

        II.         Spare Parts (Unit 1)

        III.        Transmission  facilities  (including  any and all facilities
                    and equipment providing  interconnection  between the Unit 1
                    turbine  generator  and the ANPP  High  Voltage  Switchyard,
                    including  step-up  transformers  and standby  equipment and
                    systems).



                                       -2-

6O91.CHASEUl. LEASE. 47:1

<PAGE>



IV.   Oil and diesel fuel inventories (Unit 1).                         =2219
                                                                        =(2219)
B.    All PVNGS common facilities, INCLUDING BUT NOT LIMITED
      TO:                                                               =2221
                                                                        =(2221)
I.    Surveillance systems, including associated                        =2225
      radioactive monitoring systems and equipment.                     =2226
                                                                        =(2226)
II.   Water treatment facilitaies and transport systems for supply      =2228
      of waste water effluent.                                          =2229
                                                                        =(2229)
III.  Warehouse and related storage facilities                          =2231
      and equipment.                                                    =(2231)
      BUT EXCLUDING:
I.    Nuclear fuel, including spare fuel                                =2236
      assemblies.                                                       =(2236)
II.   All transmission and ANPP High Voltage Switchyard                 =2238
      facilities.                                                       =(2238)
III.  Adminstration Building.                                           =2240

IV.   Adminstration Annex Builidng.                                     =2242

V.    Technical Support Center.                                         =2244

VI.   Visitor Center.                                                   =2246

VII.  External communication systems and equipment,                     =2248
      including associated interconnections and computer                =2249
      data links.                                                       =(2249)

VIII. Parking lot improvements, road improvemnts, fencing               =2251
      and dikes.                                                        =2252

IX.   Spare parts (common facilities).                                  =2254

X.    Simulator.                                                        =2256

XI.   Oil and diesel fuel inventories.                                  =2258

XII.  Real property, beneficial interest in Title USA Company of        =2260
      Arizona Trust No. 530, and Project Agreement interests            =2261
      described in Schedule 4.

                                       -3-

6091.CHASEU1.LEASE.47:1

<PAGE>

When Recorded, Return to: Greg R. Nielsen, Esq.
                          Snell & Wilmer
                          3100 Valley Bank Center
                          Phoenix, Arizona 85073

        CERTAIN RIGHTS OF THE LESSOR UNDER THE FACILITY LEASE AS AMENDED BY THIS
AMENDMENT  NO. 1 THERETO  HAVE BEEN  ASSIGNED  TO, AND ARE SUBJECT TO A SECURITY
INTEREST  IN  FAVOR  OF,  CHEMICAL  BANK,  AS  INDENTURE  TRUSTEE  UNDER A TRUST
INDENTURE,  MORTGAGE,  SECURITY  AGREEMENT  AND  ASSIGNMENT OF RENTS DATED AS OF
DECEMBER  15,  1986.   THIS   AMENDMENT   NO.1  HAS  BEEN  EXECUTED  IN  SEVERAL
COUNTERPARTS.  SEE SECTION 3(e) OF THIS AMENDMENT NO1 FOR INFORMATION CONCERNING
THE RIGHTS OF HOLDERS OF VARIOUS COUNTERPARTS HEREOF.

      THIS COUNTERPART IS NOT THE ORIGINAL COUNTERPART.

================================================================================

                                 AMENDMENT NO.1

                            Dated as of April 8, 1987
                                       to

                             FACILITY LEASE (Unit 1)
                          Dated as of December 15, 1986

                                     between

                       THE FIRST NATIONAL BANK OF BOSTON,
                        not in its individual capacity ,a
                           but solely as Owner Trustee
                        under a Trust Agreement, dated as
                              of December 15, 1986,
                           with Chase Manhattan Realty
                              Leasing Corporation,

                                     Lessor
                                       and
                      PUBLIC SERVICE COMPANY OF NEW MEXICO,
                                     Lessee

================================================================================

             Original Facility Lease Recorded on DECEMBER 17, 1986,
                as Instrument No. 86-695925, in Maricopa County
                               Recorder's Office.

================================================================================
6091 CHASEU1 LEASE 204:1

<PAGE>


                  AMENDMENT NO. 1, dated as of April 8, 1987  (Amendment No. 1),
to the Facility Lease dated as of December 15, 1986,  between THE FIRST NATIONAL
BANK or BOSTON, a national banking association,  not in its individual capacity,
but solely as Owner  Trustee under a Trust  Agreement,  dated as of December 15,
1986, with chase Manhattan  Realty Leasing  Corporation,  a New York corporation
(the Lessor), and PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation
(the Lessee).


                                   WITNESSETH:


                  WHEREAS,  the Lessee and the Lessor  have  heretofore  entered
into a Facility  Lease  dated as of  December  15,  1986 (the  Facility  Lease),
providing  for the lease by the Lessor to the Lessee of the  Undivided  Interest
and the Real Property Interest;

                  WHEREAS,  the  Lessee  and the  Lessor  desire  to  amend  the
Facility Lease as set forth in section 2 hereof; and

                  WHEREAS, the Indenture Trustee has consented to this Amendment
No. 1 pursuant to the  Request,  Instruction  and Consent  effective on April 8,
1987;

                  NOW, THEREFORE,  in consideration of the premises and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                  SECTION 1. Definitions.

                  For  purposes  hereof,  capitalized  terms used herein and not
otherwise  defined herein or in the recitals shall have the meanings assigned to
such ante in Appendix A to the Facility Lease.

6091.CHASEEU1.LEASE.204:1

<PAGE>



                  SECTION 2. Amendments.

                  (a)A  new  section  8(g) of the  Facility  Lease  is  inserted
therein, to read in its entirety as follows:

                  "(g) Useful  Life.  If the Lessee shall not  theretofore  have
        exercised its option under section 13 to purchase the Undivided Interest
        and the  Real  Property  Interest,  then  (i) if the  Lessee  shall  not
        theretofore  have  exercised  its option to renew the Lease  pursuant to
        Section 12, on January 15, 2014, the Lessee shall initiate the Appraisal
        Procedure to determine the remaining  Economic  Useful Life of Unit 1 as
        of July 15, 2014 and (ii) an the Rent  Payment Date  occurring  one year
        prior to the end of the Renewal Term, if any, the Lessee shall  initiate
        the Appraisal  Procedure to determine the remaining Economic Useful Life
        of Unit 1 as of the date  six  months  prior  to the end of the  Renewal
        Term.  The  Lessee and the  Lessor  agree to use their  best  efforts to
        ensure that such determination of remaining economic useful life is made
        no  later   than  July  15,   2014  (in  the  case  of  the  first  such
        determination)  and six months  prior to the end of the Renewal Term (in
        the case of the second such determination)

                  (b) section  l5(iv) of the Facility Lease is hereby amended to
read in its entirety as follows:

                  "(iv) (1) the Lessee shall fail to per-form its agreements set
        forth in section 5(a) hereof or (2) the remaining  Economic  Useful Life
        of Unit 1, as determined under Section e(g) if required thereby to be so
        determined,  shall be (x) as of the date six months  prior to the end of
        the Basic Lease Term, less than five and one-half years or (y) as of the
        date six months prior to the end of the Renewal Term, three and one-half
        years; or"






                                       -2-
6091.CHASEU1.LEASE.204:1


<PAGE>


                  (C)  section  16(a)  (vii) of the  Facility  Lease  is  hereby
amended to read in its entirety as follows:

                 "(vii) in the case of an Event of Default.  specified in clause
                 (iv) of section 15, the Lessor may demand, by written notice to
                 the Lessee  specifying a payment date which shall be (A) in the
                 case of an Event of Default  specified in subclause (1) of said
                 clause  (IV),  not earlier than the date 30 days after the last
                 Basic Rent Payment Date of the Lease Term, and (B), in the case
                 of an Event  of  Default  specified  in  subclause  (2) of said
                 clause  (iv),  the last  Basic Rent  Payment  Date of the Lease
                 Term,  that the Lessee pay to the Lessor,  and the Lessee shall
                 pay to the Lessor, on such payment date, as liquidated  damages
                 for loss of a bargain and not as a penalty, any unpaid Rent due
                 through  such last Basic Rent  Payment Date plus an amount (not
                 less  than  zero)  equal  to  the  Fair   Market   Sales  Value
                 (determined  without  regard to the  obligation  of the  Lessee
                 under Section  1o(b)(3)(xi) of the Participation  Agreement) of
                 the  undivided   Interest  and  the  Real   Property   Interest
                 (determined  on the basis of the  actual  condition  of Unit 1)
                 determined  as of such last Basic Rent Payment  Date  (together
                 with interest on such amount at the interest rate  specified in
                 section  3(b) (iii) from such last Basic Rent  Payment  Date to
                 the date of actual  payment)  and upon  receipt of such payment
                 the Lessor shall (or may prior to the receipt of such  payment)
                 Transfer  to the Lessee  the  Undivided  Interest  and the Real
                 Property Interest);  provided,  however,  that a the Lessor may
                 not exercise  the  foregoing I. remedy if the Lessor shall have
                 failed to Transfer the Undivided Interest and the Real Property
                 Interest  to the  bidder  (which  shall not be the Lessee or an
                 Affiliate of the Lessee) that shall have  submitted the highest
                 cash bid on or before  the date on which  such Event of Default
                 arose excluding, however, any such cash bid which the Lessor or
                 the Owner  Participant  determines  was not  submitted  in good

                    
                                    -3-





6091.CHASEU1.LEASE.204.1




<PAGE>
        faith,  or as to which the bidder  fails to  certify to the Lessor  such
        information as the Lessor or Owner Participant may reasonably request in
        order to determine  whether or not such bid was  submitted in good faith
        (and the Lessor  agrees that it will,  if and to the extent so requested
        by the  Lessee on or after the date 90 days  preceding  such last  Basic
        Rent Payment Date, use reasonable efforts Cat the expense of the Lessee)
        for a period  ending  on the day 90 days  after  such  last  Basic  Rent
        Payment  Date,  to find a  Person  willing  to  submit  such  cash  bid:
        provided,  however,  that the  failure  of the Lessor to do so shall not
        relieve the Lessee of its obligations under this clause (vii))."

                  (d) A new  definition  is hereby  added to  Appendix  A to the
Facility Lease, to read in its entirety as follows:

                  "Decommissioning shall mean the decommissioning and retirement
        from  service of Unit 1, and the  related  possession,  maintenance  and
        disposal of  radioactive  material  used in or produced  incident to the
        possession and operation of Unit 1, including,  without limitation,  (i)
        placement and  maintenance  of Unit 1 in a state of protective  storage,
        (ii) in-place  entombment and maintenance of Unit 1, (iii) dismantlement
        of Unit 1, (iv) any other form of  decommissioning  and retirement  from
        service  required  by or  acceptable  to the NRC and (v) all  activities
        undertaken  incident to the implementation  thereof and to the obtaining
        of NRC authority therefor,  including, without limitation,  maintenance,
        storage,   custody,   removal,   decontamination,   and  disposition  of
        materials,  equipment  and  fixtures,  razing  of  Unit 1,  removal  and
        disposition of debris from the PVNGS Site, and  restoration of the PVNGS
        Site related to Unit 1 for unrestricted use."

                  (e) A new  definition  is hereby  added to  Appendix  A to the
Facility Lease, to read in its entirety as follows:




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<PAGE>


                  "Decommissioning  Costs shall mean all costs,  liabilities and
        expenses  relating or allocable to, or incurred in connection  with, the
        Decommissioning of Unit 1, including,  without  limitation,  (i) any and
        all costs of activities  undertaken to terminate NRC licensing authority
        and  requirements  to own,  operate  and  possess  Unit 1 and to possess
        radioactive  material used in or produced incident to the possession and
        operation  of  Unit  1)  and  (ii)  any  and  all  costs  of  activities
        undertaken,  prior to  termination  of all NRC  licensing  authority and
        requirements with respect to Unit 1 and the radioactive material used in
        or  produced  incident to the  possession  and  operation  of Unit 1, to
        possess,  maintain,  and  dispose  of  radioactive  material  used in or
        produced incident to the possession and operation of Unit 1."

                  (f) A  new  definition  is  hereby  added  Appendix  A to  the
Facility Lease, to read in entirety as follows:

                  "Economic  Useful Life shall mean that period  (commencing  on
        the date as of which the  determination of Economic Useful Life is to be
        made as provided in section 8(g) of the Facility Lease and ending on the
        date upon which either of the states of affairs described in clauses (i)
        and (ii) below ceases to apply,  or can  reasonably be expected to cease
        to apply,  to Unit 1) during  which  (i) Unit 1 will be useful  to,  and
        usable by, any owner or lessee  thereof as a facility for the generation
        of  electric  power  and (ii)  Unit I is an  economic  and  commercially
        practical  facility  for the  generation  of electric  power  capable of
        producing  (after  taking into  account  costs of capital) a  reasonable
        economic return to the owner thereof. For the purposes of determinations
        under clauses (i) and, (ii) above, the following factors,  among others,
        shall be taken  into  account  (as such  factors  obtain  on the date of
        determination  and as such factors are reasonably  expected to obtain in




                                       -5-




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<PAGE>

the  future):  (a)  provisions  of the Project  Agreements  (including,  without
limitation, the ANPP Participation Agreement and the Material Project Agreements
(or  substitutes for such Material  Project  Agreements in effect on the date of
determination));  (b) the actual  condition and  performance  of Unit 17 (c) the
actual  condition and performance of such other  facilities  constituting  PVNGS
(including,  without  limitation,  the Common Facilities) as are integral to the
operation  of Unit 1;  (d) the  actual  condition  of,  and  access  of the ANPP
Participants to, the ANPP switchyard and such other  transmission  facilities as
are available and necessary to permit the  transmission of the maximum amount of
power  generated  by PVNGS;  (e) the cost of  obtaining,  handling,  storing and
disposing of nuclear fuel for Unit 17 (f) the projected cost (including, without
limitation,   costs  attributable  to  obligations  to  fund  any  reserve  fund
maintained (or funded) by licensed owners and/or lessees of Unit 1 to the extent
dedicated to (or  attributable  to and freely  available with respect to) Unit 1
(the Unit 1 Fund)) or the  Decommissioning  or retirement from service of Unit 1
including  without  limitation,  Decommissioning  Costs (taking into account the
balance (plus projected  investment  earnings thereon) of the Unit 1 Fund) ; (g)
the  cost of  Capital  Improvements  to  Unit 1 then  planned  to be a made,  or
reasonably  expected to be made; (h) the cost of acquiring or leasing the Unit 1
Retained Assets; (i) the current status of all Governmental  Action with respect
to Unit 1  (including,  without  limitation,  the  License)  required  to permit
licensed  owners  and/or  lessees to possess and (in the case of then  Operating
Agent)  to  operate  Unit  1  and  such  other  facilities   constituting  PVNGS
(including,  without  limitation,  the Common Facilities) as are integral to the
operation  of Unit 1;  and (j) the  relative  cost of  producing  an  amount  of
electric power and energy  equivalent to the generating  capacity of Unit 1 from
other facilities then available in the region serviced,  or reasonably  expected
to be serviced, by PVNGS."



                                       -6-
6091.CHASEU1.LEASE.204:1


<PAGE>


                  (e) Paragraph (B) (a) of the definition of "Acceptable Change"
set forth in Appendix A to the Facility  Lease is hereby  amended to read in its
entirety as follows:

                  "(a) the amount  payable by all licensees of a single  nuclear
        facility in respect of such facility in any one year and with respect to
        any one "nuclear  incident"  under any deferred  premium or similar plan
        required  by  Applicable  Law shall not exceed $36  million  (subject to
        adjustment as provided in subclause (V) of the preceding clause (b))."



                  SECTION 3. Miscellaneous.

                  (a) Effective Date of Amendments.  The amendments set forth in
Section 2 hereof shall be and become  effective upon the execution hereof by the
parties hereto.

                  (b)  Counterpart  Execution.  This  Amendment  No.  1  may  be
executed  in any number of  counterparts  and by each of the  parties  hereto on
separate  counterparts;  all such counterparts shall together constitute but one
and the same instrument.

                  (c) Governing  raw. This  Amendment No. 1 has been  negotiated
and  delivered  in the  State of New  York and  shall  be  governed  by,  and be
construed in accordance  with, the laws of the State of New York,  except to the
extent that pursuant to the law of the State of Arizona such law is  mandatorily
applicable hereto.

                  (d) Disclosure.  Pursuant to Arizona Revised  Statutes Section
33-401, the beneficiary of the Trust Agreement is Chase Manhattan Realty Leasing
Corporation, a New York corporation. The address of the beneficiary is One Chase
Manhattan  Plaza,  New York,  New York 10081.  A copy of the Trust  Agreement is
available  for  inspection  at the  offices of the Owner  Trustee at 100 Federal
Street, Boston, Massachusetts 02110, Attention of Corporate Trust Division.




                                       -7-





6091.CHASEU1.LEASE.204:1



<PAGE>


                  (e)  Amendment  No. 1. The single  executed  original  of this
Amendment  No. 1 marked  "THIS  COUNTERPART  IS THE  ORIGINAL  COUNTERPART"  and
containing the receipt of the Indenture  Trustee thereon shall be the "original"
of this  Amendment  No. 1. To the extent that this  Amendment  No. 1 constitutes
chattel  paper,  as such term is defined in the  Uniform  Commercial  Code as in
effect in any applicable  jurisdiction,  no security  interest in this Amendment
No. 1 may be created or  continued  through the  transfer or  possession  of any
counterpart other than the "original".



                                       -8-

6091.CHASEU1.LEASE.204:1


<PAGE>


IN WITNESS  WHEREOF,  each of the parties hereto has caused this Amendment No. 1
to Facility Lease to be duly executed by an officer thereunto duly authorized.

                                       THE FIRST NATIONAL BANK OF BOSTON, not in
                                         its individual capacity,  but solely as
                                         Owner Trustee under a Trust  Agreement,
                                         dated as of  December  15,  1986,  with
                                         Chase    Manhattan    Realty    Leasing
                                         Corporation


                                       By
                                          -----------------------------------
                                                  Assistant Cashier


                                       PUBLIC SERVICE COMPANY OF NEW MEXICO


                                       By
                                          -----------------------------------
                                                 Vice President and
                                                Corporate Controller

                                       -8-
                                                                
6091.CHASEUl.LEASE.204:l


<PAGE>


                  IN WITNESS WHEREOF, each of the Parties hereto has caused this
Amendment No. 1 to Facility  Lease to be duly  executed by an officer  thereunto
duly authorized.


                                       THE FIRST NATIONAL BANK OF BOSTON, not in
                                         its individual capacity,  but solely as
                                         Owner Trustee under a Trust  Agreement,
                                         dated as of  December  15,  1986,  with
                                         Chase    Manhattan    Realty    Leasing
                                         Corporation


                                       By
                                           ---------------------------------
                                                  Assistant Cashier

                                       PUBLIC SERVICE COMPANY OF
                                       NEW MEXICO

                                       By
                                           ---------------------------------
                                                  Vice President and
                                                 Corporate Controller



                                       -9-

6091.CHASEU1.LEASE.204:1


<PAGE>


State of New York     )
                      )ss:
County or Bernalillo  )



                  The foregoing  instrument was acknowledged  before me this 8th
day of April, 1987, by B.D. Lackey, the Vice President and Corporate  Controller
of Public Service Company of New Mexico, a New Mexico corporation,  on behalf of
the corporation.




                                                 -----------------------------
                                                      Notary Public

Commonwealth of Massachusetts  )
                               )ss:
County of Suffolk              )

                The foregoing instrument was acknowledged before me this 8th day
of April, 1987, by James E. Mogavero, an Assistant Cashier of THE FIRST NATIONAL
BANK OF BOSTON,THE  FIRST  NATIONAL  BANK, a national  banking  association,  on
behalf of the banking  association  as Owner Trustee  under the Trust  Agreement
dated as of December 15, 1986 with Chase Manhattan Realty Leasing Corporation.



                                                      /s/ Carol Malley
                                                 -----------------------------
                                                         Notary Public


                                                    CAROL MALLEY
                                                    Notary Public
                                        My Commission Expires January 28, 1994





6091.CHASEU1.LEASE.204:1