Exhibit 10.6

                               Dated 1 APRIL 1998




                          THE NATIONAL GRID COMPANY plc



                                       and



                          SOUTH WESTERN ELECTRICITY plc




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

                                AGREEMENT TO VARY
                 Certain Type 1, Type 2, Type 3, Type 4, Type 5
                       and Type 6 Supplemental Agreements
                   ----------------------------------------




<PAGE>



                                    CONTENTS


                                                                         Page

1.       Interpretation                                                    2

2.       Amendments                                                        2

3.       Continuation of the Agreements                                    2

4.       Miscellaneous                                                     3

5.       Entire Agreement                                                  3

6.       Governing Law                                                     3

7.       Restrictive Trade Practices Act                                   3


Schedule 1:       Amendments to the Type 1 Supplemental Agreements         5

Schedule 2:       Amendments to the Type 2 Supplemental Agreements         7

Schedule 3:       Amendments to the Type 3 Supplemental Agreements         9

Schedule 4:       Amendments to the Type 4 Supplemental Agreements        10

Schedule 5:       Amendments to the Type 5 Supplemental Agreements        12

Schedule 6:       Amendments to the Type 6 Supplemental Agreements        13

Schedule 7:       Appendix E Charging Rules                               15

Schedule 8:       Appendix EE Reactive Power                              32

Schedule 9:       The Supplemental Agreements                             33








<PAGE>


THIS AGREEMENT  is made on              1 April 1998 BETWEEN

(1)      THE NATIONAL GRID COMPANY plc (registered number 2366977) whose
         registered office is at National Grid House, Kirby Corner Road,
         Coventry CV4 8JY ('NGC');
(2)      SOUTH WESTERN ELECTRICITY plc (registered number 2366894) whose
         registered office is at 800 Park Avenue, Aztec West, Almondsbury,
         Bristol B512 4SE (the 'User") which expression shall include its
         successors and assigns.

WHEREAS

(A)      by the Master Connection and Use of System Agreement dated 30th March
         1990 (the "Master Agreement") the Parties thereto agreed to give effect
         to and be bound by certain rules and procedures for establishing a
         contractual framework between the parties pursuant to which
         Supplemental Agreements will from time to time be made, for connection
         of Plant and Apparatus to the NGC Transmission System, for the use by
         the Parties of the NGC Transmission System and the payment of charges
         to NGC; and pursuant to the terms of the Master Agreement NGC and the
         User entered into:-
(a)      the Type 1 Supplemental Agreements listed in Columns 1 and 2 in Part 1
         of Schedule 9 in respect of the Connection Sites listed in Column 3 in
         Part I of Schedule 9 (the "Type I Agreements");
(b)      the Type 2 Supplemental Agreements listed in Columns 1 and 2 in Part 2
         of Schedule 9 in respect of the Connection Sites listed in Column 3 in
         Part 2 of Schedule 9 (the "Type 2 Agreements");
(c)      the Type 3 Supplemental Agreements listed in Columns 1 and 2 in Part 3
         of Schedule 9 in respect of the sites of connection in Column 3 in Part
         3 of Schedule 9 (the "Type 3 Agreements");
(d)      the Type 4 Supplemental Agreements listed in Columns 1 and 2 in Part 4
         of Schedule 9 in respect of the sites of connection in Column 3 in Part
         4 of Schedule 9 (the "Type 4 Agreements");
(e)      the Type 5 Supplemental Agreements listed in Columns 1 and 2 in Part 5
         of Schedule 9 in respect of the sites of connection in Column 3 in Part
         5 of Schedule 9 (the "Type 5 Agreements"); and
(f)      the Type 6 Supplemental Agreements listed in Columns 1 and 2 in Part 6
         of Schedule 9 in respect of the sites of connection in Column 3 in Part
         6 of Schedule 9 (the "Type 6 Agreements");
(B)      the parties to this Agreement have agreed to amend the Agreements on
         the terms and subject to the conditions set out below.

NOW THIS AGREEMENT WITNESSES as follows:-

1.       INTERPRETATION

l.1      Except where defined herein or where the context otherwise requires,
         words and expressions defined in the Master Agreement and the
         Agreements shall have the same respective meanings when used in this
         Agreement.
1.2      The table of contents and the headings to each of the Clauses are
         inserted for convenience only and shall be ignored in construing this
         Agreement.

2.       AMENDMENTS

         The parties hereby agree that with effect from 1st April 1998:- (a) the
         Type 1 Agreements shall be amended as set out in Schedule 1; (b) the
         Type 2 Agreements shall be amended as set out in Schedule 2; (c) the
         Type 3 Agreements shall be amended as set out in Schedule 3; (d) the
         Type 4 Agreements shall be amended as set out in Schedule 4; (e) the
         Type 5 Agreements shall be amended as set out in Schedule 5; and (f)
         the Type 6 Agreements shall be amended as set out in Schedule 6.

3.       CONTINUATION OF THE AGREEMENTS
         Each of the Agreements shall remain in force and effect and this
         Agreement and each of the Agreements shall be treated as one document
         so that, upon each of the Agreements being amended pursuant to Clause
         2, all references to each of the Agreements shall be treated as
         references to that agreement as amended by this Agreement.

4.       MISCELLANEOUS

         The provisions of Clauses 22 to 27 (inclusive) and 29 to 30 (inclusive)
         of the Master Agreement shall be deemed to be incorporated herein
         mutatis mutandis.

5.       ENTIRE AGREEMENT
5.1      Each party acknowledges that in entering into this Agreement on the
         terms set out herein it is not relying upon any representation,
         warranty, promise or assurance made or given by any other party or any
         other person, whether or not in writing, at any time prior to the
         execution of this Agreement which is not expressly set out herein.

5.2      None of the parties shall have any right of action against any other
         party arising out of or in connection with any representation,
         warranty, promise or assurance referred to in Sub-Clause 5.1 (except in
         the case of fraud).

6.       GOVERNING LAW
         This Agreement shall be governed by, and construed in all respects in
         accordance with, English Law.

7.       RESTRICTIVE TRADE PRACTICES ACT
         Any restriction or information provision (as each of those terms are
         defined or construed in Section 43(1) of The Restrictive Trade
         Practices Act 1976) contained in
         this Agreement, or any provision contained in this Agreement adding to
         or extending any restriction or information provision contained in any
         of the Agreements shall not take effect or shall cease to have
         affect:-

                  (a) if a copy of this Agreement is not provided to the
                  Department of Trade and Industry ("DTI") within 28 days of the
                  date of this Agreement; or (b) if within 28 days of the
                  provision of that copy to the DTI, the DTI gives notice of
                  objection to the party providing it.

IN WITNESS whereof the hands of the duly authorised representatives of the
parties hereto at the date first above written



THE NATIONAL GRID COMPANY plc      )
                                                                     )
by                                                                   )


<PAGE>


                                   SCHEDULE 1

In each of the Type I Supplemental Agreements listed at Schedule 9 Part 1:-

(a)      At Clause 1.1 the definition of Qualifying Guarantee shall be deleted
         and replaced with the following definition:

         "means a guarantee in favour of NGC in a form proposed by the User and
         agreed by NGC (whose agreement shall not be unreasonably withheld or
         delayed) and which is provided by an entity which holds an Approved
         Credit Rating."

(b) Clause 8 shall be deleted and replaced with the following clause:

         "REACTIVE POWER

         With regard to the Obligatory Reactive Power Service and all Enhanced
         Reactive Power Services the provisions of Appendix EE to this
         Supplemental Agreement shall apply".

(c) Clause 17.6A.3.2(b) shall be deleted and replaced with the following Clause:

          "Deenergise the User's Equipment at any Connection  Site which serves
               only the User or a customer of the User."

(d) Clause 17.7.2 shall be deleted and replaced with the following Clause:

          "NGC may terminate this Supplemental Agreement and all others to which
               the User is a party forthwith by notice to the User if:-

          (a)  NGC has given a valid  notice of default pursuant to  Sub-Clause
               17-6A.2 and

          (b)  such event of  default remains unremedied  at the expiry of the
               later of

                    (i)  the  period of 6 months  from the date of such  notice;
                         and

                    (ii) where the User disputes bona fide the event of default
                         and  has  promptly  brought  and is  actively  pursuing
                         proceedings  against NGC to determine the dispute,  the
                         date on which the dispute is resolved or determined.

                           Upon termination pursuant to this Sub-Clause the User
                  shall pay to NGC the Termination Amount due under the terms of
                  the Charging Rules and the provisions of Clause 17.7.1(i)
                  shall apply mutatis mutandis".

         (e) Appendix E Charging Rules shall be deleted and replaced with the
         Appendix E Charging Rules in Schedule 7 to this Agreement.

        (f)  A new  Appendix  EE  shall be  inserted  in the  form set out in
              Schedule 8 to this Agreement.

(g) The Contents page shall be amended to reflect the amendments at (b) and (f)
above.


<PAGE>


                                   SCHEDULE 2

In each of the Type 2 Supplemental Agreements listed at Schedule 9 Part 2:-

(a)      At Clause 1.1 the definition of Qualifying Guarantee shall be deleted
         and replaced with the following definition:

         "means a guarantee in favour of NGC in a form proposed by the User and
         agreed by NGC (whose agreement shall not be unreasonably withheld or
         delayed) and which is provided by an entity which holds an Approved
         Credit Rating."

(b) A new clause 12A shall be added immediately after Clause 12 as follows:-

         "12A     REACTIVE POWER

                           With regard to the Obligatory Reactive Power Service
                  and all Enhanced Reactive Power Services the provisions of
                  Appendix EE to this Supplemental Agreement shall apply".

(c) Clause 22.6A.3.2(b) shall be deleted and replaced with the following clause:

          "Deenergise the User's  Equipment at any Connection  Site which serves
               only the User or a customer of the User."

(d) Clause 22.7.2 shall be deleted and replaced with the following clause:

          "NGC may terminate this Supplemental Agreement and all others to which
               the User is a party forthwith by notice to the User if:-

          (a)  NGC has given a valid  notice of default pursuant to  Sub-Clause
               22.6A.2 and

          (b)  such event of  default remains  unremedied  at the expiry of the
               later of

               (i)  the period of 6 mouths from the date of such notice; and

               (ii) where the User  disputes bona fide the event of default and
                    has promptly brought and is actively  pursuing  proceedings
                    against NGC to determine the dispute, the date on which the
                    dispute is resolved or determined.

         Upon termination pursuant to this Sub-Clause the User shall pay to NGC
         the Termination Amount due under the terms of the Charging Rules and
         the provisions of Sub-Clause 22.7.1(i) shall apply mutatis mutandis".

         (e) Appendix E Charging Rules shall be deleted and replaced with the
         Appendix E Charging Rules in Schedule 7 to this Agreement.

        (f)  A new  Appendix  EE  shall  be  inserted  in the  form set out in
             Schedule 8 to this Agreement.

        (g)  The Contents  page shall be amended to reflect the  amendments at
               (b) and (f) above.


<PAGE>


                                   SCHEDULE 3

In each of the Type 3 Supplemental Agreements listed at Schedule 9 Part 3:-

(a)      At Clause 1.1 the definition of Qualifying Guarantee shall be deleted
         and replaced with the following definition:

         "means a guarantee in favour of NGC in a form proposed by the User and
         agreed by NGC (whose agreement shall not be unreasonably withheld or
         delayed) and which is provided by an entity which holds an Approved
         Credit Rating."

(b) Clause 7 shall be deleted and replaced with the following clause:

         "REACTIVE POWER

         With regard to the Obligatory Reactive Power Service and all Enhanced
         Reactive Power Services the provisions of Appendix EE to this
         Supplemental Agreement shall apply:-

(c) Clause 13.6A.3.2(b) shall be deleted and replaced with the following clause:

          "Deenergise the User's  Equipment at any Connection Site which serves
               only the User or a customer of the User."

(d) Clause 13.7.2 shall be deleted and replaced with the following clause:

         "NGC may terminate this Supplemental Agreement and all others to which
          the User is a party forthwith by notice to the User if:-

          (a)  NGC has given a valid  notice of default pursuant to  Sub-Clause
               13.6A.2 and

          (b)  such event of  default  remains  unremedied at the expiry of the
               later of

               (i)  the period of 6 months from the date of such notice; and
                  
               (ii) where the User  disputes bona fide the event of default and
                    has promptly brought and is actively pursuing proceedings
                    against NGC to determine the dispute, the date on which the
                    dispute is resolved or determined.

         Upon termination pursuant to this Sub-Clause the provisions of Clause
13.7.1 shall apply mutatis mutandis".

(e)  Appendix E Charging Rules shall be deleted and replaced with the Appendix E
     Charging Rules in Schedule 7 to this Agreement.

(f)  A new  Appendix  EE shall be  inserted in the form set out in Schedule 8 to
     this Agreement.

(g) The Contents page shall be amended to reflect the amendments at (b) and (f)
above.


<PAGE>


                                   SCHEDULE 4

In each of the Type 4 Supplemental Agreements listed at Schedule 9 Part 4:-

(a)      At Clause 1.1 the definition of Qualifying Guarantee shall be deleted
         and replaced with the following definition:

         "means a guarantee in favour of NGC in a form proposed by the User and
         agreed by NGC (whose agreement shall not be unreasonably withheld or
         delayed) and which is provided by an entity which holds an Approved
         Credit Rating."

(b) Clause 9 shall be deleted and replaced with the following clause:

         "REACTIVE POWER

         With regard to the Obligatory Reactive Power Service and all Enhanced
         Reactive Power Services the provisions of Appendix EE to this
         Supplemental Agreement shall apply".

(c) Clause 15.6A.3.2(h) shall be deleted and replaced with the following clause:

          "Deenergise the User's  Equipment at any Connection Site which serves
               only the User or a customer of the User."

(d) Clause 15.7.2 shall be deleted and replaced with the following clause:

         "NGC may terminate this Supplemental Agreement and all others to which
          the User is a party forthwith by notice to the User if:-

               (a)  NGC  has  given  a  valid  notice of default  pursuant  to
                    Sub-Clause 15.6A.2 and

               (b)  such event of default remains unremedied  at the expiry of
                    the later of

         (i)      the period of 6 months from the date of such notice; and

         (ii) where the User  disputes  bona fide the event of default  and has
              promptly brought and is actively pursuing proceedings against NGC
               to  determine  the  dispute,  the date on which  the  dispute  is
               resolved or determined.

         Upon termination pursuant to this Sub-Clause the provisions of Clause
         15.7.1 shall apply mutatis mutandis".

(e)      Appendix E Charging Rules shall be deleted and replaced with the
         Appendix E Charging Rules in Schedule 7 to this Agreement.


(f)  A new  Appendix  EE shall be inserted in the form set out in Schedule 8 to
     this Agreement.

(g) The Contents page shall be amended to reflect the amendments at (b) and (f)
above.


<PAGE>


                                   SCHEDULE 5

In each of the Type 5 Supplemental Agreements listed at Schedule 9 Part 5:-

(a)      At Clause 1.1 the definition of Qualifying Guarantee shall be deleted
         and replaced with the following definition:

         "means a guarantee in favour of NGC in a form proposed by the User and
         agreed by NGC (whose agreement shall not be unreasonably withheld or
         delayed) and which is provided by an entity which holds an Approved
         Credit Rating."

(b) A new Clause 5A shall be added immediately after Clause 5 as follows:

         "5A      REACTIVE POWER

                           With regard to the Obligatory Reactive Power Service
                  and all Enhanced Reactive Power Services the provisions of
                  Appendix EE to this Supplemental Agreement shall apply".

(c) Clause 8.5A.3.2(b) shall be deleted and replaced with the following clause:

          "Deenergise the User's  Equipment at any Connection  Site which serves
           only the User or a customer of the User."

(d) Clause 8.6.2 shall be deleted and replaced with the following clause:

          "NGC may terminate this Supplemental Agreement and all others to which
           the User is a party forthwith by notice to the User if:-

          (a)  NGC has given a valid  notice of default  pursuant to  Sub-Clause
               8.5A.2 and

          (b)  such event of default  remains  unremedied  at the expiry of the
               later of

               (i)  the  period of 6 months from the date of such notice;  and
                    (ii) where the User disputes bona fide the event of default
                    and  has promptly  brought and is actively  pursuing
                    proceedings against NGC to determine the dispute,  the date
                    on which the dispute is resolved or determined.

                           Upon termination pursuant to this Sub-Clause the
                  provisions of Clause 8.6.1 shall apply mutatis mutandis".

(e)      Appendix E Charging Rules shall be deleted and replaced with the
         Appendix E Charging Rules in Schedule 7 to this Agreement.

(f)  A new  Appendix EE shall be  inserted in the form set out in Schedule 8 to
     this Agreement.

(g) The Contents page shall be amended to reflect the amendments at (b) and (f)
above.


<PAGE>


                                   SCHEDULE 6


In each of the Type 6 Supplemental Agreements listed at Schedule 9 Part 6:-

(a)      At Clause 1.1 the definition of Qualifying Guarantee shall be deleted
         and replaced with the following definition:

         "means a guarantee in favour of NGC in a form proposed by the User and
         agreed by NGC (whose agreement shall not be unreasonably withheld or
         delayed) and which is provided by an entity which holds an Approved
         Credit Rating."

(b) A new Clause 8A shall be added immediately after clause 8 as follows:

         "8A      REACTIVE POWER

                  With regard to the Obligatory Reactive Power Service and all
                  Enhanced Reactive Power Services the provisions of Appendix EE
                  to this Supplemental Agreement shall apply".

(c) Clause 11.5A.3.2(b) shall be deleted and replaced with the following clause:

          "Deenergise the User's Equipment at any Connection  Site which serves
               only the User or a customer of the User."

(d) Clause 11.6.2 shall be deleted and replaced with the following clause:

         "NGC may terminate this Supplemental Agreement and all others to which
         the User is a party forthwith by notice to the User if:

          (a)  NGC has given a valid  notice of default  pursuant to Sub-Clause
               11.5A-2 and

         (b)      such event of default remains unremedied at the expiry of the
                  later of

                  (i)      the period of 6 months from the date of such notice;
                           and

                           (ii) where the User disputes bona fide the event of
                           default and has promptly brought and is actively
                           pursuing proceedings against NGC to determine the
                           dispute, the date on which the dispute is resolved or
                           determined.

         Upon termination pursuant to this Sub-Clause the provisions of Clause
         11.6.1 shall apply mutatis mutandis".

(e)      Appendix E Charging Rules shall be deleted and replaced with the
         Appendix E Charging Rules in Schedule 7 to this Agreement.


(f)  A new Appendix  EE shall be  inserted in the form set out in Schedule 8 to
     this Agreement.

(g) The Contents page shall be amended to reflect the amendments at (b) and (f)
above.


<PAGE>


                                   SCHEDULE 7

                            APPENDIX E CHARGING RULES


Part 1 - Transmission Network Use of System Charges and Connection Charges

Introduction

Under the terms of this Supplemental Agreement the User is liable to pay
Transmission Network Use of System Charges based upon the Registered Capacity of
Generating Units passing Active Power on to and/or the Demand taken from the NGC
Transmission System and Connection Charges. The basis upon which Transmission
Network Use of System Charges and Connection Charges are levied according to a
User's particular circumstances are set out in the statement issued by NGC under
paragraphs 1, 2 and 3 of Condition 10 to the Transmission Licence.

1.1      Data Requirements

1.1.1    On or before a date not later than 10 Business Days after the
         confirmation of the basis of calculation of charges pursuant to
         paragraph 2.1 in each Financial Year the User shall supply NGC with
         such data as NGC may from time to time reasonably request pursuant to
         paragraph 2.1 to enable NGC to calculate, the Connection Charges and/or
         Transmission Network Use of System Charges due from the User to NGC or
         from NGC to the User (as the case may be) in respect of the Connection
         Site including the data specified in Appendix C;

1.1.2    On or before a date not later than 10 Business Days after the
         confirmation of the basis of calculation of charges pursuant to
         paragraph 2.1 in each Financial Year, Users:

                  (a) who are owners or operators of a User System shall provide
                  to NGC a forecast for the following Financial Year of the
                  Natural Demand attributable to each Grid Supply Point equal to
                  the forecasts of Natural Demand under both Annual Average Cold
                  Spell (ACS) Conditions and a forecast of the average metered
                  Demand attributable to such Grid Supply Point (or such other
                  forecast as may be notified by NGC to the User pursuant to
                  paragraph 2.1) for each of a number of peak half-hours as
                  notified by NGC to the User under paragraph 2.1:

                  (b) who are Suppliers shall provide to NGC a forecast for the
                  following Financial Year of its metered Demand attributable to
                  each Transmission Network Use of System Demand Zone equal to
                  the average of the forecasts of Demand attributable to such
                  Transmission Network Use of System Demand Zone (or such other
                  forecast as may be notified by NGC to the User pursuant to
                  paragraph 2.1) for each of a number
of peak half-hours notified by NGC to the User under paragraph 2.1;

(c)  who are Generators  shall  provide  to NGC a  forecast  for the  following
     Financial Year of:

                  (i) the metered Station Demand (Active Power) attributable to
                  the Power Station for the Generating Units comprised therein
                  equal to the average of the forecasts of such Station Demand
                  (Active Power) (or such other forecast as may be notified by
                  NGC to the User pursuant to paragraph 2.1) attributable to the
                  sum of the Generating Units for each of a number of peak
                  half-hours as notified by NGC to the User under paragraph 2.1;

                  (ii) the highest Registered Capacity to be declared pursuant
                  to the terms of the Pooling and Settlement Agreement of each
                  Generating Unit comprised within a Power Station for the
                  period as notified by NGC to the User under paragraph 2.1;

(d)      who are Generators and whose Equipment is comprised within a Trading
         Site (as such term is defined in the Pooling and Settlement Agreement)
         shall supply to NGC a forecast for the following Financial Year of:-

                  (i) the highest Registered Capacity declared pursuant to the
                  terms of the Pooling and Settlement Agreement of each
                  Generating Unit comprised within a Power Station which forms
                  part of such Trading Site; and

                  (ii) the average Demand within the Trading Site (other than
                  Station Demand) to be supplied by the Power Station in (i)
                  above for each of the number of peak half hours notified by
                  the User to NGC pursuant to paragraph 2.1;

                  (iii) the Station Demand for the Power Station within the
                  Trading Site, determined in accordance with paragraph
                  1.1.2(c)(i);

         for the period as notified by NGC to the User under paragraph 2.1 and
         NGC shall use such forecasts as the basis of Transmission Network Use
         of System Charges for such Financial Year.

1.1.3    Variation of Charges by NGC during the Financial Year

         The User shall notify NGC of any revision to the forecast Demand
         submitted by the User under paragraph 1.1 of this Appendix E at least
         quarterly or at such other intervals as may be agreed between NGC and
         the User from time to time. NGC shall revise the Transmission Network
         Use of System Charges payable by the User to take account of any such
         revised forecast provided in accordance with this paragraph 1.1.3. NGC
         shall commence charging the varied Transmission Network Use of System
         Charges from the first
day      of the month following the month in which such revised forecast was
         received provided always that such forecast is provided before 15th day
         of such month.


<PAGE>


1.2      Reconciliation Statements

         Initial Reconciliation Statements

1.2.1On or before 1 March in each Financial Year NGC shall  promptly  calculate
     on the basis set out in the statement published by NGC in accordance  with
     Licence  Condition  10 of the Transmission  Licence the Demand  related or
     Generation related Transmission Network Use of System Charges (as the case
     may be) that would have been Payable by the User during each month  during
     that Financial Year if those charges had been  calculated on the basis of
     the actual Demand data or the User's highest declared Registered  Capacity
     recorded during the Financial  Year in respect of the forecasts  which had
     previously been provided by the User in accordance with paragraph 1.1 (the
     "Actual Amount"'). NGC shall then compare the Actual Amount with the amount
     of Demand related or Generation related Transmission Network Use of System
     Charges (as the case may be) paid during each month during that  Financial
     Year by the User (the "Notional Amount").

1.2.2    As soon as reasonably practicable and in any event by 1st March in each
         Financial Year NGC shall then prepare an initial reconciliation
         statement and send it to the User. Such statement shall specify the
         Actual Amount and the Notional Amount for each month during the
         relevant Financial Year and, in reasonable detail, the information from
         which such amounts were derived and the manner in which they were
         calculated.

1.2.3    Together with the initial reconciliation statement NGC shall issue a
         credit note in relation to any sum shown by the reconciliation
         statement to be due to the User or an invoice in respect of sums due to
         NGc and in each case interest thereon calculated pursuant to paragraph
         1.2.5 below.

1.2.4    Invoices issued under paragraph 1.2.3 above and 1.2.5 below shall be
         payable on or before 3lst March in the Financial Year to which they
         relate.

1.2.5    In respect of the Financial Year:-

                  (a) the user shall, following receipt of an appropriate
                  invoice, pay to NGC an amount equal to the amount (if any) by
                  which the aggregate Actual Amount exceeds the aggregate
                  Notional Amount; and

                  (b) NGC shall issue the User with a credit note for an amount
                  equal to the amount (if any) by which the aggregate Notional
                  Amount exceeds the aggregate Actual Amount.

         Interest shall be payable by the paying Party to the other on such
         amounts from the date of payment applicable to the month concerned
         until the date, of actual payment of such amounts and such interest
         shall
be calculated on a daily basis at a rate equal to the Base Rate during such
period.


<PAGE>


         Final Reconciliation Statements

1.2.6             (a) NGC shall as soon as reasonably practicable after the end
                  of each Financial Year issue a further reconciliation
                  statement in respect of Transmission Network Use of System
                  Charges payable in respect of each month of that Financial
                  Year showing:-

                                   (i) any change in the Transmission Network
                           Use of System Charges from those specified in the
                           initial reconciliation statement provided in
                           accordance with paragraph 1.2.1 above;

                                   (ii) whether the change represents a
                           reconciliation payment owing by NGC to a user or by a
                           User to NGC;

                                   (iii) the amount of interest determined in
                            accordance with 1.2.5 above;

                                   (iv) the information from which the amounts
                           in (i) above are derived and the manner of
                           calculation.

                  (b) The provisions of paragraphs 1.2.3 and 1.2.5 shall apply
                  mutatis mutandis to sums specified in the Final Reconciliation
                  Statement.

2.       Revision of Charges

2.1      To the extent permitted by the Transmission Licence and this Agreement
         NGC may revise its Connection Charges and Transmission Network Use of
         System Charges or the basis of their calculation including issuing
         revisions to Appendices A, B, C and D (or D1 if appropriate) hereto. On
         or before 31st October in each Financial Year NGC shall notify the User
         in writing of the intended basis of calculation to be used by NGC in
         the following Financial Year together with time periods over which the
         data required to be provided pursuant to paragraph 1 of this Appendix E
         is required and shall consult with the User concerning the same. On or
         before 30th November in each Financial Year NGC shall confirm to the
         User the basis of calculation to be used in the following Financial
         Year.

2.2      NGC shall give the User not less than 2 months prior written notice of
         any revised charges, including revisions to Appendices A, B, C and D
         (or D1 if appropriate) hereto, which notice shall specify the date upon
         which such revisions become effective (which may be at any time). The
         User shall pay any such revised charges and Appendix A, B, C, D (and/or
         Dl as appropriate) shall be amended automatically (and a copy sent to
         the User) to reflect any changes to such Appendices with effect from
         the date specified in such notice

2.3      Subject to the  provisions of paragraph 3.2 below if in the reasonable
         opinion of NGC any development,  replacement,  renovation, alteration,
         construction  or  other  work  to  the  NGC  Transmission   System  or
         termination  of  a  Supplemental  Agreement  by  another  User  or  an
         alteration  to the  requirements  of the User or any other  User means
         that to ensure that NGC is charging in accordance  with the provisions
         of the Statement pursuant to Condition 10 of the Transmission  Licence
         NGC  needs  to vary  the  Connection  Charges  payable  by the User in
         relation to the Connection  Site then NGC shall have the right to vary
         such  charges  accordingly  upon  giving  to the User not less  than 2
         months  priors  written  notice.  Such notice  shall be deemed to be a
         revised  Connection  Offer  and  before  any  such  variation  becomes
         effective  the  provisions of  Sub-Clauses  11.3 to 11.4 of the Master
         Agreement  shall apply mutatis  mutandis  following any such variation
         the  provisions of  Appendices A and B shall be amended  automatically
         (and a copy sent to the User) to reflect  such  variation  with effect
         from the date such variation comes into effect.

3.       Replacement of NGC Assets

3.1      Appendix A specifies the age of each of the NGC Assets at the
         Connection Site at the date of this Supplemental Agreement NGC
         Connection Charges are calculated on the assumption that NGC Assets
         will not require replacement until the expiry of the Replacement Period
         applicable to each NGC Asset concerned and such period has been agreed
         between NGC and the User.

3.2      Where in NGC's reasonable opinion an NGC Asset requires replacement
         before the expiry of its Replacement Period NGC shall, with the prior
         written approval of the User (except where in NGC's reasonable opinion
         such replacement is necessary in which case such approval shall not be
         required but in such case the User shall have the right to Disconnect)
         have the right to replace the NGC Asset at no additional cost to the
         User until expiry of its original Replacement Period. Upon expiry of
         such original Replacement Period NGC shall be entitled to vary the
         Connection Charge sin respect of the replaced NGC Asset so that they
         are calculated on the basis of the then Net Asset Value of such NGC
         Assets. NGC shall give the User not less than 2 months prior written
         notice of such varied charges which notice shall specify the date upon
         which such increase or reduction (as the case may be) becomes
         effective. The User shall pay such varied charges and Appendices A and
         B shall be amended automatically (and a copy sent to the User) to
         reflect such revised charges with effect from the date specified in
         such notice.

3.3      Upon the expiry of the Replacement Period of any NGC Asset:-

               (a)  (i) if in NGC's  reasonable opinion to enable NGC to comply
                    with its licence and statutory obligations  it is necessary
                    to replace such NGC Asset; or

                  (ii)     if such NGC Asset is to be left in service

         then NGC shall give written notice of this and that it will, unless
         within 3 months of the receipt of such notice the User objects in
         writing to the proposal, replace or retain (as the case may be) such
         NGC Asset.

         (b)      the User may request that NGC replaces the Asset.

     3.4  Where the User serves a counter notice pursuant to paragraph 3.3 above
          then NGC shall:-

         (a)      keep the NGC Asset in service;  and

                  (b) negotiate with the User in good faith with regard to the
                  Connection Charges applicable to such NGC Asset.

         In the event that NGC and the User fail to agree the level of such
         Connection Charges in accordance with paragraph 3.4(b) above then the
         User shall pay Connection Charges to NGC in respect of such NGC Asset
         equal to the Connection Charges payable by the User in respect of the
         NGC Asset in the last Financial Year of the Replacement Period (the
         "Deemed Charge") and the matter shall be referred to the Director for
         determination.

         If the Director determines that the Connection Charges payable in
         respect of such NGC Asset should be:-

         (i) less than the Deemed Charge then NGC shall repay to the User the
         difference between the Deemed Charge and the amount so determined by
         the Director together with interest at the Base Rate, for the period
         from when the User started to pay the Deemed Charge until the date of
         payment;

         (ii) greater than the Deemed Charge then the User shall pay the
         difference to NGC together with interest at the Base Rate for the
         period from when the User started to pay the Deemed Charge until the
         date of payment.

3.5      When the Connection Charges are payable in respect of NGC Assets:-

         (a)      replaced in accordance with paragraph 3.3 above;  or

         (b)      retained in accordance with paragraph 3.3 above;  then

         NGC shall except in the circumstances in paragraph 3.4(b) give the User
         not less than 2 months prior written notice of such varied charges and
         specify the date upon which such charges become effective. The User
         shall pay such varied charges and Appendices A and B shall be amended
         automatically (and a copy sent to the User) to reflect such revised
         charges with effect from the dates notified to the User by NGC.

         Where NGC is in negotiation with the User in accordance with paragraph
         3.4(b) then it s hall give such notice as is reasonably practicable in
         the circumstances.

4.       Termination Amounts

4.1      The expressions set out below shall have the meanings shown:-

                 "Termination Amount"       shall be the sum calculated to be
                 equal to the aggregate of the following:-

                                                             (a)    in respect
                          of NGC Assets:-

                                                    (i)
                                                     shown in Appendix A
                                                     to the Supplemental
                                                     Agreement and
                                                     which, in NGC's
                                                     reasonable opinion
                                                     are no longer
                                                     required by NGC to
                                                     enable NGC to
                                                     comply with its
                                                     Licence Standards,
                                                     and can therefore
                                                     be removed ("Type A
                                                     Assets"); (aa) the
                                                     Net Asset Value of
                                                     such NGC Asset as
                                                     at the end of the
                                                     Financial Year in
                                                     which termination
                                                     occurs (on the
                                                     assumption that the
                                                     sums specified in
                                                     paragraph 4.1(b)
                                                     will be paid), plus
                                                     (bb) a sum equal to
                                                     the reasonable
                                                     costs of removing
                                                     such NGC Assets and
                                                     of making good the
                                                     remaining Plant and
                                                     Apparatus at the
                                                     Connection Site
                                                     following the
                                                     removal of any Type
                                                     A Assets;

                                               (ii)
                                                     in Appendix A to
                                                     the Supplemental
                                                     Agreement and which
                                                     in NGC's reasonable
                                                     opinion cannot be
                                                     removed ("Type B
                                                     Assets") as a
                                                     result of the
                                                     termination, a sum
                                                     equal to the
                                                     product of the
                                                     Asset Allocation
                                                     Factor multiplied
                                                     by the Net Asset
                                                     Value of t hat NGC
                                                     Asset as at the end
                                                     of the Financial
                                                     Year in which
                                                     termination occurs;
                                                     and


                                      in relation to NGC Assets:


                                     (aa)      which NGC has determined to
                                     replace upon the expiry of the relevant
                                     Replacement Period in accordance with
                                     paragraph 3.3;  and


                                     (bb)      in respect of which no
                                     counter notice has been served by the
                                     User pursuant to paragraph 3.3;  and


                                     (cc) the
                                     User has
                                     served in
                                                              accordance
                                                              with the
                                                              provisions
                                                              of this
                                                              Supplemental
                                                              Agreement
                                                              a notice
                                                              to
                                                              Disconnect
                                                              in respect
                                                              of the
                                                              Connection
                                                              Site at
                                                              which the
                                                              NGC Assets
                                                              were
                                                              located;
                                                              and


                                                              (dd) due
                                                              to the
                                                              timing of
                                                              the
                                                              replacement
                                                              of such
                                                              NGC
                                                              Assets, no
                                                              Connection
                                                              Charges
                                                              will have
                                                              become
                                                              payable in
                                                              respect of
                                                              such NGC
                                                              Assets by
                                                              the User
                                                              by the
                                                              date of
                                                              Termination;


                                                     the reasonable
                                                     costs incurred by
                                                     NGC in connection
                                                     with the
                                                     installation of
                                                     such NGC Assets.

                                                               (b)      the
                                                     Connection Charges and Use
                                                     of System Charges for the
                                                     Financial Year in which
                                                     termination occurs.

                                            "Asset Allocation Factor" means in
                                            respect of each NGC Asset specified
                                            in Appendix A to this Supplemental
                                            Agreement the figure expressed as a
                                            percentage appearing in the column
                                            headed Allocation and immediately
                                            adjacent to the description of the
                                            NGC Asset to which it relates.

4.2      In the event that a Termination Amount specified in paragraph
         4.1(a)((i) is paid, in respect of Type A Assets, and subsequently NGC
         re-uses such NGC Assets in respect of which such payment has been made
         at the same or another Connection Site then NGC shall pay to the User a
         sum equal to the lower of:-

         (i)      the Termination Amount paid in respect of such NGC Asset;  or

         (ii) the Net Asset  Value  attributed  to such NGC Asset for  charging
               purposes upon its re-use;

         less any reasonable costs incurred by NGC in respect of storage. NGC
         shall use its reasonable endeavours to re-use such NGC Assets.

4.3      In the event that a Termination Amount specified in paragraph
         4.1(a)(ii) above is paid in respect of Type B Assets and these are
         subsequently re-used then NGC shall pay to the User a sum equal to the
         lower of:-

         (i)      the Termination Amount paid in respect of such NGC Assets;  or

                  (ii) the Net Asset Value attributed to such NGC Asset for
                  charging purposes upon its re-use.

4.4      For the purposes of paragraphs 4.2 and 4.3 re-use shall not occur where
         any NGC Asset remains connected for the purpose of providing a
         continuing connection for other Users connected to the NGC Transmission
         System at the Connection Site at the date of termination. However in
         the event of any User requiring a continued connection modifying its
         requirements or another User connecting at the Connection Site and the
         NGC Assets in respect of which a payment has been made are required for
         this modification this shall constitute re-use.

4.5      NGC shall be under no obligation to rebate any of the Termination
         Amounts described in paragraph 4.1(b) except to the extent that
         connection and/or Transmission Network Use of System Charges are
         subsequently received in respect of NGC Assets in relation to which
         such Termination Amounts have been paid to NGC during the Financial
         Year in which termination has occurred.

4.6      Upon request in writing, and at the cost of the User NGC shall issue a
         certificate no more frequently than one each calendar year indicating
         whether or not such assets have or have not been re-used. If NGC at any
         time decide that it is not economic to retain any Plant and Apparatus
         constituting any NGC Asset in respect of which Termination Amounts have
         been paid it may at its reasonable discretion dispose of the said Plant
         and Apparatus. Where NGC decides to so dispose of such Plant and
         Apparatus it shall where the Plant and/or Apparatus is disposed of in a
         state where it is capable of re-use pay to the User an appropriate
         proportion of any sale proceeds received in respect thereof.

5.       Deductions

                  In respect of any NGC Engineering Charges which have been paid
         by the User in connection with a Connection Application or under
         Sub-Clause 2.4 of the Supplemental Agreement Type 2 NGC shall reduce
         the amount of Connection Charges payable by the User in relation to the
         respective Connection Site on 1 April in each of the first 3 years (or
         such other period as may be agreed between NGC and the User) of the
         payment of such Connection Charges by an amount equal on each occasion
         to one third of such NGC Engineering Charges.

Part 2 - Transmission Services Use of System Charges

Introduction

Under the terms of this Supplemental Agreement the User is liable to pay
Transmission Services Use of System Charges. The basis upon which Transmission
Services Use of System Charges are levied and the calculation methodology and
rules which will be used to quantify those charges are set out in the statement
issued by NGC under paragraphs 1 and 2 of Condition 10 to the Transmission
Licence.

1.       Reconciliation

1.1      At any time after the Payment Date, NGC may submit to the User, and
         shall submit to the User at the written request of the User a Statement
         (which may form part of an invoice or other document) in respect of any
         Settlement Day (a "Reconciliation Statement") showing:-

                  (a) each Settlement Day in respect of which there has been a
                  change (for any reason) in the value of any parameter
                  originally used in the calculation of the Transmission
                  Services Use of System Charges in respect of such Settlement
                  Day, together with details of the value of the old and new
                  parameter;

                  (b) the amount of any reconciliation payments (if any)
                  required to make the Transmission Services Use of System
                  Charges paid in respect of that Settlement Day equal to the
                  payment which would have been payable had the invoice prepared
                  pursuant to Clause 5.4.1 of this Supplemental Agreement been
                  prepared on the basis of the changed parameter;

                  (c) whether the reconciliation payment represents an amount
                  owing by NGC to the User or by the User to NGC;

                  (d) the amount of interest accruing on such reconciliation
                  payment calculated in accordance with this paragraph 1.1
                  below.

         Interest payable in respect of each reconciliation payment shall accrue
         from and including the relevant Payment Date up to but excluding the
         date upon which the amounts specified in the Reconciliation Statement
         are paid, and shall be at a rate equal to the Base Rate for the time
         being and from time to time. Interest shall accrue from day to day.

1.2      Together with the Reconciliation Statement in the case of sums due:-

         (a)      from the User to NGC, NGC shall:-

                                    (i) send the User an invoice in relation to
                           any sums shown by the Reconciliation Statement to be
                           due to NGC and interest thereon calculated in
                           accordance with paragraph 1.1; or

                                    (ii) include those sums due in another
invoice; and

          (b)  from  NGC to the  User,  forthwith  following  the  issue  of any
               Reconciliation Statement, NGC shall:-

                                    (i) issue a credit note in relation to any
                           sum shown by the Reconciliation Statement to be due
                           to the User and interest thereon calculated in
                           accordance with paragraph 1.1; or

                                    (ii) include those sums due to the User as a
                           credit in an invoice from NGC to the User.

1.3      The right to submit a Reconciliation Statement and consequential
         invoices and/or credit notes shall survive the termination of this
         Supplemental Agreement and the parties agree that the provisions of
         this Appendix E Part 2 shall remain in full force and effect and shall
         continue to bind them after such termination (the version in existence
         as at the date of termination being the applicable version, in the case
         of any amendments).

2.       Reconciliation Payments

         The User, or as the case may be, NGC, shall pay the amounts set out in
         the relevant invoice or credit note, either in accordance with the
         applicable requirements for payment of other sums due under that
         invoice in the case of sums shown in an invoice also dealing with other
         payments, or in other cases within 5 Business Days of the date of the
         Reconciliation Statement.

3.       Revision of Charges

         On or before 31 October in each Financial Year NGC shall notify the
         User in writing of the intended basis of calculation to be used by NGC
         in calculating Transmission Services Use of System Charges for the
         following Financial Year and shall consult the User concerning the
         same. On or before 30 November in each Financial Year NGC shall confirm
         to the User the basis of calculation to be used in calculating those
         charges for the following Financial Year.

Part 3

1.       Transmission Services Use of System Charges Security Cover

1.1      Provision of Security Cover

         The User shall provide Security Cover from time to time in accordance
         with the following provisions:-

                  1.1.1 the User shall not later than the date of its accession
                  to the Master Agreement or 1st April 1997 (whichever is later)
                  deliver to NGC evidence reasonably satisfactory to it that:-

                  (i)      it presently hold an Approved Credit Rating;   or

                                    (ii) it has provided and is not in default
                           under the Security Cover referred to in paragraph
                           1.1.2 below;

                  1.1.2 if the User does not hold or ceases to hold an Approved
                  Credit Rating it shall, not later than the date of:-

                  (i)      the date of its accession to the Master Agreement;

                  (ii)     the 1st April 1997;  or

                  (iii) the date upon which it ceases to have an Approved Credit
Rating:-

                                                     (a) deliver to NGC a
                                    Qualifying Guarantee in such amount as shall
                                    be notified by NGC to the User in accordance
                                    with paragraph 2; or

                                                     (b) deliver to NGC a Letter
                                    of Credit (available for an initial period
                                    of not less than 6 months) in such amount as
                                    shall be notified by NGC to the User in
                                    accordance with paragraph 2; and/or

                                                     (c) deliver to NGC cash for
                                    credit to the Escrow Account in such amount
                                    as shall be notified by NGC in accordance
                                    with paragraph 2.

                  1.1.3 The provision of security in respect of Transmission
                  Services Use of System Charges by the User in accordance with
                  the terms of :

                                    (a) this Supplemental Agreement shall
                           relieve it of its obligations to provide such
                           security under the terms of any other Supplemental
                           Agreement to which the User is a party; and

                                    (b) any other Supplemental Agreement to
                           which the User is a party shall relieve it of its
                           obligations to provide such security under the terms
                           of this Supplemental Agreement;

                           in each case, to the extent of the security provided
                  to NGC pursuant to this Appendix or the same provision under
                  the terms of any other Supplemental Agreement made between NGC
                  and the User.

                  1.1.4 The provisions of this Part 3 of Appendix E shall be in
                  addition to any other requirements to provide security in
                  respect of any other sums due under the terms of this
                  Supplemental Agreement.

1.2      Maintenance of Security Cover

         Where the user is required to provide security cover in accordance with
         the terms of paragraph 1.1 it shall at all times thereafter maintain a
         Security Amount equal to or more than the Security Cover applicable to
         it. Immediately upon any reduction occurring in the Security Amount
         provided by the User or any Letter of Credit or Qualifying Guarantee
         being for any reason drawn down or demanded respectively, the User will
         procure that new Letters of Credit or Qualifying Guarantees are issued
         or existing Letters of Credit or Qualifying Guarantees are reinstated
         (to the satisfaction of NGC) to their full value or cash is placed to
         the credit of the Escrow Account in an amount required to restore the
         Security Amount to an amount at least equal to the Security Cover
         applicable to the User, and in such proportions of Letters of Credit,
         Qualifying Guarantees and/or cash as the User may determine. Not later
         than 10 Business Days before any outstanding Letter of Credit and/or
         Qualifying Guarantee is due to expire, the User shall procure to the
         satisfaction of NGC that its required Security Amount will be available
         for a further period of not less than 6 months which may be done in one
         of the following ways:-

                  1.2.1 subject to the issuing bank continuing to have an
                  Approved Credit Rating provide NGC with confirmation from the
                  issuing bank that the validity of the Letter of Credit has
                  been extended for a period of not less than 6 months on the
                  same terms and otherwise for such amount as is required by
                  this Part 3; or

                  1.2.2 provide NGC with a new Letter of Credit issued by an
                  issuing bank with an Approved Credit Rating for an amount at
                  least equal to the required Security Amount applicable to it
                  (less its balance on the Escrow Account) which Letter of
                  Credit shall be available for a period of not less than 6
                  months; or

                  1.2.3 subject to the entity issuing the Qualifying Guarantee
                  continuing to have an Approved Credit Rating provide NGC with
                  confirmation from the issuing entity that the validity of the
                  Qualifying Guarantee has been extended for a period of not
                  less than 6 months on the sane terms and otherwise for such
                  amount as is required by this Part 3; or

                  1.2.4 provide NGC with a new Qualifying Guarantee for an
                  amount at least equal to the required Security Amount
                  applicable to it (less its balance on the Escrow Account)
                  which Qualifying Guarantee shall be available for a period of
                  not less than 6 months; or

                  1.2.5 procure such transfer to NGC for credit to the Escrow
                  Account of an amount as shall ensure that the credit balance
                  applicable to the User and standing to the credit of the
                  Escrow Account shall be at least equal to the required
                  Security Amount.

1.3               Failure to supply or maintain Security Cover
                  --------------------------------------------

         If the User fails at any time to provide or maintain Security Cover to
         the satisfaction of NGC in accordance with the provisions of this Part
         3, NGC may at any tie while such default continues, and if at such time
         any Letter of Credit and/or Qualifying Guarantee forming part of the
         Security Cover is due to expire within nine Business Days immediately,
         and without notice to the User, demand payment of the entire amount of
         any outstanding Letter of Credit and/or Qualifying Guarantee and shall
         credit the proceeds of the Letter of Credit and/or Qualifying Guarantee
         to the Escrow Account.

1.4      Substitute Letter of Credit or Qualifying Guarantee

1.4.1    If the bank issuing the User's Letter of Credit ceases to have the
         credit rating set out in the definition of Letter of Credit in Clause
         1.1 of this Supplemental Agreement such User shall forthwith procure
         the issue of a substitute Letter of Credit by a bank that has such a
         credit rating or a Qualifying Guarantee or transfer to NGC cash to be
         credited to the Escrow Account.

1.4.2    If the entity providing the User's Qualifying Guarantee ceases to have
         an Approved Credit Rating the User shall forthwith procure a
         replacement Qualifying Guarantee from an entity with such a credit
         rating or a Letter of Credit or transfer to NGC cash to be credited to
         the Escrow Account.

2.       Credit Monitoring

2.1      Determination of Security Cover

         The amount of Security Cover which the User shall be required to
         maintain s hall be determined from time to time by NGC in accordance
         with this Part 3 on the basis of the criteria set out in paragraph 2.2,
         and shall be notified to the User.

2.2      Criteria for provision of Security Cover

                  If paragraph 1.1.2 applies, the amount of Security Cover
         required to be provided by the User in respect of this and any other
         Supplemental Agreement to which the User is a party shall be provided
         in an amount to be reasonably assessed by NGC as the aggregate amount
         reasonably anticipated by NGC as being payable by the User pursuant to
         all Supplemental Agreements to which the User is a party in respect of
         the Transmission Services Use of System Charges referred to in Part 2
         of Appendix D over a 28 day period.

2.3      Six Monthly Variation

         In respect of paragraph 2.2 NGC shall calculate the amount for the two
         six-month periods commencing 1st April and 1st October in each year and
         shall advise the User accordingly.

2.4      Review of Security Cover

         NGC shall keep under review the Security Cover relating to the User and
         shall promptly advise the User whenever the Security Amount maintained
         by the User is more or less than the amount required to be maintained
         pursuant to paragraph 2 of this Part 3.

2.5      Increase or Decrease of Security Cover

         If, after considering any representations which may be made by the
         User, NGC reasonably determines that the User's Security Cover should
         be increased or decreased, it shall so notify the User. If NGC so
         determines that such Security Cover should be decreased and the User
         consents then that reduction shall take place. NGC shall consent to an
         appropriate reduction in the available amount of any outstanding
         Qualifying Guarantee or Letter of Credit and/or shall repay to the User
         such part of the deposit held in the Escrow Account for the account of
         the User (together with all accrued interest on the part to be repaid)
         sufficient to reduce the User's Security Amount to the level of
         Security Cover applicable to it. If NGC so determines that the User's
         Security Cover should be increased, the User s hall, within five
         Business Days of notice as aforesaid, procure an additional or
         replacement Qualifying Guarantee or Letter of Credit or transfer to NGC
         cash to be credited to the Escrow Account in an amount sufficient to
         increase its Security Amount so as to be at least equal to the level of
         Security Cover applicable to it.

2.6      Notification in respect of Security Cover

         NGC shall notify the  User promptly if:-

                  2.6.1 the User fails to provide, maintain, extend or renew a
                  Qualifying Guarantee or a Letter of Credit which it is
                  required to provide, maintain, extend or renew pursuant to
                  paragraphs 1 or 2;

                           2.6.2 NGC shall make a demand under any such
                  Qualifying Guarantee or a call under a Letter of Credit; or

                  2.6.3 NGC becomes aware that the User (a) s hall cease to have
                  an Approved Credit Rating, or (b) shall be placed on credit
                  watch by the relevant credit rating agency (or becomes subject
                  to an equivalent procedure) which in any case casts doubt on
                  the User retaining an Approved Credit Rating, or (c) shall be
                  in default under the additional or alternative security
                  required to be provided pursuant to this Part 3; or

                  2.6.4 NGC becomes aware that any bank that has issued a Letter
                  or Credit which has not expired shall cease to have the credit
                  rating required by this Appendix; or

                  2.6.5 NGC becomes aware that any entity providing a Qualifying
                  Guarantee which has not expired shall cease to have an
                  Approved Credit Rating.

         Provided always that the failure by NGC to notify the User pursuant to
         this paragraph 2.6 s hall not relieve the User of its obligations under
         and in accordance with the terms of this Appendix.

2.7      Release from Security Cover Obligations

         Upon the User ceasing to be a party to the Master Agreement and
         provided that all amounts owed by the User in respect of the
         Transmission Services Use of System Charges have been duly and finally
         paid and that it is not otherwise in default in any respect of any
         Transmission Services Use of System Charges (including interest)
         payable under the terms of any Supplemental Agreement, the User shall
         be released from the obligation to maintain Security Cover and NGC
         shall consent to the revocation of any outstanding Qualifying Guarantee
         or Letter of Credit and shall repay to the User the balance (including
         interest credited thereto) standing to the credit of the User on the
         Escrow Account at that date.


<PAGE>


3.       Payment Default

         If, by 1230 hours on any Payment Date, NGC has been notified by the
         User or it otherwise has reason to believe that the User will to have
         remitted to it by close of banking business on the Payment Date all or
         any part ("the amount in default") of any amount which has been
         notified by NGC to the User as being payable by the user by way of the
         Transmission Services Use of System Charges on the relevant Payment
         Date, then NGC s hall be entitled to act in accordance with the
         following provisions (or whichever of them shall apply) in the order in
         which they appear until NGC is satisfied that the User has discharged
         its obligations in respect of the Transmission Services Use of System
         Charges under this Supplemental Agreement and/or any other Supplemental
         Agreement to which the User is a party which are payable in respect of
         the relevant Settlement Day:-

                  (a) NGC may to the extent that the User is entitled to receive
                  payment from NGC pursuant to this Supplemental Agreement
                  and/or any other Supplemental Agreement to which the User is a
                  party (unless it reasonably believes that such set-off shall
                  be unlawful) set off the amount of such entitlement against
                  the amount in default;

                  (b) NGC shall be entitled to set off the amount of funds then
                  standing to the credit of the Escrow Account to the extent
                  that it represents Security Cover provided by the User in
                  accordance with paragraph 2.1.2 against the Transmission
                  Services Use of System Charges unpaid by the User and for that
                  purpose NGC shall be entitled to transfer any such amount from
                  the Escrow Account to any other accounts of NGC at its
                  absolute discretion and shall notify the User accordingly;

                  (c) NGC may demand payment under any outstanding Letter of
                  Credit supplied by the User in a sum not exceeding the
                  available amount of all such Letters of Credit;

                  (d) NGC may demand payment under any outstanding Qualifying
                  Guarantee provided for the benefit of the User pursuant to
                  paragraph 1.1.2(a).

4.                Utilisation of Funds

         In addition to the provisions of paragraph 3 above if NGC serves a
         notice of default under the terms of Clause 17.6A of a Type 1
         Supplemental Agreement and/or notice of termination under Clause 17.7
         of a Type 1 Supplemental Agreement (or the equivalent Clauses in a
         Supplemental Agreement other than a Type 1 Supplemental Agreement) then
         NGC shall be entitled to demand payment of any of the Transmission
         Services Use of System Charges which are outstanding whether or not the
         Payment Date in respect of them shall have passed and:-

                  (i) make demand under any outstanding Qualifying Guarantee or
                  a call under any outstanding Letter of Credit supplied by the
                  User; and

                  (ii) to set off the funds in the Escrow Account to the extent
                  that they represent Security Cover provided by the User
                  against the Transmission Services Use of System Charges unpaid
                  by the User and for that purpose NGC shall be entitled to
                  transfer any such amount from the Escrow Account to any other
                  account of NGC as it shall in its sole discretion think fit.

5.                User's Right to Withdraw Funds

5.1      If the User is not in default in respect of any amount owed to NGC in
         respect of the Transmission Services Use of System Charges under the
         terms of any Supplemental Agreement to which the User is a p arty:-

                  5.1.1 NGC shall transfer to the User quarterly interest
                  credited to the Escrow Account; and

                  5.1.2 NGC shall transfer to such User within a reasonable time
                  after such User's written request therefor any amount of cash
                  provided by the User by way of Security Cover which exceeds
                  the amount which such User is required to provide by way of
                  security in accordance with paragraph 1 of this Part 3.

Part 4

Definitions and Interpretations

In this Appendix the following expression shall have the meaning set out below:

"Base                      Rate" in respect of any day the rate per annum which
                           is equal to the base lending rate of Barclays Bank
                           PLC as at close of business on that day;

Interpretation

Where this Appendix makes reference to the word "paragraph" then it shall be a
reference to a paragraph in this Appendix unless the contrary is stated.


<PAGE>


                                   SCHEDULE 8

                                   APPENDIX EE


             Reactive Power Market and Default Payment Arrangements

For the purposes only of paragraph 2 thereof, the contents of Schedule 5 to the
Master Agreement and the Appendices thereto as varied from time to time shall be
deemed to be incorporated herein as if the same were set out in full.
Accordingly, NGC and the user hereby agree and undertake with each other ( so
that such obligation of the user to NGC hereby created is held by NGC as trustee
for the benefit of all other users now and in the future) that this Appendix
shall not be capable of variation except as provided in paragraph 2 of Schedule
5 to the Master Agreement (as amended from time to time), and in respect of this
Appendix the Clause headed "VARIATIONS" in this Supplemental Agreement shall
have no effect. For the avoidance of doubt, the trust referred to above and
hereby created shall apply only to the obligation on the User created by the
above mentioned agreement and undertaking to NGC expressly set out in this
Appendix and shall not prevent or restrict any agreement which may be entered
into between NGC and the User amending or varying any part or parts of this
Supplemental Agreement not being this Appendix.


<PAGE>


                                   SCHEDULE 9


Part 1 - Type 1 Supplemental Agreements


Date                                 Ref                       Connection Site
----                                 ---                       ---------------
27 March 1997                        A/SWE/90/14-1EX           Abham
27 March 1997                        A/SWE/90/14-2EX           Alverdiscott
27 March 1997                        A/SWE/90/14-3EX           Axminster
27 March 1997                        A/SWE/90/14-4EX           Bridgwater
27 March 1997                        A/SWE/90/14-5EX           Exeter
27 March 1997                        A/SWE/90/14-6EX           Indian Queens
27 March 1997                        A/SWE/90/14-7EX           Iron Acton
27 March 1997                        A/SWE/90/14-8EX           Landulph
27 March 1997                        A/SWE/90/14-9EX           Melksham
27 March 1997                        A/SWE/90/14-10EX          Taunton


Part 2 - Type 2 Supplemental Agreements



<PAGE>


FD2\X    - 1 -
Date                                 Ref                       Connection Site
N/A                                  N/A                       N/A


Part 3 - Type 3 Supplemental Agreements



<PAGE>


FD2\X    - 1 -
Date                                 Ref           Sites of Connection
N/A                                  N/A           N/A


Part 4 - Type 4 Supplemental Agreements



<PAGE>


FD2\X    - 1 -
Date                                 Ref           Sites of Connection
N/A                                  N/A           N/A



<PAGE>


Part 5 - Type 5 Supplemental Agreements

Date                                 Ref             Sites of Connection
27 March 1997                        A/SW/90/14-11D   Various


Part 6 - Type 6 Supplemental Agreements



<PAGE>


FD2\V    - 1 -
Date                                 Ref              Sites of Connection
N/A                                  N/A                   N/A





<PAGE>


                               Dated 31 MARCH 1998




                          THE NATIONAL GRID COMPANY plc



                                       and



                                     OTHERS




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

                                AGREEMENT TO VARY
                            the Master Connection and
                             Use of System Agreement
                     ----------------------------------------






<PAGE>


                                TABLE OF CONTENTS


Clause                                                                     Page

1.       Interpretation

2.       Amendments

3.       Continuation of the Master Agreement

4.       Miscellaneous

5.       Entire Agreement

6.       RTPA


Schedules

1.       Users

2.       Transmission Users Group

         Appendix 1 - Form of Deed of Accession

         Appendix 2 - Form of TUG Constitution and Rules





<PAGE>


THIS AGREEMENT TO VARY is made on the      31     day of  March   1998

BETWEEN:


(1)   THE NATIONAL GRID COMPANY plc a company registered in England with
      number 2366977 and whose registered office is at National Grid House,
      Kirby Corner Road, Coventry CV4 8JY ("NGC"); and

(2)  THE PERSONS whose names, registered numbers and registered offices are set
     out in Schedule 1 (each a "User").

WHEREAS:

(A)      This Agreement is supplemental to and varies the Master Connection and
         Use of System Agreement dated 30th March 1990 made between NGC and the
         Users (the "Master Agreement'); and

(B)      NGC and the Users have agreed to amend the Master Agreement on the
         terms and subject to the conditions set out below.

IT IS HEREBY AGREED:

1.       Interpretation

1.1      Except where defined herein or where the context otherwise requires,
         words and expressions defined in the Master Agreement shall have the
         same respective meanings when used in this Agreement.

1.2      The table of contents and the headings to each of the Clauses are
         inserted for convenience only and shall be ignored in construing or
         interpreting this Agreement.

<PAGE>


2.       Amendments

2.1      The parties to this Agreement hereby agree that with effect from the
         date of this Agreement the Master Agreement shall be amended:

                  2.1.1 by the insertion of the following new definition in
                  alphabetical order in Schedule 2 of the Master Agreement:

                                                     "TUG Party" means
                                                     each person admitted in the
                                                     capacity as such and for
                                                     the time being and from
                                                     time to time party to
                                                     Schedule 4 only in
                                                     accordance with the
                                                     provisions thereof, and
                                                     shall include any
                                                     successor(s) in title to,
                                                     or permitted assigns(s) of,
                                                     such person:

                  2.1.2 by the deletion of the definition of "Party" and by
                  substitution with the following:

                                                     "Party " each
                                                     person for the time being
                                                     and from time to time party
                                                     to the Master Agreement
                                                     other than TUG Parties, and
                                                     shall include any
                                                     successor(s) in title to,
                                                     or permitted assign(s) of,
                                                     such person;

                  2.1.3 by the deletion of the expression "Electricity Supply
                  Industry Arbitration Association" in Clauses 19.2.3(e),
                  19.11.3(e) and 26.1 of the Master Agreement and by
                  substitution with the expression "Electricity Arbitration
                  Association";

                 2.1.4 by the addition of a new Schedule 4 in the form set out
                 in Schedule 2.


<PAGE>


3.       Continuation of the Master Agreement

         The Master Agreement shall remain in full force and effect and this
         Agreement and the Master Agreement shall be treated as one document so
         that, upon the Master Agreement being amended pursuant to Clause 2, all
         references to the Master Agreement shall be treated as references to
         that agreement as amended by this Agreement.

4.       Miscellaneous

         The provisions of Clauses 22, 23, 24 and 26 to 30 inclusive of the
         Master Agreement shall be deemed to be incorporated herein mutatis
         mutandis.

5.       Entire Agreement

5.1      Each party to this Agreement acknowledges that in entering into this
         Agreement on the terms set out herein it is not relying upon any
         representation, warranty, promise or assurance made or given by any
         other party or any other person, whether or not in writing, at any time
         prior to the execution of this Agreement which is not expressly set out
         herein.

5.2      None of the parties to this Agreement shall have any right of action
         against any other party arising out of or in connection with any
         representation, warranty, promise or assurance referred to in Clause
         5.1 (except in the case of fraud).

6.       RTPA

         Any restriction or information provision (each of those terms having
         the same meaning in this Clause as in the Restrictive Trade Practices
         Act 1976) contained in this Agreement or any provision contained in
         this Agreement adding to or extending any restriction or information
         provision contained in any agreement which is varied or amended by this
         Agreement, shall not take effect or shall cease to have effect:
                  (a) if a copy of this Agreement is not provided to the
                  Department of Trade and Industry ("DTI") within twenty-eight
                  days of the date on which this Agreement is made, or

                  (b) if, within twenty-eight days of the provision of that copy
                  to the DTI, the DTI gives notices of objection to the party
                  providing it.

IN WITNESS whereof the hands of the duly authorised representatives of the
parties hereto the day and year first above written



<PAGE>


FD2\V
                                   SCHEDULE 1

                                      Users


ABB Energy Development Company Limited
2688994
Carmelite
50 Victoria Embankment
Blackfriars
London EC4Y ODX

Accord Electric Limited
2869629
152 Grosvenor Road
London SW1V 3JL

AES Barry Limited
3135522
Burleigh House
17/19 Worple Way
Richmond
TW10 6AG

AES Tyneside Limited
3135543
Burleigh House
17/19 Worple Way
Richmond
TW10 6AG

AES Partington Limited
3210149
Burleigh House
17/19 Worple Way
Richmond
TW10 6AG

Amoco Power Resource (Europe) Ltd
3042173
Amoco House
West Gate
London
W5 1XL



<PAGE>


Anglian Power Generators Limited
2488955
Wherstead Park
Wherstead
Ipswich
Suffolk IP9 2AQ

Barking Power Limited
2354681
Devonshire House
Mayfair Place
London W1X 5FH

British Gas Trading Ltd
3078711
Charter Court
50 Windsor Road
Slough
Berkshire SL1 2HA

British Nuclear Fuels plc
1002607
Risley
Warrington
Cheshire WA3 6AS

BOC Limited
337663
Chertsey Road
Windlesham
Surrey GU20 6HJ

BP Chemicals Limited
194971
Britannic House
1 Finsbury Circus
London
EC2M 7BA

Canatxx Energy Ventures Limited
2673604
Hillhouse International
PO Box 4
Thornton Cleveleys
Lancs
FY5 4QD


<PAGE>


Candecca Resources Limited
953066
Welton Gathering Centre
Barfield Lane
Wragby Road
Sudbrooke
Lincolnshire LN2 2QU

CeltPower Limited
2656561
Tomen House
13 Charles II Street
London SWIY 4QT

Citigen (London) Limited
2427823
100 Thames Valley Park Drive
Reading
Berkshire RG6 1PT

Corby Power Limited
2329494
Five Chancery Lane
Clifford's Inn
London EC4A 1BY

Coryton Energy Company
FC20597
20 St. James Street
4th Floor
London
SW1A 1EJ

Cottam Development Centre Limited
3273552
53 New Broad Street
London
EC2M 1JJ

Crosfield Limited
00048745
Bank Quay
Warrington
Cheshire
WA5 1AB



<PAGE>


Derwent CoGeneration Limited
2650621
Lansdowne House
Berkeley Square
London W1X 5DB

Eastern Electricity plc
2366906
Wherstead Park
Wherstead
Ipswich
Suffolk 1P9 2AQ

Eastern Merchant Generation Ltd
3116225
Wherstead Park
Wherstead
Ipswich
Suffolk IP9 2AQ

East Midlands Electricity plc
2366923
PO Box 444
Woodyard Lane
Wollaton
Nottingham
Nottinghamshire NG8 1EZ

Electricity Direct (UK) Limited
3174056
78, High Street
Lewes
East Sussex
BN7 1XF

Elm Energy and Recycling (UK) Limited
2516685
Elm Energy House
Ettingshall Road
Wolverhampton
West Midlands WV2 2LA

Energy Supply Contracts Limited
172268
One Great Tower Street
London EC3R 5AH



<PAGE>


Enfield Energy Centre Limited
2796628
Concorde House
Concorde Way
Preston Farm Industrial Estate
Stockton-on-Tees
Cleveland TS18 3RB

Enron Gas and Petrochemicals Trading Limited
3003823
4 Millbank
London
SW1P 3ET

Fellside Heat and Power Limited
2614535
Fellside Lodge
Seascale
Cumbria CA20 1PG

Fibrogen Limited
2547498
38 Clarendon Road
London W11 3AD

Fibropower Limited
2234141
38 Clarendon Road
London W11 3AD

First Hydro Company
2444277
Bala House
Lakeside Business Village
St Davids Park
Deeside
Clwyd CH5 3XJ

Flotilla Power (UK) Limited
2880635
4 Millbank
London SW1P 3ET




<PAGE>


Grovehurst Energy Limited
2197516
UK Paper House
Kemsley
Sittingboume
Kent ME10 3ET

Humber Power Limited
2571241
South Humber Bank Power Station
South Marsh Road
Stallingborough
North East Lincolnshire
DN37 8BZ

Impkemix Energy Limited
2076043
The Heath
Runcom
Cheshire WA7 4QF

Independent Energy UK Limited
3033406
30 Aylesbury Street
London EC1R 0ER

Indian Queens Power Limited
2928100
Burleigh House
17/19 Worple Way
Richmond
TW10 6AG

International Generating Company Limited
3039100
Springside House
Tinwell
Stamford
PE9 3UQ

Joint European Torus (JET), Joint Undertaking (a Joint Undertaking within the
meaning of Chapter V of the Treaty establishing the European Atomic Energy
Committee) Culham Abingdon Oxfordshire OX14 3EA


<PAGE>


Keadby Developments Limited
2691516
Keadby Power Station
PO Box 89
Keadby
Scunthorpe
North Lincolnshire DN17 3AZ

Keadby Generation Limited
2729513
Keadby Power Station
PO Box 89
Keadby
Scunthorpe
North Lincolnshire DN17 3AZ

Kent Power Limited
2723303
100 Thames Valley Park Drive
Reading
Berkshire RG6 1PT

Kingsnorth Power Limited
2675504
Chancery House
53164 Chancery Lane
London WC2A 1QU

Lakeland Power Limited
2355290
Roosecote Power Station
Roosecote Marsh
Barrow in Furness
Cumbria LA13 0PQ

London Electricity plc
2366852
Templar House
81-87 High Holborn
London WC1V 6NU

Magnox Electric plc
2264251
Berkeley Centre
Berkeley
Gloucestershire GL13 9PB


<PAGE>


Manweb plc
2366937
Manweb House
Chester Business Park
Wrexham Road
Chester CH4 9RF

Manweb Services Limited
2631510
Manweb House
Kingsfield Court
Chester Business Park
Chester
CH4 9RF

Medway Power Limited
2537903
Burleigh House
17/19 Worple Way
Richmond
Surrey TW10 6AG

Midlands Electricity plc
2366928
Mucklow Hill
Halesowen
West Midlands B62 8BP

Midlands Power (LTK) Limited
2251099
Mucklow Hill
Halesowen
West Midlands B62 8BP

National Power PLC
2366963
Windmill Hill Business Park
Whitehill Way
Swindon
Wiltshire SN5 6PB

National Power (Cogeneration Trading) Limited
2745602
Windmill Hill Business Park
Whitehill Way
Swindon
Wiltshire SN5 6PB


<PAGE>


Norsk Hydro (U.K.) Limited
841421
Bridge House
69 London Road
Twickenham
Middlesex TW1 1RH

Northern Electric plc
2366942
Carliol House
Market Street
Newcastle upon Tyne
Tyne & Wear  NE1 6NE

NORWEB plc
2366949
PO Box 14
410 Birchwood Boulevard
Warrington
Cheshire WA3 7GA

Nuclear Electric Limited
3076445
Barnett Way
Barnwood
Gloucester GL4 3RS

Peterborough Power Limited
2353599
Wherstead Park
Wherstead
Ipswich
Suffolk IP9 2AQ

PowerGen plc
2366970
53 New Broad Street
London EC2M 1JJ

Railtrack plc
2904587
Railtrack House
Euston Square
London
NW1 2EE



<PAGE>


Regional Power Generators Limited
2352390
Wetherby Road
Scarcroft
Leeds LS14 3HS

Rocksavage Power Company, Ltd.
FC 18868
Maples & Calder, Ugland House
PO Box 309
George Town
Grand Cayman
Cayman Islands
British West Ind.

SaltEnd Cogeneration Company
3274949
Britannic House
I Finsbury Circus
London
EC2M 7BA

Savage Land Limited
3145444
20 St James's Street
London
SW1A 1ES

Scottish Hydro-Electric plc
SC117119
10 Dunkeld Road
Perth PH1 5WA

Scottish Power plc
Sc117120
1 Atlantic Quay
Glasgow G2 8SP

Seabank Power Limited
2591188
Severn Road
Hallen
Bristol
BS10 7SP



<PAGE>


SEEBOARD plc
2366867
Forest Gate
Brighton Road
Crawley
West Sussex RH11 9BH

Shell Power Limited
2559630
Shell Mex House
Strand
London WC2R ODX

Siemens plc
727817
Siemens House
Oldbury
Bracknell
Berkshire
RG12 8FZ

Slough Energy Supplies Limited
2474514
234 Bath Road
Slough
Berkshire SL1 4EE

South East London Combined Heat and Power Limited
2489384
37-41 Old Queen Street
London
SW1H 9JA

Southern Electric plc
2366879
Southern Electric House
Westacott Way
Littlewick Green
Maidenhead
Berkshire SL6 3QB

Southern Energy (UK) Generation Limited
3321733
200 Aldersgate Street
London
EC1A 4JJ


<PAGE>


South Wales Electricity plc
2366985
Newport Road
St Mellons
Cardiff
South Glamorgan CF3 9XW

South Western Electricity plc
2366894
800 Park Avenue
Aztec West
Almondsbury
Bristol
BS12 4SE

Sutton Bridge Power
2586357
4. Millbank
London
SW1P 3ET

Teesside Power Limited
2464040
4 Millbank
London SW1P 3ET

The Renewable Energy Company Limited
3043412
Stroud House
Russell Street
Stroud
Gloucestershire
GL5 3AN

Tyne Property Development Limited
1194995
Siemens House
Oldbury
Bracknell
Berkshire
RG12 8FZ

UK Electric Power Limited
2844010
Williams Denton Jones
Glamaber
Bangor
Gwynedd  LL57 2DY

<PAGE>


 FD2\W    - 1 -
UML Limited
661900
Thermal Road
Bromborough
Wirral
Merseyside L62 4XG

Wainstones Power Limited
3462783
Pickfords Wharf
Clink Street
London SE1 9DF

Yorkshire Electricity Group plc
2366995
Wetherby Road
Scarcroft
Leeds LS14 3HS



<PAGE>
  SCHEDULE 2

                     New Schedule 4 to the Master Agreement
                            Transmission Users Group

1.       Introduction

1.1 In this Schedule the following expressions shall bear the following
meanings:

                                 "Industry Party" has the meaning given to that
                                   expression in the TUG Constitution;

                                  "New TUG Party"  means any  person  who
                                  applies to be admitted in the capacity of
                                  TUG Party and who is an Industry Party and
                                  who is not already a Party  at the time of
                                  application;

                                  "Representative" has the meaning
                                  given to that expression in the TUG
                                   Constitution;

 "Transmission Users Group"
                                  or "TUG" means the group established pursuant
                                  to paragraph 4 of this Schedule;

                                  "TUG Confidential
                                  Information" means all data
                                  and other information
                                  supplied to a Party or a
                                  TUG Party by another Party
                                  or TUG Party under the
                                  provisions of this
                                  Schedule;

                                  "TUG Deed of Accession"
                                  means a deed in, or
                                  substantially in, the form
                                  set out in Appendix 1 to
                                  this Schedule as amended
                                  from time to time in
                                  accordance with the terms
                                  of this Agreement; and "TUG
                                  Constitution" means the
                                  constitution and rules of
                                  the Transmission Users
                                  Group in the form set out
                                  in Appendix 2 to this
                                  Schedule as amended from
                                  time to time in accordance
                                  with the term of this
                                  Agreement and the TUG
                                  Constitution.

1.2      Without prejudice to the terms of paragraph 8 the Parties and the TUG
         Parties expressly agree and acknowledge that the expression "TUG Party"
         shall not be capable of amendment without the consent of TUG Parties,
         but that any word or expression which is not defined in paragraph 1.1
         but which is a definition for the purposes of this Agreement and is
         used primarily for parts of this Agreement other than this Schedule
         shall, subject to
paragraph2.3 and without prejudice to paragraph 2.5, be capable of being
         amended without such consent notwithstanding that it may also be used
         in this Schedule.

2.       Amendments and Modifications

2.1      Obligations

                  2.1.1 The Parties and TUG Parties expressly acknowledge and
                  agree that each TUG Party is bound only to the extent of the
                  obligations which are expressly set out or referred to in this
                  Schedule (including those provisions incorporated herein by
                  reference in paragraph 5)
                  and not by any other provision of this Agreement.

                  2.1.2 Each TUG Party agrees to comply with the provisions of
                  this Schedule (including those provisions of this Agreement
                  incorporated herein by reference in paragraph 5).

                  2.1.3 The Parties and TUG Parties further expressly agree that
                  any TUG Party shall be conferred only with such rights in
                  respect of this Agreement as are expressed to be conferred on
                  it as TUG Party pursuant to provisions which are expressly set
                  out in this Schedule (including those provisions incorporated
                  herein by reference in paragraph 5).

                  2.1.4 References in this paragraph 2.1 to this Schedule shall
                  include references to this Schedule as varied, modified or
                  supplemented from time to time in accordance with the terms of
                  this Agreement.

2.2      Consent

         The consent or agreement of any TUG Party shall not be required to any
         modification, abrogation, amendment or suspension of any provision of
         this Agreement which is not expressly set out in this Schedule (and for
         this purpose the provisions of this Agreement incorporated herein by
         reference in paragraph 5 shall be deemed to be not set out in this
         Schedule). Each TUG Party hereby irrevocably waives any rights which it
         might be considered or held to have to consent or agree to any such
         modification, abrogation, amendment or suspension.

2.3      Authorisation to amend

         Without prejudice to paragraphs 2.1, 2.2 and 2.5 each TUG Party hereby
         unconditionally and irrevocably authorises and instructs NGC to sign on
         its behalf amending agreements to this Agreement, to execute any
         agreement which modifies, abrogates, amends or suspends any provision
         of this Agreement in circumstances where such TUG Party's consent or
         approval is not required, and undertakes not to withdraw, qualify or
         revoke such authority and instruction at any time.

2.4      Notification

         NGC shall notify each TUG Party forthwith of all amendments,
         modifications, abrogations and suspensions which are made to this
         Agreement for which the consent or agreement of such TUG Party is not
         required.

2.5      Appeal to Director

                  2.5.1 Where any TUG Party considers that any modification,
                  abrogation, amendment or suspension proposed to be made to any
                  provisions of the Agreement in respect of which the consent or
                  approval of a TUG Party is not required (pursuant to paragraph
                  2.2) would have a material adverse effect on its rights and
                  liabilities as a TUG Party as set out in this Schedule (the
                  "proposed change"), it shall have the right in the prescribed
                  time limits to refer the matter in writing to the Director
                  (such referral to be copied to NGC, each Party and each TUG
                  Party) who shall determine, taking into account the views of
                  Parties, whether such proposed change has a material adverse
                  effect on the basis of TUG Parties as a group. The Director
                  shall not have locus standi to consider any perceived or
                  actual prejudice to an individual TUG Party. The Director's
                  determination shall be final and binding for all purposes.

                  2.5.2 For the purposes of enabling a TUG Party to appeal to
                  the Director in accordance with the terms of paragraph 2.5.1,
                  NGC shall give all TUG Parties and the Director notice of the
                  proposed change at least 14 clear days prior to the
                  implementation of the proposed change in accordance with the
                  provisions of this Agreement.

                  2.5.3 If an appeal to the Director against a proposed change
                  is made within 14 days after notification by NGC pursuant to
                  paragraph 2.5.2, the change shall not come into effect until
                  the determination of the Director has been made in accordance
                  with the terms of paragraph 2.5.4 or paragraph 2.5.5 applies.
                  If no appeal is made within the said 14 days, the change shall
                  come into effect on the expiry of that period.

                  2.5.4 The Director shall within 28 days of receipt of a
                  referral pursuant to paragraph 2.5.1, or such longer period as
                  shall be agreed in writing by the Director and NGC, make the
                  determination referred to therein giving supporting reasons
                  and:
                                    (a) if the determination of the Director is
                           that the proposed change does not have a material
                           adverse effect upon the rights and liabilities as set
                           out in this Schedule of the TUG Parties as a group,
                           then the proposed change shall come into effect in
                           accordance with the provisions
of this Agreement;

                                    (b) if the determination of the Director is
                           that the proposed change does have a material adverse
                           effect upon the rights and liabilities as set out in
                           this Schedule of the TUG Parties as a group, the
                           Director shall require that the proposed change does
                           not come into effect and in which case such proposed
                           change shall not come into effect; and

                                    (c) if the Director determines that a
                           proposed change is not to come into effect pursuant
                           to paragraph 2.5.4(b), the Director shall have no
                           authority to require any modifications to the
                           proposed change to obviate or mitigate such material
                           adverse effect or to require any other change.

                  2.5.5 If the Director does not make his determination within
                  28 days of receipt of a referral or, such other period as
                  shall have been agreed in writing by the Director and NGC, in
                  accordance with the terms of paragraph 2.5.4, the proposed
                  change shall come into effect in accordance with the provision
                  of this Agreement.

3.       TUG Parties

3.1      The Parties and TUG Parties shall admit a New TUG Party as an
         additional party for the purposes of this Schedule only, on the terms
         set out in paragraph 2. Such admission shall take effect by way of a
         TUG Deed of Accession prepared by NGC at the expense and cost of the
         New TUG Party and to be executed by NGC for itself and on behalf of all
         other Parties and TUG Parties. Upon execution and delivery of the TUG
         Deed of Accession by NGC and the New TUG Party and subject to the terms
         and conditions of that TUG Deed of Accession, the New TUG Party shall.
         for the purposes of this Schedule only, on the terms set out in
         paragraph 2, become a TUG Party.

3.2      Each Party and each TUG Party hereby authorises and instructs NGC to
         execute any such TUG Deed of Accession on its behalf and undertakes not
         to withdraw, qualify or revoke any such authority or instruction at any
         time.

3.3      NGC shall  promptly  notify all Parties and all TUG Parties in writing
         that the New TUG Party has become a TUG Party .

3.4      In addition to the  provisions of paragraph 6, a TUG Party shall cease
         to be a TUG when it accedes to this Agreement as a Party.

4.       Establishment of the Transmission Users Group

         4.1 Each Party and each TUG Party hereby agrees to the establishment of
         the Transmission Users Group upon the terms and subject to the
         conditions of this Agreement and the TUG Constitution and agrees to
         comply with the provisions of the TUG Construction.

5.       Incorporation by reference

5.1      The provisions of Clauses 1, 15, 20 to 24 inclusive and 26 to 30
         inclusive of this Agreement shall be deemed to be incorporated into
         this Schedule 4 mutatis mutandis as if each reference therein to the
         word "Party" were a reference to the words "Party and TUG Party" and
         each reference therein to the word "Parties" were to the words "Parties
         and TUG Parties".

5.2      For the avoidance of doubt, the provisions of Clauses 2 to 14
         inclusive, 16 to 19 inclusive and 25 shall not be regarded as
         incorporated into this Schedule and shall not apply to this Schedule.
6.       Duration and Termination

6.1      A TUG Party shall  automatically  cease to be a TUG Party upon ceasing
         to be an Industry Party.

6.2      A Party (other than NGC) which is not an Industry Party shall not be
         bound by this Schedule and shall have no rights or obligations in
         relation to this Schedule. A Party which ceases to be an Industry Party
         shall automatically cease to be bound by this Schedule and shall have
         no rights or obligations in relation to this Schedule.

6.3      A person ceasing to be a TUG Party (including under paragraph 3.4)
         shall not affect any rights or obligations of such TUG Party which may
         have accrued to the date of termination or expiry and shall not affect
         any continuing obligations of any TUG Party under this Agreement.

6.4      A Party ceasing to be bound by the provisions of this Schedule in
         accordance with paragraph 6.2 shall not affect any rights or
         obligations of such Party which may have accrued to the date on which
         it ceased to be an Industry Party and shall not affect any continuing
         obligations of any Party under this Agreement.

6.5      Following termination of this  Agreement  paragraph 7 shall remain in
         full force and effect.

7.       Confidentiality

7.1      Each Party and each TUG Party (each an "Obligor") hereby undertakes
         with each other Party and each other TUG Party that it shall preserve
         the confidentiality of. and not directly or indirectly reveal, report,
         publish, disclose, transfer or use for its own purposes. TUG
         Confidential information except:

         7.1.1 in the circumstances set out in paragraph 7.2: or

         7.1.2 to the extent otherwise expressly permitted by this Schedule; or

          7.1.3 with the prior  consent in writing of the other  Parties and
                TUG  Parties  to  whose   affairs   such  TUG   Confidential
                Information relates.

7.2      The circumstances referred to in paragraph 7.1 are:

                  7.2.1 where the TUG Confidential Information is in the public
                  domain before it is furnished to the Obligor; or

         7.2.2 where the TUG Confidential Information after it is furnished to
the Obligor:

               (a)  is acquired by the  Obligor in  circumstances  to which this
                    paragraph 7 does not apply;

               (b)  is acquired by the  Obligor in  circumstances  to which this
                    paragraph  7 does apply but then ceases to be subject to the
                    restrictions imposed by paragraph 7; or

               (c)  enters the public domain.

                           and in any case otherwise than as a result of (i) a
                  breach by the Obligor of its obligations in this paragraph 7
                  or (ii) a breach by the person who disclosed that TUG
                  Confidential Information of that person's confidentiality
                  obligation and the Obligor is aware of such breach; or

                  7.2.3 if the Obligor is required or permitted to make
                  disclosure of the TUG Confidential Information to any person:

                    (a)  in compliance  with the duties of the Obligor under the
                         Act or any other requirements of a Competent Authority;
                         or

                    (b)  in compliance with the conditions of any Licence or any
                         document  referred  to in any  Licence  with  which the
                         Obligor is required to comply; or

                    (c)  in compliance with any other requirement or law; or

                    (d)  in response to a requirement of any stock exchange or
                         regulatory  authority  or the Panel on Take-overs and
                         Mergers; or

                  (e)    pursuant to the Arbitration  Rules for the Electricity
                         Arbitration  Association or pursuant to any judicial or
                         other arbitral process or tribunal having  jurisdiction
                         in relation to the Obligor; or

                    (f)  in compliance  with the  requirements  of Section 35 of
                         the Act and with the  provisions  of the Fuel  Security
                         Code; or

                  7.2.4 if the Obligor makes disclosure of the TUG Confidential
                  Information to its employees, directors, agents, consultants
                  and professional advisers in each case on the basis set out in
                  paragraph 7.3; or

                  7.2.5 if the Obligor makes disclosure of the TUG Confidential
                  Information in circumstances where it is expressly permitted
                  or required to disclose that information under the terms of
                  any agreement or arrangement (including this Agreement) with
                  the party to whose affairs such TUG Confidential Information
                  relates.

7.3      The Obligor shall adopt procedures within its organisation (applicable
         to (without limitation) its employees and directors) for ensuring the
         confidentiality of TUG Confidential Information which it is obliged to
         preserve as confidential under paragraph 7. 1. These procedures shall
         include, but shall not necessarily be limited to:

                  7.3.1 TUG Confidential Information will be disseminated within
                  the Obligor only on a "need to know" basis.

                  7.3.2 agents, consultants and professional advisers of the
                  Obligor in receipt of TUG Confidential Information will be
                  made fully aware of the Obligor's obligations of confidence in
                  relation thereto and enter into similar confidentiality
                  undertakings as are given by the Obligor under this paragraph
                  7; and

                  7.3.3 any copies of the TUG Confidential Information whether
                  in hard copy or computerised form will clearly identify the
                  TUG Confidential Information as confidential.

7.4      The provisions of this paragraph 7 shall continue to bind a person
         after its cessation as a Party or a TUG Party (as the case may be) for
         whatever reason.

8.       Variations

8.1      Subject to the terms of paragraphs 8.2 and 8.3, no variations to this
         Schedule (including, without limitation, this paragraph 8) shall be
         effective unless made in writing and signed by and on behalf of all
         Parties and all TUG Parties. The Parties and the TUG Parties shall
         effect any amendment required to be made to this Schedule by the
         Director as a result of a change in the Transmission Licence or an
         order or direction made pursuant to the Act or a Licence and each Party
         and each TUG Party hereby authorises and instructs NGC to make any
such     amendment on its behalf and undertakes not to withdraw, qualify or
         revoke such authority or instruction at any time.

8.2      Subject to the terms of paragraph 8.4, all variations to the TUG
         Constitution shall be made in accordance with the terms of paragraph
         14.8 of the TUG Constitution or any other relevant provision of the TUG
         Constitution from time to time providing for amendments of the TUG
         Construction. Each Party and each TUG Party hereby authorises and
         instructs NGC to make and to sign any amendment on its behalf which are
         approved pursuant to the terms of the TUG Constitution and undertakes
         not to withdraw, qualify or revoke such authority or instruction at any
         time.

8.3      Notwithstanding. the term of paragraph 1.2 the meanings of the
         expressions "Industry Party" and "Representative" which are primarily
         defined in the TUG Constitution shall only be amended in accordance
         with the provisions of the TUG Constitution.

8.4      In the event of any inconsistency between the provisions of the TUG
         Constitution and the Agreement, the provisions of the Agreement shall
         prevail.

9.       Ratification

         Each of the Parties and the TUG Parties hereby ratifies the appointment
         of those individuals listed in Appendix 1 of the TUG Construction (in
         its form when first brought into effect) as the first officers and
         Representatives of the Transmission Users Group and expressly
         acknowledge and agree that those individuals are Representatives and
         officers of the Transmission Users Group duly appointed in accordance
         with the terms of the TUG Constitution.

10.      Indemnities

10.1     Subject to the terms of paragraphs 10.2 and 10.3, each Party and each
         TUG Party (in their respective capacities as Industry Parties)
         expressly acknowledges and agrees that it shall indemnify and keep
         indemnified the Representative by whom it is represented as provided in
         paragraph 6.1 of the TUG Constitution (and, if more than one, as
         between the relevant Parties and TUG Parties rateably in proportion to
         their weighted voting rights as provided in paragraph 14.6 of the TUG
         Constitution) from and against any and all costs (including legal
         costs), charges, expenses, damages, or other liabilities properly
         incurred or suffered by the Representative in relation to the
         Transmission Users Group or his office as a Representative or the due
         exercise by him of his powers, duties and responsibilities as a
         Representative under this Agreement and the TUG Constitution and all
         claims, demands or proceedings arising out of or in connection with the
         same except any such costs, charges, expenses, damages or other
         liabilities which are suffered or incurred or occasioned by the wilful
         default or bad faith
of, or breach of obligation, duty or trust by such a Representative.

10.2     Where a Representative represents more than one Industry Party, each
         Party and each TUG Party (in their respective capacities as Industry
         Parties) who is represented by such Representative agrees to indemnify
         such Representative on a joint and several basis in accordance with the
         terms of paragraph 10. l.

10.3     Each Party and each TUG Party shall upon the request of any
         Representative by whom the Party or TUG Party is represented. provide
         to such Representative a written deed of indemnity reflecting the terms
         of this paragraph 10.


<PAGE>


                                   Appendix 1
                            Form of Deed of Accession

THIS DEED OF ACCESSION is made on [     ]

BETWEEN:

(1)      [ ], a company incorporated [with limited liability] under the laws of
         [ ] (registered number) and having its registered [principal] office at
         [ ] (the "New TUG Party"); and

(2)  The  National  Grid Company plc ("NGC") on behalf of all the parties to the
     Master Agreement referred to below.

WHEREAS:

(A)      By an agreement dated 30th March 1990 (the "Master Agreement") made
         between The National Grid Company plc and the Users (as named therein)
         (as amended, varied, supplemented and modified) the parties thereto
         agreed to establish a contractual framework between NGC and the Users
         pursuant to which supplemental agreements would be entered into
         providing for (inter alia) connection to NGC's Transmission System and
         the payment of certain charges.

(B)      By paragraph 3 of Schedule 4 to the Master Agreement additional parties
         may be admitted to that Agreement for the purposes of, and only to be
         bound by and conferred rights in accordance with, Schedule 4 thereto in
         the capacity of TUG Party; and

(C)      The New TUG Party is not a Party or a TUG Party and has requested that
         it be admitted as a TUG Party pursuant to paragraph 3 of Schedule 4 to
         the Master Agreement and each of the Parties and TUG Parties hereby
         agrees to such admission.

NOW IT IS HEREBY AGREED as follows:

1        . Unless the context otherwise requires, words and expressions defined
         in the Master Agreement used for the purposes of Schedule 4 to the
         Master Agreement shall bear the same meanings respectively when used
         herein.

2.       NGC (acting on behalf of each of the Parties and TUG Parties) hereby
         admits the New TUG Party as an additional TUG Party under Schedule 4 to
         the Master Agreement on the terms and conditions hereof and with effect
         from [insert effective date of admission].

3.       The New TUG Party hereby accepts its admission as a TUG Party and
         undertakes with NGC (acting on behalf of each of the Parties and TUG
         Parties) to perform and to be bound by the terms and conditions of
         Schedule 4 to the Master Agreement as a TUG Party as from the [insert
         effective date of admission].

4.       For all purposes in connection with the Master Agreement the New TUG
         Party shall as from the [insert effective date of admission] be treated
         including for the purposes of paragraph 2 of Schedule 4 to the Master
         Agreement as if it had been a signatory of the Master Agreement as a
         TUG Party and as if this Agreement were part of the Master Agreement.
         and the rights and obligations of the Parties and TUG Parties shall be
         construed accordingly.



<PAGE>


IN WITNESS whereof this document has been duly executed and delivered as deed
the day and year first above written.

EXECUTED as a DEED by
[NEW TUG PARTY]

 .............................................
Director

 .............................................
Director/Secretary

Notice details (Clause 23 of the Master Agreement as incorporated into Schedule
4 thereto by paragraph 5 thereof).

Address:
Telex number:
Facsimile number:
Attention:

EXECUTED as a DEED by
THE NATIONAL GRID COMPANY PLC for and on behalf of each of the Parties
(including TUG Parties) to the Master Agreement

 ...............................................
Director

 ...............................................
Director/Secretary


<PAGE>


                                   Appendix 2
                       Form of TUG Constitution and Rules






<PAGE>










                          THE TRANSMISSION USERS GROUP


                             CONSTITUTION AND RULES



<PAGE>


                                TABLE OF CONTENTS

Paragraph                                                                 Page

1.       Name of the Group

2.       Definitions and Interpretation

3.       Constitution

4.       Objects and Powers

5.       Membership

6.       Appointment of Representatives

7.       Chairman

8.       Secretary

9.       Alternates

10.      Vacation of Office

11.      Meetings

12.      Notice of Meetings

13.      Proceedings at Meetings and Quorum

14.      Representation, Voting and Resolutions

15.      Minutes

16.      Sub Committees and Working Groups

Appendices

1.   List of first Chairman, Secretary and  Representatives of the Transmission
     Users Group

2.       Part 1 - Industry Party Representatives Election Procedure
         Part 2 - Appointment of Consumer Party Representatives

3.       Calculation of Industry Party Votes

4.       Form of Consumer Party Representatives Confidentiality Letter of
         Undertaking



<PAGE>



                          The Transmission Users Group

1.       Name of the Group

         The Group shall be called the "Transmission Users Group".

2.       Definitions and Interpretation

2.1      The following words and expressions shall have the following meanings
         in this Constitution and Rules:

                      "Ancillary Service" has the
                      meaning given to that phrase in the Grid Code;

                      "Chairman"  means the
                      person appointed to be Chairman from time to time
                      pursuant to paragraph 7. 1 the Vice Chairman when
                      acting as Chairman, and a Representative appointed to
                      be Chairman of a Meeting of the Group pursuant to
                      paragraph 7.2;

                      "Constitution"  means the
                      constitution and rules of the Group as set out herein,
                      as may be amended from time to time in accordance with
                      the terms of the Master Agreement;

                      'Consumer Party" means any body
                      which.  from time to time is  included  on the list drawn
                      up by the Chairman pursuant to Part 2 of Appendix 2;



<PAGE>


                      "Consumer Party
                      Representative"  means a
                      representative appointed in accordance with paragraph
                      6.3 and who has entered into a Letter of Undertaking;

                      "Domestic Consumer"  means a customer
                      supplied or to be supplied at premises used by him
                      wholly or mainly for domestic purposes;

                      "Externally Interconnected Party " has the meaning
                      given to that phrase in the Grid Code;

                      "External Pool Members"  has the meaning
                      given to that phrase in the Grid Code;

                      "Generator"  has the
                      meaning given to that phrase in the Grid Code;

                      "Grid Code Review Panel" has the meaning
                      given to that phrase in the Grid Code;

                      "Group" means the
                      Transmission Users Group;

                      "lndustry Party" means each person
                      who is one or more of the following:-

                      (a)      Generator;
                      (b)      Public Electricity Supplier;
                      (c)      Second Tier Supplier;
                      (d)      Non Embedded Customer;
                      (e)      Externally Interconnected Party;
                      (f)      External Pool Member;
                      (g)      Provider of Ancillary
                               Services  not  otherwise  included  in the above
                               list;


<PAGE>


                    and who:

                     has had
                     votes allocated to it on
                     1st April of the applicable
                     TUG Year as a result of the
                     vote allocation procedure
                     carried out in accordance
                     with paragraph 6 of the
                     Constitution;

                     continues to
                     be within one or more of the categories within the list
                     in (a) to (g) above during the applicable TUG Year; and

                     has agreed
                     to be bound by the
                     provisions relating to the
                     Group contained in Schedule
                     4 of the Master Agreement
                     or when admitted as a Party
                     or TUG Party will become
                     bound by the provisions
                     relating to the Group
                     contained in Schedule 4 of
                     the Master Agreement
                     without having to satisfy
                     any further conditions;

                     "Industry Party Group"
                     means in relation to any
                     Industry Party that
                     Industry Party and any
                     affiliate (as defused in
                     the Pooling and Settlement
                     Agreement) and related
                     undertaking (as defined in
                     the Pooling and Settlement
                     Agreement) of that Industry
                     Party which is itself an
                     Industry Party;

                     "Industry Party
                     Representative" means a
                     representative  appointed in  accordance  with  paragraph
                     6.1;

                     "Interested Party" means
                     both Consumer Parties and
                     Industry Parties;
                     'Interested Parties'
                     Meeting" means the annual
                     meeting referred to in
                     paragraph 11.3 to which
                     Interested Parties, NGC and
                     Non-Voting Representatives
                     may attend;

                     "Letter of Undertaking" means a letter of
                     undertaking to be signed by each Consumer
                     Representative in the form set out in Appendix 4;

                     "Master Agreement"
                     means the Master Connection
                     and Use of System Agreement
                     dated 30 March 1990 as
                     amended from time to time;

                     "NGC Representative"  means  a
                     representative  appointed in  accordance  with  paragraph
                     6.4;

                     "Nomination Form"  means the form of
                     that  name  referred  to  in  paragraph  4 of  Part  1 of
                     Appendix 2;

                     "Non-Embedded Customer"  has the meaning
                     given to that phrase in the Grid Code;

                     "Non-Voting Representative" means a
                     representative referred to in paragraph 5.1.3;

                     "Representative"  means either an
                     Industry Party Representative, a Consumer Party
                     Representative,, the NGC Representative or a Non-Voting
                     Representative, or all or some as the context requires;

                     "Second Tier Suppliers" has the meaning
                     given to that phrase in the Grid Code;

                     " Secretary "  means the
                     person duly appointed from time to time pursuant to
                     paragraph 8;

                     "TUG Issues"  means the
                     objects of the Group as set out in paragraph 4;

                     "TUG Year"  means a
                     year beginning on I April each year;

                     "Vice Chairman"   means the person
                     appointed to be Vice Chairman from time to time
                     pursuant to paragraph 7.3;

                     "Voting Paper"  means the paper of
                     that name referred to in paragraph 8 of Part 1 of
                     Appendix 2; and

                     "Voting Representative" means a
                     representative referred to in paragraph 5.1.2.

2.2      Except as otherwise provided herein and unless the context otherwise
         admits, words and expressions used herein shall have the same meaning
         as defined in the Pooling and Settlement Agreement or the Master
         Agreement. In the event of conflict the definition used in the Master
         Agreement will prevail.

2.3      Words importing the singular only also include the plural and vice
         versa where the context requires. Words importing the masculine only
         also include the feminine.

2.4      Headings and titles shall not be taken into consideration in the
         interpretation or construction of the words and expressions used
         herein.

2.5      Unless the context otherwise requires. references in this Constitution
         to a particular paragraph or Appendix shall be a reference to that
         paragraph or Appendix in this Constitution.
3.       Constitution

         The Group is a standing body established pursuant to the Master
Agreement to deal with TUG Issues.

4.       Objects and Powers

4.1      The object of the Group shall be to meet to consider and/or discuss
         electricity transmission related issues.

4.2      The Group shall also have the following powers:

       4.2.1 to consider the adoption of issues which other bodies
       (including the Executive Committee (PEC) and the Grid Code
       Review Panel) may offer to it, or agree to pass to it, and the
       mechanics of such adoption;

       4.2.2    to amend the Constitution of the Group from time to time; and

       4.2.3 to consider whether the Group should request other
       bodies to adopt TUG Issues which it would like to refer to
       such other bodies.

5.       Membership

5.1 The Group shall consist of:

         5.1.1    officers

                  (a)      a Chairman; and

                  (b)      a Secretary.



<PAGE>


         5.1.2    Voting Representatives

               (a)  not more than 15 Industry Party Representatives appointed in
                    accordance with paragraph 6.1; and

               (b)  not more than 3 Consumer Party Representatives appointed in
                    accordance with paragraph 6.3.

         5.1.3    Non-Voting

                  (a)      1 observer nominated by the Executive Committee
                          (PEC);

                  (b)      1 observer nominated by the Director; and

                  (c) 1 observer nominated by the Grid Code Review Panel.

         5.1.4      NGC Representative

                  Not more than 1 NGC Representative.

         5.2  Experts may also attend  meetings of the Group in accordance with
              the provisions of paragraph 14.3. --------

5.3      A list of the first Representatives, the Chairman and the Secretary of
         the Group i@@ set out in Appendix 1. A revised copy of Appendix 1 will
         be circulated to Representatives and to the Chairman as soon as
         reasonably practicable following any change. and the revised Appendix 1
         will replace the then existing Appendix 1. Any revision of Appendix I
         to reflect changes to Representatives or the Chairman will be deemed
         not to be an amendment to the Constitution pursuant to paragraph 14.

5.4      No person other than an individual shall be appointed a Representative
         (or alternate) or the Chairman. An individual shall not be appointed as
         a Voting Representative if he is an employee or officer of or a person
         acting exclusively for a company or other entity (whether or not a
         corporate body) which already has a Voting Representative on the Group
         or if his appointment as a Voting Representative would result in the
         Group consisting of two or more Voting Representatives from she same
         Industry Party Group.

6.       Appointment of Representatives

6.1      Industry Part,,, Representatives

         Industry Party Representatives will be elected in accordance with the
         election procedure set out in Part I of Appendix 2. which election
         shall be conducted by NGC. The Group will review and amend as necessary
         from time to time the election procedure set out in Part I of Appendix
         2 in relation to Industry Parry Representatives and will in any event
         carry out such a review not earlier than 12 months but no later than 24
         months of the Group being
established.

6.2      Representative's Constituents

         6.2.1    An Industry Party Representative shall:-

                                            6.2.1.1 in the case of Industry
                                    Party Representatives who have been elected
                                    pursuant to Part 1 of Appendix 2. represent
                                    the interests of:

          (a)  all the Industry Parties on whose Voting Paper he was the highest
               placed  preference  amongst  those  elected  in  accordance  with
               paragraph 8 of Part I of Appendix 2; and

          (b)  in the case of  those  Industry  Parties  who did not  express  a
               preference  for  any  elected  Representative,   those  who  have
               subsequently   selected  such   Representative  as  their  choice
               pursuant to paragraph 6.2.2.

6.2.1.1 in the case of Industry Party  Representatives who (as a result of there
being  15 or  fewer  than 15  nominations  received)  have  been  appointed
pursuant to paragraph 7.1 of Part 1 of Appendix 2.  represent the interests
of:-

          (a)  all the industry  Parties who nominated  him in  accordance  with
               paragraph 6 of Part 1 of Appendix 2; and

          (b)  in the  case  of  those  Industry  Parties  who  did  not  make a
               nomination.   those   who   have   subsequently   selected   such
               representative as their choice pursuant to paragraph 6.2.2.

6.2.2 In the event that an Industry Party did not:

6.2.2.1 express a preference for any elected Industry Party Representative, or

6.2.2.2  nominate  an  industry  Party  Representative   appointed  pursuant  to
 paragraph 7.1 of Part 1 of Appendix 2 (as the case may be),

                   that Industry Party may choose subsequently to select
                  one of the elected or appointed (as the case may be) Industry
                  Party Representatives to be its Representative in accordance
                  with paragraph 7.3 or 10 (as the case may be) of Part I of
                  Appendix 2. If it does not so select one of the elected or
                  appointed (as the case may be) Industry Party
Representatives, then it shall not be represented.
6.2.3    An Industry Party Representative cannot refuse to represent an Industry
         Party who selects him under paragraphs 6.2.1 and 6.2.2.

6.3      Consumer Party Representatives

         Consumer Party Representatives (one of whom must represent the
         interests of Domestic Consumers and no more than 2 may represent the.
         interests of other consumers) will be appointed in accordance with Part
         2 of Appendix 2, which procedure shall be conducted by the Chairman. No
         person (including, for the avoidance of doubt, Industry Parties and
         Representatives) shall be entitled to make any claim for compensation
         or damages or any other relief whatsoever against NGC as a result of
         NGC performing its obligations in accordance with paragraph 1 of Part 2
         of Appendix 2. The Group will review and amend as necessary from time
         to time the selection procedure set but in Part 2 of Appendix 2 in
         relation to Consumer Party Representatives and will in any event carry
         out such a review not earlier than 12 months but no later than 24
         months of the Group being established.

6.4      NGC Representative

         NGC will. from time to time. appoint a person to act as the NGC
         Representative and shall have the power to remove such person so
         appointed. Any appointment or removal of the NGC Representative shall
         be effected by notice in writing and delivered to the Secretary or
         tendered at a meeting of the Group.

6.5      Non-Voting Representatives

         Non-Voting Representatives are those listed in paragraph 5.1.3. Each
         Non-Voting Representative may attend meetings of the Group, and may
         speak, but cannot vote.



<PAGE>


6.6      Appeal/Audit of election/selection procedure for Representatives

         If any Interested Party believes that the procedures set out in Parts I
         or 2 (as the case may be) of Appendix 2 have not been followed
         correctly to a significant extent it may ask the Chairman appointed
         pursuant to paragraph 7.1 to investigate. If. following, investigation
         (which shall take such form as the Chairman decides) the Chainnan
         believes there are grounds for further investigation, the Chairman
         shall appoint a suitable external person or body to carry out further
         investigation. The Chairman shall carry out such investigation as
         expeditiously as is reasonably practicable. In any event, the Chairman
         shall report on the progress of such investigation at the next meeting
         of the Group following a request by any Interested Party to investigate
         and subsequent meetings of the Group if necessary.

6.7     Findings of A1212eal/Audit  of  Election/Selection   Procedure  for
        Representatives

         If,  as a result of an  investigation  carried out under paragraph 6.6
         above it is found:-

6.7.1    that the number of votes allocated to Industry Parties is incorrect: or

                  6.7.2 that as a result of an incorrect allocation of votes
                  between Industry Parties or a miscalculation of votes. an
                  Industry Party Representative would have not been elected had
                  the votes been allocated or calculated correctly; or

                  6.7.3 that the procedure for the selection of Consumer Party
                  Representatives had not been followed correctly to a
                  significant extent,

         then the Representatives elected or selected (as the case may be) shall
         remain Representatives of the Group until the next election or
         selection procedure (as the case may be). In the event of the votes
         allocated between Industry Parties being incorrect then NGC shall
         re-allocate the votes appropriately between Industry Parties.


<PAGE>


7.       Chairman

7.1      Upon the retirement or removal by NGC of the first and each successive
         Chairman. NGC shall appoint a person to act as Chairman. The Chairman
         shall be an executive director of NGC except for the first Chairman who
         shall be the "Director. Commercial and System Strategy" as at 1 April
         1997.

7.2      The Chairman shall preside at every meeting of the Group at which he is
         present. If the Chairman is unable to be present at a meeting, the
         Vice-Chairman appointed pursuant to paragraph 7.3 shall act as
         Chairman. If neither the Chairman nor the Vice Chairman is present
         within half an hour after the time appointed for holding the meeting,
         the Representatives present may appoint a Representative to be Chairman
         of the meeting provided that such meeting is quorate in accordance with
         paragraph 13.2.

7.3      At the first meeting of the Group (and from time to time thereafter)
         the Representatives present at such meeting shall elect. by a simple
         majority on a show of hands, one of the Representatives to be
         Vice-Chairman. Representatives present shall each have one vote. For
         the avoidance of doubt Industry Party Representatives will not be
         required to vote in accordance with the wishes of those Interested
         Parties whom he represents and Non-Voting Representatives and the NGC
         Representative present shall each have one vote on the election of a
         Vice-Chairman.

7.4      The Chairman shall have and carry out only such duties and
         responsibilities and exercise such powers as are expressly provided in
         this Constitution. The Chairman shall exercise impartially all such
         duties, responsibilities and powers.

7.5      If the Chairman does not carry out his duties and responsibilities in
         accordance with Paragraph 7.4, the Group may pass a resolution which
         shall be recorded in the minutes of the Group expressing its concern at
         that failure.



<PAGE>


8.       Secretary

8.1      NGC shall, unless the Group decides otherwise, perform the secretarial
         role in relation to the Group and shall provide a Secretary together
         with such other staff as it shall deem necessary. NGC shall notify each
         Representative of the identity and address for correspondence of the
         Secretary as soon as reasonably practicable after his appointment.

8.2      The Secretary shall not be a Representative of the Group and shall not
         be entitled to cast a vote at any meeting although he shall have the
         right to speak at a meeting.

8.3      The Secretary's  duties shall be to attend to the day to day operation
         of the Group and in particular to:

          8.3.1attend to the requisition of meetings and to serve all requisite
               notices;

          8.3.2maintain a register  of names and addresses of Representatives
               and the Chairman and  alternates as appointed  from time to time;
               and

         8.3.3    keep minutes of all meetings.

9.       Alternates

9.1      Each Representative shall have the power to appoint any individual to
         be his alternate and may at the Representative's discretion remove an
         alternate so appointed.

9.2      Any appointment or removal of an alternate shall (unless the Chairman
         otherwise agrees) be effected by notice in writing executed by the
         Representative appointing the alternate and delivered to the Secretary
         or tendered at a meeting of the Group.

9.3      If the Representative appointing the alternate so requests, an
         alternate shall be entitled to receive notice of all meetings of the
         Group or of meetings of sub-committees or working groups of which the
         Representative who appointed him is a member, and for the purpose of
         the proceedings at the meeting, the provisions of this Constitution
         shall apply as if the alternate were a Representative. Every person
         acting as an alternate shall have the votes of each Representative for
         whom that person acts as alternate, in addition to that person's own
         votes if he is also a Representative.

9.4      An alternate Representative shall cease to be an alternate if the
         Representative who appointed him ceases for any reason to be a
         Representative.

9.5      References in this Constitution to a Representative shall, unless the
         context otherwise requires, include his duly appointed alternate.

10.      Vacation of Office

10.1 The office of a Representative shall be vacated if:

          10.1.1 the  Representative  resigns his office by notice  delivered to
               the Secretary; or

                  10.1.2 three consecutive meetings of the Group have been held
                  at which neither that Representative nor his alternate has
                  been present. neither having submitted to the Chairman an
                  explanation for absence which is acceptable in the reasonable
                  opinion of the Chairman appointed pursuant to paragraph 7.1;
                  or

                  10.1.3 the Representative conducts himself in a manner which
                  in the reasonable opinion of the Chairman appointed pursuant
                  to paragraph 7.1 is unbecoming to the office of a
                  Representative.

10.2     In the event that the office of an Industry Party Representative is
         vacated pursuant to paragraph 10.1 or such Industry Party
         Representative dies or ceases to be employed or exclusively retained by
         the company or other entity (whether or not a corporate body) which
         employed him at the time he was elected or (as the case may be)
         nominated then:
                  10.2.1 those Industry Parties whom such Industry Party
                  Representative represents (as identified on the list published
                  by NGC pursuant to paragraph 11 of Part 1 of Appendix 2)
                  may select a new Industry Party Representative;

                  10.2.2 in the event that an Industry Party does not wish the
                  newly selected Industry Party Representative to be its
                  Representative it may select one of the other elected Industry
                  Party Representatives to be its Representative;

                  10.2.3 if it does not wish the newly elected lndustry Party
                  Representative to be its Representative and it does not so
                  select one of the other elected Industry Party
                  Representatives, then it shall cease to be represented.

         In any event such Industry Party shall notify the Secretary of its
         selection or non-selection as the case may be.

10.3     In the event that the office of a Consumer Party Representative is
         vacated pursuant to paragraph 10.1 or such Consumer Party
         Representative dies, the Electricity Consumers' Committees Chairman's
         Group shall be invited to select a new Consumer Party Representative.

10.4     In the event that the office of a Non-Voting Representative or the NGC
         Representative is vacated pursuant to paragraph 10.1 or such
         Representative dies then the Executive Committee (PEC) or the Director
         or the Grid Code Review Panel or NGC (as the case may) will
appoint a new Representative.

10.5     Any Representative elected or appointed pursuant to paragraphs 10.2 or
         10.3 above shall remain in office until such time as new elections take
         place pursuant to Part 1 of Appendix 2.



<PAGE>


11.      Meetings

11.1     The Group shall call meetings at such regular scheduled times as it may
         decide, but in any event meetings shall be called no more than 8 weeks
         apart.

11.2     The Chairman or any Representative may request the Secretary to
         requisition further meetings by giving 21 days notice to the Secretary.
         The notice shall be:

         11.2.1   in writing; and

                  11.2.2 contain a summary of the business that it is proposed
                  will be conducted and the Secretary shall proceed to convene a
                  meeting of the Group within 7 days of the date of expiry of
                  such notice in accordance with the provisions of paragraph 12.

11.3     In March of each year an Interested Parties Meeting will be held. The
         following matters will be included on the agenda for the Interested
         Parties Meeting:

                  11.3.1 a report from the Chairman on the business conducted by
                  the Group over the preceding twelve months; and

                  11.3.2 the appropriate elements of the election or appointment
                  (as the case may be) of paragraphs 6.1 and 6.3.

12.      Notice of Meetings

12.1     All meetings shall be called by the Secretary on at least 14 days
         written notice (exclusive of the day on which it is served and of the
         day for which it is given), or by shorter notice if so agreed by all
         Representatives and the Chairman.


12.2     If at any time a person has not been appointed as Secretary, or the
         Secretary is for any reason unable to act. the Chairman shall make
         alternative arrangements to convene meetings.

12.3     The notice of each meeting shall be given to all Representatives and to
         the Chairman and shall contain the time. date and venue of the meeting,
         an agenda and a summary of the business to be conducted.

12.4     The accidental omission to give notice of a meeting to, or the
         non-receipt of notice of a meeting by person entitled to receive notice
         shall not invalidate the proceedings at that meeting.

12.5     By notice to the Secretary, any Representative can request additional
         matters to be considered at the meeting and provided such notice is
         given at least 10 days (exclusive of the day on which is is served and
         of the day for which it is given) before the date of the
meeting, those matters will be included in a revised agenda for the meeting. The
         Secretary shall circulate the revised agenda to the Chairman and to
         each Representative as soon as practicable.

12.6     Each Representative and the Chairman shall from time to time
         communicate his address to the Secretary and all notices sent to such
         address shall be considered as having been duly given.

13.      Proceedings at Meetings and Quorum

13.1     Subject to paragraphs 11 and 12 the Group may meet for the transaction
         of business and adjourn and otherwise regulate its meetings as it
         thinks fit.

13.2 8 Voting Representatives and the NGC Representative present in person or by
     their alternates shall constitute a quorum for a meeting. of the Group.

13.3     Subject to the provisions of paragraph 13.5, the Chairman may, after a
         reasonable period of time from the time appointed for holding any
         meeting of the Group decide that because a quorum is not present, the
         meeting shall be adjourned. The meeting shall be adjourned to such day,
         time and place as the Secretary may notify to Representatives and to
         the Chainnan within 3 days of the adjournment. Alternatively, the
         Chairman may with the consent of all Representatives present decide
         that the meeting of the Group should proceed. In the case of a meeting
         which. at any time, ceases to be quorate the Chairman may also with the
         consent of all Representatives remaining decide that such meeting
         should continue.

13.4     A meeting adjourned in accordance with paragraph 13.3 shall not be
         called to take place within one week of the adjournment but may be
         called on less than 14 days notice. If at such adjourned meeting a
         quorum is not present within a reasonable period of time (as the
         Chairman may decide) from the time appointed for holding the meeting,
         the meeting shall not take place.

13.5     Only matters identified in the agenda referred to in paragraph 12.3 (or
         a revised agenda submitted pursuant to paragraph 12.5), and which have
         been discussed as an agenda item at a meeting of the Group which met
         the requirements of paragraph 13.2 at least 4 weeks prior. shall be
         resolved upon at a meeting (but this shall not prevent matters raised
         under the heading "Any Other Business" being discussed), provided that
         the meeting at which a matter is to be resolved upon is itself quorate
         or (in the case of a meeting which is not quorate throughout) the
         matter is resolved upon in that part of the meeting which was quorate.

13.6     In the event that:

13.6.1 there was some defect in the  appointment of either a  Representative  or
     the Chairman;

13.6.2 the election procedure has not been properly followed;

13.6.3 the votes cast by a Voting  Representative  did not  reflect the views of
     those he represents; or

13.6.4 the minutes are not approved.

         any decision taken by any meeting of the Group or of a sub-committee or
         working group shall be valid as if such person had been duly appointed,
         the election procedure had been duly followed, or the votes were fully
         reflective, or (as the case may be) the minutes had been duly approved
         provided that none of the events set out in paragraphs 13.6.1 to 13.6.4
         above has occurred as a result of a failure by either an Interested
         Party or a Representative to act in good faith.

13.7     In the exercise of its powers and the performance of its duties and
         responsibilities, the Group shall have due regard for the need to
         promote the attainment of the objects of the Group set out in paragraph
         4.1.

13.8     The Group, each Representative, the Chairman and the Secretary shall be
         entitled to rely upon any communication or document reasonably believed
         by it or him to be genuine and correct and to have been communicated or
         signed by the person by whom it purports to be communicated or signed.

14.      Representation, Voting and Resolutions

14.1 The Chairman.  each  Representative  and the Secretary shall be entitled to
     attend and speak at every meeting of the Group.

14.2     Subject to an Industry Party Representative's overriding obligation as
         a Representative of the Group set out in paragraph 13.7, in the
         exercise of his powers and the performance of his duties and
         responsibilities as a Representative. an Industry Party Representative
         shall represent the interests of the Industry Party or Parties as the
         case may be whom he represents pursuant to paragraph 6.2 above
         (including representing different views). An Industry Party
         Representative shall cast the votes of the Industry Party or Parties as
         the case may be whom he represents as directed by such Industry
         Parties.

14.3     Experts shall (at the discretion of the Chairman. due notice having
         been given to him prior to the meeting) be entitled to attend any
         meeting of the Group with a Representative and shall be entitled to
         speak at any meeting but shall not be entitled to vote on any issue.

14.4     Industry Parties shall between them have a maximum of 135,000.000 votes
         and Consumer Party Representatives shall between them have a maximum of
         15.000,000 votes. Each Industry Party shall exercise its votes through
         the
Representative who represents it. In respect of any vote by Representatives of
         the Group no resolution shall be passed without the agreement of the
         NGC Representative.

14.5     The votes allocated pursuant to Appendix 3 to Industry Parties who, as
         a result of failing to select one of the elected industry Party
         Representatives pursuant to paragraphs 6.2.2 or 10.2.2 are not
         represented on the Group shall not be re-allocated between those
         Industry Parties who are represented on the Group.

14.6     Industry Parties and Consumer Party Representatives shall have votes
         calculated as set out in ill review and amend as necessary Appendix 3,
         such votes to be calculated by NGC. The Group will from time to time
         the provisions set out in Appendix 3 in relation to the calculation of
         votes for Industry Parties and Consumer Party Representatives and will
         in any event carry out such a review not earlier than 12 months but no
         later than 24 months of the Group being established.

14.7     Appeal on a vote to change Constitution and Rules

         If any lndustry Party does not agree with any proposed change to the
         Constitution it may (in circumstances where the provisions of Licence
         Condition IOC(3) of NGC's Transmission Licence apply) request the
         Director to make a determination pursuant to Licence Condition IOC(3)
         of NGC's Transmission Licence.
14.8     This Constitution shall not be changed other dm by a majority vote of
         65 % of votes cast by Voting Representatives at a meeting of the Group
         which is quorate pursuant to paragraph 13.2 and endorsed by NGC
         pursuant to paragraph 14.4.

15.      Minutes

15.1     The Secretary shall circulate copies of the minutes of each meeting of
         the Group and of Group decisions to each Representative and to the
         Chairman as soon as practicable and in any event within 14 days after
         the relevant meeting has been held.

15.2     If the Secretary receives any comments on the minutes, he shall then
         include those aspects of the minutes upon which there is disagreement
         into the agenda for the next following meeting of the Group as the
         first item for resolution. The minutes shall be formally approved at
         the next following meeting.

16.      Sub Committees and Working Groups

16.1 The Group may establish sub-committees from time to time. Each
sub-committee:

                  16.1.1 shall be composed of such persons (whether or not
                  Representatives) and shall discharge such rights, powers,
                  duties and responsibility as the Group may determine;

                  16.1.2 shall be given and shall be subject to written terms of
                  reference and to such procedures as the Group may determine;

                  16.1.3 shall, in the exercise of its rights and powers and the
                  performance of its duties and responsibilities delegated to it
                  by the Group, at all times conduct itself and its affairs in a
                  manner which it considers best designed to give effect to the
                  object set out in paragraph 4.1.


16.2     The meetings of sub-committees shall so far as possible be arranged so
         that the minutes of such meetings can if appropriate be presented to
         the Representatives in sufficient time for consideration before the
         next following meeting of the Group.

16.3     The Group may further establish working groups to advise it on any
         matter from time to time. Such working groups may consist of
         Representatives and/or others as the Group may determine for the
         purpose.

16.4     Resolutions of sub-committees and working groups shall not have binding
         effect unless approved by resolution of the Group.

17.      Dispute Resolution

17.1     Subject to the terms of paragraph  17.2 the provisions of Clause 26 of
         the Master Agreement shall apply to this Constitution.

17.2      Notwithstanding  the  terms of  paragraph  5. 1 of Schedule 4 of the
          Master Agreement, where circumstances contemplated by paragraph 6.6 or
          paragraph 3 of Part 1 of Appendix 2 arise, the procedures provided for
          in  paragraph  6.6 or paragraph 3 of Part 1 of Appendix 2 (as the case
          may be) shall be the sole remedy  available  and, for the avoidance of
          doubt,  the provisions of Clause 26 of the Master  Agreement shall not
          apply.



<PAGE>

   Appendix 1

     List of first Chairman,  Secretary and  Representatives of the Transmission
     Users Group

Chairman

Name of Individual                Name of Company/Organisation of Individual

Roger Urwin                             NGC

Secretary

Name of Individual                Name of Company/Organisation of Individual

Richard Dunn                      NGC

Industry Party Representatives

Name of Individual                Name of Company/Organisation of Individual

David Tolley                      National Power PLC
Tony Dicicco                      PowerGen plc
David Tilstone                    Eastern Group plc
John Tucker                                 SEEBOARD
Willie Maclean                      Scottish Power plc
Ian Moran                                   Southern Electric plc
John Capener                                Nuclear Electric Limited
Malcom Chandler                     Northern Electric plc
Keith Miller                                Teesside Power Limited
Kath Wall                                   Magnox Electric plc
Dick Cecil                                  London Electricity plc
David Shakespeare                   South Wales Electricity plc
Terry Ballard                               Midlands Electricity plc
Tim Simpson                                 Yorkshire Electricity Group plc
David Porter                               Association of Electricity Producers


<PAGE>


Consumer Party Representatives

Name of Individual                 Name of Company/Organisation of Individual

Aubrey Bourne                       Major Energy Users' Council
(Non-domestic consumers)
Robert Spears                               Utility Buyers Forum
(Non-domestic consumers)

Bernard Quigg                               Electricity Consumers' Committees
(Domestic Consumers)

NGC Representative

Name of Individual                   Name of Company/Organisation of Individual

Charles Davies

Non Voting Representative

Name of Individual                   Name of Company/Organisation of Individual

Brian Saunders                      Executive Committee (PEC)
(nominated by the Executive Committee (PEC))
John Stewart                                OFFER
(nominated by the Director)
Mike Metcalfe                               NGC
(nominated by the Grid Code Review Panel)



<PAGE>


FD2\U    - 1 -
                                   Appendix 2

                                     Part 1

                Industry Party Representatives Election Procedure

1.       Notification of Information

         No later than 21st January each year, NGC shall provide each Industry
         Party with a notification containing the following information:

         1.1  total MWhrs traded within the England and Wales electricity pool;

         1.2  total payments made to and/or from NGC;

                 1.3 such Industry Party's MWhrs traded within the England and
                 Wales electricity pool and such Industry Party's payments made
                 to and/or from NGC, and

         1.4      the number of votes allocated to such Industry Party.

2.       Raising of Disputes

         No later than 5th February each year, Industry Parties shall raise any
         objections to, or queries on, the information contained in the
         notification received from NGC pursuant to paragraph 1 of this Part 1
         of Appendix 2.

3.       Resolution of Disputes

         NGC and any Industry Party who raises an objection or query under
         paragraph 2 of this Part 1 of Appendix 2, shall attempt to resolve such
         objection or query by discussion. In the event that the objection or
         query cannot be resolved, the Chairman appointed pursuant to paragraph
         7.1 shall, no later than 19th February, make a determination resolving
         the objection or query and enabling the election procedure to be
         completed. The determination of the Chairman shall not preclude an
         Industry Party from asking the Chairman to carry out an investigation
         in accordance with paragraph 6.6.

4.       Dispatch of Nomination Forms

         No later than 21st January each Year. NGC will send to each Industry
         Party a Nomination Form on which to nominate one person who must have
         agreed to stand as an Industry Party Representative if elected (and who
         must indicate that by signing the Nomination Form in the relevant
         place, or indicate in some other manner agreed with the Chairman
         appointed pursuant to paragraph 7.1), but who need not be an employee
         of an Industry Party.

5.       Principles of Nominations

5.1      Each Industry Party:

          5.1.1 may only nominate one person to stand for election  as an
               Industry Party Representative; and

                  5.1.2 shall ensure that there will only be one person who is
                  connected (employee, consultant or otherwise) with such
                  Industry Party and who has agreed to stand for election as an
                  industry Party Representative.

          5.2  Each Industry Party that is a member of an Industry  Party Group
               shall be obliged to:

                  5.2.1 nominate the same person as the other Industry Party or
                  Industry Parties (as the case may be) who are also members of
                  such Industry Parry Group; and


                  5.2.2 ensure that there will only be one person who is
                  connected (employee. consultant or otherwise) with such
                  Industry Party Group and who has agreed to stand for election
                  as an Industry Party Representative.

6.       Return of Notification Forms

         No later than 5th February each year. each Industry Party shall return
         to NGC the Nomination Form. In the event that NGC does not receive a
         duly completed Nomination Form within that time it shall be presumed
         that any Industry Party which has not returned a duly completed
         Nomination Form does not wish to nominate a person to stand as an
         Industry Party Representative.

7.       Receipt of 15 or fewer Nominations

7.1      In the event that 15 or fewer than 15 nominations are received, there
         will be no election and each of the nominees shall be appointed as an
         Industry Party Representative.

7.2      No later than 24th February each year NGC shall send to all Industry
         Parties who did not nominate one of the Industry Party Representative
         so appointed, a list of the Industry Party Representatives so
         appointed.

7.3      No later than 4 March each Year. such Industry Parties will notify NGC
         whether it wishes to select a Representative pursuant to paragraph
         6.2.2 and if so the name of the Representative.



<PAGE>


8.       Receipt of Nominations

8.1      Despatch of Voting Papers

         In the event that more than 15 nominations are received, NGC shall draw
         up a complete list of nominations on a Voting Paper which shall then be
         sent to all Industry Parties by 24th February each year.

8.2      Marking of Voting Papers

         On receipt, each Industry Party shall mark the Voting Paper to rank the
         nominees in order of preference until these, are indifferent about the
         remaining candidates. Each Industry Party that is a member of an
         Industry Party Group shall when marking the Voting Paper to rank the
         nominees in order of preference be obliged to rank the same nominees in
         the same order of preference as the other Industry Party or Industry
         Parties (as the case may be) who are also members of such Industry
         Party Group.

8.3      Return of Voting Papers

         No later than 10th March each year. each Industry Party shall return to
         NGC its Voting Paper. In the event that NGC does not receive a duly
         completed Voting Paper within that time it shall be presumed that any
         Industry Party which has not resumed a duly completed Voting Paper does
         not wish to express a preference about any of the candidates on the
         Voting Paper.

8.4      Counting of Votes

         The votes for first preferences will be totalled by NGC to rank the
nominees in order of popularity.



<PAGE>


8.5      Elimination of Nominees

         The nominee with the fewest votes shall be eliminated and shall take no
         further part in the election process. NGC shall transfer the votes of
         all those Industry Parties who voted for that nominee to the nominee
         who is the next highest preference (and who has not already been
         eliminated) of such Industry Party or Industry Parties (as the case may
         be).

8.6      Re-ranking of Nominees

         NGC will then re-rank the nominees and this process will be repeated
         until there are only 15 nominees left who will become the 15 Industry
         Party Representatives.

8.7      Equal Votes

         In the event that there are two or more nominees with equally the
         fewest votes then each such nominee will be eliminated except in the
         event when such elimination would result in there being fewer than 15
         nominees left. In such circumstance the lowest nominees will be ranked
         according to the number of first preference votes to determine which
         shall fill the remaining seat(s) on the Group. If the lowest ranked
         nominees are also equal on the number of first preference votes then
         NGC shall rank according to second preference votes and so on until one
         nominee ranks higher than the other. In the event that there is still
         no outcome the nominees concerned will draw lots.

9.       Voting by an Industry Party Group

9.1      NGC shall not be under any obligation to monitor or to ensure that
         nominations made by or the voting by (as the case may be) Industry
         Parties that are members of the same Industry Group as part of the
         election procedure for Industry Party Representatives is in accordance
         with the provisions of:-

         9.1.1    paragraph 5.4; and

         9.1.2    paragraphs 5.2 and 8.2 of this Part 1 of Appendix 2.

9.2      Each Industry Party agrees to ensure that it complies with the
         provisions relating to Industry Party Groups set out in:-

         9.2.1    paragraph 5.4; and

         9.2.2    paragraphs 5.2 and 8.2 of this Part 1 of Appendix 2.

10.      Selection of Industry Party Representatives

                  No later than 20th March each Year NGC shall send to each
         Industry Party who did not express a preference for any elected
         Industry Party Representative a list of the Industry Party
         Representatives elected. No later than 31st March each year each such
         Industry Party shall notify NGC whether it wishes to select a
         Representative pursuant to paragraph 6.2.2 and if so, the name of the
         Representative.

11.      Notification of Industry Party Representatives

         On completion of the election procedure set out in this Part 1 of
         Appendix 2 (including selection by those who did not express a
         preference as provided in paragraph 10 of this Part 1 of Appendix 2),
         NGC shall publish to Industry Parties:

                  (a) a list of elected Representatives and the Industry Parties
                  whom they each represent.

                  (b) a list of all Industry Parties and the number of votes
                  allocated to each Industry Party pursuant to Appendix 3
                  Provided that NGC shall not disclose the number of votes
                  allocated to Industry Parties who have notified the Chairman
                  in writing that they elect not to have the number of votes
                  allocated to them disclosed. Industry Parties may only elect
                  not to have the number of votes allocated to them disclosed if
                  they have fewer than 500,000 votes.



<PAGE>


                                     Part 2

                  Appointment of Consumer Party Representatives

1.       The Chainnan appointed pursuant to paragraph 7.1, in consultation with
         the Electricity Consumers' Committees Chairmen's Group shall draw up,
         and update from time to time, a list of Consumer Parties:

2.       No later than 21st January each year, the Chairman will invite
         nominations for the Consumer Party Representative who will represent
         the interests of Domestic Consumers and the two Consumer Party
         Representatives who will represent the interests of consumers other
         than Domestic Consumers from each of the bodies included on the list
         prepared under paragraph 1 above. Nominations for, Consumer Party
         Representatives, who must have:-

                  (a) agreed to stand as a Representative if selected (and who
                  must indicate that by signing the nomination form in the
                  relevant places, or indicate in some other manner agreed with
                  the Chairman appointed pursuant to paragraph 7.1); and

         (b) agreed to sign a Letter of Undertaking, if selected.

         must be provided by 24th February each year.

3.       In the event that no person is nominated to represent the interests of
         Domestic Consumers there shall be no person appointed to represent the
         interests of Domestic Consumers but there may be up to (but no more
         than) 2 Consumer Party Representatives to represent the interests of
         consumers other than Domestic Consumers.

4.       In the event that only one person is nominated to represent the
         interests of Domestic Consumers there will be no selection as provided
         in paragraph 6 of this Part 2 of Appendix 2 and such nominee shall be
         appointed as a Representative.
5.       In the event that two or fewer than two persons are nominated to
         represent the interests of consumers other than Domestic Consumers,
         there will be no selection as provided in paragraph 6 of this Part 2 of
         Appendix 1 and each of the nominees shall be appointed as a
         Representative.

6. In the event that:

          6.1  more than one person is nominated to represent the interests of
               Domestic Consumers; or

          6.2  more than two persons are nominated to represent the interests of
               consumers other than Domestic Consumers,

                  NGC shall. no later than 2nd March each year, notify the
         Electricity Consumers' Committees Chairmen's Group of the names of the
         individuals who have been nominated. No later than 20th March each
         year, the Electricity Consumers' Committees Chairmen's Group (in
         consultation with OFFER) shall select the candidates that, in their
         opinion. represent the broadest spectrum of representation for
         consumers.

7.       As soon as reasonably practicable after the completion of the selection
         procedure NGC shall publish a list of selected Consumer Party
         Representatives.



<PAGE>


                                   Appendix 3

                       Calculation of Industry Party Votes

1.       Vote Allocation

         A minimum of 150,000,000 votes shall be allocated between Industry
         Parties and Consumer Party Representatives. Industry Parties shall,
         between them, carry a maximum of 135.000,000 of the votes and Consumer
         Party Representatives shall, between them, carry a maximum of
         15.000.000 of the votes.

2.       Industry Party

         In respect of Industry  Parties  votes shall be calculated by NGC in
         accordance with the following:-

2.1      Basis of Data

         all data used by NGC in calculating the number of votes to be allocated
         to Industry Parties in respect of each TUG Year will be based on the 12
         month period expiring on 30th November immediately prior to the
         commencement of the election procedure for that TUG Year;

2.2      Supply of Data

         the Settlement System Administrator will supply actual data for both
         Genset Metered Generation and Consumer Gross Demand (as those
         expressions are respectively defused in the Pooling and Settlement
         Agreement) to NGC broken down on a company by company basis provided
         always that if the Settlement System Administrator fails to supply such
         data the Industry Parties will provide such data direct to NGC;

2.3      the data to be utilised is as follows:-

                  (A) total energy traded within England and Wales electricity
                  pool for each Industry Party will be the sum of its Genset
                  Metered Generation and Consumer Gross Demand in MWh;

                 (B)  in relation to  payments  made to and/or from NGC,  the
                      following will be included:-

                                    (i) the sum of the magnitude of all amounts
                           invoiced under all Supplemental Agreements (or
                           equivalent agreements) with each Industry Party,
                           provided that

                                                     (a) for the purposes of
                                    arriving at such amount. any generation or
                                    demand infrastructure charges payable to an
                                    Industry Party in respect of any individual
                                    Generating Unit or Connection Site shall be
                                    deemed to be a payment to NGC; and

                                                     (b) connection charges
                                    invoiced internally by NGC on NGC
                                    Interconnections Business shall not (for the
                                    avoidance of doubt) be included; and

                                                     (c) any capital
                                    contribution (whether in monetary form or
                                    otherwise) made other than annually shall be
                                    converted into a deemed annual charge on the
                                    basis of the applicable depreciation period;

                                    (ii) the sum of the magnitude of amounts
                           invoiced under Ancillary Services Agreements with
                           each Industry Party; and

                    (iii)equivalent amounts  invoiced under an  Interconnection
                         Agreement;

2.4      Votes Allocation

         votes will be allocated to Industry Parties on the basis of 50% on
         energy traded with the England and Wales electricity pool (calculated
         in accordance with paragraph 2.3 of this Appendix 3) and 50% on
         payments to/from NGC (calculated in accordance with paragraph 2.3 of
         this Appendix 3) as follows:-

         Industry Party's Energy Traded (MWhrs)   x 67,500,000
              Total Energy Traded (MWhrs)

         plus

         Total Payments of Industry Party   x 67,500,000
                      Total Payments

2.5      Rounding Down of Votes

         votes allocated to each Industry Party shall be rounded down to the
nearest whole number.

2.6      Reallocation of Votes

         the number of votes allocated to each Industry Party will not be
         changed between elections other than as provided in paragraph 6.7. If
         an Industry Party starts trading energy or money starts to flow between
         NGC and such Industry Party between elections of Industry Party
         Representatives, such Industry Party will not be allocated any votes
         until the next election. For the avoidance of doubt, Industry Parties
         ceasing to trade between elections will not have their votes
         reallocated until the next election of Industry Party Representatives.
         An Industry Party either acquiring or divesting itself of assets will
         not result in a reallocation of votes until the next election.



<PAGE>


3.       Consumer Party Representatives

         In respect of Consumer Party Representatives votes shall be calculated
         by NGC in accordance with the following:-

         3.1      Vote Allocation

                  each Consumer Party   Representative   will  be  allocated
                  5,000.000 votes;

         3.2      Fewer than 3 Consumer Party Representatives

                           in the event that fewer than three Consumer Party
                  Representatives are nominated or fewer than three are
                  appointed pursuant to Part 2 of Appendix 2 then the 5,000,000
                  votes which would have been allocated to such Consumer Party
                  Representative will not be referred to the Consumer Party
                  Representative or Representatives (as the case may be) who
                  have been selected. For the avoidance of doubt, if a Consumer
                  Party Representative decides not to exercise its voting power
                  such votes will not be transferred to any other Consumer Party
                  Representative selected.



<PAGE>


                                   Appendix 4

                    Form of  Consumer  Party  Representatives'  Confidentiality
                    Letter of Undertaking

To The National Grid Company plc ("NGC') and the
Industry Parties (as hereinafter defined)      [name of Consumer Representative]
as at the date hereof and as from time to time       [address]
hereafter                                             [date]


Dear Sirs

Transmission Users Group

1.       I refer to the Constitution and Rules of the Transmission Users Group
         as amended from time to time (the "Constitution"). Words and
         expressions used in this letter shall have the same meaning as defined
         in the Constitution.

2.       I hereby undertake to the Industry Parties as at the date hereof and
         from time to time hereafter as follows:

         2.1      to comply with the provisions of the Constitution; and

                  2.2 to preserve the confidentiality of, and not directly or
                  indirectly reveal, report, publish, disclose, transfer or use
                  for my own purpose. TUG Confidential Information (as defined
                  in paragraph 5 of this letter) except with the prior consent
                  in writing of NGC and the Industry Parties or in the
                  circumstances set out in paragraph 3 of this letter.

3. The circumstances referred to in paragraph 2 of this letter are:

                    3.1  where the TUG Confidential Information is in the public
                         domain  before it is  furnished to me; or 3.2 where the
                         TUG Confidential  Information  after it is furnished to
                         me:

                    (a)  is  acquired  by,  me in  circumstances  to which  this
                         letter does not apply;

                    (b)  is acquired by me in circumstances to which this letter
                         does  apply  but  then  ceases  to be  subject  to  the
                         restrictions imposed by this letter. or

                    (c)  enters the public domain.

                           and in any case otherwise than as a result of (a) a
                  breach by me of my obligations in this letter or (b) a breach
                  by the person who disclosed that TUG Confidential Information
                  of that person's confidentiality obligation and I am aware of
                  such
breach; or

                  3.3 if I am required or permitted to make disclosure of the
                  TUG Confidential Information to any person:

                    (a)  in  compliance with the  requirements  of a  Competent
                         Authority; or

                    (b)  in compliance with any other requirement or law; or

                    (c)  in response to a requirement  of any stock  exchange or
                         regulatory  authority  or the Panel on  Take-overs  and
                         Mergers; or

                    (d)  pursuant  to  any  judicial  or  arbitral   process  or
                         tribunal having jurisdiction in relation to me; or

                  3.4 if I make disclosure of the TUG Confidential Information
                  to my consultants and professional advisers in each case on
                  the basis set out in paragraph 4; or

                  3.5 if I make disclosure of the TUG Confidential Information
                  in circumstances where I am expressly permitted or required to
                  disclose that information under the terms of any agreement or
                  arrangement with the party to whose affairs such TUG
                  Confidential Information relates.

4.       I hereby agree that I will adopt procedures ensuring the
         confidentiality of TUG Confidential Information which I am obliged to
         preserve as confidential under paragraph 2.2 of this letter. These
         procedures shall include, but shall not necessarily be limited to:

                  4.1 Consumer Parties, my consultant and professional advisers
                  in receipt of TUG Confidential Information will be made fully
                  aware of my obligations of confidence in relation to the TUG
                  Confidential Information and will enter into similar
                  confidentiality undetakings as are given by me in this letter;
                  and

                  4.2 any copies of the TUG Confidential Information whether in
                  hard copy or computerised form will clearly identify the TUG
                  Confidential Information as confidential.

5.       In this letter TUG Confidential Information means all data and other
         information supplied to me by another Representative or Industry Party
         in connection with the Constitution.

6.       The obligations relating to confidentiality contained in paragraphs 2
         to 6 inclusive of this letter shall continue to be binding on me after
         I have ceased to be a Representative for whatever reason.

7.       The terms of Clause 15 (limitation of liability) of the Master
         Agreement shall apply to this letter as if set out in full herein.

8. This letter shall be governed by and construed in accordance with English
Law.



<PAGE>


EXECUTED and DELIVERED as a DEED
by [name of individual]
in the presence of
[Witness]
Name:
Address:
Occupation:




<PAGE>


THE NATIONAL GRID COMPANY plc

By



 .........................



EACH OF THE USERS

By



 .............................


for The National Grid Company plc in exercise of the authority vested in it by
Clause 25.1 of the Master Agreement pursuant to and in accordance with a
determination of the Director General of Electricity Supply dated 30 March 1998



<PAGE>


                               Dated 31 MARCH 1998




                          THE NATIONAL GRID COMPANY plc



                                       and



                                     OTHERS




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

                                AGREEMENT TO VARY
                            the Master Connection and
                             Use of System Agreement
                          ----------------------------------------








                          Martineau Johnson Solicitors
                                St Philips House
                                St Philips Place
                                Birmingham B3 2PP

                               Tel: 0121 200 3300
                               Fax: 0121 200 3330



<PAGE>


                               Dated 31 MARCH 1998




                          THE NATIONAL GRID COMPANY plc



                                       and



                                     OTHERS




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

                                AGREEMENT TO VARY
                            the Master Connection and
                             Use of System Agreement
                       ----------------------------------------








                          Martineau Johnson Solicitors
                                St Philips House
                                St Philips Place
                                Birmingham B3 2PP

                               Tel: 0121 200 3300
                               Fax: 0121 200 3330



<PAGE>


                                TABLE OF CONTENTS


Clause                                                                     Page

1.       Interpretation                                                    1

2.       Amendments                                                        2

3.       Continuation of the Master Agreement                              4

4.       Miscellaneous                                                     4

5.       Entire Agreement                                                  4

6.       RTPA                                                              5


Schedules

1.       Users                                                             6

2.       New Schedule 5 to the Master Agreement - Reactive Power and
         Default Payment Arrangements                                      19





<PAGE>


THIS AGREEMENT TO VARY  is made on the     31   day of  March    1998

BETWEEN

(1)      THE NATIONAL GRID COMPANY PLC a company registered in England with
         number 2366977 and whose registered office is at National Grid House,
         Kirby Corner Road, Coventry, CV4 8JY ("NGC"); and

(2)      THE PERSONS whose names, registered numbers and registered offices are
         set out in Schedule 1 (each a "User").

WHEREAS:

(A)      This Agreement is supplemental to and varies the Master Connection and
         Use of System Agreement dated 30th March 1990 made between NGC and the
         Users as amended by an Agreement to Vary of today's date (the "Master
         Agreement"); and

(B)      NGC and the Users have agreed to further amend the Master Agreement on
         the terms and subject to the conditions set out below.

IT IS HEREBY AGREED:

1.       Interpretation

1.1      Except where defined herein or where the context otherwise requires,
         words and expressions defined in the Master Agreement shall have the
         same respective meanings when used in this Agreement.

1.2      The table of contents and the headings to each of the Clauses are
         inserted for convenience only and shall be ignored in construing or
         interpreting this Agreement.


<PAGE>


2.       Amendments

         The parties to this Agreement hereby agree that with effect from the
         date of this Agreement the Master Agreement shall be amended as
         follows:

2.1      by the addition of the words "Save in relation to the Obligatory
         Reactive Power Service and all Enhanced Reactive Power Services," at
         the beginning of Clause 3.1 thereof, and

2.2       by the addition of the following new Clause 3.2:-

         "With regard to the Obligatory Reactive Power Service and all Enhanced
         Reactive Power Services the provisions of Schedule 5 shall apply."; and

2.3       by the deletion of Clause 19.8; and

2.4       by the inclusion of the following new definitions in Schedule 2
           thereto:-

                   ""Reactive Power" the product of
                   voltage  and  current  and the  sine of the  phase  angle
                   between them  measured in units of  voltamperes  reactive
                   and standard multiples thereof ie
                   1000var = 1 kvar
                   1000kvar = 1 Mvar.

                   "System Ancillary Service"  a Part I System
                   Ancillary  Service  and/or  a  Part II  System  Ancillary
                   Service as the case may be."; and

 2.5  by the inclusion of the following new definition in Schedule 2 thereto
     in substitution  for the existing  definition of Commercial  Ancillary
     Services:-

                                                     ""Commercial Ancillary
                                                     Services" Ancillary
                                                     Services, other than System
                                                     Ancillary Services,
                                                     utilised by NGC in
                                                     operating the Total System
                                                     if a User (or other person)
                                                     has agreed to provide them
                                                     under an Ancillary Services
                                                     Agreement or under a
                                                     Supplemental Agreement with
                                                     payment being dealt with
                                                     under an Ancillary Services
                                                     Agreement or in the case of
                                                     Externally Interconnected
                                                     Parties or External Pool
                                                     Members (as defined in the
                                                     Grid Code) under any other
                                                     agreement (and in the case
                                                     of Externally
                                                     Interconnected Parties and
                                                     External Pool Members
                                                     includes ancillary services
                                                     equivalent to
or similar to System Ancillary  Services).  A non-exhaustive list of Commercial
Ancillary Services is set out
                                     below:-

                                                     -
                       Frequency  Control  by means of  Pumped  Storage
                       Unit Spinning in Air
                                                                   -
                       Frequency  Control by means of  adjustment  to a
                       Pumped Storage Unit Pumping Programme
                                                                   -
                       Frequency Control by means of Demand Reduction
                                                                   -
                       Reactive  Power supplied by means of synchronous
                       or static compensators Hot Standby

                         In  addition,
                         there is also the Ancillary
                         Service of cancelled start
                         which arises as part of
                         ordinary operational
                         instruction of Generating
                         Units and therefore needs
                         no separate description.

                         Defined
                         terms  used in this  definition  are  defused in the
                         Grid Code."; and

2.6       by the addition of a new Schedule 5 in the form set out in Schedule 2.

3.       Continuation of the Master Agreement

         The Master Agreement shall remain in full force and effect and this
         Agreement and the Master Agreement shall be treated as one document so
         that. upon the Master Agreement being amended pursuant to Clause 2, all
         references to the Master Agreement shall be treated as references to
         that agreement as amended by this Agreement.

4.       Miscellaneous

          The  provisions  of Clauses 22. 23. 24 and 26 to 30  inclusive  of the
          Master  Agreement  shall  be  deemed  to be  incorporated  herein
          mutatis mutandis.

5.       Entire Agreement

5.1      Each party to this Agreement acknowledges that in entering into this
         Agreement on the terms set out herein it is not relying upon any
         representation, warranty, promise or assurance made or given by any
         other party or any other person, whether or not in writing, at any time
         prior to the execution of this Agreement which is not expressly set out
         herein.

5.2      None of the parties to this Agreement shall have any right of action
         against any other party arising out of or in connection with any
         representation, warranty, promise or assurance referred to in Clause
         5.1 (except in the case of fraud).


<PAGE>


6.       RTPA

         Any restriction or information provision (each of those terms having
         the same meaning in this Clause as in the Restrictive Trade Practices
         Act 1976) contained in this Agreement or any provision contained in
         this Agreement adding to or extending any restriction or information
         provision contained in any agreement which is varied or amended by this
         Agreement, shall not take effect or shall cease to have effect:

                  (a) if a copy of this Agreement is not provided to the
                  Department of Trade and Industry ("DTI") within twenty-eight
                  days of the date on which this Agreement is made, or

                  (b) if, within twenty-eight days of the provision of that copy
                  to the DTI, the DTI gives notice of objection to the party
                  providing it.

IN WITNESS whereof the hands of the duly authorised representatives of the
parties hereto the day and year first above written.


<PAGE>


                                   SCHEDULE 1

                                      Users


ABB Energy Development Company Limited
2688994
Carmelite
50 Victoria Embankment
Blackfriars
London   EC4Y ODX

Accord Electric Limited
2869629
152 Grosvenor Road
London SWIV 3JL

AES Barry Limited
3135522
Burleigh House
17/19 Worple Way
Richmond
TW10 6AG

AES Tyneside Limited
3135543
Burleigh House
19/19 Worple Way
Richmond
TW10 6AG

AES Partington Limited
3210149
Burleigh House
17/19 Worple Way
Richmond
TW10 6AG

Amoco Power Resource (Europe) Ltd
3042173
Amoco House
West Gate
London
W5 IXL

Anglian Power Generators Limited
2488955
Wherstead Park
Wherstead
Ipswich
Suffolk  IP9 2AQ

Barking Power Limited
2354681
Devonshire House
Mayfair Place
London W1X 5FH

British Gas Trading Ltd
3078711
Charter Court
50 Windsor Road
Slough
Berkshire SLI 2HA

British Nuclear Fuels plc
1002607
Risley
Warrington
Cheshire WA3 6AS

BOC Limited
337663
Chertsey Road
Windlesham
Surrey  GU20 6HJ

BP Chemicals Limited
194971
Britannic House
I Finsbury Circus
London
EC2M 7BA

Canatxx Energy Ventures Limited
2673604
Hillhouse International
PO Box 4
Thornton Cleveleys
Lancs
FY5 4QD


Candecca Resources Limited
953066
Welton Gathering Centre
Barfield Lane
Wragby Road
Sudbrooke
Lincolnshire  LN2 2QU

CeltPower Limited
2656561
Tomen House
13 Charles II Street
London  SWIY 4QT

Citigen (London) Limited
2427823
100 Thames Valley Park Drive
Reading
Berkshire RG6 1PT

Corby Power Limited
2329494
Five Chancery Lane
Clifford's Inn
London  EC4A IBY

Coryton Energy Company
FC20597
20 St James Street
4th Floor
London
SW1A 1EJ

Cottam Development Centre Limited
3273552
53 New Broad Street
London
EC2M 1JJ

Crosfield Limited
00048745
Bank Quay
Warrington
Cheshire
WA5 1AB

<PAGE>


Derwent CoGeneration Limited
2650621
Lansdowne House
Berkeley Square
London W1X 5DB

Eastern Electricity plc
2366906
Wherstead Park
Wherstead
Ipswich
Suffolk  IP9 2AQ

Eastern Merchant Generation Ltd
3116225
Wherstead Park
Wherstead
Ipswich
Suffolk   IP9 2AQ

East Midlands Electricity plc
2366923
PO Box 444
Woodyard Lane
Wollaton
Nottingham
Nottinghamshire NG8 1EZ

Electricity Direct (UK) Limited
3174056
78, High Street
Lewes
East Sussex
BN7 1XF

Elm Energy and Recycling (UK) Limited
2516685
Elm Energy House
Ettingshall Road
Wolverhampton
West Midlands WV2 2LA

Energy Supply Contracts Limited
172268
One Great Tower Street
London EC3R 5AH

<PAGE>


Enfield Energy Centre Limited
2796628
Concorde House
Concorde Way
Preston Farm Industrial Estate
Stockton-on-Tees
Cleveland TS18 3RB

Enron Gas and Petrochemicals Trading Limited
3003823
4 Millbank
London
SW1P 3ET

Fellside Heat and Power Limited
2614535
Fellside Lodge
Seascale
Cumbria CA20 1PG

Fibrogen Limited
2547498
38 Clarendon Road
London W11 3AD

Fibropower Limited
2234141
38 Clarendon Road
London W11 3AD

First Hydro Company
2444277
Bala House
Lakeside Business Village
St Davids Park
Deeside
Clwyd  CH5 3XJ

Flotilla Power (UK) Limited
2880635
4 Millbank
London   SWIP 3ET

<PAGE>


Grovehurst Energy Limited
2197516
UK Paper House
Kemsley
Sittingbourne
Kent  ME10 3ET

Humber Power Limited
2571241
South Humber Bank Power Station
South Marsh Road
Stallingborough
North East Lincolnshire
DN37 8BZ

Impkemix Energy Limited
2076043
The Heath
Runcorn
Cheshire  WA7 4QF

Independent Energy UK Limited
3033406
30 Aylesbury Street
London EC1R OER

Indian Queens Power Limited
2928100
Burleigh House
17119 Worple Way
Richmond
TW10 6AG

International Generating Company Limited
3039100
Springside House
Tinwell
Stamford
PE9 3UQ

Joint European Torus (JET), Joint Undertaking (a Joint Undertaking within the
meaning of Chapter V of the Treaty establishing the European Atomic Energy
Committee) Culham Abingdon Oxfordshire OX14 3EA

Keadby Developments Limited
2691516
Keadby Power Station
PO Box 89
Keadby
Scunthorpe
North Lincolnshire DNI7 3AZ

Keadby Generation Limited
2729513
Keadby Power Station
PO Box 89
Keadby
Scunthorpe
North Lincolnshire DNI7 3AZ

Kent Power Lirnited
2723303
100 Thames Valley Park Drive
Reading
Berkshire  RG6 1PT

Kingsnorth Power Limited
2675504
Chancery House
53164 Chancery Lane
London WC2A 1QU

Lakeland Power Limited
2355290
Roosecote Power Station
Roosecote Marsh
Barrow in Furness
Cumbria LA13 0PQ

London Electricity plc
2366852
Templar House
81-87 High Holborn
London WC1V 6NU

Magnox Electric plc
2264251
Berkeley Centre
Berkeley
Gloucestershire GLI3 9PB

<PAGE>


Manweb plc
2366937
Manweb House
Chester Business Park
Wrexham Road
Chester CH4 9PF

Manweb Services Limited
2631510
Manweb House
Kingsfield Court
Chester Business Park
Chester
CH4 9RF

Medway Power Limited
2537903
Burleigh House
17/19 Worple Way
Richmond
Surrey TW10 6AG

Midlands Electricity plc
2366928
Mucklow Hill
Halesowen
West Midlands B62 5BP

Midlands Power (UK) Limited
2251099
Mucklow Hill
Halesowen
West Midlands B62 8BP

National Power PLC
2366963
Windmill Hill Business Park
Whitehill Way
Swindon
Wiltshire SN5 6PB

National Power (Cogencration Trading) Limited
2745602
Windmill Hill Business Park
Whitehill Way
Swindon
Wiltshire SN5 6PB

<PAGE>


Norsk Hydro (U.K.) Limited
841421
Bridge House
69 London Road
Twickenham
Middlesex TW1 1RH

Northern Electric plc
2366942
Carliol House
Market Street
Newcastle upon Tyne
Tyne & Wear NE1 6NE

NORWEB plc
2366949
PO Box 14
410 Birchwood Boulevard
Warrington
Cheshire WA3 7GA

Nuclear Electric Limited
3076445
Barnett Way
Barnwood
Gloucester GL4 3RS

Peterborough Power Limited
2353599
Wherstead Park
Wherstead
Ipswich
Suffolk IP9 2AQ

PowerGen plc
2366970
53 New Broad Street
London EC2M 1JJ

Railtrack plc
2904587
Railtrack House
Euston Square
London
NW1 2EE

<PAGE>


Regional Power Generators Limited
2352390
Wetherby Road
Scarcroft
Leeds LS14 3HS

Rocksavage Power Company, Ltd.
FC18868
Maples & Calder, Ugland House
PO Box 309
George Town
Grand Cayman
Cayman Islands
British West Ind.

SaltEnd Cogeneration Company
3274949
Britannic House
1 Finsbury Circus
London
EC2M 7BA

Savage Land Limited
3145444
20 St James's Street
London
SW1A 1ES

Scottish Hydro-Electric plc
SC117119
10 Dunkeld Road
Perth   PH1 5WA

Scottish Power plc
Sc117120
1 Atlantic Quay
Glasgow G2 8SP

Seabank Power Limited
2591188
Severn Road
Hallen
Bristol
BS10 7SP

<PAGE>


SEEBOARD plc
2366867
Forest Gate
Brighton Road
Crawley
West Sussex PH11 9BH

Shell Power Limited
2559630
Shell Mex House
Strand
London WC2R ODX

Siemens plc
727817
Siemens House
Oldbury
Bracknell
Berkshire
RG12 8FZ

Slough Energy Supplies Limited
2474514
234 Bath Road
Slough
Berkshire SL1 4EE

South East London Combined Heat and Power Limited
2489384
37-41 Old Queen Street
London
SW1H 9JA

Southern Electric plc
2366879
Southern Electric House
Westacott Way
Littlewick Green
Maidenhead
Berkshire SL6 3QB

Southern Energy (UK) Generation Limited
3321733
200 Aidersgate Street
London
EC1A 4JJ

<PAGE>


South Wales Electricity plc
2366985
Newport Road
St Mellons
Cardiff
South Glamorgan CF3 9XW

South Western Electricity plc
2366894
800 Park Avenue
Aztec West
Almondsbury
Bristol  BS12 4SE

Sutton Bridge Power
2586357
4, Millbank
London  SW1P 3ET

Teesside Power Limited
2464040
4 Millbank
London  SW1P 3ET

The Renewable Energy Company Limited
3043412
Stroud House
Russell Street
Stroud
Gloucestershire
GL5 3AN

Tyne Property Development Limited
1194995
Siemens House
Oldbury
Bracknell
Berkshire  RG12 SFZ

<PAGE>


UK Electric Power Limited
2844010
Williams Denton Jones
Glamaber
Bangor
Gwynedd
LL57 2DY

UML Limited
661900
Thermal Road
Bromborough
Wirral
Merseyside L62 4XG

Wainstones Power Limited
3462783
Pickfords Wharf
Clink Street
London SE1 9DF

Yorkshire Electricity Group plc
2366995
Wetherby Road
Scarcroft
Leeds LS14 3HS

<PAGE>


                                   SCHEDULE 2

                     New Schedule 5 to the Master Agreement
             Reactive Power Market and Default Payment Arrangements


1.       DEFINITIONS AND INTERPRETATIONS

1.1     In this Schedule and the Appendices, except where the context otherwise
        requires, the following, expressions shall bear the following
        meanings:-

                            "Base Rate" means, in
                            respect of any day, the
                            rate per annum which is
                            equal to the base lending
                            rate from time to time of
                            Barclays Bank plc as at the
                            close of business on the
                            immediately preceding
                            business day (being a
                            weekday other than a
                            Saturday on which banks are
                            open for domestic business
                            in the City of London);

                            "Commercial Boundary" means
                            (unless otherwise defined
                            in the relevant Ancillary
                            Services Agreement,
                            including a Market
                            Agreement) the commercial
                            boundary between either NGC
                            or a PES (as the case may
                            be) and the User at the
                            higher voltage terminal of
                            the generator step-up
                            transformer.

                            "Contract Test"   a test  (not  being  a
                            Reactive Test) described in a Market Agreement;

                      "Excitation System"   means the
                      equipment  providing  the  field  current  of a  machine,
                      including  all  regulating  and control  elements as well
                      as  field   discharge  or   suppression   equipment   and
                      protection devices;

                      "Genset Registered Capacity"  has the
                      meaning attributed to it in the Pool Rules;

         "Non-Centrally Despatched
                              Generating Unit"   means   a   Generating
                              Unit which is not subject to Central Despatch;

                              "Reactive Despatch
                              Instruction" means a
                              Despatch Instruction
                              relation to Reactive Power
                              given by NGC to a Generator
                              in accordance with
Grid Code SDC2;

                                 "Reactive Power Zone" means
                 those separate areas of
                 England and Wales
                 identified as zones in the
                 Seven Year Statement for
                 1997 for the purpose of
                 specifying local Reactive
                 Power capability and need;

                 "Reactive Test"  means a test
                 conducted pursuant to Grid Code OC5.5.1;

                 "Relevant Zone" means, in
                 relation to any Despatch
                 Unit, the Reactive Power
                 Zone to which that Despatch
                 Unit is allocated as
                 specified in an Ancillary
                 Services Agreement;

                 "Representative"  has the meaning
                 attributed to it in Schedule 4 to this Agreement;

                 "Synchronous Compensation" means the operation of
                 rotating synchronous       Apparatus   for  the  specific
                 purpose of either  generation  or  absorption of Reactive
                 Power;

                 "Tendered Capability Breakpoint"   has  the meaning
                 attributed to it in sub-paragraph 1.4 of Appendix 5;

                 "Trading Site"  has  the
                 meaning  attributed  to it in the Pooling and  Settlement
                 Agreement;

                 "Transmission Users Group"  means the group
                 established  pursuant  to  paragraph  4 of  Schedule 4 to
                 this Agreement,

                 "TUG Issue"   has  the
                 meaning   attributed to it in Schedule  4  to  this
                 Agreement;

                 "'TUG Party"  has the
                 meaning   attributed   to  it  in   Schedule  4  to  this
                 Agreement.

1.2      For the purpose of this Schedule and the Appendices, "Obligatory
         Reactive Power Service" means the Part I System Ancillary Service
         referred to in Grid Code CC 8.1 which the relevant User is obliged to
         provide (for the avoidance of doubt, as determined by any direction in
         force from time to time and issued by the Director relieving a relevant
         User from the obligation under its Licence to comply with such part or
         parts of the Grid
Code     or any Distribution Code or, in the case of NGC, the Transmission
         Licence as may be specified in such direction) in respect of the supply
         of Reactive Power (otherwise than by means of synchronous or static
         compensation) and in respect of the required Reactive Power capability
         referred to in Grid Code CC 6.3.2, which shall comprise:-

                  (a) in relation to a Despatch Unit. compliance by the relevant
                  User in all respects with all provisions of the Grid Code
                  relating to that supply of Reactive Power and required
                  Reactive Power capability (including without limitation the
                  Connection Conditions and the Scheduling and Despatch Codes of
                  the Grid Code) together with the provision of metering
                  facilities meeting the requirements of Appendix 4: and

                  (b) in relation to a Non-Centrally Despatched Generating Unit
                  compliance by the relevant User in all respects with all
                  provisions of the Grid Code applicable to it relating to that
                  supply of Reactive Power and required Reactive Power
                  capability, together with the provision of such despatch
                  facilities (including the submission to NGC of all relevant
                  technical, planning and other data in connection therewith)
                  and metering, facilities (meeting the requirements of Appendix
                  4), and upon such terms, as shall be set out in an Ancillary
                  Services Agreement entered into between NGC and the relevant
                  User.

         For the avoidance of doubt. "Obligatory Reactive Power Service" when
         used in this Schedule and the Appendices excludes provision of Reactive
         Power capability from Synchronous Compensation and from static
         compensation equipment. and the production of Reactive Power pursuant
         thereto.

1.3      For the purpose of this Schedule and the Appendices, "Enhanced Reactive
         Power Service" means the Commercial Ancillary Service of:-

                  (a) the provision of Reactive Power capability of a Generating
                  Unit in excess of that which a User is obliged to provide from
                  that Generating Unit under and in accordance with the
                  Connection Conditions of the Grid Code and the production of
                  Reactive Power pursuant thereto, which a User may agree to
                  provide and which is capable of being made available to, and
                  utilised by, NGC in accordance with the Scheduling, and
                  Despatch Codes of the Grid Code (or as may otherwise be agreed
                  in writing between NGC and a User) for the purposes of voltage
                  support on the NGC Transmission System, upon and subject to
                  such terms as may be agreed in writing between NGC and such
                  User; or

                           (b) the provision of Reactive Power capability from
                  Synchronous Compensation or from static compensation equipment
                  and the production of Reactive Power pursuant thereto, which a
                  User or any other person may agree to provide and which is
                  capable of being made available to, and utilised by, NGC for
                  the purposes of voltage support on the NGC Transmission
                  System. upon and subject to such terms as may be agreed in
                  writing between NGC and such User or other person; or

                  (c) such other provision or enhancement of capability of Plant
                  and/or Apparatus or other equipment to generate or absorb
                  Reactive Power, and the production of Reactive Power pursuant
                  thereto, which a User or any other person may agree to provide
                  and which is capable of being made available to, and utilised
                  by, NGC for the purposes of voltage support on the NGC
                  Transmission System, upon and subject to such terms as may be
                  agreed in writing between NGC and such User or other person.

1.4      Unless otherwise defined in this paragraph 1, terms and expressions
         found in the Grid Code have the same meanings, interpretations and
         constructions in this Schedule and the Appendices.

1.5      In this Schedule and the Appendices, except where the context otherwise
         requires, references to a particular Appendix, Part, Section,
         sub-section, paragraph or sub-paragraph shall be a reference to a
         particular Appendix to or part of this Schedule or, as the case may be,
         that Section, sub-section, paragraph or sub-paragraph in this Schedule.

2.       VARIATIONS AND REVIEW

2.1               (a) The Parties hereby agree that governance of this Schedule
                  and the Appendices is an appropriate matter to be passed to
                  the Transmission Users Group but further agree that. unless
                  and until otherwise agreed by the Parties in writing, and
                  notwithstanding and without prejudice to Clause 25.1 of this
                  Agreement, this Schedule and the Appendices (except this
                  paragraph 2) may be varied upon the terms and conditions of
                  sub-paragraphs 2.2 to 2.5 inclusive.

                  (b) Solely for the purposes of enabling this Schedule and the
                  Appendices (except this paragraph 2) to be varied upon the
                  terms and conditions of sub-paragraphs 2.2 to 2.5 inclusive as
                  specified in sub-paragraph 2. 1 (a), the contents of this
                  Schedule and the Appendices as varied from time to time shall
                  be deemed to be incorporated as a separate Appendix into each
                  and every Supplemental Agreement entered into by a User and in
                  force from time to time, and the Parties hereby agree that,
                  notwithstanding any contrary provision, express or implied, in
                  this Agreement or any Supplemental Agreement, each such
                  Appendix to a Supplemental
Agreement         shall only he capable of variation with the agreement in
                  writing of all Parties or by way of a variation to this
                  Schedule and the Appendices upon the terms and conditions of
                  sub-paragraphs 2.2 to 2.5 inclusive and not otherwise (and
                  Sub-Clause 1.2 of this Agreement shall be read and construed
                  accordingly). Such Appendix is hereafter referred to in this
                  paragraph 2 as "the Supplemental Appendix".

2.2               (a) If NGC and/or any User or Users ("the Proposing Party")
                  considers that any variation should be made to this Schedule
                  and/or the Appendices (except this paragraph 2) with regard to
                  the Reactive Power market and the default payment arrangements
                  (a "Proposed Variation") then, subject as provided below,
                  written details of the Proposed Variation, together with
                  reasons therefor and such other written information as the
                  Proposing Party shall reasonably consider to be relevant ("the
                  Supporting Documentation"), shall be submitted by the
                  Proposing, Party's Representative as a TUG Issue at a meeting
                  of the Transmission Users Group, provided always that:-

                                    (i) written details of a Proposed Variation
                           and Supporting Documentation may not be so submitted
                           for the purposes of this paragraph 2 if the effect of
                           the Proposed Variation would in any way conflict
                           with, or otherwise be inconsistent with, the charging
                           principles (as amended from time to time) set out in
                           Appendix 8 (save to the extent the Proposed Variation
                           comprises solely a variation to such charging
                           principles or includes a variation to such charging
                           principles remedying the conflict or inconsistency);
                           and

                                    (ii) for the purposes of this paragraph 2,
                           written details of a Proposed Variation shall on y be
                           deemed to have been submitted as a TUG Issue at a
                           meeting of the Transmission Users Group if such
                           details include a statement to the effect that they
                           are being submitted pursuant to and for the purposes
                           of this paragraph 2.

                  (b) If this Schedule and/or the Appendices shall not have been
                  amended in accordance with Clause 25.1 of this Agreement to
                  effect such Proposed Variation, then at any time after expiry
                  of a period of 120 days, but not later than 180 days,
                  following the date on which written details of the Proposed
                  Variation and Supporting Documentation were submitted at a
                  meeting of the Transmission Users Group in accordance with
                  sub-paragraph 2.2(a), the Proposing Party shall be entitled:-

                                    (i) where the Proposing Party is a User, to
                           serve written notice on NGC requiring NGC to
serve                      written notice on all other Users of the Proposing
                           Party's intention to require NGC pursuant to
                           sub-paragraph 2.2(c)(i) to refer the Proposed
                           Variation to the Director for determination; or

                                    (ii) where the Proposing Party is NGC, to
                           serve written notice on all Users of its intention to
                           refer the Proposed Variation to the Director in
                           accordance with sub-paragraph 2.2(c)(ii),

                           each such notice to be copied to the Director. NGC
                  shall so notify all other Users as referred to in
                  sub-paragraph 2.2(b)(i) within 10 days following receipt of
                  the notice from the Proposing Party.

                  (c) If no such amendments to this Schedule and/or the
                  Appendices to effect such Proposed Variation shall have been
                  made within 30 days following receipt (or issue, as the case
                  may be) by NGC of the notice referred to in sub-paragraph
                  2.2(b), then the Proposing Party shall be entitled:-

                                    (i) where the Proposing Party is a User,
                           within a further 30 day period, to serve written
                           notice on NGC requiring NGC to refer the Proposed
                           Variation to the Director, whereupon NGC shall be
                           obliged within 10 days following receipt thereof by
                           written notice (copied to all other Users) to refer
                           the Proposed Variation to the Director for
                           determination; or

                                    (ii) where the Proposing Party is NGC,
                           within a further 30 day period, by written notice
                           (copied to all Users) to refer the Proposed Variation
                           to the Director for determination.

2.3      Each reference by NGC of a Proposed Variation to the Director referred
         to in sub-paragraph 2.2(c) shall be made in the manner of a variation
         to each Supplemental Appendix proposed by NGC pursuant to Condition
         IOC(3) of the Transmission Licence, and shall be accompanied by a
         request from NGC to the Director to settle any dispute relating
         thereto. When making each such reference, NGC shall provide the
         Director with copies of the written details and Supporting
         Documentation in relation to the Proposed Variation first submitted by
         the Proposing Party at a meeting of the Transmission Users Group as
         referred to at sub-paragraph 2.2(a) and. where the Proposing Party is a
         User, NGC shall invite the Director to raise any questions or queries
         concerning the Proposed Variation direct with the User concerned.

2.4      If a reference shall have been made by NGC to the Director pursuant to
         sub-paragraph 2.2(c) and the Director shall have made a determination
         in accordance with Condition 10C(3) of the Transmission

                  Licence requiring each Supplemental Appendix and/or the
         provisions of this Schedule and/or the Appendices to be varied, then
         the Parties shall give effect to any such variation so determined to be
         made by varying each of their respective Supplemental Appendices and/or
         the provisions of this Schedule and/or the Appendices accordingly, and
         each Party hereby authorises and instructs NGC to make all such
         variations on its behalf and undertakes not to withdraw, qualify or
         revoke such authority and instruction at any time. In the absence of
         any such determination by the Director, no such variations shall be
         made.

2.5      The Parties acknowledge and agree that the Transmission Users Group
         shall be requested to review each of the matters described in Appendix
         7 by the respective date (if any) shown opposite each therein. In
         carrying out such review, the Transmission Users Group shall be
         requested to take into account the respective applicable principles (if
         any) set out therein and to give due and proper consideration to any
         matter referred to it by the Director. For the avoidance of doubt-
         following each such review NGC or any User may raise a Proposed
         Variation with respect thereto in accordance with sub-paragraph 2.2(a).
         It is further agreed that:-

                  (a) NGC shall consider and, no later than 31st December 1999,
                  report to the Transmission Users Group on the practicalities
                  of establishing a unified mechanism for the provision of
                  voltage support for the NGC Transmission System; and

                  (b) the Transmission Users Group shall be requested, no later
                  than 31st March. 2000, to invite the Grid Code Review Panel to
                  review the provisions of the Grid Code with respect to
                  Reactive Power in light of this Schedule.

<PAGE>


2.6       For the avoidance of doubt:-

                  (a) the provisions of sub-paragraphs 2.2 to 2.5 inclusive
                  shall constitute the entirety of the rights of Parties
                  (whether under this Agreement or otherwise) to refer (or to
                  require NGC to refer) to the Director for determination any
                  variation to this Schedule 5 and/or the Appendices. and each
                  of the Parties hereby agrees that, saver in the circumstances
                  provided in sub-paragraph 2.3, no request shall be made to the
                  Director under Condition 10C(3) of the Transmission Licence to
                  settle any dispute relating to any Proposed Variation where
                  NGC is the Proposing Party; and

                  (b) nothing in this paragraph 2 shall confer on any Party any
                  right to refer (or to require NGC to refer) to the Director
                  for determination any variation or proposed variation to any
                  part or parts of this Agreement other than this Schedule 5 and
                  the Appendices; and


                  (c) the provisions of this paragraph 2 may only be varied in
                  the manner provided in Clause 25.1 of this Agreement.

3.       DISPUTE RESOLUTION

3.1      Save in relation to any dispute or difference concerning a Proposed
         Variation (in respect of which paragraph 2 shall apply), and subject
         always to sub-paragraph 3.2, any dispute or difference of whatever
         nature howsoever arising under out of or in connection with this
         Schedule and/or the Appendices (in this paragraph 3 referred to as a
         "Dispute") shall be and hereby is referred to arbitration pursuant to
         the arbitration rules of the Electricity Arbitration Association in
         force from time to time.

3.2               (a) In this sub-paragraph 3.2, each Party which is party to
                  the Dispute in question is referred to as "a Disputing Party"
                  and "Disputing Parties" shall be construed accordingly.

                  (b) Before submitting any notice under the arbitration rules
                  commencing arbitration proceedings in relation to any Dispute,
                  unless a notice shall have been served in respect of that
                  Dispute pursuant to sub-paragraph 3.2(c), a Disputing Party
                  shall first serve written notice on all other Disputing
                  Parties of its intention to commence arbitration proceedings.
                  Arbitration proceedings may not then be commenced until the 30
                  day period referred to in sub-paragraph 3.2(c)(ii) shall have
                  elapsed without a notice pursuant to that sub-paragraph having
                  been served or, where such notice has been served within such
                  period, except in the circumstances provided in sub-paragraphs
                  3.2(d) and (e).

                  (c) If a Disputing Party reasonably believes that the subject
                  matter of the Dispute is directly relevant to, or the
                  resolution of the Dispute would have a material effect upon,
                  any one or more other Parties not being Disputing Parties,
                  then that Disputing Party may:-

                    (i)  for so long as no notice is served in  accordance  with
                         sub-paragraph 3.2(b) above, at any time. or

                    (ii) upon  receipt of  any  such  notice,  within  30  days
                         thereafter, serve written notice on all other Disputing
                         Parties of its intention to raise the Dispute as a TUG
                         Issue at a meeting of the  Transmission  Users  Group.
                         Upon receipt of such notice,  no  Disputing  Party may
                         subsequently commence arbitration proceedings except in
                         the circumstances provided in sub-paragraphs 3.2(d) and
                         (e).

                  (d) Not earlier than 30 days nor later than 90 days after a
                  notice is served pursuant to sub-paragraph 2") 3.2(c) above.
                  the Representative of that and/or any other Disputing Party
                  may submit written details of the Dispute as a TUG Issue at a
                  meeting of the Transmission Users Group. Provided it shall
                  first have been given the opportunity to consult with regard
                  to the nature and scope of confidential information relating
                  to its affairs proposed to be disclosed. each Disputing Party
                  hereby consents to such disclosure of confidential information
                  (but not rates and prices) relating to its affairs to the
                  extent relevant to the Dispute. If such written details are
                  not so submitted prior to expiry of such 90 day period, then
                  any Disputing Party wishing to commence arbitration
                  proceedings in relation to the Dispute in question may
                  thereafter do so.

                  (e) Upon the expiry of the period of 120 days after the date
                  on which written details of the Dispute are submitted at a
                  meeting of the Transmission Users Group in accordance with
                  sub-paragraph 3.2(d), any Disputing Party wishing to commence
                  arbitration proceedings in relation to the Dispute in question
                  may thereafter do so.

3.3       Clause 26.1 of this Agreement shall be read and construed accordingly.

4.       OBLIGATORY REACTIVE POWER SERVICE - DEFAULT PAYMENT ARRANGEMENT

4.1      Notwithstanding any other provision of this Agreement, the provisions
         of this Schedule and the Appendices, together with the Ancillary
         Services Agreements referred to in sub-paragraph 4.6. shall govern the
         rights and obligations of the Parties with respect to payments to be
made by NGC to Users for the provision of the Obligatory Reactive Power Service.

4.2      Subject always to paragraph 5, and notwithstanding

                  (a) the provisions of the Works Programme for reactive power
                  ancillary services agreed by Pool Members on 1st March 1994,
                  as adopted from 1st August 1994; and

                  (b) the provisions of any Ancillary Services Agreement now or
                  hereafter in effect (but subject always to sub-paragraph 6.2),

         the payments to be made by NGC to Users for the provision of the
         Obligatory Reactive Power Service in all Ancillary Services Agreements
         under which Users are or will be paid for the Obligatory Reactive Power
         Service shall, subject always to sub-paragraphs 2.5 and 4.7, in respect
         of all periods from (and including) 1st October, 1997 to (and
         including) 31st March, 2000 comprise solely payments for capability and
         utilisation, and thereafter comprise solely payments for utilisation,
         in each case determined in respect of each Settlement Period in
         accordance with sub-paragraph 4.3.

4.3  Save to the extent and for the duration of any Market Agreement (as defused
     in  sub-paragraph 5. 1) which may be entered into between NGC and a User as
     referred to in paragraph S:-

                  (a) the utilisation and capability payments for provision of
                  the Obligatory Reactive Power Service from Despatch Units
                  shall be determined in accordance with the provisions of
                  Appendix 1; and

                  (b) the utilisation and capability payments for provision of
                  the Obligatory Reactive Power Service from Non-Centrally
                  Despatched Generating Units shall be determined on a basis to
                  be agreed between NGC and each relevant User but, so far as
                  reasonably practicable, consistent with the provisions of
                  Appendix I (but so that such payments shall not become due and
                  payable from NGC to any such User with effect from a date
                  earlier than that on which the relevant Ancillary Services
                  Agreement referred to in sub-paragraph 4.6 is so amended or
                  concluded).

4.4  The Parties  acknowledge and agree that. as at the date this Schedule comes
     into effect:-

                  (a) the totality of payments for the provision of the
                  Obligatory Reactive Power Service, determined in accordance
                  with the provisions of this paragraph 4, reflect so far as
                  reasonably practicable the overall variable costs (on the
                  basis of the charging principles set out in Appendix 8)
                  incurred across all relevant Generating Units of the provision
                  of the Obligatory Reactive Power Service (whether or not
                  payments are made in respect of those Generating Units
                  pursuant to this paragraph 4 or pursuant to Market Agreements
                  entered into in accordance with paragraph 5); and

                (b) without prejudice to the review of the indexation factor
                specified as item 4 in Appendix 7, such totality of payments
                will continue to reflect those overall variable costs
                notwithstanding all and any variations thereto reasonably
                anticipated at such date.

4.5      It is hereby agreed and acknowledged that nothing in this Schedule and
         the Appendices shall affect in any way the obligation on each User to
         comply with the provisions of the Grid Code insofar as they relate to
         Reactive Power. For the avoidance of doubt. and without limiting the
         foregoing, it is hereby agreed and acknowledged that, notwithstanding
         that the payments for the Obligatory Reactive Power Service with effect
         from 1st April, 2000 shall, subject always to sub-paragraph 2.5.
         comprise solely payments for utilisation. nothing in this Schedule and
         the Appendices shall relieve Users from the obligation to comply with
         the provisions of the Grid Code in relation to Reactive Power by virtue
         of Sub-Clause 9.3 of this Agreement or otherwise howsoever.

4.6      Ancillary Services Agreements have been and will continue to be entered
         into bilaterally between NGC and Users but it is intended that, subject
         as provided below, Ancillary Services Agreements between NGC and Users
         providing the Obligatory Reactive Power Service will be amended or (if
         not in existence when this Schedule takes effect) concluded so as to
         give effect to the provisions of sub-paragraphs 4.2 and 4.3. Subject
         always to sub-paragraphs 4.8 and 6.2, NGC and each relevant User
         therefore agree, as soon as reasonably practicable, to amend the
         existing Ancillary Services Agreement or conclude a new Ancillary
         Services Agreement in respect of each relevant Generating Unit in order
         to give effect to the provisions of sub-paragraphs 4.2 and 4.3.

4.7      For the avoidance of doubt, no payments referred to in this paragraph 4
         shall be payable by NGC to a User in relation to any Generating Unit
         unless and until the relevant Ancillary Services Agreement is so
         amended or concluded as provided in sub-paragraph 4.6.

4.8      Notwithstanding the foregoing provisions of this paragraph 4, and
         without prejudice to paragraph 7, NGC shall only be obliged to amend or
         conclude any Ancillary Services Agreement with regard to any Generating
         Unit if.-

                  (a) the leading or lagging Reactive Power capability required
                  of that Generating Unit in accordance with Grid Code CC 6.3.2
                  is IS Mvar or more (measured at the Commercial Boundary); and

                           (b) where that Generating Unit is not subject to
                  Central Despatch, NGC and the relevant User shall have agreed
                  terms (to be incorporated into the Ancillary Services
                  Agreement) with regard to despatch facilities, including the
                  ability for NGC to obtain relevant technical, planning and
                  other data in connection therewith; and

                  (c) there exists in relation to that Generating Unit metering
                  facilities meeting the requirements of Appendix 4.

5.       OBLIGATORY REACTIVE POWER SERVICE AND ENHANCED REACTIVE POWER SERVICES
         - MARKET PAYMENT MECHANISM

5.1      Nothing in this Schedule and the Appendices, and nothing in any
         Ancillary Services Agreement entered into or amended in accordance with
         sub-paragraph 4.6, shall prevent or restrict:-

         (a)      the entering into or amendment of any Ancillary Services
                  Agreement between NGC and any User to provide for the making
                  of payments by NGC to that User for the provision of the
                  Obligatory Reactive Power Service on an alternative basis to
                  that set out or referred to in paragraph 4; or

                  (b) the entering into or amendment of any Ancillary Services
                  Agreement between NGC and any User (or other person) for the
                  provision of an Enhanced Reactive Power Service.

         Any such agreement constituting an Ancillary Services Agreement or an
         amendment thereto and which is entered into in accordance with the
         principles contained in sub-paragraph 5.3 is referred to in this
         Schedule and the Appendices as a "Market Agreement".

5.2      The coming into effect of a Market Agreement in relation to any
         Generating Unit shall, in respect of that Generating Unit, suspend and
         replace for the duration thereof the provisions for payment for the
         Obligatory Reactive Power Service (if applicable) set out or referred
         to in paragraph 4. In such a case, and for the avoidance of doubt, with
         effect from the expiry or termination of the Market Agreement, the
         provisions for payment for the Obligatory Reactive Power Service set
         out or referred to in paragraph 4 shall in relation to that Generating
         Unit cease to be suspended and shall resume full force and effect.

5.3     The following principles shall govern  the  entering  into  of  Market
        Agreements:-

         (a)      Relevant Dates

                                            (i) Each Market Agreement will
                           commence on either 1st April or 1st October,
                           whichever next follows the submission by NGC of the
                           package of information as more particularly described
                           in sub-paragraph 5.3(b)(i) ("Contract Start Days").
                           The first such Contract Start Day will be 1st April
                           1998.

                  (ii)     For the purposes of this sub-paragraph 5.3:-

                                                     (a) a Market Day shall be a
                                    date not earlier than twenty weeks and not
                                    later than sixteen weeks prior to a Contract
                                    Start Day; and

                                                     (b) a Tender Period shall
                                    be a period of at least eight consecutive
                                    weeks commencing on a date nominated by NGC
                                    and ending on a Market Day.

         (b)      Submission of Tender information by NGC

                                    (i) NGC shall, acting reasonably and having
                           regard to the principles contained in this
                           subparagraph 5.3, compile a package of information
                           for the use of interested parties comprising
                           technical, procedural and contractual requirements,
                           directions and specifications to govern Market
                           Agreements to take effect from the following Contract
                           Start Day. NGC shall ensure that such requirements,
                           directions and specifications do not conflict with
                           any of the principles contained in this sub-paragraph
                           5.3 and so far as reasonably practicable do not
                           discriminate between Tenderers.

                                    (ii) Prior to the commencement of each
                           Tender Period, NGC shall provide to all persons who
                           shall by then have requested the same the package of
                           information as more particularly described in
                           sub-paragraph 5.3(b)(i).


<PAGE>


         (c)      Submission of Tenders

                           During the Tender Period, but for the avoidance of
                  doubt not later than the Market Day, an interested party may
                  submit to NGC:-

               (i)  in relation to any Generating  Unit providing the Obligatory
                    Reactive Power Service,  prices for and Tendered  Capability
                    Breakpoints relating to the provision thereof : or

               (ii) in relation to that Generating  Unit, a tender for provision
                    of  the  Enhanced   Reactive  Power  Service   specified  in
                    sub-paragraph 1.3(a) and/or (b) and/or (c); and/or

               (iii)in relation to any other  Generating Unit or other Plant and
                    Apparatus  (or other  equipment),  a tender for provision of
                    the   Enhanced   Reactive   Power   Service   specified   in
                    sub-paragraph 1.3(b) and/or (c),

                           in each case in accordance with sub-paragraph 5.3(d).
                  All such submissions are referred to in this Schedule and the
                  Appendices as "Tenders", and "Tenderers" shall be construed
                  accordingly.

         (d)      Form of tenders

                  (i)      All Tenders submitted by Users which comprise:-

                                                     (a) prices for and Tendered
                                    Capability Breakpoints relating to the
                                    provision of the Obligatory Reactive Power
                                    Service from Despatch Units; and

                                                     (b) terms for the provision
                                    of the Enhanced Reactive Power Service
                                    specified in sub-paragraph 1.3(a) from
                                    Despatch Units,

                           shall be completed on the basis that payment will be
                  determined in respect of each Settlement Period in accordance
                  with the formulae and other provisions set out in Appendix 2
                  and in the manner set out in Appendix 5.

                  (ii) All other Tenders (including without limitation those in
                  respect of Non-Centrally Despatch Generating Units and those
                  comprising terms for the provision of the Enhanced Reactive
                  Power Service specified in sub-paragraphs 1.3(b) and (c))
                  shall be submitted in accordance with and on the basis of such
                  (if any) reasonable directions given by NGC in the package of
                  information referred to in sub-paragraph 5.3(b)(i) or
                  otherwise in such manner as may be reasonably specified by NGC
                  from time to time, which directions shall in either case be,
                  so far as reasonably practicable, consistent with the
                  provisions of Appendices 2 and 5.

                  (iii) Each Tender comprising prices for and Tendered
                  Capability Breakpoints relating to the provision of the
                  Obligatory Reactive Power Service shall be submitted on the
                  basis that NGC may only select all (and not some) of the
                  prices and Tendered Capability Breakpoints comprised therein.

                  (iv) Save where expressly provided otherwise in a Tender, each
                  Tender comprising terms for the provision of an Enhanced
                  Reactive Power Service shall be treated as having been
                  submitted on the basis that NGC may select all or part only of
                  the Reactive Power capability comprised therein (which, in the
                  case of the Enhanced Reactive Power Service specified in
                  sub-paragraph 1.3(a), shall mean all or part only of the
                  excess capability comprised therein).

                  (v) All Tenders shall be submitted in respect of periods of
                  whole and consecutive calendar months. to be not less than
                  twelve months and in multiples of six months, to commence on
                  the next following Contract Start Day. Save where expressly
                  provided otherwise in a Tender, a Tender (whether in relation
                  to the Obligatory Reactive Power Service or an Enhanced
                  Reactive Power Service) shall be treated as having been
                  submitted on the basis that NGC may select all or part only of
                  any period so tendered (in multiples of six months), subject
                  to a minimum period of twelve consecutive months, commencing
                  on the next following Contract Start Day.

         (e)      Qualification and Evaluation of Tenders

                                    (i) Each Tender must satisfy the mandatory
                           qualification criteria set out in Section A of
                           Appendix 6.

                                    (ii) NGC shall evaluate and (without
                           prejudice to sub-paragraphs 5.3(d)(iii),(iv) and (v))
                           select Tenders (or part(s) thereof) on a basis
                           consistent with its obligations under the Act, the
                           Transmission Licence and this Agreement and, subject
                           thereto, in accordance with the evaluation criteria
                           set out in Section B of Appendix 6. Without
                           limitation, NGC reserves the right to require tests
                           of a Generating Unit or other Plant and Apparatus (or
                           other equipment), on a basis to be agreed with a
                           Tenderer, as part of the evaluation of a Tender.

                                    (iii) NGC shall use reasonable endeavours to
                           evaluate Tenders within ten weeks from each Market
                           Day.

         (f)      Entering into of Market Agreements

                                    (i) Having selected a Tender (or part(s)
                           thereof) in accordance with sub-paragraph 5.3(e), NGC
                           shall notify the relevant Tenderer that it wishes to
                           enter into a Market Agreement in respect thereof. and
                           that Tenderer and NGC shall each use reasonable
                           endeavours to agree the terms of. and enter into, a
                           Market Agreement in respect thereof as soon as
                           reasonably practicable but in any event not later
                           than 4 weeks prior to the relevant Contract Start
                           Day. Notwithstanding the foregoing, if a Market
                           Agreement has not been entered into by the date being
                           4 weeks prior to the relevant Contract Start Day,
                           then either NGC or the Tenderer shall be entitled.
                           provided that it shall have used all reasonable
                           endeavours to agree the terms of. and enter into, the
                           Market Agreement as aforesaid, to notify the other
                           that it no longer wishes to enter into the Market
                           Agreement. whereupon the Tender in question shall be
                           deemed to be withdrawn.

                                    (ii) In the event of a deemed withdrawal of
                           a Tender in the circumstances set out in subparagraph
                           5.3(f)(i), NGC shall be entitled to re-evaluate and
                           select all or part of any outstanding Tenders in
                           accordance with sub-paragraphs 5.3(e)(i) and (ii) and
                           to notify one or more Tenderers if. in substitution
                           for the Tender so deemed to be withdrawn, it wishes
                           to enter into a Market Agreement in respect of any
                           other Tender or Tenders (or part(s) thereof).
                           Following such notification, NGC and each Tenderer in
                           question shall use reasonable endeavours to agree the
                           terms of, and enter into, a Market Agreement prior to
                           the relevant Contract Start Day.

                                    (iii) If. in respect of any Tender, a Market
                           Agreement is not entered into by the relevant
                           Contract Start Day, that Tender shall be deemed to be
                           withdrawn.

                                    (iv) Save where otherwise provided in this
                           paragraph 5. all Market Agreements must be entered
                           into on the basis of the terms set out in the
                           relevant Tender (or relevant part(s) thereof).

         (g)      Legal Status of Tenders

                           For the avoidance of doubt, a Tender shall not
                  constitute an offer open for acceptance by NGC, and in respect
                  of any Tender or part(s) thereof selected by NGC pursuant to
                  sub-paragraph 5.3(e) or (f), neither the Tenderer in question
                  nor NGC shall be obliged to provide or pay for the Obligatory
                  Reactive Power Service and/or an Enhanced Reactive Power
                  Service upon the terms of that Tender (or the relevant
                  part(s) thereof) unless and to the extent that those terms are
                  incorporated in a Market Agreement subsequently entered into.

         (h)      Publication

                                    (i) Within the six weeks following each
                           Contract Start Day, NGC shall provide to all persons
                           requesting the same the following information:-

                                                     (a) in respect of all
                                    Market Agreements then subsisting, prices
                                    and contracted Reactive Power capability on
                                    an individual Tender basis relating to the
                                    period from the immediately preceding
                                    Contract Start Day until the next following
                                    Contract Start Day;

                                                     (b) in respect of all
                                    Ancillary Services Agreements (including
                                    Market Agreements) subsisting in respect of
                                    the six month period ending on the
                                    immediately preceding Contract Start Day
                                    (commencing with that ending on 30
                                    September, 1998), details of utilisation of
                                    Mvarh provided by individual Despatch Units
                                    (or, where relevant, Non-Centrally
                                    Despatched Generating Units. other Plant
                                    and/or Apparatus or other equipment)
                                    pursuant to the Obligatory Reactive Power
                                    Service and Enhanced Reactive Power
                                    Services;

                                                     (c) details of the
                                    circumstances surrounding any failure by NGC
                                    during the preceding six month period to
                                    perform any of its duties and
                                    responsibilities under this paragraph 5 in
                                    the circumstances referred to in paragraph
                                    7; and

                    (d)  any other information  reasonably  considered by NGC to
                         be pertinent to the Tender process,

                                            and, to this extent, each Party
                           consents to the disclosure by NGC of the information
                           referred to in sub-sub-paragraphs (a) and (b) above
                           in so far as it relates to the provision of the
                           Obligatory Reactive Power Service and (where
                           applicable) an Enhanced Reactive Power Service from
                           its Generating Units and/or other Plant and Apparatus
                           (or other equipment).

                                    (ii) Without prejudice to the provision of
                           information pursuant to sub-paragraph 5.3 (h)(i), NGC
                           further agrees to use all reasonable endeavours to
                           provide to all persons requesting the same, within
                           the six weeks following each Contract Start Day,
                           estimates of the Mvarh absorption and generation by
                           the NGC Transmission
                           System, where used for the purposes of voltage
                           support, during the preceding six month period
                           (commencing with that ending on 30th September,
                           1998).

6.       AMENDMENT AND CONCLUSION OF ANCILLARY SERVICES AGREEMENTS

6.1      NGC and each relevant User shall promptly do all such acts and execute
         and deliver such agreements and other documentation as may be necessary
         to amend or conclude the relevant Ancillary Service Agreements so as to
         give effect to the provisions of this Schedule and the Appendices as
         amended from time to time.

6.2      Sub-paragraphs 4.6 and 6.1 shall not require NGC or any User to amend
         or conclude an Ancillary Services Agreement so as to give effect to
         this Schedule and the Appendices if and to the extent that, in respect
         of any Generating Unit. NGC and such User shall have expressly agreed
         in writing, that no payments shall be made by NGC to such User under an
         Ancillary Services Agreement for the provision of the Obligatory
         Reactive Power Service from that Generating Unit.


<PAGE>

7.       STATUTORY AND REGULATORY OBLIGATIONS

7.1      No Party shall be bound to perform any of its duties or
         responsibilities under this Schedule and the Appendices (including
         without limitation with regard to the amending or concluding of
         Ancillary Services Agreements in accordance with sub-paragraph 4.6 and
         the entering into of Market Agreements in accordance with paragraph 5)
         if and to the extent that to do so would be likely to involve that
         Party in breach of its duties and obligations (if any) under the Act or
         of any condition of a Licence. Accordingly, nothing in this Schedule
         and the Appendices shall preclude NGC from procuring. the provision of
         any Enhanced Reactive Power Service in a manner otherwise than in
         accordance with paragraph 5 in order to comply with its duties and
         obligations under the Act and/or any condition of the Transmission
         Licence to the extent such compliance cannot reasonably be assured by
         the performance of its duties and responsibilities under paragraph 5.

         Without prejudice to sub-paragraph 7.1, NGC shall not be bound to
         comply with the provisions of subparagraph 5.3(h) with regard to the
         disclosure of information to the extent that to do so would be likely
         to restrict, distort or prevent competition in the provision of the
         Obligatory Reactive Power Service and/or Enhanced Reactive Power
         Services.


<PAGE>


                                   Appendix 1

 Payments for the Obligation Reactive Power Service - Default Payment
 Arrangements

The provisions of this Appendix 1, as referred to in sub-paragraph 4.2 of this
Schedule, shall apply to the calculation of default payments for provision of
the Obligatory Reactive Power Service from Despatch Units.
All payments shall be expressed in pounds sterling.

1.       Total Payment

                               Total Payment (PT)        =        PU
                               + PC             [(pound)   per    Settlement
                               Period per Despatch Unit]

         where, subject always to paragraphs 7 and 8 below:

                    PU   = the utilisation payment in respect of a Despatch Unit
                         for a Settlement  Period  determined in accordance with
                         paragraph 2 below; and

                           PC = the capacity payment in respect of a Despatch
                           Unit for a Settlement Period determined in accordance
                           with paragraph 3 below.

2.       Utilisation Payment

                                 PU       =       BPU * U
                                 [(pound) per  Settlement  Period per Despatch
                                  Unit]
         Where
         BPU      =        46,270,000 * 1 * X            [(pound)/Mvarh]

                           42,054,693
         Where
         I        =        defined in paragraph 5 below;
         X        =        a factor which shall be:

                  (i) in respect of any Settlement Period from (and including)
                  1st October 1997 to (and including) 31st March 1998, 0.2; and

                  (ii) in respect of any Settlement Period from (and including)
                  1st April, 1998 to (and including) 31st March, 1999, 0.5
                  (subject as provided below); and

                  (iii) subject always to sub-paragraph 2.5 of this Schedule, in
                  respect of any Settlement Period from (and including) 1st
                  April, 1999 to (and including) 31st March. 2000, 0.75 (subject
                  as provided below); and

                  (iv) subject always to sub-paragraph 2.5 of this Schedule, in
                  respect of all Settlement Periods thereafter, 1.00 (subject as
                  provided below);

                  Provided always that with effect from 1st April 1998. X shall
         be 0.2 in all Settlement Periods from (and including) that in which:-

                  (a) the relevant Despatch Unit (or, in relation to a Centrally
                  Despatched CCGT Module, any relevant CCGT Unit) fails a
                  Reactive Test until (and including) the Settlement Period in
                  which a subsequent Reactive Test is passed in relation to that
                  Despatch Unit (or CCGT Unit (as the case may be)); or

                  (b) the User fails (other than pursuant to an instruction
                  given by NGC or as permitted by the Grid Code) to set the
                  Automatic Voltage Regulator of the Despatch Unit (or, in
                  relation to a Centrally Despatched CCGT Module, any relevant
                  CCGT Unit) to a voltage following mode until (and including)
                  the Settlement Period in which the User notifies NGC that the
                  Automatic Voltage Regulator is so set; or

                  (c) the Despatch Unit fails to comply with a Reactive Despatch
                  Instruction due to the fact that the Despatch Unit (or, in
                  relation to a Centrally Despatched CCGT Module any relevant
                  CCGT Unit) is unable to increase and/or decrease its Mvar
                  output (other than as a direct result of variations in System
                  voltage) until (and including) the Settlement Period in which
                  the User notifies NGC that the Despatch Unit is so able to
                  comply; or

                  (d) the Despatch Unit fails to have a Mvar range which
                  includes the ability to provide zero Mvar at the Commercial
                  Boundary until (and including) the Settlement Period in which
                  the User notifies NGC that the Despatch Unit has or once more
                  has such range; and

         U = defined in Section 1 of Appendix 3.

3.       Capability Payment

                           PC = [[(BPC * ZWFlead * QClead * QSF lead) + (BPC *
                           ZWFlag * QClag * QSFlag)] * J] [(pound) per
                           Settlement Period per Despatch Unit]

         Provided always that PC shall be 0 in all Settlement Periods from (and
including) that in which:-

                  (i) the User fails (other than pursuant to an instruction
                  given by NGC or as permitted by the Grid Code) to set the
                  Automatic Voltage Regulator of the Despatch Unit (or, in
                  relation to a Centrally Despatched CCGT Module, any relevant
                  CCGT Unit) to a voltage following mode until (and including)
                  the Settlement Period in which the User notifies NGC that the
                  Automatic Voltage Regulator is so set; or

                           (ii) the Despatch Unit fails to comply with a
                  Reactive Despatch Instruction due to the fact that the
                  Despatch Unit (or in relation to a Centrally Despatched CCGT
                  Module any relevant CCGT Unit) is unable to increase and/or
                  decrease its Mvar output (other than as a direct result of
                  variations in System voltage) until (and including) the
                  Settlement Period in which the User notifies NGC that the
                  Despatch Unit is so able to comply; or

                  (iii) the Despatch Unit fails to have a Mvar range which
                  includes the ability to provide zero Mvar at the Commercial
                  Boundary until (and including) the Settlement Period in which
                  the User notifies NGC that the Despatch Unit has or once more
                  has such range; or

                  (iv) a continuous period of unavailability of a Despatch Unit
                  to be Despatched by NGC in accordance with Grid Code SDC
                  extends beyond 75 consecutive days until (and including) the
                  Settlement Period in which the Despatch Unit is subsequently
                  declared available in accordance with Grid Code SDC.

         Where

         BP2      =    46,270,000 * 1 * Y  [(pound)/Mvar per Settlement Period
                       -------------------------------------------  
                       0.868178624 * 16,112 * 8,760 * 2

         Where

         I        =    defined in paragraph 5 below;

         Y        =    a factor which shall be:-

                    (i)  in  respect  of  any   Settlement   Period   from  (and
                         including) 1st October,  1997 to (and  including)  31st
                         March. 1998, 0.8; and

                    (ii) in  respect  of  any   Settlement   Period   from  (and
                         including)  1st  April,  1998 to (and  including)  31st
                         March, 1999, 0.5; and

                    (iii)subject always to  sub-paragraph  2.5 of this Schedule,
                         in  respect  of  any   Settlement   Period   from  (and
                         including)  1st  April,  1999 to (and  including)  31st
                         March, 2000, 0.25; and

                    (iv) subject always to  sub-paragraph  2.5 of this Schedule,
                         in respect of all Settlement Periods thereafter, 0;

                           ZWF = the Provisional Zonal Weighting Factor defined
                           in paragraph 4 below (expressed to apply to both
                           leading and lagging Mvar) subject to reconciliation
                           in accordance with that paragraph.

                           QC   = defined in  Section 2 of  Appendix  3 
                          (expressed  to apply to both leading and lagging
                           Mvar);

                           QSF = the shortfall factor relating to the capability
                           payment (expressed as either QSFlead QSFlag to apply
                           respectively to capability leading and capability
                           lagging as applicable), being


                                    min     ( 1, ( QR) 2 )
                                                   --   
                                            (      QC      )

         Where

                    QR   = defined in  Section 2 of  Appendix  3  (expressed  to
                         apply to both leading and lagging Mvar); and

                           J = 1 in each Settlement Period in which, in relation
                           to the Despatch Unit in question, Genset Registered
                           Capacity is greater than 2MW, otherwise 0.

4.       Zonal Weighting Factors

                           ZWF = the Provisional Zonal Weighting Factor
                           (expressed as either ZWFlead or ZWFlag to apply
                           respectively to the zonal weighting factor leading
                           and the zonal weighting factor lagging) for the
                           Despatch Unit, calculated as follows:,

                                                     (a) in respect of the
                                    period from (and including) 1st October,
                                    1997 to (and including) 31st March, 1998 and
                                    in respect of each subsequent twelve month
                                    period ending 31st March, provisional zonal
                                    weighting factors ("the Provisional Zonal
                                    Weighting Factors') shall be calculated by
                                    NGC in respect of both leading and lagging
                                    Reactive Power by reference to:-

                    (i)  the leading or lagging (as the case may be) Mvar "need"
                         for leading  for lagging (as the case may be)  Reactive
                         Power for that period in each Relevant Zone, divided by

                    (ii) the total  leading or lagging (as the case may be) Mvar
                         capability  for that  period in each  Relevant  Zone as
                         forecast by NGC ("the Total Forecast Capability"),

                    with the  result  of  that   division  in  each  case  being
                         multiplied by an adjustment factor being:-

                                            16112
                                            TAN

                  Where

                                                              TAN = a figure
                             being, for the period from (and
                             including) 1st October, 1997 to (and
                             including) 31st March, 1998, 14,775,
                             and for each subsequent twelve month
                             period ending 31st March, a figure
                             being the sum total of the leading
                             Mvar "need" for leading Reactive
                             Power plus the sum total of the
                             lagging Mvar "need" for lagging,
                             Reactive Power in all Reactive Power
                             Zones for the twelve month period in
                             question, as given each year in the
                             Seven Year Statement,

                               provided that each Provisional Zonal Weighting
                               Factor (both leading and lagging) shall not
                               in any event be greater than 3.000 and
                               provided further that (for the avoidance of
                               doubt) no determination of ZWFlead, ZWFlag,
                               and TAN shall be made in respect of any such
                               twelve month period when Y = 0.

                  (b) The Provisional Zonal Weighting Factors, together with the
                  Total Forecast Capability, will be notified by NGC as soon as
                  reasonably practicable by publication in the first practicable
                  Seven Year Statement (or any update thereof).

         Reconciliation

         As soon as reasonably practicable following the expiry of each twelve
         month period ending 31st March, NGC shall recalculate ZWFlead and
         ZWFlag, for that twelve month period in accordance with the above
         provisions for calculation of the Provisional Zonal Weighting. Factors
         but substituting for the Total Forecast Capability the actual total
         leading or lagging (as the case may be) Mvar capability for that twelve
         month period in each Relevant Zone as determined by NGC ("the Total
         Actual Capability"). Such recalculation of ZWFlead and ZWFlag shall be
         undertaken by NGC in a manner consistent with the principles and
         methodologies set out in the document entitled "Methodology Document
         for the Recalculation of Zonal Weighting Factors" published by NGC for
         this purpose. Such recalculated figures for ZWFlead and ZWFlag ("the
         Final Zonal Weighting Factors"), together with the Total Actual
         Capability, shall be published by NGC in the Seven Year Statement. Each
         Final Zonal Weighting Factor (both leading and lagging) shall not in
         any event be greater than 3.000 and (for the avoidance of doubt) no
         determination of ZWFlead, ZWFlag, and TAN shall be made in respect of
         any such twelve month period when Y=0.

         NGC shall derive the Total Actual Capability from the Mvar capability
         (required under and in accordance with the Connection Conditions of the
         Grid Code) of Generating Units
         in respect of which Ancillary Services Agreements have been or will be
         amended or concluded to give effect to the provisions of sub-paragraphs
         42 and 4.3 of this Schedule. In respect of any twelve month period
         ending 31st March. such Mvar capability shall be reduced pro rata for
         all Settlement Periods in such twelve month period in respect of which
         no capability payments referred to in this Appendix I shall fall due:-

                    (a)  by virtue of  paragraph 7 below  (with  effect from the
                         commencement  of the twelve month period in  question);
                         and

                    (b)  by virtue of  paragraph  8 below  (until the end of the
                         twelve month period in question): and

                    (c)  by virtue of factor J referred to in  paragraph 3 above
                         being set to zero (at any time during the twelve  month
                         period in question).

         As soon as reasonably practicable following publication of the relevant
         Seven Year Statement, NGC shall pay to each relevant User or be paid by
         each relevant User such sum as will reconcile:-

                  (i) capability payments made to that User and calculated in
                  accordance with paragraph 3 above by reference to the
                  Provisional Zonal Weighting Factors,

         with

                  (ii) capability payments due to or from that User and
                  calculated in accordance with paragraph 3 above by reference
                  to the Final Zonal Weighting Factors.

         For the avoidance of doubt. such reconciliation will include the
         payment of interest at the Base Rate from the date of payment by NGC to
         that User of the capability payments referred to at (i) above.

         For clarification purposes. each reference in this paragraph 4 to
         "need" does not imply actual Reactive Power need but is used merely to
         refer to the figure identified as "need" in the Seven Year Statement.
         Such figure shall be determined each year using the same principles and
         methodologies as used to determine the zonal weighting factors for the
         twelve month periods ended on 31st March, 1996 and 31st March, 1997.

5.       Indexation

         The indexation factor I used in the formulae in paragraphs 2 and 3
         above shall, with effect from 1st October, 1997 in respect of the
         period from (and including) that date to (and including) 31st March,
         1998, and with effect from 1st April in respect of each subsequent
         twelve month period ending, 31st March. be determined as follows:-

                  I        =                         RPI2
                                                     RPI1,
         Where

         For the period from (and including) 1st October, 1997 to (and
         including) 31st March, 1998 RPI, = 155.4, and thereafter RPI, is the
         PPI for March of the immediately preceding twelve month period ending
         31st March.

         RPI1 is the RPI for March, 1994 (142.5).

         The index used is the Retail Prices Index (RPI) with 1987 = 100 base.
         The source of the RPI index is the monthly Department of Employment
         "Employment Gazette".

         In the event that RPI ceases to be published or is not published in
         respect of any relevant month or it is not practicable to use RPI
         because of a change in the method of compilation or some other reason,
         the indexation factor I shall be calculated by NGC using an alternative
         index nominated by NGC as it thinks fit acting reasonably but with a
         view to determining the relevant payment after indexation that would be
         closest to the relevant payment after indexation if RPI had continued
         to be available.

         Subject always to  sub-paragraph  2.5 of this Schedule,  in respect of
         all periods from (and  including) 1st April,  2001 the indexation
         factor I  applicable  for the  period  from (and  including)  1st
         April, 2000 to (and including) 31st March, 2001 shall apply. A

6.       Information Unavailable

         Where any information or data required by NGC for the calculation of
         payments to be made pursuant to this Schedule for any 12 month period
         ending 31st March is not available to NGC at the relevant time, NGC
         shall calculate payments for that 12 month period based upon the
         amounts payable to Users for the immediately preceding a 12 month
         period adjusted by NGC to reflect its best estimate of the unavailable
         information or data. Once such information or data is available, NGC
         shall accordingly make all consequential adjustments to the payments
         from itself to Users as soon as reasonably practicable thereafter to
         reflect any repayment or additional payment so required to be made by
         one party to the other in respect of the period from 1st April in such
         year until the date of such repayment or additional payment (including
         interest thereon at the Base Rate).

7.       Commissioning

7.1      Save in relation to Despatch Units operational prior to 1st April,
         1997, no utilisation or capability payments referred to in this
         Appendix I shall fall due and payable to any User in respect of any
         Despatch Unit until the Settlement Period in which it is demonstrated
         to the reasonable satisfaction of NGC, having regard to industry
         practice, that the Despatch Unit (or, in or the case of a
         Centrally Despatched CCGT Module, but subject always to sub-paragraph
         7.4 below, each relevant CCGT Unit) complies with the provisions of
         Grid Code CC6.3.2 and CC6.3.4 or (where NGC in its sole discretion
         requires Reactive Power from a Despatch Unit before then for the
         purposes of security of the NGC Transmission System) such earlier date
         as NGC may agree with a User in respect of that Despatch Unit.

7.2      Before any demonstration of compliance referred to in sub-paragraph 7.1
         above, it shall be necessary for the User to demonstrate to NGC's
         reasonable satisfaction, having regard to industry practice, that the
         Despatch Unit's (or, in the case of a Centrally Despatched CCGT Module,
         each relevant CCGT Unit's) Excitation System, and in particular the
         Under-excitation Limiter, has been successfully commissioned and
         complies with the provisions of Grid Code CC6.3.8.

7.3      For the avoidance of doubt, the issue by NGC in relation to a Despatch
         Unit of a Despatch Instruction to unity power factor or zero Mvar shall
         neither imply by itself that NGC is reasonably satisfied with
         compliance as referred to in sub-paragraph 7.1 above nor imply in
         relation to the Despatch Unit agreement by NGC of an earlier date as
         also referred to therein.

7.4      Until such time as it shall be demonstrated to the reasonable
         satisfaction of NGC that, in relation to a Centrally Despatched CCGT
         Module. all relevant CCGT Units comply with the provisions of Grid Code
         CC6.3.2 and CC6.3.4 as referred to in sub-paragraph 7.1 above, it is
         the intention that capability and utilisation payments shall fall due
         to a User in respect of that Centrally Despatched CCGT Module
         notwithstanding the provisions of sub-paragraph 7.1 above but on the
         basis that capability payments will be calculated by reference to the
         Reactive Power capability of each CCGT Unit in respect of which
         compliance has been demonstrated. For such period, and in relation to
         that Centrally Despatched CCGT Module only, this Appendix I and the
         definitions of QC and QR set out in Appendix 3 shall be read and
         construed accordingly.


<PAGE>


8.       De-energisation, Decommissioning and Disconnection

         Subject to all rights and obligations of NGC and the User accrued at
         such date, utilisation and capability payments referred to in this
         Appendix I shall cease to fall due and payable to any User in respect
         of any Despatch Unit with effect from the date of expiry or termination
         for whatever reason of the relevant Ancillary Services Agreement in
         accordance with its terms or (if earlier) with effect from the date of
         Deenergisation, Decommissioning or Disconnection of that Despatch Unit
         for any reason pursuant to the relevant Supplemental Agreement or this
         Agreement.

9.       Reconciliation

         As soon as practicable after this Schedule has taken effect and
         Ancillary Services Agreements have been amended so as to give effect
         thereto, NGC will pay to each relevant User or be paid by each relevant
         User such sum as will reconcile:-

                  (a) payments (if any) made to such User for the provision of
                  the Obligatory Reactive Power Service from Despatch Units in
                  respect of the period from 1st October, 1997 to (and
                  including) the date of such reconciliation by NGC

         with

                  (b) payments due to or from such User pursuant to any
                  Ancillary Services Agreements giving effect to this Schedule
                  in respect of the period from lst October, 1997 to the date of
                  such reconciliation (both dates inclusive) as if such
                  Ancillary Services Agreements had then been effective.

         For the avoidance of doubt, such reconciliation will include the
         payment of interest at Base Rate from the date of the relevant payment
         by NGC referred to at sub-paragraph 9(a) above.


<PAGE>


                                   Appendix 2

          Payments  for the  Obligatory  Reactive  Power  Service  and  Enhanced
          Reactive Power Services - Market Mechanism

The provisions of this Appendix 2, as referred to in sub-paragraph 5.3(dXi) of
this Schedule, shall apply to the calculation of payments in respect of Tenders
comprising prices for and Tendered Capability Breakpoints relating to the
Obligatory Reactive Power Service and in respect of Tenders comprising terms for
the provision of the Enhanced Reactive Power Service specified in sub-paragraph
1.3(a) of this Schedule, in each case in respect of Despatch Units. All payments
shall be expressed in pounds sterling. All algebraic terms contained in this
Appendix 2 shall bear the meanings set out in paragraph I below unless the
context otherwise requires.

1.       Definitions

         For the purposes of this Appendix 2, unless the context otherwise
         requires, the following terms shall have the following meanings:-

         Aij  =        Genset  Metered  Generation (as defined
             in  the  Pool  Rules)  in  respect  of  a  Despatch   Unit  for  a
                               Settlement Period;

          CA1, CA2 and CA3 = the available capability prices (expressed to apply
               to   both   leading   and   lagging)((pound)/Mvar/h)   (as   more
               particularly described in paragraph 2 of Appendix 5) as specified
               in the relevant Market Agreement,

          CS1, CS2 and CS3 = the synchronised  capability  prices  (expressed to
               apply to both  leading  and  lagging)  ((pound)/Mvar/h)  (as more
               particularly described in paragraph 2 of Appendix 5) as specified
               in the relevant Market Agreement;

          CUI, CU2 and CU3 = the utilisation  prices (expressed to apply to both
               leading  and   lagging)((pound)/Mvarh)   (as  more   particularly
               described  in  paragraph  2 of Appendix  5) as  specified  in the
               relevant Market Agreement;

          K    = in respect of Centrally  Despatched CCGT Modules,  the relevant
               configuration   factor  as  specified  in  the  relevant   Market
               Agreement, otherwise 1;

          Qlead = defined in Section 2 of Appendix 3;

          Qlag = defined in Section 2 of Appendix 3;

          Q1,  Q2 and Q3 = the contracted capability  breakpoints  (expressed to
               apply  to both  leading  and  lagging)  in  whole  Mvar as may be
               specified in the relevant Marketing Agreement, where:

          (i)  Q1 = TQ1, Q2 = TQ2 and Q3 = QC where TQ2 < QCo TQ3

          (ii) Q1 = TQ1 Q2 = null Q3 = null where 0o QSo TQ2

          (iii) Q1 = QC Q2 = null Q3 = null where 0o QSo TQ1

          SPD  = Settlement Period Duration (as defined in the Pool Rules);

          TQ1, TQ2 and TQ3 = defined in Appendix 5;

          Ulead = defined in Section 1 of Appendix 3;

          Ulag = defined in Section 1 of Appendix 3;

          V    = the system voltage range performance factor (expressed to apply
               to both leading and lagging) as calculated in accordance with the
               formulae set out in the relevant Market Agreement, otherwise 1;

          XPij = Genset  Actual  Availability  (as defined in the Pool Rules) in
               respect of a Despatch Unit for a Settlement Period.


the contracted capability breakpoints (expressed to apply to both leading and
lagging) in whole Mvar as may be specified in the relevant Market Agreement,
where:

2.       Total Payment

                                                     Total
                                                     Payment
                                                     (PTM) =
                                                     PUM + PCA
                                                     + PCS
                                                     [(pound)
                                                     per
                                                     Settlement
                                                     Period
                                                     per
                                                     Despatch
                                                     Unit]

         where, subject always to paragraphs 6, 7 and 8 below:

          PUM  = the  utilisation  payment in  respect of a Despatch  Unit for a
               Settlement  Period  determined  in  accordance  with  paragraph 3
               below;

          PCA  = the  availability  capability  payment in respect of a Despatch
               Unit  for a  Settlement  Period  determined  in  accordance  with
               paragraph 4 below; and

          PCS  = the  synchronised  capability  payment in respect of a Despatch
               Unit  for a  Settlement  Period  determined  in  accordance  with
               paragraph 5 below.

         Provided always that PTM shall be 0 in all Settlement Periods from and
including that in which:-

                  (a) the relevant Despatch Unit (or, in relation to a Centrally
                  Despatched CCGT Module, any relevant CCGT Unit) fails a
                  Reactive Test or a Contract Test until (and including) the
                  Settlement Period in which a subsequent Reactive Test or
                  Contract Test (as the case may be) is passed in relation to
                  that Despatch Unit (or CCGT Unit (as the case may be)); or

                  (b) the User fails (other than pursuant to an instruction
                  given by NGC or as permitted by the Grid Code) to set the
                  Automatic Voltage Regulator of the Despatch Unit (or, in
                  relation to a Centrally Despatched Module, any relevant CCGT
                  Unit) to a voltage following mode until (and including) the
                  Settlement Period in which the User notified NGC that the
                  Automatic Voltage Regulator is so set; or

                  (c) the Despatch Unit fails to comply with a Reactive Despatch
                  Instruction due to the fact that the Despatch Unit (or, in
                  relation to a Centrally Despatched CCGT Module, any relevant
                  CCGT Unit) is unable to increase and/or decrease its Mvar
                  Output (other than as a direct result of variations in System
                  voltage) until (and including) the Settlement Period in which
                  the User notifies NGC that the Despatch Unit is so able to
                  comply; or

                  (d) the Despatch Unit fails to have a Mvar range which
                  includes the ability to provide zero Mvar at the Commercial
                  Boundary until (and including) the Settlement Period in which
                  the User notifies NGC that the Despatch Unit has or once more
                  has such range.

3.                Utilisation Payment

3.1               For each Settlement Period,

                  PUM = PUMlead + PUMlag [(pound)per Settlement Period per
                  Despatch Unit]

                  Where

                  PUMlead  =        defined in sub-paragraph 3.2 below;

                  PUMlag            =       defined in sub-paragraph 3.3 below.

3.2               Leading Utilisation (PUMlead)

                  There are four mutually exclusive cases (a), (b), (c) or (d):

                           (a)      If      Q2lead 

                                    then PUMlead = SPD * [(CU1lead * Q1lead) +
                           (CU2lead * (Q2lead - Q1lead)) + CU3lead * ((Ulead /
                           SPD) - Q2lead))]

                           (b)      If

                                    either  Q1lead 
                           at least two breakpoints)

                                    or      Q2lead 
                           deemed null (ie there are only two breakpoints

                                    then PUMlead = SPD * [(CU1lead * Q1lead) +
                           (CU2lead * ((Ulead / SPD) - Q1lead))]

                           (c)      If

                                    either  0 
                           breakpoints)

                                    or      Q1lead 
                           there is only one breakpoint)

                                    then    PUMlead = CU1lead * Ulead

                           (d)      otherwise

                                    PUMlead = 0        [(pound)per Settlement
                                    Period per Despatch Unit]

3.3                        Lagging Utilisation (PUMlag)

                           There are four mutually exclusive cases (a), (b), (c)
or (d):

                           (a)      If      Q2lag 
                           null (ie there are three breakpoints)

                                    then PUMlag = SPD * [(CU1lag * Q1lag) +
                           (CU2lag * (Q2lag - Q1lag)) + (CU3lag * ((Ulag / SPD)
                           -
Q2lag))]


<PAGE>


                           (b)      If

                                    either Q1lag
                           Q2lag is not deemed null (ie there are at least two
                           breakpoints)

                                    or      Q2lag 
                           deemed null (ie there are only two breakpoints)

                                    then    PUMlag = SPD * [(CU1lag * Q1lag) +
                                    (CU2lag * ((Ulag / SPD) -
                           Q1lag))]

                           (c)      If

                                    either  0 
                           breakpoints)

                                    or      Q1lag 
                           there is only one breakpoint)

                                    then    PUMlag = CU1lag * Ulag


                           (d)      Otherwise

                                    PUMlag = 0  [(pound)per Settlement Period
                                    per Despatch
                           Unit]

4.                         Available Capacity Payment

4.1                        For each Settlement Period,

                           where XPij> 5MWh

                           then     PCA = K* ((Vlead * PCAlead) + )Vlag
                          * PCAlag))

                           Otherwise

                           PCA = 0  
                          [(pound)per Settlement Period per Despatch Unit]

                           where

                           PCAlead    =    defined in sub-paragraph 4.2 below;

                           PCAlag     =    defined in sub-paragraph 4.3 below.

4.2                        Available Leading Capability (PCAlead)

                           There are four mutually exclusive cases (a), (b), (c)
or (d):

                           (a)      If      Q2lead 
                           deemed null (ie there are three breakpoints)

                                            then PCAlead = SPD * [(CA1lead *
                           Q1lead) +(CA2lead * (Q2lead - Q1lead)) + (CA3lead *
                           (Qlead = Q2lead))]

                           (b)      If      Q1lead 
                           are at least two breakpoints)

                                    then PCAlead = SPD * [(CA1lead * Q1lead) +
                           (CA2lead * (Qlead - Q1lead))]

                           (c)      If      0 

                                    then    PCAlead = SPD * CA1lead * Qlead

                           (d)      otherwise

                                    PCAlead =        0   
                               [(pound)per Settlement Period per Despatch Unit]

4.3                        Available Lagging Capability (PCAlag)

                           (a)      If      Q2lag 
                           there are three breakpoints)

                                    then PCAlag = SPD * [(CA1lag * Q1lag) +
                           (CA2lag * (Q2lag - Q1lag)) + (CA3lag * (Qlag -
                           Q2lag))]

                           (b)      If      Q1lag are
                           at least two breakpoints)

                                    then PCAlag = SPD * [(CA1lag * Q1lag) +
(CA2lag * (Qlag - Q1lag))]

                           (c)      If      0 
                                    then    PCAlag = SPD * CA1lag * Qlag

                           (d)      Otherwise

                                 PCAlag = 0 
                               [(pound)per Settlement Period per Despatch Unit]

5.                         Synchronised Capability Payment

5.1                        For each Settlement Period

                           where    Aij > 5MWh

         PCS = K* ((Vlead * PCSlead) + (Vlag * PCSlag))

         otherwise

         PCS = 0     [(pound)per Settlement Period per Despatch Unit]

         where

         PCSlead  =        defined in sub-paragraph 5.2 below;

         PCSlag            =        defined in sub-paragraph 5.3 below.

5.2      Synchronised Leading Capability (PCSlead)

         There are four mutually exclusive cases (a), (b), (c) and (d):

                           (a)      If      Q2lead 
                           null (ie there are three breakpoints)

                                    then PCSlead = SPD * [(CS1lead * Q1lead) +
                           (CS2lead * (Q2lead Q1lead)) + (CS3lead * (Qlead
                           Q2lead))]

                           (b)      If      Q1lead 
                           are at least two breakpoints)

                                    then PCSlead = SPD * [(CS1lead * Q1lead) +
                           (CS2lead * (Qlead - Q1lead))]

                           (c)      If      0 

                                    then    PCSlead = SPD * CS1lead * Qlead

                           (d)      otherwise

                                    PCSlead = 0
                               [(pound)per Settlement Period per Despatch Unit]

5.3                        Synchronised Lagging Capability (PCSlag)

                           There are four mutually exclusive cases (a), (b), (c)
or (d):

                           (a)      If      Q2lag 
                           there are three breakpoints)

                                    then PCSlag = SPD * [(CS1lag * Q1lag) +
                           (CS2lag * (Q2lag = Q1lag)) + (CS3lag * (Qlag -
                           Q2lag))]

                           (b)      If      Q1lag 
                           at least two breakpoints)

                                    then PCSlag = SPD * [(CS1lag * Q1lag) +
(CS2lag * (Qlag - Q1lag))]

                           (c)      If      0 

                                    then    PCSlag = SPD * CS1lag * Qlag

                           (d)      Otherwise

                                    PCSlag = 0 
               [(pound)per Settlement Period per Despatch Unit]

6.       Testing

         NGC reserves the right to require to be included in any Market
         Agreement, on a basis to be agreed with a Tenderer, terms with regard
         to the carrying out of a Contract Test. The provisions of Grid Code OC
         5.5.1 relating to the carrying out of a Reactive Test (including
         re-tests) shall apply to the carrying out of Contract Tests.

7.       Termination

         Save where expressly provided otherwise in a Tender, each Market
         Agreement shall contain terms entitling NGC to terminate that Market
         Agreement in the event that the User fails to provide a satisfactory
         level of service and entitling the User to terminate the Market
         Agreement in the event that NGC fails (without reasonable cause) to
         make due payment to the User, in each case as more particularly defined
         therein.

8.       De-energisation, Decommissioning and Disconnection

         Subject to all rights and obligations of NGC and the User accrued at
         such date, utilisation, available capability and synchronised
         capability payments referred to in this Appendix 2 shall cease to fall
         due and payable to any User in respect of any Despatch Unit with effect
         from the date of expiry or termination for whatever reason of the
         relevant Market Agreement in accordance with its terms or (if earlier)
         with effect from the date of De-energisation, Decommissioning or
         Disconnection of that Despatch Unit for any reason pursuant to the
         relevant Supplemental Agreement or this Agreement.


<PAGE>


                                   Appendix 3
                                 Technical Data
                                    Section 1
                            Reactive Utilisation Data

This Section 1 of Appendix 3 specifies the technical data to be used to
determine the utilisation payments to be made in accordance with Appendix I and
Appendix 2. For the purposes thereof, the following terms shall have the
following meanings:-

Ulead                      = leading Mvarh produced by the relevant Despatch
                           Unit at the Commercial Boundary in the relevant
                           Settlement Period measured by metering meeting the
                           requirements of Appendix 4 and as specified in the
                           relevant Ancillary Services Agreements (including a
                           Market Agreement) where the User has complied with a
                           Reactive Despatch Instruction in accordance with Grid
                           Code SDC2, otherwise 0;

Ulag                       = lagging Mvarh produced by the relevant Despatch
                           Unit at the Commercial Boundary in the relevant
                           Settlement Period measured by metering meeting the
                           requirements of Appendix 4 and as specified in the
                           relevant Ancillary Services Agreements (including a
                           Market Agreement) where the User has complied with a
                           Reactive Despatch Instruction in accordance with Grid
                           Code SDC2, otherwise 0;

U                 =        the total Mvarh (leading and lagging)

                                    where
                                                   U =  Ulead  +
                                Ulag                      [Mvarh    per
                                   Settlement Period per Despatch Unit]
For the avoidance of doubt, leading Mvarh shall mean Mvarh imported by the
Despatch Unit at the Commercial Boundary irrespective of the direction of Active
Power flow, and lagging Mvarh shall mean Mvarh exported by the Despatch Unit at
the Commercial Boundary irrespective of the direction of Active Power flow.


<PAGE>


                                    Section 2
                 Reactive Power Capability Data & Redeclarations


This Section 2 of Appendix 3 specifies the technical data to be used to
determine the capability payments to be made in accordance with Appendix 1 and
Appendix 2.

1.   For the purposes  thereof,  the  following  terms shall have the  following
     meanings:-

         Qlead             =        min (QRlead, QClead)               [Mvar]

         Qlag              =        min (QRlag, QClag)                 [Mvar]

         where

                                    QC = as specified in the relevant Ancillary
                                    Services Agreement (including a Market
                                    Agreement), being the high voltage value
                                    (specified in whole Mvar) equivalent at the
                                    Commercial Boundary to the low voltage Mvar
                                    capability (leading or lagging) of the
                                    relevant Despatch Unit as described in
                                    paragraph 2 below, representing the
                                    capability to supply continuously leading or
                                    lagging Mvar (as the case may be);

                                    QR = as determined in accordance with the
                                    relevant Ancillary Services Agreement
                                    (including a Market Agreement), being, in
                                    relation to a Settlement Period, the high
                                    voltage value (specified in whole Mvar)
                                    equivalent to the redeclared low voltage
                                    Mvar capability (leading or lagging) of the
                                    relevant Despatch Unit (or, in the absence
                                    of such redeclaration. such high voltage
                                    value reasonably determined by NGC as a
                                    result of monitoring and/or testing as
                                    provided in the relevant Ancillary Services
                                    Agreement (including a Market Agreement)),
                                    and QRlead, and QRlag, shall be construed
                                    accordingly.

2.   (a) In respect of capability payments made in accordance with Appendix 1:-

                                    (i) QC shall be the capability required to
                           be provided under and in accordance with the
                           Connection Conditions of the Grid Code (where
                           applicable. as determined by any direction in force
                           from time to time and issued by the Director
                           relieving the relevant User from the obligation under
                           its Licence to comply with such part or parts of the
                           Grid Code as may be specified therein); and

                                            (ii) QC and QR shall represent the
                           high voltage value equivalent at Rated MW at the
                           Commercial Boundary.

(b)  In respect of capability payments made pursuant to a Market Agreement in
                  accordance with Appendix 2:-

                                    (i) QC shall be the capability required to
                           be provided under and in accordance with the
                           Connection Conditions of the Grid Code or, where the
                           Market Agreement is in respect of a Tender for terms
                           for the provision of the Enhanced Reactive Power
                           Service specified in sub-paragraph 1.3(a) of this
                           Schedule, a capability agreed to be provided in
                           excess of that required under and in accordance with
                           the Connection Conditions of the Grid Code but so
                           that in such a case QC cannot exceed TQ3 (defined in
                           Appendix 5);

                                    (ii) QC shall represent the high voltage
                           value equivalent at a nominated Genset Registered
                           Capacity specified by a Tenderer in the Tender at the
                           Commercial Boundary within the system voltage range
                           specified in the relevant Market Agreement; and

                                    (iii) QR shall represent the high voltage
                           value equivalent at the then current Genset
                           Registered Capacity at the Commercial Boundary within
                           the system voltage range specified in the relevant
                           Market Agreement.

                  (c) For the purposes of this section 2, the figures for QC and
                  QR shall be determined in a manner consistent with the
                  principles and methodologies set out in a document published
                  or to be published from time to time by NGC for this purpose.

For the avoidance of doubt, leading capability shall mean the ability to import
Reactive Power at the Commercial Boundary irrespective of the direction of
Active Power flow, and lagging capability shall mean the ability to export
Reactive Power at the Commercial Boundary irrespective of the direction of
Active Power flow.


<PAGE>


                                   Appendix 4
                                    Metering



1.       Pooling and Settlement Agreement

         For the avoidance of doubt, nothing in this Appendix shall affect the
         rights and obligations of those Parties also party to the Pooling and
         Settlement Agreement under Clause 60 and Schedule 21 thereto with
         regard to Metering Equipment and Metering Systems insofar as such
         provisions relate to Reactive Energy.

2.       Despatch Units

2.1      For the purposes of this Schedule and the Appendices, subject always to
         sub-paragraph 2.2. the quantities of Mvarh imported and exported by a
         Despatch Unit shall be derived from the relevant Metering System for
         that Despatch Unit registered with the Settlement System Administrator.

2.2      Where the existing Metering System for the Despatch Unit registered
         with the Settlement System Administrator does not incorporate Metering
         Equipment capable of measuring and recording Mvarh imports and exports
         for that Despatch Unit for each Settlement Period. then the relevant
         User shall register or procure that there is registered in accordance
         with Clause 60.2.2 of the Pooling and Settlement Agreement a Metering
         System which does incorporate such Metering Equipment.

2.3      All relevant Metering Equipment identification and location codes shall
         be set out in the relevant Ancillary Services Agreement, and the
         Generator hereby agrees to facilitate agreement between the Parties
         with respect thereto by providing NGC as soon as reasonably practicable
         following request with all necessary supporting diagrams and other
         written documentation.

2.4       Where the configuration of the Metering System is such that:-

                  2.4.1 Mvarh import and export values for the Despatch Unit are
                  not measured at the Commercial Boundary, and/or

                  2.4.2 Mvarh import and export values for the Despatch Unit are
                  measured by more than one Meter; and/or

                  2.4.3 the Mvarh import and export values for the Despatch Unit
                  are measured by a Meter which also measures the Mvarh import
                  and export values of one or more other Generating Units. Plant
                  and Apparatus or other equipment,

     then appropriate loss adjustment factors and aggregation  methodologies (as
     the case may be)  shall be used to  determineon  a  Settlement  Period
     basis the Mvarh  import  value and Mvarh export value for the relevant
     Despatch Unit at the  Commercial  Boundary to be used for the purposes
     of this Schedule.

         Subject always to sub-paragraph 2.5, the appropriate factors and
         methodologies for each relevant Despatch Unit shall be agreed by NGC
         and each relevant User (both acting reasonably) in the relevant
         Ancillary Services Agreement by adoption of one or more of the factors
         or methodologies set out in the document entitled "Methodology Document
         for the Aggregation of Reactive Power Metering" (as amended from time
         to time) published by NGC for this purpose. This document shall specify
         the respective factors and methodologies to be applied for particular
         Metering System configurations in order to determine so far as
         reasonably practicable the Mvarh import value and Mvarh export value
         for the relevant Despatch Unit at the Commercial Boundary as required
         by this sub-paragraph 2.4

2.5      Loss adjustment factors and aggregation methodologies need not be
         agreed between NGC and the relevant User in connection with any
         configuration described in sub-paragraph 2.4.3 in respect of periods
         prior to 1st April, 1998.

3. Non-Centrally Despatched Generation Units and other Plant and/or Apparatus
(or other equipment)

         In respect of each Generating Unit whose MW output is sold in
         accordance with the Pool Rules, the provisions of paragraph 2 shall
         apply (as if references therein to Despatch Unit were to Generating
         Unit). In all other cases, the following provisions shall apply:-

3.1      The quantities of Mvarh imported and exported shall be measured and
         recorded through Meters complying with all relevant Codes of Practice
         to the extent applying to Reactive Energy, Which shall include without
         limitation those relating to calibration, testing and commissioning.

3.2      Such Meters shall be capable of providing a Mvarh import and export
         value for each Settlement Period for each Non Centrally Despatched
         Generating Unit or other Plant and/or Apparatus or other equipment.

3.3      Such Meters shall be situated as close as reasonably practicable to the
         Commercial Boundary taking into account relevant financial
         considerations.

3.4  The  principles  set out in  paragraph  2.4 in relation to  adjustment  and
     aggregation shall apply.

3.5      For the purposes of remote interrogation the relevant Ancillary
         Services Agreement shall include appropriate terms with regard to the
         provision and maintenance of all communication links.

4.       Trading Sites

         It is the intention of the Parties that the treatment of Trading Sites
         for the purposes of metering and the provisions of this Appendix shall
         be the subject of a review by the Transmission Users Group as referred
         to in Appendix 7.

5.       Definitions

         In this Appendix 4, the terms "Codes of Practice", "Meters", Metering
         Equipment", "Metering System" and "Reactive Energy" shall have the
         meaning attributed to each of them in the Pooling and Settlement
         Agreement.


<PAGE>


                                   Appendix 5
                              Submission of Tenders


The provisions of this Appendix 5 specify the manner in which Users shall
complete Tenders comprising prices and Tendered Capability Breakpoints relating
to the Obligatory Reactive Power Service and terms for the provision of the
Enhanced Reactive Power Service specified in sub-paragraph 1.3(a) of this
Schedule, in each case in respect of Despatch Units.

A Tender shall include (inter alia) details of the Reactive Power range, the
prices tendered for utilisation and capability and an indexation mechanism as
set out below. Each Tender must relate to one Despatch Unit only. Users wishing
to tender in relation to more than one Despatch Unit must therefore submit
separate Tenders for each Despatch Unit.

1.       Reactive Power Capability

1.1      In respect of each Despatch Unit, a Tenderer must nominate a Genset
         Registered Capacity which it anticipates will be the actual Genset
         Registered Capacity on the Contract Start Day for that Despatch Unit
         (in this Appendix 5 referred to as "the Nominated Genset Registered
         Capacity") to be used for the duration of the Market Agreement. All
         capability data used for the purpose of a Tender must be expressed as
         the capability of a Despatch Unit at the Commercial Boundary and must
         represent the value of Reactive Power output which can be supplied
         continuously at the Commercial Boundary when the Despatch Unit is
         operating at the Nominated Genset Registered Capacity.

1.2      In respect of each Despatch Unit, all capability data relating to the
         provision of the Enhanced Reactive Power Service specified in
         sub-paragraph 1.3(a) of this Schedule must be expressed as the
         capability of that Despatch Unit at the Commercial Boundary across a
         system voltage range to be specified by the Tenderer in its Tender (or
         otherwise in accordance with directions given by NGC).

1.3      All Reactive Power capability data in respect of a Despatch Unit must
         be expressed as positive, whole numbers in Mvar, with leading and
         lagging capability data distinguished by the subscripts lead and lag.

1.4      In respect of each Despatch Unit, and subject to any directions issued
         from time to time by NGC with regard to such values, the User must
         submit at least one Reactive Power capability value and may in addition
         submit up to a further two Reactive Power capability values (all three
         being "Tendered Capability Breakpoints"), for both leading and lagging
         Mvar. One of these Tendered Capability Breakpoints, in respect of both
         leading and lagging Mvar, must be equivalent to the minimum Reactive
         Power capability of a Despatch Unit which a User is obliged to provide
         under and in accordance with the Connection Conditions of the Grid
         Code (to the nearest whole Mvar) after
         application of the principles set out in subparagraphs 1.1 and 1.2
         above and as further described in the package of information referred
         to in subparagraph 5.3(b)(i) of this Schedule.

1.5      The Tendered Capability Breakpoints shall be defined for the purposes
         of this Appendix as TQ1, TQ2, TQ3, for leading and laggin. Mvar as the
         case may be, where:-

                  TQ3lead  TQ2lead  TQ1lead  0

         and      TQ3lag  TQ2lag  TQ1lag  0

1.6      Where only two Tendered Capability Breakpoints are tendered, for
         leading or lagging Mvar as the case may be, then the value of TQ3 shall
         be deemed to be null for the purposes of calculating payments for
         capability and utilisation and no additional payments for capability
         will fall due and payable in respect of a Despatch Unit for the
         provision of Reactive Power capability above Tendered Capability
         Breakpoint TQ2.

1.7      Where only one Tendered Capability Breakpoint is tendered, for leading
         or lagging Mvar as the case may be, then the values of TQ2 and TQ3
         shall be deemed to be null for the purposes of calculating payments for
         capability and utilisation and no additional payments for capability
         will fall due and payable in respect of a Despatch Unit for the
         provision of Reactive Power capability above Tendered Capability
         Breakpoint TQ1.

1.8      The Reactive Power capability value at zero Mvar (referred to in
         paragraph 2 below as Q0) shall be treated as a Tendered Capability
         Breakpoint for the purposes of tendering capability and utilisation
         prices and calculating capability and utilisation payments.

2.       Prices

         In respect of each Tendered Capability Breakpoint, prices submitted by
         Users must be zero or positive. quoted in pounds sterling to the
         nearest tenth of a penny and shall otherwise be tendered as described
         in sub-paragraphs 2.1, 2.2 and 2.3 below. The prices shall be described
         using the following notation:-

         C1lag is the price applicable between Tendered Capability Breakpoints
         Q0 and TQ1lag including TQ1lag

         C2lag is the price applicable between Tendered Capability Breakpoints
         TQ1lag and TQ2lag including TQ2lag

         C3lag is the price applicable between Tendered  Capability Breakpoints
         TQ2lag and TQ3lag including TQ3lag

          C1lead is the price applicable between Tendered Capability Breakpoints
          Q0 and TQ1lead including TQ1lead

         C2lead is the price applicable between Tendered Capability Breakpoints
         TQ1lead and TQ2lead including TQ2lead

          C3lead is the price applicable between Tendered Capability Breakpoints
          TQ2lead and TQ3lead including TQ3lead

          where C shall represent CU, CA or CS, as the case may be.

2.1       Utilisation Prices (CU)

         (a)       Utilisation prices submitted by Users must be:-

                  (i)      quoted in units of (pound)/Mvarh; and

                  (ii)     no greater than (pound)999.999/Mvarh.

                  (b) Utilisation prices must increase across the Reactive Power
                  capability range, for leading or lagging Mvar as the case may
                  be, such that:-

                  CU3lead  o CU2lead o CU1lead o 0

                  CU3lag o CU2lag o CU1lago 0

                  (c) Utilisation payments shall be made for metered Reactive
                  Power output and shall be calculated in accordance with
                  Appendix 2.

2.2      Available Capability Prices (CA)

         (a)      Available capability prices submitted by Users must be:-

                  (i)      quoted in units of (pound)/Mvar/h; and

                  (ii)     no greater than (pound)999.999/Mvarlh.

                  (b) Available capability prices must increase across the
                  Reactive Power capability range, for leading or lagging Mvar
                  as the case may be, such that:-

                  CA3lead o CA2lead o CA1lead o 0

                  CA3lag o CA2lag o CA1lag o 0

                  (c) Available capability payments shall be calculated in
accordance with Appendix 2.

2.3      Synchronised Capability Prices (CS)

         (a)      Synchronised capability prices submitted by Users must be:-

                  (i)      quoted in units of (pound)/Mvar/h; and

                  (ii)     no greater than (pound)999.999/Mvar/h.

                  (b) Synchronised capability prices must increase across the
                  Reactive Power capability range, for leading or lagging Mvar
                  as the case may be, such that;-

                  CS3lead o CS2lead o CS1lead o 0

                  CS3lag o CS2lag o CS1lag o 0

                  (c) Synchronised capability payments shall be calculated in
                  accordance with Appendix 2.

3.       Indexation

         Where a Tender is submitted in respect of a period which exceeds the
         minimum 12 month period required by sub-paragraph 5.3(d)(v) of this
         Schedule, then the User shall submit one mechanism for calculating
         indexation on an annual basis which shall apply to all prices submitted
         in the Tender for all subsequent periods of 12 months following the
         minimum 12 month period to which the Tender applies. Such mechanism
         shall be based on either the Retail Prices Index (as referred to in
         paragraph 5 of Appendix 1), a fixed percentage (which may be positive,
         zero or negative) or a summation of such Retail Prices Index and such
         fixed percentage.

4.       Other Technical Information

         A User shall submit with a Tender such other technical information as
         reasonably directed by NGC in accordance with sub-paragraph 5.3(b)(i)
         of this Schedule. Such information may include (without limitation):-

4.1      in relation to a Tender for the Enhanced Reactive Power Service
         specified in sub-paragraph 1.3(a) of this Schedule, details of the
         capability of the Generating Unit to provide Reactive Power at the
         generator stator terminals by reference to the Generator Performance
         Chart submitted in accordance with Operating Condition 2.4.2 of the
         Grid Code, which capability must represent the true operating
         characteristics of that Generating Unit., and

4.2      details of the system voltage range over which the User proposes to
         make available from the Generating Unit such Enhanced Reactive Power
         Service (and in each case any restrictions thereto); and

4.3      in relation to a Tender for the Enhanced Reactive Power Service
         specified in sub-paragraph 1.3(a) of this Schedule, the ambient air
         temperature at which such Enhanced Reactive Power Service is specified,
         and variations to such Enhanced Reactive Power Service in accordance
         with any air temperature range specified by NGC; and

4.4      details, including prices, of any additional services offered as part
         of any Enhanced Reactive Power Service (not being the Enhanced Reactive
         Power Service specified in sub-paragraph 1.3(a) of this Schedule); and

4.5 any restrictions on NGC selecting part of an Enhanced Reactive Power
Service.

<PAGE>



                                   Appendix 6

                      Qualification and Evaluation Criteria

Section A - Qualification Criteria

1.   Without prejudice to the requirements of sub-paragmph 5.3 of this Schedule,
     all Tenders must satisfy the following mandatory qualification criteria:-

1.1      in relation to a Tender for provision of the Enhanced Reactive Power
         Service specified in subparagraph l.3(a) of this Schedule. the leading
         and/or lagging capability (as the case may be) comprised therein, being
         the capability in excess of that required under and in accordance with
         the Connection Conditions of the Grid Code, must be at least 15 Mvar
         leading, and/or 15 Mvar lagging (as the case may be) or (if lower) such
         amount of Mvar representing an additional 10% of that required under
         and in accordance with the Connection Conditions of the Grid Code (in
         each case as measured at the Commercial Boundary); and

1.2      in relation to a Tender for provision of any other Enhanced Reactive
         Power Service, the leading and/or laggin capability (as the case may
         be) comprised therein must be at least 15 Mvar leading and/or 15 Mvar
         lagging (as the case may be) (as measured at the Commercial Boundary);
         and

1.3      the tendered capability must be subject to Mvar metering meeting the
         requirements of Appendix 4; and

1.4      the tendered capability must be subject to Mvar despatch facilities
         reasonably acceptable to NGC, incorporating the ability for NGC to
         receive from the Tenderer relevant technical, planning and other data
         in NGC's reasonable opinion necessary in connection therewith: and

1.5      the site in question must be the subject of an agreement for connection
         to, and/or use of, the NGC Transmission System or (as the case may be)
         a Distribution System.

Section B - Evaluation Criteria

The overall economic value of a Tender (and where appropriate any part thereof)
will be assessed by reference to the following criteria (which are not listed in
any order of importance or priority):-

2.1      in relation to a Generating Unit providing the Obligatory Reactive
         Power Service, a comparison with the default payment arrangements for
         that Generating Unit, including the effect (if any) of the balance of
         tendered capability and utilisation prices as a hedge against forecast
         costs of that Generating Unit pursuant to the default payment
         arrangements;

2.2      the location of the tendered  capability  and its  effectiveness  in
         providing voltage support for the NGC Transmission System;

2.3      its interaction with other Tenders, in terms (inter alia) of relative
         prices and capability tendered and relative effectiveness in providing
         voltage support as referred to in sub-paragraph 2.2 above;

2.4      forecast savings  (if any) in  constraint  costs  resulting  from the
         consequential effect on power flows; and

2.5      any forecast benefit or detriment attributable to it in the context of
         the investment pi ' g process referred to at paragraph 4 below.

3.       Particular factors affecting the value of a Tender (and where
         appropriate any part thereof) may include (without limitation) the
         following evaluation criteria (which are not listed in any order of
         importan ce or priority):-

3.1      the amount of leading and lagging Mvar tendered and the impact (if any)
         of any changes in the technical data, the Genset Registered Capacity
         and other information submitted to NGC pursuant to the Data
         Registration Codes of the Grid Code since the date of submission of the
         Tender;

3.2       prices and other terms offered within the Tender;

3.3      the number of months over which capability is tendered;

3.4     forecast Mvarh output, including any revised forecast of Mvarh output
        taking into account tendered utilisation prices (for the avoidance of
        doubt of the Tender and of all other Tenders pursuant to sub-paragraph
        2.3 above);

3.5     in relation to a Generating  Unit,   forecast  MW  output  and  MW
        availability;

3.6      the expected availability and quality of capability tendered, in terms
         of reliability and dependability for despatch purposes, derived from:-

          (i)  historical performance (where relevant);

          (ii) expected reliability of capability tendered signalled by tendered
               prices;

          (iii) any programme agreed with NGC for the restoration of capability;

3.7      the availability of suitable monitoring facilities;

3.8      the capability (if any) of a Generating Unit to provide voltage support
         services when not providing, Active Power (for example pumped storage
         plant operating, in spin-gen mode or when pumping and open cycle gas
         turbine plant when declutched and operating in Synchronous Compensation
mode);

3.9      the complexity of the terms offered within the Tender;

3.10     the results of any testing  carried  out  pursuant  to  sub-paragraph
         5.3(e)(ii) of this Schedule and (where  applicable) the absence of any
         such testing; and

3.11     any other factors enhancing or constraining the capability tendered,
         derived (inter alia) from technical and other information made
         available to NGC (including without limitation operational and planning
         data provided to NGC pursuant to the Grid Code).

4.       For the avoidance of doubt, Tenders will be considered in the
         investment planning process of NGC's Transmission Business only if, and
         to the extent, required to enable NGC to comply with its obligations
         under the Act and the Transmission Licence, and in such a case any
         consequential benefit or detriment attributable to the Tender will be
         taken into account in the tender evaluation process and Tenders will be
         evaluated accordingly.

5.       For the avoidance of doubt:-

                  (a) extant voltage support for the NGC Transmission System
                  whether via contracted services from third parties or assets
                  owned and/or operated by NGC's Transmission Business: and

                  (b) forecast Mvarh Demand on the NGC Transmission System and
at Grid Supply Points,

         in each case as at the relevant Market Day and as anticipated by NGC at
         the subsequent Contract Start Day and throughout the term of the
         Tender, will be taken into account in the tender evaluation process and
         Tenders will be evaluated accordingly.


<PAGE>


                                   Appendix 7
                               Matters for Review

Matter                                             Date of review

1.        The values of X and Y referred to in Appendix 1 in respect 1st
          October, 1998 of Settlement Periods from (and including) 1st April,
          1999.

2. Applicable principle:
          The degree and extent to which a competitive market has been
          established in accordance with the provisions of this Schedule (taking
          into account, inter alia, the amount of Mvar capability the subject of
          Market Agreement and the utilisation thereof).

2.        Any payment arrangements formulated by NGC in conjunction 1st 
          October, 1998 with any relevant User in relation  to Non-Centrally
          Despatched Generating Units

          Applicable principle:
          The extent to which it is reasonably practicable to achieve
          consistency with the provisions of Appendix 1 or Appendices 2 and 5
          (as the case may be).

3.        The treatment of Trading Sites for the purposes of 1st October, 1999
          metering and calculation of Mvar capability in connection with this
          Schedule.

          Applicable principle:
          Non

4.       The indexation  factor referred to in Appendix 1 to apply 1st October,
         2000 in respect of all periods from (and including) 1st April, 2001

          Applicable principles:
          Those charging principles set out in Appendix 8

5.                 (a) The extent of any change in the nature of, or Not
                   applicable extent of recovery under the Pooling and
                   Settlement Agreement of, variable costs incurred or to be
                   incurred by Generating Units providing the Obligatory
                   Reactive Power Service; and

          (b)      the extent to which such changes should lead to a change in
                   the specific costs identified in paragraph 1 of Appendix 8
                   upon which the totality of payments referred to therein is
                   based and founded.

          Applicable principle:
          That, to the extent innovation in the development of the default
          payment arrangements or the giving of appropriate economic signals is
          not thereby stifled, the specific costs from time to time identified
          in paragraph 1 of Appendix 8 (and upon which the totality of payments
          referred to therein is based and founded) should continue to comprise
          the totality of variable costs (actual or estimated) incurred or to be
          incurred in respect of, and aggregated across, all Generating Units
          providing the Obligatory Reactive Power Service, provided always that
          each of those specific costs from time to time identified shall only
          be a variable cost not recovered under the Pooling and Settlement
          Agreement which:-

          (i)       is not being  incurred at the date this  Schedule
                   comes into effect; or

          (ii)     is being incurred at the date this Schedule comes into effect
                   and as at that date is either identified as a specific cost
                   in paragraph 1 of Appendix 8 or is being recovered under the
                   Pooling and Settlement Agreement.



<PAGE>


                                   Appendix 8
                               Charging Principles


In accordance with the relevant provisions of this Schedule, the following
principles are intended to form the basis of the default payment arrangements
for the provision of the Obligatory Reactive Power Service set out in this
Schedule and are intended to be taken into account in any review of the
indexation factor referred to in Appendix 1. However, they are not intended to
stifle innovation in the development of the default payment arrangements or the
giving of appropriate economic signals. It is therefore the Parties' intention
that, upon any change in the nature of, or extent of recovery under the Pooling
and Settlement Agreement of, variable costs (actual or estimated) incurred or to
be incurred by Generating Units providing the Obligatory Reactive Power Service,
the specific costs identified in paragraph I below shall be a matter for review
by the Transmission Users Group as more particularly referred to as item 5 of
Appendix 7.

1        . The totality of payments that would be made pursuant to the default
         payment arrangements in the absence of Market Agreements shall be based
         and founded upon the following variable costs (actual or estimated)
         incurred or to be incurred in respect of, and aggregated across, all
         Generation.
         Units providing the Obligatory Reactive Power Service:-

                  1.1 the additional heat losses incurred as a consequence of
                  producing Reactive Power, measured at the high voltage side of
                  the generator/transformer terminals, the calculation of such
                  heat losses to take account of the square law relationship
                  between the electric current and the additional heat losses
                  incurred; and

                  1.2 maintenance costs incurred as a direct result of Reactive
                  Power output (including a sum in respect of any reduction in
                  the working, life of generating unit components consequent
                  upon Reactive Power output).

2.       For the avoidance of doubt, and without limitation, the totality of
         payments referred to in paragraph 1 above shall not take into account
         in respect of any Generating Unit providing the Obligatory Reactive
         Power Service the fixed costs incurred in achieving initial compliance
         with the relevant provisions of the Grid Code.

3.       Further for the avoidance of doubt, the totality of payments referred
         to in paragraph I above shall, to the extent affecting the specific
         costs therein identified, take due account of any change in or
         amendments to, or replacement of, the Pooling and Settlement Agreement,
         the Grid Code and any other statutory or regulatory obligation, in each
         case coming into force or effect after 1st October, 997 and affecting
         the provision of the Obligatory Reactive Power Service.


<PAGE>


THE NATIONAL GRID COMPANY plc
BY

 .......................................................................

EACH OF THE USERS
BY

 .......................................................................

for The National Grid Company plc in exercise of the authority vested in it by
Clause 25.1 of the Master Agreement pursuant to and in accordance with a
determination of the Director General of Electricity Supply dated 30 March 1998