TRANSITIONAL POWER PURCHASE AGREEMENT



 



BY AND BETWEEN



 



SIERRA PACIFIC POWER COMPANY


 

AND

 


WPS NORTHERN NEVADA, LLC


 


 


DATED: OCTOBER 25, 2000





ASSET BUNDLE: TRACY/PINON

 


TABLE OF CONTENTS



	
Section  

    	
      Page


	
1. DEFINITIONS 

	
  
  1

    
	
2. TERM 


    	
  
  8

    
	
3. SECURITY 


    	
  
  9

    
	4. SUPPLY SERVICE 

    	
  
  10

    
	5. NOTIFICATION 

    	
  
  14

    
	6. PRICING OF ENERGY AND ANCILLARY SERVICES 

    	
  
  15

    
	7. INVOICING AND PAYMENTS

    	
  
  16

    
	8. REGULATORY APPROVALS 

    	
  
  19

    
	9. COMPLIANCE 

    	
  
  20

    
	10. INDEMNIFICATION 

    	
  
  20

    
	11. LIMITATION OF LIABILITY 

    	
  
  22

    
	12. FORCE MAJEURE 

    	
  
  22

    
	13. DISPUTES 

    	
  
  24

    
	14. NATURE OF OBLIGATIONS 

    	
  
  27

    
	15. SUCCESSORS AND ASSIGNS 

    	
  
  27

    
	16. REPRESENTATIONS 

    	
  
  28

    
	17. DEFAULT AND REMEDIES 

    	
  
  29

    
	18 FACILITY ADDITIONS AND MODIFICATIONS 

    	
  
  30

    
	19. COORDINATION 

    	
  
  30

    
	20. EMERGENCY AND NONEMERGENCY CONDITION RESPONSE 

    	
  
  30

    
	21. OUTAGE SCHEDULING 

    	
  
  31

    
	22. REPORTS 

    	
  
  32

    
	23. COMMUNICATIONS 

    	
  
  32

    
	24. NOTICES

    	
  
  33

    
	25. MERGER 

    	
  
  33

    
	26. HEADINGS 

    	
  
  34

    
	27. COUNTERPARTS AND INTERPRETATION 

    	
  
  34

    
	28. SEVERABILITY 

    	
  
  34

    
	29. WAIVERS 

    	
  
  34

    
	30. AMENDMENTS 

    	
  
  35

    
	31. TIME IS OF THE ESSENCE 

    	
  
  35

    
	32. APPROVALS 

    	
  
  35

    
	33. PLR SERVICE 

    	
  
  36

    
	34.
      CONFIDENTIALITY

    	
  
  36

    
	35. CHOICE OF LAW 

    	
  
  37

    


  	



	

Exhibits 

    	Page

	EXHIBIT A ASSET BUNDLE CAPACITIES AND OPERATING PARAMETERS 

    	
  
  A-1

	
EXHIBIT B PRICE FLOOR OF ENERGY, PRICE CEILING OF ENERGY, AND PRICE

   OF ANCILLARY SERVICES 
      

    	
  
  B-1

	EXHIBIT C SUPPLIER'S MONTHLY INVOICE 

    	
  
  C-1

	EXHIBIT D BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS 

    	
  
  D-1

	EXHIBIT E YEAR END TRUE-UP INVOICE 

    	
  
  E-1

	EXHIBIT F NOTICES, BILLING AND PAYMENT INSTRUCTIONS 

    	
  
  F-1

	EXHIBIT G FORM OF AVAILABILITY NOTICE 

    	
  
  G-1

	EXHIBIT H FORM OF GUARANTEE 

    	
  
  H-1

	
EXHIBIT I COMPANY OBSERVED HOLIDAYS 


    	
  
  I-1

	EXHIBIT J ADJUSTMENTS TO TPPA AMOUNT

    	
  
  J-1

	EXHIBIT K ADJUSTMENTS TO MINIMUM ANNUAL TAKE

    	
  
  K-1

	EXHIBIT L ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE

    	
  
  L-1

	
        EXHIBIT M ASSET BUNDLE CONTRACTUAL AND
        OPERATIONAL CONSTRAINTS
      

    	
  
  M-1




  
    
      
        
  
   


      

    

  



  
 


TRANSITIONAL POWER PURCHASE AGREEMENT


 This Agreement is made and entered into as of October 25,
2000 by and between Sierra Pacific Power Company, a Nevada corporation
("Buyer"), and WPS Northern Nevada, LLC, a Nevada limited liability
company (the "Supplier"). Buyer and Supplier are referred to
individually as a "Party" and collectively as the "Parties."

 WITNESSETH:


 WHEREAS, Buyer is selling its Tracy/Pinon generating
station and other assets associated therewith to Supplier (the "Asset
Sale");

 WHEREAS, notwithstanding the Asset Sale, Buyer expects
that it has been designated as the Provider of Last Resort ("PLR") for
its Nevada retail electric customers who are unable to obtain electric service
from an alternative seller or who fail to select an alternative seller. The load
required to serve such customers, plus the customers under those wholesale sales
agreements existing at the Effective Date, is referred to herein as Buyer's
Transitional Resource Requirement; and

 WHEREAS, as a result of the Asset Sale, Buyer will no
longer have its interest in the Tracy/Pinon generating station as a source of
supply for its Transitional Resource Requirement; and

 WHEREAS, Supplier has or is willing to secure the
necessary resources to provide a portion of Buyer's Transitional Resource
Requirement; and

 WHEREAS, Buyer desires to purchase from Supplier and
Supplier desires to sell Energy and Ancillary Services under contract to Buyer;
and

 NOW, THEREFORE, in consideration of the mutual covenants,
representations and agreements hereinafter set forth, and intending to be
legally bound hereby, the Parties agree as follows:

 


1.    DEFINITIONS


     1.1    Format.

       
1.1.1    References to Articles and Sections herein are
cross-references to Articles and Sections, respectively, in this Agreement,
unless otherwise stated.

       
1.1.2    Any parts of this Agreement which are incorporated by
reference shall have the same meaning as if set forth in full text herein.

    1.2    Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:

         1.2.1   
"Agreement" means this Agreement together
with the Exhibits attached hereto, as such may be amended from time to time.

        
1.2.2    "Adjusted Replacement Cost of Energy" means
the Replacement Cost of Energy that will be due from Supplier after true-up in
accordance with the provisions of Section 7.5. Example determinations of the
Adjusted Replacement Cost of Energy are shown on Exhibit E.

        
1.2.3    "Ancillary Services" means those
capacity-related services as listed in Exhibit B as well as the Energy component
of such services. These services are defined in Buyer's OATT.

        
1.2.4    "Asset Bundle" means the Tracy/Pinon
generating station(s) and other assets associated therewith pursuant to the
terms of the Asset Sale Agreement.

        
1.2.5    "Asset Bundle Capacity" means, with respect
to each unit listed in Exhibit A, the net generating capacity (in megawatts
("MW")) of such unit, as modified from time to time in accordance with
Section 5.2, Section 20, and Section 21, and not to exceed at any time the net
capacity for each unit listed in Exhibit A. Asset Bundle Capacity shall also
mean, as the context requires, the Energy (in megawatt-hours ("MWh"))
and the Ancillary Services which the units would be capable of producing if they
operated at the capacity level described in the first sentence of this Section
1.2.6.

        
1.2.6    "Asset Sale" has the meaning set forth in
the Recitals.

        
1.2.7    "Asset Sale Agreement" means the Asset Sale
Agreement between Buyer and Supplier, dated as of October 25, 2000, to purchase
Buyer's Asset Bundle.

        
1.2.8    "Asset Sale Closing" means the transfer of
Buyer's ownership of the Asset Bundle through the consummation of the Asset Sale
pursuant to the terms of the Asset Sale Agreement.

        
1.2.9    "Average Cost of Delivered Energy" means the
total cost of Delivered Energy for the Contract Year after the application of
the annual true-up mechanism from Section 7.5 divided by the total Delivered
Energy for the Contract Year. Example determinations of Average Cost of
Delivered Energy are shown on Exhibit E.

       
1.2.10    "Availability Notice" means a notice
delivered from time to time by Supplier to Buyer pursuant to Section 5.2
notifying Buyer of changes in the availability of the Asset Bundle.

        
1.2.11    "Business Day" means any day other than
Saturday, Sunday, and any day that is an observed holiday by Buyer as shown on
Exhibit I.

        
1.2.12    "Buyer's OATT" means Buyer's then-effective
Open Access Transmission Tariff, as it may be amended, which has been accepted
for filing by the FERC.

        
1.2.13    "CALPX" means the California Power Exchange
and any successor entity thereto.

        
1.2.14    "Confidential Information" has the meaning
set forth in Section 34.

        
1.2.15    "Contract Year" means, with respect to the
first Contract Year, the period beginning on the Effective Date and, with
respect to each subsequent Contract Year, the period immediately following the
end of the preceding Contract Year, and in each case ending on the earlier of
the date which is twelve (12) months thereafter or the termination date of this
Agreement, as provided in Section 2.1.

        
1.2.16    "Control Area" has the meaning set forth in
Buyer's OATT.

        
1.2.17    "Control Area Operator" means an entity or
organization, and its representatives, which is responsible for operating and
maintaining the reliability of the electric power system(s) within the Buyer's
Control Area. The Control Area Operator is also referred to as the transmission
operator.

        
1.2.18    "Credit Amount" shall mean an amount
initially equal to $200 million, as decreased on a periodic basis in accordance
with Exhibit J.

        
1.2.19    "Delivered Amount" means, with respect to
any Dispatch Hour, the Energy delivered by Supplier to Buyer at the designated
Point(s) of Delivery during such Dispatch Hour, whether or not such Energy was
generated by the Asset Bundle, plus any additional amounts pursuant to Section
4.1.2, Section 4.1.3 and the Ancillary Services provided by Supplier for Buyer
during any Dispatch Hour pursuant to the terms of this Agreement.

        
1.2.20    "Derating" means a reduction to the Asset
Bundle Capacity.

        
1.2.21    "Dispatch Hour" means the prescribed hour(s)
when Energy is to be delivered by Supplier to Buyer at the designated Point(s)
of Delivery and the prescribed hour(s) when Ancillary Services are to be
provided to the ISA by Supplier on behalf of Buyer.

        
1.2.22    "EDU" means electric distribution utility,
the organization with the responsibility for the distribution of energy over
Buyer's distribution system to retail end-users.

        
1.2.23    "Effective Date" means the date that this
Agreement becomes effective, which shall be the date on which the Closing Date,
as defined in the Asset Sale Agreement, actually occurs; provided, however, that
the Effective Date shall not occur until the FERC has accepted this Agreement
or, if modifications to this Agreement are required pursuant to Section 2.2.2,
the FERC has accepted the modified Agreement for filing.

        
1.2.24    "Emergency Condition" shall mean a public
declaration by the ISA or Control Area Operator that the Control Area is in
danger of imminent voltage collapse or uncontrollable cascading outages.

        
1.2.25    "Energy" means electricity (measured in MWh)
and associated power-producing capacity to be provided by Supplier to Buyer
pursuant to this Agreement. Also known as "firm energy and associated firm
capacity".

        
1.2.26    "Event of Default" has the meaning set forth
in Section 17 hereof.

        
1.2.27    "FERC" means the Federal Energy Regulatory
Commission and any successor agency thereto.

        
1.2.28    "Force Majeure" has the meaning set forth in
Section 12 hereof.

        
1.2.29    "GAAP" means Generally Accepted Accounting
Principles for the United States.

        
1.2.30    "Good Utility Practice" means the applicable
practices, methods, and acts:


                
                (i) required by applicable Laws, applicable
                permits, applicable reliability criteria, whether or not the
                Party whose conduct at issue is a member thereof, and

                (ii) otherwise engaged in or approved by a
                significant portion of the United States electric utility
                industry during the relevant time period, which, in the exercise
                of reasonable judgement in light of the facts known at the time
                the decision was made, could have been expected to accomplish
                the desired result at a reasonable cost consistent with
                applicable Laws, applicable permits, applicable reliability
                criteria, good business practices, safety, environmental
                protection, economy and expediency. Good Utility Practice is not
                intended to be limited to the optimum practice, method or act to
                the exclusion of all others, but rather to practices, methods or
                acts generally accepted by the United States electric utility
                industry.

                

  

       
1.2.31    "Governmental Authority" means any foreign,
federal, state, local, tribal or other governmental, regulatory or
administrative agency, court, commission, department, board, or other
governmental subdivision, legislature, rulemaking board, tribunal, arbitrating
body, or other governmental authority.

        
1.2.32    "Gross Replacement Costs of Energy" means
Buyer's Replacement Cost of Energy prior to adjustment for the amount that Buyer
would have paid for the Energy if Supplier had delivered the Energy to Buyer.
Example determinations of Gross Replacement Costs of Energy are shown on Exhibit
D.

        
1.2.33    "Guarantee" has the meaning set forth in
Section 3.1.2 hereof.

        
1.2.34    "Guarantor" has the meaning set forth in
Section 3.1.2 hereof.

        
1.2.35    "Invoiced Replacement Costs" means the
Replacement Costs which have been billed to Supplier or subtracted from payments
to Supplier in accordance with the provisions of Section 4.2 and Section 7.4.

        
1.2.36    "ISA" means the Mountain West Independent
System Administrator, or the regional transmission organization authorized with
the responsibility for the scheduling and administration of Energy and Ancillary
Services over, through and within the Transmission System in coordination with
other interconnected entities to provide transmission services.

        
1.2.37    "ISA's OATT" means the ISA's then-effective
Open Access Transmission Tariff, as it may be amended, which has been accepted
for filing by the FERC.

        
1.2.38    "Law" means any law, treaty, code, rule,
regulation, order, determination, permit, certificate, authorization, or
approval of an arbitrator, court or other Governmental Authority which is
binding on a Party or any of its property.

        
1.2.39    "Limit on Excused Energy" means the amount
of energy that can be excused under the provisions of Section 12.4 as shown on
Exhibit A.

        
1.2.40    "Market Price of Energy" has the meaning set
forth in Section 6.2.1.

        
1.2.41    "Minimum Annual Energy Take" has the meaning
set forth in Section 4.1.2.

         1.2.42   
"Minimum Hourly Energy Take" has the meaning
set forth in Section 4.1.3.

        
1.2.43    "Minimum Investment Grade Rating" of a
Person means that such Person has a minimum credit rating on its senior
unsecured debt securities of at least two of the following ratings: (i) BBB as
determined by Standard & Poor's Corporation, (ii) Baa2 as determined by
Moody's Investors Service, Inc., or (iii) a comparable rating by another
nationally recognized rating service reasonably acceptable to Buyer.

        
1.2.44    "Minimum Tangible Net Worth" means the total
book value of shareholder's equity less the balance of goodwill, as reported on
the latest quarterly balance sheet prepared in accordance with Generally
Accepted Accounting Principles (GAAP).

        
1.2.45    "Negotiated Service" has the meaning set
forth in the wholesale generation tariff filed in FERC Docket No. ER00-2018.

        
1.2.46    "NERC" means the North American Electric
Reliability Council and any successor entity thereto.

        
1.2.47    "Nonemergency Condition" shall mean the
determination, direction or order by the ISA, or Control Area Operator to
Supplier and/or Buyer to change the Supply Amount which is not a result of or
due to an Emergency Condition. A Nonemergency Condition includes an
insufficiency of Ancillary Services to securely operate the Control Area.

        
1.2.48    "Operating Representatives" means the
persons designated by each Party to transmit and receive routine operating and
emergency communications required under this Agreement.

        
1.2.49    "Party" has the meaning set forth in the
preamble of this Agreement.

         1.2.50   
"Permitted Deratings" means those reductions
to the Asset Bundle Capacity of which Supplier may notify Buyer from time to
time in an Availability Notice pursuant to Section 5.2.

        
1.2.51    "Person" means any natural person,
partnership, limited liability company, joint venture, corporation, trust,
unincorporated organization, or governmental entity or any department or agency
thereof.

        
1.2.52    "Point of Delivery" means the point (s)
which has (have) been specified as the Interconnection Point(s) in the
Interconnection Agreement between Buyer and Supplier, dated October 25, 2000, as
it may be amended from time to time, as well as any alternative locations agreed
upon pursuant to Section 4.1.6.

        
1.2.53    "Price Ceiling of Energy" means the ceiling
price of Energy as stated in Exhibit B.

        
1.2.54    "Price Floor of Energy" means the floor
price of Energy as stated in Exhibit B.

         1.2.55   
"Provider of Last Resort (PLR)" has the
meaning set forth in the Recitals.

       
1.2.56    "PUCN" means the Public Utilities Commission
of Nevada and any successor entity thereto.

        
1.2.57    "Recourse Service" has the meaning set forth
in the wholesale generation tariff filed in FERC Docket No. ER00-2018.

        
1.2.58    "Replacement Costs" means with respect to a
period of time, the difference between (a) the actual costs, including without
limitation related penalties and transmission costs, incurred by Buyer to
replace any shortfall between (1) the Supply Amount and (2) the Delivered
Amounts of Energy (or in the case of Ancillary Services the Supplier's schedule
of Ancillary Services) during such period and (b) the payments the Supplier
would have been entitled to in respect of such shortfall in delivery; provided
that Replacement Costs shall also be subject to the annual true-up mechanism set
forth in Section 7.5.

        
1.2.59    "Supply Amount" means, with respect to each
Dispatch Hour, the amount of Energy and Ancillary Services, not to exceed the
Asset Bundle Capacity for such Dispatch Hour, requested by Buyer to be delivered
by Supplier during any Dispatch Hour. The Supply Amount for any Dispatch Hour
shall be determined pursuant to Section 5.1.

        
1.2.60    "Total Amount of Energy Replaced" means the
summation of Replacement Energy as shown on Exhibit E.

        
1.2.61    "TPPA Amount" means the amount paid by Buyer
to Supplier in consideration of this Agreement as provided in Sections 3.1 and
4.2 of the Asset Sale Agreement.

        
1.2.62    "Transitional Resource Requirement" or
"TRR" means the Energy and loss compensation necessary for Buyer to
meet its obligations as a Provider of Last Resort (PLR) for Nevada and under
those wholesale sales agreements existing at the Effective Date.

        
1.2.63    "Transmission System" means the facilities
that are used to provide transmission service within Buyer's Control Area in
accordance with Buyer's OATT or the ISA's OATT.

        
1.2.64    "WSCC" means the Western Systems
Coordinating Council and any successor entity thereto.

 2.    TERM

     2.1    Term.

        
2.1.1    Subject to the provisions of Section 2.1.2, unless terminated
earlier pursuant to the terms of this Agreement, the term of this Agreement
shall commence on the Effective Date and continue until the earlier of the
effective date of an order by a Governmental Authority terminating Buyer's PLR
responsibility or at 11:59 p.m. (Pacific Time) on December 31, 2002. Supplier
shall provide service under this Agreement commencing on the first hour on the
day after the Effective Date.

        
2.1.2    Provided that this Agreement has not otherwise terminated as
a result of an order by a Governmental Authority terminating Buyer's PLR
responsibility, Buyer in its sole discretion may provide written notification to
Supplier, at any point during October 2002, that it is exercising its unilateral
right to take service under the terms and conditions of this Agreement for the
period from January 1, 2003 until 11:59 p.m. (Pacific Time) February 28, 2003.

     2.2    Termination.

       
2.2.1     Except pursuant to Sections 2.2.2 or 17.4, this Agreement may
not be terminated without the explicit prior written approval of Buyer.

        
2.2.2    If, prior to the Asset Sale Closing, the FERC or any other
Governmental Authority places conditions on or requires revisions of this
Agreement which have a material adverse effect on Supplier or Buyer, the Parties
agree to negotiate in good faith those amendments to the Agreement reasonably
necessary to preserve the bargain between the Parties. If the Parties fail to
negotiate mutually acceptable amendments to this Agreement within sixty (60)
days of such action by the FERC or other Governmental Authority, either Party
may terminate the Agreement after first notifying the other Party in writing at
least ten (10) Business Days prior to the termination date; provided that
neither Party may exercise a right of termination pursuant to this Section 2.2.2
after the Asset Sale Closing.

        
2.2.3    This Agreement may be terminated with the mutual agreement of
the Parties.

        
2.2.4    Any termination of this Agreement pursuant to this Section 2
shall not take effect until FERC either authorizes the termination or accepts a
written notice of termination.

     2.3    Effect of Termination.


        
2.3.1    Adjustment of TPPA Amount. If the Effective Date of this
Agreement is before June 1, 2001, the TPPA Amount shall be adjusted to equal (1)
the TPPA Amount multiplied by (2) 100% plus the sum of the monthly adjustments
from Exhibit J for each month or portion thereof between the Effective Date and
June 1, 2001. An example calculation is shown on Exhibit J. 


              If the Effective Date of this Agreement is
              after June 1, 2001, the TPPA Amount shall be adjusted to equal (1)
              the TPPA Amount multiplied by (2) 100% minus the sum of the
              monthly adjustments from Exhibit J for each month or portion
              thereof between June 1, 2001 and the Effective Date. An example
              calculation is shown on Exhibit J.

              If this Agreement is terminated on or before
              December 31, 2002 (or March 1, 2003, if Buyer exercises its rights
              under Section 2.1.2 of this Agreement), Supplier shall pay to
              Buyer an amount, in accordance with the provisions of Section 7,
              equal to the TPPA Amount which existed before any adjustment in
              accordance with the first or second paragraph of this Section
              2.3.1, multiplied by the sum of: (x) the total monthly adjustments
              for every month or portion thereof between the date on which this
              Agreement is terminated and December 31, 2002; and, (y) the total
              monthly adjustments for every month or portion thereof between
              either (i) January 1, 2003 and March 1, 2003, or (ii) if this
              Agreement is terminated after January 1, 2003, the termination
              date of this Agreement and March 1, 2003. An example calculation
              is shown on Exhibit J.



       
2.3.2    Any default or termination of this Agreement shall not
release either Party from any applicable provisions of this Agreement with
respect to:

            
2.3.2.1    The payment of liquidated damages pursuant to Sections 4.2,
12, 17, 18, or 21.

            
2.3.2.2    Indemnity obligations contained in Section 10, to the extent
of the statute of limitations period applicable to any third party claim.

            
2.3.2.3    Limitation of liability provisions contained in Section 11.

            
2.3.2.4    Payment of any unpaid amounts in respect of obligations
arising prior to or resulting from termination.

            
2.3.2.5    For a period of one (1) year after the termination date, the
right to raise a payment dispute and the resolution thereof pursuant to Section
13.

            
2.3.2 6    The resolution of any dispute submitted pursuant to Section
13 prior to, or resulting from, termination.

 3.    SECURITY

     3.1    Supplier Certification; Guarantee. As a condition of
Buyer's execution of, and continuing compliance with, this Agreement, Supplier
shall at Supplier's option comply with the provisions of either Section 3.1.1 or
Section 3.1.2.

        
3.1.1    Supplier Certification. Supplier shall (a) provide a
certificate from a duly authorized corporate officer of Supplier certifying
that, as of the Effective Date, Supplier has a credit rating equal to or higher
than the Minimum Investment Grade Rating; or (b) post a letter of credit in a
form reasonably acceptable to Buyer in the amount of the Credit Amount from a
financial institution with each of: (i) a credit rating of A2 or better from
Moody's Investors Service, Inc., (ii) a credit rating of A or better from
Standard & Poor's Corporation, and (iii) a Minimum Tangible Net Worth
("MTNW") of one (1) billion dollars.

        
3.1.2    Guarantee. In the alternative to the provisions of
Section 3.1.1, the Supplier may provide a corporate guarantee, in form and
substance as set forth in Exhibit H, made by an entity (the
"Guarantor") that:

            
3.1.2.1    has a credit rating equal to or higher than the Minimum
Investment Grade Rating, together with a certificate from a duly authorized
corporate officer of such Guarantor certifying that, as of the Effective Date,
such Guarantor has a credit rating equal to or higher than the Minimum
Investment Grade Rating; or

            
3.1.2.2    has a MTNW of no less than one (1) billion dollars, together
with a certificate from a duly authorized corporate officer of such Guarantor
certifying that, as of the Effective Date, such Guarantor has a MTNW of no less
than one (1) billion dollars; or

            
3.1.2.3    posts a letter of credit in a form reasonably acceptable to
Buyer in the amount of the Credit Amount from a financial institution with each
of: (i) a credit rating of A2 or better from Moody's Investors Service, Inc.,
(ii) a credit rating of A or better from Standard & Poor's Corporation, and
(iii) a Minimum Tangible Net Worth ("MTNW") of one (1) billion
dollars.

     3.2    Compliance.

        
3.2.1    Reporting. If at any time during the term of this
Agreement, Standard & Poor's Corporation, Moody's Investors Service, Inc. or
another nationally recognized firm downgrades the credit rating of Supplier, the
Guarantor, or the financial institution that issued the letter of credit, as
applicable, then Supplier shall provide Buyer with written notice of such change
of circumstance within two (2) Business Days of any such change. In the event
such a downgrade also constitutes an Event of Default pursuant to Section 17,
the requirements of this Section 3.2.1 are in addition to, and not in lieu of,
the requirements of Section 17.

 4.    SUPPLY SERVICE

     4.1    Obligations of the Parties.

        
4.1.1    Supply Amount. Supplier shall be required to provide the
Supply Amount in any Dispatch Hour. As provided in Section 5.1, Buyer shall make
reasonable efforts to ensure that the Supply Amount is no greater than necessary
to satisfy Buyer's TRR.

            
4.1.1.1    With the Buyer's prior consent, not to be unreasonably
withheld or delayed, Supplier shall be entitled to generate or otherwise procure
the Supply Amount from sources other than the Asset Bundle.

            
4.1.1.2    Supplier shall deliver the Supply Amount to Buyer during the
Dispatch Hour on a continuous basis at the Point(s) of Delivery and shall
schedule the Supply Amount in accordance with the Buyer's OATT or the ISA's OATT,
as applicable.

            
4.1.1.3    The Buyer at its sole discretion shall designate the
allocation of the Supply Amount between Energy and Ancillary Services in
accordance with the notification provisions of Section 5. 


  
                          4.1.1.3.1 The Parties recognize
                          that operation of the Asset Bundle is subject to, and
                          thus the Supply Amount at times may be limited by, the
                          operational parameters of the Asset Bundle. The
                          Parties further recognize that the consolidation of
                          two or more generating units into an Asset Bundle
                          precludes contractual provisions addressing such
                          operational parameters in a matter normally applied to
                          Energy purchases from specified generating units.
                          Consequently, Supplier will have the right to raise
                          concerns regarding the effect of such operational
                          parameters upon Buyer's day-ahead requests, and Buyer
                          will make good faith efforts to alleviate Supplier's
                          concerns. 

                          4.1.1.3.2 The Parties further
                          recognize that the Asset Bundle also is subject to the
                          contractual and operating constraints set forth in
                          Exhibit M.

  



       
4.1.2    Minimum Annual Energy Take. The Buyer shall accept a
minimum annual energy take during each Contract Year. The Minimum Annual Energy
Take shall be set forth on Exhibit A.

            
4.1.2.1    Buyer's Obligation to Take. If Buyer is unwilling to
accept the Minimum Annual Energy Take for any Contract Year, as may be adjusted
pursuant to Section 4.1.2.2, the difference (in MWh) between the Supply Amount
of Energy (including consideration for Energy that would have been taken but was
unavailable due to Permitted Deratings or Force Majeure, as well as the Total
Amount of Energy Replaced) and the Minimum Annual Energy Take shall be billed at
the Price Ceiling of Energy less the Price Floor of Energy. An example of the
monthly determination of the amount of Energy to be credited against the Minimum
Annual Energy Take is shown on Exhibit L.

            
4.1.2.2    Adjustments to Minimum Annual Energy Take. Buyer shall
have the right to reduce the Minimum Annual Energy Take if the number of
customers taking electric service from Buyer falls below the number of customers
on December 31, 2000. Adjustments will be applicable, on a pro rata basis, on
the first (1st) day of the month immediately following Supplier's
receipt of Buyer's notice of adjustment. Buyer shall provide supporting data in
reasonable detail to support its calculations. An example of the calculation of
a revised Minimum Annual Energy Take is shown on Exhibit K.

        
4.1.3    Minimum Hourly Energy Take. The Buyer shall accept a
Minimum Hourly Energy Take for any Dispatch Hour if the Supply Amount, or a
portion thereof, is provided to Buyer from the Asset Bundle. The Minimum Hourly
Energy Take is stated in Exhibit A.

            
4.1.3.1    Buyer's Obligation to Take. If Buyer is unwilling to
accept the Minimum Hourly Energy Take, the difference (in Mwh) between the
Supply Amount of Energy (including consideration for Energy that would have been
taken but was unavailable due to Permitted Deratings or Force Majeure, as well
as the Total Amount of Energy Replaced) and Minimum Hourly Energy Take shall be
billed at the Price Ceiling of Energy less the Price Floor of Energy.

        
4.1.4    Supplier Rights to Output. Supplier may sell to others
any portion of the Asset Bundle Capacity in excess of the Supply Amount.

        
4.1.5    Point(s) of Delivery. Supplier shall deliver, and Buyer
shall take delivery of, the Supply Amount of Energy at the Point(s) of Delivery.
Subject to Section 4.1.6.2, Supplier shall be responsible for all costs
associated with delivery of the Supply Amount of Energy to the Point(s) of
Delivery.

        
4.1.6    Alternative Points of Delivery. For any Dispatch Hour,
either Party may designate one or more alternative Points of Delivery, subject
to the other Party's prior approval and consistent with Buyer's OATT or the
ISA's OATT, as applicable, such approval not to be unreasonably withheld or
delayed.

            
4.1.6.1    If Supplier has designated an alternative Point of Delivery,
Supplier shall be responsible for all costs of delivery to such alternative
Point of Delivery.

           
4.1.6.2    If Buyer has designated an alternative Point of Delivery,
Buyer shall be responsible for all costs of delivery to such alternative Point
of Delivery.

            
4.1.7    Fuel. Buyer shall have no responsibility for any fuel
procurement or fuel transportation costs or activities associated with the Asset
Bundle during the term of this Agreement.

            
4.1.8    Resale. Except as provided in the next sentence, the
Supply Amount may be resold by Buyer only as necessary to satisfy Buyer's TRR.
If, after submitting the day-ahead request of the Supply Amount pursuant to
Section 5.1, the Buyer determines that the scheduled Supply Amount, together
with purchases scheduled on a day-ahead basis under Buyer's other Transitional
Power Purchase Agreements, exceeds Buyer's most current projected TRR, then the
Buyer also shall resell at wholesale that amount of Energy in excess of Buyer's
actual TRR as necessary to balance its load and resources.

            
4.1.9    Right to Review. Buyer and Supplier each shall have the
right to review during normal business hours the relevant books and records of
the other Party to confirm the accuracy of such as it pertains to transactions
under this Agreement. The review shall be consistent with standard business
practices and shall follow reasonable notice to the other Party. Reasonable
notice for a review of the previous month's records shall be at least a
twenty-four (24) hour period from a Business Day to a subsequent Business Day.
If a review is requested of other than the previous month's records, then notice
of that request shall be provided with a minimum of seven (7) calendar days
written notice by the requesting Party. The notice shall specify the period to
be covered by the review. The Party providing records can make reasonable
requests that the receiving Party keep the records confidential, and the
receiving Party shall take reasonable steps to accommodate such requests.

    4.2    Liquidated Damages.

            
4.2.1    If the Delivered Amount of Energy is less than the Supply
Amount of Energy in any Dispatch Hour during a month, and Replacement Costs
computed in respect of such month are greater than zero, then Supplier shall
reimburse Buyer for such Replacement Costs. If Supplier's schedule of Ancillary
Services is less than the Supply Amount of Ancillary Services in any Dispatch
Hour during a month, Supplier shall reimburse Buyer for such Replacement Costs
for the difference between Supplier's schedule and the Supply Amount of
Ancillary Services. An example of the methodology used to calculate Replacement
Costs is provided in Exhibit D.

            
4.2.2    Supplier also shall be responsible for any costs incurred by
Buyer associated with a violation of reliability criteria (including but not
limited to imbalance costs or penalties) due to a deviation between the Supply
Amount and Delivered Amount.

            
4.2.3    The Parties recognize and agree that the payment of such
amounts by Supplier pursuant to this Section 4.2 is an appropriate remedy in the
event of such a failure and that any such payment does not constitute a
forfeiture or penalty of any kind, but rather constitutes actual costs to Buyer
under the terms of this Agreement.

     4.3    Supplier Operating Representative. Supplier shall provide
and maintain a twenty-four (24) hour seven (7) day per week communication link
with Buyer's control center and with Buyer's schedulers. Supplier's Operating
Representatives shall be available to address and make decisions on all
operational matters under this Agreement on a twenty-four (24) hour seven (7)
day per week basis.

 5.    NOTIFICATION

     5.1    Scheduling Notification. Buyer shall provide Supplier
with a day-ahead request of the Supply Amount one (1) hour prior to when
day-ahead bids are due to the CALPX. Buyer shall make reasonable efforts to
ensure that the day-ahead request of the Supply Amount is no greater than that
amount then projected to be necessary to satisfy Buyer's TRR. In addition, for
each day-ahead request, the change in the Supply Amount from one (1) hour to the
next hour shall be no greater than the ramping capability of the units within
the Asset Bundle as shown in Exhibit A.

     5.2    Availability Notification.

        
5.2.1    No later than 5:00 a.m. (Pacific Time) of each day, Supplier
shall deliver to Buyer an Availability Notice in the form set forth in Exhibit
G.

        
5.2.2    Availability Notices shall provide, for the ninety-six (96)
hour period starting at 6:00 a.m. (Pacific Time) that day, Supplier's hourly
projection of the unavailability or derating ("Derating") of the Asset
Bundle compared to the Asset Bundle Capacity figures stated for each unit in
Exhibit A. Each Availability Notice also shall contain, as applicable:


  
                (a) the units which are subject to a
                Derating;

                (b) the magnitude of the Derating;

                (c) the hours during which the Derating is
                expected to apply;

                (d) the cause of the Derating;

                (e) the extent, if any, to which the Derating
                is attributable to a Permitted

                Derating; and

                (f) the projected Asset Bundle Capacity for
                each unit during the period covered by the Availability Notice,
                pursuant to Section 5.2.4 below.

  



           
5.2.3    If and to the extent a Derating is the result of one or more
of the following causes, it shall be a Permitted Derating:


  
                (a) approved planned outages pursuant to
                Section 21;

                (b) response to an Emergency Condition as
                described in Section 20; or

                (c) subject to the limitations expressed in
                Section 12.5, a Force Majeure event.

  



           
5.2.4    In respect of any Dispatch Hour, the Asset Bundle Capacity of
each unit shall be the Asset Bundle Capacity figure stated in Exhibit A minus
any Permitted Derating applicable during such hour.

            
5.2.5    Neither the Asset Bundle Capacity nor the Supply Amount shall
be reduced by Deratings which are not Permitted Deratings. Supplier shall be
responsible for all Replacement Costs, pursuant to Section 4.2.1, caused by
Deratings that are not Permitted Deratings.

 6.    PRICING OF ENERGY AND ANCILLARY SERVICES

     6.1    Overview. The price of Energy paid by Buyer to Supplier
shall be based upon a designated hourly market price, subject to monthly floor,
monthly ceiling, and annual true-up provisions. The Price Floor of Energy will
ensure that Supplier will receive an average price for Energy for each month
which is not less than the price stated in Exhibit B. The Price Ceiling of
Energy provision provides that the average price of Energy paid to Supplier each
month and for each year shall not exceed the price stated in Exhibit B.

     6.2    Price of Energy.

        
6.2.1    Market Price of Energy. In respect of any Dispatch Hour,
the designated Market Price of Energy shall be the North of Path 15 ("NP
15") hourly market-clearing price in the day-ahead market from the CALPX as
published at the following Web Site (or its successor web site) http://www.calpx.com/prices/index_prices_dayahead_trading.html.
Should this hourly market in the day-ahead market not exist for the entire term,
the Parties shall agree upon a similar market price index.

       
6.2.2    Price Floor of Energy. The Price Floor of Energy is
stated in Exhibit B and shall not change during the term of this Agreement.

        
6.2.3    Price Ceiling of Energy. The Price Ceiling of Energy is
stated in Exhibit B and shall not change during the term of this Agreement.

     6.3    Pricing of Ancillary Services. The price of the capacity
component of Ancillary Services is stated in Exhibit B. The price of Ancillary
Services shall not change during the term of the Agreement. Supplier shall make
available to Buyer and Buyer shall offer to pass through the Energy portion of
Ancillary Services with respect to the Supply Amount to the ISA, or Control Area
Operator, at the Price Ceiling of Energy (plus expected direct transaction
costs). The net proceeds shall be credited to the Supplier pursuant to Section
7.

     6.4    Price Revisions. The Parties waive any and all rights to
seek to revise the provisions of this Agreement, including the prices stated,
pursuant to Sections 205 and/or 206 of the Federal Power Act.

     6.5    Recourse Service. Buyer agrees not to purchase Recourse
Service during the term of the Agreement. However, Buyer is permitted to
purchase Negotiated Service during the term of the Agreement.

 7.    INVOICING AND PAYMENTS

     7.1    Invoicing and Payment. On or before the tenth (10th)
day of each month, Supplier shall send to Buyer an invoice setting forth the
Supply Amount, Delivered Amount, the Market Price of Energy pursuant to Section
6.2.1 for each Dispatch Hour in the previous month, any amount due in accordance
with Section 7.13 and the total due from Buyer. The invoice shall be calculated
based upon data available to Supplier and shall be in accordance with this
Section 7 and Exhibit C. Buyer shall promptly notify Supplier if Buyer in good
faith disputes any portion of the invoice, stating in reasonable detail the
reason for the dispute.

     7.2    Monthly Invoice Calculation. On each monthly invoice,
Supplier shall calculate the following amounts:

        
7.2.1    The Delivered Amount in respect of each Dispatch Hour
multiplied by the corresponding Market Price of Energy pursuant to Section
6.2.1, summed over the billing period;

        
7.2.2    Sum of the Delivered Amounts in respect of all Dispatch Hours
of the billing period multiplied by the Price Ceiling of Energy;

        
7.2.3    Sum of the Delivered Amounts in respect of all Dispatch Hours
of the billing period multiplied by the Price Floor of Energy;

        
7.2.4    For each Dispatch Hour of the billing period, the shortfall,
if any, between the Supply Amount and the Delivered Amount (and in the case of
Ancillary Services the shortfall between the Supply Amount of Ancillary Services
and Supplier's schedule of Ancillary Services);

        
7.2.5    The Supply Amount of Ancillary Services for each dispatch
hour multiplied by the price of Ancillary Services as stated in Exhibit B; and

        
7.2.6    The Delivered Amount of Energy related to Ancillary Services
for each dispatch hour multiplied by the Price Ceiling of Energy as stated in
Exhibit B.

        
7.2.7    If applicable, any amount to be calculated in accordance with
Section 7.13.

     7.3    Supplier's Invoice. Supplier will invoice the lesser of
the amounts calculated in Sections 7.2.1 and 7.2.2, provided that if the amount
calculated in Section 7.2.1 is less than the amount calculated in Section 7.2.3,
Supplier shall invoice Buyer the amount calculated in Section 7.2.3. Supplier
shall also include in its invoice the amounts calculated in Sections 7.2.5,
7.2.6 and 7.2.7. If the Delivered Amount exceeds the Supply Amount, Buyer shall
not be obligated to pay for the excess amount. Buyer shall pay Supplier for the
amounts invoiced pursuant to Section 7.2.6 upon Buyer's receipt of payment from
ISA or Control Area Operator. Examples of this monthly invoice calculation (and
annual true-up process) are contained in Exhibit C.

     7.4    Buyer's Invoice. In the event any shortfall occurs
pursuant to Section 7.2.4 or payment is due to Buyer pursuant to Section 7.13,
Buyer shall within ten (10) Business Days of receipt of Supplier's invoice
deliver to Supplier a Buyer's invoice detailing any Replacement Costs or other
payment due. Buyer shall provide supporting data in reasonable detail to support
its calculations of Replacement Costs. Supplier shall promptly notify Buyer if
Supplier in good faith disputes any portion of the invoice, stating in
reasonable detail the reason for the dispute. If the Buyer's invoice results in
an amount due from Supplier to Buyer, Buyer may offset such amount from its
payment of Supplier's corresponding invoice. 

                   
        Buyer shall have the right to adjust the invoices
        issued in accordance with this Section 7.4 if Buyer incurs Replacement
        Costs that were not known when earlier invoices were issued. Adjusted
        invoices shall be issued within thirty (30) days of the date on which
        the additional Replacement Costs become known. Buyer shall provide
        supporting data in reasonable detail to support its calculations of
        Replacement Costs. Supplier shall promptly notify Buyer if Supplier in
        good faith disputes any portion of the invoice, stating in reasonable
        detail the reason for the dispute. If the Buyer's adjusted invoice
        results in an amount due from Supplier to Buyer, Buyer may offset such
        amount from its payment of Supplier's corresponding invoice.

    7.5    Annual True-Up Mechanism for Energy.

        
7.5.1    The annual true-up mechanism will provide adjustments among
the Parties with respect to each Contract Year in the following scenarios: 


  
                (a) If (i) the Price Ceiling of Energy
                multiplied by the hourly Delivered Amount of Energy summed over
                the Contract Year is less than or equal to (ii) the Market Price
                of Energy for each hour pursuant to Section 6.2.1 multiplied by
                the Delivered Amount of Energy for each hour during the Contract
                Year, Supplier shall subtract (x) the amount invoiced by
                Supplier for Energy pursuant to Section 7.3 summed of over the
                Contract Year from (y) the Price Ceiling of Energy multiplied by
                the hourly Delivered Amount of Energy summed over the Contract
                Year. If the difference calculated in accordance with the
                preceding sentence is greater than or equal to zero, Buyer shall
                pay the difference to Supplier. If the difference is less than
                zero, Supplier shall refund the difference to Buyer.

                (b) If (i) the Price Ceiling of Energy
                multiplied by the hourly Delivered Amount of Energy summed over
                the Contract Year is greater than or equal to (ii) the Market
                Price of Energy for each hour pursuant to Section 6.2.1
                multiplied by the Delivered Amount of Energy for each hour
                during the Contract Year, Supplier shall subtract (x) the amount
                invoiced by Supplier for Energy pursuant to Section 7.3 summed
                of over the Contract Year from (y) the Market Price of Energy
                multiplied by the hourly Delivered Amount of Energy summed over
                the Contract Year. If the difference calculated in accordance
                with the preceding sentence is greater than or equal to zero,
                Buyer shall pay the difference to Supplier. If the difference is
                less than zero, Supplier shall refund the difference to Buyer.

  




  
                (c) If Buyer incurred Replacement Costs for
                energy during the Contract Year, Supplier shall multiply the
                Total Amount of Energy Replaced during the Contract Year by the
                Average Cost of Delivered Energy after true-up as determined in
                accordance with Section 7.5.1 (a) or 7.5.1 (b). If the amount so
                obtained is greater than the sum of the monthly Gross
                Replacement Costs of Energy from Buyer's Invoices for the
                Contract Year, the Adjusted Replacement Cost of Energy for the
                Contract Year shall be zero. If the amount so obtained is less
                than the sum of the monthly Gross Replacement Costs of Energy
                from Buyer's Invoices for the Contract Year, the Adjusted
                Replacement Cost of Energy for the Contract Year shall be the
                sum of the monthly Gross Replacement Costs of Energy less the
                amount obtained in accordance with the first sentence of this
                Section 7.5.1(c).

                If the Adjusted Replacement Cost of Energy is
                greater than the sum of the monthly Invoiced Replacement Costs
                of Energy from Buyer's Invoices for the Contract Year, Supplier
                shall pay the difference to Buyer. If the sum of the monthly
                Invoiced Replacement costs of Energy is greater than the
                Adjusted Replacement Cost of Energy, Buyer shall pay the
                difference to Seller.

  



       
7.5.2    True-up adjustments will be calculated by Supplier within
twenty (20) days after each Contract Year. Examples of the true-up calculations
and invoice form are set forth in Exhibit E. Interest shall be calculated
pursuant to 18 CFR Section 35.19a and shall be included in the true-up invoice.
Invoices for true-up adjustments shall be submitted by Supplier within thirty
(30) days after the end of the Contract Year. Payments for such invoices shall
be due from Buyer thirty (30) days from receipt of the true-up invoice.

     7.6    Invoice Disagreements. Should there be a good faith
dispute over any invoice, the Parties shall promptly seek resolution pursuant to
Section 13. Pending resolution of the invoice dispute, payment shall be made or
offsets or credits taken, as applicable, based upon the undisputed portion of
the invoice.

     7.7    Adjustments. Upon resolution of the dispute, the
prevailing Party shall be entitled to receive the disputed amount, as finally
determined to be payable along with interest (calculated pursuant to 18 C.F.R.
Section 35.19a through the date of payment. No invoice (or payment covered
thereby) shall be subject to adjustment unless notice or request for adjustment
is given within one (1) year of the date payment thereunder was due.

     7.8    Method of Payment. Subject to Sections 7.3, 7.6 and 7.7,
Buyer shall remit all amounts due by wire or electronic fund transfer, pursuant
to Supplier's invoice instructions, no later than thirty (30) days after receipt
of the invoice.

     7.9    Overdue Payments. Overdue payments shall bear interest
from and including, the due date to the date of payment on the unpaid portion
calculated pursuant to 18 C.F.R. Section 35.19a.

    7.10    Buyer Right to Offset. Buyer shall have the right to
offset any amounts Supplier owes to Buyer, including Replacement Costs (except
for such amounts disputed in good faith by Supplier), against the amounts owed
by Buyer to Supplier.

     7.11    Taxes. Each Party shall pay ad valorem and other taxes
attributed to its facilities and services provided. Supplier shall not include
any taxes of any kind in its invoices to Buyer. The prices of Energy and
Ancillary Services shall not change during the term of this Agreement as a
result of any changes in local, state or federal taxes, fees or levies.

     7.12    Late Invoices. If either Party submits an invoice outside
of the time deadlines set forth herein, that Party shall not forfeit its rights
to collect the amounts due thereunder, provided that such invoice is no more
than six (6) months late, and provided that changes to invoices remain subject
to the deadline in Section 7.7.

     7.13    Early Termination. Notwithstanding any other provision
herein, in the event that this Agreement is terminated before December 31, 2002
(or March 1, 2003 if Buyer exercises its rights under Section 2.1.2), and as a
result of such termination Buyer is entitled to a payment in accordance with
Section 2.3.1, Supplier shall include an amount calculated in accordance with
Section 2.3.1 and Exhibit J, to be paid by Supplier to Buyer in the next monthly
invoice submitted to Buyer following such termination.

 8.    REGULATORY APPROVALS

     8.1    This Agreement will be filed with the FERC and any other
appropriate regulatory agencies by the appropriate Party as may be required.

 9.    COMPLIANCE

     9.1    Each Party shall comply with all relevant Laws and shall, at
its sole expense, maintain in full force and effect all relevant permits,
authorizations, licenses, and other authorizations material to the maintenance
of facilities and the performance of obligations under this Agreement.

     9.2    Each Party and its representatives shall comply with all
relevant requirements of any authorized Control Area Operator, ISA, and/or EDU
to ensure the safety of its employees and the public, and to ensure electric
system reliability and integrity, material to the performance of this Agreement.

     9.3    Buyer and Supplier shall perform or cause to be performed,
their obligations under this Agreement in all material respects in accordance
with Good Utility Practices.

10.    INDEMNIFICATION

     10.1    To the fullest extent permitted by law, a Party to this
Agreement ("the Indemnifying Party") shall indemnify, defend and hold
harmless the other Party, its parent, affiliates, and successors and agents
(each an "Indemnified Party") from and against any and all claims,
demands, suits, obligations, payments, liabilities, costs, judgments, damages,
losses or expenses asserted by third parties against an Indemnified Party and
arising out of, relating to, or resulting from the Indemnifying Party's breach
of, or the negligent performance of its obligations under this Agreement.

        
10.1.1    Such indemnity shall also extend to actual courts costs,
attorneys' fees, expenses and other liabilities incurred in the defense of any
claim, action or proceeding, including negotiation, settlement, defense and
appeals, to which this indemnification obligation applies. In furtherance of the
foregoing indemnification and not by way of limitation thereof, the Indemnifying
Party hereby waives any defense it otherwise might have against the Indemnified
Party under applicable workers' compensation laws.

        
10.1.2    In claims against any Indemnified Party by an agent of the
Indemnifying Party, or anyone directly or indirectly employed by them or anyone
for whose acts they may be liable, the indemnification obligation under this
Section 10 shall not be limited by a limitation on amount or type of damages,
compensation or benefits payable by or for the Indemnifying Party or a
subcontractor under workers' or workmen's compensation acts, disability benefit
acts or other employee benefit acts.

        
10.1.3    Such indemnity shall also extend to all costs and expenses
incurred by the Indemnified Party in any action or proceeding to enforce the
provisions of this Agreement, but only if and to the extent the Indemnified
Party prevails in such action or proceeding.

     10.2    No Negation of Existing Indemnities; Survival. Each
Party's indemnity obligations hereunder shall not be construed to negate,
abridge or reduce other rights or obligations or indemnity which would otherwise
exist at law or equity. The obligations contained herein shall survive any
termination, cancellation, or suspension of this Agreement to the extent that
any third party claim is commenced during the applicable statute of limitations
period.

     10.3    Indemnification Procedures.

        
10.3.1    Any Party seeking indemnification under this Agreement shall
give the other Party notice of such claim promptly but in any event on or before
thirty (30) days after the Party's actual knowledge of such claim or action.
Such notice shall describe the claim in reasonable detail, and shall indicate
the amount (estimated if necessary) of the claim that has been, or may be
sustained by, said Party. To the extent that the other Party will have been
actually and materially prejudiced as a result of the failure to provide such
notice, such notice will be a condition precedent to any liability of the other
Party under the provisions for indemnification contained in this Agreement.

        
10.3.2    In any action or proceeding brought against an Indemnified
Party by reason of any claim indemnifiable hereunder, the Indemnifying Party
may, at its sole option, elect to assume the defense at the Indemnifying Party's
expense, and shall have the right to control the defense thereof and to
determine the settlement or compromise of any such action or proceeding.
Notwithstanding the foregoing, an Indemnified Party shall in all cases be
entitled to control its defense in any action if it: 


                (i) may result in injunctions or other
                equitable remedies in respect of the Indemnified Party which
                would affect its business or operations in any materially
                adverse manner;

                (ii) may result in material liabilities which
                may not be fully indemnified hereunder; or

                (iii) may have a significant adverse impact
                on the business or the financial condition of the Indemnified
                Party (including a material adverse effect on the tax
                liabilities, earnings or ongoing business relationships of the
                Indemnified Party) even if the Indemnifying Party pays all
                indemnification amounts in full.



       
10.3.3    Subject to Section 10.3.2, neither Party may settle or
compromise any claim for which indemnification is sought under this Agreement
without the prior consent of the other Party; provided, however, said consent
shall not be unreasonably withheld or delayed.

 11.    LIMITATION OF LIABILITY

     11.1    Responsibility for Damages: Except as otherwise provided
herein or to the extent of the other Party's negligence or willful misconduct,
each Party shall be responsible for all physical damage to or destruction of the
property, equipment and/or facilities owned by it and its affiliates and any
physical injury or death to natural Persons resulting therefrom, regardless of
who brings the claim and regardless of who caused the damage, and shall not seek
recovery or reimbursement from the other Party for such damage; provided, that
in any such case the Parties will exercise Due Diligence to remove the cause of
any disability at the earliest practicable time.

     11.2    No Consequential Damages: To the fullest extent permitted
by law and notwithstanding other provisions of this Agreement, in no event shall
a Party, or any of its Agents, be liable to the other Party, whether in
contract, warranty, tort, negligence, strict liability, or otherwise, for
special, indirect, incidental, multiple, consequential (including but not
limited to lost profits or revenues and lost business opportunities), or
punitive damages related to or resulting from performance or nonperformance of
this Agreement or any activity associated with or arising out of this Agreement.
For purposes of clarification, Replacement Costs shall not be considered
consequential or incidental damages under this Section 11.2. In addition, this
limitation on liability shall not apply with respect to claims pursuant to
Section 10 hereof.

     11.3    Survival: The provisions of this Section 11 shall survive
any termination, cancellation, or suspension of this Agreement.

 12.    FORCE MAJEURE

     12.1    An event of "Force Majeure" shall be defined as any
interruption or failure of service or deficiency in the quality or quantity of
service or any other failure by a Party to perform any of its obligations
hereunder to the extent such failure occurs without fault or negligence on the
part of that Party and is caused by factors beyond that Party's reasonable
control, which by the exercise of reasonable diligence that Party is unable to
prevent, avoid, mitigate or overcome, including: 


              (i) acts of God or the public enemy, such as
              storms, flood, lightning, and earthquakes,

              (ii) failure, threat of failure, or unscheduled
              withdrawal of facilities from operation for maintenance or repair,
              and including unscheduled transmission and distribution outages,

              (iii) sabotage of facilities and equipment,

              (iv) civil disturbance,

              (v) strike or labor dispute,

              (vi) action or inaction of a court or public
              authority, or

              (vii) any other cause of similar nature beyond
              the reasonable control of that Party.



    12.2    Economic hardship of either Party shall not constitute Force
Majeure under this Agreement. Notwithstanding this, if Buyer suffers an event of
Force Majeure it shall be relieved of its obligation to take delivery of, or
otherwise pay for, Energy and Ancillary Services under this Agreement for the
duration of the event of Force Majeure; provided, however, that Buyer shall not
be relieved of its obligation to pay for any Energy or Ancillary Services
provided by Supplier under this Agreement prior to the event of Force Majeure.
In addition, if Buyer is unable to have Energy and Ancillary Services delivered
from the Point(s) of Delivery to its service territory due to an outage on the
Transmission System, that shall be considered a Force Majeure event and shall
relieve Buyer of performance for the extent of the event.

     12.3    In the event of a Force Majeure, neither Party shall be
considered in default under this Agreement or responsible to the other Party in
tort, strict liability, contract or other legal theory for damages of any
description, and affected performance obligations shall be extended by a period
equal to the term of the resultant delay, but in no event shall exceed the term
of the Agreement, provided that the Party relying on a claim of Force Majeure: 



              (i) provides prompt written notice of such
              Force Majeure event to the other Party, giving an estimate of its
              expected duration and the probable impact on the performance of
              its obligations hereunder;

              (ii) exercises all reasonable efforts to
              continue to perform its obligations under this Agreement;

              (iii) expeditiously takes action to correct or
              cure the event or condition excusing performance so that the
              suspension of performance is no greater in scope and no longer in
              duration than is dictated by the problem; provided, however, that
              settlement of strikes or other labor disputes will be completely
              within the sole discretion of the Party affected by such strike or
              labor dispute;

              (iv) exercises all reasonable efforts to
              mitigate or limit damages to the other Party; and

              (v) provides prompt notice to the other Party
              of the cessation of the event or condition giving rise to its
              excuse from performance.



    12.4    Notwithstanding the above provisions, a Force Majeure event
shall excuse Supplier from its obligation to deliver the Supply Amount pursuant
to Section 4 of this Agreement only for the first twenty-four (24) hours of the
Force Majeure event, provided that the total amount of energy excused in
accordance with this Section 12.4 during any Contract Year shall not exceed the
Limit on Excused Energy set forth in Exhibit A. After such twenty-four (24) hour
period, Supplier must either deliver the Supply Amount at the Point(s) of
Delivery or pay liquidated damages pursuant to Section 4.2 of this Agreement.

     12.5    If Supplier has notified Buyer of an event of Force Majeure,
and if Supplier so requests, Buyer will attempt to replace the Supply Amount
that is not excused in accordance with Section 12.4 with Energy or Ancillary
Services from another Asset Bundle. However, Buyer's inability to acquire such
replacement Energy or Ancillary Services shall not excuse Supplier from
Supplier's obligation to deliver the Supply Amount not otherwise excused in
accordance with Section 12.4

 13.    DISPUTES

     13.1    Any action, claim or dispute which either Party may have
against the other arising out of or relating to this Agreement or the
transactions contemplated hereunder, or the breach, termination or validity
thereof (any such claim or dispute, a "Dispute") shall be submitted in
writing to the other Party. The written submission of any Dispute shall include
a concise statement of the question or issue in dispute together with a
statement listing the relevant facts and documentation that support the claim.

     13.2    The Parties agree to cooperate in good faith to expedite the
resolution of any Dispute. Pending resolution of a Dispute, the Parties shall
proceed diligently with the performance of their obligations under this
Agreement.

     13.3    The Parties shall first attempt in good faith to resolve any
Dispute through informal negotiations by the Contract Representatives. In the
event that the Contract Representatives are unable to satisfactorily resolve the
Dispute within thirty (30) days from the receipt of notice of the Dispute,
either Party may by written notice to the other Party refer the Dispute to its
respective senior management for resolution as promptly as practicable. If the
Parties' senior management are unable to resolve the Dispute within forty-five
(45) days from the date of such referral, thereafter the Parties may agree in
writing to extend the time period of such senior management negotiations. In the
event the Parties' senior management do not resolve the dispute within the
prescribed or extended time period, either Party may initiate arbitration
through the serving and filing of a demand for arbitration and the Parties
expressly agree that arbitration in accordance with this Section 13 shall be the
exclusive means to further resolve any Dispute and hereby irrevocably waive
their right to a jury trial with respect to any Dispute, provided that at any
time:

        
13.3.1    A request made by a Party for provisional remedies requesting
preservation of the Parties' respective rights and obligations under the
Agreement may be resolved by a court of law located in the County of the
principal place of business of Buyer.

        
13.3.2    Nothing in this Agreement shall preclude, or be construed to
preclude, any Party from filing a petition or complaint with the FERC or PUCN
with respect to any arbitrable Dispute over which said agency has jurisdiction.
In such case, the other Party may request the FERC or PUCN, as applicable, to
reject or to waive jurisdiction. If jurisdiction is rejected or waived with
respect to all or a portion of the Dispute, the portion of the Dispute not so
accepted by the FERC or PUCN, as applicable, shall be resolved through
arbitration in accordance with this Agreement. To the extent that the FERC or
PUCN, as applicable, asserts or accepts jurisdiction over the Dispute, the
decision, finding of fact or order of FERC shall be final and binding, subject
to judicial review under the Federal Power Act or Nevada Revised Statutes and
subject to the provisions of Section 2.2.2. Any arbitration proceedings that may
have commenced with respect to the Dispute prior to the assertion or acceptance
of jurisdiction by the FERC or PUCN, as applicable, shall be terminated to the
extent the FERC or PUCN accepts or asserts jurisdiction over such Dispute.

     13.4    Unless otherwise agreed by the Parties, any arbitration
initiated under this Agreement shall be conducted in accordance with the
following:

        
13.4.1    Arbitrations shall be held within the County of the principal
place of business of Buyer.

        
13.4.2    Except as otherwise modified herein, the arbitration shall be
conducted in accordance with the "Commercial Arbitration Rules" of the
American Arbitration Association ("AAA") then in effect.

        
13.4.3    Arbitration shall be conducted by one neutral arbitrator who
shall be selected pursuant to the AAA rules and the following:

            
13.4.3.1    The Parties agree that the list of potential arbitrators
provided by the AAA shall, if available, contain twenty (20) candidates, and at
least fifty percent (50%) of the candidates shall be members of the AAA National
Energy Panel.

            
13.4.3.2    The Parties also agree that each shall be allowed to strike
the names of five candidates before ranking the remaining candidates and
returning the list to the AAA in accordance with the Commercial Arbitration
Rules. If the Parties are unable to agree on an arbitrator, such arbitrator
shall be appointed by the AAA.

            
13.4.3.3    The arbitrator shall not have any current or past substantial
business, financial, or personal relationships with either Party (or their
Affiliates) and shall not be a vendor, supplier, customer, employee, consultant,
or competitor to either of the Parties or their Affiliates.

            
13.4.3.4    The arbitrator shall be authorized only to interpret and
apply the provisions of this Agreement or any related agreements entered into
under this Agreement and shall have no power to modify or change any provision
of this Agreement. The arbitrator shall have no authority to award punitive or
multiple damages or any damages inconsistent with this Agreement. The arbitrator
shall within thirty (30) days of the conclusion of the hearing, unless such time
is extended by agreement of the Parties, notify the Parties in writing of his or
her decision, stating his or her reasons for such decision and separately
listing his or her findings of fact and conclusions of law. Judgment on the
award may be entered in any court having jurisdiction.

     13.5    The Parties shall proceed with the arbitration expeditiously,
and the arbitration shall be concluded within five (5) months of the filing of
the demand for arbitration pursuant to this Section 13 in order that the
decision may be rendered within six (6) months of such filing, unless the
arbitrator extends such time at the request of a Party upon a showing of good
cause or upon agreement of the Parties.

     13.6    Any arbitration proceedings, decision or award rendered
hereunder and the validity, effect and interpretation of any arbitration
agreement shall be governed by the Federal Arbitration Act of the United States,
9 U.S.C. Section 1 et seq.

     13.7    The decision of the arbitrator shall be final and binding on
both Parties and may be enforced in any court having jurisdiction over the Party
against which enforcement is sought.

     13.8    The fees and expenses of the arbitrator shall be shared by
the Parties equally, unless the decision of the arbitrator shall specify some
other apportionment of such fees and expenses. All other expenses and costs of
the arbitration shall be borne by the Party incurring the same.

14.    NATURE OF OBLIGATIONS

     14.1    Except where specifically stated in this Agreement to be
otherwise, the duties, obligations, and liabilities of the Parties shall be
several, not joint or collective. The provisions of this Agreement shall not be
construed to create an association, trust, partnership, or joint venture; to
impose a trust or partnership duty, obligation, or liability or agency
relationship on or with regard to either Party.

     14.2    Nothing in this Agreement nor any action taken hereunder
shall be construed to create any duty, liability, or standard of care to any
person not a Party to this Agreement. Each Party shall be individually and
severally liable for its own obligations under this Agreement.

     14.3    By this Agreement, neither Party dedicates any part of its
facilities or the service provided under this Agreement to the public.

 15.    SUCCESSORS AND ASSIGNS

     15.1    This Agreement may be assigned, without express written
consent of the other Party, as follows:

        
15.1.1    Buyer may assign this Agreement or assign or delegate its
rights and obligations under this Agreement, in whole or in part, if such
assignment is made to an affiliate, parent, subsidiary, successor or any party,
provided that such assignee operates all or a portion of the PLR or if such
assignment is required by Law or applicable regulations.

     15.2    Supplier may, without the consent of Buyer, assign, transfer,
pledge or otherwise dispose of its rights and interests hereunder to a trustee,
lending institution, or any Person for the purposes of financing or refinancing
the Asset Bundle, including upon or pursuant to the exercise of remedies under
such financing or refinancing, or by way of assignments, transfers, conveyances
of dispositions in lieu thereof; provided, however, that no such assignment or
disposition shall relieve or in any way discharge Supplier or such permitted
assignee from the performance of its duties and obligations under this
Agreement. Buyer agrees to execute and deliver such documents as may be
reasonably necessary to accomplish any such assignment, transfer, conveyance,
pledge or disposition of rights hereunder for purposes of the financing or
refinancing of the Asset Bundle, so long as Buyer's rights under this Agreement
are not thereby materially altered, amended, diminished or otherwise impaired.

     15.3    Either Party may, without the consent of the other Party,
assign this Agreement to a successor to all or substantially all of the assets
of such Party by way of merger, consolidation, sale or otherwise, provided such
successor assumes and becomes liable for all of such Party's duties and
obligations hereunder including Section 3 hereof.

     15.4    Except as stated above, neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assigned by either Party,
including by operation of law, without the prior written consent of the other
Party, said consent not to be unreasonably withheld. Any assignment of this
Agreement in violation of the foregoing shall be, at the option of the
non-assigning Party, void.

     15.5    Except as set forth above, no assignment or transfer of
rights or obligations under this Agreement by a Party shall relieve said Party
from full liability and financial responsibility for the performance thereof
after any such transfer or assignment unless and until the transferee or
assignee shall agree in writing to assume the obligations and duties of said
Party under this Agreement and the other Party has consented in writing to such
assumption; said consent not to be unreasonably withheld.

     15.6    This Agreement and all of the provisions hereof are binding
upon, and inure to the benefit of, the Parties and their respective successors
and permitted assigns.

 16.    REPRESENTATIONS

     16.1    Representations of the Parties. The Parties represent and
warrant each to the other as follows:

        
16.1.1    Incorporation. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Nevada.
Supplier is a Nevada limited liability company duly organized, validly existing
and in good standing under the laws of the State of Nevada. Both Buyer and
Supplier have all requisite corporate or limited liability company power and
authority to own, lease and operate their material assets and properties and to
carry on their business as now being conducted.

        
16.1.2    Authority. The Party has full corporate or limited
liability company power and authority to execute and deliver this Agreement and,
subject to the procurement of applicable regulatory approvals, to carry out the
actions required of it by this Agreement. The execution and delivery of this
Agreement and the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate or limited liability company action
required on the part of the Party. The Agreement has been duly and validly
executed and delivered by the Party and, assuming that it is duly and validly
executed and delivered by the other Party, constitutes a legal, valid and
binding agreement of the Party.

        
16.1.3    Compliance With Law. The Party represents and warrants
that it is not in violation of any applicable Law, or applicable regulation,
which violation could reasonably be expected to materially adversely affect the
other Party's performance of its obligations under this Agreement. The Party
represents and warrants that it will comply with all Laws, and regulations
applicable to its compliance with this Agreement, non-compliance with which
would reasonably be expected to materially adversely affect either Party's
performance of its obligations under this Agreement.

        
16.1.4    Representations of Both Parties. The representations in
this Section 16 shall continue in full force and effect for the term of this
Agreement.

 17.    DEFAULT AND REMEDIES

     17.1    An Event of Default hereunder shall be deemed to have
occurred upon a Party's (Defaulting Party) failure to comply with any material
obligation imposed upon it by this Agreement. Examples of an Event of Default
include, but are not limited to the following: 


              (i) Failure to make any payments due under this
              Agreement;

               (ii) Failure to deliver the Supply Amount for a
              period of five (5) consecutive days;

              (iii) Failure to follow the directions of a
              Control Area Operator, ISA, EDU, WSCC, NERC, PUCN, FERC, or any
              successor thereto where following such directions is required
              hereunder;

              (iv) Supplier not being in compliance with
              Section 3; and

              (v) Failure of the Guarantor to be in
              compliance with the terms of the Guarantee delivered under Section
              3.1.2.



                  17.2    An Event of Default shall be excused:

        
17.2.1    In the event such Event of Default was caused by Force
Majeure provided that the Party claiming a Force Majeure complies with the
requirements of Section 12; and

        
17.2.2    In the event such Event of Default was caused by transmission
and distribution outages or disruptions.

     17.3    Unless excused, in an Event of Default the Non-Defaulting
Party shall be entitled to provide written notice (or oral notice in case of
emergency followed by written notice) of the Event of Default to the Defaulting
Party and to specify a cure period, which cure period shall be a minimum of
thirty (30) days.

     17.4    If an Event of Default is not cured by the Defaulting Party
during the cure period specified by the Non-Defaulting Party, the Non-Defaulting
Party shall be entitled to those remedies which are not inconsistent with the
terms of this Agreement, including termination and the payment of liquidated
damages. A Defaulting Party shall not be liable to the Non-Defaulting Party for
any punitive, consequential or incidental damages. For purposes of
clarification, Replacement Costs shall not be considered consequential or
incidental damages under this Section 17.4.

     17.5    Notwithstanding this Section 17, liquidated damages shall be
paid to Buyer pursuant to Sections 4.2, 12, 18, and 21.

 18.    FACILITY ADDITIONS AND MODIFICATIONS

     18.1    Supplier shall be entitled to make additions and
modifications to the Asset Bundle subject to the following:

        
18.1.1    To the extent additions and modifications interfere with the
operation of the Asset Bundle in providing the Supply Amount to Buyer beyond the
limits for planned outages set forth in Section 21, liquidated damages shall be
paid to Buyer pursuant to Section 4.2.

        
18.1.2    Supplier shall use reasonable efforts to minimize any adverse
impact on Buyer during the course of making such additions and modifications.

        
18.1.3    Such additions and modifications shall be conducted in
accordance with Good Utility Practice, and all applicable Laws, regulations,
reliability criteria and the Interconnection Agreement between Buyer and
Supplier, dated October 25, 2000, as it may be amended from time to time.

     18.2    Supplier shall seek Buyer's prior written approval for all
Supplier's additions or modifications to the Asset Bundle which might reasonably
be expected to have an adverse effect upon Buyer with respect to operations or
performance under this Agreement.

 19.    COORDINATION

     19.1    Upon knowledge thereof, each Party shall promptly give notice
to the other Party of any labor dispute which is delaying or threatens to delay
the timely performance of this Agreement, which shall include a description of
the general nature of the dispute.

 20.    EMERGENCY AND NONEMERGENCY CONDITION RESPONSE

     20.1    Buyer and Supplier shall comply with any applicable
requirement of any Governmental Authority, NERC, WSCC, ISA, Control Area
Operator, transmission operator, EDU or any successor of any of them, regarding
the reduced or increased generation of the Asset Bundle in the event of an
Emergency Condition or Nonemergency Condition.

     20.2    Supplier shall not be obligated to deliver the Supply Amount
and no liquidated damages shall become due, if the Supply Amount is reduced in
the event of an Emergency Condition or a Nonemergency Condition.

     20.3    Each Party shall provide prompt oral notice to the other
Party of any Emergency Condition or Nonemergency Condition.

     20.4    Either Party may take reasonable and necessary action to
prevent, avoid or mitigate injury, danger, damage or loss to its own equipment
and facilities, or to expedite restoration of service; provided, however, that
the Party taking such action shall give the other Party prior notice if at all
possible before taking any action. However, this Section 20.4 shall not be
construed to supersede Sections 20.2 and 20.3.

21.    OUTAGE SCHEDULING

     21.1    Supplier shall request Buyer's approval prior to any
inspections, proposed planned outages or other non-forced outages (all
hereinafter referred to as "planned outages") of the Asset Bundle so
as to minimize the impact on the availability of the Asset Bundle. Under no
circumstances shall Supplier conduct a planned outage without the express prior
consent of Buyer pursuant to this Section 21.

     21.2    Planned Outages.

        
21.2.1    Within sixty (60) days following the Effective Date of this
Agreement and on or before October 1 of each Contract Year, Supplier shall
provide Buyer with a schedule of proposed planned outages for the period
beginning on the date of such proposed schedule for the following twelve (12)
months. The proposed planned outage schedule will designate days for each unit
in which the Asset Bundle Capacity will be reduced in part or total for each
such unit. Each proposed schedule shall include all applicable information,
including but not limited to the following: Month, day and time of requested
outage; facilities impacted (such as Unit and description); duration of outage;
purpose of outage; amount of capacity (in MWs) which is derated; other
conditions and remarks; and name of contact and phone number.

        
21.2.2    Buyer shall promptly review Supplier's proposed schedule and
shall, at Buyer's discretion, not to be unreasonably exercised, either require
modifications or approve the proposed schedule. Supplier shall use its best
efforts to accomplish all planned outages in accordance with the approved
schedule. Supplier shall be responsible to Buyer for Replacement Costs (i) if
any outage period exceeds its approved schedule, provided that changes to the
approved schedule may be requested by either Party and each Party shall make
reasonable efforts to accommodate such changes, provided further the Buyer shall
have no obligation to agree to Supplier's revisions to the approved planned
outage schedule; and (ii) if Supplier conducts a planned outage without the
consent of Buyer as provided herein.

 22.    REPORTS

     22.1    Supplier shall promptly provide Buyer with copies of any
orders, decrees, letters or other written communications to or from any
Governmental Authority asserting or indicating that Supplier and/or its Asset
Bundle is in violation of Laws which relate to Supplier, or operations or
maintenance of the Asset Bundle and which may have an adverse effect on Buyer.
Supplier shall use reasonable efforts to keep Buyer appraised of the status of
any such matters.

 23.    COMMUNICATIONS

     23.1    Supplier's Operating Representatives shall be available
twenty-four (24) hours per day for communications with the Control Area Operator
and/or the ISA and Buyer to facilitate the operations contained in this
Agreement.

     23.2    Supplier shall, at its expense, maintain and install
real-time communications equipment at the Asset Bundle to maintain
communications between personnel on site at the Asset Bundle, Buyer and the
Control Area Operator at all times. Supplier shall provide at its expense:


              (i) Ringdown voice telephone lines, and

               (ii) Equipment to transmit to and receive
              telecopies from Buyer and the Control Area Operator.



    23.3    Supplier shall immediately report to Buyer any "Abnormal
Condition" that has or may occur, and provide all pertinent information,
including but not limited to the following: 


              (i) A description of the "Abnormal
              Condition" and the actions to be taken to alleviate the
              "Abnormal Condition";

              (ii) The expected duration including the
              beginning and ending time of the "Abnormal Condition";
              and

              (iii) The amount of any adjustment to the
              current (real time) level of Energy and Ancillary Services.



    23.4    Cause of the Condition.


        
23.4.1    An "Abnormal Condition" shall include without
limitation any conditions that, to Supplier's knowledge, have or are reasonably
likely to: 


                (i) Adversely affect Supplier's ability to
                provide Energy and Ancillary Services to Buyer;

                (ii) Cause an unplanned reduction in the
                amount of delivery of Energy and Ancillary Services to Buyer; or

                (iii) Cause an unplanned isolation of the
                Asset Bundle from the transmission system.



    23.5    Supplier shall immediately notify Buyer after such
"Abnormal Condition" has been alleviated.

 24.    NOTICES

     24.1    All notices hereunder shall, unless specified otherwise, be
in writing and shall be addressed, except as otherwise stated herein, to the
Parties as set forth in Exhibit F.

     24.2    All written notices or submittals required by this Agreement
shall be sent either by hand-delivery, regular first class U.S. mail, registered
or certified U.S. mail postage paid return receipt requested, overnight courier
delivery, electronic mail or facsimile transmission and will be effective and
deemed to have been received on the date of receipt personally, on the date and
time as documented by method of delivery if during normal business hours or on
the next succeeding Business Day, or on the third (3rd) Business Day
following deposit with the U.S. mail if sent regular first class U.S. mail.

     24.3    Notices of an Event of Default pursuant to Section 17 and or
Force Majeure pursuant to Section 12 may not be sent by regular first class U.S.
mail.

     24.4    Any payments required to be made under this Agreement shall
be made to the Party as set forth in Exhibit F.

     24.5    Each Party shall have the right to change, at any time upon
written notice to the other Party, the name, address and telephone numbers of
its representatives under this Agreement for purposes of notices and payments.

 25.    MERGER

     25.1    The Agreement contains the entire agreement and understanding
between the Parties with respect to all of the subject matter contained herein,
thereby merging and superseding all prior agreements and representations by the
Parties with respect to such subject matter.

     25.2    In the event of any conflict between this Agreement and the
Asset Sale Agreement, the terms of the Asset Sale Agreement shall govern.

 26.    HEADINGS

     26.1    The headings or section titles contained in this Agreement
are inserted solely for convenience and do not constitute a part of this
Agreement between the Parties, nor should they be used to aid in any manner in
the construction of this Agreement.

 27.    COUNTERPARTS AND INTERPRETATION

     27.1    This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.

     27.2    In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of authorship of any of the provisions of this
Agreement.

     27.3    Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise.

     27.4    The word "including" in this Agreement shall mean
"including without limitation".

 28.    SEVERABILITY

     28.1    If any term, provision or condition of this Agreement is held
to be invalid, void or unenforceable by a court or Governmental Authority of
competent jurisdiction and such holding is subject to no further appeal or
judicial review, then such invalid, void, or unenforceable term, provision or
condition shall be deemed severed from this Agreement and all remaining terms,
provisions and conditions of this Agreement shall continue in full force and
effect, unless, however, the effect of the severance would vitiate the intent of
the Parties hereto, as determined by either Party in its reasonable discretion.

     28.2    The Parties shall endeavor in good faith to replace such
invalid, void, or unenforceable provisions with a valid and enforceable
provision which achieves the purposes intended by the Parties to the greatest
extent permitted by law.

 29.    WAIVERS

     29.1    No failure or delay on the part of a Party in exercising any
of its rights under this Agreement or in insisting upon strict performance of
provisions of this Agreement, no partial exercise by either Party of any of its
rights under this Agreement, and no course of dealing between the Parties shall
constitute a waiver of the rights of either Party under this Agreement. Any
waiver shall be effective only by a written instrument signed by the Party
granting such waiver, and such shall not operate as a waiver of, or estoppel
with respect to, any subsequent failure to comply therewith.

30.    AMENDMENTS

     30.1    The Parties shall negotiate in good faith to determine
necessary amendments, if any, to this Agreement, provided that in negotiating
such amendments the Parties shall attempt, in good faith, to reasonably preserve
the bargain initially struck in this Agreement if any Governmental Authority,
FERC, any state or the PUCN, implements a change in any Law or applicable
regulation that materially affects or is reasonably expected to materially
affect Buyer's PLR service under this Agreement.

     30.2    The Parties shall meet to discuss the impact of any changes
in Buyer's OATT or the ISA's OATT, as applicable, or any rule or practice of
NERC, WSCC, or any other Governmental Authority on the terms of this Agreement
upon request by either Party during the term of this Agreement.

     30.3    In the event that it is deemed necessary to amend this
Agreement, the Parties will attempt to agree upon such amendment and will submit
such mutually agreed upon amendment(s) to the FERC for filing and acceptance.

     30.4    Amendments to this Agreement shall be in writing and shall be
executed by an authorized representative of each Party.

 31.    TIME IS OF THE ESSENCE

     31.1    Time is of the essence of this Agreement and in the
performance of all of the covenants and conditions hereof.

 32.    APPROVALS

     32.1    Each Party's performance under this Agreement is subject to
the condition that all requisite governmental and regulatory approvals for such
performance are obtained in form and substance satisfactory to the other Party
in its reasonable discretion. Each Party shall use best efforts to obtain all
required approvals and shall exercise due diligence and shall act in good faith
to cooperate and assist each other in acquiring any regulatory approval
necessary to effectuate this Agreement. Further, the Parties agree to reasonably
support the other Party in any associated regulatory proceedings, including by
being a witness on behalf of the other Party.

     32.2    Notwithstanding the provisions of Section 2.2.2 of this
Agreement, if any Governmental Authority in its review of the Agreement places
conditions on or requires revisions of the Agreement which do not have a
material adverse effect on Supplier or Buyer, the Parties agree to execute an
amendment to the Agreement reasonably acceptable to each Party incorporating
such conditions or revisions.

     32.3    This Agreement is made subject to present or future state or
federal laws, regulations, or orders properly issued by state or federal bodies
having jurisdiction.

     32.4    The Parties hereto agree to execute and deliver promptly, at
the expense of the Party requesting such action, any and all other and further
instruments, documents and information which may reasonably be necessary or
appropriate to give full force and effect to the terms and intent of this
Agreement.

 33.    PLR SERVICE

     33.1    The Agreement is premised on Buyer providing PLR service.
Notwithstanding anything to the contrary contained herein, if Nevada retail
electricity restructuring (including implementation of retail customer choice of
electricity suppliers) is delayed beyond the Effective Date of this Agreement,
the Parties shall continue to perform this Agreement in all respects pursuant to
the terms and conditions hereof as if Buyer was the PLR and Buyer's retail and
wholesale customers shall be considered as the TRR.

 34.    CONFIDENTIALITY

     34.1    Confidential Information. Certain information provided by
a Party (the "Disclosing Party") to the other Party (the
"Receiving Party") in connection with the negotiation or performance
of this Agreement may be considered confidential and/or proprietary (hereinafter
referred to as "Confidential Information") by the Disclosing Party. To
be considered Confidential Information hereunder, such information must be
clearly labeled or designated by the Disclosing Party as
"confidential" or "proprietary" or with words of like
meaning. If disclosed orally, such information shall be clearly identified as
confidential and such status shall be confirmed promptly thereafter in writing.

     34.2    Treatment of Confidential Information. The Receiving
Party shall treat any Confidential Information with at least the same degree of
care regarding its secrecy and confidentiality as the Receiving Party's similar
information is treated within the Receiving Party's organization. The Receiving
Party shall not disclose the Confidential Information of the Disclosing Party to
third parties (except as stated hereinafter) nor use it for any purpose other
than the negotiation or performance of this Agreement, without the express prior
written consent of the Disclosing Party. The Receiving Party further agrees that
it shall restrict disclosure of Confidential Information as follows:

       
34.2.1    Disclosure shall be restricted solely to its agents as may be
necessary to enforce the terms of this Agreement after advising those agents of
their obligations under this Section 34.2.

       
34.2.2    In the event that the Receiving Party is requested, pursuant
to or as required by applicable Law or by legal process, to disclose any
Confidential Information, the Receiving Party shall provide the Disclosing Party
with prompt notice of such request or requirement in order to enable Disclosing
Party to seek an appropriate protective order or other remedy and to consult
with Disclosing Party with respect to Disclosing Party taking steps to resist or
narrow the scope of such request or legal process. The Receiving Party agrees
not to oppose any action by the Disclosing Party to obtain a protective order or
other appropriate remedy. In the absence of such protective order, and provided
that the Receiving Party is advised by its counsel that it is compelled to
disclose the Confidential Information, the Receiving Party shall: 


                (i) furnish only that portion of the
                Confidential Information which the Receiving Party is advised by
                counsel is legally required; and

                 (ii) use its commercially reasonable best
                efforts, at the expense of the Disclosing Party, to ensure that
                all Confidential Information so disclosed will be accorded
                confidential treatment.



                    34.3    Excluded Information. Confidential Information shall not
be deemed to include the following:

        
34.3.1    information which is or becomes generally available to the
public other than as a result of a disclosure by the Receiving Party;

        
34.3.2    information which was available to the Receiving Party on a
non-confidential basis prior to its disclosures by the Disclosing Party; and

       
34.3.3    information which becomes available to the Receiving Party on
a non-confidential basis from a person other than the Disclosing Party or its
representative who is not otherwise bound by a confidentiality agreement with
Disclosing Party or its agent or is otherwise not under any obligation to
Disclosing party or its agent not to disclose the information to the Receiving
Party.

     34.4    Injunctive Relief Due to Breach. The Parties agree that
remedies at law may be inadequate to protect each other in the event of a breach
of this Section 34, and the Receiving Party hereby in advance agrees that the
Disclosing Party shall be entitled to seek and obtain, without proof of actual
damages, temporary, preliminary and permanent injunctive relief from any court
or Governmental Authority of competent jurisdiction restraining the Receiving
Party from committing or continuing any breach of this Section 34.

 35.    CHOICE OF LAW

     35.1    This Agreement and the rights and obligations of the Parties
shall be construed and governed by the Laws of: (i) the State of Nevada as if
executed and performed wholly within that state; and (ii) the Federal Power Act,
to the extent the rights and obligations of the Parties are covered by such act.

 



 


IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be executed by their duly authorized representative on the date set
forth below.

 

	
      SIERRA PACIFIC POWER COMPANY
	
      
	
      WPS NORTHERN NEVADA, LLC

      
      By: WPS POWER DEVELOPMENT, INC.

      (Its Sole Member)

    
	
       

      By: _______________________

      William E. Peterson

    	
      
	
       

      By: _______________________

      Gerald L. Mroczkowski

    
	
          Title: Senior Vice President, General Counsel, and Corporate
          Secretary
	
      
	
      Title: Vice President

	
      Date: October 25, 2000
	
      
	
      Date: October 25, 2000