<PAGE>

                                                                  EXHIBIT (4)(B)

NOTE NO. R-1                                               CUSIP N0. 826418 AT 2



     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO SIERRA PACIFIC
POWER COMPANY (THE "COMPANY") OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     THIS NOTE IS A BOOK-ENTRY SECURITY AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE OF A DEPOSITORY. THIS NOTE IS EXCHANGEABLE FOR NOTES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED HEREIN, AND NO TRANSFER OF THIS NOTE
(OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF
THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN SUCH LIMITED
CIRCUMSTANCES.

     THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

     THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED

                                       1
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OR OTHERWISE TRANSFERRED ONLY (1) INSIDE THE U.S. TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (II) OUTSIDE THE U.S. IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER
THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF
CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.

                         SIERRA PACIFIC POWER COMPANY
                              FLOATING RATE NOTES
                      DUE OCTOBER 13, 2000  (THE "NOTES")

     Sierra Pacific Power Company, a corporation duly organized and existing
under the laws of the State of Nevada (the "Company"), for value received,
hereby promises to pay to Cede & Co., as the nominee of The Depository Trust
Company, or registered assigns, the principal amount of $100,000,000 on October
13, 2000 (the "Maturity Date"), and to pay interest as set forth below on the
outstanding principal amount hereof from time to time from September 17, 1999 or
from the most recent Interest Payment Date (as defined below) to which interest
has been paid or duly provided for, quarterly in arrears on December 15, 1999,
March 15, June 15 and September 15, 2000 and on the Maturity Date (each, an
"Interest Payment Date"), commencing December 15, 1999, until the principal
hereof is paid or made available for payment. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date shall, as
provided herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the fifteenth
calendar day preceding each Interest Payment Date (each, a "Regular Record
Date"); provided, however, that interest payable on the Maturity Date shall be
        --------  -------
payable to the person to whom the principal amount of this Note is payable. Any
interest payable on any Interest Payment Date other than the Maturity Date and
not so punctually paid or duly provided for shall forthwith cease to be payable
to the person in whose name this Note is registered at the close of business on
such Regular Record Date and shall instead be payable to the Person in whose
name this Note (or one or more predecessor Notes) is registered at the close of
business on a special record date for the payment of such interest to be fixed
by the Company, notice whereof shall be given to the registered holder of this
Note (or one or more predecessor Notes) not less than 10 days prior to such
special record date. Principal of this Note shall be payable against surrender
hereof at the corporate trust office of the Fiscal Agent or at such other office

                                       2
<PAGE>

or agency of the Company as may be designated by it for such purpose in the
Borough of Manhattan, The City of New York.

     Payment of the principal of and interest on this Note shall be made at the
corporate trust office of the Fiscal Agent or at such other office or agency of
the Company as may be designated by it for such purpose in the Borough of
Manhattan, The City of New York, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts; provided, however, that, at the option of the Company,
                          --------  -------
payments of interest may be made by check mailed to the address of the person
entitled thereto as such address shall appear in the Note Register (as defined
in Section 3 hereof); and provided further, however, that in the case of Notes
                          -------- -------  -------
held by a depository (as defined in Section 3 hereof) or its nominee, payments
of principal and interest shall be made by wire transfer of immediately
available funds to an account designated by such depository.

     If any Interest Payment Date for this Note (other than an Interest Payment
Date at the Maturity Date) would otherwise be a day that is not a Business Day
(as defined in Section 1 hereof), such Interest Payment Date shall be postponed
until the next succeeding Business Day unless such Business Day falls in the
next calendar month, in which case such Interest Payment Date shall be the next
preceding Business Day. If the Maturity Date of this Note falls on a day that is
not a Business Day, the payment of principal and interest will be made on the
next succeeding Business Day, and no interest on such payment shall accrue for
the period from and after such Maturity Date, except as otherwise expressly
provided for herein.

     This Note is one of a duly authorized series of securities of the Company,
limited in aggregate principal amount of $100,000,000, issued under a Fiscal and
Paying Agency Agreement, dated as of September 14, 1999, (the "Fiscal Agency
Agreement"), duly executed and delivered by the Company to Bankers Trust
Company, as Fiscal and Paying Agent (the "Fiscal Agent"). All terms that are
used but not defined in this Note and that are defined in the Fiscal Agency
Agreement shall have the meanings set forth therein.

     This Note may be redeemed at the option of the Company, in whole, beginning
on March 15, 2000, and on the 15th day of each month thereafter, at a redemption
price equal to 100% of the unpaid principal amount plus accrued and unpaid
interest on this Note to the date of redemption. Any such redemption may be made
by the Company upon not less than 15 Business Days prior notice mailed to the
holder of this Note at its registered address by first-class mail. On and after
the redemption date, interest shall cease to accrue on this Note unless the
Company defaults in the payment of any principal then due and payable.

     1.   Calculation of Interest.  The period beginning on, and including,
September 17, 1999 and ending on, but excluding, the first Interest Payment Date
and each successive period beginning on, and including, an Interest Payment Date
and ending on, but excluding, the next succeeding Interest Payment Date is
herein called an "Interest Period".  "Business

                                       3
<PAGE>

Day" shall mean any day on which commercial banks and foreign exchange markets
are open for business, including dealings in deposits in U.S. dollars in New
York and London.

     The rate of interest payable from time to time in respect of this Note (the
"Rate of Interest") will be a floating rate determined by reference to LIBOR,
determined as described below, plus a margin of 0.75% per annum. All percentages
resulting from any calculation on this Note will be rounded to the nearest one
hundredth-thousandth of a percentage point, with five one millionths of a
percentage point rounded upwards (e.g., 9.876545% (or .09876545) would be
rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting
from such calculation on the Notes will be rounded to the nearest cent (with
one-half cent being rounded upward).

          (a)  At approximately 11:00 a.m. (London time) on the second day on
     which commercial banks are open for business (including dealings in U.S.
     Dollar deposits) in London (or, for purposes of paragraph (c) (ii) below,
     New York) prior to the commencement of the Interest Period for which such
     rate will apply (each such day an "Interest Determination Date"), Bankers
     Trust Company, London Branch, or its successor in this capacity (the
     "Calculation Agent"), will calculate the rate of interest (the "Rate of
     Interest") for such Interest Period as, subject to the provisions described
     below, the rate per annum equal to 0.75% above the rate appearing on the
     Dow Jones Telerate Page 3750 (or such other page as may replace that page
     on the Dow Jones Telerate Service) for three-month U.S. dollar deposits in
     the London inter-bank market on such Interest Determination Date.

          (b)  If on any Interest Determination Date an appropriate rate cannot
     be determined from the Dow Jones Telerate Service, the Rate of Interest for
     the next Interest Period shall, subject to the provisions described below,
     be the rate per annum that the Calculation Agent certifies to be 0.75% per
     annum above the arithmetic mean of the offered quotations, as communicated
     to and at the request of the Calculation Agent by not less than two major
     banks in London selected by the Calculation Agent (the "Reference Banks,"
     which expression shall include any successors nominated by the Calculation
     Agent), to leading banks in London by the principal London offices of the
     Reference Banks for three-month U.S. dollar deposits in the London inter-
     bank market as at 11:00 a.m. (London time) on such Interest Determination
     Date.

          (c)  If on any Interest Determination Date fewer than two of such
     offered rates are available, the Rate of Interest for the next Interest
     Period shall be whichever is the higher of:

               (i)  the Rate of interest in effect for the last preceding
          Interest Period to which (a) or (b) above shall have applied; and

                                       4
<PAGE>

               (ii)  the Reserve Interest Rate.  The "Reserve Interest Rate"
          shall be the rate per annum which the Calculation Agent determines to
          be 0.75% per annum above either (1) the arithmetic mean of the U.S.
          dollar offered rates which New York City banks selected by the
          Calculation Agent are or were quoting, on the relevant Interest
          Determination Date, for three-month deposits to the Reference Banks or
          those of them (being at least two in number) to which such quotations
          are or were, in the opinion of the Calculation Agent, being so made,
          or (2) in the event that the Calculation Agent can determine no such
          arithmetic mean, the arithmetic mean of the U.S. dollar offered rates
          which at least two New York City banks selected by the Calculation
          Agent are or were quoting on such Interest Determination Date to
          leading European banks for a period of three months; provided,
          however, that if the banks selected as aforesaid by the Calculation
          Agent are not quoting as mentioned above, the Rate of Interest shall
          be the Rate of Interest specified in (i) above.

     The Calculation Agent shall, as soon as practicable after 11:00 a.m.
(London time) on each Interest Determination Date, determine the Rate of
Interest and calculate the amount of interest payable in respect of the
following Interest Period (the "Interest Amount"). The Interest Amount shall be
calculated by applying the Rate of Interest to the principal amount of each Note
outstanding at the commencement of the Interest Period, multiplying each such
amount by the actual number of days in the Interest Period concerned (which
actual number of days shall include the first day but exclude the last day of
such Interest Period) divided by 360 and rounding the resultant figure upwards
to the nearest cent (half a cent being rounded upwards). The determination of
the Rate of Interest and the Interest Amount by the Calculation Agent shall (in
the absence of willful default, bad faith or manifest error) be final and
binding on all parties.

     Notwithstanding anything herein to the contrary, the interest rate on the
Notes shall in no event be higher than the maximum rate permitted by New York
law, as the same may be modified by United States law of general application.

     Interest shall cease to accrue on this Note on the Maturity Date unless,
upon presentation of this Note, payment of principal is improperly withheld or
refused, in which case, interest shall continue to accrue.

     2.   Calculation Agent.  So long as any of this Note remains outstanding,
the Company shall maintain under appointment a Calculation Agent, which shall
initially be the Fiscal Agent, to calculate the Rate of Interest payable on this
Note in respect of each Interest Period. If the Calculation Agent shall fail to
establish the Rate of Interest for any Interest Period, or if the Company shall
remove the Calculation Agent, the Company shall appoint another commercial or
investment bank to act as the Calculation Agent. The Company may change the
Calculation Agent without notice.

                                       5
<PAGE>

     All certificates, communications, opinions, determinations, calculations,
quotations and decisions given, expressed, made or obtained for the purposes of
the provisions hereof relating to the payment and calculation of interest on
this Note by the Calculation Agent shall (in the absence of willful default, bad
faith or manifest error) be binding on the Company, the Calculation Agent and
all of the holders and owners of beneficial interests in this Note, and no
liability shall (in the absence of willful default, bad faith or manifest error)
attach to the Calculation Agent in connection with the exercise or non-exercise
by it of its powers, duties and discretions.

     3.   Registration;  Registration of Transfer and Exchange.  The Company
shall cause to be kept at an office or agency to be maintained by the Company a
register (the register maintained in such office being herein referred to as the
"Note Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Notes and of
transfers of Notes. The Fiscal Agent is hereby appointed "Note Registrar" for
the purpose of registering Notes and transfers of Notes as herein provided. The
Company may appoint co-registrars and may change any Note Registrar or co-
registrar without notice.

     Notes shall be exchangeable pursuant to this Section 3 for Notes registered
in the name of, and a transfer of a Note may be registered to, any person other
than DTC or its successor depository (DTC or such successor being referred to as
a "depository") for such Note or its nominee only if (i) such depository
notifies the Company that it is unwilling or unable to continue as depository
for such Note or if at any time such depository ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, and a
successor depository is not appointed by the Company within 90 days, (ii) there
shall have occurred and be continuing an Event of Default (as defined below)
with respect to the Notes or (iii) the Company, in its sole discretion, elects
to terminate the book-entry system. Upon the occurrence of any one or more of
the conditions specified in clauses (i), (ii) or (iii) of the preceding
sentence, such Note shall be exchanged for Notes registered in the names of, and
the transfer of such Note shall be registered to, such persons (including
persons other than the depository with respect to such Notes and its nominee) as
such depository shall direct, in each case subject to Section 5 hereof.

     Subject to the restrictions on transfer and delivery set forth in this
Note, Notes may be presented for exchange or for registration of transfer (duly
endorsed or with the form of transfer endorsed thereon duly executed) at the
office of the Fiscal Agent or at the office of any other transfer agent
designated by the Company for such purpose. Such transfer or exchange shall be
effected upon the Fiscal Agent's or such other transfer agent's, as the case may
be, being satisfied with the documents of title and identity of the person
making the request. The Company may at any time designate additional transfer
agents or rescind the designation of any transfer agent or approve a change in
the office through which any transfer agent acts; provided, however, that there
                                                  --------  -------
shall at all times be a transfer agent in the Borough of Manhattan, The City of
New York.

                                       6
<PAGE>

     The Notes and any certificates for Notes issued in exchange for Notes or a
beneficial interest therein will bear the third legend set forth in this Note.
The holder of a certificated Note may transfer such Note, subject to compliance
with the provisions of such legend, as provided in the preceding paragraph. Upon
the transfer, exchange or replacement of Notes bearing such legend, or upon
specific request for removal of such legend on a Note, the Company will deliver
only Notes bearing such legend, or will refuse to remove such legend, as the
case may be, unless there is delivered to the Company such satisfactory
evidence, which may include an opinion of counsel, as may reasonably be required
by the Company that neither such legend nor the restrictions on transfer set
forth therein are required to ensure compliance with the provisions of the
Securities Act.

     4.   Acts by Holders.

          (a)  Any request, demand, authorization, direction, notice, consent,
     waiver or other action provided by the Notes or the Fiscal Agency Agreement
     to be given or taken by holders may be embodied in and evidenced by one or
     more instruments of substantially similar tenor signed by such holders in
     person or by an agent duly appointed in writing; and, except as otherwise
     expressly provided in the Notes or the Fiscal Agency Agreement, such action
     shall become effective when such instrument or instruments are delivered to
     the Fiscal Agent and, where it is hereby expressly required, to the
     Company. Such instrument or instruments (and the action embodied therein
     and evidenced thereby) are herein sometimes referred to as the "Act" of the
     holders signing such instrument or instruments. Proof of execution of any
     such instrument or of a writing appointing any such agent shall be
     sufficient for any purpose of the Notes and the Fiscal Agency Agreement and
     conclusive in favor of the Fiscal Agent and the Company, if made in the
     manner provided in this Section.

          (b)  The fact and date of the execution by any person of any such
     instrument or writing may be proved by the affidavit of a witness of such
     execution or by a certificate of a notary public or other officer
     authorized by law to take acknowledgments of deeds, certifying that the
     individual signing such instrument or writing acknowledged to him the
     execution thereof. Where such execution is by a signer acting in a capacity
     other than his or her individual capacity, such certificate or affidavit
     shall also constitute sufficient proof of his or her authority. The fact
     and date of the execution of any such instrument or writing, or the
     authority of the person executing the same, may also be proved in any other
     manner which the Fiscal Agent deems sufficient.

          (c)  The Company may set any day as the record date for the purpose of
     determining the holders of outstanding Notes entitled to make any request
     or demand or give any authorization, direction, notice, consent or waiver
     or take other action, provided or permitted by the Notes and the Fiscal
     Agency Agreement to be made, given or taken by holders of the Notes.

                                       7
<PAGE>

          With regard to any record date set pursuant to the immediately
     preceding paragraph, the holders of outstanding Notes on such record date
     (or their duly appointed agents), and only such persons, shall be entitled
     to take relevant action, whether or not such holders remain holders after
     such record date. With regard to any action that may be taken hereunder
     only by holders of a requisite principal amount of outstanding Notes (or
     their duly appointed agents) and for which a record date is set pursuant to
     the immediately preceding paragraph, the Company, may at its option, set an
     expiration date after which no such action purported to be taken by any
     holder shall be effective unless taken on or prior to such expiration date
     by holders of the requisite principal amount of outstanding Notes on such
     record date (or their duly appointed agents). On or prior to any expiration
     date set pursuant to this paragraph, the Company may, on one or more
     occasions at its option, extend such expiration date to any later date.
     Nothing in this paragraph shall prevent any holder (or any duly appointed
     agent thereof) from taking, at any time, any action contrary to or
     different from, any action previously taken, or purported to have been
     taken hereunder by such holder, in which event the Company may set a record
     date in respect thereof pursuant to this paragraph. Notwithstanding the
     foregoing, the Company shall not set a record date for, and the provisions
     to this paragraph shall not apply with respect to, any action to be taken
     by holders pursuant to Section 8 hereof.

          Upon receipt by the Fiscal Agent of notice of any default, any
     declaration of acceleration, or any rescission and annulment of any such
     declaration, or of any direction in accordance with Section 8 hereof, a
     record date shall automatically and without any other action by any person
     be set for the purpose of determining the holders of outstanding Notes
     entitled to join in such notice, declaration, or rescission and annulment,
     or direction, as the case may be, which record date shall be the close of
     business on the date the Fiscal Agent receives such notice, declaration,
     rescission and annulment or direction, as the case may be. The holders of
     outstanding Notes on such record date (or their duly appointed agent), and
     only such persons, shall be entitled to join in such notice, declaration,
     rescission and annulment, or direction, as the case may be, whether or not
     such holders remain holders after such record date; provided that, unless
                                                         --------
     such notice, declaration, rescission and annulment, or direction, as the
     case may be, shall have become effective by virtue of holders of the
     requisite principal amount of outstanding Notes on such record date (or
     their duly appointed agents) having joined therein on or prior to the 90th
     day after such record date, such notice of default, declaration, or
     rescission and annulment or direction given or made by the holders, as the
     case may be, shall automatically and without any action by any person be
     canceled and of no further effect. Nothing in this paragraph shall prevent
     a holder (or a duly appointed agent thereof) from giving, before or after
     the expiration of such 90-day period, a notice of default, a declaration of
     acceleration, a rescission and annulment of a declaration of acceleration
     or a direction, contrary to or different from, or, after the expiration of
     such period, identical to, a previously given notice, declaration,
     rescission and annulment, or direction, as the case may be, that has been
     canceled pursuant to the

                                       8
<PAGE>

     proviso to the preceding sentence, in which event a new record date in
     respect thereof shall be set pursuant to this paragraph.

          (d)  The ownership of the Notes shall be proved by the Note Register.

          (e)  Any request, demand, authorization, direction, notice, consent,
     waiver, or other Act of the holder of any Note shall bind every future
     holder of the same Note and the holder of every Note issued upon the
     registration of transfer thereof or in exchange therefor or in lieu thereof
     in respect of anything done, omitted or suffered to be done by the Fiscal
     Agent or the Company in reliance thereon, whether or not notation of such
     action is made upon such Note.

     5.   Denominations.  The Notes are issuable only in registered form without
coupons in denominations of $100,000 and integral multiples of $1,000 in excess
thereof.

     6.   Persons Deemed Owners.  The Company, the Fiscal Agent and any agent of
the Company or the Fiscal Agent may treat the person in whose name this Note is
registered as the owner hereof for the purpose of receiving payment as herein
provided and for all other purposes whatsoever, whether or not this Note shall
be overdue, and neither the Company, the Fiscal Agent nor any such agent shall
be affected by notice to the contrary.

     7.   Amendments and Waivers.  Without the consent of any holders of the
Notes, the Company, when authorized by a resolution duly adopted by the Board of
Directors of the Company, and the Fiscal Agent, at any time and from time to
time, may amend the terms of the Notes and enter into one or more agreements
supplemental to the Fiscal Agency Agreement, in form satisfactory to the Fiscal
Agent, for any of the following purposes:

          (a)  to evidence the succession of another person to the Company and
     the assumption by any such successor of the covenants of the Company herein
     and in the Fiscal Agency Agreement; or

          (b)  to add to the covenants of the Company for the benefit of the
     holders of the Notes; or

          (c)  to add any additional Events of Default; or

          (d)  to secure the Notes; or

          (e)  to evidence and provide for the acceptance of appointment by a
     successor Fiscal Agent with respect to the Notes; or

          (f)  to amend the restrictions on transfer applicable to the Notes as
     set forth on this Note; or

                                       9
<PAGE>

          (g)  to cure any ambiguity or to correct or supplement any provision
     herein which may be inconsistent with any other provision herein, or to
     correct or supplement any defective provision contained herein or in the
     Fiscal Agency Agreement, provided that such action pursuant to this clause
                              --------
     (g) shall not adversely affect the interests of the holders of the Notes.

     With the consent of the holders of not less than 66-2/3% in principal
amount of the outstanding Notes, by act of said holders delivered to the Company
and the Fiscal Agent, the Company, when authorized by a resolution duly adopted
by the Board of Directors of the Company, and the Fiscal Agent, at any time and
from time to time, may amend the terms of the Notes and enter into an agreement
supplemental to the Fiscal Agency Agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Notes, or the Fiscal Agency Agreement as the same pertains to the Notes, or
of modifying in any manner the rights of the holders of the Notes: provided,
                                                                   --------
however, that no such amendment or supplemental agreement shall, without the
-------
consent of the holder of each outstanding Note affected thereby,

          (1)  change the stated maturity of the principal of, or any
     installment of interest on, any Note, or reduce the principal amount
     thereof or the rate of interest thereon, or change any place of payment
     where, or the coin or currency in which, any Note or interest thereon is
     payable, or impair the right to institute suit for the enforcement of any
     such payment on or after the stated maturity thereof, or

          (2)  reduce the percentage in principal amount of the outstanding
     Notes, the consent of whose holders is required for any such amendment or
     supplemental agreement or the consent of whose holders is required for any
     waiver provided for herein or in the Fiscal Agency Agreement, or

          (3)  modify any of the provisions of this Section or Section 9, except
     to increase any such percentage or to provide that certain other provisions
     of the Notes cannot be modified or waived without the consent of the holder
     of each outstanding Note affected thereby.

     It shall not be necessary for any act of holders under this Section 7 to
approve the particular form of any proposed amendment or supplemental agreement,
but it shall be sufficient if such act shall approve the substance thereof.

     Upon the execution of any agreement supplement to the Fiscal Agency
Agreement as permitted by this Section 7, the Notes and the Fiscal Agency
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of the Notes and the Fiscal Agency Agreement, as the
same pertains to the Notes, for all purposes; and every

                                       10
<PAGE>

holder of the Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.

     8.   Defaults and Remedies.  The occurrence of any of the following events
shall constitute an Event of Default with respect to the Notes:

          (a)  default in the payment of the principal of any of the Notes when
     the same becomes due and payable; or

          (b)  default in the payment of any installment of interest upon any of
     the Notes when the same becomes due and payable, and continuance of such
     default for a period of 30 days; or

          (c)  failure on the part of the Company duly to observe or perform any
     other of the covenants or agreements on the part of the Company in the
     Notes for a period of 90 days after the date on which written notice of
     such failure, requiring the Company to remedy the same, shall have been
     given to the Company by the Fiscal Agent by registered or certified mail or
     to the Company and the Fiscal Agent by the holders of at least 25% in
     aggregate principal amount of the Notes, or

          (d)  a decree or order by a court having jurisdiction in the premises
     shall have been entered adjudging the Company bankrupt or insolvent, or
     approving as properly filed a petition seeking reorganization of the
     Company under the Federal Bankruptcy Code or any other similar applicable
     Federal or State law, and such decree or order shall have continued
     undischarged and unstayed for a period of 60 days; or a decree or order of
     a court having jurisdiction in the premises for the appointment of a
     receiver or liquidator or trustee or assignee in the bankruptcy or
     insolvency of the Company or of its property, or for the winding up or
     liquidation of its affairs, shall have been entered, and such decree or
     order shall have continued undischarged and unstayed for a period of 60
     days; or

          (e)  the Company shall institute proceedings to be adjudicated
     bankrupt, or shall consent to the filing of a bankruptcy proceeding against
     it, or shall file a petition or answer or consent seeking reorganization
     under the Federal Bankruptcy Code or any other similar Federal or State
     law, or shall consent to the filing of any such petition or shall consent
     to the appointment of a receiver or liquidator or trustee or assignee in
     bankruptcy or insolvency of it or of its property, or shall make an
     assignment for the benefit of creditors or shall admit in writing its
     inability to pay its debts generally as they become due.

     If an Event of Default occurs and is continuing, the holders of at least
25% in principal amount of the Notes then outstanding may declare all the Notes
to be due and payable immediately. Holders of a majority in principal amount of
the Notes may waive an Event of

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<PAGE>

Default and rescind any related declaration except as provided in Section 9(a)
hereof. The Fiscal Agent may withhold from holders of Notes notice of any
continuing Event of Default, except in respect of a default in the payment of
principal of or interest on the Notes, if it determines that withholding such
notice is in their interest.

     9.   Waivers.

          (a)  The holders of not less than a majority in principal amount of
     the outstanding Notes may on behalf of the holders of the Notes waive any
     past default hereunder with respect to the Notes and its consequences,
     except a default

               (1)  in the payment of the principal of or interest on any Note,
          or

               (2)  In respect of a covenant or provision hereof which under
          Section 7 cannot be modified or amended without the consent of the
          holder of each outstanding Note affected.

          Upon any such waiver, such default shall cease to exist, and any Event
     of Default arising therefrom shall be deemed to have been cured, for every
     purpose of the Notes; but no such waiver shall extend to any subsequent or
     other default or impair any right consequent thereon.

          (b)  The Company may omit in any particular instance to comply with
     any term, provision or condition set forth in the Notes or the Fiscal
     Agency Agreement with respect to the Notes if before the time for such
     compliance the holders of at least 66-2/3% in principal amount of the
     outstanding Notes shall, by act of such holders, either waive such
     compliance in such instance or generally waive compliance with such term,
     provision or condition, but (i) without the consent of the holder of each
     Note affected thereby, no such waiver shall extend to or affect any term,
     provision or condition which under Section 7 cannot be modified or amended
     without the consent of the holder of each outstanding Note affected, and
     (ii) no such waiver shall extend to or affect any term, provision or
     condition except to the extent so expressly waived, and, until such waiver
     shall become effective, the obligations of the Company and any duties of
     the Fiscal Agent in respect of any such term, provision or condition shall
     remain in full force and effect.

     10.  Company May Consolidate Etc., Only on Certain Terms.  The Company
covenants that it will not merge or consolidate with any other corporation or
sell or convey all or substantially all of its assets to any person, firm or
corporation, except that the Company may merge or consolidate with, or sell or
convey all or substantially all of its assets to, any other corporation,
provided that (i) either the Company shall be the continuing corporation, or the
--------
successor corporation (if other than the Company) shall be a corporation
organized and existing under the laws of the United States of America or a State
thereof and such corporation shall expressly assume the due and punctual payment
of the principal of and interest on all the

                                       12
<PAGE>

Notes, according to their tenor, and the due and punctual performance and
observance of all of the covenants and conditions of this Note and the Fiscal
Agency Agreement to be performed by the Company, by supplemental agreement in
form satisfactory to the Fiscal Agent, executed and delivered to the Fiscal
Agent by such corporation, and (ii) the Company or such successor corporation,
as the case may be, shall not, immediately after such merger, consolidation,
sale or conveyance, be in default in the performance of any such covenant or
condition.

     Upon any consolidation of the Company with, or merger of the Company into,
any other person or any sale or conveyance of all or substantially all of the
assets of the Company in accordance with this Section 10, the successor person
formed by such consolidation or into which the Company is merged or to which
such sale or conveyance is made shall succeed to, and be substituted for, and
may exercise every right and power of the Company under this Note and the Fiscal
Agency Agreement with the same effect as if such successor person had been named
as the Company herein, and thereafter, except in the case of a lease, the
predecessor person shall be relieved of all obligations and covenants under the
Notes and the Fiscal Agency Agreement.

     11.  Unclaimed Amounts.  Any money deposited with the Fiscal Agent in trust
for the payment of the principal of or interest on any Note and remaining
unclaimed for twelve months after such principal or interest has become due and
payable shall be paid to the Company upon its request; and the holder of such
Note shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Fiscal Agent with respect
to such money shall thereupon cease.

     12.  Mutilated, Destroyed, Lost and Stolen Notes.  If any Note becomes
mutilated or defaced or is apparently destroyed, lost or stolen, the Fiscal
Agent shall, subject to the provisions of this Section 12, authenticate and
deliver a new Note in exchange and substitution for the mutilated or defaced
Note or in lieu of or in substitution for the apparently destroyed, lost or
stolen Note.

     Application for the authentication and delivery of a substitute Note
pursuant to this Section 12 may be made at the office of the Fiscal Agent. If
the applicant for any substitute Note shall furnish to the Company and the
Fiscal Agent (i) in the case of any such request in case of loss or theft, such
security or indemnity as may be required by the Company and the Fiscal Agent in
their sole discretion to indemnify and defend and to save each of them and any
agent of either of them harmless, and (ii) in the case of any request for a
substitute Note in case of destruction, loss or theft, evidence to the
satisfaction of the Company and the Fiscal Agent of the apparent destruction,
loss or theft of such Note and of the ownership thereof, then, in the absence of
notice to the Company or the Fiscal Agent that such Note has been acquired by a
bona fide purchaser, the Company shall execute and the Fiscal Agent shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a
new Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding.

                                       13
<PAGE>

     In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Note, pay such Note.

     Upon the issuance of any substitute Note under this Section 12, the Company
may require the payment of a sum sufficient to cover any tax assessment or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Fiscal Agent) connected
therewith.

     Every new Note issued pursuant to this Section in lieu of any destroyed,
lost or stolen Note shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of the Fiscal Agency Agreement equally and proportionately with any and
all other Notes.

     The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.

                                       14
<PAGE>

     13.  No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Notes or the Fiscal Agency Agreement, or
for any claim based on, in respect of or by reason of such obligations or their
creation. Each holder (and each beneficial owner) of a Note by accepting such
Note (or acquisition of a beneficial interest therein) waives and releases all
such liability. Such waiver and release are part of the consideration for the
issuance of the Notes.

     THIS NOTE SHALL FOR ALL PURPOSES BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     This Note shall not be valid or obligatory for any purpose until the
certificate of authentication hereon shall have been signed by the Fiscal Agent
under the Fiscal Agency Agreement.



           [The remainder of this page is left blank intentionally.]

                                       15
<PAGE>

IN WITNESS WHEREOF, the Company has caused this instrument to be signed in its
corporate name, manually or by facsimile, by an Authorized Representative and a
facsimile of its corporate seal to be affixed hereunto or imprinted hereon,
attested by the manual or facsimile signature of its Secretary or one of its
Assistant Secretaries.


                                        SIERRA PACIFIC POWER COMPANY



Attest:  _________________________      By: ___________________________
                                            Name:
                                            Title:


Dated: September 17, 1999


                 FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION

     This is one of the Notes referred to in the within-mentioned Fiscal Agency
Agreement.


                                        BANKERS TRUST COMPANY, as
                                        Fiscal Agent


                                        By: __________________________
                                            Authorized Signer

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