<PAGE>

                                                                    EXHIBIT 10.5

                           SUMMIT ENERGY VENTURES, LLC

              RESTRUCTURING AND TERMINATION OF MEMBERSHIP AGREEMENT

      This Agreement (this "Agreement") is entered into and effective as of
April 30, 2004, by and among Summit Energy Ventures LLC, a Delaware limited
liability company ("Summit"), Commonwealth Energy Corporation, a California
corporation ("Commonwealth"), Steven Strasser, in his individual capacity
("Strasser"), and Northwest Power Management, Inc., a Washington corporation
("Investment Manager") (collectively, the "Parties").

                                R E C I T A L S:

      A. Summit owns (i) 3,000,542 shares of pre-merger Series C Preferred Stock
and 545,557 shares of Common Stock of Envenergy, Inc., a Delaware corporation
("Envenergy") which will be converted into shares of Common Stock of Encorp,
Inc., a Delaware corporation ("Encorp"), upon the completion of the merger of
Envenergy and Encorp (the "Envenergy Interest"), (ii) 256 shares of Turbocorp
B.V., a private company with limited liability incorporated under the laws of
The Netherlands ("Turbocorp B.V."), after the issues of shares currently being
completed (the "Turbocorp Interest"), and (iii) assuming conversion of all
preferred shares, 5,902,951 shares of common stock and common stock equivalents
of Power Efficiency Corporation, a Delaware corporation ("Power Efficiency"), as
described in detail in Schedule X attached.

      B. Summit is governed by the Limited Liability Company Agreement of Summit
Energy Ventures, LLC, dated June 29, 2001, as amended by the First Amendment to
the Limited Liability Company Agreement of Summit Energy Ventures, LLC on August
1, 2001 and by the Second Amendment to the Limited Liability Company Agreement
of Summit Energy Ventures, LLC on February 27, 2002 (the "LLC Agreement").
Immediately prior to giving effect to this Agreement, CEC and Strasser
constitute all of the members of Summit.

      C. The Parties now desire to restructure the ownership of Summit and to
redeem and distribute the membership interest of Commonwealth, as specifically
set forth below (collectively, the "Restructuring").

      NOW, THEREFORE, in consideration of the promises and covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:

      1. DEFINED TERMS. Any capitalized terms used in this Agreement and not
specifically defined in this Agreement shall have the meanings given such terms
in the LLC Agreement.

<PAGE>

      2. CLOSING DATE. The Restructuring shall be deemed to be effective as of
12:01 a.m. Pacific Daylight Savings Time on the date of closing, which shall
take place as soon as practicable after the conditions set forth herein have
been satisfied (the "Closing Date").

      3. COMPLETE REDEMPTIONS; POWER EFFICIENCY NOTE.

            (a) Effective as of the Closing Date, Commonwealth (the "Redeeming
      Member") hereby unconditionally and irrevocably surrenders its entire
      right, title and interest in and to such Redeeming Member's Preferred
      Membership Interests and Common Membership Interests (as such terms are
      defined in the LLC Agreement) in Summit (such Redeeming Member's "Redeemed
      Interest"), including all rights and benefits of such Redeeming Member as
      a member of Summit, or as the assignee or other holder of an interest in
      Summit, and such Redeeming Member hereby retires and withdraws from
      Summit. From and after the Closing Date, the Redeeming Member shall have
      no further rights or interests in Summit as a member thereof or otherwise,
      including but not limited to any interest in the Net Profits, Net Losses,
      Net Cash Flow, Net Capital Cash Proceeds, Cash Available for Distribution,
      liquidation proceeds or capital of Summit, any right to manage or direct
      Summit or its affairs, any right to an accounting or other financial or
      other information with respect to Summit, or any other rights, benefits
      and interests attributable to such Redeeming Member's status as a member
      or as an assignee of an interest in Summit, either pursuant to the LLC
      Agreement or the Limited Liability Company Act of the State of Delaware
      (the "LLC Act"). Without limiting the foregoing, Commonwealth hereby
      withdraws as a member of Summit, effective as of the Closing Date.

            (b) As consideration for the redemption of the Redeeming Member's
      Redeemed Interest, Summit hereby unconditionally and irrevocably assigns
      to the Redeeming Member, effective as of the Closing Date and subject to
      Subsection 3(c) hereof, Summit's entire right, title and interest in (i)
      the Envenergy Interest, (ii) the Turbocorp Interest, (iii) 1,747,587
      shares of convertible preferred stock and 1,645,404 shares of Common Stock
      of Power Efficiency (the "PEC Shares"); and (iv) all of the cash owned by
      Summit on the Closing Date (the "Closing Date Cash Balance") less (y)
      $1,400,000; and (z) (A) any accrued and unpaid accounting, audit and legal
      fees incurred by Summit in accordance with the terms of the LLC Agreement
      relating to the operations of the business of Summit prior to the Closing
      Date, and (B) all legal fees incurred in connection with the Restructuring
      in an aggregate amount not to exceed $10,000 and accounting fees incurred
      in connection with the Restructuring (collectively, the "Fees").

            (c) Effective as of the Closing Date and as soon as practicable
      thereafter, Summit shall (i) assign to the Redeeming Member the Envenergy
      Interest, the Turbocor Interest, and the PEC Shares and (ii) transfer to
      the Redeeming Member the Closing Date Cash Balance less (y) $1,400,000 and
      (z) payment of and provision for the Fees.

            (d) Reference is made to the loan advanced or to be advanced by
      Summit to Power Efficiency in the maximum aggregate principal amount of
      $300,000, evidenced by a note of Power Efficiency in favor of Summit dated
      April 20, 2004, (the "PE Note"). As additional consideration for the
      redemption, Summit agrees that it will assign,

                                       2

<PAGE>

      without recourse, its entire interest in the PE Note and all security
      therefor to Commonwealth as of May 31, 2004, if the PE Note is not paid in
      full prior to this date. Any payments of principal and interest on the PE
      Note made by Power Efficiency on or before May 31, 2004 will be paid by
      Strasser, Northwest Power Management and/or Summit to Commonwealth.

      4. ADMISSION OF NEW MEMBER. By execution of this Agreement, each Party
hereby approves the admission of John Lackland ("Lackland") as a member of
Summit, and Lackland is hereby admitted as a member of Summit, effective as of
the Closing Date. From and after the Closing Date, Lackland shall have all of
the rights of a member with respect to Summit as provided under the LLC
Agreement and the LLC Act. As consideration for being admitted as a member of
Summit, concurrently with the execution of this Agreement, Lackland shall
advance cash in the amount of $2,000 to Summit as a contribution to the capital
of Summit, which amount shall not be included in the Capital. In addition to the
rights of Lackland as a member of Summit as described above, Lackland shall have
such economic interests and other rights, subject to such obligations, as shall
be set forth in the LLC Agreement.

      5. LLC AGREEMENT AMENDED. To the extent that the provisions of this
Agreement change the ownership or governance of Summit or any other provision of
the LLC Agreement as currently in effect, the Parties agree that the LLC
Agreement is hereby amended to give full effect to all of the provisions of this
Agreement. Without limiting the immediately preceding sentence, effective as of
the Closing Date, (i) Commonwealth hereby withdraws as a member of Summit and
(ii) Lackland is hereby admitted as a member of Summit owning five hundredths of
one percent (0.05%) of the Common Membership Interests. The Investment Committee
and the Investment Manager hereby approve such withdrawal and admission pursuant
to the LLC Agreement. The LLC Agreement as amended by this Section 5 shall
govern the operation of Summit until such time as Lackland, Strasser and Summit
(with their respective successors or assigns) enter into a Restated LLC
Agreement. Each party to this Agreement agrees to execute and deliver such other
documents or instruments as any party hereto may reasonably determine to be
necessary or advisable to effect and evidence the provisions of this Section 5.

      6. RESIGNATION OF INVESTMENT COMMITTEE. Effective as of the Closing Date,
the current members of the Summit Investment Committee shall resign their
positions.

      7. REPRESENTATIONS AND WARRANTIES OF REDEEMING MEMBER. The Redeeming
Member hereby represents and warrants to Summit, Strasser and the Investment
Manager that as of the date hereof:

            (a) The Redeeming Member is a corporation, duly organized, validly
      existing and in good standing under the laws of the State of California
      and has full power and authority under applicable law to own its
      properties and to carry on its business as now being conducted, and is
      duly authorized and has full power and authority to execute and deliver
      this Agreement and consummate the transactions contemplated by this
      Agreement.

                                       3

<PAGE>

            (b) The Redeeming Member is the legal and beneficial owner of its
      Redeemed Interest and has good and marketable title to its Redeemed
      Interest, free and clear of any and all liens, claims, equities, security
      interests, encumbrances, options, charges and restrictions of any nature
      whatsoever except as may exist pursuant to the LLC Agreement and this
      Agreement.

            (c) The Redeeming Member's execution and delivery of this Agreement
      and the performance of its obligations hereunder will not result in the
      breach of or a default under any agreement, contract, commitment,
      indenture, bond, license or other obligation to which such Redeeming
      Member is a party or by which such Redeeming Member or any of its assets
      may be bound or affected, nor violate any law, statute, rule, regulation
      nor any order, writ or decree of any court.

            (d) The Redeeming Member is acquiring the Envenergy Interest, the
      Turbocorp Interest and the PEC Shares for its own account for investment
      purposes only and not with a view to, or for resale in connection with,
      any distribution or public offering of any thereof within the meaning of
      the United States Securities Act of 1933 and applicable United States
      state securities laws.

            (e) This Agreement and the provisions hereof are legal, valid and
      binding against the Redeeming Member in accordance with their terms,
      except to the extent that enforceability may be limited by applicable
      bankruptcy, insolvency and other similar laws, by any equitable principles
      affecting creditors' rights generally, and by the discretion of courts in
      granting equitable remedies, regardless of whether such enforceability is
      considered in a proceeding at law or in equity and regardless of whether
      such limitations are derived from constitutions, statutes, judicial
      decisions or otherwise.

      8. REPRESENTATIONS AND WARRANTIES OF SUMMIT. Summit, Strasser and the
Investment Manager (individually and collectively) hereby represent and warrant
to Commonwealth that as of the date hereof:

            (a) Summit is a limited liability company, duly organized, validly
      existing and in good standing under the laws of the State of Delaware and
      has full power and authority under applicable law to own its properties
      and to carry on its business as now being conducted.

            (b) Summit is the legal and beneficial owner of each of the
      Envenergy Interest, the Turbocorp Interest, the PEC Shares, and the
      Closing Date Cash Balance (collectively, the "Redemption Consideration")
      and has good and marketable title to the Redemption Consideration, free
      and clear of any and all liens, claims, equities, security interests,
      encumbrances, options, charges and restrictions of any nature whatsoever,
      except as provided in the agreements and other documents attached hereto
      as Exhibits A and B.

            (c) This Agreement and the provisions hereof are legal, valid and
      binding against Summit, Strasser and the Investment Manager in accordance
      with their terms, except to the extent that enforceability may be limited
      by applicable bankruptcy, insolvency and

                                       4

<PAGE>

      other similar laws, by any equitable principles affecting creditors'
      rights generally, and by the discretion of the courts in granting
      equitable remedies, regardless of whether such enforceability is
      considered in a proceeding at law or in equity and regardless of whether
      such limitations are derived from constitutions, statutes, judicial
      decisions or otherwise.

            (d) Summit's execution and delivery of this Agreement and the
      performance of its obligations hereunder will not (i) result in the breach
      of or a default under any agreement, contract, commitment, indenture,
      bond, license or other obligation to which Summit is a party or by which
      Summit or any of its assets may be bound or affected, or (ii) violate any
      law, statute, rule or regulation applicable to Summit or any order, writ
      or decree of any court applicable and known to Summit.

            (e) No third party consents are required for Summit to transfer the
      Redemption Consideration to Commonwealth except for consents which have
      been obtained or Summit reasonably expects to obtain prior to the Closing
      Date.

            (f) The Investment Manager has discharged its duties under the LLC
      Agreement in accordance with the applicable provisions of Article 4 of the
      LLC Agreement, and applicable law and government regulation, in all
      material respects; provided, however, that nothing contained in this
      Section 8(f) or in any other provision of this Agreement shall be deemed
      to increase the standard of care applicable to, or the related liability
      of, the Investment Manager (or any related liability of Strasser) beyond
      that provided in Section 4.7 of the LLC Agreement or alter in any manner
      whatsoever relating to any provision of such Section 4.7 or Section 4.8 of
      the LLC Agreement.

            (g) The general ledger records of Summit delivered by Summit to
      Commonwealth as of May 14, 2004, are accurate and complete in all material
      respects.

      9. COVENANTS OF COMMONWEALTH. Commonwealth hereby covenants to Summit that
as of the date hereof:

            (a) Commonwealth agrees to be bound by all agreements relating to
      Encorp and the Envenergy Interest and Turbocorp B.V. to which Summit is
      currently a party, including. without limitation, the Articles of
      Association and Amended and Restated Shareholders Agreement of Turbocorp
      B.V. Copies of such agreements are attached hereto as Exhibit A.

            (b) Commonwealth further agrees to be bound by the consent and
      agreement of Summit delivered to PEC dated May 10, 2004, attached hereto
      as Exhibit B, with respect to the conversion of PEC Series A Preferred
      Stock.

      10. CONDITIONS TO OBLIGATIONS OF COMMONWEALTH. The obligation of
Commonwealth to effect the Restructuring shall be subject to the fulfillment on
or prior to the Closing Date of the following additional conditions, any one or
more of which may be waived in whole or in part by Commonwealth:

                                       5

<PAGE>

            (a) the Parties will write a mutually agreeable press release
      describing the Restructuring;

            (b) the Board of Directors of Commonwealth shall have approved the
      execution, delivery and performance of this Agreement by Commonwealth; and

            (c) all legal matters with respect to this Agreement and the
      transactions provided for herein shall be reasonably satisfactory to
      counsel to Commonwealth.

      11. CONDITIONS TO OBLIGATIONS OF SUMMIT, STRASSER AND THE INVESTMENT
MANAGER. The obligation of Summit, Strasser and the Investment Manager to effect
the Restructuring shall be subject to the fulfillment on or prior to the Closing
Date of the following additional conditions, any one or more of which may be
waived in whole or in part by Summit:

            (a) the Parties will write a mutually agreeable press release
      describing the Restructuring; and

            (b) all legal matters with respect to this Agreement and the
      transactions provided for herein (including, without limitation, the
      resolutions evidencing the approval of the Board of Directors of
      Commonwealth referred to in Section 10(b) above) shall be reasonably
      satisfactory to Jones Vargas, counsel to Summit, Strasser and the
      Investment Manager.

      12. INDEMNIFICATION CONCERNING REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Sections 7 and 8 of this Agreement
shall survive for a period of one (1) year from the date of this Agreement. Each
party making representations and warranties in such Sections (the "Indemnitor")
agrees to indemnify, defend and hold the other Parties, and their shareholders,
officers, directors, members, managers, partners, employees, heirs, executors,
administrators, personal representatives, successors and assigns (the
"Indemnitees") harmless from and against any and all loss, cost, damage,
liability or expense (including without limitation attorneys' fees, court costs
and litigation expenses) which the Indemnitees may suffer, sustain or incur as a
result of, arising under or in connection with any inaccuracy or breach of any
representation or warranty of the Indemnitor contained in this Agreement.

      13. INDEMNIFICATION OF COMMONWEALTH. Except to the extent otherwise
specifically provided in this Agreement (including Section 12 hereof), the
Investment Manager, Strasser and members of Summit (as constituted after the
date of the redemptions contemplated by this Agreement) shall indemnify, defend,
and hold Commonwealth and its Affiliates, members, managers, officers,
directors, shareholders, partners, employees and agents, and their respective
successors, executors, administrators and personal representatives, harmless
from and against


                                       6

<PAGE>

any loss, liability, damage, cost or expense (including without limitation
attorneys' fees, court costs and litigation expenses) sustained or incurred by
Commonwealth or any one or more of such other parties, arising from or with
respect to the operations, activities, business and affairs of Summit after the
Closing Date.

      14. INDEMNIFICATION OF SUMMIT, INVESTMENT MANAGER AND MEMBERS. Except to
the extent otherwise specifically provided in this Agreement (including Section
12 hereof), Commonwealth shall indemnify, defend and hold Summit, Strasser and
the Investment Manager, the respective members and shareholders of Summit and
the Investment Manager, and their respective Affiliates, partners, members,
managers, officers, directors, shareholders, partners, employees and agents, and
their respective successors, executors, administrators and personal
representatives, harmless from and against any loss, liability, damage, cost or
expense (including without limitation attorneys' fees, court costs and
litigation expenses) sustained or incurred by any one or more of such Parties,
arising from any act by Commonwealth after the date of this Agreement.
Commonwealth shall further indemnify, defend and hold the Investment Manager and
Strasser harmless from and against any loss, liability, damage, cost or expense
(including without limitation attorneys' fees, court costs and litigation
expenses) sustained or incurred any one or more of such parties arising from a
lawsuit or claim by a shareholder of Commonwealth relating to (i) the act of
formation of Summit or (ii) the act of the redemption of Commonwealth's interest
in Summit, and the transactions effecting such redemption, pursuant to this
Agreement.

      15. INDEMNIFICATION PURSUANT TO LLC AGREEMENT. Except to the extent
otherwise specifically provided in this Agreement, (a) the Investment Manager
and Strasser shall indemnify, defend and hold Commonwealth and its Affiliates,
members, managers, officers, directors, shareholders, partners, employees and
agents, and their respective successors, executors, administrators and personal
representatives, harmless from and against any loss, liability, damage, cost or
expense (including without limitation attorneys' fees, court costs and
litigation expenses) sustained or incurred by Commonwealth or any one or more of
such other parties, arising from or with respect to any breach by the Investment
Manager of its duties, or the failure of the Investment Manager to perform its
responsibilities, in each case as set forth in Article 4 of the LLC Agreement,
subject to the provisions of Section 4.7(b) of the LLC Agreement; and (b) the
provisions of Section 4.8 of the LLC Agreement shall remain in full force and
effect in accordance with their terms with respect to matters occurring prior to
the Closing Date.

      16. RELEASES.

            (a) Except as specifically provided in Sections 3, to the extent
      (but only to the extent) of the obligations of Summit, Strasser and the
      Investment Manager and Commonwealth to take the specific actions provided
      for therein, and Sections 12, 13 and 15 of this Agreement, Commonwealth
      hereby unconditionally and irrevocably releases Summit, Strasser, and the
      Investment Manager, the respective members and shareholders of Summit and
      the Investment Manager, and their respective Affiliates, partners,
      members, managers, officers, directors, shareholders and employees from
      any and all claims or rights which Commonwealth may have against any such
      party arising under or in any manner related to this Agreement, the
      transactions provided for herein,

                                       7

<PAGE>

      the Redemption Consideration, the LLC Agreement or the operation,
      activities, business and affairs of Summit, including but not limited to
      any and all obligations for the distribution or return of capital and the
      payment of fees.

            (b) Except as specifically provided in Sections 3, 12 and 14 of this
      Agreement, Summit, Strasser and the Investment Manager and its members,
      affiliates, directors and employees hereby unconditionally and irrevocably
      release Commonwealth and its Affiliates, partners, members, managers,
      officers, directors, shareholders and employees from any and all claims or
      rights which Summit may have against any such party arising under or in
      any manner related to the Redemption Consideration, Summit, the LLC
      Agreement or the operation, activities, business and affairs of Summit,
      including but not limited to any obligation to contribute capital, loan
      funds, reimburse any expenses or otherwise advance funds to Summit.

      17. STANDSTILL AGREEMENT OF SUMMIT. Prior to the first anniversary of the
Closing Date:

            (a) Summit, its members, the Investment Manager, Strasser, or an
      Affiliate of any thereof, either individually or as a member of a group
      (an "Acquiror") shall not, directly or indirectly (through the acquisition
      of control of another person or otherwise), alone or in concert with
      others, (i) at any time beneficially own any voting securities of
      Commonwealth greater than, or (ii) acquire, solicit an offer to sell or
      agree to acquire, by purchase, gift or otherwise, any direct or indirect
      beneficial interest in any voting securities of Commonwealth if the effect
      of such acquisition would be to increase the aggregate number of voting
      securities of Commonwealth then beneficially owned, directly or
      indirectly, by an Acquiror and its affiliates to greater than, which then
      represents 4.99% of the voting power of the securities of Commonwealth
      entitled to vote generally for the election of directors of Commonwealth
      (the "Percentage Limitation"); provided, however, that the foregoing
      restriction in this subsection (a) shall be deemed not to be violated if
      the aggregate percentage ownership of an Acquiror and its affiliates is
      increased as a result of a recapitalization of Commonwealth or a
      repurchase of securities by Commonwealth or any other action taken by
      Commonwealth.

            (b) Neither any Acquiror nor any of its affiliates shall directly or
      indirectly "solicit" "proxies" with respect to the voting securities of
      Commonwealth under any circumstances or become a "participant" in any
      "election contest" (as such terms are used in proxy rules under the 1934
      Act, as presently in effect) relating to the election of directors of
      Commonwealth or seek to initiate, propose and otherwise solicit
      stockholders of Commonwealth for the approval of one or more stockholder
      proposals or induce or attempt to induce any other person to initiate any
      stockholder proposal.

            (c) Neither an Acquiror nor any of its affiliates shall join any
      partnership, limited partnership, syndicate or other group, enter into a
      voting trust or similar agreement, or otherwise act in concert with any
      person, or induce a third party to propose a transaction, for the purpose
      of then or thereafter acquiring, holding, voting or disposing of
      beneficial ownership of shares of voting securities of Commonwealth or for
      the purpose of circumventing the provisions of this Agreement.

                                       8

<PAGE>

            (d) Neither an Acquiror nor any of its affiliates shall merger with
      or into, or consolidate with, any other corporation, unless (i) the
      Acquiror is the surviving corporation or the surviving corporation and its
      affiliates agree in writing to be bound by this Agreement and (ii) after
      consummation of the transaction, the surviving corporation and its
      affiliates do not beneficially own, directly or indirectly, an aggregate
      number of voting securities of Commonwealth greater than the Percentage
      Limitation.

            (e) Neither an Acquiror nor any of its Affiliates shall, directly or
      indirectly (i) make or propose a tender or exchange offer for any voting
      securities of Commonwealth or for any other securities of Commonwealth, or
      make or propose an offer to purchase all or substantially all the assets
      of Commonwealth or otherwise effect a business combination with
      Commonwealth; (ii) propose any business combination, sale or transfer of
      assets, liquidation or other extraordinary corporate transaction with
      Commonwealth; (iii) publicly disclose an intent, purpose, plan or proposal
      with respect to Commonwealth or the voting securities of Commonwealth
      inconsistent with the provisions of this Agreement; (iv) furnish to any
      person not affiliated with or employed by an Acquiror, or acting as
      counsel or as an advisor to an Acquiror, non-public, confidential
      information ("Confidential Information") regarding commonwealth or its
      affiliates except with the consent of Commonwealth or as required by
      applicable law (information will not be deemed Confidential Information
      that (x) is already in the possession of an Acquiror and was not obtained
      from Commonwealth or its affiliates, (y) becomes available in the public
      domain other than as a result of disclosure by an Acquiror or its
      affiliates, or the employees and advisors of an Acquiror or its
      affiliates, or (z) is not acquired from Commonwealth or its affiliates or
      persons known by an Acquiror or its affiliates to be in breach of an
      obligation of secrecy to Commonwealth or its affiliates); or (v) assist,
      participate in, facilitate, encourage or solicit any effort or attempt by
      any other person or group to do or seek to do any of the actions
      restricted or prohibited under this Section 17.

            (f) No request or proposal to amend, modify or waive any provision
      of this Agreement shall be made by an Acquiror or its affiliates or
      solicited except in a nonpublic and confidential manner and each such
      proposal or request shall be accompanied by a written opinion of
      independent counsel, selected by an Acquiror and with a recognized
      expertise in the securities laws of the United States of America,
      addressed to each party to which such proposal or request is directed, to
      the effect that, based solely on the facts known to, and the reasonable
      assumptions made by, such counsel and recited in such opinion, such
      counsel believes that such proposal or request and the subject matter
      thereof, as so presented, does not, by itself, require disclosure by any
      party hereto or any affiliate of any such party pursuant to any laws,
      rules, regulations, including, without limitation, the Securities Act of
      1933 or the 1934 Act and any rule or regulation promulgated thereunder.

      18. FURTHER ACTS. Each party agrees to do such further acts and execute,
deliver, file and record such further documents and instruments as may be
necessary or advisable to effectuate, evidence and record the transactions
contemplated by this Agreement, including but not limited to an amendment to or
restatement of the LLC Agreement and any other public filings or

                                       9

<PAGE>

recordings to the extent necessary to correct any statements therein that are no
longer accurate by reason of the transactions pursuant to this Agreement.

      19. NON-DEFAMATION; NON-DISPARAGEMENT. The Parties agree not to make any
derogatory or untrue statement in any format, whether written, electronic, or
oral to the press or any individual or entity regarding any other Party, this
Agreement or the transactions contemplated hereby.

      20. SURVIVAL. All agreements, representations, and warranties made by each
party herein shall survive the date of this Agreement for a period of three
years (except as otherwise expressly provided in Sections 12 and 17 hereof) and
shall be deemed to be material and to have been relied upon by each other party
to this Agreement.

      21. THIRD PARTIES. This Agreement is for the sole and exclusive benefit of
the Parties and their respective successors and assigns, and no third party is
intended to or shall have any rights or benefits hereunder.

      22. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the Parties and their respective heirs, executors,
administrators, successors and assigns.

      23. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the Parties regarding subject matter hereof and supercedes all prior
agreements, whether written or oral with regard thereto, including but not
limited to the LLC Agreement.

      24. MODIFICATIONS. No change, modification or amendment shall be made to
this Agreement unless set forth in writing and signed by all of the Parties
affected thereby.

      25. SEVERABILITY. If any provision of this Agreement or the application of
such provision to any person or circumstance shall be held invalid, the
remainder of this Agreement, or the application of such provision to persons or
circumstances, other than those as to which it is held invalid, shall not be
affected.

      26. APPLICABLE LAW. This Agreement shall be governed by the laws of the
State of Delaware.

      27. RECITALS; HEADINGS; CONSTRUCTION. The Recitals to this Agreement are
hereby incorporated in and made a part of this Agreement, and each party hereby
acknowledges the accuracy of the Recitals. The headings in this Agreement are
inserted for convenience and identification only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision. Wherever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of any noun or pronoun shall include the plural and vice
versa.

      28. COUNTERPARTS. This Agreement may be executed in multiple counterparts
with separate signature pages, each such counterpart shall be considered an
original, but all of which together shall constitute one and the same
instrument.

                                       10

<PAGE>

      29. DISPUTE RESOLUTION. In the event of any dispute under this Agreement,
including but not limited to any claim that a breach has occurred, that cannot
be resolved after fifteen (15) calendar days of good faith negotiations, such
dispute shall be resolved by binding arbitration held in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (the
"Association") in Orange County, City of Tustin, State of California. In order
to commence arbitration, a party shall give written notice, after the expiration
of the good faith negotiations period, to the other Parties thirty (30) days
before filing any demand for arbitration. The Parties shall bear their own costs
of any arbitration.

      30. IN WITNESS WHEREOF, each of the Parties has executed this Agreement as
of the date first set forth above.

                              SUMMIT ENERGY VENTURES, LLC, a
                              Delaware limited liability company

                              By: Northwest Power Management, Investment Manager

                                      By: /s/ Steven Z. Strasser
                                          -----------------------------
                                          Steven Z. Strasser, President

                              By: Steven Z. Strasser, an individual

                                      By: /s/ Steven Z. Strasser
                                          ------------------------------
                                          Steven Z. Strasser

                              COMMONWEALTH ENERGY
                              CORPORATION, a California corporation

                              By: /s/ Ian B. Carter
                                  -------------------------------------
                                  Name: Ian B. Carter
                                  Title:Chairman and Chief Executive Officer

                              /s/ Steven Z. Strasser
                              ----------------------
                              Steven Z. Strasser

                                       11

<PAGE>

                              INVESTMENT COMMITTEE:

                              /s/ Ian B. Carter
                              -----------------------------------------
                              Ian B. Carter, Member

                              /s/ Robert C. Perkins
                              -----------------------------------------
                              Robert C. Perkins, Member

                              NORTHWEST POWER MANAGEMENT,
                              INC., a Washington corporation, as Investment
                              Manager

                              By: /s/Steven Z. Strasser
                                  -------------------------------------
                                  Steven Z. Strasser, President

                                       12

<PAGE>

                                   SCHEDULE X

         DISTRIBUTION OF POWER EFFICIENCY SHARES IN SUMMIT RESTRUCTURING

<TABLE>
<CAPTION>
                    DISTRIBUTION OF ACTUAL SHARES OUTSTANDING AT 5/14/04
                    ----------------------------------------------------
CLASS OF SHARES            Total           to CEC         to SEV
---------------          ---------       ---------       ---------
<S>                      <C>             <C>             <C>
Preferred Shares         3,328,737       1,747,587       1,581,150
Common Shares            3,134,102       1,645,404       1,488,698
                         ---------       ---------       ---------
Total                    6,462,839       3,392,990       3,069,849
                         ---------       ---------       ---------
</TABLE>

<TABLE>
<CAPTION>
                                              DISTRIBUTION AT 5/14/04 (ASSUMING PREFERRED FULLY CONVERTED ON 5/14/04)
                                              -----------------------------------------------------------------------
                                                            Total             to CEC             to SEV
                                                          ---------          ---------          ---------
<S>                                                       <C>                <C>                <C>
Common Shares From Conversion                             2,768,849          1,453,646          1,315,203
Common Shares Previously Outstanding                      3,134,102          1,645,404          1,488,698
                                                          ---------          ---------          ---------
Total                                                     5,902,951          3,099,049          2,803,902
                                                          ---------          ---------          ---------
</TABLE>