<PAGE>

Exhibit 10(e)



                     ASSET PURCHASE AGREEMENT

                   dated as of November 1, 1998

                         by and between

                       PP&L GLOBAL, INC.

                            And

                   PUGET SOUND ENERGY, INC.

<PAGE>
                            CONTENTS

ARTICLE I SALE OF ASSETS AND CLOSING........................ 2

     1.01  The Sale..........................................2
     1.02  Liabilities.......................................7
     1.03  Purchase Price; Allocation........................9
     1.04  Purchase Price Adjustment.........................9
     1.05  Closing..........................................10
     1.06  Prorations.......................................12
     1.07  Further Assurances; Post-Closing Cooperation.....13
     1.08  Third Party Consents.............................14
     1.09  Insurance Proceeds...............................15
     1.10  Inclusion/Exclusion of Certain Assets............15

ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER.........16

     2.01  Corporate Existence of Seller....................16
     2.02  Authority........................................17
     2.03  No Conflicts.....................................17
     2.04  Governmental Approvals and Filings...............18
     2.05  Reports..........................................18
     2.06  Taxes............................................19
     2.07  Legal Proceedings................................19
     2.08  Compliance with Laws and Orders..................19
     2.09  Real Property....................................20
     2.10  Tangible Personal Property.......................21
     2.11  Intellectual Property Rights.....................21
     2.12  Contracts........................................21
     2.13  Licenses.........................................23
     2.14  Insurance........................................23
     2.15  Environmental Matters............................23
     2.16  Absence of Condemnation Proceedings..............24
     2.17  Regulation as a Utility..........................24
     2.18  Brokers..........................................25
     2.19  Acknowledgment of Purchaser......................25
     2.20  Disclaimers Regarding Assets.....................25

ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER.....25

     3.01  Corporate Existence..............................26
     3.02  Authority........................................26
     3.03  No Conflicts.....................................26
     3.04  Governmental Approvals and Filings...............27
     3.05  Legal Proceedings................................27
     3.06  Compliance with Laws and Orders..................28
     3.07  Regulation as a Utility..........................28
     3.08  Brokers..........................................28
     3.09  Financing........................................28
     3.10  Financial Statements.............................28
     3.11  Opportunity to Inspect Assets....................29

ARTICLE IV COVENANTS OF SELLER..............................29

     4.01  Regulatory and Other Approvals...................29
     4.02  HSR Filings......................................30
     4.03  Investigation by Purchaser.......................30
     4.04  No Solicitations.................................31
     4.05  Conduct of Business..............................31
     4.06  Certain Restrictions.............................32
     4.07  Security Deposits................................34
     4.08  Delivery of Books and Records, etc.; Removal of
           Property.........................................34
     4.09  Fulfillment of Conditions........................34
     4.10  Observation, Inspection and Participation........34
     4.11  Notice of Breach.................................35
     4.12  Bridge Financing Fees............................35
     4.13  Special Maintenance and Capital Expenditures.....36

ARTICLE V COVENTANTS OF PURCHASER...........................36

     5.01  Regulatory and Other Approvals...................36
     5.02  HSR Filings......................................37
     5.03  PPUC Approval for Holding Company................37
     5.04  Notice of Breach.................................38
     5.05  Fulfillment of Conditions........................38
     5.06  Tax-Exempt Bond Financed Pollution Control
           Facilities.......................................38
     5.07  Purchaser Financing..............................39

ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASER...........39

     6.01  Representations and Warranties...................39
     6.02  Performance......................................40
     6.03  Officers' Certificates...........................40
     6.04  Orders and Laws..................................40
     6.05  Regulatory Consents and Approvals................40
     6.06  Colstrip Rights of First Refusal.................40
     6.07  Third Party Consents.............................40
     6.08  No Seller Material Adverse Effect................41
     6.09  Proceedings......................................41
     6.10  Deliveries.......................................41
     6.11  Colstrip Operations Arrangements.................41
     6.12  Purchaser Financing..............................41
     6.13  Opinion of Counsel...............................41
     6.14  Transfer of MPC Generation Assets................41

ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLER.............42

     7.01  Representations and Warranties...................42
     7.02  Performance......................................42
     7.03  Officers' Certificates...........................42
     7.04  Orders and Laws..................................42
     7.05  Regulatory Consents and Approvals................43
     7.06  Third Party Consents.............................43
     7.07  Opinion of Counsel...............................43
     7.08  No Purchaser Material Adverse Effect.............43
     7.09  Proceedings......................................43
     7.10  Colstrip Rights of First Refusal.................44
     7.11  Deliveries.......................................44

ARTICLE VIII TAX MATTERS AND POST-CLOSING TAXES.............44

     8.01  Transfer Taxes...................................44
     8.02  Returns with Respect to Prorated Taxes...........44

ARTICLE IX SURVIVAL; NO OTHER REPRESENTATIONS...............45

     9.01  Survival of Representations, Warranties, Covenants 
           and Agreements                                   45
     9.02  No Other Representations.........................45

ARTICLE X INDEMNIFICATION...................................46

     10.01  Other Indemnification...........................46
     10.02  Method of Asserting Claims......................49
     10.03  Exclusivity.....................................53
     10.04  Purchaser's Release of Seller Under the Colstrip
            Contracts.......................................53

ARTICLE XI TERMINATION......................................53

     11.01  Termination.....................................53
     11.02  Effect of Termination...........................54

ARTICLE XII DEFINITIONS.....................................55

     12.01  Definitions.....................................55

ARTICLE XIII MISCELLANEOUS..................................71

     13.01  Notices.........................................71
     13.02  Bulk Sales Act..................................72
     13.03  Entire Agreement................................72
     13.04  Expenses........................................72
     13.05  Public Announcements............................73
     13.06  Confidentiality.................................73
     13.07  Waiver..........................................74
     13.08  Amendment.......................................74
     13.09  No Third Party Beneficiary......................74
     13.10  No Assignment; Binding Effect...................75
     13.11  Headings........................................75
     13.12  Invalid Provisions..............................75
     13.13  Governing Law...................................76
     13.14  Counterparts....................................76
     13.15  Consent to Assignment...........................76

SCHEDULES

     Schedule I    Pre-Closing Known Remedial Liabilities

EXHIBITS

     Exhibit A     General Assignment and Bill of Sale
     Exhibit B     Assumption Agreement
     Exhibit C     Pollution Control Facilities
     Exhibit D     Officer's Certificate of Seller
     Exhibit E     Secretary's Certificate of Seller
     Exhibit F     Wholesale Transition Service Agreement
     Exhibit G-1   Opinion of Counsel to Seller
     Exhibit G-2   Opinion of Montana Counsel to Seller
     Exhibit H     Officer's Certificate of Purchaser
     Exhibit I     Secretary's Certificate of Purchaser
     Exhibit J     Opinion of Counsel to Purchaser

<PAGE>
                 ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT dated as of November 1, 
1998 is made and entered into by and between PP&L Global, 
Inc., a Pennsylvania corporation ("Purchaser"), and Puget 
Sound Energy, Inc., a Washington corporation ("Seller").  
Capitalized terms not otherwise defined herein have the 
meanings set forth in Section 12.01.

WHEREAS, Seller and its subsidiaries engage in a number 
of diversified energy related businesses;

	WHEREAS, Seller's principal business is regulated utility 
operations involving the generation, purchase, transmission 
and distribution of electricity and the purchase, 
transportation and distribution of natural gas in Washington; 
and

	WHEREAS, Seller desires to sell, transfer and assign to 
Purchaser, and Purchaser desires to purchase and acquire from 
Seller, Seller's undivided interests in Colstrip Units 1&2 and 
Colstrip Units 3&4 and related transmission assets (as defined 
herein, the "PSE Colstrip Interests"), Seller's rights under 
the Colstrip Contracts (as defined herein) and certain other 
assets of Seller relating to the PSE Colstrip Interests, and 
in connection therewith, Purchaser has agreed to assume 
certain of the liabilities of Seller relating to such assets, 
all on the terms set forth herein;

	WHEREAS, on the date hereof PP&L Resources, Inc., a 
Pennsylvania corporation and the parent of Purchaser 
("Parent"), has entered into an Equity Contribution Agreement 
(the "Contribution Agreement") with Purchaser and Seller;

NOW, THEREFORE, in consideration of the mutual covenants 
and agreements set forth in this Agreement, and for other good 
and valuable consideration, the receipt and sufficiency of 
which are hereby acknowledged, the parties hereto agree as 
follows:

                           ARTICLE I

                   SALE OF ASSETS AND CLOSING

1.01  The Sale

	(a)  On the terms and subject to the conditions set forth 
in this Agreement, Seller will sell, transfer, convey, assign 
and deliver to Purchaser, and Purchaser will purchase and pay 
for, at the Closing, free and clear of all Liens other than 
Permitted Liens (as such term is defined with respect to any 
date after the Closing), all of Seller's right, title and 
interest in, to and under the PSE Colstrip Interests and the 
Assets and Properties used or held for use principally in 
connection with the operation of the Colstrip Facilities, 
except as otherwise provided in Section 1.01(b), as the same 
shall exist as of the Closing including, but not limited to 
the following (collectively with any proceeds and awards 
referred to in Section 1.09, the "Assets"):

	(i)  Real Property.  The real property (including all 
buildings, structures, fixtures and other improvements 
thereon) used or held for use in connection with or related to 
the operation of the Colstrip Facilities, as described in 
Section 1.01(a)(i) of the Disclosure Schedule, which real 
property is held in fee, easement, permit interest or other 
interest, as the case may be (the "Real Property");

	(ii)  Real Property Leases.  (A) The leases and subleases 
of real property used or held for use in connection with or 
related to the operation of the Colstrip Facilities, as 
described in Section 1.01(a)(ii)(A) of the Disclosure 
Schedule, as to which Seller is the lessor or sublessor and 
(B) the leases and subleases of real property used in 
connection with or related to the operation of the Colstrip 
Facilities, as described in Section 1.01(a)(ii)(B) of the 
Disclosure Schedule, as to which Seller is the lessee or 
sublessee, together with any options to purchase the 
underlying property and leasehold improvements thereon, and in 
each case all other rights, subleases, licenses, permits, 
deposits and profits appurtenant to or related to such leases 
and subleases (the leases and subleases described in 
subclauses (A) and (B), the "Real Property Leases");

	(iii)  Inventory.  All inventories of fuels, supplies, 
materials and spares used or held for use in connection with 
the operation of the Colstrip Facilities located on the Real 
Property or the real property subject to the Real Property 
Leases, held for use principally in connection with, or in 
transit to the Colstrip Facilities on the date of the Closing 
(a listing of the fuel inventories, as of September 30, 1998, 
is included in Section 1.01(a)(iii) of the Disclosure 
Schedule) (the "Inventory");

	(iv)  Tangible Personal Property.  All machinery, 
equipment, vehicles, furniture and other personal property 
located where the operation of the Colstrip Facilities is 
conducted, or used or held for use in connection with the 
operation of the Colstrip Facilities (including but not 
limited to the items listed in Section 1.01(a)(iv) of the 
Disclosure Schedule), together with all buildings and 
structures ("Improvements") pertaining to Colstrip Units 3 and 
4, including Seller's interest in the facilities shared by 
Colstrip Units 1, 2, 3 and 4 relating thereto, as to those 
Improvements which have been severed from the Real Property 
and are to be treated as personal property, and all warranties 
against manufacturers or vendors relating thereto, to the 
extent that such warranties are freely transferable (the 
"Tangible Personal Property");

	(v)  Business Contracts.  All contracts, agreements and 
personal property leases (other than the Real Property Leases, 
the Transferable Permits, the Fuel Contracts and the Colstrip 
Contracts) used primarily in the operation of the Colstrip 
Facilities, that are listed in Section 1.01(a)(v) of the 
Disclosure Schedule (the "Business Contracts");

	(vi)  Transferable Permits.  All Licenses and 
Environmental Permits owned or held by Seller and used or held 
for use in connection with the operation of the Colstrip 
Facilities that are transferable by Seller to Purchaser as 
listed in Section 1.01(a)(vi) of the Disclosure Schedule, and 
the water rights owned or held by Seller, whether or not such 
rights are created or evidenced by a License, and used or held 
for use in connection with the operation of the Colstrip 
Facilities including those listed in Section 1.01(a)(vi) of 
the Disclosure Schedule (the "Transferable Permits");

	(vii)  Intangible Personal Property.  All Intellectual 
Property used or held for use principally in connection with 
the operation of the Colstrip Facilities and all rights, 
privileges, claims, causes of action and options relating or 
pertaining to the operation of the Colstrip Facilities or the 
Assets, including but not limited to the items listed in 
Section 1.01(a)(vii) of the Disclosure Schedule (the 
"Intangible Personal Property");

	(viii)  Security Deposits.  All security deposits 
deposited by or on behalf of Seller as lessee or sublessee 
under the Real Property Leases (the "Tenant Security 
Deposits");

	(ix)  Prepaid Expenses.  Except for prepaid expenses and 
deposits of Seller attributable to any Excluded Asset or 
Retained Liabilities, all prepaid expenses, progress payments 
and deposits of or by Seller, rights to receive a prepaid 
expense, deposit or progress payment, and cash in transit that 
constitutes a prepaid expense, progress payment or deposit, 
relating to the Assets or the ownership, operation and 
maintenance of the Colstrip Facilities;

	(x)  Fuel Contracts.  All of the fuel contracts listed in 
Section 1.01(a)(x) of the Disclosure Schedule (the "Fuel 
Contracts");

	(xi)  Colstrip Contracts.  Seller's undivided interests 
in, and all of Seller's rights under the Contracts relating 
to, the Colstrip Facilities listed in Section 1.01(a)(xi) of 
the Disclosure Schedule (the "Colstrip Contracts");

	(xii)  Allowance and Emission Reduction Credits.  All of 
the allowances and/or emission reduction credits described in 
Section 1.01(a)(xii) of the Disclosure Schedule; 

	(xiii)  Warranties.  Any other warranties and indemnities 
given by third parties relating to the Assets or to the 
ownership, operation and maintenance of the Colstrip 
Facilities other than in connection with any Excluded Assets 
or Retained Liabilities;

	(xiv)  Colstrip Books and Records.  All books, operating 
and maintenance records, operating, safety and maintenance 
manuals, engineering or design plans, drawings, blue prints 
and as-built plans, specifications, procedures and similar 
items of Seller relating specifically to the Colstrip 
Facilities (the "Colstrip Books and Records"); and

	(xv)  PSE Colstrip Transmission Assets. Subject to 
Sections 1.10 and 6.12, the PSE Colstrip Transmission Assets 
as described in Section 1.01(a)(xv) of the Disclosure 
Schedule.

	To the extent any of the Colstrip Books and Records are 
items susceptible to duplication and are either (x) used in 
connection with any of Seller's businesses other than the PSE 
Colstrip Interests or (y) are required by Law to be retained 
by Seller, Seller may deliver photostatic copies or other 
reproductions from which, in the case of Colstrip Books and 
Records referred to in clause (x), information solely 
concerning Seller's businesses other than the PSE Colstrip 
Interests has been deleted.  To the extent that any Contract 
to be transferred hereunder to Purchaser is also utilized by 
or is for the benefit of any of Seller's businesses other than 
the PSE Colstrip Interests, the rights and obligations under 
such Contracts shall be to the extent practicable allocated 
between the PSE Colstrip Interests and such other businesses 
in a fair and equitable manner that is reasonably satisfactory 
to the parties.

	(b)  Excluded Assets.  Notwithstanding anything in this 
Agreement to the contrary, the Assets shall not include the 
following assets of Seller (the "Excluded Assets"):

	  (i)  Cash.  All cash, commercial paper, certificates of 
deposit and other bank deposits, treasury bills and other cash 
equivalents;

	  (ii)  Investments.  Certificates of deposit, shares of 
stock, securities, evidences of Indebtedness, interest in 
joint ventures, partnerships, limited liability companies and 
other entities;

	  (iii)  Tax Refunds.  All refunds or credits, if any, of 
Taxes relating to the Assets due to or from Seller 
attributable to any period ending on or prior to the Closing;

	  (iv)  Real and Personal Property.  The real or personal 
property forming a part of the Assets described in 
Section 1.01(b)(iv) of the Disclosure Schedule, the 
delineation and composition of which shall be subject to the 
Separation Document;

	  (v)  Corporate Records.  All Books and Records of 
Seller other than the Colstrip Books and Records;

	  (vi)  Litigation Claims.  Any rights (including 
indemnification) and claims and recoveries under litigation of 
Seller against third parties attributable to the period on or 
prior to the Closing except to the extent relating to the 
Assumed Liabilities;

	  (vii)  Excluded Obligations.  The rights of Seller in, 
to and under all Contracts of any nature, the obligations of 
Seller under which are not expressly assumed by Purchaser 
pursuant to Section 1.02(a);

	  (viii)  Tradename and Logo.  All tradenames, 
trademarks, service marks or logos owned by Seller or its 
Subsidiaries including all of Seller's right, title and 
interest in, to and under the names "Puget Sound Energy, 
Inc.," "Puget Sound Power & Light Company," "Puget Power" or 
any related or similar trade names, trademarks, service marks 
or logos;

	  (ix)  Accounts Receivable.  All trade accounts 
receivable and all notes, bonds and other evidences of 
Indebtedness of and rights to receive payments arising out of 
sales occurring in connection with the operation of the 
Colstrip Facilities prior to the Closing and the security 
agreements related thereto, including any rights of Seller 
with respect to any third party collection procedures or any 
other Actions or Proceedings which have been commenced in 
connection therewith;

	  (x)  Insurance.  Life insurance policies of Seller's 
Employees and all other insurance policies relating to the PSE 
Colstrip Interests;

	  (xi)  Allowance and Emission Reduction Credits.  All of 
Seller's excess allowances and/or emission reduction credits 
relating to the Colstrip Facilities that are not described in 
Section 1.01(a)(xii) of the Disclosure Schedule;

	  (xii)  All Other Assets.  All other Assets and 
Properties owned by Seller or its Affiliates not used in the 
operation of the Colstrip Facilities; and

	  (xiii)  Other.  Seller's rights under this Agreement 
and the Operative Agreements.

1.02	Liabilities

	(a)  Assumed Liabilities.  In connection with the sale, 
transfer, conveyance, assignment and delivery of the Assets 
pursuant to this Agreement, on the terms and subject to the 
conditions set forth in this Agreement, at the Closing, 
Purchaser will assume and agree to pay, perform and discharge 
when due all of the following Liabilities of Seller, direct or 
indirect, known or unknown, absolute or contingent, which 
arise and are attributable to the period after the date of the 
Closing and relate solely to the Assets or which arose and 
relate to the period on or prior to the date of the Closing 
and are specifically referred to in this Section 1.02(a) as 
being assumed by Purchaser (in all cases, except for Seller's 
Liabilities in connection with the Pollution Control Bonds and 
Liabilities constituting Retained Liabilities) (the "Assumed 
Liabilities"):

	  (i)  Real Property Lease Obligations.  All Liabilities 
of Seller under the Real Property Leases arising and to be 
performed after the date of the Closing, and excluding any 
such Liabilities arising or to be performed on or prior to the 
date of the Closing;

	  (ii)  Tangible Personal Property Obligations.  All 
Liabilities of Seller under any Contract related to the 
Tangible Personal Property arising and to be performed after 
the date of the Closing, and excluding any such Liabilities 
arising or to be performed on or prior to the date of the 
Closing;

	  (iii)  Liabilities under Business Contracts and 
Transferable Permits.  All Liabilities of Seller under the 
Business Contracts and Transferable Permits, to the extent 
transferred to Purchaser, arising and to be performed after 
the date of the Closing, and excluding any such Liabilities 
arising or to be performed on or prior to the date of the 
Closing;

	  (iv)  Security Deposits.  All Liabilities of Seller 
with respect to any security deposit held by Seller as lessor 
or sublessor under the Real Property Leases, to the extent and 
only to the extent of the respective amount of the security 
deposit delivered to Purchaser at the Closing with respect to 
any such Real Property Lease (the "Landlord Security 
Deposits");

	  (v)  Fuel Contracts and Colstrip Contracts.  All 
Liabilities of Seller under the Fuel Contracts and the 
Colstrip Contracts arising and to be performed after the date 
of the Closing, and excluding any such Liabilities arising or 
to be performed on or prior to the date of the Closing; 

	  (vi)  Pre-Closing Colstrip Liabilities.  All 
Liabilities of Seller described in Section 1.02(a)(vi) of the 
Disclosure Schedule; and

	  (vii)  Environmental Liabilities.  Subject to 
Section 10.01(b), all Environmental Liabilities; provided, 
however, that nothing set forth in this Section 1.02(a) shall 
require Purchaser to assume any Liability for (x) payment of 
any fines or penalties imposed by a Governmental or Regulatory 
Authority relating to the ownership, operation and maintenance 
of the Colstrip Facilities on or prior to the Closing 
("Environmental Fines and Penalties"), or (y) any Off-Site 
Environmental Liabilities).

Except with respect to Environmental Liabilities that are 
Assumed Liabilities, Assumed Liabilities shall not include 
Liabilities to the extent such Liabilities, but for a breach 
or default by Seller of its obligations, would have been paid, 
performed or otherwise discharged specifically by their terms 
or the terms hereof on or prior to the Closing as it relates 
to the Assets or to the extent the same arise out of any such 
breach or default.

	(b)  Retained Liabilities.  Except for the Assumed 
Liabilities, Purchaser shall not assume by virtue of this 
Agreement or the transactions contemplated hereby, and shall 
have no liability for, any Liabilities of Seller including 
Seller's Liabilities under this Agreement and the Operative 
Agreements and including, but not limited to, the following 
(the "Retained Liabilities"):

	  (i)  any Liabilities of Seller in connection with the 
Pollution Control Bonds or claims by bondholders;

	  (ii)  any Environmental Fines and Penalties;

	  (iii)  any Off-Site Environmental Liabilities;

	  (iv)  any Liabilities of Seller in respect of any 
Excluded Assets;

	  (v)  any Liabilities of Seller for Taxes;

	  (vi)  any Liabilities of Seller with respect to 
commitments for the purchase or sale of power or fuel, other 
than as provided in Section 1.02(a);

	  (vii)  any Liabilities of Seller relating to any 
Employee of Seller.

1.03  Purchase Price; Allocation

	(a)  Purchase Price.  Subject to any adjustment required 
pursuant to Sections 1.10 or 4.12, the aggregate purchase 
price for the Assets shall be an amount equal to the sum of 
(x) the Base Purchase Price, (y) the Adjustment Amount and 
(z) subject to Sections 1.10(a) and 6.12, the PSE Transmission 
Amount (collectively, the "Purchase Price"), payable in 
immediately available United States funds at the Closing in 
the manner provided in Section 1.05 or thereafter (as provided 
in Section 1.04).

	(b)  Allocation of Purchase Price.  Purchaser and Seller 
shall negotiate in good faith prior to the Closing Date and 
determine the allocation of the consideration paid by 
Purchaser for the Assets.  Each party hereto agrees (i) that 
any such allocation shall be consistent with the requirements 
of Section 1060 of the Code and the regulations thereunder, 
(ii) to complete jointly and to file separately Form 8594 with 
its Federal Income Tax Return consistent with such allocation 
for the tax year in which the Closing occurs and (iii) that no 
party will take a position on any income, transfer or gains 
Tax Return, before any Governmental or Regulatory Authority 
charged with the collection of any such Tax or in any judicial 
proceeding, that is in any manner inconsistent with the terms 
of any such allocation without the consent of the other party.

1.04	Purchase Price Adjustment

	(a)  Within 30 days after the Closing, Seller shall 
obtain from MPC and deliver to Purchaser a statement (each, an 
"Adjustment Statement") which reflects (i) the net book value, 
as reflected on the books of Seller as of the Closing of all 
fuel inventory (FERC account no. 151) and stores inventory 
(FERC account no. 154) used at or in connection with the PSE 
Colstrip Interests (the "Inventory Adjustment Amount"), and 
(ii) the Maintenance and Capital Expenditures Amount 
applicable to the PSE Colstrip Interests.  The Inventory 
Adjustment Amount and the Maintenance and Capital Expenditures 
Amount for the Closing are referred to collectively as the 
"Adjustment Amount."  The Inventory Adjustment Amount will be 
based on an inventory survey conducted by MPC within five days 
prior to the Closing consistent with MPC's current inventory 
procedures (the "Inventory Survey").  Seller will request that 
MPC permit an employee, or representative, of Purchaser to 
observe the Inventory Survey.  Each Adjustment Statement shall 
be prepared using the same generally accepted accounting 
principles, policies and methods as MPC, has historically used 
in connection with the calculation of the items reflected on 
such Adjustment Statement.  Purchaser agrees to cooperate with 
Seller and MPC in connection with the preparation of each 
Adjustment Statement and related information, and shall 
provide to Seller and MPC such books, records and information 
as may be reasonably requested from time to time.

(b)  Purchaser may dispute an Inventory Adjustment Amount 
or a Maintenance and Capital Expenditures Amount; provided, 
however, that Purchaser shall notify Seller and MPC in writing 
of the disputed amount, and the basis of such dispute, within 
ten (10) Business Days of Purchaser's receipt of the 
applicable Adjustment Statement.  In the event of a dispute 
with respect to any part of an Adjustment Amount, Purchaser 
and Seller shall attempt to reconcile their differences and 
any resolution by them as to any disputed amounts shall be 
final, binding and conclusive on the parties.  If Purchaser 
and Seller are unable to reach a resolution of such 
differences within 30 days of receipt of Purchaser's written 
notice of dispute to Seller, Purchaser and Seller shall submit 
the amounts remaining in dispute for determination and 
resolution to the Independent Accounting Firm, which shall be 
instructed to determine and report to the parties, within 30 
days after such submission, upon such remaining disputed 
amounts, and such report shall be final, binding and 
conclusive on the parties hereto with respect to the amounts 
disputed.  The fees and disbursements of the Independent 
Accounting Firm shall be shared equally by Purchaser and 
Seller. 

	(c)  Within ten (10) Business Days after Purchaser's 
receipt of an Adjustment Statement, Purchaser shall pay all 
undisputed amounts, or if there is a dispute with respect to 
any amount of such Adjustment Statement within five (5) 
Business Days after the final determination of any amounts on 
such Adjustment Statement, Purchaser shall pay to Seller an 
amount equal to the disputed Adjustment Amount as finally 
determined to be payable with respect to such Adjustment 
Statement.  All Adjustment Statement payments shall be less 
the Estimated Adjustment Amount; provided, however, that if 
such amount shall be less than zero then within five (5) 
Business Days after the final determination of such amount 
Seller will pay to Purchaser the amount by which such amount 
is less than zero.  Any amount paid under this Section 1.04 
shall be paid with interest for the period commencing on the 
date of the Closing through the date of payment, calculated at 
the prime rate for domestic banks as published in the Wall 
Street Journal (Northeast Edition) in the "Money Rates" 
section on the date of the Closing, and in immediately 
available United States funds.

1.05  Closing

	(a)  Closing.  The Closing will take place at the offices 
of Perkins Coie LLP, 1201 Third Avenue, Seattle, Washington 
98101, or at such other place as Purchaser and Seller mutually 
agree, at 7:00 A.M. local time, on the Closing Date.  At the 
Closing, Purchaser will pay an amount (the "Estimated Purchase 
Price") in United States dollars equal to the sum of (x) the 
Base Purchase Price, as the same may be adjusted pursuant to 
Sections 1.10 and 4.12, and (y) the Estimated Adjustment 
Amount for the Closing, by wire transfer of immediately 
available United States funds to such account as Seller may 
reasonably direct by written notice delivered to Purchaser by 
Seller at least two (2) Business Days before the Closing. 
Simultaneously, (a) Seller will assign and transfer to 
Purchaser good and valid title in and to the Assets (free and 
clear of all Liens, other than Permitted Liens, as such term 
is defined with respect to periods after the Closing) by 
delivery of (i) a General Assignment and Bill of Sale 
substantially in the form of Exhibit A hereto (the "General 
Assignment"), duly executed by Seller, covering the Personal 
Property comprising Assets except for the Intellectual 
Property, (ii) an assignment of the Intellectual Property in 
form and substance reasonably satisfactory to Purchaser, 
(iii) (A) special warranty deeds in proper statutory form for 
recording and otherwise in form and substance reasonably 
satisfactory to Purchaser conveying good and marketable title 
to the Real Property in which Seller has a fee or easement 
interest (subject only to Permitted Liens), (B) an assignment 
in form and substance reasonably satisfactory to Purchaser 
conveying valid and subsisting title to the Real Property in 
which Seller has a permit interest or other interest (neither 
fee nor easement) (subject only to Permitted Liens) and (C) 
all necessary documentation to transfer and convey to 
Purchaser the water rights listed in Section 1.01(a)(vi) of 
the Disclosure Schedule including water rights transfer 
certificates executed in proper form to be filed with the 
appropriate Governmental or Regulatory Authority, and 
(iv) such other good and sufficient instruments of conveyance, 
assignment and transfer, in form and substance reasonably 
acceptable to Purchaser's counsel, as shall be effective to 
vest in Purchaser good and valid title to the Assets, good and 
marketable title to the Real Property in which Seller has a 
fee or easement interest and valid and subsisting title to the 
Real Property in which Seller has a permit interest or other 
interest (neither fee nor easement), in each case subject only 
to Permitted Liens (the General Assignment and the other 
instruments referred to in clauses (a) (ii), (iii) and (iv) 
being collectively referred to herein as the "Assignment 
Instruments"), and (b) Purchaser will assume from Seller the 
due payment, performance and discharge of the Assumed 
Liabilities by delivery of (i) an Assumption Agreement 
substantially in the form of Exhibit B hereto (the "Assumption 
Agreement"), duly executed by Purchaser, and (ii) such other 
good and sufficient instruments of assumption, in form and 
substance reasonably acceptable to Seller's counsel, as shall 
be effective to cause Purchaser to assume the Assumed 
Liabilities as and to the extent provided in Section 1.02(a) 
(the Assumption Agreement and such other instruments referred 
to in clause (b) (ii) being collectively referred to herein as 
the "Assumption Instruments").  At the Closing, there shall 
also be delivered to Seller and Purchaser the opinions, 
certificates and other contracts, documents and instruments 
required to be delivered under Articles VI and VII.

	(b)  Additional Purchase Price Payments.  

          (i)  In the event that the Portland Closing Date 
occurs either prior to or on the Closing Date, on the Closing 
Date Purchaser shall pay to Seller the Combined Payment 
Amount; and

         (ii)  In the event that the Portland Closing Date 
occurs after the Closing Date, on the Portland Closing Date 
Purchaser shall pay to Seller the Combined Payment Amount.

	All payments made pursuant to this Section 1.05(b) shall 
be paid by wire transfer of immediately available United 
States funds to such account as Seller may reasonably direct 
by written notice delivered to Purchaser by Seller at least 
two (2) Business Days before the applicable closing date.

1.06  Prorations

	The following items relating to the Assets,  the 
ownership of the PSE Colstrip Interests, and the operation of 
the Colstrip Facilities will be allocated pro rata per diem 
for the tax year that includes the date of the Closing, with 
Seller liable for such items to the extent they are allocable 
to the period prior to the date of the Closing and Purchaser 
liable for such items to the extent they are allocable to 
periods beginning with and subsequent to the date of the 
Closing:

	(a)  Property Taxes on or with respect to the Assets.

	(b)  Rents, additional rents, Taxes, to the extent 
normally adjusted in connection with similar transactions, and 
other items payable by Seller under the Real Property Leases 
and the Business Contracts.

	(c)  The amount of rents, Taxes and charges for sewer, 
water, telephone, electricity and other utilities relating to 
the Real Property and the real property subject to the Real 
Property Leases.

	(d)  All other items (excluding other Taxes) normally 
adjusted in connection with similar transactions.

Except as otherwise agreed by the parties, the net amount 
of all such prorations will be settled and paid as of the date 
of the Closing.  At least ninety (90) days prior to the date 
of the Closing, Seller will provide Purchaser with a 
reasonably detailed schedule showing a calculation of the 
estimated prorations as if the Closing were occurring on such 
date.  If the Closing shall occur before a real estate Tax 
rate is fixed, the apportionment of Taxes shall be based upon 
the Tax rate for the preceding year applied to the latest 
assessed valuation and such Taxes shall be reprorated upon the 
request of Seller, on the one hand, or Purchaser, on the other 
hand, made within sixty (60) days after the date that the 
actual amounts become available.  Seller and Purchaser agree 
to furnish each other with such documents and other records as 
may be reasonably requested in order to confirm all adjustment 
and proration calculations made pursuant to this Section 1.06.

1.07  Further Assurances; Post-Closing Cooperation

	(a)  Subject to the terms and conditions of this 
Agreement, at any time or from time to time after the Closing, 
at Purchaser's request and without further consideration, 
Seller shall execute and deliver to Purchaser such other 
instruments of sale, transfer, conveyance, assignment and 
confirmation, provide such materials and information and take 
such other actions as Purchaser may reasonably deem necessary 
or desirable in order more effectively to transfer, convey and 
assign to Purchaser, and to confirm Purchaser's title to, all 
of the Assets, and, to the full extent permitted by Law, to 
put Purchaser in actual possession and control of the Assets 
and to assist Purchaser in exercising all rights with respect 
thereto, and otherwise to cause Seller to fulfill its 
obligations under this Agreement and the Operative Agreements.  
From time to time after the Closing, at Purchaser's request 
and expense, Seller will reasonably cooperate with Purchaser 
in its efforts to maximize any Tax benefits associated with 
the Assets with respect to periods following the Closing and 
to minimize the Tax costs associated with the transactions 
contemplated hereby; provided such cooperation does not 
adversely affect Seller's Tax position. From time to time 
after the Closing, at Seller's request and expense, Purchaser 
will reasonably cooperate with Seller in its efforts to 
maximize any Tax benefits associated with the Assets with 
respect to periods prior to the Closing and to minimize the 
Tax costs associated with the transactions contemplated 
hereby; provided such cooperation does not adversely affect 
Purchaser's Tax position.

	(b)  Following the Closing, each party will afford the 
other party, its counsel and its accountants, during normal 
business hours, reasonable access to the books, records and 
other data relating to the PSE Colstrip Interests in its 
possession with respect to periods prior to the Closing and 
the right to make copies and extracts therefrom, to the extent 
that such access may be reasonably required by the requesting 
party in connection with (i) the preparation of Tax Returns, 
(ii) the determination or enforcement of rights and 
obligations under this Agreement, (iii) compliance with the 
requirements of any Governmental or Regulatory Authority, 
(iv) the determination or enforcement of the rights and 
obligations of any Indemnified Party or (v) in connection with 
any actual or threatened Action or Proceeding.  Further, each 
party agrees for a period extending six (6) years after the 
Closing not to destroy or otherwise dispose of any such books, 
records and other data unless such party shall first offer in 
writing to surrender such books, records and other data to the 
other party and such other party shall not agree in writing to 
take possession thereof during the thirty (30) day period 
after such offer is made.

	(c)  If, in order properly to prepare its Tax Returns, 
other documents or reports required to be filed with 
Governmental or Regulatory Authorities or its financial 
statements or to fulfill its obligations hereunder, it is 
necessary that a party be furnished with additional 
information, documents or records relating to the PSE Colstrip 
Interests not referred to in paragraph (b) above, and such 
information, documents or records are in the possession or 
control of the other party, such other party shall use its 
best efforts to furnish or make available such information, 
documents or records (or copies thereof) at the recipient's 
request, cost and expense.  Any information obtained by such 
party in accordance with this paragraph shall be held 
confidential by such party in accordance with Section 13.06.

	(d)  Notwithstanding anything to the contrary contained 
in this Section 1.07, if the parties are in an adversarial 
relationship in litigation or arbitration, the furnishing of 
information, documents or records in accordance with paragraph 
(c) of this Section 1.07 shall be subject to applicable rules 
relating to discovery.

1.08  Third Party Consents

	To the extent that any Business Contract, Transferable 
Permit, Fuel Contract or Colstrip Contract is not assignable 
without the consent of another party, this Agreement shall not 
constitute an assignment or an attempted assignment thereof if 
such assignment or attempted assignment would constitute a 
breach thereof.  Seller and Purchaser shall use their 
reasonable efforts to obtain the consent of such other party 
to the assignment of any such Business Contract, Transferable 
Permit, Fuel Contract or Colstrip Contract to Purchaser in all 
cases in which such consent is or may be required for such 
assignment.  If any such consent shall not be obtained, or if 
any attempted assignment would be ineffective or would impair 
Purchaser's rights and obligations so that Purchaser would not 
in effect acquire the benefit of substantially all of such 
rights and obligations, Seller shall cooperate with Purchaser 
in any reasonable arrangement, to the extent legally 
permissible, designed to provide for Purchaser the benefits 
intended to be assigned to Purchaser under the relevant 
Business Contract, Transferable Permit, Fuel Contract or 
Colstrip Contract, including enforcement at the cost and for 
the account of Purchaser of any and all rights of Seller 
against the other party thereto arising out of the breach or 
cancellation thereof by such other party or otherwise.  If and 
to the extent that such arrangement is not made in a manner 
reasonably satisfactory to Purchaser, Purchaser shall have no 
obligation pursuant to Section 1.02 or otherwise only with 
respect to any such Business Contract, Transferable Permit, 
Fuel Contract or Colstrip Contract.  The provisions of this 
Section 1.08 shall not affect the right of Purchaser not to 
consummate the transactions contemplated by this Agreement as 
provided in Section 1.10 or if the conditions to its 
obligations hereunder contained in Sections 6.05, 6.06 and 
6.07 have not been fulfilled.

1.09  Insurance Proceeds

	If any of the Assets (other than an Asset excluded under 
Section 1.10) are destroyed, damaged or taken in condemnation, 
the insurance proceeds or condemnation award with respect 
thereto shall be an Asset; provided, however, Seller agrees 
not to settle or compromise any amounts concerning such Assets 
during negotiations with Seller's insurance company without 
Purchaser's prior consent.  At the Closing, Seller shall pay 
or credit to Purchaser any such insurance proceeds or 
condemnation awards received by it on or prior to the Closing 
and shall assign to or assert for the benefit of Purchaser all 
of its rights against any insurance companies, Governmental or 
Regulatory Authorities and others with respect to such damage, 
destruction or condemnation.  As and to the extent that there 
is available insurance under policies maintained by Seller and 
its Affiliates, predecessors and successors in respect of any 
Assumed Liability, except for any such insurance proceeds with 
respect to which the insured is directly or indirectly self-
insured or has agreed to indemnify the insurer, Seller shall 
cause such insurance to be applied toward the payment of such 
Assumed Liability.  The provisions of this Section 1.09 shall 
not affect the right of Purchaser not to consummate the 
transactions contemplated by this Agreement if the conditions 
to its obligations hereunder contained in Sections 6.01 or 
6.08 have not been fulfilled.

1.10  Inclusion/Exclusion of Certain Assets

	(a)  Purchaser agrees to use its reasonable best efforts 
to obtain the approval described in clause (ii) of the 
definition of Purchaser Required Regulatory Approvals in a 
manner reasonably satisfactory to Purchaser that will allow 
Purchaser to purchase and own, operate and maintain after the 
Closing the PSE Colstrip Transmission Assets, and to consult 
with Seller prior to abandoning its efforts to do so.  If, 
notwithstanding Purchaser's compliance with the preceding 
sentence and with Section 5.01, such Purchaser Required 
Regulatory Approval is not obtained from FERC with respect to 
the proposed purchase, ownership or operation of the PSE 
Colstrip Transmission Assets, or is finally denied by FERC, 
within seven (7) months from the date of execution of this 
Agreement, or in the event that the condition set forth in 
Section 6.12 has not been satisfied on or prior to the 
Closing, then (i) at the Closing, Seller and Purchaser shall 
enter into the Transmission Service Agreement and the 
Separation Document, (ii) the PSE Colstrip Transmission Assets 
shall be Excluded Assets hereunder, (iii) the Purchase Price 
shall be reduced by the PSE Transmission Amount and (iv) the 
conditions to Closing described in Sections 6.05 and 7.05 
shall be deemed satisfied with respect to such Purchaser 
Required Regulatory Approval solely with respect to the PSE 
Colstrip Transmission Assets but shall not be deemed satisfied 
with respect to any other Assets, provided that Seller shall 
have the right, in its sole discretion, to waive such seven 
(7) month period and to require Purchaser to continue to 
pursue such approval, consistent with Purchaser's obligations 
under Section 5.01 hereof, for such time period(s) as Seller 
may determine, not to exceed the time period provided for in 
Section 11.01(d) hereof.  

	(b)  Purchaser has been provided copies of title 
insurance commitments covering certain of the Assets and 
intends to obtain at its expense additional title commitments 
and title policies.  Seller agrees to use reasonable efforts 
to cure title objections of which Seller is notified by 
Purchaser, to the extent title would not otherwise satisfy 
Seller's obligations with respect to the title to be delivered 
by Seller in compliance with Section 1.05(a) of this 
Agreement.  From and after the date hereof and through the 
Closing, Seller shall use reasonable efforts to cure and 
remove exceptions to title to the Real Property (other than 
those exceptions referred to in the preceding sentence) of 
which Seller is notified by Purchaser in writing; provided, 
however, that in no event shall Seller be obligated to incur 
expenses or make payments of any nature in excess of $620,000 
in discharging its obligations set forth in this sentence.  
Nothing in the two preceding sentences shall change or 
otherwise affect the nature of the title to the Real Property 
that Seller is obligated to transfer to Purchaser in 
compliance with this Agreement.

                         ARTICLE I
          REPRESENTATIONS AND WARRANTIES OF SELLER

	Seller hereby represents and warrants to Purchaser as 
follows:

2.01  Corporate Existence of Seller

	Seller is a corporation duly incorporated, validly 
existing and in good standing under the Laws of the State of 
Washington, and has full corporate power and authority to own, 
use and lease the Assets.  Seller is duly qualified or 
licensed to do business as a foreign corporation and is in 
good standing in each jurisdiction in which the Assets make 
such qualification necessary, except in each case in those 
jurisdictions where the failure to be so duly qualified or 
licensed and in good standing would not create a Seller 
Material Adverse Effect.  Seller has heretofore made available 
to Purchaser complete and correct copies of its restated 
articles of incorporation, as amended, and bylaws (or other 
comparable corporate charter documents), as currently in 
effect.

2.02  Authority

	Seller has full corporate power and authority to execute 
and deliver this Agreement and the Operative Agreements to 
which it is a party, to perform its obligations hereunder and 
thereunder and to consummate the transactions contemplated 
hereby and thereby, including to sell and transfer (pursuant 
to this Agreement) the Assets.  The execution and delivery by 
Seller of this Agreement and the Operative Agreements to which 
it is a party, and the performance by Seller of its 
obligations hereunder and thereunder, have been duly and 
validly authorized by the Board of Directors of Seller, no 
other corporate action on the part of Seller or its 
shareholders being necessary.  This Agreement has been duly 
and validly executed and delivered by Seller and, subject to 
receipt of Seller Required Regulatory Approvals and Purchaser 
Required Regulatory Approvals, constitutes, and upon the 
execution and delivery by Seller of the Operative Agreements 
to which it is a party, such Operative Agreements will 
constitute, legal, valid and binding obligations of Seller 
enforceable against Seller in accordance with their terms 
except as the same may be limited by bankruptcy, insolvency, 
reorganization, arrangement, moratorium or other similar Laws 
relating to or affecting the rights of creditors generally, or 
by general equitable principles.

2.03  No Conflicts

	Except as set forth in Section 2.03 of the Disclosure 
Schedule, and other than obtaining Seller Required Regulatory 
Approvals and Purchaser Required Regulatory Approvals, the 
execution and delivery by Seller of this Agreement do not, and 
the execution and delivery by Seller of the Operative 
Agreements to which it is a party, the performance by Seller 
of its obligations under this Agreement and such Operative 
Agreements and the consummation of the transactions 
contemplated hereby and thereby will not:

	(a)  conflict with or result in a violation or breach of 
any of the terms, conditions or provisions of the restated 
articles of incorporation, as amended, or restated bylaws, as 
amended (or other comparable corporate charter documents) of 
Seller;

	(b)  require any consent, approval, authorization or 
permit, or filing with or notification to, any Governmental or 
Regulatory Authority, except (x) for the Seller Required 
Regulatory Approvals and the Purchaser Required Regulatory 
Approvals, or (y) for those requirements which become 
applicable to Seller as a result of the specific regulatory 
status of Purchaser (or any of its Affiliates) or as a result 
of any other facts that specifically relate to the business or 
activities in which Purchaser (or any of its Affiliates) is or 
proposes to be engaged;

	(c)  result in a default (or give rise to any right of 
termination, cancellation or acceleration or require any 
consent or approval) under any of the terms, conditions or 
provisions of any note, bond, mortgage, indenture, license, 
agreement or other instrument or obligation to which Seller is 
a party or by which Seller, or any of the Assets may be bound, 
except for such defaults (or rights of termination, 
cancellation or acceleration or any consent or approval) as to 
which requisite waivers or consents have been obtained; or

	(d)  conflict with or result in a violation or breach of 
any term or provision of any Law or Order applicable to Seller 
or any of its Assets and Properties.

2.04  Governmental Approvals and Filings

	Except for (i) Seller Required Regulatory Approvals and 
(ii) with respect to the PSE Colstrip Transmission Assets as 
set forth in Section 1.01(a)(xv) of the Disclosure Schedule, 
no consent, approval or action of, filing with or notice to 
any Governmental or Regulatory Authority on the part of Seller 
is required in connection with the execution, delivery and 
performance of this Agreement or any of the Operative 
Agreements to which it is a party or the consummation of the 
transactions contemplated hereby or thereby, except those as 
would be required solely as a result of the identity or the 
legal or regulatory status of Purchaser or any of its 
Affiliates.

2.05  Reports

	Since December 31, 1995, Seller has filed or caused to be 
filed with the SEC, the applicable state or local utility 
commissions or regulatory bodies and FERC, all material forms, 
statements, reports and documents (including all exhibits, 
amendments and supplements thereto) required to be filed by it 
with respect to the PSE Colstrip Interests under each of the 
Securities Act, the Exchange Act, the applicable state public 
utility Laws, the Federal Power Act, the Holding Company Act 
and the respective rules and regulations thereunder, all of 
which complied in all material respects with all applicable 
requirements of the appropriate act and the rules and 
regulations thereunder in effect on the date each such report 
was filed, and there are no material misstatements or 
omissions in respect of such reports.

2.06  Taxes

	Seller has timely filed or will timely file all Tax 
Returns required to be filed by Seller with respect to the 
ownership, operation and maintenance of the Assets and has 
paid or will pay all Taxes shown to be due on such returns 
with respect to all tax periods ending prior to the Closing 
Date.  Except for the properties financed with the Pollution 
Control Bonds, no other Assets have been financed using tax 
exempt financing.  The owners of Colstrip Units 1, 2, 3 and 4 
have jointly made a timely and effective affirmative election 
pursuant to Section 761(a) of the Code and Treasury Regulation 
Section 1.761-2(b) to be excluded from all of subchapter K of 
the Code, and such election has not been modified, revoked or 
otherwise altered, and remains in effect.  Seller has not 
taken and has not been notified that any of such owners has 
taken any action inconsistent with such election.

2.07  Legal Proceedings

	Except as disclosed in Section 2.07 of the Disclosure 
Schedule (with paragraph references corresponding to those set 
forth below):

	(a)  there are no Actions or Proceedings pending or, to 
the Knowledge of the Seller, threatened against, relating to 
or affecting Seller with respect to the ownership, operation 
or maintenance of the Assets which could reasonably be 
expected (i) to result in the issuance of an Order 
restraining, enjoining or otherwise prohibiting or making 
illegal the consummation of any of the transactions 
contemplated by this Agreement or any of the Operative 
Agreements, or (ii) individually or in the aggregate with 
other such Actions or Proceedings, to create a Seller Material 
Adverse Effect; and

	(b)  there are no Orders outstanding against Seller with 
respect to the ownership, operation and maintenance of the 
Assets which, individually or in the aggregate with other such 
Orders, would have a Seller Material Adverse Effect.

2.08  Compliance with Laws and Orders

	Except as disclosed in Section 2.08 of the Disclosure 
Schedule, Seller is not in material violation of or in 
material default under any Law or Order applicable to Seller's 
ownership of the Assets or, to Seller's Knowledge, the 
operation and maintenance of the Assets.

2.09  Real Property

	(a)  Section 1.01(a)(i) of the Disclosure Schedule 
contains a description of, and exhibits indicating the 
location of, the Real Property owned by Seller and included in 
the Assets, and Section 1.01(a)(ii)(A) of the Disclosure 
Schedule contains a description of, and exhibits indicating 
the location of, each parcel of real property leased by Seller 
(as lessor, sublessor, lessee or sublessee), or as to which 
Seller holds easements or other rights, and included in the 
Assets.

	(b)  Seller, or with respect to Real Property described 
in Exhibit D to Section 1.01(a)(i) of the Disclosure Schedule, 
MPC or its Affiliates, as the case may be, has, and at Closing 
Seller will have, good and marketable title to the Real 
Property in which Seller (or with respect to the Real Property 
described in the aforementioned Exhibit D, MPC or its 
Affiliates, as the case may be) holds a fee or easement 
interest.  Pursuant to the terms and conditions of the 
Colstrip Contracts, Seller has, and, to Seller's Knowledge, 
MPC or its Affiliates has, valid and subsisting title to the 
Real Property in which Seller (or MPC or its Affiliates, as 
the case may be) holds a permit interest or other interest, in 
each case, free and clear of all Liens other than Permitted 
Liens.  Except for the Permitted Liens and the Real Property 
subject to Real Property Leases described in 
Section 1.01(a)(ii)(A) of the Disclosure Schedule, Seller, 
subject to the terms and conditions of the Colstrip Contracts, 
is in possession of the Real Property and there are no third 
party licenses or tenants at the sites of the Real Property or 
Real Property Leases.

	(c)  Seller, has a valid and subsisting leasehold estate 
in and the right to quiet enjoyment of the real properties 
subject to the Real Property Leases described in 
Section 1.01(a)(ii)(B) of the Disclosure Schedule for the full 
term thereof.  Each Real Property Lease to which Seller is a 
party is a legal, valid and binding agreement, enforceable in 
accordance with its terms, of Seller and of each other Person 
that is a party thereto, and except as set forth in 
Section 2.09(c) of the Disclosure Schedule, there is no 
default (or any condition or event which, after notice or 
lapse of time or both, would constitute a default) thereunder.

	(d)  Seller has made available to Purchaser prior to the 
execution of this Agreement true and complete copies of 
(i) any current surveys in Seller's possession or any policies 
of title insurance currently in force and in the possession of 
Seller with respect to the Real Property, and (ii) all Real 
Property Leases (including any amendments and renewal letters) 
and, to the extent reasonably available, all other documents 
referred to in clause (i) of this paragraph (d) with respect 
to the real property subject to the Real Property Leases 
described in Section 1.01(a)(ii)(B) of the Disclosure 
Schedule.

	(e)  Except set forth in Section 12.01(e) of the 
Disclosure Schedule, all Real Properties have access to a 
public road and are zoned for their current uses.  No fee 
ownership, lease, right of way, easement, license or other 
right in real property, other than the Real Property and the 
Real Property Leases, is necessary for the Purchaser to own, 
operate or maintain the Assets substantially as currently 
owned, operated and maintained by Seller.  Seller or to 
Seller's knowledge, MPC or its Affiliates, has not received 
any written notice that any of the improvements on any of the 
Real Property or Real Property Leases, including without 
limitation the Easements, or any appurtenances thereto or 
equipment therein or the operation or maintenance thereof, 
violate any restrictive covenant or the terms, conditions or 
restrictions of any easement.

2.10  Tangible Personal Property

	Seller, subject to the terms and conditions of the 
Colstrip Contracts, or, to Seller's Knowledge, MPC or its 
Affiliates, is in possession of and has good and valid title 
to, or has valid leasehold interests in or valid rights under 
Contract to use, all the Tangible Personal Property used in 
and individually or in the aggregate with other such property 
material to the ownership, operation and maintenance of the 
Colstrip Facilities.  All the Tangible Personal Property is 
free and clear of all Liens, other than Permitted Liens and 
Liens disclosed in Section 2.10 of the Disclosure Schedule, 
and is in all material respects in good working order and 
condition, ordinary wear and tear excepted; provided, however, 
that if the PSE Transmission Assets are not purchased by 
Purchaser, the Separation Document will be considered a 
Permitted Lien with respect to the property, subject thereto.

2.11  Intellectual Property Rights

	Seller has not received notice that Seller is infringing 
any Intellectual Property of any other Person in connection 
with the Assets or the operation of the Colstrip Facilities, 
no claim is pending or has been made against Seller to such 
effect that has not been resolved and, to its Knowledge, 
Seller is not infringing any Intellectual Property of any 
other Person.

2.12  Contracts

	(a)  Section 2.12(a) of the Disclosure Schedule (with 
paragraph references corresponding to those set forth below) 
contains a true and complete list of each of the following 
Contracts (true and complete copies of which, together with 
all amendments and supplements thereto, have been made 
available to Purchaser prior to the execution of this 
Agreement) to which Seller is a party (other than indirectly 
pursuant to Seller's obligations under the Colstrip Contracts) 
and which relate to the operation of the Colstrip Facilities 
or by which any of the Assets are bound:

	  (i)  all Contracts with any Person containing any 
provision or covenant prohibiting or limiting the ability of 
Seller to engage in any activity relating to the operation of 
the Colstrip Facilities or compete with any Person in 
connection with the operation of the Colstrip Facilities or 
prohibiting or limiting the ability of any Person to compete 
with Seller in connection with the operation of the Colstrip 
Facilities;

	  (ii)  all partnership, joint venture, shareholders' or 
other similar Contracts with any Person in connection with the 
operation of the Colstrip Facilities;

	  (iii)  all Contracts with distributors, dealers, 
manufacturer's representatives, sales agencies or franchises 
with whom Seller deals in connection with the operation of the 
Colstrip Facilities which in any case involve the payment or 
potential payment, pursuant to the terms of any such Contract, 
by or to Seller of more than $250,000 annually;

	  (iv)  all Contracts relating to the future disposition 
or acquisition of any Assets, other than dispositions or 
acquisitions of Inventory in the ordinary course of business; 
and

	  (v)  all other Contracts (other than the Real Property 
Leases) not described above that constitute Assumed 
Liabilities with respect to the operation of the Colstrip 
Facilities that (A) involve the payment or potential payment, 
pursuant to the terms of any such Contract, by or to Seller of 
more than $250,000 annually and (B) cannot be terminated 
within sixty (60) days after giving notice of termination 
without resulting in any material cost or penalty to Seller 
(or, after the Closing, to Purchaser).

	(b)  Each Contract required to be disclosed in 
Section 2.12(a) of the Disclosure Schedule and each of the 
Colstrip Contracts and the Fuel Contracts and each of the 
Business Contracts which involves the payment or potential 
payment by or to Seller of more than $250,000 annually is in 
full force and effect and constitutes a legal, valid and 
binding agreement, enforceable in accordance with its terms, 
of Seller and of each other party thereto; and except as 
disclosed in Section 2.12(b) of the Disclosure Schedule 
neither Seller nor, to the Knowledge of Seller, any other 
party to such Contract is in violation or breach of or default 
under any such Contract (or with notice or lapse of time or 
both, would be in violation or breach of or default under any 
such Contract).

2.13  Licenses

	(a)  Seller has been, and is, in material compliance with 
all Licenses, including without limitation those described on 
Section 2.13(b) of the Disclosure Schedule, necessary to allow 
Seller to obtain the benefits of the PSE Colstrip Interests as 
currently enjoyed by Seller.  Except as disclosed in 
Section 2.13(a) of the Disclosure Schedule, Seller has not 
received any written notification that it is in violation, nor 
does Seller otherwise have Knowledge of any violations, of any 
of such Licenses, or any Law or Order of any Governmental or 
Regulatory Authority applicable to it.  

	(b)  Section 2.13(b) of the Disclosure Schedule sets 
forth all material Licenses and Environmental Permits relating 
to the ownership, operation and maintenance of the Colstrip 
Facilities and to which Seller is a named licensee or 
permittee.

2.14  Insurance

	Except as set forth in Section 2.14 of the Disclosure 
Schedule, all material policies of fire, liability, worker's 
compensation and other forms of insurance owned or held by 
Seller (other than indirectly through Seller's obligations 
under the Colstrip Contracts) and insuring the Assets are in 
full force and effect, all premiums with respect thereto 
covering all periods up to and including the date as of which 
this representation is being made have been paid (other than 
retroactive premiums which may be payable with respect to 
comprehensive general liability and worker's compensation 
insurance policies), and no notice of cancellation or 
termination has been received by Seller with respect to any 
such policy which was not replaced on substantially similar 
terms prior to the date of such cancellation.  Except as set 
forth in Section 2.14 of the Disclosure Schedule, Seller has 
not been refused any insurance with respect to the Assets nor 
has its coverage been limited by any insurance carrier to 
which it has applied for any such insurance or with which it 
has carried insurance during the last twelve months.

2.15  Environmental Matters

	With respect to its ownership interest in the PSE 
Colstrip Interests, except as disclosed in Section 2.15 of the 
Disclosure Schedule:

	(a)  Seller and to Seller's Knowledge, MPC, holds, and is 
in substantial compliance with, all Licenses which are 
required for Seller to own, and for MPC to operate and 
maintain, the Assets under applicable Environmental Laws 
("Environmental Permits"), and Seller has not received any 
written notice of any violation of any Environmental Law that 
has not heretofore been resolved and Seller and, to Seller's 
Knowledge, MPC, is otherwise in substantial compliance with 
applicable Environmental Laws with respect to the ownership, 
operation and maintenance of the Assets.

	(b)  Seller has not received any written request for 
information, or been notified that it is a potentially 
responsible party, under any Environmental Law with respect to 
any on-site location relating to the ownership, operation and 
maintenance of the Assets.

	(c)  Seller has not entered into or agreed to any consent 
decree or order, and is not subject to any outstanding 
judgment, decree, or judicial order relating to compliance 
with any Environmental Law or to investigation or cleanup of 
Hazardous Materials under any Environmental Law relating to 
the ownership, operation and maintenance of the Assets.

	(d)  There are no claims, actions, proceedings or 
investigations pending or, to the Knowledge of Seller, 
threatened against Seller before any court, Governmental or 
Regulatory Authority relating to any Environmental Law 
relating to the PSE Colstrip Interests with respect to the 
ownership, operation and maintenance of the Assets.

	(e)  To its Knowledge, Seller or MPC has made available 
to Purchaser: (i) a list of all material environmental reports 
and/or audits prepared by or for Seller within the past five 
(5) years which discuss the environmental conditions of the 
Assets; and (ii) a list of all underground storage tanks 
and/or surface impoundments located on the Assets which 
contain or have contained Hazardous Materials.

The representations and warranties made in this 
Section 2.15 are Seller's exclusive representations and 
warranties relating to environmental matters.

2.16  Absence of Condemnation Proceedings

	Neither the whole nor any portion of the PSE Colstrip 
Interests is subject to any pending or, to Seller's Knowledge, 
threatened suit or Order for condemnation or other taking by 
any public authority.

2.17  Regulation as a Utility

	Seller is a public utility company within the meaning of 
the Holding Company Act. Except as set forth in Section 2.17 
of the Disclosure Schedule, Seller is not subject to 
regulation as a public utility or public service company (or 
similar designation) by the United States, any state of the 
United States, any foreign country or any municipality or any 
political subdivision of the foregoing.

2.18  Brokers

	Except for Goldman, Sachs & Co., whose fees, commissions 
and expenses are the sole responsibility of MPC, Morgan 
Stanley Dean Witter, whose fees, commissions and expenses are 
the sole responsibility of Seller and Merrill Lynch & Co., 
whose fees, commissions and expenses are the sole 
responsibility of PGE, all negotiations relative to this 
Agreement and the transactions contemplated hereby have been 
carried out by Seller directly with Purchaser without the 
intervention of any Person on behalf of Seller in such manner 
as to give rise to any valid claim by any Person against 
Purchaser for a finder's fee, brokerage commission or similar 
payment.

2.19  Acknowledgment of Purchaser

	Purchaser expressly acknowledges that Seller is the 
holder of a non-controlling interest in the Colstrip 
Facilities pursuant to the Colstrip Contracts, and that Seller 
(i) did not manage the construction of the PSE Colstrip 
Interests, (ii) is not now and has never been the operator (or 
otherwise in physical possession) of the Colstrip Facilities 
and (iii) was not involved in or responsible for the creation 
or provision of data or information about the Colstrip 
Facilities by MPC or any other co-owner of Colstrip Units 1, 
2, 3 and 4. 

2.20  Disclaimers Regarding Assets

	EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THE ASSETS 
ARE BEING TRANSFERRED "AS IS, WHERE IS" AND SELLER EXPRESSLY 
DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR 
NATURE, EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE OR 
QUALITY OF THE ASSETS OR THE PROSPECTS (FINANCIAL AND 
OTHERWISE), RISKS AND OTHER INCIDENTS OF THE ASSETS AND SELLER 
SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF 
MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY 
PARTICULAR PURPOSE WITH RESPECT TO THE ASSETS, OR ANY PART 
THEREOF.

                          ARTICLE II
          REPRESENTATIONS AND WARRANTIES OF PURCHASER

	Purchaser hereby represents and warrants to Seller as 
follows:

3.01  Corporate Existence

	Purchaser is a corporation duly incorporated, validly 
existing and in good standing under the Laws of the 
Commonwealth of Pennsylvania and has full corporate power and 
authority to conduct its business as it is now being conducted 
and to own, lease and operate its Assets and Properties.  
Purchaser has full corporate power and authority to enter into 
this Agreement and the Operative Agreements to which it is a 
party, to perform its obligations hereunder and thereunder and 
to consummate the transactions contemplated hereby and 
thereby.  Purchaser has heretofore made available to Seller 
complete and correct copies of its articles of incorporation 
and by-laws (or other comparable corporate charter documents), 
as currently in effect.

3.02  Authority

	The execution and delivery by Purchaser of this Agreement 
and the Operative Agreements to which it is a party, and the 
performance by Purchaser of its obligations hereunder and 
thereunder, have been duly and validly authorized by the Board 
of Directors of Purchaser, no other corporate action on the 
part of Purchaser or its stockholders being necessary.  This 
Agreement has been duly and validly executed and delivered by 
Purchaser and, subject to receipt of Seller Required 
Regulatory Approvals and Purchaser Required Regulatory 
Approvals, constitutes, and upon the execution and delivery by 
Purchaser of the Operative Agreements to which it is a party, 
such Operative Agreements will constitute, legal, valid and 
binding obligations of Purchaser enforceable against Purchaser 
in accordance with their terms except as the same may be 
limited by bankruptcy, insolvency, reorganization, 
arrangement, moratorium or other similar Laws relating to or 
affecting the rights of creditors generally, or by general 
equitable principles.

3.03  No Conflicts

	Except as set forth in Section 3.03 of the Disclosure 
Schedule, and other than obtaining Seller Required Regulatory 
Approvals and Purchaser Required Regulatory Approvals, the 
execution and delivery by Purchaser of this Agreement do not, 
and the execution and delivery by Purchaser of the Operative 
Agreements to which it is a party, the performance by 
Purchaser of its obligations under this Agreement and such 
Operative Agreements and the consummation of the transactions 
contemplated hereby and thereby will not:

	(a)  conflict with or result in a violation or breach of 
any of the terms, conditions or provisions of the articles of 
incorporation or by-laws (or other comparable corporate 
charter documents) of Purchaser;

	(b)  require any consent, approval, authorization or 
permit, or filing with or notification to, any Governmental or 
Regulatory Authority except for Seller Required Regulatory 
Approvals and Purchaser Required Regulatory Approvals;

	(c)  result in a default (or give rise to any right of 
termination, cancellation or acceleration) under any of the 
terms, conditions or provisions of any note, bond, mortgage, 
indenture, license, agreement or other instrument or 
obligation to which Purchaser is a party or by which any of 
its Assets and Properties may be bound, except for such 
defaults (or rights of termination, cancellation or 
acceleration) as to which requisite waivers or consents have 
been obtained; or

	(d)  conflict with or result in a violation or breach of 
any term or provision of any Law or Order applicable to 
Purchaser or any of its Assets and Properties.

3.04  Governmental Approvals and Filings

	Except for Purchaser Required Regulatory Approvals, no 
consent, approval or action of, filing with or notice to any 
Governmental or Regulatory Authority on the part of Purchaser 
is required in connection with the execution, delivery and 
performance of this Agreement or any of the Operative 
Agreements to which it is a party or the consummation of the 
transactions contemplated hereby or thereby.

3.05  Legal Proceedings

	Except as disclosed in Section 3.05 of the Disclosure 
Schedule (with paragraph references corresponding to those set 
forth below):

	(a)  there are no Actions or Proceedings pending or, to 
the Knowledge of Purchaser, threatened against, relating to or 
affecting Purchaser or any of its Assets and Properties which 
could reasonably be expected (i) to result in the issuance of 
an Order restraining, enjoining or otherwise prohibiting or 
making illegal the consummation of any of the transactions 
contemplated by this Agreement or any of the Operative 
Agreements, or (ii) individually or in the aggregate with 
other such Actions or Proceedings, to create a Purchaser 
Material Adverse Effect; and

	(b)  there are no Orders outstanding against Purchaser 
which, individually or in the aggregate with other such 
Orders, would have a Purchaser Material Adverse Effect.

3.06  Compliance with Laws and Orders

	Except as disclosed in Section 3.06 of the Disclosure 
Schedule, Purchaser is not in violation of or in default under 
any Law or Order applicable to Purchaser or its Assets and 
Properties.

3.07  Regulation as a Utility

	Purchaser is not a public utility company within the 
meaning of the Holding Company Act.  As of the Closing, 
Purchaser will be subject to regulation as a public utility 
and as a Licensee under the Federal Power Act.  Purchaser is 
not otherwise subject to regulation as a public utility or 
public service company (or similar designation) by the United 
States, any state of the United States (except to the extent 
that the assets acquired by Purchaser under the MPC Purchase 
Agreement and related activities in connection therewith make 
Purchaser subject to regulation under Montana law), any 
foreign country or any municipality or any political 
subdivision of the foregoing.

3.08  Brokers

	Except for Chase Securities Inc., whose fees, commissions 
and expenses are the sole responsibility of Purchaser, all 
negotiations relative to this Agreement and the transactions 
contemplated hereby have been carried out by Purchaser 
directly with Seller without the intervention of any Person on 
behalf of Purchaser in such manner as to give rise to any 
valid claim by any Person against Purchaser for a finder's 
fee, brokerage commission or similar payment.

3.09  Financing

	Purchaser has cash and/or commitments for equity 
contributions or credit facilities sufficient (and has 
provided Seller with evidence thereof) to pay the Base 
Purchase Price and the Combined Payment Amount and to make all 
related payments of fees and expenses in connection with the 
transactions contemplated by this Agreement and the Operative 
Agreements.

3.10  Financial Statements

	Purchaser has delivered to Seller the financial 
statements of Purchaser listed on Section 3.10 of the 
Disclosure Schedule, and such financial statements and notes 
fairly present the financial condition and the results of 
operations, changes in stockholders' equity, and cash flow of 
Purchaser as of the respective dates of and for the periods 
referred to therein, all in accordance with GAAP, subject, in 
the case of interim financial statements, to normal recurring 
year-end adjustments (the effect of which will not, 
individually or in the aggregate, be materially adverse) and 
the absence of notes and schedules.

3.11  Opportunity to Inspect Assets

	Prior to its execution of this Agreement, Purchaser has 
conducted an independent investigation of the Assets.  In 
making its decision to execute this Agreement, and to purchase 
the Assets, Purchaser has relied upon the terms and provisions 
of this Agreement and the results of such independent 
investigation.

                          ARTICLE IV
                      COVENANTS OF SELLER

	Seller covenants and agrees with Purchaser that, at all 
times from and after the date hereof until the Closing, and, 
with respect to Section 4.08, thereafter Seller will comply 
with all covenants and provisions of this Article IV, except 
to the extent Purchaser may otherwise consent in writing.

4.01  Regulatory and Other Approvals

	Seller will (a)(i) take all reasonable steps necessary or 
desirable, and proceed diligently and in good faith and use 
all reasonable efforts, as promptly as practicable to obtain 
all consents, approvals (including Final Orders) or actions 
of, to make all filings with and to give all notices to 
Governmental or Regulatory Authorities provided that the Final 
Order(s) of the WUTC approving the transaction and the terms 
and conditions of each of the Operative Agreements and the 
respective regulatory treatment of any and all financial 
impacts thereof in each case shall be in form and substance 
satisfactory to Seller in its reasonable discretion and (ii) 
take all commercially reasonable steps necessary or desirable 
to obtain all consents, approvals or actions, and give all 
notices to, any other Person required of Seller, in each case, 
to consummate the transactions contemplated hereby and by the 
Operative Agreements, including those described in 
Section 2.03 of the Disclosure Schedule and Seller Required 
Regulatory Approvals, or required for Purchaser to own, 
operate or maintain, on and after the Closing, the Assets 
substantially as such assets are currently owned, operated and 
maintained by Seller, (b) provide such other information and 
communications to such Governmental or Regulatory Authorities 
or other Persons as such Governmental or Regulatory 
Authorities or other Persons may reasonably request in 
connection therewith and (c) provide reasonable cooperation 
(i) to Purchaser in obtaining all Purchaser Required 
Regulatory Approvals and other consents, approvals or actions 
of, making all filings with and giving all notices to 
Governmental or Regulatory Authorities or other Persons 
required of Purchaser to consummate the transactions 
contemplated hereby and by the Operative Agreements and (ii) 
to Purchaser and Purchaser's potential lenders in connection 
with Purchaser Financing for the transactions contemplated by 
this Agreement.  Prior to making any filings with a 
Governmental or Regulatory Authority pursuant to this 
Section 4.01, Seller agrees to provide copies of such filings 
to Purchaser.  Nothing in this Agreement shall require Seller 
to institute litigation or to pay or agree to pay any sum of 
money or make financial accommodations (other than the payment 
or incurrence of customary expenses and filing or other fees) 
in order to obtain any necessary consent, approval or 
authorization including, without limitation, the Seller 
Required Regulatory Approvals.  Seller will provide prompt 
notification to Purchaser when any such consent, approval, 
action, filing or notice referred to in clause (a) above is 
obtained, taken, made or given, as applicable, and will advise 
Purchaser of any communications (and, unless precluded by Law 
or Order, provide copies of any such communications that are 
in writing) with any Governmental or Regulatory Authority or 
other Person regarding any of the transactions contemplated by 
this Agreement or any of the Operative Agreements.

4.02  HSR Filings

	In addition to and not in limitation of Seller's 
covenants contained in Section 4.01, Seller will (a) consult 
with Purchaser as to appropriate timing of filings and take 
promptly all actions necessary to make the filings required of 
Seller or its Affiliates under the HSR Act, (b) comply at the 
earliest practicable date with any request for additional 
information received by Seller or its Affiliates from the 
Federal Trade Commission or the Antitrust Division of the 
Department of Justice pursuant to the HSR Act and (c) 
cooperate with Purchaser in connection with Purchaser's filing 
under the HSR Act and in connection with resolving any 
investigation or other inquiry concerning the transactions 
contemplated by this Agreement commenced by either the Federal 
Trade Commission or the Antitrust Division of the Department 
of Justice or state attorneys general.

4.03  Investigation by Purchaser

	Seller will (a) provide Purchaser and its officers, 
employees, counsel, accountants, financial advisors, potential 
lenders, Purchaser's and potential lenders' consultants and 
other representatives (collectively, "Representatives") with 
full access, upon reasonable prior notice and during normal 
business hours, to the Employees and such other officers, 
employees and agents of Seller who have any responsibility for 
the PSE Colstrip Interests, to Seller's accountants and, 
subject to the terms and conditions of the Colstrip Contracts, 
to the Assets (including, to the extent it is within Seller's 
power to do so, access to the Colstrip 1, 2, 3 and 4 site), 
but only to the extent that such access does not unreasonably 
interfere with Seller's business and the operation of the 
Assets, (b) make available to Purchaser and its 
Representatives, upon request, a copy of each report, schedule 
or other document filed or received by Seller between the Bid 
Date and the Closing with or from the SEC, FERC, EPA, WUTC or 
any other relevant Governmental or Regulatory Authority and 
relating to the ownership, operation and maintenance of the 
Assets or the transactions contemplated by this Agreement, and 
all such information and data (including copies of Business 
Contracts, Transferable Permits, Fuel Contracts, Colstrip 
Contracts, and other Books and Records) concerning the 
ownership, operation and maintenance of the PSE Colstrip 
Interests and the Assets and the Assumed Liabilities as 
Purchaser or its Representatives reasonably may request in 
connection with such investigation, except to the extent that 
furnishing any such report, schedule, other documents, 
information or data would violate any Law, Order (including 
any protective order or similar confidentiality obligation), 
Contract, License or Environmental Permit applicable to Seller 
or by which any of its Assets and Properties is bound.  In 
furtherance of the foregoing, Seller agrees to cooperate with 
Purchaser in connection with Purchaser's efforts to obtain 
Purchaser Financing, as defined in Section 5.07.  Seller's 
cooperation shall include the negotiation and execution of a 
consent with the lenders with respect to the Operative 
Agreements, which consent shall include providing such lenders 
with rights to cure a Purchaser default under the Operative 
Agreements; provided, however, that Seller shall not be 
obligated, in connection with such cooperation or consent, to 
take any action or enter into any agreement that would have 
any adverse effect on Seller or any of its rights or benefits 
under this Agreement or the Operative Agreements.

4.04  No Solicitations

	Subject to the duties imposed by applicable Law, Seller 
will not take, nor will it permit any Affiliate of Seller (or 
authorize or permit any investment banker, financial advisor, 
attorney, accountant or other Person retained by or acting for 
or on behalf of Seller or any such Affiliate) to take, 
directly or indirectly, any action to solicit, encourage, 
receive, negotiate, assist or otherwise facilitate (including 
by furnishing confidential information with respect to the PSE 
Colstrip Interests or permitting access to the Assets and 
Properties and Books and Records of Seller) any offer or 
inquiry from any Person concerning the acquisition of any of 
the Assets other than Purchaser or its Affiliates or any of 
their Representatives.

4.05  Conduct of Business

	(a)  From the Bid Date to the Closing, Seller shall, 
consistent with the terms and conditions of the Colstrip 
Contracts and to the extent such matters are presented to 
Seller by MPC thereunder, vote or cause to be voted its 
Project Share (as defined in the Colstrip Contracts) in favor 
of (i) the continued operation of the Colstrip Facilities only 
in the ordinary course of business consistent with Good 
Utility Practice, (ii) causing MPC to use commercially 
reasonable efforts, to (A) maintain good relations with and 
keep available (subject to dismissals and retirements in the 
ordinary course of business) the services of key Employees, 
(B) maintain the Assets in good working order and condition, 
ordinary wear and tear excepted, (C) maintain the good will of 
lessors, customers, suppliers, lenders and other Persons with 
whom MPC otherwise has significant business relationships in 
connection with the operation of the Colstrip Facilities, (D) 
materially comply with all Laws and Orders, including 
Environmental Laws applicable to the ownership, operation and 
maintenance of the Colstrip Facilities and (E) keep in force 
at not less than their present limits all material policies of 
insurance covering the Assets to the extent reasonably 
practicable in light of the prevailing market conditions in 
the insurance industry.

	(b)  Without limiting the generality of the foregoing, 
except with the prior written consent of Purchaser, Seller 
will, with respect to the Colstrip Facilities promptly notify 
Purchaser if Seller becomes aware of the cancellation of any 
material insurance policy or any material modification 
thereto.

4.06  Certain Restrictions

	Except as set forth in Section 4.06 of the Disclosure 
Schedule, Seller will refrain from agreeing to any of the 
following actions:

	(a)  creating any Lien (other than a Permitted Lien) on 
the Assets except in the ordinary course of Seller's business 
or as required under Seller's instruments of Indebtedness as 
in effect on the date hereof and, in each case, as will be 
removed on or prior to the Closing;

	(b)  selling, leasing (as lessor), transferring or 
otherwise disposing of, any of the Assets (except as 
contemplated by Exhibit D to Section 1.01(a)(i) of the 
Disclosure Schedule), other than Assets used, consumed or 
replaced in the ordinary course of business consistent with 
Good Utility Practice;

	(c)  entering into, amending or modifying in any material 
way, terminating (partially or completely), granting any 
waiver of any material term under or giving any material 
consent with respect to any Business Contract, Transferable 
Permit, Fuel Contract, Colstrip Contract or other contract or 
agreement comprising a part of the Assets or that relates to 
the Assets, the Assumed Liabilities or is material to the 
operation of the Colstrip Facilities;

	(d)  other than in the ordinary course of business, 
incurring, purchasing, canceling, prepaying or otherwise 
providing for a complete or partial discharge in advance of a 
scheduled payment date with respect to, or waiving any right 
under, any Liability of or owing to Seller in connection with 
the Assets, the Assumed Liabilities or the operation of the 
Colstrip Facilities in an aggregate principal amount exceeding 
$500,000;

	(e)  engaging with any Person in any Business 
Combination, unless such Person agrees in a written instrument 
to adopt and comply with the terms and conditions of this 
Agreement as though such Person was an original signatory 
hereto;

	(f)  engaging in any transaction individually or in the 
aggregate with other such transactions material to the 
ownership or operation of the Assets with any officer, 
director, Affiliate or Associate of Seller, or any Associate 
of any such officer, director or Affiliate, that would be an 
Assumed Liability and that would extend beyond the Closing 
other than in the ordinary course of business on terms no less 
favorable to Seller than could be obtained on an arm's-length 
basis with an unaffiliated third party;

	(g)  to the extent it has notice thereof and the 
authority to do so pursuant to the Colstrip Contracts, making 
any material change in the level of fuel inventory and stores 
inventory customarily maintained by Seller with respect to the 
PSE Colstrip Interests, other than consistent with Good 
Utility Practice; 

	(h)  to the extent it has notice thereof and the 
authority to do so pursuant to the Colstrip Contracts, 
entering into any commitment for the purchase or sale of fuel 
having a term greater than six months and not terminable on or 
before the Closing either (i) automatically, or (ii) by option 
of Seller (or, after the Closing, by Purchaser) in its sole 
discretion, if the aggregate payment under such commitment and 
all other outstanding commitments not previously approved by 
Purchaser would be expected to exceed $500,000;

	(i)  making any tax election or entering into or amending 
any real or personal property Tax agreement, treaty or 
settlement that would have a negative effect on the Tax status 
of Purchaser with regard to the Assets; or

	(j)  entering into any Contract to do or engage in any of 
the foregoing.

	The foregoing shall not preclude Seller from making, or 
agreeing to the making  of (i) Maintenance Expenditures and 
Capital Expenditures and (ii) at Seller's expense under the 
Colstrip Contracts, such other maintenance and capital 
expenditures as Seller or MPC deems necessary, subject in all 
cases to the applicable provisions of the Colstrip Contracts.

4.07  Security Deposits

	Seller will transfer to Purchaser at the Closing all of 
Seller's right, title and interest in and to the Tenant 
Security Deposits and the Landlord Security Deposits and any 
other deposits, prepayments or progress payments made or held 
by Seller in connection with the Assets or material to the 
ownership, operation and maintenance of the Colstrip 
Facilities.

4.08  Delivery of Books and Records, etc.; Removal of Property

	(a)  At the Closing, Seller shall deliver or make 
available to Purchaser at Seller's place of business in 
Bellevue, Washington, all of the Books and Records relating to 
the PSE Colstrip Interests as are in Seller's possession, and 
if at any time after the Closing Seller discovers in its 
possession or under its control any other such Books and 
Records or other Assets, it will forthwith deliver such Books 
and Records or other Assets to Purchaser.

	(b)  Except as set forth in Section 4.08(b) of the 
Disclosure Schedule, within a reasonable time after the 
Closing, Seller shall take all commercially reasonable steps 
to remove any of Seller's Assets and Properties not being sold 
to Purchaser hereunder from the Real Property except as 
contemplated by the Separation Document.  Such removal shall 
be at the sole cost and risk of Seller, including risk of loss 
and damage to such Assets and Properties and to the Assets 
conveyed to Purchaser hereby.

4.09  Fulfillment of Conditions

	Seller will execute and deliver at the Closing each 
Operative Agreement that Seller is required hereby to execute 
and deliver as a condition to the Closing, will take all 
commercially reasonable steps necessary or desirable and 
proceed diligently and in good faith to satisfy each other 
condition to the obligations of Purchaser contained in this 
Agreement and will not take or fail to take any action that 
could reasonably be expected to result in the nonfulfillment 
of any such condition.

4.10  Observation, Inspection and Participation

	Seller agrees, subject to its rights and obligations 
under the Colstrip Contracts that between the date of this 
Agreement and the date of the Closing , Purchaser shall be 
entitled to have a reasonable number of representatives, all 
of whom shall be employees of Purchaser or its Affiliates 
unless otherwise approved by Seller in each instance, which 
approval shall not be unreasonably withheld ("Site 
Representatives") at any of the Assets, on a full or part time 
basis (whether on site or off-site), as determined by 
Purchaser; provided, however, that (a) the presence and 
activities of the Site Representatives shall be conducted in a 
manner as not to interfere unreasonably with the ownership, 
operation and maintenance of the Assets, or with the 
activities of Seller and MPC not related to the Assets and 
(b) the Site Representatives shall not have access to any 
information that is unavailable pursuant to Section 4.03. 
Reasonable office space and facilities will be made available 
by Seller to such Site Representatives. Each Site 
Representative shall have the right to review budgets and 
expenditures, audit records (except for personnel and medical 
records unless required by law), inspect equipment, advise on 
repairs required for equipment, review permits, review the 
progress of outages, review maintenance and operating 
practices and otherwise observe all activities at the above 
mentioned facilities in each case to the extent related to the 
operation of the Assets.  Between the date hereof and the 
Closing, Seller shall, to the extent it is able to do so under 
the Colstrip Contracts, exercise its reasonable efforts to 
invite Site Representatives to attend internal meetings in 
which Seller participates and which relate specifically to the 
physical operation or maintenance of the Assets; provided, 
however, that such obligation shall not extend to (i) meetings 
of the boards of directors, or any committees thereof, of  
Seller or any of its Affiliates, (ii) meetings with counsel, 
or (iii) meetings the subject matter of which, in Seller's 
reasonable judgment, if disclosed to Purchaser, would likely 
be detrimental to Seller (including, without limitation, 
information relating to Seller's proposed business activities 
following the Closing or to contractual or other matters as to 
which the interests of Seller and Purchaser may diverge).  
Site Representatives shall also be entitled to consult with 
Seller and make recommendations as to all activities relating 
to the management, operation, maintenance, construction, 
renewal, addition, replacement, modification and disposal of 
the Assets, including, without limitation, applications for 
authorizations, permits and licenses, and fuel procurement and 
transportation.

4.11  Notice of Breach

	Seller shall promptly give notice to Purchaser upon 
becoming aware of the occurrence of any event which would 
cause or constitute a breach of any of the representations, 
warranties or covenants of Seller contained in this Agreement.

4.12  Bridge Financing Fees

	In the event that Purchaser obtains bridge financing 
directly or indirectly from a non-Affiliated third party in 
connection with the transactions contemplated hereby, Seller 
will deduct from the Base Purchase Price at the time of 
Closing an amount equal to 31.11% of any financing fees paid 
by Purchaser in connection with such bridge financing; 
provided, however, that the deduction under this Section 4.12 
shall not exceed $4,812,717 in the aggregate.

4.13  Special Maintenance and Capital Expenditures

	Within thirty (30) days after the date hereof, Seller and 
Purchaser shall mutually agree on a Schedule setting forth a 
month by month special maintenance and capital expenditure 
budget relating to the Assets for calendar years 1999 and 2000 
(the "Budget").  The Budget will be divided into two parts; 
Category A items and Category B items.  With respect to items 
listed under Category A, Seller agrees to use commercially 
reasonable efforts to cause MPC, to the extent Seller has the 
right to do so under the Colstrip Contracts, to conduct and 
complete such special maintenance and capital expenditures at 
the times set forth in the Budget.  With respect to items 
listed under Category B, Seller shall cause MPC, to the extent 
Seller has the right to do so under the Colstrip Contracts, to 
conduct and complete such special maintenance and capital 
expenditures at such times as Seller and MPC shall determine 
in their reasonable discretion after consultation with 
Purchaser.  With respect to emergency special maintenance and 
capital expenditure items not identified in the Budget that 
arise after the date hereof and prior to the Closing, Seller 
will cause MPC, to the extent Seller has the right to do so 
under the Colstrip Contracts, to consult with Purchaser and to 
conduct and complete any such emergency special maintenance 
and capital expenditure items in accordance with Good Utility 
Practice ("Emergency Expenditures").

                            ARTICLE V
                     COVENANTS OF PURCHASER

	Purchaser covenants and agrees with Seller that, at all 
times from and after the date hereof until the Closing and, in 
the case of Section 5.06, thereafter, Purchaser will comply 
with all covenants and provisions of this Article V, except to 
the extent Seller may otherwise consent in writing.

5.01  Regulatory and Other Approvals

	Purchaser will (a) take all reasonable steps necessary or 
desirable, and proceed diligently and in good faith and use 
all reasonable efforts, at the earliest commercially 
practicable dates, to obtain all consents, approvals or 
actions of, to make all filings with and to give all notices 
to Governmental or Regulatory Authorities or any other Person 
required of Purchaser to consummate the transactions 
contemplated hereby and by the Operative Agreements, including  
those described in Section 3.03 of the Disclosure Schedule and 
Purchaser Required Regulatory Approvals or for Purchaser to 
own, operate or maintain, on and after the Closing, the Assets 
substantially as such assets are currently owned, operated and 
maintained by Seller, (b) provide such other information and 
communications to such Governmental or Regulatory Authorities 
or other Persons as such Governmental or Regulatory 
Authorities or other Persons may reasonably request in 
connection therewith and (c) provide reasonable cooperation to 
Seller in obtaining Seller Required Regulatory Approvals and 
all other consents, approvals or actions of, making all 
filings with and giving all notices to Governmental or 
Regulatory Authorities or other Persons required of Seller to 
consummate the transactions contemplated hereby and by the 
Operative Agreements.  Prior to making any filings with a 
Governmental or Regulatory Authority pursuant to this 
Section 5.01, Purchaser agrees to provide copies of such 
filings to Seller.  Nothing in this Agreement shall require 
Purchaser to institute litigation or to pay or agree to pay 
any sum of money or make financial accommodations (other than 
the payment or incurrence of customary expenses and filing or 
other fees) in order to obtain any necessary consent, approval 
or authorization including, without limitation, the Purchaser 
Required Regulatory Approvals.  Purchaser will provide prompt 
notification to Seller when any such consent, approval, 
action, filing or notice referred to in clause (a) above is 
obtained, taken, made or given, as applicable, and will advise 
Seller of any communications (and, unless precluded by Law, 
provide copies of any such communications that are in writing) 
with any Governmental or Regulatory Authority or other Person 
regarding any of the transactions contemplated by this 
Agreement or any of the Operative Agreements.

5.02  HSR Filings

	In addition to and without limiting Purchaser's covenants 
contained in Section 5.01, Purchaser will (a) consult with 
Seller as to the appropriate timing of filings and take 
promptly all actions necessary to make the filings required of 
Purchaser or its Affiliates under the HSR Act, (b) comply at 
the earliest practicable date with any request for additional 
information received by Purchaser or its Affiliates from the 
Federal Trade Commission or the Antitrust Division of the 
Department of Justice pursuant to the HSR Act and 
(c) cooperate with Seller in connection with Seller's filing 
under the HSR Act and in connection with resolving any 
investigation or other inquiry concerning the transactions 
contemplated by this Agreement commenced by either the Federal 
Trade Commission or the Antitrust Division of the Department 
of Justice or state attorneys general.

5.03  PPUC Approval for Holding Company

	From the date hereof through the Closing, Purchaser 
agrees not to enter into any Contract or take any action 
which, when taken together with the consummation of the 
transactions contemplated by this Agreement, would violate any 
condition imposed by the PPUC that limits Parent's investment 
in diversified businesses without prior PPUC approval.  
Purchaser further agrees that, in seeking the approval 
described in clause (iv) of the definition of Purchaser 
Required Regulatory Approvals, Purchaser shall use 
commercially reasonable efforts to seek any reasonable PPUC 
approval that would allow Purchaser to consummate the 
transactions contemplated hereby and to own, operate and 
maintain the Assets in substantially the same manner as 
currently owned, operated and maintained by Seller.

5.04  Notice of Breach

	Purchaser shall promptly give notice to Seller upon 
becoming aware of the occurrence of any event which would 
cause or constitute a breach of any of the representations, 
warranties or covenants of Purchaser contained in this 
Agreement.

5.05  Fulfillment of Conditions

	Purchaser will execute and deliver at the Closing each 
Operative Agreement that Purchaser is hereby required to 
execute and deliver as a condition to the Closing, will take 
all commercially reasonable steps necessary or desirable and 
proceed diligently and in good faith to satisfy each other 
condition to the obligations of Seller contained in this 
Agreement and will not take or fail to take any action that 
could reasonably be expected to result in the nonfulfillment 
of any such condition.

5.06  Tax-Exempt Bond Financed Pollution Control Facilities

	(a)  Following the Closing until the maturity or 
redemption date of the Pollution Control Bonds,

          (i)  Except as otherwise permitted in (ii), 
Purchaser will not materially change or permit to be changed 
the character or nature of the use of those facilities listed 
in Exhibit C hereto (the "Pollution Control Facilities") from 
the manner Seller has used said facilities prior to the sale 
of the Assets, unless such changed use would constitute a use 
or purpose of said facilities for which tax-exempt bonds could 
be issued pursuant to section 1313 of the Tax Reform Act of 
1986 (P.L. 99-514 or, hereinafter, the "1986 Tax Act"), to 
refund bonds described in section 1312(a) of the 1986 Tax Act 
which, for purposes hereof, are assumed to have been issued to 
finance facilities of the same character and use or purpose as 
said facilities; 

         (ii)  Purchaser will not sell or otherwise transfer 
any portion of such Pollution Control Facilities  unless (A) 
the transferee covenants to satisfy the conditions of Section 
5.06(a)(i) and with respect to its ownership and use of said 
facilities following the date of any such purchase or (B) the 
transfer relates to personal property and is exclusively for 
cash the proceeds of which will be expended within six months 
of the date of receipt on facilities for which tax-exempt 
bonds could be issued pursuant to section 1313 of the 1986 Tax 
Act, to refund bonds described in section 1312(a) of said act 
which, for purposes hereof, are assumed to have been issued to 
finance facilities of the same character and use or purpose as 
said facilities; and

        (iii)  Purchaser will cooperate with Seller and use 
commercially reasonable efforts to permit Seller to have 
access to the Colstrip Facilities at reasonable times to 
examine the Pollution Control Facilities.

	Nothing herein shall be construed to prevent Purchaser 
from ceasing to use any facilities or equipment that, in 
Purchaser's reasonable judgment, have become obsolescent or 
otherwise uneconomical to continue to use.  Seller will notify 
Purchaser when the Pollution Control Bonds have matured or 
been redeemed.  

5.07  Purchaser Financing

	Purchaser will proceed in good faith and use all 
reasonable efforts to obtain financing on commercially 
reasonable terms in amounts and structure reasonably 
consistent with Purchaser's financing plan as set forth in 
Purchaser's written proposal to Seller dated September 25, 
1998 (the "Purchaser Financing").

                          ARTICLE VI
            CONDITIONS TO OBLIGATIONS OF PURCHASER

	The obligations of Purchaser hereunder to purchase the 
Assets and to assume and pay, perform and discharge the 
Assumed Liabilities are subject to the fulfillment, at or 
before the Closing, of each of the following conditions (all 
or any of which may be waived in whole or in part by Purchaser 
in its sole discretion):

6.01  Representations and Warranties

	The representations and warranties made by Seller in this 
Agreement and the Operative Agreements, taken as a whole, 
shall be true and correct, in all material respects, on and as 
of the Closing as though repeated on and as of the Closing or, 
in the case of representations and warranties made as of a 
specified date earlier than the Closing, on and as of such 
earlier date.

6.02  Performance

	Seller shall have performed and complied with, in all 
material respects, the agreements, covenants and obligations 
required by this Agreement to be so performed or complied with 
by Seller at or before the Closing.

6.03  Officers' Certificates

	Seller shall have delivered to Purchaser a certificate, 
dated as of the Closing and executed by the Chairman of the 
Board, the President or any Vice President of Seller, 
substantially in the form and to the effect of Exhibit D 
hereto, and a certificate, dated as of the Closing and 
executed by the Secretary or any Assistant Secretary of 
Seller, substantially in the form and to the effect of Exhibit 
E hereto.

6.04  Orders and Laws

	There shall not be in effect on the date of the Closing 
any Order or Law restraining, enjoining or otherwise 
prohibiting or making illegal the consummation of any of the 
transactions contemplated by this Agreement or any of the 
Operative Agreements.

6.05  Regulatory Consents and Approvals

	Subject to Section 1.10, all Seller Required Regulatory 
Approvals and Purchaser Required Regulatory Approvals shall 
have been duly obtained, made or given and shall be in full 
force and effect and shall be Final Orders reasonably 
satisfactory to Purchaser, and all terminations or expirations 
of waiting periods imposed by any Governmental or Regulatory 
Authority necessary for the consummation of the transactions 
contemplated by this Agreement and the Operative Agreements, 
including under the HSR Act, shall have occurred.

6.06  Colstrip Rights of First Refusal

	Seller shall have either received the consents required 
under each of the Colstrip Rights of First Refusal or the 
exercise periods of such Colstrip Rights of First Refusal 
shall have expired.

6.07  Third Party Consents

	The consents (or in lieu thereof waivers) listed in 
Section 6.07 of the Disclosure Schedule shall have been 
obtained and shall be in full force and effect and shall be 
reasonably satisfactory to Purchaser.

6.08  No Seller Material Adverse Effect

	There shall not have occurred and be continuing a Seller 
Material Adverse Effect.

6.09  Proceedings

	All corporate and other proceedings to be taken by Seller 
in connection with the transactions contemplated hereby and 
all documents incident thereto shall be reasonably 
satisfactory in form and substance to Purchaser and its 
counsel, and Purchaser and its counsel shall have received all 
such certified or other copies of such documents as it or they 
may reasonably request.

6.10  Deliveries

	Seller shall have executed and delivered to Purchaser 
(i) the General Assignment, (ii) the other Assignment 
Instruments, (iii) the Wholesale Transition Service Agreement, 
dated as of the Closing, with Purchaser substantially in the 
form and to the effect of Exhibit F hereto (the "Wholesale 
Transition Service Agreement"), and (iv) if the PSE 
Transmission Assets are not conveyed to Purchaser at the 
Closing, Seller and Purchaser shall have entered into the 
Transmission Service Agreement and the related Separation 
Document.

6.11  Colstrip Operations Arrangements

	There shall be in effect (a) arrangements reasonably 
satisfactory to Purchaser pursuant to which Purchaser shall be 
the operator of the entire Colstrip generating facility for a 
period of at least ten (10) years after the Closing, subject 
only to removal for cause or (b) such other arrangements with 
respect to the operation of the Colstrip generating facility 
as are reasonably acceptable to Purchaser.

6.12  Purchaser Financing

	Purchaser's obligation to purchase the PSE Colstrip 
Transmission Assets at the Closing is subject to the receipt 
by Purchaser, on or prior to the Closing, of the Purchaser 
Financing or other financing reasonably satisfactory to 
Purchaser.

6.13  Opinion of Counsel

	Purchaser shall have received the opinion of (i) Perkins 
Coie LLP, counsel to Seller, dated as of the Closing, 
substantially to the effect of Exhibit G-1 hereto, and 
(ii) outside Montana counsel to Seller, dated as of the 
Closing, substantially to the effect of Exhibit G-2 hereto.

6.14  Transfer of MPC Generation Assets 

	That portion of the Generation Assets (as such term is 
defined in the MPC Purchase Agreement) to be transferred to 
Purchaser at the Closing under the MPC Purchase Agreement 
consisting of, at a minimum, (i) Corette, (ii) MPC's undivided 
interest in Colstrip 1,2 and 3, and (iii) the Missouri/Madison 
Hydro Units with Basin/Idaho/BPA Power Contracts (in each case 
of (i), (ii) and (iii), as such terms are defined in the MPC 
Purchase Agreement) shall have been purchased by Purchaser, 
unless such purchase has not occurred solely as a result of a 
breach by Purchaser of the MPC Purchase Agreement.

                          ARTICLE VII
               CONDITIONS TO OBLIGATIONS OF SELLER

	The obligations of Seller hereunder to sell the Assets 
are subject to the fulfillment, at or before the Closing, of 
each of the following conditions (all or any of which may be 
waived in whole or in part by Seller in its sole discretion):

7.01  Representations and Warranties

	The representations and warranties made by Purchaser in 
this Agreement and the Operative Agreements, taken as a whole, 
shall be true and correct, in all material respects on and as 
of the Closing as though repeated on and as of the Closing.

7.02  Performance

	Purchaser shall have performed and complied with, in all 
material respects, the agreements, covenants and obligations 
required by this Agreement to be so performed or complied with 
by Purchaser at or before the Closing.

7.03  Officers' Certificates

	Purchaser shall have delivered to Seller a certificate, 
dated as of the Closing and executed by the Chairman of the 
Board, the President or any Executive or Senior Vice President 
of Purchaser, substantially in the form and to the effect of 
Exhibit H hereto, and a certificate, dated as of the Closing 
and executed by the Secretary or any Assistant Secretary of 
Purchaser, substantially in the form and to the effect of 
Exhibit I hereto.

7.04  Orders and Laws

	There shall not be in effect on the date of the Closing 
any Order or Law restraining, enjoining or otherwise 
prohibiting or making illegal the consummation of any of the 
transactions contemplated by this Agreement or any of the 
Operative Agreements.

7.05  Regulatory Consents and Approvals

	Subject to Section 1.10, all Seller Required Regulatory 
Approvals and Purchaser Required Regulatory Approvals shall 
have been duly obtained, made or given and shall be in full 
force and effect and shall be a Final Order, and all 
terminations or expirations of waiting periods imposed by any 
Governmental or Regulatory Authority necessary for the 
consummation of the transactions contemplated by this 
Agreement and the Operative Agreements, including under the 
HSR Act, shall have occurred.

7.06  Third Party Consents

	The consents (or in lieu thereof waivers) listed in 
Section 7.06 of the Disclosure  Schedule shall have been 
obtained and shall be in full force and effect and shall be 
reasonably satisfactory to Seller.

7.07  Opinion of Counsel

	Seller shall have received the opinion of  Winthrop, 
Stimson, Putnam & Roberts, counsel to Purchaser, dated as of 
the Closing, substantially to the effect of Exhibit J hereto.  
Such counsel's opinion need not cover any matter contained in 
the opinions required by Exhibit J to the extent such matter 
involves the laws of Montana, Oregon, Washington, Pennsylvania 
or any other jurisdiction other than the federal laws of the 
United States or the laws of the State of New York, and in 
lieu thereof, Seller shall have received the opinions of 
counsel admitted in such other jurisdictions covering such 
matters.

7.08  No Purchaser Material Adverse Effect

	There shall not have occurred and be continuing a 
Purchaser Material Adverse Effect.

7.09  Proceedings

	All corporate and other proceedings to be taken by 
Purchaser in connection with the transactions contemplated 
hereby and all documents incident thereto shall be reasonably 
satisfactory in form and substance to Seller and its counsel 
and Seller and its counsel shall have received all such 
certified or other copies of such documents as it or they may 
reasonably request.

7.10  Colstrip Rights of First Refusal

	Seller shall have either received the consents required 
under each of the Colstrip Rights of First Refusal or the 
exercise periods of such Colstrip Rights of First Refusal 
shall have expired.

7.11  Deliveries

	Purchaser shall have delivered to Seller (i) the 
Assumption Agreement (ii) the other Assumption Instruments, 
(iii) the Wholesale Transition Service Agreement ,and (iv) 
subject to Section 1.10, the Transmission Service Agreement 
and Separation Document.

                            ARTICLE VIII
                  TAX MATTERS AND POST-CLOSING TAXES

8.01  Transfer Taxes

	All Transfer Taxes incurred in connection with this 
Agreement and the transactions contemplated hereby shall be 
borne by Purchaser, and Purchaser, at its own expense, will 
file, to the extent required by applicable Law, all necessary 
Tax Returns and other documentation with respect to all such 
Transfer Taxes, and, if required by applicable Law, Seller 
will join in the execution of any such Tax Returns or other 
documentation and will take such positions therein as are 
reasonably requested by Purchaser.  Nothing in the foregoing 
sentence shall require Seller to take a position adverse to 
its own posture with regard to Taxes.  Prior to the Closing, 
Purchaser will provide to Seller, to the extent possible, an 
appropriate certificate from each applicable taxing authority 
to the effect that no Transfer Tax will be incurred in 
connection with this Agreement and the transactions 
contemplated hereby.

8.02  Returns with respect to Prorated Taxes

With respect to those Taxes to be prorated in accordance 
with Section 1.06 of this Agreement, Purchaser shall prepare 
and timely file all Tax Returns required to be filed after the 
Closing with respect to the Assets and shall duly and timely 
pay all such Taxes shown to be due on such Tax Returns. 
Purchaser's preparation of any such Tax Return shall be 
subject to Seller's approval, which approval shall not be 
unreasonably withheld. Purchaser shall make such Tax Returns 
available for Seller's review and approval no later than 
twenty (20) Business Days prior to the due date for filing 
such Tax Return. Within fifteen (15) Business Days after 
receipt of such Tax Return, Seller shall pay to Purchaser its 
proportionate share of the amount shown as due on such Tax 
Return determined in accordance with Section 1.06 of this 
Agreement.

                          ARTICLE IX
              SURVIVAL; NO OTHER REPRESENTATIONS

9.01  Survival of Representations, Warranties, Covenants and 
      Agreements

(a)  Subject to Section 11.02, the representations and 
warranties of Purchaser and Seller (other than the 
representations and warranties , (x) contained in Section 2.06 
(the "Tax Representation") which shall survive for the 
applicable period of the applicable statute of limitation), 
and (y) contained in Section 2.09(b) (the "Title 
Representation") which shall survive the Closing indefinitely) 
(all of the representations and warranties of Purchaser and 
Seller, excluding the Tax Representation and the Title 
Representation, are hereinafter referred to as the "General 
Representations"), shall survive the Closing for a period of 
twelve (12) months; provided, however, if Purchaser (or any 
successor or assign of Purchaser) procures title insurance 
with respect to the Real Property, to the extent that 
Purchaser (or any successor or assign of Purchaser) actually 
receives proceeds from the title insurer in respect of any 
matters addressed by any of the representations and warranties 
contained in Section 2.09, then, only with respect to such 
matters, and only to such extent, such representations and 
warranties shall be deemed not to have been made;

(b)  Subject to Section 11.02, the covenants and 
agreements of Seller and Purchaser contained in this Agreement 
(other than the covenants and agreements contained in 
Articles IV (excluding Section 4.08) and V (excluding 
Section 5.06) (the "Pre-Closing Covenants"), which covenants 
and agreements shall survive the Closing for a period of 
twelve (12) months) (all of the covenants and agreements of 
Purchaser and Seller, excluding the Pre-Closing Covenants, are 
hereinafter referred to as the "Post-Closing Covenants"), 
shall survive the Closing indefinitely; and

(c)  Any due diligence or other investigation or 
examination by any party with respect to the transactions 
contemplated by this Agreement shall not in any way affect or 
lessen the representations and warranties of the other party 
contained herein or the indemnifications with respect thereto.

9.02  No Other Representations

Notwithstanding anything to the contrary contained in 
this Agreement, it is the explicit intent of each party hereto 
that Seller is making no representation or warranty 
whatsoever, express or implied, including but not limited to 
any implied representation or warranty as to condition, 
merchantability or suitability as to any of the Assets, except 
those representations and warranties contained in this 
Agreement and the exhibits, schedules, documents, certificates 
and instruments delivered in connection with the Closing.  In 
particular, Seller makes no representation or warranty to 
Purchaser with respect to (i) the information set forth in the 
Confidential Information Memorandum dated March 1998 and the 
supplements thereto, or (ii) any financial projection or 
forecast relating to the Colstrip Facilities. With respect to 
any such projection or forecast delivered by or on behalf of 
Seller to Purchaser, Purchaser acknowledges that (i) there are 
uncertainties inherent in attempting to make such projections 
and forecasts, (ii) it is familiar with such uncertainties, 
(iii) it is taking full responsibility for making its own 
evaluation of the adequacy and accuracy of all such 
projections and forecasts furnished to it and (iv) it shall 
have no claim against Seller with respect to such projections 
and forecasts.

                           ARTICLE X
                        INDEMNIFICATION

10.01  Other Indemnification

(a)  Subject to the other Sections of this Article X, 
Seller shall indemnify Purchaser and its Affiliates and their 
respective directors, officers, employees, agents and 
representatives ("Purchaser Group") in respect of, and hold 
Purchaser Group harmless from and against, any and all Losses 
suffered, incurred or sustained by Purchaser Group or to which 
Purchaser Group becomes subject, resulting from, arising out 
of or relating to:  

          (i)  any breach by Seller of any representation or 
warranty of Seller contained in this Agreement (determined in 
all cases as if the terms "material" or "materially" (or the 
capitalized versions thereof) were not included therein);

         (ii)  any breach by Seller of any covenant or 
agreement of Seller contained in this Agreement (determined in 
all cases as if the terms "material" or "materially" (or the 
capitalized versions thereof) were not included therein); or

        (iii)  Retained Liability;

provided, however, that Seller shall have no liability for 
Losses under clause (i) arising from a breach of a General 
Representation or the Tax Representation unless and until the 
aggregate amount of all Losses arising from such breaches 
asserted by Purchaser equals or exceeds $2,500,000 in which 
event Seller shall be liable for all such Losses; and 
provided, further, that, except with respect to Losses arising 
from a breach of the Title Representation, such 
indemnification shall be effective only with respect to claims 
written notice of which is received by Seller with respect to 
Losses arising under clause (i) above relating to General 
Representations (or, with respect to the Tax Representation, 
the date upon which the applicable statute of limitations 
expires) or clause (ii) above relating to Pre-Closing 
Covenants, no later than the date that is twelve (12) months 
from the Closing.  Except as set forth in paragraph (b) below 
in, no event shall the Liability of Seller for Losses under 
clause (i) of this Section 10.01(a) arising out of breaches of 
the General Representations exceed, in the aggregate, fifty 
percent (50%) of the Purchase Price, (or, with respect to 
breaches of the Title Representation and the covenants 
contained in Sections 1.01(a)(i) and 1.05 exceed, in the 
aggregate, the Purchase Price).

(b)  In addition to the indemnities contained in clause 
(a) above, Seller shall indemnify Purchaser Group in respect 
of, and hold it harmless from and against, all Losses 
suffered, incurred or sustained by Purchaser Group arising 
from any Pre-Closing Environmental Liability; provided, 
however, that (1) indemnification for Pre-Closing Unknown 
Remedial Liabilities shall be effective only with respect to 
Losses arising out of a matter described in a Claim Notice 
received by Seller no later than the date that is two years 
from the Closing, (2) Seller's Liabilities under this 
paragraph for Pre-Closing Known and Unknown Remedial 
Liabilities shall be limited in each case to Seller's pro rata 
share (calculated pursuant to the Colstrip Contracts) of 50% 
of any such Loss suffered, incurred or sustained by Purchaser 
Group, and shall not, in any event, exceed, in the aggregate, 
an amount equal to 10% of the Purchase Price (each such 
Liability of Seller shall be paid by it at the same time that 
Purchaser Group has paid its 50% share thereof); provided, 
further, that this indemnity shall only extend to such Pre-
Closing Environmental Liabilities attributable to conditions 
existing at or prior to the Closing, and Seller shall not be 
required to indemnify Purchaser for Losses to the extent 
attributable to acts or omissions of Purchaser resulting in an 
increase in or aggravation of such Environmental Liabilities, 
whether arising from a change in use of the Assets or 
otherwise.  In the event that Seller disputes the pro rata 
share of any Losses attributable by Purchaser to Seller under 
this Section 10.01(b)(2) in the Claim Notice, Seller will 
nevertheless pay Purchaser the amount requested by Purchaser 
in the Claim Notice and Seller shall proceed to resolve any 
dispute with MPC and PGE concerning allocations of pro rata 
shares.  If Purchaser fails to make a claim against a 
Potentially Responsible Party with respect to Pre-Closing 
Environmental Liabilities, then upon making an indemnity 
payment pursuant to this paragraph (b), Seller shall, to the 
extent of such indemnity payment, be subrogated to all rights 
of Purchaser against any Potentially Responsible Party in 
respect of the Losses to which the indemnity payment relates. 
If Purchaser makes a claim against, and recovers from, a 
Potentially Responsible Party with respect to Pre-Closing 
Environmental Liabilities and Seller has made an indemnity 
payment with respect to such Loss, then Purchaser shall 
reimburse Seller 50% of such amounts recovered, net of any 
third party costs of collection.

(c)  Subject to the other Sections of this Article X, 
Purchaser shall indemnify Seller and its Affiliates and their 
respective directors, officers, employees, agents and 
representatives ("Seller Group") in respect of, and hold 
Seller Group harmless from and against, any and all Losses 
suffered, incurred or sustained by Seller Group or to which 
Seller Group becomes subject, resulting from, arising out of 
or relating to:  

          (i)  any breach by Purchaser of any representation 
or warranty of Purchaser contained in this Agreement 
(determined in all cases as if the terms "material" or 
"materially," or the capitalized versions thereof, were not 
included therein);

         (ii)  any breach by Purchaser of any covenant or 
agreement of Purchaser contained in this Agreement (determined 
in all cases as if the terms "material" or "materially" (or 
the capitalized versions thereof) were not included therein); 
or

        (iii)  an Assumed Liability; 

provided, however, that Purchaser shall have no liability for 
Losses under clause (i) arising from a breach of a General 
Representation unless and until the aggregate amount of all 
such Losses arising from such breaches asserted by Seller 
equals or exceeds $2,500,000 in which event Purchaser shall be 
liable for all Losses; and provided, further, that such 
indemnification shall be effective only with respect to claims 
written notice of which is received by Purchaser with respect 
to Losses arising under clause (i) above relating to General 
Representations or clause (ii) above relating to Pre-Closing 
Covenants, no later than the date that is twelve (12) months 
from the Closing.  In no event shall the Liability of 
Purchaser for Losses under this Article X arising out of 
breaches of the General Representations exceed, in the 
aggregate, fifty percent (50%) of the Purchase Price.

(d)  To the extent that an Indemnified Party has received 
insurance proceeds prior to the payment of an indemnity 
payment on an indemnifiable Loss, such indemnifiable Loss 
shall be reduced by an amount equal to such proceeds received 
by the Indemnified Party.  If the amount of any indemnifiable 
Loss, at any time subsequent to the making of an indemnity 
payment in respect thereof, is reduced by recovery, settlement 
or otherwise under or pursuant to any insurance coverage or 
pursuant to any claim, recovery, settlement or payment by or 
against any other entity, the amount of such reduction, less 
any costs, expenses or premiums incurred in connection 
therewith (together with interest thereon from the date of 
payment thereof at the prime rate then in effect for domestic 
banks as published in the Wall Street Journal (Northeast 
Edition) in the "Money Rates" section), shall promptly be 
repaid by the Indemnified Party to the Indemnifying Party.  
Nothing in this Section 10.01(d) shall be construed to require 
any party hereto to obtain or maintain any insurance coverage 
or make any claim under its insurance coverage.

(e)  Seller shall not be liable on account of any 
obligations of any co-owners of Colstrip Units 1, 2, 3 and 4 
to Purchaser.  

(f)  Except as expressly provided above in this Section 
10.01, the Indemnifying Party hereby expressly waives all 
rights of subrogation in respect of any payments made by it 
under this Article X.

10.02	Method of Asserting Claims

All claims for indemnification by any Indemnified Party 
under Section 10.01 will be asserted and resolved as follows:

(a)  In the event any claim or demand in respect of which 
an Indemnified Party might seek indemnity under Section 10.01 
is asserted against or sought to be collected from such 
Indemnified Party by a Person other than Seller, Purchaser or 
any Affiliate of Seller or Purchaser (a "Third Party Claim"), 
the Indemnified Party shall deliver a Claim Notice with 
reasonable promptness to the Indemnifying Party. The 
Indemnifying Party will notify the Indemnified Party as soon 
as practicable within the Dispute Period whether the 
Indemnifying Party disputes its liability to the Indemnified 
Party under Section 10.01 and whether the Indemnifying Party 
desires, at its sole cost and expense, to defend the 
Indemnified Party against such Third Party Claim.

          (i)  If the Indemnifying Party notifies the 
Indemnified Party within the Dispute Period that the 
Indemnifying Party desires to defend the Indemnified Party 
with respect to the Third Party Claim pursuant to this 
Section 10.02(a), then the Indemnifying Party will have the 
right to defend, at the sole cost and expense of the 
Indemnifying Party, such Third Party Claim by all appropriate 
proceedings, which proceedings will be vigorously and 
diligently prosecuted by the Indemnifying Party to a final 
conclusion or will be settled at the discretion of the 
Indemnifying Party (with the consent of the Indemnified Party, 
which consent will not be unreasonably withheld).  The 
Indemnifying Party will have full control of such defense and 
proceedings, including any settlement thereof; provided, 
however, that the Indemnified Party may, at the sole cost and 
expense of the Indemnified Party, at any time prior to the 
Indemnifying Party's delivery of the notice referred to in the 
first sentence of this Section 10.02(a)(i), file any motion, 
answer or other pleadings or take any other action that the 
Indemnified Party reasonably believes to be necessary or 
appropriate to protect its interests and not prejudicial to 
the Indemnifying Party (it being understood and agreed that, 
except as provided in clause (ii) below, if an Indemnified 
Party takes any such action that is prejudicial and causes a 
final adjudication that is adverse to the Indemnifying Party, 
the Indemnifying Party will be relieved of its obligations 
hereunder with respect to the portion of such Third Party 
Claim prejudiced by the Indemnified Party's action); and 
provided further, that if requested by the Indemnifying Party, 
the Indemnified Party will, at the sole cost and expense of 
the Indemnifying Party, cooperate with the Indemnifying Party 
and its counsel in contesting any Third Party Claim that the 
Indemnifying Party elects to contest, or, if appropriate and 
related to the Third Party Claim in question, in making any 
counterclaim against the Person asserting the Third Party 
Claim, or any cross-complaint against any Person (other than 
the Indemnified Party or any of its Affiliates). 
Notwithstanding the foregoing, the Indemnified Party may take 
over the control of the defense or settlement of a Third Party 
Claim at any time if it irrevocably waives its right to 
indemnity under Section 10.01 with respect to such Third Party 
Claim.

         (ii)  If the Indemnifying Party fails to notify the 
Indemnified Party within the Dispute Period that the 
Indemnifying Party desires to defend the Third Party Claim 
pursuant to Section 10.02(a), or if the Indemnifying Party 
gives such notice but fails to prosecute vigorously and 
diligently or settle the Third Party Claim, or if the 
Indemnifying Party fails to give any notice whatsoever within 
the Dispute Period, then the Indemnified Party will have the 
right to defend, at the sole cost and expense of the 
Indemnifying Party, the Third Party Claim by all appropriate 
proceedings, which proceedings will be vigorously and 
diligently prosecuted by the Indemnified Party to a final 
conclusion or will be settled at the discretion of the 
Indemnified Party (with the consent of the Indemnifying Party, 
which consent will not be unreasonably withheld). The 
Indemnified Party will have full control of such defense and 
proceedings, including (except as provided in the immediately 
preceding sentence) any settlement thereof; provided, however, 
that if requested by the Indemnified Party, the Indemnifying 
Party will, at the sole cost and expense of the Indemnifying 
Party, cooperate with the Indemnified Party and its counsel in 
contesting any Third Party Claim which the Indemnified Party 
is contesting, or, if appropriate and related to the Third 
Party Claim in question, in making any counterclaim against 
the Person asserting the Third Party Claim, or any cross-
complaint against any Person (other than the Indemnified Party 
or any of its Affiliates). Notwithstanding the foregoing 
provisions of this Section 10.02(a)(ii), if the Indemnifying 
Party has notified the Indemnified Party within the Dispute 
Period that the Indemnifying Party disputes its liability 
hereunder to the Indemnified Party with respect to such Third 
Party Claim and if such dispute is resolved in favor of the 
Indemnifying Party in the manner provided in clause (iii) 
below, the Indemnifying Party will not be required to bear the 
costs and expenses of the Indemnified Party's defense pursuant 
to this Section 10.02(a)(ii) or of the Indemnifying Party's 
participation therein at the Indemnified Party's request, and 
the Indemnified Party will reimburse the Indemnifying Party in 
full for all reasonable costs and expenses incurred by the 
Indemnifying Party in connection with such litigation. The 
Indemnifying Party may participate in, but not control, any 
defense or settlement controlled by the Indemnified Party 
pursuant to this Section 10.02(a)(ii), and the Indemnifying 
Party will bear its own costs and expenses with respect to 
such participation.

        (iii)  If the Indemnifying Party notifies the 
Indemnified Party that it does not dispute its liability to 
the Indemnified Party with respect to the Third Party Claim 
under Section 10.01 or fails to notify the Indemnified Party 
within the Dispute Period whether the Indemnifying Party 
disputes its liability to the Indemnified Party with respect 
to such Third Party Claim, the Loss in the amount specified in 
the Claim Notice will be conclusively deemed a liability of 
the Indemnifying Party under Section 10.01 and the 
Indemnifying Party shall pay the amount of such Loss to the 
Indemnified Party on demand.  If the Indemnifying Party has 
timely disputed its liability with respect to such claim, the 
Indemnifying Party and the Indemnified Party will proceed in 
good faith to negotiate a resolution of such dispute, and if 
not resolved through negotiations within the Resolution 
Period, such dispute shall be resolved by litigation in a 
court of competent jurisdiction.

(b)  In the event any Indemnified Party should have a 
claim under Section 10.01 against any Indemnifying Party that 
does not involve a Third Party Claim, the Indemnified Party 
shall deliver an Indemnity Notice with reasonable promptness 
to the Indemnifying Party prior to the expiration of the 
indemnification notice period described in this Section 10.02.  
If the Indemnifying Party notifies the Indemnified Party that 
it does not dispute the claim described in such Indemnity 
Notice or fails to notify the Indemnified Party within the 
Dispute Period whether the Indemnifying Party disputes the 
claim described in such Indemnity Notice, the Loss in the 
amount specified in the Indemnity Notice will be conclusively 
deemed a liability of the Indemnifying Party under 
Section 10.01 and the Indemnifying Party shall pay the amount 
of such Loss to the Indemnified Party on demand.  If the 
Indemnifying Party disputes all or any portion of its 
liability with respect to such claim, it shall notify the 
Indemnified Party thereof in writing during the Dispute 
Period, specifying the portion of the claim that is disputed 
and the basis for such position.  If the Indemnifying Party 
has timely disputed its liability with respect to such claim, 
the Indemnifying Party will be deemed to have accepted and be 
liable for payment of the undisputed portion of such claim on 
demand and the Indemnifying Party and the Indemnified Party 
will proceed in good faith to negotiate a resolution of such 
dispute, and if not resolved through negotiations within the 
Resolution Period, such dispute shall be resolved by 
litigation in a court of competent jurisdiction.

(c)  In the event of any Loss resulting from a 
misrepresentation, breach of warranty or nonfulfillment or 
failure to be performed of any covenant or agreement contained 
in this Agreement as to which an Indemnified Party would be 
entitled to claim indemnity under Section 10.01 but for the 
Loss limitation provisions of Section 10.01(a) and (c), such 
Indemnified Party may nevertheless deliver a written notice to 
the Indemnifying Party containing the information that would 
be required in a Claim Notice or an Indemnity Notice, as 
applicable, with respect to such Loss. In the case of a Claim 
Notice, the provisions of Section 10.02(a)(i) will be 
applicable. If the Indemnifying Party notifies the Indemnified 
Party that it does not dispute the claim described therein or 
fails to notify the Indemnified Party within the Dispute 
Period whether the Indemnifying Party disputes the claim 
described in such Claim Notice or Indemnity Notice, as the 
case may be, the Loss specified in the notice will be 
conclusively deemed to have been incurred by the Indemnified 
Party for purposes of making the determination of the Loss 
limitations set forth in Section 10.01. If the Indemnifying 
Party has timely disputed the claim described in such Claim 
Notice or Indemnity Notice, as the case may be, the 
Indemnifying Party and the Indemnified Party will proceed in 
good faith to negotiate a resolution of such dispute, and if 
not resolved through negotiations within the Resolution 
Period, such dispute shall be resolved by litigation in a 
court of competent jurisdiction.

(d)  In the event of any claim for indemnity under 
Section 10.01(a), Purchaser agrees to give Seller and its 
Representatives reasonable access to the Books and Records and 
Employees in connection with the matters for which 
indemnification is sought to the extent Seller reasonably 
deems necessary in connection with its rights and obligations 
under this Article X.

(e)  All payments made pursuant to this Article X shall 
be treated as an adjustment to the Purchase Price.

(f)  In the event an action, dispute, claim, counterclaim 
or controversy ("Dispute") arises between the parties arising 
out of or relating to this Agreement, the aggrieved party 
shall promptly notify the other party of the Dispute within 
ten Business Days after such Dispute arises. If the parties 
have failed to resolve the Dispute within ten Business Days 
after delivery of such notice, each party shall, within five 
Business Days thereafter, nominate a senior officer of its 
management to meet to attempt to resolve the Dispute. The 
senior officers shall meet within twenty Business Days after 
their nomination. Should the senior officers be unable to 
resolve the Dispute, either party may pursue any and all 
available legal remedies, unless the parties mutually agree in 
writing to an alternative dispute resolution procedure.

10.03	Exclusivity

After the Closing, to the extent permitted by Law, the 
indemnities set forth in this Article X shall be the exclusive 
remedies of Purchaser Group and Seller Group, or any member of 
either of them, for any misrepresentation, breach of warranty 
or nonfulfillment or failure to be performed of any covenant 
or agreement contained in this Agreement, any schedule hereto, 
or any certificate delivered by or on behalf of Seller or 
Purchaser in connection herewith, and the parties shall not be 
entitled to a rescission of this Agreement or to any further 
indemnification rights or claims of any nature whatsoever in 
respect thereof, all of which the parties hereto hereby waive.

10.04  Purchaser's Release of Seller Under the Colstrip 
       Contracts

From and after the Closing, Purchaser, for itself and on 
behalf of its Affiliates, does hereby release, hold harmless 
and forever discharge Seller from any and all claims, demands, 
liabilities (including fines and civil penalties) or causes of 
action at Law or in equity, whether known or unknown, 
resulting from any Claim that Seller is not released from its 
obligations under the Colstrip Contracts by virtue of Sections 
1.01(a)(xi) and 1.02(a)(v); provided, however, that nothing in 
this Section 10.04 shall be deemed to affect Seller's Retained 
Liabilities, Purchaser's Assumed Liabilities or the parties' 
indemnification obligations hereunder.

                          ARTICLE XI
                          TERMINATION

11.01  Termination

This Agreement may be terminated, and the transactions 
contemplated hereby may be abandoned:

(a)  at any time before the Closing, by mutual written 
agreement of Seller and Purchaser; or

(b)  at any time before the Closing, by Seller or 
Purchaser, in the event that any Final Order or Law becomes 
effective restraining, enjoining, or otherwise prohibiting or 
making illegal the consummation of any of the transactions 
contemplated by this Agreement or any of the Operative 
Agreements, upon notification of the non-terminating party by 
the terminating party; or

(c)  at any time before the Closing, by Seller or 
Purchaser, in the event (i) of a breach hereof by the non-
terminating party which gives rise to, as applicable, either a 
Seller Material Adverse Effect (if Seller is the breaching 
party) or a Purchaser Material Adverse Effect (if Purchaser is 
the breaching party) if such non-terminating party fails to 
cure such breach within forty-five (45) days following 
notification thereof by the terminating party, provided that 
if, at the end of such forty-five (45) day period, the non-
terminating party is endeavoring in good faith, and proceeding 
diligently, to cure such breach, the non-terminating party 
shall have an additional forty-five (45) days in which to 
effect such cure or (ii) upon notification of the non-
terminating party by the terminating party that the 
satisfaction of any condition to the terminating party's 
obligations under this Agreement becomes impossible or 
impracticable with the use of commercially reasonable efforts 
if the failure of such condition to be satisfied by the 
terminating party is not caused by a breach hereof by the 
terminating party, provided that if it is reasonably possible 
that the circumstances giving rise to the impossibility or 
impracticability may be removed prior to the expiration of the 
time periods provided in the following subsection (d), then 
such notification may not be given until such time as the 
removal of such circumstances is no longer reasonably possible 
within such time periods; or

(d)  at any time after the date which is twelve (12) 
months after the date of this Agreement, by Seller or 
Purchaser upon notification of the non-terminating party by 
the terminating party if the Closing shall not have occurred 
on or before such date and such failure to consummate is not 
caused by a breach of this Agreement by the terminating party; 
provided, however, that if on such date Purchaser and Seller 
have not received all Purchaser Required Regulatory Approvals 
and all Seller Required Regulatory Approvals but all other 
conditions to the Closing shall be fulfilled or shall be 
capable of being fulfilled, then neither party may terminate 
this Agreement until the expiration of such date which is 
eighteen (18) months after the date of this Agreement; 
provided further that if on such date Purchaser or MPC has not 
received all Purchaser Required Regulatory Approvals or all 
Seller Required Regulatory Approvals (in each case as defined 
in the MPC Purchase Agreement) related to the Hydro Units (as 
defined in the MPC Purchase Agreement) but all other 
conditions to the Closing shall be fulfilled or shall be 
capable of being fulfilled, then neither party may terminate 
this Agreement until the expiration of the date which is 
twenty-four (24) months after the date of this Agreement.

11.02  Effect of Termination

If this Agreement is validly terminated pursuant to 
Section 11.01, this Agreement will forthwith become null and 
void, and there will be no liability or obligation on the part 
of Seller or Purchaser (or any of their respective officers, 
directors, employees, agents or other representatives or 
Affiliates), except as provided in the next succeeding 
sentence and except that the provisions with respect to 
expenses in Section 13.04 and confidentiality in Section 13.06 
will continue to apply following any such termination. 
Notwithstanding any other provision in this Agreement to the 
contrary, upon termination of this Agreement pursuant to 
Section 11.01(c) or (d), Seller will remain liable to 
Purchaser for any willful breach of Section 4.09 of this 
Agreement by Seller existing at the time of such termination, 
and Purchaser will remain liable to Seller for any willful 
breach of Section 5.05 of this Agreement by Purchaser existing 
at the time of such termination, and Seller or Purchaser may 
seek such remedies, including damages and fees of attorneys, 
against the other with respect to any such breach as are 
provided in this Agreement or as are otherwise available at 
Law or in equity.

                          ARTICLE XII
                          DEFINITIONS

12.01  Definitions

(a)  Defined Terms.  As used in this Agreement, the 
following defined terms have the meanings indicated below:

"Actions or Proceedings" means any action, suit, 
proceeding, arbitration or Governmental or Regulatory 
Authority investigation.

"Adjustment Amount" has the meaning ascribed to it in 
Section 1.04.

"Adjustment Statement" has the meaning ascribed to it in 
Section 1.04.

"Affiliate" means any Person that directly, or indirectly 
through one of more intermediaries, controls or is controlled 
by or is under common control with the Person specified. For 
purposes of this definition, control of a Person means the 
power, direct or indirect, to direct or cause the direction of 
the management and policies of such Person whether by Contract 
or otherwise and, in any event and without limitation of the 
previous sentence, any Person owning ten percent (10%) or more 
of the voting securities of another Person shall be deemed to 
control that Person.

"Agreement" means this Asset Purchase Agreement and the 
Exhibits, the Disclosure Schedule and the Schedules hereto and 
the certificates delivered in accordance with Sections 6.03 
and 7.03, as the same shall be amended from time to time.

"Assets" has the meaning ascribed to it in 
Section 1.01(a).

"Asset Group" means one or more of the categories of 
Assets set forth on Schedule I to the MPC Purchase Agreement.

"Assets and Properties" of any Person means all assets 
and properties of every kind, nature, character and 
description (whether real, personal or mixed, whether tangible 
or intangible and wherever situated), including the goodwill 
related thereto, operated, owned or leased by such Person.

"Assignment Instruments" has the meaning ascribed to it 
in Section 1.05.

"Associate" means, with respect to any Person, any 
corporation or other business organization of which such 
Person is an officer or partner or is the beneficial owner, 
directly or indirectly, of ten percent (10%) or more of any 
class of equity securities, any trust or estate in which such 
Person has a substantial beneficial interest or as to which 
such Person serves as a trustee or in a similar capacity and 
any relative or spouse of such Person, or any relative of such 
spouse, who has the same home as such Person.

"Assumed Liabilities" has the meaning ascribed to it in 
Section 1.02(a).

"Assumption Agreement" has the meaning ascribed to it in 
Section 1.05.

"Assumption Instruments" has the meaning ascribed to it 
in Section 1.05.

"Base Purchase Price" means $441,000,000.

"Bid Date" means September 28, 1998.

"Books and Records" of any Person means all files, 
documents, instruments, papers, books and records relating to 
the business, operations, condition of (financial or other), 
results of operations and Assets and Properties of such 
Person, including  financial statements, Tax Returns and 
related work papers and letters from accountants, budgets, 
pricing guidelines, ledgers, journals, deeds, title policies, 
minute books, stock certificates and books, stock transfer 
ledgers, Contracts, Licenses, customer lists, computer files 
and programs, retrieval programs, operating data and plans and 
environmental studies and plans.

"Budget" has the meaning ascribed to it in Section 4.13.

"Business Combination" means with respect to any Person, 
any merger, consolidation or combination to which such Person 
is a party, any sale, dividend, split or other disposition of 
capital stock or other equity interests of such Person or any 
sale, dividend or other disposition of all or substantially 
all of the Assets and Properties of such Person, provided, 
however, that neither (i) a divestiture by Seller of all or 
part of its generating assets (provided that no such 
divestiture will operate as release of Seller from its 
obligations pursuant to this Agreement) nor (ii) any 
activities or transactions of any Affiliate of Seller (so long 
as not involving Seller), shall be considered a Business 
Combination hereunder.

"Business Contracts" has the meaning ascribed to it in 
Section 1.01(a)(v).

"Business Day" means a day other than Saturday, Sunday or 
any day on which banks located in the State of Washington and  
the Commonwealth of Pennsylvania are authorized or obligated 
to close.

"Capital Expenditures" means those capital expenditures 
which are identified in the Budget referred to in 
Section 4.13, and such other emergency, non-budgeted capital 
expenditures made by Seller in accordance with the provisions 
of Section 4.13.

"CERCLA" means the Comprehensive Environmental Response, 
Compensation and Liability Act of 1980, as amended, and the 
rules and regulations promulgated thereunder.

"Claim Notice" means written notification pursuant to 
Section 10.02(a) of a Third Party Claim as to which indemnity 
under Section 10.01 is sought by an Indemnified Party, 
enclosing a copy of all papers served, if any, and specifying 
the nature of and basis for such Third Party Claim and for the 
Indemnified Party's claim against the Indemnifying Party under 
Section 10.01, together with the amount or, if not then 
reasonably ascertainable, the estimated amount, determined in 
good faith, of such Third Party Claim.

"Closing" means the closing of the transactions 
contemplated by Section 1.05.

"Closing Date" means (a) the later of (x) July 1, 1999 
and (y) the date thirty (30) days after the day on which the 
last of the consents, approvals, actions, filings, notices or 
waiting periods described in or related to the filings 
described in Sections 6.04 through 6.07 and Sections 7.04 
through 7.06 has been obtained, made or given or has expired, 
as applicable; provided, that Purchaser agrees to use 
reasonable efforts to be prepared to close prior to July 1, 
1999, and shall give notice to Seller in the event Purchaser 
determines that it is able to do so, or (b) such other date as 
Purchaser and Seller mutually agree upon in writing.

"Code" means the Internal Revenue Code of 1986, as 
amended, and the rules and regulations promulgated thereunder.

"Colstrip Books and Records" has the meaning ascribed to 
it in Section 1.01(a)(xii).

"Colstrip Contracts" has the meaning ascribed to it in 
Section 1.01(a)(xi).

"Colstrip Facilities" means the thermal electric 
generating facilities known as Colstrip Units 1, 2, 3&4 
located near Colstrip, Montana, including the Common 
Facilities (as defined in the Colstrip Contracts) and the PSE 
Colstrip Transmission Assets.

"Colstrip Rights of First Refusal" means the rights 
described in the following agreements:  (i) Section 16(d) of 
the Construction and Ownership Agreement, dated as of July 30, 
1971, by and between Seller and MPC; (ii) Sections 24(b) and 
24(f) of the Ownership and Operation Agreement, dated as of 
May 6, 1981, as amended, by and among Seller, MPC, WWP, PGE, 
and Pacific Power & Light Company ("Pacific"); and 
(ii) Section 28(f) of the Colstrip Project Transmission 
Agreement, dated as of May 6, 1981, as amended, by and among 
Seller, MPC, WWP, PGE and Pacific.

"Combined Payment Amount" means an amount equal to 
$461,000,000 minus the amount of the Base Purchase Price 
(prior to any adjustment thereto pursuant to Section 1.10).

"Contract" means any agreement, lease, license, evidence 
of Indebtedness, mortgage, indenture, security agreement or 
other contract.

"Contribution Agreement" has the meaning ascribed to it 
in the forepart of this Agreement.

"Disclosure Schedule" means, as the context requires, 
(a) the record delivered to Purchaser by Seller herewith and 
dated as of the date hereof, containing all lists, 
descriptions, exceptions and other information and materials 
as are required to be included therein by Seller pursuant to 
this Agreement and (b) the record delivered to Seller by 
Purchaser herewith and dated as of the date hereof, containing 
all lists, descriptions, exceptions and other information and 
materials as are required to be included therein by Purchaser 
pursuant to this Agreement.

"Dispute" has the meaning ascribed to it in 
Section 10.02(f).

"Dispute Period" means the period ending thirty (30) days 
following receipt by an Indemnifying Party of either a Claim 
Notice or an Indemnity Notice.

"Easements" means, with respect to the Assets, the 
reservations of easements in favor of Seller to be included in 
the deeds of conveyance with respect to such Assets, 
substantially as set forth in Section 12.01(b) of the 
Disclosure Schedule.

"Employee" means each employee or officer of Seller, 
Purchaser or MPC, as the context may require, or any of their 
Affiliates, whose employment responsibilities relate to the 
PSE Colstrip Interests or the Colstrip Facilities.  

"Environmental Fines and Penalties" has the meaning 
ascribed to it in Section 1.02(a)(vii).

"Environmental Law" means all Federal, state, municipal 
and local laws (including common laws), regulations, rules, 
ordinances, codes, licenses, decrees, judgments, directives, 
or judicial or administrative orders relating to pollution, 
protection, preservation or restoration of human health, the 
environment or natural resources, including, without 
limitation, laws relating to Releases or threatened Releases 
of Hazardous Materials (including, without limitation, into or 
through ambient air, surface water, groundwater, land, 
wetlands, surface and subsurface strata), or otherwise 
relating to the manufacture, processing, distribution, use, 
treatment, storage, disposal, transport or handling of 
Hazardous Materials, including without limitation the Clean 
Water Act, the Clean Air Act, the Resource Conservation and 
Recovery Act, the Toxic Substances Control Act, and CERCLA, in 
each case as amended, and their local counterparts.

"Environmental Liabilities" means any liabilities, 
obligations or responsibilities under or related to former, 
current or future Environmental Laws or the common law, 
whether such liability, obligation or responsibility is known 
or unknown, contingent or accrued, arising as a result of or 
in connection with (a) any violation or alleged violation of 
Environmental Laws relating to the Assets; (b) compliance with 
applicable Environmental Laws relating to the Assets; (c) loss 
of life, injury to persons or property or damage to natural 
resources (whether or not such loss, injury or damage was made 
manifest before or after the Closing) caused (or allegedly 
caused) by the presence or Release of Hazardous Materials at, 
on, in, under, adjacent to or migrating from the Assets; and 
(d) the reasonable investigation and/or remediation required 
by Law or constituting a reasonable response to a Governmental 
or Regulatory Authority having jurisdiction (whether or not 
such investigation or remediation commenced on or before the 
Closing) of Hazardous Materials that are present or have been 
Released at, on, in, under, adjacent to or migrating from the 
Assets, including, but not limited to, Hazardous Materials in 
the soil, surface water, sediments, groundwater, landfill 
cells, or in other environmental media at or adjacent to the 
Assets ("Remedial Liabilities"); provided, further that the 
liabilities, obligations or responsibilities described in 
clauses (a), (b) and (c) shall not include those described in 
clause (d); provided further that Environmental Liabilities 
shall not include (x) Purchaser's internal costs or 
consequential damages (including the value of employees' time, 
loss of use, downtime or increased operating costs); (y) costs 
of capital improvements (including the replacement of 
equipment that has reached its useful life); nor (z) 
monitoring required by environmental permits or the design of 
the Assets, except, in the case of clauses (y) and (z), as 
covered in clause (d) above.

"Environmental Permits" has the meaning ascribed in 
Section 2.15.

"EPA" means the Environmental Protection Agency.

"Estimated Adjustment Amount" means Seller's good faith 
reasonable estimate of an Adjustment Amount for the Closing, 
which estimate shall be provided to Purchaser no later than 
five Business Days before the Closing.

"Estimated Purchase Price" has the meaning ascribed to it 
in Section 1.05.

"Exchange Act" means the Securities Exchange Act of 1934, 
as amended, and the rules and regulations promulgated 
thereunder.

"Excluded Assets" has the meaning ascribed to it in 
Section 1.01(b).

"Federal Power Act" means the Federal Power Act of 1935, 
as amended, and the rules and regulations promulgated 
thereunder.

"FERC" means the Federal Energy Regulatory Commission.

"Final Order" means a final Order after all opportunities 
for rehearing are exhausted (whether or not any appeal thereof 
is pending) that has not been further revised, stayed, 
enjoined, set aside, annulled or suspended, with respect to 
which any required waiting period has expired, and as to which 
all conditions to effectiveness prescribed therein or 
otherwise by Law, regulation or Order have been satisfied. 

"Fuel Contracts" has the meaning ascribed to it in 
Section 1.01(a)(x).

"GAAP" means generally accepted accounting principles, 
consistently applied throughout the specified period and in 
the immediately prior comparable period.

"General Assignment" has the meaning ascribed to it in 
Section 1.05.

"General Representations" has the meaning ascribed to it 
in Section 9.01(a).

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

          (i)  required of the party to whom Good Utility 
Practice is being applied under regulations of the National 
Electric Safety Code (as each of such terms is defined in the 
Interconnection Agreement (as such term is defined in the MPC 
Purchase Agreement)), or its successor, whether or not the 
party whose conduct is at issue is a member thereof; or

         (ii)  otherwise engaged in or approved by a 
significant portion of the electric utility industry during 
the relevant time period; which, in the exercise of reasonable 
judgment 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 to the party being expected to 
apply Good Utility Practice, consistent with law, regulation, 
good business practices, generation, transmission, and 
distribution reliability, safety, and expedition.  Good 
Utility Practice is intended to include practices, methods, or 
acts generally accepted in the region, and is not intended to 
be limited to optimum practices, methods, or acts to the 
exclusion of all others.  Good Utility Practice does not 
include intentional disregard of contractual commitments, even 
if those commitments are uneconomic under current market 
conditions.

"Governmental or Regulatory Authority" means any court, 
tribunal, arbitrator, authority, agency, commission, official 
or other instrumentality of the United States, any foreign 
country or any domestic or foreign state, county, city or 
other political subdivision or any Native American tribal 
council or similar governing entity.

"Hazardous Material" means (A) any petrochemical, 
petroleum or petroleum products, oil, flammable explosives, 
radioactive materials, radon gas, asbestos in any form that is 
or could become friable, urea formaldehyde foam insulation and 
transformers or other equipment that contain dielectric fluid 
which may contain levels of polychlorinated biphenyls (PCBs); 
(B) any chemicals or other materials or substances which are 
now or hereafter become defined under any Environmental Law as 
or included in the definition of "hazardous substances," 
"hazardous wastes," "hazardous chemicals," "hazardous 
materials," "extremely hazardous wastes," "restricted 
hazardous wastes," "toxic substances," "pollutants," 
"contaminants," "hazardous matter," "restricted hazardous 
materials" or words of similar import ; and (C) any other 
chemical or other material or substance, the discharge, 
emission, Release or exposure to which is now or hereafter 
prohibited, limited or regulated by any Governmental or 
Regulatory Authority under any Environmental Law.

"Holding Company Act" means the Public Utility Holding 
Company Act of 1935, as amended, and the rules and regulations 
promulgated thereunder.

"HSR Act" means Section 7A of the Clayton Act (Title II 
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 
as amended) and the rules and regulations promulgated 
thereunder.

"Improvements" has the meaning ascribed to it in 
Section 1.01(a)(iv).

"Indebtedness" of any Person means all obligations of 
such Person (i) for borrowed money, (ii) evidenced by notes, 
bonds, debentures or similar instruments, (iii) for the 
deferred purchase price of goods or services (other than trade 
payables or accruals incurred in the ordinary course of 
business), (iv) under capital leases and (v) in the nature of 
guarantees of the obligations described in clauses (i) through 
(iv) above of any other Person.

"Indemnified Party" means any Person claiming 
indemnification under any provision of Article X.

"Indemnifying Party" means any Person against whom a 
claim for indemnification is being asserted under any 
provision of Article X.

"Indemnity Notice" means written notification pursuant to 
Section 10.02(b) of a claim for indemnity under Article X by 
an Indemnified Party, specifying the nature of and basis for 
such claim, together with the amount or, if not then 
reasonably ascertainable, the estimated amount, determined in 
good faith, of such claim.

"Indenture" means the Fortieth Supplemental Indenture, 
dated as of September 1, 1954, as amended and supplemented, 
between Seller and State Street Bank and Trust Company, as 
successor trustee.

"Independent Accounting Firm" means Price 
WaterhouseCoopers or such other independent accounting firm of 
national reputation mutually appointed by Seller and 
Purchaser.

"Intangible Personal Property" has the meaning ascribed 
to it in Section 1.01(a)(vii).

"Intellectual Property" means all patents and patent 
rights, trademarks and trademark rights, trade names and trade 
name rights, service marks and service mark rights, service 
names and service name rights, brand names, inventions, 
copyrights and copyright rights, trade secrets, know-how, 
techniques, computer programs and related documentation, and 
any and all other intangible assets or proprietary information 
or rights (whether registered or under common law) and all 
pending applications for and registrations of patents, 
trademarks, service marks and copyrights.

"Inventory" has the meaning ascribed to it in 
Section 1.01(a)(iii).

"Inventory Adjustment Amount" has the meaning ascribed to 
in Section 1.04.

"Inventory Survey" has the meaning ascribed to in Section 
1.04.

"IRS" means the United States Internal Revenue Service.

"Knowledge" or similar phrases in this Agreement means: 
(i) in the case of Seller, the actual knowledge of Seller's 
officers and employees who are persons generally responsible 
for the subject matter to which knowledge is pertinent, such 
persons being listed in Section 12.01(c) of the Disclosure 
Schedule at the date as of which the representation, warranty 
or covenant is made or repeated, and (ii) in the case of 
Purchaser the actual knowledge of Purchaser's officers and 
employees who are persons generally responsible for the 
subject matter to which knowledge is pertinent, such persons 
being listed in Section 12.01(d) of the Disclosure Schedule at 
the date as of which the representation, warranty or covenant 
is made or repeated.

"Landlord Security Deposits" has the meaning ascribed to 
it in Section 1.02(a)(iv).

"Laws" means all laws, statutes, rules, regulations, 
ordinances and other pronouncements having the effect of law 
of the United States, any foreign country or any domestic or 
foreign state, county, city or other political subdivision or 
of any Governmental or Regulatory Authority.

"Liabilities" means all Indebtedness, obligations and 
other liabilities of a Person (whether absolute, accrued, 
contingent, fixed or otherwise, or whether due or to become 
due).

"Licenses" means all licenses, permits, certificates of 
authority, authorizations, approvals, registrations, 
franchises and similar consents granted or issued by any 
Governmental or Regulatory Authority, other than Environmental 
Permits, including applications for any of the foregoing.

"Liens" means any mortgage, pledge, assessment, security 
interest, lease, lien, adverse claim, levy, charge or other 
encumbrance of any kind, or easement, any conditional sale 
Contract, title retention Contract or other Contract to give 
any of the foregoing.

"Loss" means any and all damages, fines, penalties, 
deficiencies, losses and expenses (including interest, court 
costs, reasonable fees of attorneys, accountants and other 
experts or other reasonable expenses of litigation or other 
proceedings or of any claim, default or assessment); provided, 
however, "Loss" shall not include any consequential, 
incidental or punitive damages for any reason, other than in 
the case of willful misconduct.

"Maintenance Expenditures" means those special 
maintenance expenditures which are identified in the Budget 
referred to in Section 4.13 and such other emergency, non-
budgeted special maintenance expenditures made by Seller in 
accordance with the provisions of Section 4.13 and the 
exercise of Good Utility Practices.

"Maintenance and Capital Expenditures Amount" means 
(i) the aggregate amount of all funds actually expended by 
Seller (and amounts due from Seller to third parties at the 
time of the Closing in respect of work actually performed by 
such third parties, to the extent such amounts are not Assumed 
Liabilities) with respect to Maintenance Expenditures and 
Capital Expenditures in each case which are identified in the 
Budget during the period beginning on the date one (1) year 
prior to the Closing and ending on the Closing (or such 
shorter period if the Closing occurs less than one year from 
the date hereof) up to but not exceeding $6,380,000 in the 
aggregate; and (ii) 85% of all Emergency Expenditures made by 
Seller in accordance with Section 4.13 (if any, during such 
one (1) year (or shorter) period described above).  The 
Maintenance and Capital Expenditures Amount shall not include 
any Capital Expenditures ,Maintenance Expenditures or 
Emergency Expenditures with respect to assets or properties 
that are not transferred to Purchaser under this Agreement.

"MPC" means The Montana Power Company, a Montana 
corporation and the operator of the Colstrip Facilities.

"MPC Purchase Agreement" means the Asset Purchase 
Agreement, dated as of the date hereof, by and between 
Purchaser and MPC, together with any amendments thereto.

"Off-Site Environmental Liabilities"  means any 
liabilities, obligations or responsibilities under or related 
to former, current or future Environmental Laws or the common 
law, whether such liability, obligation or responsibility is 
known or unknown, contingent or accrued, arising as a result 
of or in connection with Seller's storage, disposal, 
transportation, discharge, Release or recycling of Hazardous 
Materials prior to the Closing at or to locations other than 
the Real Property constituting the Assets, provided that 
liabilities attributable to migration of Hazardous Materials 
from the Real Property constituting the Assets shall not 
constitute Off-Site Environmental Liabilities.

"Operative Agreements" means, collectively, this 
Agreement, the General Assignment and the other Assignment 
Instruments, the Assumption Agreement, the other Assumption 
Instruments, the Wholesale Transition Service Agreement, the 
Contribution Agreement, the Transmission Service Agreement (if 
required), and any support or other agreements to be entered 
into at the Closing in connection with the transaction.

"Order" means any writ, judgment, decree, injunction or 
similar order of any Governmental or Regulatory Authority (in 
each such case whether preliminary or final).

"Parent" has the meaning ascribed to it in the forepart 
of this Agreement.

"Permitted Lien" means (i) those Liens and exceptions to 
title to the Assets (except Easements) set forth in Section 
12.01(e) of the Disclosure Schedule; (ii) the Easements; 
(iii) when such term is used with respect to any date before 
the Closing, Liens created by the Indenture; (iv) any Lien for 
Taxes not yet due or delinquent or being contested in good 
faith by appropriate proceedings for which adequate reserves 
have been established in accordance with GAAP; (v) when such 
term is used with respect to any date prior to the Closing, 
any statutory Lien arising in the ordinary course of business 
by operation of Law with respect to a Liability that is not 
yet due or delinquent; (vi) zoning, entitlement, conservation 
restriction and other land use and environmental regulations 
by any Governmental or Regulatory Authority; and (vii) any 
minor imperfection of title or similar Lien, limited in the 
case of items (i) - (vii) (excluding clause (ii)) to only 
those matters which, individually or in the aggregate with 
other such Liens do not materially detract from the value of 
the Assets as currently used or materially interfere with the 
ownership, operation and maintenance of the Assets.

"Person" means any natural person, corporation, general 
partnership, limited partnership, proprietorship, limited 
liability company, other business organization, trust, union, 
association or Governmental or Regulatory Authority.

"PGE" means Portland General Electric Company, an Oregon 
corporation.

"Pollution Control Bonds" means (a) Pollution Control 
Revenue Refunding Bonds, Series 1993, due March 1, 2020, of 
the City Forsyth, Montana ("Forsyth") in the original 
principal amount of $23,460,000, (b) Pollution Control Revenue 
Refunding Bonds, Series 1992, due March 1, 2022, of Forsyth in 
the original principal amount of $87,500,000, and 
(c) Pollution Control Revenue Refunding Bonds, Series 1991A 
and 1991B (AMT), due August 1, 2021 of Forsyth in the original 
principal amounts of $27,500,000 and $23,400,000, 
respectively.

"Pollution Control Facilities" means the facilities 
financed with the Pollution Control Bonds described in 
Exhibit C hereto.

"Portland Closing Date" means the date on which the 
closing of the transactions contemplated by the Asset Purchase 
Agreement, dated as of the date hereof, by and between 
Purchaser and PGE occurs.

"Post-Closing Covenants" has the meaning ascribed to it 
in Section 9.01(b).

"Potentially Responsible Party" has the meaning ascribed 
to it in CERCLA.

"PPUC Order" means the Opinion and Order adopted by PPUC 
on February 9, 1995 in Pennsylvania Power & Light Company's 
application for approval of certain transactions in connection 
with the utility's establishment of a holding company 
structure.

"Pre-Closing Covenants" has the meaning ascribed to it in 
Section 9.01(b).

"Pre-Closing Environmental Liabilities" means those 
Environmental Liabilities attributable to the period on or 
prior to the Closing;

"Pre-Closing Known Remedial Liabilities" means the subset 
of Pre-Closing Environmental Liabilities that are described in 
paragraph (d) of the definition of Environmental Liabilities 
and that are attributable to the matters set forth in Schedule 
I hereto.

"Pre-Closing Known and Unknown Remedial Liabilities" 
means all Pre-Closing Known Remedial Liabilities and Pre-
Closing Unknown Remedial Liabilities arising from or relating 
to the ownership, operation and maintenance of the PSE 
Colstrip Interests, to the extent such PSE Colstrip Interests 
or any portion thereof are acquired by Purchaser.

"Pre-Closing Unknown Remedial Liabilities" means the 
subset of Pre-Closing Environmental Liabilities that are 
described in paragraph (d) of the definition of Environmental 
Liabilities and that are not attributable to the matters set 
forth in Schedule I hereto.

"PSE Colstrip Interests" means Seller's undivided 50% 
interest in Colstrip Units 1&2 and Seller's undivided 25% 
interest in Colstrip Units 3&4, together with its interest in 
the Common Facilities as provided in the Colstrip Contracts 
and the PSE Colstrip Transmission Assets.

"PSE Colstrip Transmission Assets" means Seller's right, 
title and interest in and to the 500 kV transmission system, 
including related facilities, real property and property 
rights, for the transmission of power from the PSE Colstrip 
Interests to Bonneville Power Administration's transmission 
system near Townsend, Montana, as described in Section 
1.01(a)(xv) of the Disclosure Schedule.

"PSE Transmission Amount" means an amount equal to 
$88,600,000.

"Purchase Price" has the meaning ascribed to it in 
Section 1.03(a).

"Purchaser" has the meaning ascribed to it in the 
forepart of this Agreement.

"Purchaser Financing" has the meaning ascribed to it in 
Section 5.07.

"Purchaser Group" has the meaning ascribed to it in 
Section 10.01(a).

"Purchaser Material Adverse Effect" means any change or 
effect after the Bid Date that is individually, or in the 
aggregate, materially adverse to (a) the business, operations, 
property or condition (financial or otherwise) of Purchaser 
and its subsidiaries, taken as a whole, (b) the ability of 
Purchaser and each of its subsidiaries, taken as a whole, to 
perform their respective obligations under this Agreement or 
any of the other Operative Agreements or (c) the validity or 
enforceability of this Agreement or any of the other Operative 
Agreements, or the rights or remedies of Purchaser hereunder 
or thereunder. 

"Purchaser Required Regulatory Approvals" means 
(i) pursuant to Part II of the Federal Power Act, acceptance 
for filing and effectiveness or authorization by Final Order 
of FERC, as applicable, to allow Purchaser to (A) implement 
wholesale sales of electricity under the Wholesale Transition 
Service Agreement and any other jurisdictional agreements to 
be assigned to Purchaser, (B) acquire, own and operate the 
Assets, and (C) sell electricity at wholesale at market-based 
rates; (ii) a Final Order of FERC certifying Purchaser as an 
exempt wholesale generator pursuant to Section 32 of the 
Holding Company Act; provided however, that in the event 
Purchaser does not obtain such certification with respect to 
the acquisition and ownership of the PSE Transmission Assets, 
then the provisions of Section 1.10 shall apply with respect 
to such Assets, and provided further that in any case such 
certification will be a Purchaser Required Regulatory Approval 
with respect to all other Assets; (iii) Final Orders of the 
WUTC, Montana Public Service Commission and the Oregon Public 
Utility Commission, if required, including the determinations 
required by Section 32(c) of the Holding Company Act for the 
Assets to be eligible facilities of Purchaser as an exempt 
wholesale generator; (iv) approval or authorization by Final 
Order of the Pennsylvania Public Utility Commission pursuant 
to the PPUC Order, if required; (v) other Licenses, 
Environmental Permits and approvals or authorizations of any 
other Governmental or Regulatory Authority reasonably 
necessary pursuant to any Law for Purchaser to own and operate 
the Assets other than authorizations or approvals, the lack of 
which would not materially detract from the value of the 
Assets as currently used or materially interfere with the 
ownership, operation and maintenance of the Assets; and (vi) 
expiration or early termination of the HSR Act waiting period.

"Qualified Transfer" means a sale or other disposition of 
the Pollution Control Facilities to a transferee who is 
reasonably expected to use the Pollution Control Facilities in 
such a way that they are treated as qualified pollution 
control facilities within the meaning of Section 103(b)(4)(F) 
of the Internal Revenue Code as in effect prior to the 
enactment of Public Law No. 99-514 (the "Tax Reform Act of 
1986").

"Real Property" has the meaning ascribed to it in Section 
1.01(a)(i).

"Real Property Leases" has the meaning ascribed to it in 
Section 1.01(a)(ii).

"Release" means any release, spill, emission, pouring, 
leaking, pumping, injection, deposit, disposal, discharge, 
emptying, dispersal, dumping, leaching or migration into or 
through the indoor or outdoor environment, including the 
movement of Hazardous Materials through ambient air, soil, 
surface water, ground water, wetlands, land, surface or 
subsurface strata.

"Representatives" has the meaning ascribed to it in 
Section 4.03.

"Resolution Period" means the period ending sixty (60) 
days following receipt by an Indemnified Party of a written 
notice from an Indemnifying Party stating that it disputes all 
or any portion of a claim set forth in a Claim Notice or an 
Indemnity Notice.

"Retained Liabilities" has the meaning ascribed to it in 
Section 1.02(b).

"SEC" means the Securities and Exchange Commission.

"Securities Act" means the Securities Act of 1933, as 
amended, and the rules and regulations promulgated thereunder.

"Seller" has the meaning ascribed to it in the forepart 
of this Agreement.

"Seller Group" has the meaning ascribed to it in Section 
10.01(c).

"Seller Material Adverse Effect" means any change in or 
effect on any of the Assets or the operation of any of the 
Assets after the Bid Date that is materially adverse to the 
ownership, business, assets, operations or condition 
(financial or otherwise) of (A) in the case of the PSE 
Colstrip Interests, the PSE Colstrip Interests or (B) in the 
case of the PSE Colstrip Transmission Assets, (unless the 
provisions of Section 1.10 or 6.12 have become effective) the 
PSE Colstrip Interests or the PSE Colstrip Transmission 
Assets, in each case taken as a whole, other than (i) any 
change resulting from changes in the international, national, 
regional or local wholesale or retail markets for electricity, 
(ii) any change resulting from changes in the international, 
national, regional or local markets for any fuel used at the 
Colstrip Facilities, (iii) any change resulting from changes 
in the North American, national, regional or local electricity 
transmission systems, and (iv) changes in Law that apply 
generally to similarly situated persons, and (v) any 
materially adverse change in the Assets which is cured 
(including by payment of money) by Seller before the earlier 
of the Closing Date and the Termination Date.

"Seller Required Regulatory Approvals" means (i) the 
approval, if required, of the SEC pursuant to the Holding 
Company Act, (ii) the filings by Seller and Purchaser required 
by the HSR Act and the expiration or earlier termination of 
all waiting periods under the HSR Act, (iii) a Final Order(s) 
of the WUTC approving the transaction and the terms and 
conditions of each of the Operative Agreements and the 
respective regulatory treatment of any and all financial 
impacts thereof, in each case in form and substance 
satisfactory to Seller in its reasonable discretion, and (iv) 
a Final Order(s) of the FERC approving the transaction or any 
aspects thereof over which FERC has jurisdiction, including 
the approval, if necessary, of the Transmission Service 
Agreement, in form and substance reasonably satisfactory to 
Seller.

"Separation Document" means the separation document to be 
agreed to by the parties in the event the PSE Transmission 
Assets are not purchased by Purchaser.

"Site Representatives" has the meaning ascribed to it in 
Section 4.10.

"Tangible Personal Property" has the meaning ascribed to 
it in Section 1.01(a)(iv).

"Tax Representation" has the meaning ascribed to it in 
Section 9.01(a).

"Tax Returns" means any return, report, information 
return or other document (including any related or supporting 
information) required to be supplied to any taxing authority 
with respect to Taxes.

"Taxes" means all taxes, charges, fees, levies, 
penalties, or other assessments imposed by any United States 
Federal, state or local or foreign taxing authority, including 
but not limited to, income, excise, property, sales, transfer, 
franchise, payroll, withholding, social security or other 
taxes, including any interest, penalties or additions 
attributable thereto.

"Tenant Security Deposits" has the meaning ascribed to it 
in Section 1.01(a)(viii).

"Third Party Claim" has the meaning ascribed to it in 
Section 10.02(a).

"Title Representation" has the meaning ascribed to it in 
Section 9.01(a).

"Transferable Permits" has the meaning ascribed to it in 
Section 1.01(a)(vi).

"Transfer Taxes" means all Taxes in the nature of sales, 
use, transfer, recording, value added or forms of conveyance 
taxes.

"Transmission Service Agreement" means an agreement 
between Seller and Purchaser for Purchaser to purchase firm 
point-to-point transmission service from Seller on the PSE 
Colstrip Transmission Assets for a term of twenty-five (25) 
year pursuant to the terms and conditions of Seller's Open 
Access Transmission Tariff from time to time in effect and 
accepted for filing by the FERC.

"Wholesale Transition Service Agreement" has the meaning 
ascribed to it in Section 6.10.

"WUTC" means the Washington Utilities and Transportation 
Commission.

"WWP" means The Washington Water Power Company, a 
Washington corporation.

(b)  Construction of Certain Terms and Phrases.  Unless 
the context of this Agreement otherwise requires, (i) words of 
any gender include each other gender; (ii) words using the 
singular or plural number also include the plural or singular 
number, respectively; (iii) the terms "hereof," "herein," 
"hereby" and derivative or similar words refer to this entire 
Agreement; (iv) the terms "Article" or "Section" refer to the 
specified Article or Section of this Agreement; (v) "include" 
or "including" means including without limiting the generality 
of any description preceding such term, and (vi) the phrase 
"ordinary course of business" refers to the business of Seller 
in connection with the ownership of the PSE Colstrip Interests 
and the performance of its obligations under the Colstrip 
Contracts. Whenever this Agreement refers to a number of days, 
such number shall refer to calendar days unless Business Days 
are specified. All accounting terms used herein and not 
expressly defined herein shall have the meanings given to them 
under GAAP. Any representation or warranty contained herein as 
to the enforceability of a Contract shall be subject to the 
effect of any bankruptcy, insolvency, reorganization, 
moratorium or other similar law affecting the enforcement of 
creditors' rights generally and to general equitable 
principles (regardless of whether such enforceability is 
considered in a proceeding in equity or at Law).

                        ARTICLE XIII
                       MISCELLANEOUS

13.01  Notices

All notices, requests and other communications hereunder 
must be in writing and will be deemed to have been duly given 
only if delivered personally or by facsimile transmission or 
mailed (first class postage prepaid) to the parties at the 
following addresses or facsimile numbers:

If to Purchaser, to:

          PP&L Global, Inc.
          11350 Random Hills Rd, Suite 400
          Fairfax, Virginia 22030
          Facsimile No.:   (703) 293-2659
          Attn:  Chief Counsel

with a copy to:

          Winthrop, Stimson, Putnam & Roberts
          One Battery Park Plaza
          New York, New York 10004-1490
          Facsimile No.:  (212) 858-1500
          Attn:  David P. Falck

If to Seller, to:

          Puget Sound Energy, Inc.
          411 - 108th Avenue N.E.
          Bellevue, WA  98104-5515
          Facsimile No.: (425) 462-3300
          Attn: Stephen A. McKeon

with a copy to:

          Perkins Coie LLP
          1201 Third Avenue, 40th Floor
          Seattle, WA  98101-3089
          Facsimile No.:  (206) 583-8500
          Attn:  Andrew Bor

All such notices, requests and other communications will 
(i) if delivered personally to the address as provided in this 
Section, be deemed given upon delivery, (ii) if delivered by 
facsimile transmission to the facsimile number as provided in 
this Section, be deemed given upon receipt, and (iii) if 
delivered by mail in the manner described above to the address 
as provided in this Section, be deemed given upon receipt (in 
each case regardless of whether such notice, request or other 
communication is received by any other Person to whom a copy 
of such notice, request or other communication is to be 
delivered pursuant to this Section). Any party from time to 
time may change its address, facsimile number or other 
information for the purpose of notices to that party by giving 
notice specifying such change to the other party hereto.

13.02  Bulk Sales Act

The parties hereby waive compliance with the bulk sales 
act or comparable statutory provisions of each applicable 
jurisdiction. Seller shall indemnify Purchaser and its 
officers, directors, employees, agents and Affiliates in 
respect of, and hold each of them harmless from and against, 
any and all Losses suffered, occurred or sustained by any of 
them or to which any of them becomes subject, resulting from, 
arising out of or relating to the failure of Seller to comply 
with the terms of any such provisions applicable to the 
transactions contemplated by this Agreement.

13.03  Entire Agreement

This Agreement and the Operative Agreements and the other 
exhibits, schedules, documents, certificates and instruments 
executed and delivered pursuant to this Agreement supersede 
all prior discussions and agreements between the parties with 
respect to the subject matter hereof and thereof, including 
that certain confidentiality agreement between Purchaser and 
MPC dated April 8, 1998, as agreed to include Seller, and 
contain the sole and entire agreement between the parties 
hereto with respect to the subject matter hereof and thereof.

13.04  Expenses
Except as otherwise expressly provided in this Agreement 
(including as provided in Section 11.02), whether or not the 
transactions contemplated hereby are consummated, each party 
will pay its own costs and expenses incurred in connection 
with the negotiation, execution and closing of this Agreement 
and the Operative Agreements and the transactions contemplated 
hereby and thereby.

13.05  Public Announcements

At all times at or before the Closing, Seller and 
Purchaser will not issue or make any reports, statements or 
releases to the public or generally to the employees, 
customers, suppliers or other Persons with whom Seller has 
significant business relationships in connection with the PSE 
Colstrip Interests with respect to this Agreement or the 
transactions contemplated hereby without the consent of the 
other, which consent shall not be unreasonably withheld. If 
either party is unable to obtain the approval of its public 
report, statement or release from the other party and such 
report, statement or release is, in the opinion of legal 
counsel to such party, required by Law in order to discharge 
such party's disclosure obligations, then such party may make 
or issue the legally required report, statement or release and 
promptly furnish the other party with a copy thereof. Seller 
and Purchaser will also obtain the other party's prior 
approval of any press release to be issued immediately 
following the Closing announcing the consummation of the 
transactions contemplated by this Agreement.

13.06  Confidentiality

Each party hereto will hold, and will use its best 
efforts to cause its Affiliates, and their respective 
Representatives to hold, in strict confidence from any Person 
(other than any such Affiliate or Representative), unless (i) 
compelled to disclose by judicial or administrative process 
(including  in connection with obtaining the necessary 
approvals of this Agreement and the transactions contemplated 
hereby of Governmental or Regulatory Authorities) or by other 
requirements of Law or (ii) disclosed in an Action or 
Proceeding brought by a party hereto in pursuit of its rights 
or in the exercise of its remedies hereunder, all documents 
and information concerning the other party or any of its 
Affiliates furnished to it by the other party or such other 
party's Representatives in connection with this Agreement or 
the transactions contemplated hereby, except to the extent 
that such documents or information can be shown to have been 
(a) previously known by the party receiving such documents or 
information, (b) in the public domain (either prior to or 
after the furnishing of such documents or information 
hereunder) through no fault of such receiving party or (c) 
later acquired by the receiving party from another source if 
the receiving party is not aware that such source is under an 
obligation to another party hereto to keep such documents and 
information confidential; provided that following the Closing 
the foregoing restrictions will not apply to Purchaser's use 
of documents and information concerning the Assets or the 
Assumed Liabilities furnished by Seller hereunder.  Purchaser 
shall have the right to disclose Information of Seller with 
respect to the Assets to potential lenders and their 
respective representatives in connection with financing the 
transactions contemplated by this Agreement and to third 
parties in connection with planning for operations of the 
Assets following the Closing, provided that any such 
disclosure is made pursuant to confidentiality obligations 
equivalent to those provided in this Section 13.06; provided, 
further, if such third parties are involved in the energy 
industry then Purchaser shall not disclose information of 
Seller to such Persons without the written consent of Seller 
which shall not be unreasonably withheld.  In the event the 
transactions contemplated hereby are not consummated, upon the 
request of the other party, each party hereto will, and will 
cause its Affiliates and their respective Representatives to, 
promptly (and in no event later than five (5) Business Days 
after such request) redeliver or cause to be redelivered all 
copies of confidential documents and information furnished by 
the other party in connection with this Agreement or the 
transactions contemplated hereby and destroy or cause to be 
destroyed all notes, memoranda, summaries, analyses, 
compilations and other writings related thereto or based 
thereon prepared by the party furnished such documents and 
information or its Representatives.

13.07  Waiver

Any term or condition of this Agreement may be waived at 
any time by the party that is entitled to the benefit thereof, 
but no such waiver shall be effective unless set forth in a 
written instrument duly executed by or on behalf of the party 
waiving such term or condition. No waiver by any party of any 
term or condition of this Agreement, in any one or more 
instances, shall be deemed to be or construed as a waiver of 
the same or any other term or condition of this Agreement on 
any future occasion. All remedies, either under this Agreement 
or by Law or otherwise afforded, will be cumulative and not 
alternative.

13.08  Amendment

This Agreement may be amended, supplemented or modified 
only by a written instrument duly executed by or on behalf of 
each party hereto.

13.09  No Third Party Beneficiary

The terms and provisions of this Agreement are intended 
solely for the benefit of each party hereto and their 
respective successors or permitted assigns, and it is not the 
intention of the parties to confer third party beneficiary 
rights upon any other Person other than any Person entitled to 
indemnity under Article X.

13.10  No Assignment; Binding Effect

Neither this Agreement nor any right, interest or 
obligation hereunder may be assigned by any party hereto 
without the prior written consent of the other party hereto 
and any attempt to do so will be void, except (a) for 
assignments and transfers by operation of Law, (b) that Seller 
may assign its rights, interests or obligations hereunder, in 
whole or in part, to an Affiliate, and (c) that Purchaser may 
assign any or all of its rights, interests and obligations 
hereunder (including without limitation, its rights under 
Article X) to (i) a direct or indirect wholly-owned 
subsidiary, provided that any such subsidiary agrees in 
writing to be bound by all of the terms, conditions and 
provisions contained herein (in which event, from the date of 
such assignment and subject to the other provisions of this 
Section 13.10, such assignee shall be the Purchaser for the 
purposes of this Agreement), or (ii) any lender providing 
purchase money or other financing to Purchaser from time to 
time as collateral security for such financing, but no such 
assignment referred to in clauses (b) or (c) shall relieve the 
assigning party of its obligations hereunder provided that no 
such assignment by Seller or Purchaser adversely affects the 
availability or timing of any Federal, state or local 
government consent or approval required for the consummation 
of the transactions contemplated hereby. Subject to the 
preceding sentence, this Agreement is binding upon, inures to 
the benefit of and is enforceable by the parties hereto and 
their respective successors and assigns.  

13.11  Headings

The headings used in this Agreement have been inserted 
for convenience of reference only and do not define or limit 
the provisions hereof.  Neither party shall be deemed to have 
been the drafter of this Agreement, which is the product of 
detailed, arm's-length negotiations between the parties and 
their respective counsel.

13.12  Invalid Provisions

If any provision of this Agreement is held to be illegal, 
invalid or unenforceable under any present or future Law, and 
if the rights or obligations of any party hereto under this 
Agreement will not be materially and adversely affected 
thereby, (a) such provision will be fully severable, (b) this 
Agreement will be construed and enforced as if such illegal, 
invalid or unenforceable provision had never comprised a part 
hereof, (c) the remaining provisions of this Agreement will 
remain in full force and effect and will not be affected by 
the illegal, invalid or unenforceable provision or by its 
severance herefrom and (d) in lieu of such illegal, invalid or 
unenforceable provision, there will be added automatically as 
a part of this Agreement a legal, valid and enforceable 
provision as similar in terms to such illegal, invalid or 
unenforceable provision as may be possible.

13.13  Governing Law

This Agreement shall be governed by and construed in 
accordance with the Laws of the State of New York applicable 
to a contract executed and performed in such State, without 
giving effect to the conflicts of laws principles thereof.

13.14  Counterparts

This Agreement may be executed in any number of 
counterparts, each of which will be deemed an original, but 
all of which together will constitute one and the same 
instrument.

13.15  Consent to Assignment

Seller agrees to consent, effective as of the closing 
under the MPC Purchase Agreement, to the assignment by MPC to 
Purchaser of MPC's rights and obligations under the Power 
Sales Agreement dated October 1, 1989, as amended, between 
Seller and MPC, provided that the terms of such assignment are 
reasonably satisfactory to Seller.

<PAGE>
	IN WITNESS WHEREOF, this Agreement has been duly executed 
and delivered by the duly authorized officer of each party as 
of the date first above written.

                             PP&L GLOBAL, INC.




                             By:    /s/ PAUL T. CHAMPAGNE  
                                 Name:  Paul T. Champagne
                                 Title:  Vice President



                             PUGET SOUND ENERGY, INC.




                             By:   /s/ STEVE MCKEON        
                                 Name:  Stephen A. McKeon
                                 Title:  Vice President

<PAGE>

                            Schedule I

              Pre-Closing Known Remedial Liabilities

Hazardous contamination identified in the report entitled 
Phase II Investigation dated August 1998 for the Colstrip 
Project prepared for Montana Power Company by Pilko & 
Associates, Inc.

<PAGE>
                                                    EXHIBIT A

              GENERAL ASSIGNMENT AND BILL OF SALE

THIS GENERAL ASSIGNMENT AND BILL OF SALE is entered into 
this ____ day of ________, [1999] by and between [PP&L Global, 
Inc.], a Pennsylvania corporation ("Purchaser"), and Puget 
Sound Energy, Inc., a Washington corporation ("Seller").

WHEREAS, Purchaser and Seller have entered into an Asset 
Purchase Agreement, dated as of October __, 1998 (the "Asset 
Purchase Agreement"; capitalized terms not defined herein 
shall have the meanings ascribed to them in the Asset Purchase 
Agreement), pursuant to which Seller has agreed to sell, 
transfer, convey, assign and deliver to Purchaser and 
Purchaser has agreed to purchase and acquire from Seller the 
PSE Colstrip Interests and certain other assets of Seller used 
or held for use principally in connection with the operation 
of the PSE Colstrip Interests, and Purchaser has agreed, in 
partial consideration therefor, to assume certain obligations 
in connection therewith by executing an Assumption Agreement 
of even date herewith;

WHEREAS, Seller desires to transfer and assign to 
Purchaser the assets described below pursuant to Section 1.05 
of the Asset Purchase Agreement and Purchaser desires to 
accept the sale, transfer, conveyance, assignment and delivery 
thereof;

NOW, THEREFORE, for and in consideration of the mutual 
covenants contained herein and other good and valuable 
consideration the receipt and sufficiency of which are hereby 
acknowledged, Seller hereby irrevocably sells, transfers, 
conveys, assigns and delivers to Purchaser all of Seller's 
right, title and interest in, to and under the Assets, free 
and clear of all Liens except Permitted Liens (as such term is 
defined in the Asset Purchase Agreement with respect to 
periods after the Closing Date), TO HAVE AND TO HOLD the same 
unto Purchaser, its successors and assigns, forever.

Purchaser hereby accepts the sale, transfer, conveyance, 
assignment and delivery of the Assets.  Notwithstanding 
anything herein to the contrary, the Excluded Assets are 
specifically excluded from the Assets and shall be retained by 
Seller at and following the Closing Date.

At any time or from time to time after the date hereof, 
at Purchaser's request and without further consideration, 
Seller shall execute and deliver to Purchaser such other 
instruments of sale, transfer, conveyance, assignment and 
confirmation, provide such materials and information and take 
such other actions as Purchaser may reasonably deem necessary 
or desirable in order more effectively to transfer, convey and 
assign to Purchaser, and to confirm Purchaser's title to, all 
of the Assets, and, to the full extent permitted by Law, to 
put Purchaser in actual possession and operating control of 
the Assets and to assist Purchaser in exercising all rights 
with respect thereto.

Seller hereby constitutes and appoints Purchaser the true 
and lawful attorney of Seller, with full power of 
substitution, in the name of Seller or Purchaser, but on 
behalf of and for the benefit of Purchaser:  (i) to demand and 
receive from time to time any and all of the Assets and to 
make endorsements and give receipts and releases for and in 
respect of the same and any part thereof; (ii) to institute, 
prosecute, compromise and settle any and all Actions or 
Proceedings that Purchaser may deem proper in order to 
collect, assert or enforce any claim, right or title of any 
kind in or to the Assets; (iii) to defend or compromise any or 
all Actions or Proceedings in respect of any of the Assigned 
Assets; and (iv) to do all such acts and things in relation to 
the matters set forth in the preceding clauses (i) through 
(iii) as Purchaser shall deem desirable.  Seller hereby 
acknowledges that the appointment hereby made and the powers 
hereby granted are coupled with an interest and are not and 
shall not be revocable by it in any manner or for any reason.  
Purchaser shall indemnify and hold harmless Seller and its 
officers, directors, employees, agents and Affiliates from any 
and all Losses caused by or arising out of any breach of Law 
by Purchaser in its exercise of the aforesaid powers.

This General Assignment and Bill of Sale may be executed 
in any number of counterparts, each of which will be deemed an 
original, but all of which together will constitute one and 
the same instrument.

This General Assignment and Bill of Sale and all of the 
provisions hereof shall be binding upon and shall inure to the 
benefit of the respective parties and their assigns, 
transferees and successors.

This General Assignment and Bill of Sale shall be 
governed by and construed in accordance with the laws of the 
State of New York applicable to a contract executed and 
performed in such State without giving effect to the conflicts 
of laws principles thereof, except that if it is necessary in 
any other jurisdiction to have the law of such other 
jurisdiction govern this General Assignment and Bill of Sale 
in order for this General Assignment and Bill of Sale to be 
effective in any respect, then the laws of such other 
jurisdiction shall govern this General Assignment and Bill of 
Sale to such extent.

This General Assignment and Bill of Sale is delivered 
pursuant to and is subject to the Asset Purchase Agreement.  
In the event of any conflict between the terms of the Asset 
Purchase Agreement and the terms of this General Assignment 
and Bill of Sale, the terms of the Asset Purchase Agreement 
shall prevail.

IN WITNESS WHEREOF, the undersigned have caused their 
duly authorized officers to execute this General Assignment 
and Bill of Sale on the day and year first above written.

                             [PP&L GLOBAL, INC.]



                             By:____________________________
                                     Name:
                                     Title:


                             PUGET SOUND ENERGY, INC.



                             By:____________________________
                                    Name:
                                    Title:

<PAGE>

                                                     EXHIBIT B

                    ASSUMPTION AGREEMENT

THIS ASSUMPTION AGREEMENT is entered into this ____ day 
of _______, [1999] by and between [PP&L Global, Inc.], a 
Pennsylvania corporation ("Purchaser"), and Puget Sound 
Energy, Inc., a Washington corporation ("Seller").

WHEREAS, Purchaser and Seller have entered into an Asset 
Purchase Agreement, dated as of October __, 1998 (the "Asset 
Purchase Agreement"; capitalized terms not defined herein 
shall have the meanings ascribed to them in the Asset Purchase 
Agreement), pursuant to which Seller has agreed to sell, 
transfer, convey, assign and deliver to Purchaser and 
Purchaser has agreed to purchase from Seller the PSE Colstrip 
Interests and certain other assets of Seller used or held for 
use principally in connection with the operation of the PSE 
Colstrip Interests, and Purchaser has agreed, in partial 
consideration therefor, to assume certain obligations in 
connection therewith by executing this Assumption Agreement;

WHEREAS, pursuant to Section 1.05 of the Asset Purchase 
Agreement, Purchaser is required to execute and deliver to 
Seller this Agreement whereby Purchaser assumes the Assumed 
Liabilities;

NOW, THEREFORE, for and in consideration of the mutual 
covenants contained herein and other good and valuable 
consideration the receipt and sufficiency of which are hereby 
acknowledged, Purchaser hereby undertakes and agrees from and 
after the date hereof, subject to the limitations contained 
herein, to assume and to pay, perform and discharge when due 
the Assumed Liabilities.  

Nothing contained herein shall require Purchaser to pay 
or discharge any debts or obligations expressly assumed hereby 
so long as Purchaser shall in good faith contest or cause to 
be contested the amount or validity thereof.

Except for the Assumed Liabilities, Purchaser assumes no 
debt, liability or obligation of Seller, including without 
limitation the Retained Liabilities, by this Assumption 
Agreement, and it is expressly understood and agreed that all 
debts, liabilities and obligations not assumed hereby by 
Purchaser shall remain the sole obligation of Seller, its 
successors and assigns.

No Person other than Seller, its successors and assigns 
shall have any rights under this Assumption Agreement or the 
provisions contained herein.

This Assumption Agreement may be executed in any number 
of counterparts, each of which will be deemed an original, but 
all of which together will constitute one and the same 
instrument.

This Assumption Agreement and all of the provisions 
hereof shall be binding upon and inure to the benefit of the 
respective parties and their assigns, transferees and 
successors.

This Assumption Agreement shall be governed by and 
construed in accordance with the laws of the State of New York 
applicable to a contract executed and performed in such State 
without giving effect to the conflicts of laws principles 
thereof, except that if it is necessary in any other 
jurisdiction to have the law of such other jurisdiction govern 
this Assumption Agreement in order for this Assumption 
Agreement to be effective in any respect, then the laws of 
such other jurisdiction shall govern this Assumption Agreement 
to such extent.

This Assumption Agreement is delivered pursuant to and is 
subject to the Asset Purchase Agreement.  In the event of any 
conflict between the terms of the Asset Purchase Agreement and 
the terms of this Assumption Agreement, the terms of the Asset 
Purchase Agreement shall prevail.

IN WITNESS WHEREOF, the undersigned have caused their 
duly authorized officers to execute this Assumption Agreement 
on the day and year first above written.


                             [PP&L GLOBAL, INC.]


                             By:____________________________
                                  Name:
                                  Title:

                             PUGET SOUND ENERGY, INC.




                             By:______________________________
                                  Name:
                                  Title:
<PAGE>

                                                   EXHIBIT C

                 POLLUTION CONTROL FACILITIES

1.  POLLUTION CONTROL EQUIPMENT

Scrubber System

The air pollution control facilities employed on Units #3 and 
#4 consist of a complete scrubber system, including duct work, 
plenums, scrubber vessels, reheaters and induced draft fans, 
together with infrastructures, monitoring and electrical 
controls and instrumentation therefore, for the purpose of 
removing the sulfur dioxide (SO2) and particulate matter from 
the flue gas. The scrubber system also includes a scrubber 
maintenance facility, including a machine shop and laboratory 
dedicated to the scrubber system and an environment monitoring 
laboratory for the pollution control facilities. The scrubber 
system utilizes the Wet Venturi Principle and consists of 
eight modules for each unit through which the steam generator 
gases from the burned coal must pass.

The gases in the scrubber are contacted with finely atomized 
scrubber slurry. Within the stated performance of the system, 
fly ash particulates are removed by the slurry droplets. The 
sulfur dioxide reacts with the alkali contained in the slurry 
which results from the mixing of water, fly ash particulates, 
hydrated high calcium lime and hydrated dolomitic lime. A 
major portion of the sulfur dioxide is converted to solid 
sulfate compounds which are retained in the scrubber liquid 
and can, therefore, be piped to and deposited in an ash pond 
together with the particulate.

After the flue gas passes through the venturi section, 
absorption sprays and wash trays, it is processed through a 
demister which removes any entrained slurry and is then 
reheated and discharged through the stack.

The slurry system in the Units #3 and #4 scrubber system 
consists of recycle tanks, regenerators, agitators, pumps and 
pipelines. The slurry from the Units #3 and #4 scrubber system 
is transported to an effluent holding pond and involves the 
use of effluent holding tanks, agitators, pumps and pipelines. 
A separate wash tray pond System is used to store the 
suspended solids collected from the wash tray system.  
Reclaimed water from the clear water section of these ponds is 
circulated back to the scrubber system.

Lime Storage

The sole purpose of the lime system is to supply the lime 
slurry requirements of the scrubber regeneration system. There 
is one lime system that serves the sixteen scrubbers for Units 
#3 and #4. Major components of the system include four 
slakers, in which calcined high calcium lime is reacted with 
water to produce a hydrated lime slurry, slurry transfer 
tanks, where the slurry is diluted with water and mixed with 
dry hydrated dolomitic lime, slurry feed storage tanks, where 
the slurry will be held for use by the regenerators as needed, 
hydrators, for mixing calcined dolomitic lime with water, and 
agitators.

Scrubber Sludge Disposal

Effluent slurry is pumped from the plant to the sludge 
disposal pond located approximately three miles southeast of 
the plant. The suspended solids settle to the pond bottom and 
the clear water is pumped back to the plant.

There are two phases in the development of this pond. The 
first phase requires the construction of one dam 108 feet high 
and 1,100 feet in length. A saddle dam must also be added. The 
saddle dam will vary in height with a maximum height for this 
phase of 36 feet and be approximately 2,800 feet in length. 
The capacity of Phase I will be 6,650 acre-feet and it will 
last approximately 10 years.

The development of the second phase will require that the 
original dam be raised to 138 feet in height and increased to 
a length of 2,500 feet. The saddle dam will be raised to a 
maximum height of 66 feet and a total length of 3,500 feet. 
The capacity of the second phase will be an additional 7,000 
acre-feet and it will last approximately 12 years, for a total 
life of 22 years.

The sludge disposal pond design takes into account a permit 
requirement for minimum seepage, by providing low permeability 
plastic concrete filled trenches around the periphery of the 
pond constructed during the course of Phase I work.

Coal Dust Control System

The coal dust control system is designed to collect, store and 
treat coal dust resulting from mining, crushing, handling and 
storing coal in the course of normal Units #3 and #4 
operations. To control coal dust air pollution the points 
where coal is transferred between conveyors or placed in coal 
piles have been enclosed. The coal transfer stations between 
conveyors are enclosed with steel framed structures with metal 
siding. The structures are equipped with vacuum filtration 
systems, consisting of ducts, blowers, dust removal filters 
and associated equipment, to remove coal dust from exhaust air 
from the structures, and are also equipped with mechanical 
dust collectors. The mainline 45,000 ton coal storage pile is 
enclosed with a 340' long A-frame precast panel concrete 
structure designed to contain coal dust, thereby allowing its 
removal and treatment.

Cooling Tower Drift Containment Control Facility

Operation of the cooling towers produces exhaust air emissions 
containing circulating water, particulates and other 
pollutants generally known as cooling tower drift.  To control 
release of these air pollutants, the cooling towers are 
provided with high efficiency drift eliminators, located at 
the top of the cooling tower structures, which remove drift 
from the cooling tower exhaust air.

2.  SOLID WASTE DISPOSAL

Bottom Ash Disposal

The function of the bottom ash disposal system is to remove 
accumulations of furnace bottom ash, pulverizer pyrites, 
economizer ash, and air preheater fly ash by means of a water-
ash slurry to a disposal pond located approximately 2,000 feet 
southeast of the plant site. The system consists generally of 
three sets of fly ash hoppers, (economizer, air heater, and 
flue gas duct hoppers) pyrite hoppers, the bottom ash hopper, 
an 18,000 gallon transfer tank, a settling pond, a clear water 
pond and various pumps, and pipelines.

Clinker grinders are used to grind the bottom ash which is 
then mixed with water and sluiced to the ash transfer tank.

The economizer ash collected in economizer hoppers falls by 
gravity to the ash transfer tank.

The pyrites are collected in local tanks and sluiced to the 
ash transfer tank.

Ash collected in the flue gas duct hoppers and air preheater 
hoppers is sluiced to the ash transfer tank.

These ashes are pumped from the ash transfer tank to the 
bottom ash pond.  Reclaimed water is returned from the bottom 
ash disposal pond and redistributed to the various sections of 
the bottom ash disposal system.

3.  WATER POLLUTION CONTROL

North Plant Sediment Pond

The north plant sediment pond is designed to collect and store 
the storm runoff from the general north plant area.  These 
waters are retrained in the pond, allowing natural evaporation 
to desiccate the pond.  This prevents high quantities of 
suspended solids from being discharged to Armells Creek or 
other state surface waters.

North Plant Area Drainage System

The north plant area drainage system is designed to collect 
and store storm runoff from the water treatment building, fuel 
oil handling area and the cooling tower area in the north 
plant area drain pond. The pond also serves as a storage 
facility for one cooling tower basin drain, cooling tower 
overflow, water treatment filter backwash, and for the cooling 
tower blowdown water not used in the flue gas scrubbing 
process. These waters are potentially contaminated with oil 
and high suspended and dissolved solids and this system stores 
these discharges preventing any discharge to Armells Creek or 
other state surface waters. The north plant area drainage 
system consists of collection basins, piping, concrete 
culverts, yard drains, manholes and special yard gradings 
(berms) which route these discharges to the north plant area 
sump and north plant area drain pond. The north plant area 
drain pond incorporates a hypalon liner to comply with a 
permit requirement for minimum seepage. The oil separator 
section of the sump receives oily surface collection drains. 
The oil and water are separated.  The oil from the sump is 
then trucked away for disposal.

The water discharges are either pumped to the scrubber 
effluent holding pond via a 6" diameter pipeline, 19,000 feet 
in length for evaporation, to the circulating water system, or 
to the plant oily waste sump as appropriate.  Each discharge 
arrangement has its own set of sump pumps.

Chemical and Oily Waste System

The chemical and oily waste system is designed to collect, 
store, treat and dispose of chemical and oily wastes resulting 
from the normal operation of Units #3 and #4.  This system 
consists of drains and pipes, oil separators, chemical waste 
sumps, chemical waste neutralizing tanks, neutralizing 
chemical storage tanks, chemical inspection equipment, and 
associated mechanical and electrical control equipment.

The chemical waste drainage system includes drains and 
neutralization tanks for collection and treatment of chemical 
waste.  Chemical waste drains are located throughout Units #3 
and #4, and are used to collect and transfer chemical waste to 
holding sumps and neutralization tanks.  The neutralization 
equipment includes chemical storage and injection equipment as 
well as controls and instrumentation.

The oily waste drainage system is made up of a network of 
drains which connect oily waste from throughout Units #3 and 
#4, and dispose of the wastes in the Units #3 and #4 main 
water-oil sump. Oil separation chambers in the sump allow for 
oil removal.  The treated water is monitored for trace oil 
levels and released. After separation, the waste oil is 
removed by a contractor to an offsite disposal area.

Cooling Tower Blowdown System

The cooling tower blowdown system consists of a 6" pipeline 
from the cooling tower to the waste disposal pond where the 
blowdown is treated by settlement and evaporation in 
accordance with water pollution control requirements.

Groundwater Monitoring Wells

Groundwater monitoring wells have been installed around the 
various ponds associated with the plant operation. These ponds 
include the scrubber effluent holding pond, the scrubber drain 
pond, the scrubber wash tray pond, the bottom ash pond, and 
the north plant area effluent pond. These groundwater 
monitoring wells provide the ability through sampling to 
detect and quantify accidental discharges from the above 
mentioned plant storage and waste ponds. This is necessary to 
show compliance with State Groundwater Standards and with 
permit requirements for minimum seepage.

<PAGE>
                                                    EXHIBIT D

                   PUGET SOUND ENERGY, INC.

                    Officer's Certificate

Puget Sound Energy, Inc., a Washington corporation 
("Seller"), pursuant to Section 6.03 of the Asset Purchase 
Agreement dated as of October __, 1998 (the "Asset Purchase 
Agreement"; capitalized terms not defined herein shall have 
the meanings ascribed to them in the Asset Purchase Agreement) 
between PP&L Global, Inc., a Pennsylvania corporation, and 
Seller, HEREBY CERTIFIES that:

(1)  The representations and warranties made by Seller in 
the Asset Purchase Agreement, taken as a whole, are true and 
correct, in all material respects, on and as of the date 
hereof as though made on and as of the date hereof or, in the 
case of representations and warranties made by Seller as of a 
specified date earlier than the date hereof, on and as of such 
earlier date.

(2)  The agreements, covenants and obligations required 
by the Asset Purchase Agreement to be performed or complied 
with by Seller at or before the Closing have been duly 
performed or complied with in all material respects.

IN WITNESS WHEREOF, Seller has caused this Certificate to 
be executed on its behalf by the undersigned on and as of the 
____ day of ______, 1999.

                             PUGET SOUND ENERGY, INC.




                             By:_____________________
                                  Name:
                                  Title:





<PAGE>
                                                    EXHIBIT E

                     PUGET SOUND ENERGY, INC.
                [Assistant] Secretary's Certificate

I, __________, [Assistant] Secretary of Puget Sound 
Energy, Inc., a Washington corporation ("Seller"), pursuant to 
Section 6.03 of the Asset Purchase Agreement dated as of 
October __, 1998 (the "Asset Purchase Agreement") between PP&L 
Global, Inc., a Pennsylvania corporation, and Seller, DO 
HEREBY CERTIFY on behalf of Seller as follows:

(1)  Attached hereto as Exhibit A is a true, complete and 
correct copy of the Restated Articles of Incorporation of 
Seller and all amendments thereto (as so amended, the 
"Articles of Incorporation"), and no amendment to the Articles 
of Incorporation has been authorized or become effective since 
the date of the last of such amendments, no amendment or other 
document relating to or affecting the Articles of 
Incorporation has been filed in the office of the Secretary of 
State of the State of Washington since such date and no action 
has been taken by Seller, its shareholders, directors or 
officers in contemplation of the filing of any such amendment 
or other document or in contemplation of the liquidation or 
dissolution of Seller.

(2)  Attached hereto as Exhibit B is a true, complete and 
correct copy of the Bylaws of Seller, inclusive of all 
amendments thereto as in full force and effect on the date 
hereof and at all times since [date of last amendment].

(3)  Attached hereto as Exhibit C is a true, complete and 
correct copy of resolutions adopted by the Board of Directors 
of Seller with respect to the Asset Purchase Agreement and the 
Operative Agreements to which it is a party and the 
transactions contemplated thereby, which resolutions were duly 
and validly adopted at a meeting of the Board of Directors of 
Seller on __________, 1998, at which a quorum was present and 
acting throughout.  All such resolutions are in full force and 
effect on the date hereof in the form in which adopted and no 
other resolutions have been adopted by the Board of Directors 
of Seller or any committee thereof relating to the Asset 
Purchase Agreement and the Operative Agreements to which it is 
a party and the transactions contemplated thereby.

(4)  Each of the following named individuals is a duly 
elected or appointed, qualified and acting officer of Seller 
who holds, and at all times since October __, 1998 [date of 
execution of Asset Purchase Agreement] has held, the offices 
set opposite such individual's name, and the signature written 
opposite the name and title of such officer is such officer's 
genuine signature:

     [Name]     [Title]     ______________________________
     [Name]     [Title]     ______________________________
     [Name]     [Title]     ______________________________
     [Name]     [Title]     ______________________________

IN WITNESS WHEREOF, Seller has caused this Certificate to 
be executed on its behalf by the undersigned on and as of the 
____ day of ________, [1999].

                             PUGET SOUND ENERGY, INC.



                             By:_______________________
                                  Name:
                                  Title:

I, __________, [title of officer] of Seller, DO HEREBY 
CERTIFY on behalf of Seller that __________ is the duly 
elected or appointed, qualified and acting [Assistant] 
Secretary of Seller, and the signature set forth above is the 
genuine signature of such officer.



                             _________________________
                               Name:
                               Title:

_______ __, [1999]






<PAGE>
                                                   EXHIBIT G-1

                 Opinion of Counsel to Seller

(1)  Seller is a corporation organized, existing and in 
good standing under the laws of the State of Washington and 
each state or other jurisdiction in which it is qualified to 
do business as a foreign corporation by virtue of owning the 
Assets or the PSE Colstrip Interests, and Seller has the 
corporate power and authority to execute and deliver the Asset 
Purchase Agreement and the Operative Agreements and to 
consummate the transactions contemplated thereby; and the 
execution and delivery of the Asset Purchase Agreement and the 
Operative Agreements and the consummation of the sale of the 
Assets contemplated thereby have been duly authorized by all 
requisite corporate action taken on the part of Seller;

(2)  the Asset Purchase Agreement and the Operative 
Agreements have been duly executed and delivered by Seller and 
(assuming that the Seller Required Regulatory Approvals and 
the Purchaser Required Regulatory Approvals are obtained) are 
valid and binding obligations of Seller, enforceable against 
Seller in accordance with their terms;

(3)  the execution, delivery and performance of the Asset 
Purchase Agreement and the Operative Agreements by Seller will 
not constitute a violation of the Restated Articles of 
Incorporation or Bylaws, as currently in effect, of Seller;

(4)  the General Assignment and Bill of Sale and other 
documents described in Section 1.05(a) are in proper form to 
transfer to Purchaser title to the Assets; and

(5)  no declaration, filing or registration with, or 
notice to, or authorization, consent or approval of any 
governmental authority is necessary for the consummation by 
Seller of the Closing other than (i) the Seller Required 
Regulatory Approvals, all of which have been obtained and are 
Final Orders and (ii) such declarations, filings, 
registrations, notices, authorizations, consents or approvals 
which if not obtained or made, would not, in the aggregate, 
have a Seller Material Adverse Effect.


<PAGE>
                                                   EXHIBIT G-2

          Opinion of Outside Montana Counsel to Seller

(1)  The Agreement and the Operative Agreements to which 
Seller is a party and which by its terms are governed by 
Montana Law have been duly and validly executed and delivered 
by Seller and, subject to receipt of Seller Required 
Regulatory Approvals, Purchaser Required Regulatory Approvals 
and third party consents specified in Section 6.07 of the 
Disclosure Schedules and Section 6.07 of the Agreement, are 
legal, valid and binding obligations of Seller, enforceable 
against Seller in accordance with their terms, except as the 
same may be limited by bankruptcy, insolvency, reorganization, 
arrangement, moratorium or other similar Laws relating to or 
affecting the rights of creditors generally, and except as the 
enforceability of the Purchase Agreement is subject to the 
application of general principles of equity (regardless of 
whether considered in a proceeding in equity or at law), 
including without limitation (i) the possible unavailability 
of specific performance, injunctive relief or any other 
equitable remedy and (ii) concepts of materiality, 
reasonableness, good faith and fair dealing;

(2)  The Assignment Instruments which by their terms are 
governed by Montana Law are in proper form and are effective 
to transfer to Purchaser title to the Assets; and

(3)  Except for Seller Required Regulatory Approvals, no 
consent, approval or action of, filing with or notice to any 
Governmental or Regulatory Authority on the part of Seller is 
required in connection with the execution, delivery and 
performance of the Agreement or any of the Operative 
Agreements to which it is a party or the consummation of the 
transactions contemplated thereby, except those as would be 
required solely as a result of the identity or the legal or 
regulatory status of Purchaser or any of its Affiliates.

As to any matter contained in such opinion which involves 
the laws of any jurisdiction other than the federal laws of 
the United States or the laws of the State of Montana, such 
counsel may, in lieu of rendering an opinion as to such 
matter, deliver the opinions of counsel admitted in such other 
jurisdictions.  Such opinions may expressly rely as to matters 
of fact upon certificates furnished by Seller and appropriate 
officers and directors of Seller and by public officials.  
Capitalized terms used but not defined herein shall have the 
respective meanings given to such terms in the Purchase 
Agreement.

<PAGE>
                                                   EXHIBIT H

                      PP&L GLOBAL, INC.
                    Officer's Certificate

PP&L Global, Inc., a Pennsylvania corporation 
("Purchaser"), pursuant to Section 7.03 of the Asset Purchase 
Agreement dated as of October __, 1998 (the "Asset Purchase 
Agreement"; capitalized terms not defined herein shall have 
the meanings ascribed to them in the Asset Purchase Agreement) 
between Purchaser and Puget Sound Energy, Inc., a Washington 
corporation, HEREBY CERTIFIES that:

(1)  The representations and warranties made by Purchaser 
in the Asset Purchase Agreement, taken as a whole, are true 
and correct in all material respects on and as of the date 
hereof as though made on and as of the date hereof.

(2)  The agreements, covenants and obligations  required 
by the Asset Purchase Agreement to be performed or complied 
with by Purchaser at or before the Closing have been duly 
performed or complied with in all material respects.

IN WITNESS WHEREOF, Purchaser has caused this Certificate 
to be executed on its behalf by the undersigned on and as of 
the ____ day of ________, [1999].

                             PP&L GLOBAL, INC.




                             By:______________________
                                  Name:
                                  Title:









<PAGE>
                                                     EXHIBIT I

                       PP&L GLOBAL, INC.
             [Assistant] Secretary's Certificate

I, __________, [Assistant] Secretary of PP&L Global, 
Inc., a Pennsylvania corporation ("Purchaser"), pursuant to 
Section 7.03 of the Asset Purchase Agreement dated as of 
October __, 1998 (the "Asset Purchase Agreement") between 
Purchaser and Puget Sound Energy, Inc., a Washington 
corporation, DO HEREBY CERTIFY on behalf of Purchaser as 
follows:

(1)  Attached hereto as Exhibit A is a true, complete and 
correct copy of the [Restated] Articles of Incorporation of 
Purchaser and all amendments thereto (as so amended, the 
"Articles of Incorporation"), and no amendment to the Articles 
of Incorporation has been authorized or become effective since 
the date of the last of such amendments, no amendment or other 
document relating to or affecting the Articles of 
Incorporation has been filed in the office of the Secretary of 
State of the Commonwealth of Pennsylvania since such date and 
no action has been taken by Purchaser, its stockholders, 
directors or officers in contemplation of the filing of any 
such amendment or other document or in contemplation of the 
liquidation or dissolution of Purchaser.

(2)  Attached hereto as Exhibit B is a true, complete and 
correct copy of the By-Laws of Purchaser, inclusive of all 
amendments thereto, as in full force and effect on the date 
hereof and at all times since [date of last amendment].

(3)  Attached hereto as Exhibit C is a true, complete and 
correct copy of resolutions adopted by the Board of Directors 
of Purchaser and PP&L Resources, Inc. ("Parent") with respect 
to the Asset Purchase Agreement and the Operative Agreements 
to which Purchaser is a party and the transactions 
contemplated thereby, which resolutions were duly and validly 
adopted at a meeting of the Board of Directors of Purchaser on 
__________, 1998, and a meeting of the Board of Directors of 
Parent on ________, 1998 at each of which a quorum was present 
and acting throughout.  All such resolutions are in full force 
and effect on the date hereof in the form in which adopted and 
no other resolutions have been adopted by the Board of 
Directors of Purchaser or any committee thereof or the Board 
of Directors of Parent or any committee thereof relating to 
the Asset Purchase Agreement and the Operative Agreements to 
which it is a party and the transactions contemplated thereby.

(4)  Each of the following named individuals is a duly 
elected or appointed, qualified and acting officer of 
Purchaser who holds, and at all times since October __, 1998 
[date of execution of Asset Purchase Agreement] has held, the 
office set opposite such individual's name, and the signature 
written opposite the name and title of such officer is such 
officer's genuine signature:

     [Name]     [Title]     ________________________________
     [Name]     [Title]     ________________________________
     [Name]     [Title]     ________________________________

IN WITNESS WHEREOF, Purchaser has caused this Certificate 
to be executed on its behalf by the undersigned on and as of 
the ____ day of ________, [1999].

                             PP&L GLOBAL, INC.




                             By:________________________
                                  Name:
                                  Title:

I, __________, [title of officer] of Purchaser, DO HEREBY 
CERTIFY on behalf of Purchaser that __________ is the duly 
elected or appointed, qualified and acting [Assistant] 
Secretary of Purchaser, and the signature set forth above is 
the genuine signature of such officer.




                             _________________________
                               Name:
                               Title:

_________ __, [1999]


<PAGE>
                                                     EXHIBIT J

               Opinion of Counsel to Purchaser

(1)  Purchaser is a corporation organized, existing and 
in good standing under the laws of the Commonwealth of 
Pennsylvania, and has the corporate power and authority to 
execute and deliver the Asset Purchase Agreement and the 
Operative Agreements and to consummate the transactions 
contemplated thereby; and the execution and delivery of the 
Asset Purchase Agreement and the Operative Agreements and the 
consummation of the sale and purchase of the Assets 
contemplated thereby have been duly authorized by all 
requisite corporate action taken on the part of the Purchaser;

(2)  the Asset Purchase Agreement and the Operative 
Agreements have been duly executed and delivered by Purchaser 
and (assuming that the Seller Required Regulatory Approvals 
and the Purchaser Required Regulatory Approvals are obtained) 
are valid and binding obligations of the Purchaser, 
enforceable against the Purchaser in accordance with their 
terms;

(3)  the execution, delivery and performance of the Asset 
Purchase Agreement and the Operative Agreements by Purchaser 
will not constitute a violation of the Certificate of 
Incorporation or Bylaws (or other similar governing 
documents), as currently in effect, of the Purchaser;

(4)  the Assumption Agreement and other instruments 
described in Section 1.05(b) are in proper form and are 
effective for Purchaser to assume the Assumed Liabilities; and

(5)  no declaration, filing or registration with, or 
notice to, or authorization, consent or approval of any 
governmental authority is necessary for the consummation by 
Purchaser of the Closing other than (i) the Purchaser Required 
Regulatory Approvals, all of which have been obtained and are 
Final Orders and (ii) such declarations, filings, 
registrations, notices, authorizations, consents or approvals 
which if not obtained would not prevent the payment by 
Purchaser of the Purchase Price.