MP Transferred Environmental Control Property Servicing Agreement


    Exhibit
      10.3

     

    EXECUTION
      COPY

     

    
      
        

      



     

    TRANSFERRED
      ENVIRONMENTAL CONTROL PROPERTY SERVICING AGREEMENT

     

    between

     

    MP
      ENVIRONMENTAL FUNDING LLC

     

    and

     

    MONONGAHELA
      POWER COMPANY

     

    Servicer

     

    Dated
      as
      of April 11, 2007

     

     

    
      
        

      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF CONTENTS

    

      
        	
                ARTICLE
                  I DEFINITIONS

              	 	 	
                1

              	 
	 	 	 	 	 
	
                SECTION
                  1.01 DEFINITIONS

              	 	 	
                1

              	 
	 	 	 	 	 
	
                ARTICLE
                  II APPOINTMENT AND AUTHORIZATION OF SERVICER

              	 	 	
                2

              	 
	 	 	 	 	 
	
                SECTION
                  2.01 APPOINTMENT OF SERVICER; ACCEPTANCE OF APPOINTMENT

              	 	 	
                2

              	 
	
                SECTION
                  2.02 AUTHORIZATION

              	 	 	
                2

              	 
	
                SECTION
                  2.03 DOMINION AND CONTROL OVER TRANSFERRED ENVIRONMENTAL CONTROL
                  PROPERTY

              	 	 	
                2

              	 
	 	 	 	 	 
	
                ARTICLE
                  III BILLING SERVICES

              	 	 	
                2

              	 
	 	 	 	 	 
	
                SECTION
                  3.01 DUTIES OF SERVICER.

              	 	 	
                2

              	 
	
                SECTION
                  3.02 COLLECTION OF ENVIRONMENTAL CONTROL CHARGES

              	 	 	
                3

              	 
	
                SECTION
                  3.03 SERVICING AND MAINTENANCE STANDARDS

              	 	 	
                4

              	 
	
                SECTION
                  3.04 MONTHLY AND QUARTERLY SERVICER’S CERTIFICATES

              	 	 	
                4

              	 
	
                SECTION
                  3.05 ANNUAL REPORTS ON SERVICING COMPLIANCE AND ATTESTATION, NOTICES
                  OF
                  SERVICER DEFAULTS

              	 	 	
                4

              	 
	
                SECTION
                  3.06 ANNUAL REPORT BY INDEPENDENT PUBLIC ACCOUNTANTS

              	 	 	
                5

              	 
	
                SECTION
                  3.07 ADDITIONAL SERVICER REPORTING REQUIREMENTS

              	 	 	
                5

              	 
	
                SECTION
                  3.08 TRANSFERRED ENVIRONMENTAL CONTROL PROPERTY
                  DOCUMENTATION

              	 	 	
                7

              	 
	
                SECTION
                  3.09 COMPUTER RECORDS; AUDITS OF DOCUMENTATION

              	 	 	
                7

              	 
	
                SECTION
                  3.10 DEFENDING TRANSFERRED ENVIRONMENTAL CONTROL PROPERTY AGAINST
                  CLAIMS

              	 	 	
                7

              	 
	
                SECTION
                  3.11 OPINIONS OF COUNSEL

              	 	 	
                8

              	 
	 	 	 	 	 
	
                ARTICLE
                  IV TRUE-UP ADJUSTMENTS

              	 	 	
                8

              	 
	 	 	 	 	 
	
                SECTION
                  4.01 ROUTINE TRUE-UP ADJUSTMENTS

              	 	 	
                8

              	 
	
                SECTION
                  4.02 NON-ROUTINE TRUE-UP ADJUSTMENTS

              	 	 	
                9

              	 
	 	 	 	 	 
	
                ARTICLE
                  V THE SERVICER

              	 	 	
                10

              	 
	 	 	 	 	 
	
                SECTION
                  5.01 REPRESENTATIONS AND WARRANTIES OF SERVICER

              	 	 	
                10

              	 
	
                SECTION
                  5.02 INDEMNITIES OF SERVICER; RELEASE OF CLAIMS

              	 	 	
                11

              	 
	
                SECTION
                  5.03 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
                  OF,
                  SERVICER

              	 	 	
                13

              	 
	
                SECTION
                  5.04 ASSIGNMENT OF SERVICER’S OBLIGATIONS

              	 	 	
                13

              	 
	
                SECTION
                  5.05 LIMITATION ON LIABILITY OF SERVICER AND OTHERS

              	 	 	
                14

              	 
	
                SECTION
                  5.06 MON POWER NOT TO RESIGN AS SERVICER

              	 	 	
                14

              	 
	
                SECTION
                  5.07 DEFENDING TRANSFERRED ENVIRONMENTAL CONTROL PROPERTY AGAINST
                  CLAIMS

              	 	 	
                14

              	 
	
                SECTION
                  5.08 SERVICING FEE

              	 	 	
                15

              	 
	
                SECTION
                  5.09 SERVICER ADVANCES

              	 	 	
                16

              	 
	
                SECTION
                  5.10 SUBSERVICING

              	 	 	
                16

              	 
	
                SECTION
                  5.11 REMITTANCES

              	 	 	
                16

              	 
	
                SECTION
                  5.12 PAYMENT DATE STATEMENTS

              	 	 	
                17

              	 
	
                SECTION
                  5.13 SCHEDULE REVISION DATE SCHEDULES

              	 	 	
                17

              	 
	
                SECTION
                  5.14 PROTECTION OF TITLE

              	 	 	
                17

              	 
	 	 	 	 	 
	
                ARTICLE
                  VI SERVICER DEFAULT

              	 	 	
                18

              	 
	 	 	 	 	 
	
                SECTION
                  6.01 SERVICER DEFAULT

              	 	 	
                18

              	 
	
                SECTION
                  6.02 NOTICE OF SERVICER DEFAULT

              	 	 	
                19

              	 
	
                SECTION
                  6.03 WAIVER OF PAST DEFAULTS

              	 	 	
                19

              	 
	
                SECTION
                  6.04 APPOINTMENT OF SUCCESSOR

              	 	 	
                20

              	 
	
                SECTION
                  6.05 COOPERATION WITH SUCCESSOR

              	 	 	
                20

              	 
	
                SECTION
                  6.06 SERVICER DEFAULT UNDER RELATED TRANSACTION

              	 	 	
                20

              	 


      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	
                ARTICLE
                  VII MISCELLANEOUS PROVISIONS

              	 	 	21	 
	
              	 	 	 	 
	
                SECTION
                  7.01 AMENDMENT

              	 	 	
                21

              	 
	
                SECTION
                  7.02 NOTICES

              	 	 	
                22

              	 
	
                SECTION
                  7.03 LIMITATIONS ON RIGHTS OF OTHERS

              	 	 	
                23

              	 
	
                SECTION
                  7.04 SEVERABILITY

              	 	 	
                23

              	 
	
                SECTION
                  7.05 SEPARATE COUNTERPARTS

              	 	 	
                23

              	 
	
                SECTION
                  7.06 HEADINGS

              	 	 	
                23

              	 
	
                SECTION
                  7.07 GOVERNING LAW

              	 	 	
                23

              	 
	
                SECTION
                  7.08 ASSIGNMENT TO INDENTURE TRUSTEE

              	 	 	
                23

              	 
	
                SECTION
                  7.09 NONPETITION COVENANTS

              	 	 	
                24

              	 
	
                SECTION
                  7.10 TERMINATION

              	 	 	
                24

              	 
	
                SECTION
                  7.11 LIMITATION OF LIABILITY

              	 	 	
                24

              	 


      

    

     

    


    EXHIBITS

     

    
      	EXHIBIT A	 	Servicing Obligations
	EXHIBIT B	 	Pending Litigation
	ANNEX 1	 	Form of Routine Adjustment Request
              
	ANNEX 2	 	Form of Monthly Servicer’s
              Certificate
	ANNEX 3	 	Form of Quarterly Servicer’s
              Certificate
	ANNEX 4	 	Form of Officer’s Certificate
	ANNEX 5	 	Form of Assessment of Servicing
              Criteria
	ANNEX 6	 	Form of Regulation AB Compliance
              Certification
	
            	 	
            
	APPENDIX A	 	Master
              Definitions


    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    TRANSFERRED
      ENVIRONMENTAL CONTROL PROPERTY SERVICING AGREEMENT dated as of April 11, 2007,
      between MP ENVIRONMENTAL FUNDING LLC, a Delaware limited liability company
      (the
“Issuer”),
      and
      MONONGAHELA POWER COMPANY (“Mon
      Power”),
      an
      Ohio corporation, doing business as Allegheny Power, as the servicer of the
      Transferred Environmental Control Property (together with each successor to
      Mon
      Power (in the same capacity) pursuant to Section 5.03
      or
6.04,
      the
“Servicer”).
      

     

    WHEREAS
      the Servicer is willing to service the Transferred Environmental Control
      Property purchased from the Seller by the Issuer from time to time in accordance
      with the Sale Agreement;

     

    WHEREAS
      the Issuer, in connection with ownership of the Transferred Environmental
      Control Property, desires to engage the Servicer to carry out the functions
      described herein;

     

    WHEREAS
      the PSCWV or its attorney will enforce this Agreement pursuant to the Financing
      Order for the benefit of the Customers to the extent permitted by applicable
      Requirements of Law; 

     

    WHEREAS
      the Environmental Control Bonds will not be “asset-backed securities” within the
      meaning of Regulation AB, but the Issuer nevertheless has committed to comply
      with all substantive ongoing periodic disclosure requirements that would apply
      under Regulation AB if the Environmental Control Bonds were “asset-backed
      securities”; and 

     

    NOW,
      THEREFORE, in consideration of the premises and the mutual covenants herein
      contained and intending to be legally bound hereby, the parties hereto agree
      as
      follows:

     

    ARTICLE
      I

     

    DEFINITIONS

     

    SECTION
      1.01 Definitions. 

     

    (a)  “Agreement”
means
      this Transferred Environmental Control Property Servicing Agreement, together
      with all Exhibits, Annexes and Appendices hereto, as the same may be amended,
      supplemented or otherwise modified from time to time.

     

    (b)  Capitalized
      terms used but not otherwise defined in this Agreement have the meanings
      assigned to them in Appendix A to this Agreement.

     

    (c)  Non-capitalized
      terms used in this Agreement which are defined in the Statute, as the context
      requires, have the meanings assigned to such terms in the Statute, but without
      giving effect to amendments to the Statute after the date hereof which have
      a
      material adverse effect on the Issuer or the Environmental Control
      Bondholders.

     

    (d)  All
      terms
      defined in this Agreement have the defined meanings when used in any certificate
      or document made or delivered pursuant hereto unless otherwise defined
      herein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (e)  The
      words
“hereof,”
      “herein,”
      “hereunder”
and
      words of similar import when used in this Agreement shall refer to this
      Agreement as a whole and not to any particular provision of this Agreement;
      Section, Annex, Schedule and Exhibit references contained in this Agreement
      are
      references to Sections, Annexes, Schedules and Exhibits in or to this Agreement
      unless otherwise specified; and the term “including”
shall
      mean “including
      without limitation.”

     

    (f)  The
      definitions contained in this Agreement are applicable to the singular as well
      as the plural forms of such terms and to the masculine as well as to the
      feminine and neuter genders of such terms.

     

    ARTICLE
      II

     

    APPOINTMENT
      AND AUTHORIZATION OF SERVICER

     

    SECTION
      2.01 Appointment
      of Servicer; Acceptance of Appointment.
      Subject
      to Section 5.04
      and
      Article VI, the Issuer hereby appoints the Servicer, and the Servicer hereby
      accepts such appointment, to perform the Servicer’s obligations pursuant to this
      Agreement on behalf of and for the benefit of the Issuer in accordance with
      the
      terms of this Agreement. This appointment and the Servicer’s acceptance thereof
      may not be revoked except in accordance with the express terms of this
      Agreement.

     

    SECTION
      2.02 Authorization.
      With
      respect to all or any portion of the Transferred Environmental Control Property,
      the Servicer shall be, and hereby is, authorized and empowered by the Issuer
      to
      (a) execute and deliver, on behalf of itself or the Issuer, as the case may
      be, any and all instruments, documents or notices, and (b) on behalf of
      itself or the Issuer, as the case may be, make any filing and participate in
      proceedings of any kind with any Governmental Authorities, including with the
      PSCWV. The Issuer shall furnish the Servicer with such documents as have been
      prepared by the Servicer for execution by the Issuer, and with the other
      documents as may be in the Issuer’s possession, as necessary or appropriate to
      enable the Servicer to carry out its duties hereunder. Upon the written request
      of the Servicer, the Issuer shall furnish the Servicer with any powers of
      attorney or other documents necessary or appropriate to enable the Servicer
      to
      carry out its duties hereunder.

     

    SECTION
      2.03 Dominion
      and Control Over Transferred Environmental Control Property.
      Notwithstanding any other provision herein, the Servicer and the Issuer agree
      that the Issuer shall have dominion and control over the Transferred
      Environmental Control Property. The Servicer hereby agrees that it shall not
      take any action that is not authorized by this Agreement or applicable
      Requirements of Law, that is not consistent with its customary procedures and
      practices, or that shall impair the rights of the Issuer in the Transferred
      Environmental Control Property, in each case unless such action is required
      by
      applicable Requirements of Law.

     

    ARTICLE
      III

     

    BILLING
      SERVICES

     

    SECTION
      3.01 Duties
      of Servicer.
      The
      Servicer shall have the following duties:

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (a)  Duties
      of Servicer Generally.
      The
      Servicer will manage, service, administer and make collections in respect of
      the
      Transferred Environmental Control Property. The Servicer’s duties will include
      (i) calculating and billing the Environmental Control Charges, collecting
      Environmental Control Charge Payments, and remitting all Environmental Control
      Charge Collections to the Indenture Trustee; (ii) responding to inquiries
      by Customers, Third Parties, the PSCWV, or any Governmental Authority with
      respect to the Transferred Environmental Control Property, including the
      Environmental Control Charges; (iii) accounting for Environmental Control
      Charge Collections, investigating delinquencies, processing and depositing
      collections and making periodic remittances, furnishing periodic reports to
      the
      Issuer, the Indenture Trustee, the PSCWV and the Rating Agencies;
      (iv) selling defaulted or written off accounts in accordance with the
      Servicer’s usual and customary practices; and (v) taking action in
      connection with True-Up Adjustments according to the procedures set forth herein
      and in Exhibit A hereto. Anything to the contrary notwithstanding, the duties
      of
      the Servicer set forth in this Agreement shall be qualified in their entirety
      by
      applicable Requirements of Law as may be in effect at the time such duties
      are
      to be performed. Without limiting the generality of this Section 3.01(a),
      in furtherance of the foregoing, the Servicer hereby agrees that it shall also
      have, and shall comply with, the duties and responsibilities relating to data
      acquisition, usage, demand and bill calculation, billing, customer service
      functions, collections, payment processing and remittance set forth in
      Exhibit A hereto.

     

    (b)  Notification
      of Laws and Regulations.
      The
      Servicer shall immediately notify the Issuer, the Indenture Trustee and the
      Rating Agencies in writing of Requirements of Law hereafter promulgated that
      have a material adverse effect on the Servicer’s ability to perform its duties
      under this Agreement.

     

    (c)  Other
      Information.
      Upon
      the reasonable request of the Issuer, the Indenture Trustee, the PSCWV or any
      Rating Agency, the Servicer shall provide to the Issuer, the Indenture Trustee
      or such Rating Agency, as the case may be, any public financial information
      in
      respect of the Servicer, or any material information regarding the Transferred
      Environmental Control Property to the extent it is reasonably available to
      the
      Servicer, as may be reasonably necessary and permitted by applicable
      Requirements of Law, for the Issuer, the Indenture Trustee, the PSCWV or such
      Rating Agency to monitor the performance by the Servicer hereunder. In addition,
      so long as any of the Environmental Control Bonds of any Series are Outstanding,
      the Servicer shall provide the Issuer, the Indenture Trustee and the PSCWV
      within a reasonable time after written request therefor, any information
      available to the Servicer or reasonably obtainable by it that is necessary
      to
      calculate the Environmental Control Charges applicable to each Rate
      Schedule.

     

    (d)  Preparation
      of Reports to be Filed with the Commission.
      The
      Servicer shall prepare or cause to be prepared any reports required to be filed
      by the Issuer under the securities laws, including without limitation, if so
      required, each Quarterly Servicer’s Certificate described in Section 3.04,
      the
      Officer’s Certificate of annual compliance described in Section 3.05,
      the
      Annual Accountant’s Report described in Section 3.06,
      and any
      certification required by Section 302
      of the
      Sarbanes-Oxley Act of 2002 and Item 601 of Regulation S-K under the Exchange
      Act.

     

    SECTION
      3.02 Collection
      of Environmental Control Charges. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (a)  The
      Servicer shall use all reasonable efforts consistent with its customary
      servicing procedures to collect all amounts owed in respect of Environmental
      Control Charges, as and when the same shall become due and shall follow such
      collection procedures as it follows with respect to collection activities that
      the Servicer conducts for itself or others. The Servicer shall not change the
      amount of or reschedule the due date of any scheduled payment of Environmental
      Control Charges, except as contemplated in this Agreement or as required by
      applicable Requirements of Law; provided, however, that the Servicer may take
      any of the foregoing actions to the extent that such action would be in
      accordance with customary billing and collection practices of the Servicer
      with
      respect to billing and collection activities that it conducts for
      itself.

     

    (b)  Upon
      a
      partial payment of amounts billed, including amounts billed under special
      contracts, such partial payments shall be allocated first to the Billed
      Environmental Control Charge, including any past-due Environmental Control
      Charges.

     

    SECTION
      3.03 Servicing
      and Maintenance Standards.
      The
      Servicer shall (a) manage, service, administer and make collections in
      respect of the Transferred Environmental Control Property with reasonable care
      and in material compliance with applicable Requirements of Law using the same
      degree of care and diligence that the Servicer exercises with respect to billing
      and collection activities that the Servicer conducts for itself and others;
      (b) follow standards, policies and procedures in performing its duties as
      Servicer that are customary in the Servicer’s industry; (c) use all
      reasonable efforts, consistent with its customary servicing procedures, to
      enforce and maintain rights in respect of the Transferred Environmental Control
      Property; and (d) calculate Environmental Control Charges in compliance
      with applicable Requirements of Law, except where the failure to comply with
      any
      of the foregoing would not have a material adverse affect on the Issuer’s or the
      Indenture Trustee’s interest in the Transferred Environmental Control Property.
      The Servicer shall follow such customary and usual practices and procedures
      as
      it shall deem necessary or advisable in its servicing of all or any portion
      of
      the Transferred Environmental Control Property, which, in the Servicer’s
      judgment, may include the taking of legal action pursuant to Section 3.09
      hereof
      or otherwise.

     

    SECTION
      3.04 Monthly
      and Quarterly Servicer’s Certificates.
      The
      Servicer will provide to the Issuer, the Indenture Trustee, the PSCWV and each
      of the Rating Agencies, so long as any Environmental Control Bonds of any Series
      are Outstanding, (a) not later than 15 days after the end of each month
      after the Environmental Control Bonds are issued (excluding April, 2007), or
      if
      such day is not a Business Day, the following Business Day, a written report
      substantially in the form of Annex 2 hereto (the “Monthly
      Servicer’s Certificate”);
      and
      (b) not later than 15 days following the end of each calendar quarter after
      the Environmental Control Bonds are issued, a written report substantially
      in
      the form of Annex 3
      hereto
      (the “Quarterly
      Servicer’s Certificate”). 

     

    SECTION
      3.05 Annual
      Reports on Servicing Compliance and Attestation, Notices of Servicer
      Defaults.

     

    (a)  On
      or
      before March 31 of each year beginning March 31, 2008, and including
      the March 31 following the Final Maturity Date of all Series of
      Environmental Control Bonds, the Servicer shall deliver: (i) to the Issuer,
      the Indenture Trustee, the PSCWV and each 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Rating
      Agency, an Officers’ Certificate substantially in the form of Annex 4
      attached
      hereto, stating that (A) a review of the activities of the Servicer during
      the preceding calendar year (or relevant portion thereof) and of its performance
      under this Agreement has been made under such officers’ supervision and
      (B) to the best of such officers’ knowledge, based on such review, the
      Servicer has complied with all its obligations under this Agreement in all
      material respects throughout such period or, if there has been a Servicer
      Default, or an act or omission, which with either the passage of time or the
      giving of notice, could become a Servicer Default, specifying each such event
      of
      default or act or omission known to such authorized officer and the nature
      and
      status thereof; (ii) to the Issuer and the PSCWV, a report regarding the
      Servicer’s assessment of compliance with the servicing criteria during the
      immediately preceding calendar year, as required under Rules 13a-18 and 15d-18
      of the Exchange Act and Item 1122 of Regulation AB. Such report shall be
      addressed to the Issuer and the PSCWV and signed by an authorized officer of
      the
      Servicer, and shall address each of the servicing criteria specified on a
      certification substantially in the form of Annex 5
      hereto
      delivered to the Issuer concurrently with the execution of this agreement;
      (iii) to the Issuer and the PSCWV, a report of a registered public
      accounting firm reasonably acceptable to the Issuer that attests to, and reports
      on, the assessment of compliance made by the Servicer and delivered pursuant
      to
      the preceding clause (ii), as described in Section 3.06
      hereof;
      and (iv) to the Issuer, the Administrator and any other person that will be
      responsible for signing the Regulation AB Compliance Certification, a
      certification in the form attached hereto as Annex 6,
      as
      required by Rules 13a-14(d) and 15d-14(d) under the Exchange Act (pursuant
      to
      Section 302 of the Sarbanes-Oxley Act of 2002) on behalf of the Issuer. The
      Servicer acknowledges that the parties identified in this clause (a)(iv) may
      rely on the certification provided by the Servicer pursuant to such clause
      in
      signing a Sarbanes Certification and filing such with the PSCWV. In addition,
      pursuant to Section 5.10,
      the
      Servicer shall cause each subservicer “participating in the servicing function”
within the meaning of Item 1122 of Regulation AB to deliver to the Issuer an
      assessment of compliance and accountants’ attestation as and when provided in
      clauses (ii) and (iii) of this paragraph.

     

    The
      requirements of clauses (ii) through (iv) above shall be applicable only so
      long
      as the Issuer is required to make such filings under the Exchange
      Act.

     

    (b)  Each
      assessment of compliance provided by a subservicer pursuant to Section 3.05(a)
      shall
      address each of the servicing criteria specified on a certification
      substantially in the form of Annex
      5
      hereto
      delivered to the Issuer concurrently with the execution of this Agreement by
      such subservicer or, in the case of a subservicer subsequently appointed as
      such, on or prior to the date of such appointment. An assessment of compliance
      provided by a subservicer pursuant to Section 3.05(a)
      need not
      address any elements of the servicing criteria other than those specified by
      the
      Servicer pursuant to Section 5.10.

     

    (c)  The
      Servicer shall deliver to the Issuer, the Indenture Trustee, the PSCWV and
      each
      Rating Agency, promptly after having obtained knowledge thereof, but in no
      event
      later than five Business Days thereafter, written notice in an Officers’
Certificate of any Servicer Default and any event which with the giving of
      notice or lapse of time, or both, would become a Servicer Default under
Section 6.01.

     

    SECTION
      3.06 Annual
      Report by Independent Public Accountants. 

     

    
      
        
        

      

      
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    (a)  Servicer
      shall cause a firm of independent certified public accountants (which may also
      provide other services to the Servicer, Mon Power or the Seller) to prepare,
      and
      the Servicer shall deliver to the Issuer, the Indenture Trustee, the PSCWV
      and
      each Rating Agency, on or before March 31 of each year, beginning
      March 31, 2008 to and including the March 31 following the Final
      Maturity Date of all Series of Environmental Control Bonds, a report addressed
      to the Servicer (the “Annual
      Accountant’s Report”),
      which
      may be included as part of the Servicer’s customary auditing activities, to the
      effect that such firm has performed certain procedures agreed to between the
      Servicer and such firm in connection with the Servicer’s compliance with its
      obligations under this Agreement during the preceding calendar year ended
      December 31 (or, in the case of the first Annual Accountant’s Report, the
      period of time from the Transfer Date until December 31, 2007), identifying
      the
      results of such procedures and including any exceptions noted. In addition,
      so
      long as the Issuer is required to make such filings under the Exchange Act,
      the
      Annual Accountant’s Report will include a report that attests to, and reports
      on, the assessment made by the Servicer as to its compliance with the servicing
      criteria set forth in (d) of Item 1122 of Regulation AB hereto and that such
      attestation of the assessment of compliance was in accordance with Rules
      1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the
      Exchange Act and was made in accordance with standards for attestation
      engagements issued or adopted by the Public Company Accounting Oversight Board.
      In
      the event that the accounting firm providing such report requires the Indenture
      Trustee to agree or consent to the procedures performed by such firm, the Issuer
      shall direct the Indenture Trustee in writing to so agree; it being understood
      and agreed that the Indenture Trustee will deliver such letter of agreement
      or
      consent in conclusive reliance upon the direction of the Issuer, and the
      Indenture Trustee will not make any independent inquiry or investigation as
      to,
      and shall have no obligation or liability in respect of the sufficiency,
      validity or correctness of, such procedures.

     

    (b)  The
      Annual Accountant’s Report shall also indicate that the accounting firm
      providing such report is Independent of the Servicer within the meaning of
      the
      Code of Professional Conduct of the American Institute of Certified Public
      Accountants or any superseding or amended standard adopted by the Public Company
      Accounting Oversight Board.

     

    SECTION
      3.07 Additional
      Servicer Reporting Requirements.
      The
      Servicer shall prepare, procure, deliver and/or file, or cause to be prepared,
      procured, delivered or filed, any reports, attestations, exhibits, certificates
      or other documents required to be delivered or filed with the SEC (and/or any
      other Governmental Authority) by the Issuer under the federal securities or
      other applicable laws or in accordance with the Basic Documents, including,
      but
      without limiting the generality of foregoing, filing with the SEC, if
      applicable, a copy or copies of (i) the Monthly Servicer’s Certificates
      described in Section
      3.04
      (under
      Form 10-D or any other applicable form), (ii) the Payment Date Statements
      described in Section 3 of Exhibit A hereto (under Form 10-D or any other
      applicable form), (iii) the annual statements of compliance, attestation reports
      and other certificates described in Section
      3.05,
      and
      (iv) the Annual Accountant’s Report (and any attestation required under
      Regulation AB) described in Section
      3.06.
      In
      addition, the appropriate officer or officers of the Servicer shall (in its
      separate capacity as Servicer) sign the Sponsor’s annual report on Form 10-K
      (and any other applicable SEC or other reports, attestations, certifications
      and
      other documents), to the extent that the Servicer’s signature is required by,
      and consistent with, the federal securities law and/or any other applicable
      law.

     

    
      
        
        

      

      
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      SECTION
        3.08 Environmental
        Control Property Documentation.
        To
        assure uniform quality in servicing the Transferred Environmental Control
        Property and to reduce administrative costs, the Servicer shall keep on file,
        in
        accordance with its customary procedures, all Environmental Control Property
        Documentation.

       

      SECTION
        3.09 Computer
        Records; Audits of Documentation. 

    

     

    (a)  Safekeeping.
      The
      Servicer shall maintain accurate and complete accounts, records and computer
      systems pertaining to the Transferred Environmental Control Property and the
      Transferred Environmental Control Property Documentation in accordance with
      its
      standard accounting procedures and in sufficient detail to permit the Annual
      Reconciliation between Estimated Environmental Control Charge Collections and
      Actual Environmental Control Charge Collections in accordance with Section
      5.11
      and to
      enable the Issuer to comply with this Agreement and the Indenture. The Servicer
      shall conduct, or cause to be conducted, periodic audits of the Transferred
      Environmental Control Property Documentation held by it under this Agreement
      and
      of the related accounts, records and computer systems, in such a manner as
      shall
      enable the Issuer and the Indenture Trustee, as pledgee of the Issuer, to verify
      the accuracy of the Servicer’s record keeping. The Servicer shall promptly
      report to the Issuer, the PSCWV and the Indenture Trustee any failure on the
      Servicer’s part to hold the Transferred Environmental Control Property
      Documentation and maintain its accounts, records and computer systems as herein
      provided and promptly take appropriate action to remedy any such failure.
      Nothing herein shall be deemed to require an initial review or any periodic
      review by the Issuer or the Indenture Trustee of the Transferred Environmental
      Control Property Documentation.

     

    (b)  Maintenance
      of and Access to Records.
      The
      Servicer shall maintain the Transferred Environmental Control Property
      Documentation at 1310 Fairmont Avenue, Fairmont, West Virginia  26554
      or at such other office as shall be specified to the Issuer, the Indenture
      Trustee and the PSCWV by written notice not later than 30 days prior to any
      change in location. The Servicer shall permit the Issuer, the Indenture Trustee
      and the PSCWV or their respective duly authorized representatives, attorneys,
      agents or auditors at any time during normal business hours as the Issuer,
      the
      Indenture Trustee or the PSCWV shall reasonably request to inspect, audit and
      make copies of and abstracts from the Servicer’s records regarding the
      Transferred Environmental Control Property, including the Environmental Control
      Charges and the Transferred Environmental Control Property Documentation. The
      failure of the Servicer to provide access to such information as a result of
      an
      obligation or applicable Requirements of Law prohibiting disclosure of
      information regarding customers shall not constitute a breach of this
Section 3.09(b).

     

    SECTION
      3.10 Defending
      Transferred Environmental Control Property Against Claims.
      The
      Servicer, on behalf of the Environmental Control Bondholders, shall institute
      any action or proceeding necessary to compel performance by the PSCWV or the
      State of West Virginia of any of their obligations or duties under the Statute
      or the Financing Order with respect to the Transferred Environmental Control
      Property. The costs of any such action shall be payable from the Collection
      Account as an Operating Expense in accordance with the priorities set forth
      in
Section 8.02(e)
      of the
      Indenture at the time such costs are incurred. The Servicer’s obligations
      pursuant to this Section 3.10
      shall
      survive and continue notwithstanding the fact that the payment of Operating
      Expenses pursuant to the priorities set forth in Section 8.02(e)
      of the
      Indenture may 

     

    
      
        
        

      

      
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    be
      delayed (it being understood that the Servicer
      shall not be required to advance its own funds to satisfy its obligations
      hereunder).
       

      SECTION
        3.11 Opinions
        of Counsel.
        With
        respect to each series of Environmental Control Bonds, the Servicer shall
        deliver to the Issuer, the PSCWV and the Indenture Trustee:

    

     

    (a)  promptly
      after the execution and delivery of this Agreement and of each amendment hereto,
      promptly after the execution of the Sale Agreement and of each amendment
      thereto, promptly after the execution of the Transfer Agreement and of each
      amendment thereto, and on the Transfer Date, an Opinion of Counsel either
      (i) to the effect that, in the opinion of such counsel, all filings,
      including filings with the PSCWV pursuant to the Statute, that are necessary
      to
      fully preserve and protect the interests of the applicable Indenture Trustee
      in
      the Transferred Environmental Control Property have been executed and filed,
      and
      reciting the details of such filings or referring to prior Opinions of Counsel
      in which such details are given, or (ii) to the effect that, in the opinion
      of such counsel, no such action shall be necessary to preserve and protect
      such
      interest; and

     

    (b)  within
      90
      days after the beginning of each calendar year beginning with the first calendar
      year beginning more than three months after the Transfer Date, an Opinion of
      Counsel, dated as of a date during such 90-day period, either (i) to the
      effect that, in the opinion of such counsel, all filings with the PSCWV pursuant
      to the Statute, have been executed and filed that are necessary to preserve
      fully and protect fully the interest of the applicable Indenture Trustee in
      the
      Transferred Environmental Control Property, and reciting the details of such
      filings or referring to prior Opinions of Counsel in which such details are
      given, or (ii) to the effect that, in the opinion of such counsel, no such
      action shall be necessary to preserve and protect such interest.

     

    Each
      Opinion of Counsel referred to in clause (a) or (b) above shall specify any
      action necessary (as of the date of such opinion) to be taken in the following
      year to preserve and protect such interest.

     

    ARTICLE
      IV

     

    TRUE-UP
      ADJUSTMENTS

     

    SECTION
      4.01 Routine
      True-Up Adjustments.

     

    (a)  With
      respect to each series of Environmental Control Bonds, the Servicer shall file
      a
      True-Up Adjustment Filing with the PSCWV at the following times: (i) at
      least 15 days prior to each Semi-Annual True-Up Adjustment Date; and
      (ii) at least 15 days prior to each Quarterly True-Up Adjustment Date
      and each Monthly True-Up Adjustment Date.

     

    (b)  For
      the
      purpose of filing any Semi-Annual True-Up Adjustment Filing, the Servicer shall
      (i) update assumptions of projected future usage and demand of electricity
      by Customers, expected delinquencies and Write-offs and future expenses relating
      to Transferred Environmental Control Property and the Environmental Control
      Bonds; (ii) calculate the Periodic Bond Payment Requirement based upon such
      updated assumptions; and (iii) determine 

     

    
      
        
        

      

      
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    the
      Environmental Control Charge to be charged on and
      after the applicable True-Up Adjustment Date.
       

      (c)  Each
        True-Up Adjustment Filing shall be substantially in the form of Annex 1 to
        this
        Servicing Agreement.

    

     

    (d)  The
      Servicer shall (i) take all reasonable actions and make all reasonable
      efforts in order to effectuate any Routine True-Up Adjustment to the
      Environmental Control Charge and (ii) promptly send to the Indenture
      Trustee copies of all material notices and documents relating to such Routine
      True-Up Adjustment.

     

    (e)  On
      the
      same date that the Servicer files any True-Up Adjustment Filing with the PSCWV,
      if the Routine True-Up Adjustment is intended to result in an increase in the
      amount of the Environmental Control Charge, the Servicer shall give public
      notice through the publication of a Class I legal advertisement in Kanawha
      County, will respond to any comments to such publication and will attend any
      hearing held in connection with any such True-Up Adjustment Filing.


     

    SECTION
      4.02 Non-Routine
      True-Up Adjustments. 

     

    (a)  Whenever
      the Servicer determines that the existing True-Up Mechanism should be amended
      or
      revised to more accurately project and generate adequate collections of
      Environmental Control Charge Payments, the Servicer shall file a Non-Routine
      True-Up Adjustment Filing with the PSCWV designating the adjustments to such
      True-Up Mechanism and any corresponding adjustments to the Environmental Control
      Charges, subject to the review and approval of the PSCWV pursuant to the
      Financing Order, and the Servicer shall notify the Rating Agencies as promptly
      as possible of the filing of any such Non-Routine True-Up Adjustment Filing.
      Subject to clause (c) below, the Servicer shall also file for a Non-Routine
      True-Up Adjustment Filing at the direction of the PSCWV.

     

    (b)  The
      Servicer shall take all reasonable actions and make all reasonable efforts
      to
      secure any Non-Routine True-Up Adjustments. 

     

    (c)  The
      Servicer shall implement any resulting adjustments to the True-Up Mechanism
      and
      any resulting revised Environmental Control Charges as of the effective date
      of
      the Non-Routine True-Up Adjustment Filing. If any Non-Routine True-Up Adjustment
      Filing is denied by the PSCWV, the Servicer shall notify the Issuer, the
      Indenture Trustee and the Rating Agencies (not later than five days after the
      Servicer’s receipt of the PSCWV’s order denying such Non-Routine True-Up
      Adjustment Filing). 

     

    (d)  The
      Servicer shall notify the Issuer, the Indenture Trustee and the Rating Agencies
      of any request for a Non-Routine True-Up Adjustment initiated by the PSCWV
      within five days of receipt of such request and shall take all necessary actions
      to prevent the implementation of such an adjustment if it would violate the
      State Pledge.

     

    
      
        
        

      

      
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      ARTICLE
        V

       

      THE
        SERVICER

       

      SECTION
        5.01 Representations
        and Warranties of Servicer.
        The
        Servicer makes the following representations and warranties as of the Transfer
        Date, on which the Issuer and the PSCWV (on behalf of the Customers) has
        relied
        and will rely in acquiring the Transferred Environmental Control Property.
        The
        representations and warranties shall survive the sale of 

       

    

     

     

    any
      of the Transferred Environmental Control Property
      to the Issuer and the pledge thereof to the Indenture Trustee pursuant to the
      Indenture.

     

    (a)  Organization
      and Good Standing.
      The
      Servicer is a corporation duly organized, validly existing and in good standing
      under the laws of the state of its incorporation, with the corporate power
      and
      authority to own its properties and to conduct its business as such properties
      are currently owned and such business is presently conducted, and has the power,
      authority and legal right to service the Transferred Environmental Control
      Property.

     

    (b)  Due
      Qualification.
      The
      Servicer is duly qualified to do business as a foreign corporation in good
      standing or equivalent status, and has obtained all necessary licenses and
      approvals in, all foreign jurisdictions in which the ownership or lease of
      property or the conduct of its business (including the servicing of the
      Transferred Environmental Control Property as required by this Agreement)
      requires such qualifications, licenses or approvals (except where the failure
      to
      so qualify or obtain such licenses and approvals would not be reasonably likely
      to have a material adverse effect on the Servicer’s business, operations,
      assets, revenues, properties or prospects or materially and adversely affect
      the
      servicing of the Transferred Environmental Control Property).

     

    (c)  Power
      and Authority.
      The
      Servicer has the corporate power and authority to execute and deliver this
      Agreement and to carry out its terms; and the execution, delivery and
      performance of this Agreement have been duly authorized by the Servicer by
      all
      necessary corporate action.

     

    (d)  Binding
      Obligation.
      This
      Agreement constitutes a legal, valid and binding obligation of the Servicer
      enforceable against the Servicer in accordance with its terms subject to
      bankruptcy, receivership, insolvency, fraudulent transfer, reorganization,
      moratorium or other laws affecting creditors’ rights generally from time to time
      in effect and to general principles of equity (regardless of whether considered
      in a proceeding in equity or at law).

     

    (e)  No
      Violation.
      The
      consummation of the transactions contemplated by this Agreement and the
      fulfillment of the terms hereof shall not conflict with, result in any breach
      of
      any of the terms and provisions of, nor constitute (with or without notice
      or
      lapse of time) a default under, the articles of incorporation or by-laws of
      the
      Servicer, or any other material indenture, agreement or other instrument to
      which the Servicer is a party or by which it shall be bound; nor result in
      the
      creation or imposition of any Lien upon any of its properties pursuant to the
      terms of any such indenture, agreement or other instrument (except as
      contemplated in the Indenture and as set forth in the Sale Agreement); nor
      violate any law or any order, rule or regulation applicable to the Servicer
      of
      any court or of any federal or state regulatory body, 

     

    
      
        
        

      

      
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    administrative
      agency or other governmental
      instrumentality having jurisdiction over the Servicer or its properties.
       

      (f)  Approvals.
        Except
        for filings with the PSCWV for revised Environmental Control Charges, pursuant
        to Article IV and Annex 1 hereto and the filing of financing statements or
        continuation statements under the UCC, no approval, authorization, consent,
        order or other action of, or filing with, any court, federal or state regulatory
        body, administrative agency or other governmental instrumentality is required
        in
        connection with the execution and delivery by the Servicer
        of this Agreement, the performance by the Servicer of the transactions
        contemplated hereby or the fulfillment by the Servicer of the terms hereof,
        except those that have been obtained or made.

    

     

    (g)  No
      Proceedings.
      Except
      as described in Exhibit B, to the Servicer’s knowledge, there are no proceedings
      or investigations pending or, to the Servicer’s best knowledge, threatened
      before any court, federal or state regulatory body, administrative agency or
      other governmental instrumentality having jurisdiction over the Servicer or
      its
      properties: (i) seeking to prevent issuance of the bonds or the
      consummation of the transactions contemplated by this Agreement, any other
      Basic
      Document or, if applicable, any Additional Indenture or subsequent sale
      agreement, (ii) seeking any determination or ruling that might materially and
      adversely affect the performance by the Servicer of its obligations under,
      or
      the validity or enforceability against the Servicer of, this Agreement, any
      other Basic Document or, if applicable, any Additional Indenture or subsequent
      sale agreement, or (iii) relating to the Servicer and which might have a
      material adverse affect on the federal or state income, gross receipts or
      franchise tax attributes of the Environmental Control Bonds.

     

    (h)  Reports
      and Certificates.
      Each
      report and certificate delivered in connection with any filing made to the
      PSCWV
      by the Servicer on behalf of the Issuer with respect to Environmental Control
      Charges or True-Up Adjustments will constitute a representation and warranty
      by
      the Servicer that each such report or certificate, as the case may be, is true
      and correct in all material respects; provided, however, that to the extent
      any
      such report or certificate is based in part upon or contains assumptions,
      forecasts or other predictions of future events, the representation and warranty
      of the Servicer with respect thereto will be limited to the representation
      and
      warranty that such assumptions, forecasts or other predictions of future events
      are reasonable based upon historical performance and the facts known to the
      Servicer on the date such report or certificate is delivered.

     

    SECTION
      5.02 Indemnities
      of Servicer; Release of Claims. 

     

    (a)  The
      Servicer shall be liable in accordance herewith only to the extent of the
      obligations specifically undertaken by the Servicer under this
      Agreement.

     

    (b)  The
      Servicer shall indemnify the Issuer and the Indenture Trustee, for itself and
      on
      behalf of the Environmental Control Bondholders for which it acts as Indenture
      Trustee, and each of their respective managers, members, officers, directors,
      employees and agents for, and defend and hold harmless each such Person from
      and
      against, any and all Losses that may be imposed upon, incurred by or asserted
      against any such Person as a result of (i) the Servicer’s willful
      misconduct, bad faith or negligence in the performance of its duties under
      this


     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    Agreement
      or (ii) the Servicer’s material breach
      of any of its obligations, duties, representations or warranties that results
      in
      a Servicer Default under this Agreement and (iii) litigation and related
      expenses relating to its status and obligations as Servicer.
       

      The
        Servicer shall not be liable for any Losses resulting from the willful
        misconduct, bad faith or negligence of any Person indemnified pursuant to
        this
Section 5.02
        (each,
        an “Indemnified
        Party”)
        or
        resulting from a breach of a representation or warranty made by such Indemnified
        Party in any of the Basic Documents that gives rise to the Servicer’s breach.
        The Environmental Control Bondholders shall be entitled
        to
        enforce their rights and remedies against the Servicer under this Section 5.02
        solely
        through a case of action brought for their benefit by the Indenture Trustee.
        The
        Servicer’s indemnification under this Section 5.02(b)
        shall
        survive the termination of this Agreement, and any amounts paid with respect
        thereto shall be remitted and deposited with the Indenture Trustee for deposit
        into the Collection Account

    

     

    (c)  The
      Servicer shall indemnify the PSCWV, on behalf of the Customers, for any Losses
      they incur by reason of the Servicer’s willful misconduct, bad faith or
      negligence including without limitation Losses attributable to higher
      Environmental Control Charges imposed on customers by reason of additional
      Operating Expenses, for example the Issuer’s higher Servicing Fees payable to a
      Successor Servicer. The PSCWV shall be entitled to enforce Section 5.02(c)
      for the
      benefit of Customers, and Customers may not enforce this indemnity. The
      Servicer’s indemnification under this Section 5.02(c)
      shall
      survive the termination of this Agreement, and any amounts paid with respect
      thereto shall be remitted and deposited with the Indenture Trustee for deposit
      into the Collection Account, unless otherwise directed by the PSCWV.


     

    (d)  The
      Servicer shall indemnify the Indenture Trustee and its officers, directors
      and
      agents for, and defend and hold harmless each such Person from and against,
      any
      and all Losses that may be imposed upon, incurred by or asserted against any
      such Person as a result of the acceptance or performance of the trusts and
      duties contained herein and in the other Basic Documents to which the Indenture
      Trustee is a party, except to the extent that any such Loss shall be due to
      the
      willful misconduct, bad faith or negligence of the Indenture Trustee. The
      foregoing indemnity is extended to the Indenture Trustee solely in its
      individual capacity and not for the benefit of the Environmental Control
      Bondholders or any other Person. Such amounts shall be deposited and distributed
      in accordance with the Indenture.

     

    (e)  The
      Servicer’s indemnification obligations under Sections
      5.02(b),(c)
      and
(d)
      for
      events occurring prior to the removal or resignation of the Indenture Trustee,
      or the termination of this Agreement with respect to the Issuer, shall survive
      the resignation or removal of the Indenture Trustee or the termination of this
      Agreement with respect to the Issuer, and shall include reasonable costs, fees
      and expenses of investigation and litigation (including the Issuer’s and the
      Indenture Trustee’s reasonable attorneys’ fees and expenses).

     

    (f)  Except
      to
      the extent expressly provided for in this Agreement or the other Basic Documents
      (including the Servicer’s claims with respect to the Servicing Fees and the
      Seller’s claim for payment of the purchase price of the Transferred
      Environmental Control Property), the Servicer hereby releases and discharges
      the
      Issuer (including its respective managers, members, officers, directors and
      agents, if any) and the Indenture Trustee (including 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    its
      officers, directors and agents) (collectively,
      the “Released
      Parties”)
      from
      any and all actions, claims and demands whatsoever, which the Servicer, in
      its
      capacity as Servicer, shall or may have against any such Person relating to
      the
      Transferred Environmental Control Property or the Servicer’s activities with
      respect thereto other than any actions, claims and demands arising out of the
      willful misconduct, bad faith or negligence of the Released
      Parties.
       

      (g)  If
        any
        action, claim, demand or proceeding (including any governmental investigation)
        shall be brought or asserted against an Indemnified Party entitled to any
        indemnification provided for under this Section 5.02,
        such
        Indemnified Party shall promptly notify the Servicer in writing; provided,
        however, that failure to give such notification shall not affect the
        indemnification provided hereunder except to the extent the Servicer shall
        have
        been actually prejudiced as a result of such failure.

    

     

    SECTION
      5.03 Merger
      or Consolidation of, or Assumption of the Obligations of,
      Servicer.
      Any
      Person (a) into which the Servicer may be merged or consolidated and which
      succeeds to any material part of the electric distribution business of the
      Servicer, (b) which results from the division of the Servicer into two or
      more Persons and which succeeds to any material part of the electric
      distribution business of the Servicer, (c) which may result from any merger
      or consolidation to which the Servicer shall be a party and which succeeds
      to
      any material part of the electric distribution business of the Servicer,
      (d) which may succeed to the properties and assets of the Servicer
      substantially as a whole and which succeeds to any material part of the electric
      distribution business of the Servicer or (e) which may otherwise succeed to
      any material part of the electric distribution business of the Servicer, which
      Person in any of the foregoing cases executes an agreement of assumption to
      perform every obligation of the Servicer hereunder, shall be the successor
      to
      the Servicer under this Agreement without further act on the part of any of
      the
      parties to this Agreement; provided, however, that (i) immediately after
      giving effect to such transaction, no representation and warranty made pursuant
      to Section 5.01
      shall
      have been breached and no Servicer Default, and no event which, after notice
      or
      lapse of time, or both, would become a Servicer Default, shall have occurred
      and
      be continuing, (ii) the Servicer shall have delivered to the Issuer, the
      PSCWV and the Indenture Trustee an Officers’ Certificate and an Opinion of
      Counsel stating that such consolidation, merger or succession and such agreement
      of assumption comply with this Section 5.03
      and that
      all conditions precedent provided for in this Agreement relating to such
      transaction have been complied with, (iii) the Rating Agencies shall have
      received prior written notice of such transaction, (iv) the Servicer shall
      have delivered to the Issuer, the Indenture Trustee, the PSCWV and each Rating
      Agency an Opinion of Counsel either stating that, in the opinion of such
      counsel, (A) all filings, including filings with the PSCWV pursuant to the
      Statute, have been executed and filed that are necessary to preserve fully
      and
      protect fully the interests of the Issuer in the Transferred Environmental
      Control Property and reciting the details of such filings or (B) no such
      action shall be necessary to preserve and protect such interests.
      Notwithstanding anything herein to the contrary, the execution of the above
      referenced agreement of assumption and compliance with clauses (i), (ii), (iii)
      and (iv) above shall be conditions precedent to the consummation of the
      transactions referred to in clause (a), (b), (c), (d) or (e) above.

     

    SECTION
      5.04 Assignment
      of Servicer’s Obligations.
      The
      Servicer may not assign its obligations hereunder to any successor unless either
      (i) the Rating Agency Condition has been 

     

    
      
        
        

      

      
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    satisfied
      and the PSCWV has approved such assignment,
      or (ii) the Servicer is replaced by a Successor Servicer pursuant to Section 6.04.
       

      SECTION
        5.05 Limitation
        on Liability of Servicer and Others. 

       

      (a)  Neither
        the Servicer nor any of its directors, officers, employees or agents shall
        be
        liable to the Issuer or its managers, the Indenture Trustee, the Environmental
        Control Bondholders, the PSCWV or any other Person, except as provided under
        this Agreement, for any action taken or for refraining from the taking of
        any
        action pursuant to this Agreement or for errors in judgment;
        provided, however, that this provision shall not protect either the Servicer
        or
        any other Person against any liability that would otherwise be imposed by
        reason
        of willful misconduct, bad faith or negligence in the performance of its
        duties
        or by reason of reckless disregard of obligations and duties under this
        Agreement and provided further that nothing in this Section 5.05
        shall
        limit the Servicer’s liabilities or obligations of the Servicer to indemnify as
        set forth in Section 5.02
        of this
        Agreement. The Servicer and any of its directors, officers, employees or
        agents
        may rely in good faith on the advice of counsel reasonably acceptable to
        the
        Indenture Trustee or on any document of any kind, prima facie properly executed
        and submitted by any Person, respecting any matters arising under this
        Agreement.

    

     

    (b)  The
      Servicer acknowledges that the PSCWV has authority to enforce all provisions
      of
      this Agreement for the benefit of Customers, including without limitation the
      enforcement of Section
      5.02(c),
      provided that such enforcement is consistent with the State Pledge.


     

    (c)  Except
      as
      provided in this Agreement, the Servicer shall not be under any obligation
      to
      appear in, prosecute or defend any legal action that is not incidental to its
      duties to service the Transferred Environmental Control Property in accordance
      with this Agreement or related to its obligation to pay indemnification, and
      that in its reasonable opinion may cause it to incur any expense or
      liability.

     

    SECTION
      5.06 Mon
      Power Not To Resign as Servicer.
      Subject
      to the provisions of Sections
      5.03
      and
5.04,
      Mon
      Power shall not resign from the obligations and duties hereby imposed on it
      as
      Servicer under this Agreement except upon a determination that the performance
      of its duties under this Agreement shall no longer be permissible under
      applicable Requirements of Law. Notice of any such determination permitting
      the
      resignation of Mon Power shall be communicated to the Issuer, the PSCWV, the
      Indenture Trustee and each Rating Agency at the earliest practicable time (and,
      if such communication is not in writing, shall be confirmed in writing at the
      earliest practicable time), and any such determination shall be evidenced by
      an
      Opinion of Counsel to such effect delivered to the Issuer, the PSCWV and the
      Indenture Trustee concurrently with or promptly after such notice. No such
      resignation shall become effective until a Successor Servicer has been approved
      by the PSCWV and shall have assumed the servicing obligations and duties
      hereunder of Mon Power in accordance with Section 6.04.

     

    SECTION
      5.07 Defending
      Transferred Environmental Control Property Against Claims.
      The
      Servicer shall institute any action or proceeding necessary to compel
      performance by each Third Party (at the earliest possible time) of any of their
      respective obligations or duties under  

     

    
      
        
        

      

      
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    applicable
      Requirements of Law with respect to the
      Transferred Environmental Control Property. In addition, the Servicer shall
      institute any action or proceeding necessary to compel performance by the PSCWV
      or the State of West Virginia, or any political subdivision, agency or other
      instrumentality of the State of West Virginia, of any of their respective
      obligations or duties under applicable Requirements of Law with respect to
      the
      Transferred Environmental Control Property. The Servicer further agrees to
      take
      such legal or administrative actions, including without limitation defending
      against or instituting and pursuing legal actions and appearing or testifying
      at
      hearings or similar proceedings, as may be reasonably necessary to block or
      overturn any attempts to cause a repeal of, modification of or supplement to
      the
      Statute or any Financing Order.  In any of the
      aforementioned actions or proceedings, the
      Servicer shall not be required to advance its own funds to institute any such
      actions or proceedings and the Servicer’s obligations pursuant to this
Section
      5.07
      shall
      continue for only so long as the Servicer is being reimbursed on a current
      basis
      for its costs and expenses incurred in undertaking such obligations. In any
      proceedings related to the exercise of the power of eminent domain by any
      municipality to acquire a portion of Mon Power’s electric distribution
      facilities, the Servicer shall assert that the court ordering such condemnation
      must treat such municipality as a successor to Mon Power under the Statute
      and
      Financing Order. The costs and expenses of any action described in this
Section
      5.07
      shall be
      payable from the Collection Account as an Operating Expense in accordance with
      Section
      8.02(e)
      of the
      Indenture.

     

    SECTION
      5.08 Servicing
      Fee.

     

    (a)  Issuer
      agrees to pay the Servicer, solely to the extent amounts are available therefor
      in accordance with the Indenture, the Servicing Fee with respect to all Series
      of Environmental Control Bonds issued by the Issuer. The Servicing Fee with
      respect to a Series for a Payment Date shall be as follows: so long as Mon
      Power
      acts as the Servicer, the Servicing Fee will be 0.05% per annum of the initial
      principal balance of the Environmental Control Bonds, payable semi-annually,
      in
      arrears; if a Successor Servicer is appointed, the Servicing Fee will be based
      on an amount approved by the PSCWV, but not in excess of a per annum rate equal
      to 1.25% of the initial principal balance of the Environmental Control Bonds.
      

     

    (b)  The
      Servicing Fee set forth in Section 5.08(a)
      above
      and the expenses provided for in Section 5.08(c)
      below
      shall be paid to the Servicer by the Indenture Trustee, on each Payment Date
      in
      accordance with the priorities set forth in Section 8.02(e) of the
      Indenture, by wire transfer of immediately available funds from the Collection
      Account to an account designated by the Servicer. Any portion of the Servicing
      Fee not paid on such date shall be added to the Servicing Fee payable on the
      subsequent Payment Date.

     

    (c)  The
      Issuer shall pay all expenses incurred by the Servicer in connection with its
      activities hereunder (including any fees to and disbursements by accountants,
      counsel, or any other Person, any taxes imposed on the Servicer (other than
      taxes based on the Servicer’s net income) and any expenses incurred in
      connection with reports to Environmental Control Bondholders, subject to the
      priorities set forth in Section 8.02(e) of the Indenture). Except for
      filing fees and fees and expenses for attorneys, accountants, printing or other
      professional services retained by the Issuer, (or procured by the Servicer
      on
      behalf of the Issuer) to meet the Issuer’s obligations under the Basic
      Documents, the Servicer shall be required to pay all expenses incurred by the
      Servicer in performing its activities hereunder from the Servicer’s own


     

    
      
        
        

      

      
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    resources,
      without additional reimbursement as
      Operating Expenses in accordance with Section 8.02(e) of the Indenture. 
       

      SECTION
        5.09 Servicer
        Advances.
        The
        Servicer shall not make any advances of interest on or principal of any series
        of the Bonds.

       

      SECTION
        5.10 Subservicing.
        The
        Servicer may at any time appoint a subservicer to perform all or any portion
        of
        its obligations as Servicer hereunder; provided, however, that the Servicer
        shall not permit any Third Party to bill or collect Environmental Control
        Charges on behalf of the Issuer except (a) as a subcontractor under
        the active supervision of the Servicer or (b) as required by applicable
        Requirement of Law and to the extent permitted by applicable Requirement
        of Law
        or regulation, after written notice of such appointment is furnished to the
        Rating Agencies; provided further, however, that the Servicer shall remain
        obligated and be liable to the Issuer, the Indenture Trustee, and the
        Environmental Control Bondholders and the PSCWV for the servicing and
        administering of the Transferred Environmental Control Property in accordance
        with the provisions hereof without diminution of such obligation and liability
        by virtue of the appointment of such subservicer and to the same extent and
        under the same terms and conditions as if the Servicer alone were servicing
        and
        administering the Transferred Environmental Control Property. The fees and
        expenses of the subservicer shall be as agreed between the Servicer and its
        subservicer from time to time, and none of the Issuer (or its members or
        managers), the Indenture Trustee, any Environmental Control Bondholder or
        the
        PSCWV shall have any responsibility therefor.

    

     

    SECTION
      5.11 Remittances. 

     

    (a)  Subject
      to Section 5.11(b),
      the
      Servicer shall remit daily all Estimated Environmental Control Charge
      Collections (from whatever source) and all proceeds of other Collateral of
      the
      Issuer, if any, received by the Servicer to the Indenture Trustee under the
      Indenture, for deposit pursuant to the Indenture.

     

    (b)  Notwithstanding
      the foregoing clause (a), as long as (i) Mon Power or any successor to Mon
      Power’s electric distribution business remains the Servicer, (ii) no
      Servicer Default has occurred and is continuing and (iii) (A) Mon
      Power or such successor maintains a long-term rating of “A+” or better by
      Standard & Poor’s, a long-term rating of “A2” or better by Moody’s and
      a long-term rating of “A” or better by Fitch, if rated by Fitch, or a short-term
      rating of “A-1” by Standard & Poor’s, a short-term rating of “P-1” by
      Moody’s and a short-term rating of “F1” by Fitch, if rated by Fitch or
      (B) the Rating Agency Condition shall have been satisfied with respect to
      all Rating Agencies (to which prior written notice will be sent) (and any
      conditions or limitations imposed by such Rating Agencies in connection
      therewith are complied with), the Servicer need not make the daily remittances
      required by such clause (a), but in lieu thereof, shall remit all Estimated
      Environmental Control Charge Collections (from whatever source) and all proceeds
      of other Collateral of such Issuer, if any, received by the Servicer during
      any
      Collection Period to the Indenture Trustee, for deposit pursuant to the
      Indenture, not later than the Business Day immediately preceding the 25th day
      of
      each month. 

     

    (c)  On
      or
      before each Remittance Date where the Servicer is not remitting a fixed sum
      on
      each date during the Billing Period, the Servicer will prepare and furnish
      to
      the 

     

    
      
        
        

      

      
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    Issuer
      and the Indenture Trustee a statement setting
      forth the aggregate amount remitted or to be remitted by the Servicer to the
      Indenture Trustee for deposit on such Remittance Date pursuant to this Section 5.11
      and the
      Indenture.
       

      (d)  On
        or
        before each Reconciliation Date, the Servicer will reconcile Actual
        Environmental Control Charge Collections with Estimated Environmental Control
        Charge Collections in respect of the immediately preceding Reconciliation
        Period. The Servicer shall calculate the amount of any Remittance Shortfall
        or
        Excess Remittance for the immediately preceding Reconciliation Period, shall
        allocate such Remittance Shortfall or Excess Remittance to
        each outstanding Series ratably based on the Environmental Control Charges
        billed for such Series for such Reconciliation Period, and (A) if a Remittance
        Shortfall exists, the Servicer shall make a supplemental remittance, to the
        applicable General Subaccount of the applicable Collection Account for each
        Series within two (2) Servicer Business Days, or (B) if an Excess Remittance
        exists, the Servicer shall be entitled either (i) to reduce the amount of
        (A)
        each Daily Remittance, or, (B) if Mon Power has satisfied the conditions
        of
Section
        5.11(b),
        each
        Monthly Remittance, which the Servicer subsequently remits to the applicable
        General Subaccount of the applicable Collection Account for application to
        the
        amount of such Excess Remittance until the balance of such Excess Remittance
        has
        been reduced to zero, the amount of such reduction becoming the property
        of the
        Servicer or (ii) so long as such withdrawal would not cause the amounts on
        deposit in the applicable General Subaccount or the applicable Excess Funds
        Subaccount for any Series to be insufficient for the payment of the next
        installment of interest on the Environmental Control Bonds or principal due
        at
        maturity on the next Payment Date or upon acceleration on or before the next
        Payment Date, to be paid immediately from such General Subaccount or Excess
        Funds Subaccount such Series’ allocable share of the amount of such Excess
        Remittance, such payment becoming the property of the Servicer. If there
        is a
        Remittance Shortfall, the amount which the Servicer remits to the applicable
        General Subaccounts of the applicable Collection Accounts on the relevant
        date
        set forth above shall be increased by the amount of such Remittance Shortfall,
        provided that
        remittance of such increase will be the sole financial responsibility of
        the
        Servicer and shall neither be considered an Operating Expense nor be paid
        out of
        the Collection Account or included in the calculation of True-Up
        Adjustments.

    

     

    SECTION
      5.12 Payment
      Date Statements.
      At
      least three Business Days before each Payment Date with respect to each Series
      of Environmental Control Bonds, the Servicer shall prepare and furnish to the
      Issuer and the Indenture Trustee a statement setting forth the amounts to be
      paid to Environmental Control Bondholders of such Series pursuant to
      Section 8.02(e) of the Indenture, as well as all other amounts to be paid
      pursuant to Section 8.02(e) of the Indenture, including the Capital Equity
      Return to be paid to the Seller.

     

    SECTION
      5.13 Schedule
      Revision Date Schedules.
      Prior
      to each Schedule Revision Date, the Servicer shall deliver to the Issuer
      replacement Schedules A and replacement Schedules B to each Series
      Supplement to which such Schedule Revision Date applies, adjusted to reflect
      the
      event giving rise to such Schedule Revision Date and setting forth the Expected
      Sinking Fund Schedule for each Payment Date applicable thereto.

     

    SECTION
      5.14 Protection
      of Title.
      The
      Servicer shall execute and file such filings, including filings with the PSCWV
      pursuant to the Statute, and cause to be executed and filed 

     

    
      
        
        

      

      
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    such
      filings, all in such manner and in such places
      as may be required by law fully to preserve, maintain, and protect the interests
      of the Issuer in the Transferred Environmental Control Property, including
      all
      filings required under the Statute relating to the transfer of the ownership
      or
      security interest in the Transferred Environmental Control Property by the
      Seller to the Issuer or any security interest granted by the Issuer in the
      Transferred Environmental Control Property. The Servicer shall deliver (or
      cause
      to be delivered) to the Issuer file-stamped copies of, or filing receipts for,
      any document filed as provided above, as soon as available following such
      filing.

     

    ARTICLE
      VI

     

    SERVICER
      DEFAULT

     

    SECTION
      6.01 Servicer
      Default.
      If any
      one of the following events (a “Servicer
      Default”)
      shall
      occur and be continuing:

     

    (a)  any
      failure by the Servicer to remit to the Indenture Trustee on behalf of the
      Issuer any required remittance that shall continue unremedied for a period
      of
      five Business Days after written notice of such failure is received by the
      Servicer from the Issuer or Indenture Trustee; or

     

    (b)  any
      failure by the Servicer or, so long as the Transferor and the Servicer are
      the
      same Person, the Transferor, as applicable, duly to observe or perform in any
      material respect any other covenant or agreement of the Servicer or the
      Transferor, as the case may be, set forth in this Agreement or any other Basic
      Document to which it is a party, which failure shall (i) materially and
      adversely affect the Transferred Environmental Control Property or the rights
      of
      Environmental Control Bondholders and (ii) continue unremedied for a period
      of 60 days after written notice of such failure shall have been given to
      the Servicer, the PSCWV or the Transferor, as the case may be, by the Issuer
      or
      the Indenture Trustee or after discovery of such failure by an officer of the
      Servicer, the PSCWV or the Transferor, as the case may be; or

     

    (c)  any
      representation or warranty made by the Servicer in this Agreement shall prove
      to
      have been incorrect in a material respect when made, which has a material
      adverse effect on the Issuer or the Environmental Control Bondholders and which
      material adverse effect continues unremedied for a period of 60 days after
      the
      date on which written notice thereof shall have been given to the Servicer
      by
      the Issuer, the PSCWV or the Indenture Trustee; or

     

    (d)  an
      Insolvency Event occurs with respect to the Servicer;

     

    then,
      and
      in each and every case, so long as the Servicer Default shall not have been
      remedied, the Indenture Trustee, as assignee of the Issuer, may, or at the
      direction of the Environmental Control Bondholders of a majority of the
      Outstanding principal amount of the Environmental Control Bonds of all Series
      or
      by the PSCWV, by notice then given in writing to the Servicer (a “Termination
      Notice”)
      shall
      terminate all the Servicer’s rights and obligations (other than the
      indemnification obligations set forth in Section 5.02
      hereof
      and the Servicer’s obligation under Section 6.04
      to
      continue performing its functions as Servicer until a Successor Servicer is
      appointed) of the Servicer under this Agreement. In addition, upon a Servicer
      Default described in Section 6.01(a),
      the
      Issuer or the Indenture Trustee may apply to the PSCWV or any court of


     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    competent
      jurisdiction to order the sequestration and
      payment of Environmental Control Charge Collections arising with respect to
      the
      Transferred Environmental Control Property for the benefit of the Environmental
      Control Bondholders, the Issuer, the Indenture Trustee, and any other assignee
      and financing parties (each as defined in the Statute). The Trustee shall not
      give a Termination Notice upon instruction of the PSCWV unless the Rating Agency
      Condition is satisfied.

     

    On
      or
      after the receipt by the Servicer of a Termination Notice, all authority and
      power of the Servicer under this Agreement, whether with respect to the
      Transferred Environmental Control Property, including the Environmental Control
      Charges, or otherwise, shall, upon appointment of a Successor Servicer pursuant
      to Section 6.04,
      without
      further action, pass to and be vested in such Successor Servicer and, without
      limitation, the Indenture Trustee is hereby authorized and empowered to execute
      and deliver, on behalf of the predecessor Servicer, as attorney-in-fact or
      otherwise, any and all documents and other instruments, and to do or accomplish
      all other acts or things necessary or appropriate to effect the purposes of
      such
      Termination Notice, including, but not limited to, completing the transfer
      of
      the Transferred Environmental Control Property Documentation and related
      documents. The predecessor Servicer shall cooperate with the Successor Servicer,
      the Indenture Trustee and the Issuer in effecting the termination of the
      responsibilities and rights of the predecessor Servicer under this Agreement,
      including the transfer to the Successor Servicer for administration by it of
      all
      cash amounts that are then held by the predecessor Servicer for remittance
      to
      the Collection Account or the Transferor, or that are thereafter be received
      by
      it. As soon as practicable after receipt by the Servicer of such Termination
      Notice, the Servicer shall deliver the Transferred Environmental Control
      Property Documentation to the Successor Servicer. 

     

    All
      reasonable costs and expenses (including attorneys fees and expenses) incurred
      in connection with transferring the Environmental Control Property Documentation
      to the Successor Servicer and amending this Agreement to reflect such succession
      as Servicer pursuant to this Section shall be paid by the predecessor
      Servicer upon presentation of reasonable documentation of such costs and
      expenses. Termination of Mon Power as Servicer shall not terminate Mon Power’s
      rights or obligations as Transferor under the Transfer Agreement. 

     

    SECTION
      6.02 Notice
      of Servicer Default.
      The
      Servicer shall deliver to the Issuer, the PSCWV, a Responsible Officer of the
      Indenture Trustee and each Rating Agency promptly after having obtained
      knowledge thereof, but in no event later than five Business Days thereafter,
      written notice in an Officers’ Certificate of any event or circumstance (such as
      a breach of any representation or warranty made by the Servicer in this
      Agreement) which, if not remedied, would become a Servicer Default under
Section 6.01.

     

    SECTION
      6.03 Waiver
      of Past Defaults.
      The
      Indenture Trustee, with the written consent of the PSCWV and the Environmental
      Control Bondholders of a majority of the Outstanding principal amount of the
      Environmental Control Bonds of all Series, may waive, in writing, any default
      by
      the Servicer in the performance of its obligations hereunder and its
      consequences, except a default in making any required remittances to the
      Indenture Trustee of Environmental Control Charge Collections from Transferred
      Environmental Control Property in accordance with Section 5.11
      of this
      Agreement. Upon any such waiver of a past default, such default shall cease
      to
      exist, and any Servicer Default arising therefrom shall be deemed to
      have 

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    been
      remedied for every purpose of this Agreement. No
      such waiver shall extend to any subsequent or other default or impair any right
      consequent thereto.
       

      SECTION
        6.04 Appointment
        of Successor.

       

      (a)  In
        the
        event of the Servicer’s termination hereunder, the Indenture Trustee, as
        assignee of the Issuer, at the direction of the Environmental Control
        Bondholders of a majority of the outstanding principal
        amount of the Environmental Control Bonds or the PSCWV, shall appoint a
        Successor Servicer, and the Successor Servicer shall accept its appointment
        by a
        written assumption in form acceptable to the Issuer and the Indenture Trustee.
        If, within 30 days after the delivery of the Termination Notice, a Successor
        Servicer shall not have been appointed and accepted such appointment, the
        Indenture Trustee may petition a court of competent jurisdiction to appoint
        a
        Successor Servicer under this Agreement. A Person shall qualify as a Successor
        Servicer only if (i) such Person is permitted under PSCWV Regulations to
        perform the duties of the Servicer pursuant to the Statute, the Financing
        Order
        and this Agreement, (ii) the Rating Agency Condition has been satisfied
        with respect to all Rating Agencies, (iii) such Person enters into a
        servicing agreement with the Issuer having substantially the same provisions
        as
        this Agreement, and (iv) if applicable, its compensation is approved or
        acquiesced to by the PSCWV pursuant to Section 5.08(a)
        hereof.

    

     

    (b)  Notwithstanding
      the Servicer’s receipt of a Termination Notice, pursuant to Section 6.01
      or the
      Servicer’s resignation in accordance with the terms of this Agreement, the
      predecessor Servicer shall continue to perform its functions as Servicer under
      this Agreement and shall be entitled to receive the requisite portion of the
      Servicing Fees, until a Successor Servicer shall have assumed, in writing,
      the
      obligations of the Servicer hereunder as described below.

     

    (c)  Upon
      appointment, the Successor Servicer shall be the successor in all respects
      to
      the predecessor Servicer and shall be subject to all the responsibilities,
      duties and liabilities arising thereafter relating thereto placed on the
      predecessor Servicer and shall be entitled to the Servicing Fees and all the
      rights granted to the predecessor Servicer by the terms and provisions of this
      Agreement.

     

    (d)  The
      Successor Servicer may not resign unless it is prohibited from serving as such
      by applicable Requirements of Law.

     

    SECTION
      6.05 Cooperation
      with Successor.
      The
      Servicer covenants and agrees with the Issuer that it will, on an ongoing basis,
      cooperate with the Successor Servicer and provide whatever information is,
      and
      take whatever actions are, reasonably necessary to assist the Successor Servicer
      in performing its obligations hereunder.

     

    SECTION
      6.06 Servicer
      Default Under Related Transaction.
      If a
“servicer default” shall occur under the Transferred Environmental Control
      Property Servicing Agreement dated April 11, 2007, between The Potomac Edison
      Company, as servicer, and PE Environmental Funding LLC, as issuer, and it
      becomes necessary to find a successor servicer under such agreement, the
      Servicer agrees to assume such role as successor servicer under such servicing
      agreement 

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    in
      accordance with the terms thereof, including,
      for avoidance doubt, for the same servicing fee provided for
      thereunder.
       

      
        ARTICLE
          VII

         

        MISCELLANEOUS
          PROVISIONS

         

        SECTION
          7.01 Amendment.

      

    

     

    (a)  Subject
      to Section
      7.01(b)
      below,
      this Agreement may be amended by the Servicer and the Issuer, with the consent
      of the Indenture Trustee and the satisfaction of the Rating Agency Condition.
      Promptly after the execution of any such amendment and consent, the Issuer
      shall
      furnish written notification of the substance of such amendment or consent
      to
      each of the Rating Agencies. Prior to the execution of any amendment to this
      Agreement, the Issuer and the Indenture Trustee shall be entitled to receive
      and
      rely upon an Opinion of Counsel stating that the execution of such amendment
      is
      authorized or permitted by this Agreement and the Opinion of Counsel referred
      to
      in Section
      3.10.
      Subject
      to paragraph (b) below, the Issuer and the Indenture Trustee may, but shall
      not
      be obligated to, enter into any such amendment which affects their own rights,
      duties or immunities under this Agreement or otherwise.

     

    (b)  Notwithstanding
      anything to the contrary in Section
      7.01(a),
      nor any
      waiver required by Section
      6.03
      hereof,
      no amendment or modification of this Agreement shall be effective except upon
      satisfaction of the conditions precedent in this Section
      7.01(b).

     

    (i)  PSCWV
      Condition.
      At
      least 16 days prior to the effectiveness of any such amendment or
      modification, and after obtaining the other necessary approvals set forth in
      Section 7.01(a),
      except
      for the consent of the Indenture Trustee and the Environmental Control
      Bondholders if the consent of the Environmental Control Bondholders is required
      or sought by the Indenture Trustee in connection with such amendment or
      modification, the Issuer shall have delivered to the PSCWV’s executive director
      and general counsel written notification of any proposed amendment or
      modification, which notification shall contain:

     

    (A)  a
      reference to Case Nos. 05-0402-E-CN and 05-0750-E-PC and any other case number
      under which a Financing Order has been issued;

     

    (B)  an
      Officer’s Certificate stating that the proposed amendment or modification has
      been approved by all parties to this Agreement; and

     

    (C)  a
      statement identifying the person to whom the PSCWV is to address any response
      to
      the proposed amendment or to request additional time.

     

    (ii)  The
      PSCWV
      or its authorized representative shall, within 15 days of receiving the
      notification complying with Section
      7.01(b)(i)
      above,
      either:

     

    
      
        
        

      

      
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      (A)  provide
        notice of its determination that the proposed amendment or modification will
        not
        under any circumstances have the effect of increasing the ongoing qualified
        costs related to the Environmental Control Bonds,

       

      (B)  provide
        notice of its consent or lack of consent to the person specified in Section
        7.01(b)(i)(C)
        above,
        or

       

      (C)  be
        conclusively deemed to have consented to the proposed amendment or
        modification,

    

     

    unless,
      within 15 days of receiving the notification complying with Section
      7.01(b)(i)
      above,
      the PSCWV or its authorized representative delivers to the office of the person
      specified in Section
      7.01(b)(i)(C)
      above
      with a written statement requesting an additional amount of time not to exceed
      15 days in which to consider whether to consent to the proposed amendment or
      modification. If the PSCWV or its authorized representative requests an
      extension of time in the manner set forth in the preceding sentence, then the
      PSCWV shall either provide notice of its consent or lack of consent or notice
      of
      its determination that the proposed amendment or modification will not under
      any
      circumstances increase ongoing qualified costs to the person specified in
Section
      7.01(b)(i)(C)
      above
      not later than the last day of such extension of time or be conclusively deemed
      to have consented to the proposed amendment or modification on the last day
      of
      such extension of time. Any amendment or modification requiring the consent
      of
      the PSCWV shall become effective on the later of (i) the date proposed by the
      parties to such amendment or modification or (ii) the first day after the
      expiration of the 15-day period provided for in this Section
      7.01(b)(ii),
      or, if
      such period has been extended pursuant hereto, the first day after the
      expiration of such period as so extended.

     

    (c)  For
      the
      purpose of this Section
      7.01,
      an
“authorized representative” of the PSCWV means any person authorized to act on
      behalf of the PSCWV, as evidenced by an Opinion of Counsel (which may be the
      general counsel) to the PSCWV.

     

    SECTION
      7.02 Notices. 

     

    (a)  All
      demands, notices and communications upon or to the Servicer, the Issuer, the
      Indenture Trustee or the Rating Agencies under this Agreement shall be in
      writing, delivered personally, via facsimile, reputable overnight courier or
      by
      first class mail, postage prepaid, and shall be deemed to have been duly given
      upon receipt,

     

    (i)  in
      the
      case of the Servicer, to Mon Power, 800 Cabin Hill Drive, Greensburg,
      Pennsylvania 15601, Attention of Amanda J. Skov, Esq.;

     

    (ii)  in
      the
      case of the Issuer or the Indenture Trustee, at the address provided for notices
      or communications to such Person in the Indenture; 

     

    (iii)  in
      the
      case of Moody’s, to Moody’s Investors Service, Inc., ABS Monitoring Department,
      99 Church Street, New York, New York 10007;

     

    
      
        
        

      

      
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      (iv)  in
        the
        case of Standard & Poor’s, to Standard & Poor’s Ratings
        Services, a division of The McGraw-Hill Companies, Inc., 55 Water Street,
        42nd Floor, New York, New York 10041, Attention of Asset Backed Surveillance
        Department;

       

      (v)  in
        the
        case of Fitch, to Fitch, Inc., One State Street Plaza, New York, New York
        10004,
        Attention of ABS Surveillance; or, as to each of the foregoing, at such other
        address as shall be designated by written notice to the other parties; and
        

    

     

    (vi)  in
      the
      case of the PSCWV, Public Service Commission of West Virginia, 201 Brooks
      Street, Charleston, West Virginia 25323, Attention: Executive
      Secretary.

     

    SECTION
      7.03 Limitations
      on Rights of Others.
      The
      provisions of this Agreement are solely for the benefit of the Servicer, the
      Seller, the Issuer (including its managers and members), the Indenture Trustee,
      on behalf of itself and the Environmental Control Bondholders, and the PSCWV,
      on
      behalf of itself and the Customers, and nothing in this Agreement, whether
      express or implied, shall be construed to give to any other Person any legal
      or
      equitable right, remedy or claim in any Collateral or under or in respect of
      this Agreement or any covenants, conditions or provisions contained herein.
      Notwithstanding anything to the contrary contained herein, for the avoidance
      of
      doubt, any right, remedy or claim to which any Customer may be entitled pursuant
      to the Financing Order and this Agreement may be asserted or exercised only
      by
      the PSCWV for the benefit of such Customer.

     

    SECTION
      7.04 Severability.
      Any
      provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof, and any such prohibition or unenforceability in any
      jurisdiction shall not invalidate or render unenforceable such provision in
      any
      other jurisdiction.

     

    SECTION
      7.05 Separate
      Counterparts.
      This
      Agreement may be executed by the parties hereto in separate counterparts, each
      of which when so executed and delivered shall be an original, but all such
      counterparts shall together constitute but one and the same
      instrument.

     

    SECTION
      7.06 Headings.
      The
      headings of the various Articles and Sections herein are for convenience of
      reference only and shall not define or limit any of the terms or provisions
      hereof.

     

    SECTION
      7.07 GOVERNING
      LAW.
      THIS
      AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WEST
      VIRGINIA, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
      OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
      IN
      ACCORDANCE WITH SUCH LAWS.

     

    SECTION
      7.08 Assignment
      to Indenture Trustee.
      The
      Servicer hereby acknowledges and consents to the mortgage, pledge, assignment
      and grant of a security interest by the Issuer to the Indenture Trustee pursuant
      to the Indenture for the benefit of the Environmental Control 

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    Bondholders
      of all right, title and interest of the
      Issuer in, to and under the Transferred Environmental Control Property owned
      by
      the Issuer and the proceeds thereof and of any and all of the Issuer’s rights
      hereunder to the Indenture Trustee. In no event shall the Indenture Trustee
      have
      any liability for the representations, warranties, covenants, agreements or
      other obligations of the Issuer, hereunder or in any of the certificates,
      notices or agreements delivered pursuant hereto, as to all of which recourse
      shall be had solely to the assets of the Issuer.
       

      SECTION
        7.09 Nonpetition
        Covenants.
        Notwithstanding any prior termination of this Agreement or the Indenture,
        but
        subject to a court of competent jurisdiction’s rights, upon application by the Issuer or the Indenture Trustee,
        to order the
        sequestration and payment of Environmental Control Revenues arising with
        respect
        to the Transferred Environmental Control Property, notwithstanding any
        bankruptcy, reorganization or other insolvency proceedings with respect to
        the
        debtor, pledgor or transferor of the Transferred Environmental Control Property
        pursuant to Section 24-2-4e(k)(4) of the Statute, the Servicer shall not,
        prior to the date which is one year and one day after the termination of
        the
        Indenture, petition or otherwise invoke or cause the Issuer to invoke the
        process of any court or government authority for the purpose of commencing
        or
        sustaining an involuntary case against the Issuer under the federal or state
        bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
        assignee, trustee, custodian, sequestrator or other similar official of the
        Issuer or any substantial part of the property of the Issuer, or ordering
        the
        winding up or liquidation of the affairs of the Issuer.

    

     

    SECTION
      7.10 Termination.
      This
      Agreement shall terminate when all Environmental Control Bonds issued by the
      Issuer have been retired, redeemed or defeased in full, and all Operating
      Expenses and other amounts owed by the Issuer under the Indenture have been
      paid
      in full.

     

    SECTION
      7.11 Limitation
      of Liability.
      It is
      expressly understood and agreed by the parties hereto that this Agreement is
      executed and delivered by U.S. Bank National Association, not individually
      or
      personally but solely as Indenture Trustee for the benefit of the Environmental
      Control Bondholders, in the exercise of the powers and authority conferred
      and
      vested in it, and nothing herein contained shall be construed as creating any
      liability on U.S. Bank National Association, individually or personally, to
      perform any covenant either expressed or implied contained herein, all such
      liability, if any, being expressly waived by the parties who are signatories
      to
      this Agreement and by any Person claiming by, through or under such parties;
      provided, however, that this provision shall not protect U.S. Bank National
      Association against any liability that would otherwise be imposed by reason
      of
      willful misconduct, bad faith or negligence in the performance of duties or
      by
      reason of reckless disregard of obligations or duties under this
      Agreement.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed by their respective officers as of the day and year first above
      written.

     

    MP
      ENVIRONMENTAL FUNDING LLC, Issuer

     

    by   /s/
      Philip L. Goulding                    

    Title: 
      Vice President

     

     

    MONONGAHELA
      POWER COMPANY, Servicer

     

    
      by   /s/
        Philip L. Goulding                    

      Title: 
        Vice President

    

     

    Acknowledged
      and Accepted:

     

    U.S.
      BANK
      NATIONAL ASSOCIATION, not in its individual capacity but solely as Indenture
      Trustee on behalf of the Environmental Control Bondholders issued by the
      Issuer,

     

    by
/s/
      Melissa A. Rosal                
Title: 
      Vice President

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    


    EXHIBIT
      A

     

    SERVICING
      OBLIGATIONS

     

    The
      Servicer agrees to comply with the following with respect to MP Environmental
      Funding LLC, as Issuer:

     

    SECTION
      1. Definitions.
      Capitalized
      terms used herein and not otherwise defined shall have the meanings set forth
      in
      Appendix A to the Indenture dated as of April 11, 2007 between the Issuer and
      U.S. Bank National Association, as Indenture Trustee.

     

    SECTION
      2. Indenture
      Trustee and Servicer Payment Date Statements. At
      least
      three Business Days before each date on which distributions to the Indenture
      Trustee and Servicer are to be made pursuant to Sections 8.02(e) and (h) of
      the
      Indenture, the Servicer shall provide the Indenture Trustee with a statement
      setting forth the amounts to be distributed to each of the Indenture Trustee
      and
      Servicer pursuant to such Sections.

     

    SECTION
      3. Payment
      Date Statements.
      At least
      three Business Days before each Payment Date, the Servicer shall provide to
      the
      Issuer, the Indenture Trustee and each Rating Agency, a statement
      indicating:

     

    
      	1.  	
              the
                amount to be paid to Environmental Control Bondholders of each Series
                and
                Class in respect of principal on such Payment Date in accordance
                with
                Section 8.02 of the Indenture and each Series Supplement
                thereto;

            


    

     

    
      	2.  	
              the
                amount to be paid to Environmental Control Bondholders of each Series
                and
                Class in respect of interest on such Payment Date in accordance with
                Section 8.02 of the Indenture and each Series Supplement
                thereto;

            


    

     

    
      	3.  	
              the
                Environmental Control Bond Balance and the Projected Environmental
                Control
                Bond Balance for each Series and Class as of that Payment Date (in
                each
                case, after giving effect to the payments on such Payment
                Date);

            


    

     

    
      	4.  	
              the
                amount on deposit in the General Subaccount for each Series and the
                Scheduled Funding for each Series, as of that Payment Date (after
                giving
                effect to the transfers to be made from or into the General Subaccount
                on
                such Payment Date);

            


    

     

    
      	5.  	
              the
                amount on deposit in the Capital Subaccount for each Series as of
                that
                Payment Date (after giving effect to the transfers to be made from
                or into
                the Capital Subaccount on such Payment
                Date);

            


    

     

    
      	6.  	
              the
                amount, if any, on deposit in the Excess Funds Subaccount as of that
                Payment Date (after giving effect to the transfers to be made from
                or into
                the Reserve Subaccount on such Payment
                Date);

            


    

     

    
      
        
        

      

      
        Exhibit
          A-1

        
          

        

      

      
        
        

      

    

     

    
      	7.  	
              the
                amount, if any, on deposit in the Tranche Subaccount (after giving
                effect
                to the transfers to be made from or into the Tranche Subaccount on
                such
                Payment Date);

            


    

     

    
      	8.  	
              the
                amounts paid to the Indenture Trustee since the preceding Payment
                Date
                pursuant to Section 8.02(e) of the
                Indenture;

            


    

     

    
      	9.  	
              the
                amounts paid to the Servicer since the preceding Payment Date pursuant
                to
                Section 8.02(e) of the Indenture;
                and

            


    

     

    
      	10.  	
              the
                amount of any other transfers and payments to be made on such Payment
                Date
                pursuant to Sections 8.02(d), (e), (f), (g) and (i) of the Indenture;
                and

            


    

     

    
      	11.  	
              the
                then-current Environmental Control Charge for each rate
                class.

            


    

     

    SECTION
      4. Remittance
      Date Statements.
      At least
      one Business Day before each Remittance Date, and in the case of Daily
      Remittances, on the last Remittance Date of such month, the Servicer shall
      prepare and furnish to the Issuer and the Indenture Trustee a statement setting
      forth the aggregate amount remitted or to be remitted by the Servicer to the
      Indenture Trustee (net of any payments owed to the Servicer in accordance with
      Section 5.11(d) of the Servicing Agreement) for deposit on such Remittance
      Date
      pursuant to the Indenture.

     

    SECTION
      5. True-Up
      Adjustments.

     

    
      	
            	(a)	
              Prior
                to each Calculation Date, the Servicer shall calculate
                

            


    

     

    
      	
            	(i)	
              the
                Environmental Control Bond Balance as of such Calculation Date (a
                written
                copy of which shall be delivered by the Servicer to the Indenture
                Trustee
                within five Business Days following such Calculation Date)
                and

            


    

     

    
      	
            	(ii)	
              the
                revised Environmental Control Charge with respect to the Transferred
                Environmental Control Property in respect of each True-Up Adjustment
                Date
                such that the Servicer projects that Environmental Control Charge
                Collections therefrom allocable to the Issuer will be sufficient
                so that:
                

            


    

     

    
      
        	
              	(A)	
                the
                  Environmental Control Bond Balance on the Payment Date immediately
                  preceding the next True-Up Adjustment Date will equal the Projected
                  Environmental Control Bond Balance as of such date or, if earlier
                  with
                  respect to any Series or Class of Environmental Control Bonds,
                  as of the
                  Payment Date immediately preceding the Expected Final Payment Date
                  therefor;

              


      

    

     

    
      	
            	(B)	
              the
                amount on deposit in the General Subaccount on the Payment Date
                immediately preceding the next True-Up Adjustment Date will equal
                the
                Periodic Bond Payment

            


    

     

    
      
        
        

      

      
        Exhibit
          A-2

        
          

        

      

      
        
        

      

    

     

    
      	
            	 	
              Requirement
                for such date or, if earlier with respect to any Series or Tranche
                of
                Environmental Control Bonds, as of the Payment Date immediately preceding
                the Expected Final Payment Date
                therefor;

            


    

     

    
      	
            	(C)	
              the
                amount on deposit in the Capital Subaccount on the Payment Date
                immediately preceding the next True-Up Adjustment Date will equal
                its
                required level for such date or, if earlier with respect to any Series
                or
                Tranche of Environmental Control Bonds, as of the Payment Date immediately
                preceding the Expected Final Payment Date therefor;
                

            


    

     

    
      	
            	(D)	
              the
                amount on deposit in the Excess Funds Subaccount on the Payment Date
                immediately preceding the next True-Up Adjustment Date, will equal
                zero;
                and

            


    

     

    
      	
            	(E)	
              the
                Environmental Control Charge Collections will provide for (i) amortization
                of the remaining outstanding principal balance of each Series in
                accordance with the Expected Sinking Fund Schedule therefor, (ii)
                payment
                of all Operating Expenses of the Issuer when due in accordance with
                the
                Indenture and (iii) deposits to the General Subaccount such that
                the
                balance therein will equal the Periodic Bond Payment Requirement
                on each
                Payment Date.

            


    

     

    
      	
            	(b)	
              
                On
                  each Semi-Annual Calculation Date, the Servicer shall file a Semi-Annual
                  True-Up Adjustment Filing with the PSCWV. On each Quarterly Calculation
                  Date and Monthly Calculation Date, the Servicer may file a Quarterly
                  True-Up Adjustment Filing or Monthly True-Up Adjustment Filing,
                  as the
                  case may be, if necessary. Each True-Up Adjustment Filing shall
                  include
                  the data specified in the Statute and the Financing
                  Order.

              

            


    

     

    
      	
            	(c)	
              On
                each True-Up Adjustment Date, the Servicer shall
                

            


    

     

    
      	
            	(i)	
              take
                all reasonable actions and make all reasonable efforts to effectuate
                all
                adjustments to the Environmental Control Charge either approved by
                the
                PSCWV or effective on an interim basis pending final approval
                and

            


    

     

    
      	
            	(ii)	
              promptly
                send to the Indenture Trustee copies of all material notices and
                documents
                relating to such adjustments.

            


    

     

    
      	
            	(d)	
              If
                deemed appropriate by the Servicer to protect Environmental Control
                Bondholders and to remedy a significant and recurring variance between
                Actual Environmental Control Charge Collections and Estimated
                Environmental Control Charge Collections, as authorized by the
                Financing

            


    

     

    
      
        
        

      

      
        Exhibit
          A-3

        
          

        

      

      
        
        

      

    

     

    
      	
            	 	
              Order,
                the Servicer shall file Non-Routine True-Up Adjustments to the
                Environmental Control Charge (as defined in the Financing Order)
                to
                accommodate material changes to the True-Up Mechanism. Such filings
                shall
                be made at least 90 days prior to the proposed effective date of
                the
                proposed adjustments. The Servicer shall provide notice of such
                non-routine adjustment and resulting change to the Environmental
                Control
                Charge to Fitch.

            


    

     

    
      
        
        

      

      
        Exhibit
          A-4

        
          

        

      

      
        
        

      

    


    ATTACHMENT
      A

     

    SERVICING
      PROCEDURES

     

    The
      Servicer agrees to comply with the following servicing procedures to assess
      its
      compliance with applicable servicing criteria.

     

    SECTION
      1. Definitions.

     

    (a) Whenever
      used in this Attachment A, the following words and phrases shall have the
      following meanings:

     

    Applicable
      MDMA
      means,
      with respect to each Customer, the meter data management agent or Third Party,
      if any, providing meter reading services for that Customer's
      account.

     

    Applicable
      Third Party
      means,
      with respect to each Customer, the Third Party, if any, providing billing or
      metering services to that Customer.

     

    Billed
      Environmental Control Charges
      means
      the amounts billed to Customers pursuant to the Environmental Control Charge,
      whether billed directly to such Customers by the Servicer or indirectly through
      a Third Party. 

     

    Bills
      means
      each of the periodic bills and the Closing Bills issued to Customers or Third
      Parties by Mon Power.

     

    Budget
      Billing Plan
      means a
      levelized payment plan offered by Mon Power, which, if elected by a Customer,
      provides for level monthly Bill charges to such Customer. For residential
      Customers, this charge is calculated by calculating actual electricity charges
      for the previous year and dividing this amount by twelve. The number which
      results from this calculation is charged to the residential Customer each month.
      In the twelfth month, Mon Power bills the residential Customer for actual use
      in
      that month, adjusted for any excess or deficit the Customer has paid Mon Power
      over the prior eleven months. If the Customer owes Mon Power $4 or more over
      the
      normal budget amount, that Customer has the option of repaying the full amount
      in the twelfth month, or spreading the amount of this deficit in equal
      installments over the first four months of the Customer's next budget year.
      The
      procedure is similar for small industrial and commercial Customers.

     

    Closing
      Bill
      means
      the final bill issued to a Customer at the time service is
      terminated.

     

    Environmental
      Control Charge Effective Date
      means
      the date on which the initial Environmental Control Charge goes into effect
      pursuant to the Financing Order.

     

    Net
      Write-Off Percent
      means
      the number (expressed as a percent) equal to

     

    
      	·  	
              the
                amount by which Write-Offs attributable to a particular billing period
                exceed Write-Off recoveries attributable to such billing period,
                divided
                by

            


    

     

    
      	·  	
              the
                total billed revenue attributable to such billing period.
                

            


    

     

    
      
        
        

      

      
        Attachment
          A-1

        
          

        

      

      
        
        

      

    

     

    Servicer
      Policies and Practices
      means,
      with respect to the Servicer’s duties under this Exhibit A, the policies and
      practices of the Servicer applicable to such duties that the Servicer follows
      with respect to comparable assets that it services for itself.

     

    True-Up
      Adjustment Filing
      has,
      with respect to the Issuer, the meaning given to such term in Appendix
      A.

     

    Variables
      includes
      the following variables used in calculating True-Up Adjustments:

     

    
      	·  	
              the
                estimated Net Write-Off Percent;
                and

            


    

     

    
      	·  	
              the
                projected billed consumption to which the Environmental Control Charge
                applies.

            


    

     

    Write-Offs
      means
      arrears that remain unpaid by Customers generally as of 45 days after the
      issuance of the Closing Bills containing such charges, unless payment
      arrangements are made and are being kept.

     

    SECTION
      2. Data
      Acquisition.

     

    
      	
            	(a)	
              Installation
                and Maintenance of Meters.
                Except to the extent that a Third Party is responsible for such services,
                the Servicer shall use its best efforts to cause to be installed,
                replaced
                and maintained meters in such places and in such condition as will
                enable
                the Servicer to obtain usage measurements for each Customer approximately
                every thirty days or as provided in the applicable
                tariff.

            


    

     

    
      	
            	(b)	
              Meter
                Reading.
                At
                least once each calendar month, the Servicer shall obtain usage
                measurements from the Applicable MDMA for each Customer; provided,
                however, that the Servicer may determine any Customer’s usage on the basis
                of estimates in accordance with applicable PSCWV
                Regulations.

            


    

     

    
      	
            	(c)	
              Cost
                of Metering.
                The Issuer shall not be obligated to pay any costs associated with
                the
                metering duties set forth in this Section 2, including, but not limited
                to, the costs of installing, replacing and maintaining meters, nor
                shall
                the Issuer be entitled to any credit against the Servicing Fee for
                any
                cost savings realized by the Servicer or any Third Party as a result
                of
                new metering and/or billing
                technologies.

            


    

     

    SECTION
      3.Usage
      and Bill Calculation.

     

    The
      Servicer shall obtain a calculation of each Customer’s usage (which may be based
      on data obtained from such Customer’s meter read or on usage estimates
      determined in accordance with applicable PSCWV Regulations) at least once each
      calendar month and shall determine therefrom each Customer’s individual charge
      relating to the Environmental Control Charge to be included on such Customer’s
      Bill pursuant to the Financing Order and PSCWV Regulations.

     

    
      
        
        

      

      
        Attachment
          A-2

        
          

        

      

      
        
        

      

    


    SECTION
      4. Billing.

     

    The
      Servicer shall implement the Environmental Control Charge as of the
      Environmental Control Charge Effective Date and shall thereafter bill each
      Customer or the Applicable Third Party for the respective Customer’s outstanding
      current and past due charges relating to the Environmental Control Charge,
      accruing until all payments of principal and interest on each Series of
      Environmental Control Bonds and all other costs and expenses related to such
      Series have been paid in accordance with the Indenture, all in accordance with
      the following:

     

    
      	
            	(a)	
              Frequency
                of Bills; Billing Practices.
                In
                accordance with the Servicer’s then-existing Servicer Policies and
                Practices, as such Servicer Policies and Practices may be modified
                from
                time to time, the Servicer shall generate and issue a Bill to each
                Customer, or to an Applicable Third Party, for such Customer’s respective
                Environmental Control Charge as a general practice once approximately
                every 60 days or such other time period as allowed by the PSCWV,
                at the
                same time, with the same frequency and on the same Bill as that containing
                the Servicer’s own charges to such Customer or Third Party, as the case
                may be. In the event that the Servicer makes any material modification
                to
                these practices, it shall notify the Issuer, the Indenture Trustee
                and the
                Rating Agencies as soon as practicable, and in no event later than
                60
                Business Days after such modification goes into effect; provided,
                however,
                that

            


    

     

    
      	
            	(i)	
              the
                Servicer may not make any modification that will materially adversely
                affect the Environmental Control Bondholders
                and

            


    

     

    
      	
            	(ii)	
              the
                Rating Agencies shall receive prior notice of any modification that
                would
                change the frequency with which Bills are issued or would change
                any
                tariff charged.

            


    

     

    
      	
            	(b)	
              Format.

            


    

     

    
      	
            	(i)	
              Each
                Bill to a Customer shall contain the charge corresponding to the
                Environmental Control Charge owed by such Customer for the billing
                period.
                The Customer’s Bill will contain in text or in a footnote, text
                substantially to the effect that a portion of the monthly charge
                representing that Transferred Environmental Control Property is being
                collected on behalf of the Issuer as owner of the Transferred
                Environmental Control Property.

            


    

     

    
      	
            	(ii)	
              The
                Servicer shall deliver to the Applicable Third Party itemized charges
                for
                such Customer including the amount of such Customer’s Environmental
                Control Charge to be remitted by the Servicer to the
                Issuer.

            


    

     

    
      	
            	(iii)	
              The
                Servicer shall conform to such requirements in respect of the format,
                structure and text of Bills delivered to Customers and
                

            


    

     

    
      
        
        

      

      
        Attachment
          A-3

        
          

        

      

      
        
        

      

    

     

    Third
      Parties as applicable PSCWV Regulations shall
      from time to time prescribe. To the extent that Bill format, structure and
      text
      are not prescribed by the Statute, other applicable Requirements of Law, the
      Servicer shall, subject to clauses (i) and (ii) above, determine the format,
      structure and text of all Bills in accordance with its reasonable business
      judgment, its Servicer Policies and Practices with respect to its own charges
      and prevailing industry standards.

     

    
      	
            	(c)	
              Delivery.
                The Servicer shall deliver all Bills to Customers
                

            


    

     

    
      	
            	(i)	
              by
                United States mail in such class or classes as are consistent with
                the
                Servicer Policies and Practices followed by the Servicer with respect
                to
                its own charges or

            


    

     

    
      	
            	(ii)	
              by
                any other means, whether electronic or otherwise, that the Servicer
                may
                from time to time use to present its own charges to its
                Customers.

            


    

     

    In
      the
      case of Customers that have elected Consolidated Third Party Billing, the
      Servicer shall deliver all Bills to the Applicable Third Parties by such means
      as are prescribed by applicable PSCWV Regulations, or, if not prescribed by
      applicable PSCWV Regulations, by such means as are mutually agreed upon by
      the
      Servicer and the Applicable Third Party and are consistent with PSCWV
      Regulations. The Servicer or a Third Party, as applicable, shall pay from its
      own funds all costs of issuance and delivery of all Bills, including but not
      limited to printing and postage costs as the same may increase or decrease
      from
      time to time.

     

    SECTION
      5. Customer
      Service Functions.

     

    The
      Servicer shall handle all Customer inquiries and other Customer service matters
      according to the same procedures it uses to service Customers with respect
      to
      its own charges.

     

    SECTION
      6. Collections;
      Payment Processing; Remittance.

     

    
      	
            	(a)	
              Collection
                Efforts; Policies; Procedures.

            


    

     

    
      	
            	(i)	
              The
                Servicer shall use reasonable efforts to collect all Billed Environmental
                Control Charges from Customers and Third Parties as and when the
                same
                become due and shall follow such collection procedures as it follows
                with
                respect to comparable assets that it services for itself or others,
                including, as follows:

            


    

     

    
      	
            	(A)	
              The
                Servicer shall prepare and deliver overdue notices to Customers and
                Third
                Parties in accordance with applicable PSCWV Regulations and the Servicer
                Policies and Practices.

            


    

     

    
      
        
        

      

      
        Attachment
          A-4

        
          

        

      

      
        
        

      

    

     

    
      	
            	(B)	
              The
                Servicer shall apply late payment charges to outstanding Customer
                and
                Third Party balances in accordance with applicable PSCWV Regulations.
                All
                late payment charges collected shall be payable to and retained by
                the
                Servicer as a component of its compensation under the Servicing Agreement,
                and the Issuer shall not have any right to share in the
                same.

            


    

     

    
      	
            	(C)	
              The
                Servicer shall deliver verbal and written final call notices in accordance
                with applicable PSCWV Regulations and Servicer Policies and
                Practices.

            


    

     

    
      	
            	(D)	
              The
                Servicer shall adhere to and carry out disconnection policies in
                accordance with the Competition Act, other applicable law and PSCWV
                Regulations and Servicer Policies and
                Practices.

            


    

     

    
      	
            	(E)	
              The
                Servicer may employ the assistance of collections agents in accordance
                with applicable PSCWV Regulations and Servicer Policies and
                Practices.

            


    

     

    
      	
            	(F)	
              The
                Servicer shall apply Customer and Third Party deposits, Customers’ letters
                of credit and Customer posted surety bonds to the payment of delinquent
                accounts in accordance with applicable PSCWV Regulations and Servicer
                Policies and Practices and according to the priorities set forth
                in
                Sections
                6(b)(ii), (iii) and
                (iv)
                of
                this Exhibit A.

            


    

     

    
      	
            	(G)	
              The
                Servicer shall promptly take all necessary action in accordance with
                applicable PSCWV Regulations to terminate billing of Environmental
                Control
                Charges by Third Parties whose payments are 30 or more days
                delinquent, or as the then current PSCWV Regulations and any billing
                services agreements allow, and to resume, prospectively, to collect
                the
                Billed Environmental Control Charges directly from the applicable
                Customers. At such time, the Servicer will apply the Third Party’s
                security deposit to satisfy charges billed previously by the Third
                Party
                which remain outstanding, including outstanding Environmental Control
                Charges.

            


    

     

    
      	
            	(ii)	
              The
                Servicer shall not waive any late payment charge or any other fee
                or
                charge relating to delinquent payments, if any, or waive, vary or
                modify
                any terms of payment of any amounts payable by a Customer, in each
                case
                unless such waiver or action:

            


    

     

    
      
        
        

      

      
        Attachment
          A-5

        
          

        

      

      
        
        

      

    

     

    
      	
            	(A)	
              would
                be in accordance with the Servicer’s customary practices or those of any
                Successor Servicer with respect to comparable assets that it services
                for
                itself and for others;

            


    

     

    
      	
            	(B)	
              would
                not materially adversely affect the rights of the Environmental Control
                Bondholders; and

            


    

     

    
      	
            	(C)	
              would
                comply with applicable Requirements of
                Law;

            


    

     

    provided,
      however, that notwithstanding anything in the Servicing Agreement or this
      Exhibit A to the contrary, the Servicer is authorized to write off any Billed
      Environmental Control Charges in accordance with its Servicer Policies and
      Practices.

     

    
      	
            	(iii)	
              The
                Servicer shall accept payment from Customers in respect of Billed
                Environmental Control Charges in such forms and methods and at such
                times
                and places as it accepts for payment of its own charges. The Servicer
                shall accept payment from Third Parties in respect of Billed Environmental
                Control Charges in such forms and methods and at such times and places
                as
                the Servicer and each Third Party shall mutually agree in accordance
                with
                applicable PSCWV Regulations.

            


    

     

    
      	
            	(b)	
              Payment
                Processing; Allocation; Priority of Payments.

            


    

     

    
      	
            	(i)	
              The
                Servicer shall post all payments received to Customer accounts as
                promptly
                as practicable, and, in any event, substantially all payments shall
                be
                posted no later than two Business Days after
                receipt.

            


    

     

    
      	
            	(ii)	
              Subject
                to clause (iii) below, the Servicer shall apply payments received
                to each
                Customer’s or Third Party’s account in proportion to the charges contained
                on the outstanding Bill to such Customer or Third
                Party.

            


    

     

    
      	
            	(iii)	
              Any
                amounts collected by the Servicer that represent partial payments
                of the
                total Bill to a Customer or Third Party shall be allocated in accordance
                with the priorities set forth in Section
                3.02(b)
                of
                the Servicing Agreement.

            


    

     

    
      	
            	(iv)	
              The
                Servicer shall hold all over-payments for the benefit of the Issuer
                and
                shall apply such funds to future Bill charges in accordance with
                clauses
                (ii) and (iii) above as such charges become
                due.

            


    

     

    
      	
            	(v)	
              For
                Customers on a Budget Billing Plan, the Servicer shall treat Environmental
                Control Charge Collections received from such


            


    

     

    
      
        
        

      

      
        Attachment
          A-6

        
          

        

      

      
        
        

      

    

     

    Customers
      as if such Customers had been billed for
      the Environmental Control Charge in the absence of the Budget Billing Plan.
      Partial payment of a Budget Billing Plan payment shall be allocated according
      to
      clause (iii) above, and overpayment of a Budget Billing Plan payment shall
      be
      allocated according to clause (iv) above.

     

    
      	
            	(c)	
              Accounts;
                Records.

            


    

     

    
      	
            	(i)	
              The
                Servicer shall maintain accounts and records as to the Transferred
                Environmental Control Property accurately and in accordance with
                its
                standard accounting procedures and in sufficient detail to permit
                reconciliation between payments or recoveries with respect to the
                Transferred Environmental Control Property and the amounts from time
                to
                time remitted to the Collection Account in respect of the Transferred
                Environmental Control Property.

            


    

     

    
      	
            	(ii)	
              The
                Servicer shall maintain accounts and records as to Third Parties
                performing billing for Customers accurately and in accordance with
                its
                standard accounting procedures and in sufficient detail to permit
                reconciliation between payments or recoveries with respect to the
                Transferred Environmental Control Property and amounts owed by such
                Customers in respect of the Environmental Control
                Charge.

            


    

     

    
      	
            	(d)	
              
                Investment
                  of Environmental Control Charge Collections.
                  Any and all interest accrued on Environmental Control Charge Collections
                  prior to the remittance of such Environmental Control Charge Collections
                  to the Issuer or Indenture Trustee shall be remitted by the Servicer
                  to
                  the Indenture Trustee for deposit in the Excess Funds
                  Subaccount.

              

            


    

     

    
      	
            	(e)	
              Calculation
                of Collections; Determination of Aggregate Remittance
                Amount.

            


    

     

    
      	
            	(i)	
              On
                or before each Remittance Date, the Servicer shall calculate the
                Estimated
                Environmental Control Charge Collections received by the Servicer
                from or
                on behalf of Customers during prior Collection Periods in respect
                of all
                previously Billed Environmental Control
                Charges.

            


    

     

    
      	
            	(ii)	
              In
                accordance with Section
                4.01
                of
                the Servicing Agreement and Annex 1, the Servicer shall update the
                Variables and shall prepare True-Up Adjustment Filings to reflect
                the
                updated Variables when required to do so pursuant to Annex
                1.

            


    

     

    
      	
            	(f)	
              Remittances.

            


    

     

    
      
        
        

      

      
        Attachment
          A-7

        
          

        

      

      
        
        

      

    

     

    
      	
            	(i)	
              The
                Servicer shall make remittances to the Issuer in accordance with
                Section
                5.11
                of
                the Servicing Agreement.

            


    

     

    
      	
            	(ii)	
              In
                the event of any change of account or change of institution affecting
                the
                remittances, the Issuer shall provide written notice thereof to the
                Servicer by the earlier of

            


    

     

    ·  
      five
      Business Days from the effective date of such change, or

     

    ·  
      five
      Business Days prior to the next applicable Remittance Date.

     

    
      
        
        

      

      
        Attachment
          A-8

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B


    


    PENDING
      LITIGATION

    


    None.

     

    
      
        
        

      

      
        Exhibit
          B-1

        
          

        

      

      
        
        

      

    

     

    ANNEX
      1 

     

    FORM
      OF ROUTINE ADJUSTMENT REQUEST

     

    DATE:

     

    [Executive
      Secretary]

    Public
      Service Commission of West Virginia 

    201
      Brooks Street, P.O. Box 812

    Charleston,
      WV 25323

     

    Re:
      Case
      Nos. 05-0402-E-CN and 05-0750-E-PC

     

    Dear
      __________________:

     

    
      As
        required by Section 24-2-4e(e) of the West Virginia Code §§ 24-2-4e(a)
        through and including 24-2-4e(v) and pursuant to the orders dated April 7,
        2006,
        June 13, 2006 and January 17, 2007 in Case Nos. 05-0402-E-CN and 05-0750-E-PC
        (the “Financing
        Order”),
        Monongahela Power Company (the “Company”)
        as
        Servicer (or any Successor Servicer) of the Transferred Environmental Control
        Property, and on behalf of the Indenture Trustee under the Indenture, dated
        as
        of April 11, 2007 between the Issuer and the Indenture Trustee, as amended,
        modified or supplemented from time to time, as assignee of MP Environmental
        Funding LLC hereby proposes an adjustment to the Environmental Control Charges
        (the “ECC”
or
        “Environmental
        Control Charges”).
        Capitalized terms used but not otherwise defined herein have the meanings
        given
        such terms in the Servicing Agreement dated as of April 11, 2007 between
        the
        Issuer and the Company, as amended, modified or supplemented from time to
        time,
        or in Appendix A thereto.

    

     

    This
      proposed adjustment is intended to satisfy Section 24-2-4e(e) and the
      Financing Order by ensuring that the ECC will recover amounts sufficient to
      timely provide all payments of debt service and other required amounts and
      charges in connection with the Environmental Control Bonds during the upcoming
      Remittance Period. 

     

    Using
      the
      formula approved by the Public Service Commission of West Virginia (the
“PSCWV”)
      in the
      Financing Order, this filing modifies the variables used in the ECC and provides
      the resulting adjusted ECC. Attachments B-1 [and B-2] hereto show the resulting
      values of the ECC, as calculated in accordance with the Joint Stipulation,
      as
      modified by the Financing Order, such modified Environmental Control Charges
      to
      be effective as of the first day of the upcoming Remittance Period. The
      calculations of these values are appended to the Attachments
      hereto.

     

    In
      accordance with the Financing Order, the proposed adjustments to the charges
      will be effective automatically on the first day of the upcoming Remittance
      Period. In the event that, prior to the first day of the upcoming
      Remittance Period, it is determined by the PSCWV that a mathematical error
      in
      the application of the formula-based mechanism exists, the Company shall correct
      such error and make any necessary corrections to the adjustments of the
      Environmental Control Charges. These adjusted Environmental Control Charges,
      as
      corrected, shall in any 

     

    
      
        
        

      

      
        Annex
          1-1

        
          

        

      

      
        
        

      

    

     

    event
      take effect on the fifteenth day of the upcoming Remittance Period. [For
      Quarterly True-Up Adjustments and Monthly True-Up Adjustments, on the first
      day
      of the quarter or month next succeeding the date of the Routine Adjustment
      Request.]

     

     

    Respectfully
      submitted,

     

    Attachment

    


    
      
        
        

      

      
        Annex
          1-2

        
          

        

      

      
        
        

      

    


    ATTACHMENT
      A TO ANNEX 1

     

    Table
      I
      below shows the current assumptions for each of the variables used in the
      Environmental Control Charge calculation.

     

    INPUT
      VALUES FOR ENVIRONMENTAL CONTROL CHARGE

     

    
      	(a)  	
              Measure
                Date

            


    

    
      	(b)  	
              For
                each Rate Schedule:

            


    

    
      	 	(i) Weighted
              average days outstanding data


    

    
      	 	(ii) Estimated
              Net Write-Off Percent


    

    
      	 	(iii) Projected
              billed revenue to which Environmental Control Charges
              apply


    

    
      	 	(iv) Annual
              class generation level MWh energy


    

    
      	 	(v) Forecasted
              annual class customer level MWh energy


    

    
      	 	(vi) Annual
              class generation level 12 CP MW demand


    

    
      	 	(vii) Forecasted
              annual class customer level demand


    

    
      	(c)  	
              Retail
                energy weighting ratio

            


    

    
      	(d)  	
              Retail
                demand weighting ratio

            


    

    
      	(e)  	
              Total
                generation level MWh energy (excl.
                wholesale)

            


    

    
      	(f)  	
              Total
                generation level 12 CP MW demand (excl.
                wholesale)

            


    

    
      	(g)  	
              Expected
                annual Write-Offs

            


    

    
      	(h)  	
              Annual
                ongoing transaction expenses

            


    

    
      	(i)  	
              Current
                Environmental Control Bonds outstanding
                balance

            


    

    
      	(j)  	
              Expected
                Environmental Control Bonds outstanding balance as of
                __/__/__

            


    

    
      	(k)  	
              Accrued
                but unpaid Environmental Control Bonds
                interest

            


    

    
      	(l)  	
              Deferred
                unpaid Environmental Control Bonds
                principal

            


    

    
      	(m)  	
              Unpaid
                ongoing transaction cost

            


    

    
      	(n)  	
              Capital
                Subaccount balance as of __/__/__

            


    

    
      	(o)  	
              Available
                True-Up Excess Funds Amount

            


    

    
      	(p)  	
              Accrued
                but unpaid Capital Equity Return

            


    

    
      	(q)  	
              federal
                corporate income tax rate

            


    

    
      	(r)  	
              Applicable
                state and local tax rates

            


    

    


    
      
        
        

      

      
        Attachment
          A-1 to Annex
          1

        
          

        

      

      
        
        

      

       

    

    ANNEX
      2

     

    FORM
      OF MONTHLY SERVICER’S CERTIFICATE

     

    MP
      Environmental Funding LLC

     

    
      $344,475,000
        Senior Secured Sinking Fund Environmental Control Bonds, Series
        A

       

    

    Pursuant
      to Section 3.04 of the Servicing Agreement dated as of April 11, 2007 (as
      the same may be amended, supplemented or otherwise modified from time to time,
      the “Servicing Agreement”) between Monongahela Power Company, as Servicer, and
      MP Environmental Funding LLC, as Issuer, the Servicer does hereby certify as
      follows:

     

    Capitalized
      terms used in this Monthly Servicer’s Certificate have their respective meanings
      as set forth in the Servicing Agreement. References herein to certain sections
      and subsections are references to the respective sections of the Servicing
      Agreement.

     

    Billing
      Period: [____________]

     

    
      	
              1.  

            	
              Current
                Billing Period

            	
              [___________]

            
	 	
              CUSTOMER
                CLASS [ ] of [ ]: [____________]

            	
               

            
	 	 	 
	
              2.  

            	
              Rate
                Schedule #[ ] kWh Billed

            	
              [___________]

            
	
              3.  

            	
              Rate
                Schedule #[ ] Weighted Average

            	
              [___________]

            
	 	
              Environmental
                Control Charge

            	
               

            
	 	
              Billed
                Environmental Control Charge Collections

            	
               

            
	 	 	 
	
              4.  

            	
              Rate
                Schedule #[ ] Billed Environmental Control Charge
                Collections

            	
              $[__________]

            
	 	 	 
	 	
              Estimated
                Environmental Control Charge Collections

            	
               

            
	 	 	 
	
              5.  

            	
              Rate
                Schedule #[ ] Environmental Control Charge Collections

            	
              $[__________]

            
	
              6.  

            	
              Total
                Residential Net Write-offs

              as
                % of Billed Environmental Control Charge Collections

              [
                ]
                CUSTOMER CLASS [ ] OF [ ]: [___________]

            	
                   
                [__________]%

            
	 	 	 
	 	 	
               

            
	
              7.  

            	
              Rate
                Schedule #[ ] kWh Billed

            	
              [___________]

            
	
              8.  

            	
              Rate
                Schedule #[ ] Weighted Average

            	
              [___________]

            
	 	
              Environmental
                Control Charge

            	
               

            
	
              9.  

            	
              Rate
                Schedule #[ ] kWh Billed

            	
              [___________]

            
	
              10.  

            	
              Rate
                Schedule #[ ] Weighted Average

            	
              [___________]

            
	 	
              Environmental
                Control Charge

            	
               

            
	
              11.  

            	
              Rate
                Schedule #[ ] kWh Billed

            	
              [___________]

            
	
              12.  

            	
              Rate
                Schedule #[ ] Weighted Average

            	
              [___________]

            
	 	
              Environmental
                Control Charge

            	
               

            
	
              13.  

            	
              Rate
                Schedule #[ ] kWh Billed

            	
              [___________]

            
	
              14.  

            	
              Rate
                Schedule #[ ] Weighted Average

            	
              [___________]

            
	 	
              Environmental
                Control Charge

            	
               

            
	 	
              Billed
                Environmental Control Charge Collections

            	
               

            


    

     

    
      
        
        

      

      
        Annex
          2-1

        
          

        

      

      
        
        

      

    

     

    
      	
              15.  

            	
              Rate
                Schedule #[ ] Billed Environmental Control Charge
                Collections

            	
              $[__________]

            
	
              16.  

            	
              Rate
                Schedule #[ ] Billed Environmental Control Charge
                Collections

            	
              $[__________]

            
	
              17.  

            	
              Rate
                Schedule #[ ] Billed Environmental Control Charge
                Collections

            	
              $[__________]

            
	
              18.  

            	
              Rate
                Schedule #[ ] Billed Environmental Control Charge
                Collections

            	
              $[__________]

            
	
              19.  

            	
              Total
                Commercial Billed Environmental Control Charge Collections

            	
              $[__________]

            
	 	 	 
	 	
              Estimated
                Environmental Control Charge Collections

            	
               

            
	 	 	 
	
              20.  

            	
              Rate
                Schedule #[ ] Environmental Control Charge Collections

            	
              $[__________]

            
	
              21.  

            	
              Rate
                Schedule #[ ] Environmental Control Charge Collections

            	
              $[__________]

            
	
              22.  

            	
              Rate
                Schedule #[ ] Environmental Control Charge Collections

            	
              $[__________]

            
	
              23.  

            	
              Rate
                Schedule #[ ] Environmental Control Charge Collections

            	
              $[__________]

            
	 	 	 
	
              24.  

            	
              Total
                Commercial Environmental Control Charge Collections

            	
              $[__________]

            
	
              25.  

            	
              Total
                Commercial Net Write-offs as

              a
                %
                of Billed Revenues [ ]

              CUSTOMER
                CLASS [ ] OF [ ]: [__________]

            	
                   
                [__________]%

            
	 	 	 
	
              26.  

            	
              Rate
                Schedule #[ ] kWh Billed

            	
              [__________]

            
	
              27.  

            	
              Rate
                Schedule #[ ] Weighted Average

            	
              [__________]

            
	 	
              Environmental
                Control Charge

            	
               

            
	 	 	 
	
              28.  

            	
              Rate
                Schedule #[ ] kWh Billed

            	
              [__________]

            
	
              29.  

            	
              Rate
                Schedule #[ ] Weighted Average

            	
              [__________]

            
	 	
              Environmental
                Control Charge

            	
               

            
	
              30.  

            	
              Rate
                Schedule #[ ] kWh Billed

            	
              [__________]

            
	
              31.  

            	
              Rate
                Schedule #[ ] Weighted Average

            	
              [__________]

            
	 	
              Environmental
                Control Charge

            	
               

            
	
              32.  

            	
              Rate
                Schedule #[ ] kWh Billed

            	
              [__________]

            
	
              33.  

            	
              Rate
                Schedule #[ ] Weighted Average

            	
              [__________]

            
	 	
              Environmental
                Control Charge

            	
               

            
	
              34.  

            	
              Rate
                Schedule #[ ] kWh Billed

            	
              [__________]

            
	
              35.  

            	
              Rate
                Schedule #[ ] Weighted Average

            	
              [__________]

            
	 	
              Environmental
                Control Charge

            	
               

            
	
              36.  

            	
              Rate
                Schedule #[ ] kWh Billed

            	
              [__________]

            
	
              37.  

            	
              Rate
                Schedule #[ ] Weighted Average

            	
              [__________]

            
	 	
              Environmental
                Control Charge

            	
               

            
	
              38.  

            	
              Street
                Lighting Rate Schedules

            	
              [__________]

            
	
              39.  

            	
              Street
                Lighting Weighted Average

            	
              [__________]

            
	 	
              Environmental
                Control Charge

            	
               

            
	 	
              Billed
                Environmental Control Charge Collections

            	
               

            
	 	 	
               

            
	
              40.  

            	
              Rate
                Schedule #[ ] Billed Environmental Control Charge
                Collections

            	
              $[__________]

            
	
              41.  

            	
              Rate
                Schedule #[ ] Billed Environmental Control Charge
                Collections

            	
              $[__________]

            
	
              42.  

            	
              Rate
                Schedule #[ ] Billed Environmental Control Charge
                Collections

            	
              $[__________]

            
	
              43.  

            	
              Rate
                Schedule #[ ] Billed Environmental Control Charge
                Collections

            	
              $[__________]

            
	
              44.  

            	
              Rate
                Schedule #[ ] Billed Environmental Control Charge
                Collections

            	
              $[__________]

            
	
              45.  

            	
              Rate
                Schedule #[ ] Billed Environmental Control Charge
                Collections

            	
              $[__________]

            
	
              46.  

            	
              Street
                Lighting Rate Schedules Billed Environmental Control Charge
                Collections

            	
              $[__________]

            
	 	 	 
	
              47.  

            	
              Total
                Industrial Billed Environmental Control Charge Collections

            	
              $[__________]

            
	 	 	 
	 	
              Estimated
                Environmental Control Charge Collections

            	 


    

     

    
      
        
        

      

      
        Annex
          2-2

        
          

        

      

      
        
        

      

    

     

    
      	
              48.  

            	
              Rate
                Schedule #[ ] Environmental Control Charge Collections

            	
              $[__________]

            
	
              49.  

            	
              Rate
                Schedule #[ ] Environmental Control Charge Collections

            	
              $[__________]

            
	
              50.  

            	
              Rate
                Schedule #[ ] Environmental Control Charge Collections

            	
              $[__________]

            
	
              51.  

            	
              Rate
                Schedule #[ ] Environmental Control Charge Collections

            	
              $[__________]

            
	
              52.  

            	
              Rate
                Schedule #[ ] Environmental Control Charge Collections

            	
              $[__________]

            
	
              53.  

            	
              Rate
                Schedule #[ ] Environmental Control Charge Collections

            	
              $[__________]

            
	
              54.  

            	
              Street
                Lighting Rate Schedules Environmental Control Charge
                Collections

            	
              $[__________]

            
	 	 	
               

            
	
              55.  

            	
              Total
                Industrial Environmental Control Charge Collections

            	
              $[__________]

            
	
              56.  

            	
              Total
                Industrial Net Write-offs as

              a
                %
                of Billed Environmental Control Charge Collections [ ]

            	
                   
                [__________]%

            
	 	 	
               

            
	 	
              AGGREGATE
                ESTIMATED ENVIRONMENTAL CONTROL CHARGE COLLECTIONS

            	
               

            
	 	 	
               

            
	 	
              Aggregate
                Environmental Control Charge Remittances for [Month, Year] Billing
                Period

            	
              $[__________]

            
	 	
              Aggregate
                Environmental Control Charge Remittances for [Month, Year] Billing
                Period

            	
              $[__________]

            
	 	
              Aggregate
                Environmental Control Charge Remittances for [Month, Year] Billing
                Period

            	
               

            
	 	
              Aggregate
                Environmental Control Charge Remittances for [Month, Year] Billing
                Period

            	 
	 	
              Aggregate
                Environmental Control Charge Remittances to Date

            	
              $[__________]

            


    

    


    


    IN
      WITNESS HEREOF, the undersigned has duly executed and delivered this Monthly
      Servicer’s Certificate this [__] day of [________________].

    


    ____________________________________

    Name:

    Title:

     

    
      
        
        

      

      
        Annex
          2-3

        
          

        

      

      
        
        

      

    

     

    ANNEX
      3

     

    FORM
      OF QUARTERLY SERVICER’S CERTIFICATE

     

    Quarterly
      Servicer’s Certificate

     

    MP
      Environmental Funding LLC

    

      $344,475,000
        Senior Secured Sinking Fund Environmental Control Bonds, Series
        A

       

    

    Pursuant
      to Section 3.04 of the Servicing Agreement dated as of April 11, 2007 (as
      the same may be amended, supplemented or otherwise modified from time to time,
      the “Servicing Agreement”) between Monongahela Power Company, as Servicer and MP
      Environmental Funding LLC, as Issuer, the Servicer does hereby certify as
      follows:

     

    Capitalized
      terms used in this Quarterly Servicer’s Certificate have their respective
      meanings as set forth in the Servicing Agreement. References herein to certain
      sections and subsections are references to the respective sections of the
      Servicing Agreement. 

     

    Billing
      Periods: [_____________]

    Payment
      Date: [_____________]


    
      

        
          	
                  1.           Collections
                    Allocable and Aggregate Amounts Available for the Current Payment
                    Date:

                	 	 
	
                  i. Balance
                    of Remittances for the [
                    ]
                    Collection Period

                	 	
                  $[________]

                
	
                  ii. Remittances
                    for the [
                    ]
                    Collection Period

                	 	
                  $[________]

                
	
                  iii
                    a. Remittances
                    for the [
                    ]
                    Collection Period

                	 	
                  $[________]

                
	
                  iii
                    b. Part
                    [
                    ]
                    Remittance for 'Daily Remittance Provision'

                	 	
                  $[________]

                
	
                  iv. Net
                    Earnings on General Subaccount

                	 	
                  $[________]

                
	
                  v. Net
                    Earnings on Capital Subaccount

                	 	
                  $[________]

                
	 	 	
                  $[________]

                
	
                  vi. Net
                    Earnings on True-Up Excess Funds Subaccount

                	 	
                  $[________]

                
	
                  vii. General
                    Subaccount Balance

                	 	
                  $[________]

                
	 	 	
                   

                
	
                  viii. True-Up
                    Excess Funds Subaccount Balance

                	 	
                  $[________]

                
	
                  ix.

                	 	
                  $[________]

                
	
                  x. Capital
                    Subaccount Balance

                	 	
                  $[________]

                
	
                  xi. Collection
                    Account Balance

                	 	
                  $[________]

                
	 	 	
                   

                
	
                  2.          
                    Outstanding
                    Principal Balance and Collection Account Balance as of Prior
                    Payment
                    Date:

                	 	
                   

                
	
                  i. Tranche
                    [
                    ]
                    Principal
                    Balance

                	 	
                  $[________]

                
	
                  ii. Tranche
                    [
                    ]
                    Principal Balance

                	 	
                  $[________]

                
	
                  iii. Tranche
                    [
                    ]
                    Principal Balance

                	 	
                  $[________]

                
	
                  iv. Tranche
                    [
                    ]
                    Principal Balance

                	 	
                  $[________]

                


        

         

        
          
            
            

          

          
            Annex
              3-1

            
              

            

          

          
            
            

          

        

         

        
          	
                  v. Environmental
                    Control Bond Principal Balance

                	 	
                  $[________]

                


        

        
          	 	 	 
	
                  vi. True-Up
                    Excess Funds Subaccount Balance

                	 	
                  $[________]

                
	
                  vii. Capital
                    Subaccount Balance

                	 	
                  $[________]

                
	 	 	
                   

                
	
                  3.          
                    Required
                    Funding/Payments as of Current Payment Date:

                	 	
                   

                
	
                  i. Projected
                    Tranche [
                    ]
                    Environmental Control Bond Balance

                	 	
                  $[________]

                
	
                  ii. Projected
                    Tranche [
                    ]
                    Environmental Control Bond Balance

                	 	
                  $[________]

                
	
                  iii. Projected
                    Tranche [
                    ]
                    Environmental Control Bond Balance

                	 	
                  $[________]

                
	
                  iv. Projected
                    Tranche [
                    ]
                    Environmental Control Bond Balance

                	 	
                  $[________]

                
	
                  v. Projected
                    Environmental Control Bond Balance

                	 	
                  $[________]

                
	 	 	
                   

                
	
                  vi. Required
                    Tranche [
                    ]
                    Coupon ([
                    ]%
                    per annum rate)

                	 	
                  $[________]

                
	
                  vii. Required
                    Tranche [
                    ]
                    Coupon ([
                    ]%
                    per annum rate)

                	 	
                  $[________]

                
	
                  viii. Required
                    Tranche [
                    ]
                    Coupon ([
                    ]%
                    per annum rate)

                	 	
                  $[________]

                
	
                  ix. Required
                    Tranche [
                    ]
                    Coupon ([
                    ]%
                    per annum rate)

                	 	
                  $[________]

                
	 	 	
                   

                
	
                  x. Required
                    Capital Subaccount Funding

                	 	
                  $[________]

                
	 	 	
                   

                
	
                  4.          
                    Allocation
                    of Remittances as of Current Payment Date Pursuant to Section
                    8.02(d) of
                    the Indenture:

                	 	 
	
                  i. Cumulative
                    Monthly Administration Fee during Relevant Quarter

                	 	
                  $[________]

                
	
                  ii. Indenture
                    Fees and Expenses

                	
                  *

                	
                  $[________]

                
	
                  iii. Independent
                    Director’s Fee

                	
                  **

                	
                  $[________]

                
	
                  iv. Servicing
                    Fee

                	 	
                  $[________]

                
	
                  v. Operating
                    Expenses (subject to $[
                    ]
                    cap)

                	 	
                  $[________]

                
	 	 	
                   

                
	
                  vi. Quarterly
                    Interest

                	 	
                  $[________]

                
	
                  1. Tranche
                    [
                    ]
                    Environmental Control Bond Coupon Payment

                	 	
                  $[________]

                
	
                  2. Tranche
                    [
                    ]
                    Environmental Control Bond Coupon Payment

                	 	
                  $[________]

                
	
                  3. Tranche
                    [
                    ]
                    Environmental Control Bond Coupon Payment

                	 	
                  $[________]

                
	
                  4. Tranche
                    [
                    ]
                    Environmental Control Bond Coupon Payment

                	 	
                  $[________]

                
	 	 	
                   

                
	
                  vii. Principal
                    Due and Payable

                	 	
                  $[________]

                
	 	 	
                   

                
	
                  viii. Scheduled
                    Quarterly Principal

                	 	
                  $[________]

                
	
                  1. Tranche
                    [
                    ]
                    Environmental Control Bond Principal Payment

                	 	
                  $[________]

                
	
                  2. Tranche
                    [
                    ]
                    Environmental Control Bond Principal Payment

                	 	
                  $[________]

                
	
                  3. Tranche
                    [
                    ]
                    Environmental Control Bond Principal Payment

                	 	
                  $[________]

                
	
                  4. Tranche
                    [
                    ]
                    Environmental Control Bond Principal Payment

                	 	
                  $[________]

                
	 	 	
                   

                
	
                  ix. Operating
                    Expenses (in excess of $[
                    ])

                	 	
                  $[________]

                


        

         

        
          
            
            

          

          
            Annex
              3-2

            
              

            

          

          
            
            

          

        

         

        
          	
                  x. Funding
                    of Capital Subaccount (to required level)

                	 	
                  $[________]

                


        

        
          	
                  xi. Required
                    Dividend Distributions to Mon Power

                	 	
                  $[________]

                
	
                  xii. Deposits
                    to True-Up Excess Funds Subaccount

                	 	
                  $[________]

                
	
                  xiii. Released
                    to Issuer upon Series Retirement: Collection Account

                	 	
                  $[________]

                
	 	 	
                   

                
	
                  5.          
                    Outstanding
                    Principal Balance and Collection Account Balance as of Current
                    Payment
                    Date: 

                                
                    (after
                    giving effect to payments to be made on such payment
                    date):

                	 	
                   

                
	 	 	
                   

                
	
                  i. Tranche
                    [
                    ]
                    Principal Balance

                	 	
                  $[________]

                
	
                  ii. Tranche
                    [
                    ]
                    Principal Balance

                	 	
                  $[________]

                
	
                  iii. Tranche
                    [
                    ]
                    Principal Balance

                	 	
                  $[________]

                
	
                  iv. Tranche
                    [
                    ]
                    Principal Balance

                	 	
                  $[________]

                
	
                  v. Environmental
                    Control Bond Principal Balance

                	 	
                  $[________]

                
	 	 	
                   

                
	
                  vi. True-Up
                    Excess Funds Subaccount Balance

                	 	
                  $[________]

                
	
                  vii Capital
                    Subaccount Balance

                	 	
                  $[________]

                
	
                  * $[
                    ]
                    per quarter, in advance plus expenses, in arrears.

                	 	 
	
                  ** Independent
                    Director’s Fee is paid in advance, first quarter. ([Quarter/Year],
                    directly by Issuer to directors)

                	 	 
	 	 	 
	
                  6.          
                    Subaccount
                    Draws as of Current Payment Date (if applicable, pursuant to
                    Section
                    8.02(d) of the Indenture):

                	 	 
	 	 	 
	
                  i. True-Up
                    Excess Funds Subaccount

                	 	
                  $[________]

                
	
                  ii. Capital
                    Subaccount

                	 	
                  $[________]

                
	
                  iii. Total
                    Draws

                	 	
                  $[________]

                
	 	 	
                   

                
	
                  7.           
                    Shortfalls
                    In Interest and Principal Payments as of Current Payment
                    Date:

                	 	
                   

                
	 	 	
                   

                
	
                  i. Quarterly
                    Interest

                	 	
                  $[________]

                
	
                  1. Tranche
                    [
                    ]
                    Environmental Control Bond Coupon Payment

                	 	
                  $[________]

                
	
                  2. Tranche
                    [
                    ]
                    Environmental Control Bond Coupon Payment

                	 	
                  $[________]

                
	
                  3. Tranche
                    [
                    ]
                    Environmental Control Bond Coupon Payment

                	 	
                  $[________]

                
	
                  4. Tranche
                    [
                    ]
                    Environmental Control Bond Coupon Payment

                	 	
                  $[________]

                
	 	 	
                   

                
	
                  ii. Quarterly
                    Principal

                	 	
                  $[________]

                
	
                  1. Tranche
                    [
                    ]
                    Environmental Control Bond Principal Payment

                	 	
                  $[________]

                
	
                  2. Tranche
                    [
                    ]
                    Environmental Control Bond Principal Payment

                	 	
                  $[________]

                
	
                  3. Tranche
                    [
                    ]
                    Environmental Control Bond Principal Payment

                	 	
                  $[________]

                
	
                  4. Tranche
                    [
                    ]
                    Environmental Control Bond Principal Payment

                	 	
                  $[________]

                


        

         

      

    

    
      
        
        

      

      
        Annex
          3-3

        
          

        

      

      
        
        

      

    

     

    
      	
              8.          
                Shortfalls
                in Required Subaccount Levels as of Current Payment
                Date:

            	 


    

    
      
        	
                i. Capital
                  Subaccount

              	 	
                $[________]

              


      

       

    

    IN
      WITNESS HEREOF, the undersigned has duly executed and delivered this Quarterly
      Servicer’s Certificate this [__] day of [________________].

     

    ____________________________________

    Name:

    Title:

     

    
      
        
        

      

      
        Annex
          3-4

        
          

        

      

      
        
        

      

    

    
       

    

    ANNEX
      4

     

    FORM
      OF OFFICER’S CERTIFICATE

     

    
      $344,475,000

       

      MP
        ENVIRONMENTAL FUNDING LLC

       

      SENIOR
        SECURED SINKING FUND ENVIRONMENTAL CONTROL BONDS, SERIES A

       

    

    MONONGAHELA
      POWER COMPANY

     

    OFFICER’S
      CERTIFICATE

     

    Pursuant
      to Section 3.05(a) of the Servicing Agreement dated as of April 11, 2007
      between MP Environmental Funding LLC, as Issuer, and Monongahela Power Company
      (the “Company”), as Servicer (as the same may be amended, supplemented or
      otherwise modified from time to time, the “Servicing Agreement”; capitalized
      terms used but not defined herein have the meanings assigned thereto in the
      Servicing Agreement), each of the undersigned, [Authorized Officer], the duly
      elected [________________] of and [Authorized Officer], the [________________]
      of the Company, having carefully examined the Servicing Agreement including
      Section 3.05 thereof, and the definitions in the Servicing Agreement
      relating thereto and certain other corporate documents and records, and having
      made such examination or investigation as they consider necessary to enable
      the
      undersigned to express any informed opinion, certifies that:

     

    (i) a
      review
      of the activities of the Company during the period from January 1, [____]
      through December 31, [____] and of its performance under the Servicing Agreement
      has been made under the supervision of the undersigned, and

     

    (ii) to
      the
      best of the knowledge of the undersigned, based on such review, the Company
      has
      complied with all conditions and covenants under the Servicing Agreement
      throughout such period [or, if there has been an Event of Default, or an act
      or
      omission, which with either the passage of time or the giving of notice, could
      become an Event of Default, specify such event of default or act or omission
      known to such authorized officer and the nature and status
      thereof].

     

    IN
      WITNESS WHEREOF, the undersigned have executed this certificate this [__] day
      of
      [________________].

     

    By:
      ____________________________________

    Name:

    Title:

     

    By:
      ____________________________________

    Name:

    Title:

     

    
      
        
        

      

      
        Annex
          4-1

        
          

        

      

      
        
        

      

    


    ANNEX
      5

     

    FORM
      OF ASSESSMENT OF SERVICING CRITERIA

     

    I,
      ________________________________, the _______________________ of the Servicer,
      am responsible for assessing the Servicer’s compliance with the servicing
      criteria set forth in Item 1122(d) of Regulation AB [that would apply if the
      Bonds were “asset-backed securities” under Item 1101(c) of Regulation AB] (the
“Servicing Criteria”).

     

    With
      respect to each of the Servicing Criteria, I have made the following assessment
      of the Servicing Criteria in accordance with Item 1122(d) of Regulation AB,
      with
      such discussion regarding the performance of such Servicing Criteria during
      the
      fiscal year covered by the Issuer’s Form 10-K Report (such fiscal year, the
“Assessment Period”):

     

    [N.B.:
      the descriptions are for reference as to how the form will be used on an ongoing
      basis for filing with the SEC]

     

    
      	 	
              Servicing
                Criteria

            	
              Applicable
                Servicing Criteria

            
	
              Reference

            	
              Criteria

            	 
	 	
              General Serving Considerations

            	 
	
              1122(d)(1)(i)

            	
              Policies
                and procedures are instituted to monitor any performance or other
                triggers
                and events of default in accordance with the transaction
                agreements.

            	
              Applicable;
                assessment below. [Assessment: cover true-up compliance
                here]

            
	
              1122(d)(1)(ii)

            	
              If
                any material servicing activities are outsourced to third parties,
                policies and procedures are instituted to monitor the third party’s
                performance and compliance with such servicing activities.

            	
              Not
                applicable; no servicing activities were outsourced.

            
	
              1122(d)(1)(iii)

            	
              Any
                requirements in the transaction agreements to maintain a back-up
                servicer
                for the environmental control property are maintained.

            	
              Not
                applicable; documents do not provided for a back-up
                servicer.

            
	
              1122(d)(1)(iv)

            	
              A
                fidelity bond and errors and omissions policy is in effect on the
                party
                participating in the servicing function throughout the reporting
                period in
                the amount of coverage required by and otherwise in accordance with
                the
                terms of the transaction agreements.

            	
              Not
                applicable; rules of the Commission govern performance requirements
                of
                persons handling customer collections. [Utility to confirm bonding
                requirements under current rules and regulations.] 

            
	 	
              Cash
                Collection and Administration

            	 
	
              1122(d)(2)(i)

            	
              Payments
                on environmental control property are deposited into the appropriate
                custodial bank accounts and related bank clearing accounts no more
                than
                two business days following receipt, or such other number of days
                specified in the transaction agreements.

            	
              Applicable;
                assessment below [Assessment: estimated collections were remitted
                from the
                Servicer to the Trustee each business day in accordance with
                Section 5.10 of the Servicing
                Agreement.]

            


    

     

    
      
        
        

      

      
        Annex
          5-1

        
          

        

      

      
        
        

      

    

     

    
      	 	
              Servicing
                Criteria

            	
              Applicable
                Servicing Criteria

            
	
              Reference

            	
              Criteria

            	
            
	
              1122(d)(2)(ii)

            	
              Disbursements
                made via wire transfer on behalf of an obligor or to an investor
                are made
                only by authorized personnel.

            	
              Applicable;
                assessment below.[Assessment: Wire transfers to the Trustee were
                made by
                authorized personnel.]

            
	
              1122(d)(2)(iii)

            	
              Advances
                of funds or guarantees regarding collections, cash flows or distributions,
                and any interest or other fees charged for such advances, are made,
                reviewed and approved as specified in the transaction
                agreements. 

            	
              Applicable,
                but no current assessment required; no advances by the Servicer or
                the
                Trustee are permitted under the transaction documents. 

            
	
              1122(d)(2)(iv) 

            	
              The
                related accounts for the transaction, such as cash reserve accounts
                or
                accounts established as a form of overcollateralization, are separately
                maintained (e.g., with respect to commingling of cash) as set forth
                in the
                transaction agreements. 

            	
              Applicable,
                but no current assessment is required; no reserve accounts are held
                by the
                Servicer. Excess funds and other transaction accounts are maintained
                and
                applied by the Trustee in accordance with the
                Indenture.

            
	
              1122(d)(2)(v)

            	
              Each
                custodial account is maintained at a federally insured depository
                institution as set forth in the transaction agreements. For purposes
                of
                this criterion, “federally insured depository institution” with respect to
                a foreign financial institution means a foreign financial institution
                that
                meets the requirements of Rule 13k-1(b)(1) of the Securities Exchange
                Act.

            	
              Applicable,
                but no current assessment required; all “custodial accounts” were
                maintained by the Trustee and invested in accordance with indenture
                requirements.

            
	
              1122(d)(2)(vi)

            	
              Unissued
                checks are safeguarded so as to prevent unauthorized
                access.

            	
              Not
                applicable; all transfers made by wire transfer.

            
	
              1122(d)(2)(vii)

            	
              Reconciliations
                are prepared on a monthly basis for all asset-backed securities related
                bank accounts, including custodial accounts and related bank clearing
                accounts. These reconciliations are (A) mathematically accurate;
                (B)
                prepared within 30 calendar days after the bank statement cutoff
                date, or
                such other number of days specified in the transaction agreements;
                (C)
                reviewed and approved by someone other than the person who prepared
                the
                reconciliation; and (D) contain explanations for reconciling items.
                These
                reconciling items are resolved within 90 calendar days of their original
                identification, or such other number of days specified in the transaction
                agreements.

            	
              Partially
                applicable; reconciliations of estimated remittances of environmental
                control charge remittances with actual storm-recovery bond collections
                are
                made on an annual basis as required by Section 5.10 of the Servicing
                Agreement.; assessment below.

            
	 	
              Investor
                Remittances and Reporting

            	 


    

     

    
      
        
        

      

      
        Annex
          5-2

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              Servicing
                Criteria

            	
              Applicable
                Servicing Criteria

            
	
              Reference

            	
              Criteria

            	
            
	
              1122(d)(3)(i)

            	
              Reports
                to investors, including those to be filed with the Commission, are
                maintained in accordance with the transaction agreements and applicable
                Commission requirements. Specifically, such reports (A) are prepared
                in
                accordance with timeframes and other terms set forth in the transaction
                agreements; (B) provide information calculated in accordance with
                the
                terms specified in the transaction agreements; (C) are filed with
                the
                Commission as required by its rules and regulations; and (D) agree
                with
                investors’ or the trustee’s records as to the total unpaid principal
                balance and number of pledged assets serviced by the
                Servicer.

            	
              Applicable;
                assessment below.

            
	
              1122(d)(3)(ii)

            	
              Amounts
                due to investors are allocated and remitted in accordance with timeframes,
                distribution priority and other terms set forth in the transaction
                agreements.

            	
              Applicable;
                assessment below. [Assessment: Servicer has provided applicable
                instructions to the trustee to allocate and remit funds to
                investors.]

            
	
              1122(d)(3)(iii)

            	
              Disbursements
                made to an investor are posted within two business days to the Servicer’s
                investor records, or such other number of days specified in the
                transaction agreements.

            	
              Not
                applicable; transaction documents do not permit Servicer to disburse
                payments to investors.

            
	
              1122(d)(3)(iv)

            	
              Amounts
                remitted to investors per the investor reports agree with cancelled
                checks, or other form of payment, or custodial bank
                statements.

            	
              Not
                applicable; bondholders are paid by the Indenture Trustee in accordance
                with terms of the Indenture.

            
	 	
              Asset
                Administration

            	 
	
              1122(d)(4)(i)

            	
              Collateral
                or security on environmental control property is maintained as required
                by
                the transaction agreements or related documents.

            	
              Applicable;
                assessment below. [Assessment: Servicer has performed true-up adjustments
                of Environmental Control Charges in accordance with Section 4.01 of
                the Servicing Agreement.]

            
	
              1122(d)(4)(ii)

            	
              Environmental
                control property and related documents are safeguarded as required
                by the
                transaction agreements.

            	
              Applicable;
                assessment below. [Assessment: Servicer has maintained custody over
                all
                environmental control property records in accordance with
                Section 3.08 of the Servicing Agreement.]

            
	
              1122(d)(4)(iii) 

            	
              Any
                additions, removals or substitutions to the assets are made, reviewed
                and
                approved in accordance with any conditions or requirements in the
                transaction agreements.

            	
              Applicable
                but no current assessment required; no removals or substitutions
                of
                pledged assets are contemplated or allowed


            


    

     

    
      
        
        

      

      
        Annex
          5-3

        
          

        

      

      
        
        

      

    

     

    
      	 	
              Servicing
                Criteria

            	
              Applicable
                Servicing Criteria

            
	
              Reference

            	
              Criteria

            	 
	 	 	under the
              transaction documents.
	
              1122(d)(4)(iv)

            	
              Payments
                on pledged assets, including any payoffs, made in accordance with
                the
                related environmental control property documents are posted to the
                Servicer’s obligor records maintained no more than two business days after
                receipt, or such other number of days specified in the transaction
                agreements, and allocated to principal, interest or other items (e.g.,
                escrow) in accordance with the environmental control transaction
                documents.

            	
              Applicable;
                assessment below.[Assessment: The Servicer posted substantially all
                environmental control charge payments to customer accounts within
                two
                business days as required by Section 6(b) of Exhibit A—Payment
                Processing: Allocation; Priority of Payments]

            
	
              1122(d)(4)(v)

            	
              The
                Servicer’s records regarding the environmental control property agree with
                the Servicer’s records with respect to an obligor’s unpaid principal
                balance.

            	
              Not
                applicable; because underlying obligation (environmental control
                charge)
                is not an interest bearing instrument

            
	
              1122(d)(4)(vi)

            	
              Changes
                with respect to the terms or status of an obligor’s environmental control
                property are made, reviewed and approved by authorized personnel
                in
                accordance with the transaction agreements and related asset
                documents. 

            	
              Applicable;
                assessment below [Assessment: Servicer has not waived or modified
                term of
                payment except in accordance with Section 6(a)(ii) of Exhibit
                A-Servicing Procedures]

            
	
              1122(d)(4)(vii)

            	
              Loss
                mitigation or recovery actions (e.g., forbearance plans, modifications
                and
                deeds in lieu of foreclosure, foreclosures and repossessions, as
                applicable) are initiated, conducted and concluded in accordance
                with the
                timeframes or other requirements established by the transaction
                agreements.

            	
              Applicable;
                assessment below. [Assessment: Loss mitigation or recovery actions
                have
                been conducted in accordance with Section 6(a) of Exhibit A—
                Collections: Payment Processing; Remittance]

            
	
              1122(d)(4)(viii)

            	
              Records
                documenting collection efforts are maintained during the period any
                pledged asset is delinquent in accordance with the transaction agreements.
                Such records are maintained on at least a monthly basis, or such
                other
                period specified in the transaction agreements, and describe the
                entity’s
                activities in monitoring delinquent environmental control charges
                including, for example, phone calls, letters and payment rescheduling
                plans in cases where delinquency is deemed temporary (e.g., illness
                or
                unemployment).

            	
              Applicable,
                but does not require assessment. No explicit documentation requirement
                with respect to delinquent accounts are imposed under the transactional
                documents due to availability of “true-up” mechanism; and any such
                documentation is maintained in accordance with applicable PSCWV rules
                and
                regulations.

            
	
              1122(d)(4)(ix)

            	
              Adjustments
                to interest rates or rates of return for environmental control property
                with variable rates are computed based on the related environmental
                control property documents.

            	
              Not
                applicable; environmental control charges are not interest bearing
                instruments.

            
	
              1122(d)(4)(x)

            	
              Regarding
                any funds held in trust for an obligor (such as escrow accounts):
                (A) such
                funds are analyzed, in accordance with the obligor’s environmental control
                

            	
              Applicable,
                but does not require assessment; Servicer maintains customer deposits
                in
                accordance 

            


    

     

    
      
        
        

      

      
        Annex
          5-4

        
          

        

      

      
        
        

      

    

     

    
      	 	
              Servicing
                Criteria

            	
              Applicable
                Servicing Criteria

            
	
              Reference

            	
              Criteria

            	
            
	 	property
              documents,
              on at least an annual basis, or such other period specified in the
              transaction agreements; (B) interest on such funds is paid, or credited,
              to obligors in accordance with applicable environmental control property
              documents and state laws; and (C) such funds are returned to the obligor
              within 30 calendar days of full repayment of the related environmental
              control property, or such other number of days specified in the
              transaction agreements.	with the
              PSCWV rules
              and regulations.
	
              1122(d)(4)(xi)

            	
              Payments
                made on behalf of an obligor (such as tax or insurance payments) are made
                on or before the related penalty or expiration dates, as indicated
                on the
                appropriate bills or notices for such payments, provided that such
                support
                has been received by the Servicer at least 30 calendar days prior
                to these
                dates, or such other number of days specified in the transaction
                agreements.

            	
              Not
                applicable.

            
	
              1122(d)(4)(xii)

            	
              Any
                late payment penalties in connection with any payment to be made
                on behalf
                of an obligor are paid from the Servicer’s funds and not charged to the
                obligor, unless the late payment was due to the obligor’s error or
                omission. 

            	
              Not
                applicable; Servicer cannot make advances of its own funds on behalf
                of
                customers under the transactional documents.

            
	
              1122(d)(4)(xiii)

            	
              Disbursements
                made on behalf of an obligor are posted within two business days
                to the
                obligor’s records maintained by the Servicer, or such other number of days
                specified in the transaction agreements.

            	
              Not
                applicable; Servicer cannot make advances of its own funds on behalf
                of
                customers to pay principal or interest on the bonds. [See
                Section 5.09. these costs are borne by the Servicer, not advanced by
                the Servicer.]

            
	
              1122(d)(4)(xiv)

            	
              Delinquencies,
                charge-offs and uncollectible accounts are recognized and recorded
                in
                accordance with the transaction agreements.

            	
              Applicable;
                assessment below. [Assessment: Servicer has reconciled actual collections
                of environmental control charges and estimated remittances on or
                before
                March 1 of the following year, per Section 5.11 of the Servicing
                Agreement [need to include]. Servicer has applied partial payments
                in
                accordance with Section 3.02(b) and Section 6(b) of Exhibit A—
                Payment Processing: Allocation; Priority of Payments]

            
	
              1122(d)(4)(xv) 

            	
              Any
                external enhancement or other support, identified in Item 1114(a)(1)
                through (3) or Item 1115 of Regulation AB, is maintained as set forth
                in
                the transaction agreements.

            	
              Not
                Applicable: No external credit support or derivatives were employed
                [or:
                Applicable; assessment below.]

            


    

     

    
      
        
        

      

      
        Annex
          5-5

        
          

        

      

      
        
        

      

    

     

    With
      respect to each of the applicable Servicing Criteria, I have made the following
      assessment in accordance with Item 1122(d) of Regulation AB, with such
      discussion regarding the performance of such Servicing Criteria during the
      fiscal year covered by the Issuer’s Form 10-K Report (such fiscal year the
“Assessment Period”).

     

    1. Item
      1122(d)(1)(i) : [include narrative of assessment]

     

    2. [Continue
      enumeration of applicable Servicing Criteria with appropriate narrative of
      assessment]

     

    Based
      on
      the aforementioned Servicing Criteria, I find that the Servicer has fulfilled
      all of the applicable servicing obligations under the Servicing Agreement in
      all
      material respects through the Assessment Period, with the exception of the
      following instance(s) of material noncompliance:

     

    1. [Include
      narrative of any material noncompliance with servicing obligations]

     

    A
      registered public accounting firm has issued an attestation report on the
      party’s assessment of compliance with the applicable servicing criteria as of
      and for the period ending the end of the Assessment Period.

     

    Date:

    


    By:
      ____________________________________

    Name:

     

    
      
        
        

      

      
        Annex
          5-6

        
          

        

      

      
        
        

      

    


    ANNEX
      6

     

    FORM
      OF REGULATION AB COMPLIANCE CERTIFICATION

     

     

    
      	 	
              Re:
                

            	
              Servicing
                Agreement dated as of April 11, 2007 (the “Servicing
                Agreement”),
                between MP Environmental Funding LLC, as issuer (the “Issuer”), and
                Monongahela Power Company (the
“Servicer”).

            


    

     

    I,
      ________________________________, the _______________________ of the Servicer,
      certify to Issuer and the Administrator, [and other required parties] and their
      officers, with the knowledge and intent that they will rely upon this
      certification, that:

     

    1.  I
      have
      reviewed the servicer compliance statement of the Servicer provided in
      accordance with Item 1123 of Regulation AB as it would apply if the
      Environmental Control Bonds were ‘asset-backed securities” under Item 1101(c) of
      Regulation AB (the “Compliance Statement”) and Section 3.05(a)(iv) of the
      Servicing Agreement, the report on assessment of the Company’s compliance with
      the servicing criteria set forth in Item 1122(d) of Regulation AB (the
“Servicing Criteria”), provided in accordance with Rules 13a-18 and 15d-18 under
      Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Item 1122
      of Regulation AB (the “Servicing Assessment”), the registered public accounting
      firm’s attestation report provided in accordance with Rules 13a-18 and 15d-18
      under the Exchange Act and Section 1122(b) of Regulation AB (the
“Attestation Report”), and all servicing reports, officer’s certificates and
      other information relating to the servicing of the Environmental Control
      Property during 200[ ] that were delivered by the Servicer to the [Issuer]
      [Administrator] [Indenture Trustee] pursuant to the Agreement (collectively,
      the
“ Servicing Information”);

     

    2.  Based
      on
      my knowledge, the Servicing Information, taken as a whole, does not contain
      any
      untrue statement of a material fact or omit to state a material fact necessary
      to make the statements made, in the light of the circumstances under which
      such
      statements were made, not misleading with respect to the period of time covered
      by the company Servicing Information;

     

    3.  Based
      on
      my knowledge, all of the Servicing Information required to be provided by the
      Servicer under the Agreement has been provided to the [Issuer] [Administrator]
      [Indenture Trustee];

     

    4.  I
      am
      responsible for reviewing the activities performed by the Servicer as servicer
      under the Agreement, and based on my knowledge and the compliance review
      conducted in preparing the Compliance Statement and except as disclosed in
      the
      Compliance Statement, the Servicing Assessment or the Attestation Report, the
      Servicer has fulfilled its obligations under the Agreement in all material
      respects; and

     

    
      
        
        

      

      
        Annex
          6-1

        
          

        

      

      
        
        

      

    

     

    5.  The
      Compliance Statement required to be delivered by the Servicer pursuant to the
      Agreement, and the Servicing Assessment and Attestation Report required to
      be
      provided by the Servicer and by any subservicer pursuant to the Agreement,
      have
      been provided to the [Issuer] [Administrator] [Indenture Trustee]. Any material
      instances of noncompliance described in such reports have been disclosed to
      the
      [Issuer] [Administrator] [Indenture Trustee]. Any material instance of
      noncompliance with the Servicing Criteria has been disclosed in such
      reports.

     

    Date:

    


    By:
      ____________________________________

    Name:

    Title:

     

    
      
        
        

      

      
        Annex
          6-2

        
          

        

      

      
        
        

      

    


    APPENDIX
      A 

     

    to

     

    SERVICING
      AGREEMENT

     

    Master
      Definitions

     

    
      
        
        

      

      
        Appendix
          A-1