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                                                                   Exhibit 10.23


                                December 20, 1990




Joseph E. Cresci
President
Environmental Power Corporation
30th Floor, Exchange Place
Boston, Massachusetts   02109

         Re: Scrubgrass Power Purchase Agreement Dear Mr. Cresci:

         Based upon information provided by Scrubgrass Power Corporation ("SPC")
to Pennsylvania Electric Company ("Penelec"), Penelec agrees, with respect to
the Agreement of Sale of Electric Energy from the Scrubgrass Generating Plant
dated August 7, 1987 between SPC and Penelec, as amended and supplemented by the
Supplemental Agreement dated February 22, 1989 between Penelec and SPC, as
further amended by the letter agreement between Penelec and SPC dated March 28,
1989, as further amended and supplemented by the Second Supplemental Agreement
dated September 27, 1989 between Penelec and SPC, as further amended and
supplemented by the Third Supplemental Agreement dated August 13, 1990 between
Penelec and SPC, and as further amended by an Amendment to the Third
Supplemental Agreement dated November 27, 1990 between Penelec and SPC
(collectively the "Agreement"), as follows:

      1. Section G, paragraph 1 is hereby modified to provide that SPC shall
         procure Business Interruption Insurance and Property Hazard Insurance
         no later than the close of construction financing and release of funds.

      2. Section G, paragraph 1(f) is hereby modified to provide that SPC shall
         provide Penelec with a properly executed certificate of Property Hazard
         Insurance within thirty (30) days following close of construction
         financing and release of funds.

      3. Section H, paragraph 5 is hereby modified to provide that within thirty
         (30) days after the Effective Date, SPC shall submit interconnection
         plans and specifications (including single line diagrams and control
         and protective relay schemes as well as plans 
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         and specifications for the Transmission Line) to Penelec for inspection
         and acceptance.

      4. Section Q, paragraph 3 is hereby modified to provide that SPC and all
         general contractors performing any services in connection with the
         construction and/or operation of the Facility or any appurtenant
         equipment (including the Transmission Line) shall procure worker's
         compensation, employer's liability, comprehensive general liability,
         including bodily injury liability, property damage liability and the
         other coverages (as specified), and automobile liability, including
         bodily injury liability and property damage liability coverage (as
         specified), at close of construction financing and release of funds.

      5. All defined terms in the Agreement shall be equally applicable to this
         letter agreement unless otherwise stated herein.

      6. Unless specifically stated otherwise in this letter agreement, the
         Agreement shall remain in full force and effect and binding in
         accordance with its terms.

                                                       Sincerely,

                                                       /s/John F. Furst

                                                       John F. Furst




Agreed To and Accepted:

/s/ Joseph E. Cresci
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Scrubgrass Power Corporation