Document:

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                                                                  EXECUTION COPY

                                                                   EXHIBIT 10.62

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                  ASTORIA GAS TURBINE CONTINUING SITE AGREEMENT

                                 By and Between

                  CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.

                                       and

                                NRG ENERGY, INC.

                                   Dated as of

                                January 27, 1999

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       ASTORIA GAS TURBINE CONTINUING SITE AGREEMENT (including the Schedules
hereto, this "Agreement") dated as of January 27, 1999, by and between
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., a New York corporation
("Seller"), and NRG ENERGY, INC., a Delaware corporation ("Buyer", and
collectively with Seller, the "Parties").

       WHEREAS Seller and Buyer are entering into a Generating Plant and Gas
Turbine Asset Purchase and Sale Agreement dated as of even date herewith (the
"Sale Agreement") for the sale of certain of Seller's generating assets;

       WHEREAS Seller intends to continue to conduct its transmission and
distribution operations from their present locations;

       WHEREAS pursuant to the Sale Agreement, Seller has agreed to transfer to
Buyer certain designated properties and assets located at the Parcels (as
defined below) pertaining to Seller's generating operations and to retain
certain designated properties and assets; and

       WHEREAS Seller and Buyer wish to define the continuing responsibilities
and obligations of the Parties to one another with respect to their respective
properties and assets located at the Parcels and other matters.

       NOW, THEREFORE, in order to carry out the transactions contemplated by
the Sale Agreement and this Agreement, and in consideration of the mutual
representations, covenants and agreements hereinafter set forth, and intending
to be legally bound hereby, the Parties hereto agree as follows:

                                   ARTICLE I

                                  Definitions

       SECTION 1.1. Definitions. As used in this Agreement, all capitalized
terms shall have the meanings ascribed to them in the Sale Agreement unless
otherwise defined in this Agreement and the following terms shall have the
following meanings:

       "Agreement" shall have the meaning set forth in the Preamble.

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       "Applicable Legal Requirements" shall have the meaning set forth in
Section 2.01.

       "Arthur Kill Parcel" shall have the meaning ascribed to the term
"Parcel" in the Arthur Kill Declaration of Easements Agreement.

       "Buyer" shall have the meaning set forth in the Preamble.

       "Buyer Operations Manager" shall have the meaning set forth in Section
3.15(a).

       "Buyer Parcel" shall have the meaning ascribed to the term "Parcel C" in
the Astoria Declaration of Easements.

       "Confidential Information" shall have the meaning set forth in Section
5.03(a).

       "Delivery Revenue Meter" means a Revenue Meter that comprises part of a
Delivery Revenue Meter System.

       "Delivery Revenue Meter Systems" means Revenue Meter Systems used to
measure the transfer of energy from Seller to Buyer.

       "Disclosing Party" shall have the meaning set forth in Section 5.03(a).

       "Emergency Low Gas Pressure Trip Switch" means the main supply header
emergency low gas pressure trip switch that monitors natural gas pressure to
the Generating Facilities and under certain circumstances interrupts natural
gas supply to the Generating Facilities.

       "Energy Control Center" means the headquarters of Seller's transmission
and distribution operations.

       "Entering Party" shall have the meaning set forth in Section 2.02(b).

       "Force Majeure Event" shall have the meaning set forth in Section
5.02(a).

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       "Gas System" means the Seller's system of distribution mains and service
lines through which natural gas is distributed to Seller's customers in
Seller's natural gas service territory.

       "Generating Facilities" means the Gas Turbines and any additional
generating plants, gas turbines or other generating facilities constructed by
Buyer after the Closing Date at the Buyer's Parcel.

       "Good Industry Practice" shall have the meaning set forth in Section
2.01(a).

       "Inside Meter" shall have the meaning set forth in Section 3.05(b) (ii).

       "ISO Rules" means the rules and procedures adopted by the ISO pursuant
to the ISO tariff from time to time in effect and the related ISO agreements.

       "NERC" means North American Electric Reliability Council or any
successor.

       "NPCC" means the Northeast Power Coordinating Council or any successor.

       "NYPP" means New York Power Pool or any successor.

       "NYPP Rules" means the rules, standards, procedures and practices of the
NYPP from time to time in effect.

       "NYSRC" means the New York State Reliability Council or any successor.

       "Output Revenue Meter" means a Revenue Meter that comprises part of an
Output Revenue Meter System.

       "Output Revenue Meter Systems" means Revenue Meter Systems used to
measure the transfer of energy output by Generating Facilities and delivered to
Points of Interconnect ion.

       "Parcel" shall have the meaning ascribed thereto in the Astoria
Declaration of Easements.

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       "Party" shall have the meaning set forth in the Preamble.

       "Points of Interconnection" means the points on the Transmission System
where electrical power generated by Buyer will be delivered by Buyer to the
Transmission System or, under certain circumstances, where electric power will
be delivered from the Transmission System to Buyer.

       "Receiving Party" shall have the meaning set forth in Section 5.03(a).

       "Remediate" means to engage in any or all of the following activities to
the extent they relate to or arise from the presence, Release or threatened
Release of Hazardous Substances at a Parcel: (i) monitoring, investigation,
cleanup, containment, removal, mitigation, response or restoration work; (ii)
obtaining any Permits necessary to conduct any such activity; (iii) preparing
and implementing any plans or studies for any such activity; and (iv) obtaining
a written notice from the Governmental Authority with jurisdiction over the
Parcel under applicable Environmental Laws that no material additional work is
required by such Governmental Authority.

       "Representatives" shall have the meaning set forth in Section 5.03(a).

       "Revenue Meter Systems" means Revenue Meters and associated current
transformers and potential transformers.

       "Sale Agreement" shall have the meaning set forth in the Recitals.

       "Seller" shall have the meaning set forth in the Preamble.

       "Seller Operations Manager" shall have the meaning set forth in Section
3.15(b).

       "Seller Parcel" shall have the meaning ascribed to the term "Parcel A"
in the Astoria Declaration of Easements.

       "Substation Interface Cables" means (i) control cables and associated
conduits located in a Substation which connect the Generating Facilities with
Buyer Assets located in the Substation and (ii) control and low voltage power
cables and associated conduits located in a Substation which connect Seller
Assets with Buyer Assets.

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       "Switching Rules" shall have the meaning set forth in Section 3.11.

       "System Integrity" means the adequate and reliable state of operation of
the Transmission System providing electric service to customers who purchase
power and related services delivered through the Transmission System.

       "Transmission System Operator" means the Seller's Energy Control Center
staff operating all or any portion of the Transmission System.

       "Trip-Out" means the automatic opening of disconnecting devices located
in a Substation or the Generating Facilities, such as circuit breakers, which
is caused by the Protective Relaying System in order to isolate faulty
facilities, equipment or systems.

                                  ARTICLE II

                                    General

        SECTION 2.1.  Compliance with Laws and Good Industry Practice.
Notwithstanding any other provision in this Agreement, Seller shall conduct all
its operations in connection with and maintain the Seller Assets, and Buyer
shall conduct all its operations in connection with and maintain the Buyer
Assets (a) in accordance with Applicable Legal Requirements and (b) pursuant to
Good Industry Practice. Each of Buyer and Seller shall make all modifications
to facilities, equipment or systems that could reasonably be expected to impact
the Generating Facilities or the Transmission System in accordance with Good
Industry Practice. Except as otherwise provided herein, Seller shall not be
responsible for the operation or maintenance of, or for providing, procuring or
storing spare parts for, the Buyer Assets and Buyer shall not be responsible
for the operation or maintenance of, or for providing, procuring or storing
spare parts for, the Seller Assets, regardless of the location of such Buyer
Assets or Seller Assets, as applicable. "Applicable Legal Requirements" means
all laws, rules, regulations and orders of any Governmental Authority,
including Environmental Laws, from time to time in effect applicable to Seller
or Seller Assets or Buyer or Buyer Assets, as applicable. "Good Industry
Practice" means any of the applicable acts, practices or methods from time to
time (i) (A) required by the NYPP, NYSRC, NPCC or NERC or the ISO or any
successor thereto, or any other organization with similar duties, including any
local, state, regional, national or international reliability organization, or
required by any rules

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issued pursuant. to the authority of any such organization, in each case, with
jurisdiction or authority in respect of Seller or Seller Assets or Buyer or
Buyer Assets and whether or not the Party whose conduct is at issue is a member
thereof, or by any other person acting pursuant to the authority of any of the
foregoing entities or organizations or (B) required by the provisions of the
Sale Agreement, this Agreement or any other Ancillary Agreement or (ii) engaged
in or approved by a significant portion of the electric utility industry in the
United States at the relevant time, including reliability, operating, planning
and engineering specifications, if in any case there are no acts, practices or
methods required by clauses (i) (A) and (i) (B) applicable at such time;
provided, however, that, in the event of any conflict among the requirements of
the foregoing clauses (i) (A) and (i) (B), Good Industry Practice shall be
determined by reference exclusively to the requirements and terms of clause (i)
(A) and not by reference to clause (i) (B).

       SECTION 2.2.  Inspections, Maintenance, Access and Information. (a)
Inspections and Maintenance. Except as otherwise provided herein, each Party
shall have the right, from time to time upon reasonable advance notice and in
accordance with Applicable Legal Requirements and Good Industry Practice, to
perform routine inspections, measurements, meter readings and maintenance of
any facilities, equipment or systems owned by such Party that are located on
the premises of the other Party, and such inspecting Party shall reimburse the
other Party for its reasonable costs and expenses in connection therewith,
including that of any escort designated by such other Party to observe such
inspection; provided, however, that the Party performing such inspections,
measurements, meter readings and maintenance shall use its reasonable best
efforts to ensure that such activities do not interfere with the other Party's
ordinary course operations.

       (b)    Access. Notwithstanding any provision to the contrary in the
Astoria Declaration of Easements and except as provided for herein or otherwise
consented to in advance by the other Party, in no event shall any employee,
contractor, agent or other representative of either Party (the "Entering
Party") enter into or be present on the premises of such other Party for any
purpose without being accompanied by an escort designated by such other Party.
To the extent any such employee, contractor, agent or other representative
enters or is present on the premises of such other Party pursuant to the
foregoing sentence, it shall comply in all respects with, and perform any
service or maintenance work in respect of any facilities, equipment or systems
located on the premises of such other Party in accordance with such other
Party's work rules and procedures, including in respect of the issuance of and
requirements for work permits, and other safety, security and

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operating protocols and procedures, from time to time in effect, and the
Entering Party shall reimburse such other Party for its reasonable costs and
expenses in connection therewith, including that of any escort designated by
such other Party; provided, however, that Seller shall not be required to
reimburse Buyer in connection therewith to the extent the Entering Party enters
or is present on the premises of Buyer from Monday through Friday from 7:00
A.M. to 4:00 P.M., or at such times as otherwise agreed by the Parties. Each
Party agrees to be solely responsible, and assume all liability, for the safety
and supervision of its employees, contractors, agents and other
representatives.

        (c)  Information.  (i)  General. Each Party shall, upon the reasonable
request of the other Party, provide such other Party with information
reasonably necessary for such requesting Party to perform its obligations under
this Agreement.

             (ii)  Generating Facilities Output Reduction or Termination. Buyer
shall give Seller reasonable advance notice of any maintenance activities
(including scheduled outages of Generating Facilities), equipment tests,
installation, construction or other modification that could reasonably be
expected to result in a reduction or termination of output from the Generating
Facilities.

       SECTION 2.3.  No Interference. (a) Except as otherwise permitted in the
Sale Agreement, this Agreement or any other Ancillary Agreement, neither Buyer
nor Seller shall service, repair or otherwise maintain any facilities,
equipment or systems owned by the other. To the extent that pursuant to the
terms of this Agreement or any Ancillary Agreement, a party services, repairs
or otherwise maintains Or has any other obligations in respect of any
facilities, equipment or systems owned by the other Party, it shall perform
such services, repairs and maintenance, and otherwise discharge such duties in
accordance with Applicable Legal Requirements and Good Industry Practice and in
a manner consistent with that which it applies to facilities, equipment or
systems it owns.

       (b)   Buyer shall not operate the Generating Facilities and Seller shall
not operate the Transmission System in any manner that has caused or could
reasonably be expected to cause physical damage to the Seller Assets or the
Buyer Assets, respectively, or otherwise results in or could reasonably be
expected to result in personal injury or loss of life, physical damage or
physical harm to property, the Generating Facilities, the Transmission System
or any other transmission system to which it is interconnected, or damage or
harm to System Integrity or public safety.

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       SECTION 2.4.  Emergency Procedures. (a) If an emergency results in or
could reasonably be expected to result in personal injury or loss of life or
damage or harm to property, the Generating Facilities, the Transmission System
or another transmission system to which it is interconnected, System Integrity
or public safety, the Party recognizing such emergency shall provide immediate
verbal notification (to be confirmed in writing as soon as reasonably
practicable) to the other Party, and the Parties agree to cooperate in good
faith (including in respect of the sharing of information) in order to prevent,
avoid or mitigate personal injury or loss of life or damage or harm to
property, the Generating Facilities, the Transmission~ System or another
transmission system to which it is interconnected, System Integrity or public
safety.

       (b)   Without limiting the generality of Section 2.04(a) and to the
extent permitted by Applicable Legal Requirements and Good Industry Practice,
in the case of a Trip-Out, each Party shall provide the other Party with
immediate verbal notification, which verbal notification (to be confirmed in
writing as soon as reasonably practicable) shall include, to the extent
possible, all information necessary to determine the cause of the Trip-Out and
the steps necessary for the restoration of service.

       (c)   To the extent Buyer and Seller utilize a common entrance and guard
facility for pedestrian and vehicular access, ingress and egress to and from
their respective premises, Buyer and Seller shall cooperate in the
establishment and implementation of evacuation procedures designed to account
for, and ensure the safety of, all Buyer and Seller employees and their
respective invitees and licensees in the event of an emergency on the Buyer
Parcel or the Seller Parcel, as the case may be.

       SECTION 2.5. Additional Agreement. The Parties agree to, from time to
time upon the reasonable request of either Party, negotiate in good faith and
execute and deliver such additional contracts, agreements, instruments and
documents to implement the terms of this Agreement, including in order to
establish any necessary operating procedures to implement the terms of this
Agreement, and the Parties agree to cooperate in making such filings or
submissions in connection with such amendments, contracts, agreements,
instruments and documents, with the appropriate Governmental Authority or other
organization as are required.

                                  ARTICLE III

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              Continuing Rights, Obligations and Responsibilities

       SECTION 3.1.  Testing and Maintenance. (a) Buyer's Equipment. Buyer
shall at appropriate intervals (at its own expense) or more frequently upon
Seller's reasonable request (in which case Seller shall reimburse Buyer for its
reasonable costs and expenses in connection therewith) (i) test, calibrate,
adjust and maintain pursuant to Good Industry Practice the telemetering, data
acquisition, Protective Relay Systems owned by Buyer and control equipment or
other facilities, equipment or systems or software that Buyer owns and is
connected or related to the Transmission System or has or could be reasonably
expected to have a material adverse effect on the Transmission System or any
other transmission system to which it is interconnected or on System Integrity,
and (ii) promptly supply Seller with copies of inspection reports, installation
and maintenance documents, test and calibration records, verifications and
validations with respect thereto.

       (b)   Seller's Equipment. (i) General. Buyer shall, at its own expense,
have the right to inspect or observe testing, calibration and maintenance and
similar activities in respect of, and installation, construction or other
modifications to, Protective Relaying Systems, Revenue Meters and Substation
Interface Cables in order to verify the adequate protection and safe operation
thereof. Seller shall give Buyer reasonable advance notice of any such
activities that it is planning to undertake.

             (ii)   Protective Relaying Systems. Seller shall test, calibrate,
adjust and maintain pursuant to Good Industry Practice at appropriate
intervals, or more frequently upon Buyer's reasonable request, all Protective
Relaying Systems owned by Seller and all auxiliary and monitoring relays and
alarms relating thereto which are owned by Seller and located in the
Substations. Buyer shall have the right, upon the completion of such testing,
calibration, adjustment and maintenance, to approve any necessary re-sealing of
such Protective Relays and, upon written request to Seller, to receive copies
of relevant settings, tests and work order data sheets. Seller reserves the
right to take any such Protective Relaying System out of service as may be
reasonably necessary and agrees to use its reasonable best efforts to provide
Buyer with reasonable advance notice thereof. Buyer shall have the sole
responsibility to provide, procure or store spare parts for such Protective
Relaying Systems and Seller shall have no responsibility in respect thereof.
Buyer shall reimburse Seller for its reasonable costs and expenses incurred
pursuant to this Section 3.01(b) (ii).

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             (iii)  Substation Interface Cables. Seller shall maintain the
Substation Interface Cables pursuant to Good Industry Practice, and Buyer shall
reimburse Seller for its reasonable costs and expenses incurred in connection
therewith.

       SECTION 3.2.  Work on Substation Property. Seller shall in accordance
with Good Industry Practice operate all facilities, equipment or systems owned
by Buyer that are located in the Substations, including pressurizing plants,
cooling plants, disconnect switches and ground switches, to the extent such
facilities, equipment or systems are operated locally, and such operations
shall be performed in accordance with Section 2.03 (a). Buyer shall not operate
any such facilities, equipment or systems, except to the extent operated
remotely, and Seller shall be permitted to monitor such remote operation. Buyer
shall reimburse Seller for its reasonable costs and expenses incurred in
connection with this Section 3.02.

       SECTION 3.3.   New Construction or Modifications. (a) Right to Modify or
Construct Retained. Except as otherwise provided in this Agreement or in any
other Ancillary Agreement, Seller shall be permitted to add to or modify, or
undertake new construction in respect of, the Transmission System in accordance
with Applicable Legal Requirements and Good Industry Practice and Buyer shall
be permitted to modify or add to the Generating Facilities in accordance with
Applicable Legal Requirements and Good Industry Practice.

       (b)   Certain Installations, Modifications or Construction. Subject to
the proviso in Section 3.04(a) and notwithstanding Section 3.03(a), no
installation of, modifications to, or new construction of, facilities,
equipment, systems or access thereto, including rights of way, fences and
gates, shall be made by either Party which results in or could be reasonably
expected to result in physical damage to Seller Assets or Buyer Assets, as the
case may be, or otherwise results in or could be reasonably expected to result
in personal injury or loss of life, physical damage or physical harm to
property, the Generating Facilities, the Transmission System or any other
transmission, system to which it is interconnected, or damage or harm to System
Integrity or public safety, without (i) prior written consent (which consent
shall not be unreasonably withheld) and (ii) compliance by such Party with the
information requirements of Section 3.03(c).

       (c)   Modifications Affecting the Transmission System or Generating
Facilities. In respect of all construction work, modifications or circuit
changes

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involving new or existing facilities, equipment, systems or circuits that could
reasonably be expected to affect the operation of the Transmission System,
Buyer shall provide Seller with drawings, plans, specifications and other
relevant documentation for review during the design phase of such work and
Buyer shall not undertake any such work without the Seller's consent to the
proposed design (which consent shall not be unreasonably withheld). In respect
of all construction work, major modifications or circuit changes involving new
or existing facilities, equipment, systems or circuits located in a Substation
that could reasonably be expected to affect the operations of the Generating
Facilities, Seller shall provide Buyer with drawings, plans, specifications and
other relevant documentation for review during the design phase of such work.
Each Party shall be responsible for its own construction work, modifications
and circuit changes, and the other Party's review of, comments on, or consent
to any documents, drawings, plans, specifications or other documentation
provided by the initiating Party, shall not relieve the initiating Party of, or
affect in any way, its responsibility for the work to be performed. The
reviewing or consenting Party shall have no liability whatsoever with respect
to any review or nonreview of, or consent to, any drawings or other
documentation submitted to it by the other Party.

       (d)   Seller Facilities and Buyer Facilities.  Without limiting the
generality of Sections 3.03(a), (b) and (c), the applicable Party shall be
permitted to upgrade, expand, enlarge, relocate or otherwise modify the Seller
Facilities or Buyer Facilities, as applicable, (i) in any manner that could not
reasonably be expected to impose a substantial additional, or substantially
different, physical burden on the Buyer Parcel or Seller Parcel, as applicable,
beyond those in existence on the Closing Date, or otherwise interfere with any
current or planned use thereof or (ii) otherwise as expressly permitted
pursuant to Schedule 2.01(a) of the Astoria Declaration of Easements.

       SECTION 3.4. Interconnection of Transmission System and Generating
Facilities. (a) Subject to Section 3.04(b) below, Seller shall permit the Gas
Turbines to be interconnected with the Transmission System in accordance with
the terms of this Agreement; provided, however, that (i) any new Generating
Facilities or any expansion of generating capacity (including in respect of any
repowering of any Gas Turbines) will require a separate agreement with Seller
for interconnection and (ii) all costs associated with establishing such
interconnection for any new Generating Facilities or other expansion of
generating capacity, including any costs associated with any studies of,
reinforcements to, or other expenditures with respect to, the Transmission
System (or any studies regarding the same) shall be borne in all respects by
Buyer.

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       (b)   The interconnection of the Gas Turbines with the Transmission
System shall be subject to interruption upon the activation of facilities,
equipment and systems designed to protect any of the Generating Facilities or
the Transmission System or System Integrity and may otherwise be subject to
extended outages due to the failure of facilities, equipment or systems or for
other reasons; provided, however, that Seller shall use its reasonable best
efforts in accordance with Good Industry Practice to restore such
interconnection. Seller shall give Buyer reasonable advance notice of any
scheduled interruption of interconnection of the Gas Turbines with the
Transmission System. Notwithstanding any other provision in the Sale Agreement,
this Agreement or any other Ancillary Agreement to the contrary, except to the
extent that any such outage or other interruption in interconnection results in
whole or in part from the gross negligence or wilful or wanton acts or
omissions to act of Seller, Seller shall in no event have any liability
whatsoever, whether direct or indirect, to Buyer therefor, including in respect
of lost revenues or lost power or capacity charges or in respect of deficiency
charges.

       (c)   If Buyer fails to operate and maintain its Generating Facilities
as provided in this Agreement, Seller may discontinue Buyer's interconnection
with the Transmission System until such failure has been corrected, to the
extent that such failure has or could be reasonably expected to have a material
adverse effect on, any Substation, or otherwise result in personal injury or
loss of life or physical damage or physical harm to property, the Generating
Facilities, the Transmission System or any other transmission system to which
it is interconnected, or damage or harm to System Integrity, or public safety.

       SECTION 3.5.  Revenue Metering. (a)(i) Seller shall install and own all
Revenue Meter Systems and shall read all Revenue Meters. Buyer shall reimburse
Seller for its reasonable costs and expenses in connection with reading Revenue
Meters that are part of Output Revenue Meter Systems and processing data
received thereby. Seller and Buyer acknowledge that a Revenue Meter System may
be both a Delivery Revenue Meter System and an Output Revenue Meter System.

             (ii)   With respect to Delivery Revenue Meter Systems, Buyer shall
reimburse Seller for its reasonable costs and expenses in connection with the
installation thereof (but not including the costs of providing any -equipment)
to the maximum extent permitted by Applicable Legal Requirements and any
applicable tariff. With respect to Output Revenue Meter Systems, Buyer shall
reimburse Seller for its reasonable costs and expenses (including in respect of
any adverse New York

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State tax consequences) in connection with providing such Output Revenue Meter
Systems and the installation thereof, to the maximum extent permitted by
Applicable Legal Requirements. Buyer's obligation to reimburse Seller pursuant
to this Section 3.05(a) (ii) shall be without regard to whether such costs or
expenses were incurred prior to or after the Closing Date.

       (iii) Seller shall provide, install and maintain the Delivery Revenue
Meter Systems (including, at Seller's option, dedicated telephone service from
each Delivery Revenue Meter with telemetry capability) and the Output Revenue
Meter Systems, in each case, listed on Schedule 3.05(a) (iii). Seller shall at
appropriate intervals, or more frequently upon Buyer's reasonable request,
test, calibrate and maintain Output Revenue Meter Systems and Buyer shall
reimburse Seller for its reasonable costs and expenses in connection therewith.

       (iv)  Seller shall arrange for the installation and maintenance of
dedicated telephone service from each Output Revenue Meter, and Buyer shall
reimburse Seller for its reasonable costs and expenses in connection therewith.
Buyer shall be responsible for keeping such telephone service in place. Buyer
shall be permitted in accordance with Applicable Legal Requirements and any
applicable tariff to arrange at its own expense for Seller to install and
maintain appropriate equipment for Buyer to obtain access to pulse output from
each Revenue Meter.

       (b)   (i) The Parties agree that if any Revenue Meter and associated
Point of Interconnection are not at the same location and if all facilities,
equipment and systems between such Point of Interconnection and such Revenue
Meter are the property of the Party receiving the service measured by such
Revenue Meter, such Revenue Meter shall be appropriately adjusted to account
for energy losses between such Revenue Meter and such Point of Interconnection.

             (ii) If either Party takes electric service at a Point of
Interconnection after the location of the Revenue Meter, Seller shall provide
and install a Revenue Meter (an "Inside Meter") at such Point of
Interconnection and measure the service taken by such Party. The cost
responsibility for each Inside Meter and installation thereof shall be
determined by the function of the meter (whether delivery or output) in
accordance with paragraph (a) (ii) above. Buyer shall reimburse Seller for its
reasonable costs and expenses in connection with Inside Meters in accordance
with Section 3.05(a) (ii). In any case where an Inside Meter is installed,
neither Party shall be charged for any electric service to the extent such
charges relate to a service delivered to the other Party. For billing purposes,
the Party

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receiving service measured by the Revenue Meter shall be credited for energy
and demand registered on the Inside Meter in an amount determined by reference
to the rates and charges for the service classification applicable to the
inside meter service under the rate schedule applicable to the service measured
by the applicable Revenue Meter.

       (c)   If, at any time, any Delivery Revenue Meter is found to be
inaccurate by a margin greater than that allowed under Applicable Legal
Requirements Seller shall repair or replace such Delivery Revenue Meter and
adjust the readings. Seller and Buyer agree that PSC regulations with respect
to Delivery Revenue Meters accuracy shall be applicable to Output Revenue
Meters as well. Buyer shall reimburse Seller for its reasonable costs and
expenses in connection with such repair or replacement of Output Revenue Meter
System equipment. Readings from a Revenue Meter for any period of inaccuracy
shall be adjusted to eliminate the effect of such inaccuracy to the extent the
duration of such period can be reasonably ascertained; provided, however, that
unless such duration can be reasonably ascertained, readings made during the
first half of the period between the last successful test of such Revenue Meter
and its repair or replacement shall not be so adjusted.

       (d)   Each Party shall, upon reasonable notice from the other Party
except in the case of an emergency, comply with any reasonable request of the
other concerning the scheduling and performance of manual Revenue Meter
readings, the sealing of Revenue Meters, the presence of a representative of
the other Party when Revenue Meters are read, Revenue Meter seals are broken
and tests are conducted, and other matters affecting the accuracy of the
measurement of electricity delivered to or from the Generating Facilities.
Without limiting the generality of the foregoing, Buyer shall have the right to
witness all manual reading and testing, calibration, adjustment and maintenance
of Revenue Meters and, upon completion thereof, to approve any necessary
resealing of Revenue Meters. If either Party believes that there has been a
failure or stoppage of any Revenue Meter or any associated data acquisition and
transmission equipment, it shall immediately notify the other Party verbally,
such notice to be promptly confirmed in writing, and the Parties shall
cooperate in taking all necessary steps to restore to operation all Revenue
Meters and associated data acquisition and transmission equipment as soon as
reasonably possible, and Buyer shall, subject to Section 3.05(a) (ii) above,
reimburse Seller for its reasonable costs and expenses in connection therewith.

       SECTION 3.6. Information Reporting Systems and Obligations. (a) General.
Without limiting the generality of Section 2.02(c), Buyer shall supply

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(using facilities, equipment and systems and software compatible with, and in a
format comprehensible to, Seller's facilities, equipment and systems) accurate,
complete and reliable information from time to time identified by Seller
necessary for operations, maintenance activities, equipment testing and
calibration, compliance by Seller with Applicable Legal Requirements and
analysis of the Transmission System, Gas System and steam system, including
metered values for MW, Mvar, voltage, amperage, frequency, protective relay and
control settings, breaker status indication, gas flow, automatic generation
control status, maximum generation alarm status, load checks, operation of
facilities with less than design relay protection, fast load pick-up status or
any other information reasonably required by Seller for reliable operation of
the Transmission System pursuant to Applicable Legal Requirements and Good
Industry Practice. Information pertaining to generation, transmission and
distribution operating parameters shall be gathered for electronic transmittal
to Seller using supervisory control and data acquisition, remote terminal unit
equipment or remote access pulse recorders or using such other facilities,
equipment or systems reasonably acceptable to Seller from time to time. Seller
shall not use or disclose to any other person such information received
pursuant to this Section 3.06(a) other than in accordance with Applicable Legal
Requirements.

       (b)   Seller Maintained Equipment. Buyer agrees that Seller shall
maintain all system operations computer control system cabinets located at the
Generating Facilities and any associated equipment contained therein, and Buyer
shall reimburse Seller for its reasonable costs and expenses in connection
therewith.

       (c)   Gas Telemetry Interruptions. If Buyer is notified by Seller of any
data interruption relating to gas telemetry, Buyer shall (i) immediately
investigate the source of such interruption, provide a preliminary status
report to Seller within one hour of such notification and (ii) to the extent
the applicable gas telemetry interruption is caused by the failure of the
telecommunications links between Seller-owned gas revenue meter telemetry
equipment and the Energy Control Center, take all necessary steps to restore
gas telemetry data transmission as soon as possible. During any such gas
telemetry data interruption, Buyer shall, at its cost and expense, read all
meters necessary to estimate gas flows into the Generating Facilities, and
shall give Seller hourly telephonic reports of such readings and the aggregate
estimated gas flow amount until such time ~s such interruption ends or Seller
informs Buyer that the results of such readings are no longer necessary. Seller
shall reimburse Buyer for its reasonable costs and expenses incurred in
connection with any data interruption resulting from the failure of
Seller-owned gas revenue meter telemetry equipment.

                                       15
<PAGE>   17

       SECTION 3.7.  Nondispatchability Notification. If any unit of any of the
Generating Facilities experiences a full or partial forced outage, Buyer shall
immediately notify Seller's Energy Control Center verbally, such notice to be
promptly confirmed in writing, of such unit's outage and the expected duration
thereof.

       SECTION 3.8.  Miscellaneous Services. (a) Services Provided by Seller.
(i) Subject to any suspension in accordance with Section 3 . 08 (a) (ii),
Seller shall upon the request of Buyer provide to Buyer in respect of
facilities, equipment and systems owned by Buyer located on Substation property
(A) light and power service in accordance with the applicable tariff or any
other charges in respect thereof reasonably agreed to by Seller and Buyer and
(B) SF(6) gas, nitrogen gas, compressed air and dielectric fluid, in connection
with which Buyer shall reimburse Seller for a reasonable estimate of its use
thereof; provided, however, that Seller shall not charge Buyer for transmission
and distribution services for power provided in connection with clause (i) (A)
above to the extent such charges relate to power transmitted by Seller on its
own behalf.

             (ii)   Seller may from time to time temporarily suspend the
services set forth in Section 3.08(a) (i) and shall provide Buyer reasonable
advance notice of any scheduled temporary suspension of services to be provided
pursuant to this Section 3.08(a) (i) reasonably in advance of such suspension.
Such notification shall include an estimated time duration for a return to
normal conditions. In the event of any unplanned or forced suspension of the
services set forth in this Section 3.08, Seller shall immediately notify Buyer
verbally, such notice to be promptly confirmed in writing. In the event of any
suspension pursuant to this Section 3.08(a) (ii), Seller shall use its
reasonable best efforts to restore such services.

       (b)   Services Provided by Buyer. Buyer acknowledges that any feeders
owned by Buyer and associated electrical facilities, equipment, systems and
transformers owned by Buyer and connected thereto providing light and power to
the Substations and current transformers and potential transformers owned by
Buyer and used in relay protection circuits that protect Seller Assets are
critical for the sale of Buyer's electric energy and delivery of such electric
energy over the Transmission System and to Seller's operations and System
Integrity and shall take all measures reasonably required for such feeders,
facilities, equipment, systems and transformers to at all times remain in
service. Notwithstanding Section 2.02(b), to the extent that any such feeder,
current transformer or potential transformer fails to remain in

                                       16
<PAGE>   18

service and Buyer fails to promptly take any necessary corrective measures,
Seller reserves the right, but shall have no obligation, to take any such
measures or perform servicing or repairs as may be reasonably required in order
to cause such feeder or relay protection circuits to resume service. Buyer
shall reimburse Seller for its reasonable costs and expenses incurred in
connection with such corrective measures and servicing and repairs.

       SECTION 3.9.  Gas Telemetry and Communications Equipment. (a) General.
Seller shall, after providing notice to Buyer, have the right to remove,
replace, modify, add or upgrade, at no cost to Buyer, gas telemetry or
communications facilities, equipment and systems including antennae, wave
guides and cables located on Buyer's structures or in Buyer's Generating
Facilities; provided, however, that any modification or upgrade to such
modification or upgrade shall be subject to Section 3.03.

       (b)   Access. Buyer and Seller shall cooperate in the implementation of
procedures designed to control access to all rooms on Buyer's premises in which
gas telemetry or communications facilities, equipment or systems owned by
Seller are located, including the designation and periodic review of a list of
personnel authorized to enter into and remove, replace, modify, add or upgrade
gas telemetry or communications facilities, equipment or systems located in
such rooms. In no event shall Buyer allow any person not previously approved by
Seller to (i) enter into any such room or (ii) remove, replace, modify, add or
upgrade any such gas telemetry or communications facilities, equipment or
systems.

       (c)   Services. At no cost to Seller, Buyer shall provide Seller with,
and operate and maintain, adequate heating, ventilation, air conditioning,
light and power and other building services for rooms on Buyer's premises in
which gas telemetry or communications facilities, equipment or systems owned by
Seller are located. Without limiting the generality of the foregoing, Buyer
shall at all times operate and maintain air conditioning facilities and
equipment adequate to maintain temperatures at the appropriate levels in
accordance with the applicable manufacturer' s specifications thereof.

       (d)   Radios. Buyer, in cooperation with Seller's Energy Control Center,
shall from time to time test and maintain the channel 6 radios which can be
used by Buyer to communicate with Seller's Energy Control Center.

                                       17
<PAGE>   19

       SECTION 3.10.  Existing Telecommunications Facilities of Seller. (a) To
the extent permitted by Applicable Legal Requirements, Seller shall or shall
cause one of its Affiliates to, at no cost to Buyer, provide to Buyer for 12
months following the Closing Date, access, solely in connection with the
operation of the Generating Facilities, to the corporate communications network
owned by Seller in existence immediately prior to the Closing Date solely to
maintain the link between the Generating Facilities and Seller's Energy Control
Center for the purpose of providing Seller's Energy Control Center with
information regarding the Generating Facilities; provided, however, that Seller
or such Affiliate,-as the case may be, may terminate such access at any time
upon three months' notice; provided further, however, that Seller or such
Affiliate, as the case may be, shall in no event have any liability whatsoever
to Buyer for any failure of any such network. Buyer acknowledges that Seller or
such Affiliate, as the case may be, may interrupt such access if so required
under Applicable Legal Requirements or if providing such access is determined
to be discriminatory or preferential pursuant to the ISO Rules. Seller shall
not use or disclose any information it receives pursuant to this Section
3.10(a) other than in accordance with Applicable Legal Requirements.

       (b)   Buyer shall at all times have available for its sole use two
diverse and redundant, in respect of each other, telecommunications links
between the Generating Facilities and Seller's Energy Control Center (one of
which may be Seller's existing corporate communications network pursuant to
Section 3.10(a) above) for the purpose of providing Seller's Energy Control
Center with information regarding the Generating Facilities.

       SECTION 3.11.  Switching, Tagging and Grounding. Subject to Section
2.01, each Party shall comply with Seller's General Instructions Governing Work
on System Electrical Equipment, as from time to time in effect (the "Switching
Rules"), promulgated pursuant to the requirements of 29 C.F.R. Section 1910.269
(1998), or any successor thereto or replacement thereof. Seller shall have no
liability to Buyer in connection with the compliance by Buyer with the
Switching Rules and Buyer agrees to hold Seller harmless from any liability as
a result thereof.

       SECTION 3.12.  Environmental Matters. (a) Cooperation. Seller and Buyer
agree to cooperate with each other concerning (i) any site plans, surveys,
permits and other similar matters that affect or concern the premises of both
Parties, including any plans to prevent or respond to spills of oil or
hazardous substances into navigable waters or to control and monitor stormwater
discharges associated with industrial or construction activities, required by
any Governmental Authority and (ii)

                                       18
<PAGE>   20

the selection of a response measure or remedial action and any follow-up or
other reports required under applicable Environmental Laws in connection with
any Release described in paragraphs (b) and (c).

       (b)   Notice. Each Party shall upon discovery immediately notify the
other Party verbally, such notice to be promptly confirmed in writing, of any
Release or threatened Release of Hazardous Substances (i) onto or :under, or
reasonably likely to migrate onto or under, the other Party's premises or (ii)
originating from, or relating to, any facilities, equipment or systems owned by
the other Party that are located on the premises of, and is operated by, the
notifying Party. In the event of any such Release, such notifying Party shall
make all initial notifications to Governmental Authorities required under
applicable Environmental Laws and shall take all appropriate initial response
measures to contain and isolate any such Release, and to the extent it is
ultimately responsible under this Agreement for remediation of such Release or
threatened Release, the other Party shall reimburse the notifying Party for its
reasonable costs and expenses incurred in connection with any such initial
response measures. The Parties shall cooperate in good faith in order to reduce
to the extent reasonably practicable any adverse operational and financial
impact of such initial response measures.

       (c)   Remediation. Each Party shall Remediate in accordance with
Environmental Laws any Release or threatened Release of Hazardous Substances
which is the responsibility of such Party pursuant to the Sale Agreement or
results, in whole or in part, from the gross negligence or wilful or wanton
acts of or omissions to act by such Party.

       SECTION 3.13.  Remote Operation.  Buyer shall at all times maintain the
capability to operate remotely the Gas Turbines from Seller's Energy Control
Center.

       SECTION 3.14.  Voltage and Frequency Requirements. Unless otherwise
agreed to in writing by the Parties or specified by the ISO, Buyer shall (a)
operate its interconnected Generating Facilities (i) with automatic voltage
regulators and minimum excitation limiters and shall maintain voltage at the
Points of Interconnection in accordance with Good Industry Practice and (ii) at
frequency settings from time to time specified by Seller with reasonable
advance notice to Buyer and (b) operate within the under-frequency,
overfrequency, undervoltage or overvoltage limits in respect of relays from
time to time specified by Seller with reasonable advance notice to Buyer.

                                       19
<PAGE>   21

       SECTION 3.15.  Authorized Representation. (a) Buyer Representatives.
Buyer shall designate an individual or individuals who have authority to bind
Buyer hereunder and Seller shall be entitled to rely upon such designation.
Buyer shall also designate an individual or individuals who will be available
at the Generating Facilities 365 days per year and 24 hours per day and shall
be empowered by Buyer to make operational decisions hereunder on Buyer's behalf
("Buyer Operations Manager"). Seller shall also be entitled to rely on
statements, actions and decisions of the Buyer Operations Manager as those of
Buyer, unless Buyer specifies otherwise in writing with respect to certain
events.

       (b)   Seller Representatives. Seller shall designate an individual or
individuals who have authority to bind Seller hereunder and Buyer shall be
entitled to rely upon such designation. Seller shall also designate an
individual or individuals who will be available at the Seller's Energy Control
Center 365 days per year and 24 hours per day and shall be empowered by Seller
to make operational decisions hereunder on Seller's behalf ("Seller Operations
Manager"). Buyer shall also be entitled to rely ,on statements, actions and
decisions of the Seller Operations Manager as those of Seller, unless Seller
specifies otherwise in writing with respect to certain events.

       SECTION 3.16.  Insurance. (a) The Parties agree to carry, at their own
cost and expense and throughout the term of this Agreement, policies of
insurance covering fire, liability, worker's compensation, property all-risk,
comprehensive bodily injury, property damage liability and automobile
liability, products, completed operations, explosion and collapse, contractual
and personal injury Assets and, in the case of Seller, the Seller Assets. Such
insurance shall be in such amounts, have such deductibles and retentions and be
underwritten by such companies as would be obtained by a reasonably prudent
electric power business and shall be primary and noncontributory with any
insurance carried by the other Party and it shall not require that such other
Party pay any premium thereunder. Notwithstanding the foregoing, either Party
may self-insure against any of the liabilities set forth in the first sentence
of this Section 3.16 if such Party satisfies all applicable statutory and
regulatory criteria with respect to the self-insurance of the relevant
liability. Upon receipt of any notice of cancellation or expiration of any such
insurance policy, the Party receiving such notice shall immediately give
written notice to the other Party.

                                       20
<PAGE>   22

       (b)   The Parties agree to furnish each other with certificates of
insurance evidencing the insurance coverage set forth in this, Section 3.16
and, upon reasonable request, a copy of any insurance policy referred to
therein.

       (c)   Except for worker's compensation insurance, each Party and its
Affiliates shall be named as additional insureds under the general liability
insurance policies maintained by each Party pursuant to Section 3 .16 (a).

       (d)   Each Party on behalf of itself and its Affiliates shall exclude
any right of subrogation under its insurance policies for any liability it has
agreed to assume under the Sale Agreement, this Agreement or any other
Ancillary Agreement. Evidence of this requirement shall be noted on all
certificates of insurance.

       SECTION 3.17.  Energy Received by Generating Facilities. (a) Buyer
agrees that energy received from any feeder owned by Buyer that receives energy
from Substations shall be used only to provide light and power to the
Generating Facilities and shall not be used in connection with any transmission
or distribution service and that it shall not sell or otherwise supply such
energy to any third party.

       (b)   Without limiting the generality of Section 3.17(a) above, Buyer
agrees that it will use energy derived from any Generating Facility as its
usual and customary source of light and power, and that it shall use energy
supplied from the Substations by feeders owned by Buyer for light and power
only when the applicable light and power transformer or associated equipment is
out of service.

       SECTION 3.18.  Seller's Gas Pipe Testing Obligations. Seller shall
inspect, test and maintain all gas service lines and related appurtenances
(including regulators, gas revenue meters, gas revenue telemetering systems
and, from time to time upon reasonable request by Buyer, scrubbers, but not
including trip switches owned by Buyer, non-revenue meter telemetering systems,
motor-operated controls and the telecommunications links between Seller-owned
gas revenue meter telemetry equipment and the Energy Control Center) connecting
Seller's Gas System to Buyer's Generating Facilities, up to the building wall
of the applicable Generating Facilities and in accordance with Applicable Legal
Requirements and Good Industry Practice. Without limiting the generality of
Section 2.03, Buyer shall not service or interfere in any manner whatsoever
with any such gas service lines and related appurtenances (including
regulators, gas revenue meters, gas revenue telemetering systems and scrubbers,
but not including trip switches owned by Buyer, non-revenue

                                       21
<PAGE>   23

meter telemetering systems, motor-operated controls and the telecommunications
links between Seller-owned gas revenue meter telemetry equipment and the Energy
Control Center). Buyer shall reimburse Seller for its reasonable costs and
expenses incurred in connection with this Section 3.18.

       SECTION 3.19.  Emergency Power. Buyer shall, in accordance with Seller's
applicable operating procedures, provide emergency power to Seller's liquefied
natural gas facility located on Seller's premises in the event of a loss of
normal power at such facility, and Seller shall reimburse Buyer for its
reasonable costs and expenses in connection therewith.

                                  ARTICLE IV

                              Billing Procedures

       SECTION 4.1.  Billing Procedures. Within five Business Days after the
first day of each month, in the case of metered light and power services, or
quarter, in all other cases, each Party shall prepare an invoice for those
reimbursable costs incurred on behalf of, or services provided to, the other
Party under this Agreement during the preceding month or quarter, as the case
may be. Each invoice shall delineate the month in which such costs or services
were incurred or provided, shall fully describe the costs or services incurred
or rendered and shall be itemized to reflect the incurrence of such costs and
the provision of such services. The amount of Buyer's invoice and amount of
Seller's invoice for such month or quarter, as the case may be, shall be
netted, and Buyer or. Seller (as the case may be) shall pay the net amount, if
any, to the other Party on or before the twentieth Business Day following
receipt of the other Party's invoice, and any overdue amounts shall bear
interest from such date through the date of payment at the prime rate of The
Chase Manhattan Bank in effect on such date. All payments shall be made in
immediately available funds by wire transfer to a bank named by such Party.
Payment of invoices by either Party shall not relieve the paying Party from any
responsibilities or obligations it has under this Agreement, the Sale Agreement
or the Astoria Declaration of Easements nor shall it constitute a waiver of any
claims arising hereunder nor shall it prejudice either Party's right to
question the correctness of any billing.

       SECTION 4.2.   Payment Default. In the event of a billing dispute, the
Parties shall continue to provide services to each other as long as the paying
Party (i) continues to make all of the payments not in dispute and (ii) if
requested by the

                                       22

<PAGE>   24

billing Party, pays into an escrow account the disputed portion of the
applicable invoice, pending resolution of such dispute.

                                   ARTICLE V

                           Miscellaneous Provisions

       SECTION 5.1.   Effectiveness and Term. (a) This Agreement shall only
become effective upon the consummation of the Closing and, prior to such time,
shall have no force or effect. If the Sale Agreement is terminated for any
reason prior to the Closing, then this Agreement shall also automatically
terminate and be of no further force or effect.

       (b)   If the Closing occurs, this Agreement shall continue in full force
and effect until the earlier of (i) such time as the permanent cessation of
power generation functions at the Generating Facilities, together with any
associated demolition, removal or restoration of the site (to the extent
required by Applicable Legal Requirements), has been completed by Buyer or (ii)
such time as the permanent cessation of interconnection functions in respect of
the Transmission System, together with any associated demolition, removal or
restoration of the site (to the extent required by Applicable Legal
Requirements), has been completed by Seller. The applicable provisions of this
Agreement shall continue in effect after any termination of this Agreement to
the extent necessary to provide for final billings, billing adjustments and
payments pertaining to liability and indemnification obligations arising from
acts or events that occurred while this Agreement was in effect.

       (c)   Buyer and Seller agree that, notwithstanding any other provision
of this Agreement, the Sale Agreement or any other Ancillary Agreement, this
Agreement may not be terminated under any circumstances by either Party as a --
result of a breach, whether or not material, of the other Party or otherwise,
except pursuant to an agreement in writing executed by each Party.

       SECTION 5.2.  Force Majeure. (a) Notwithstanding anything in this
Agreement to the contrary, neither Party shall have any liability or be
otherwise responsible to the other for its failure to carry out its
obligations,' with the exception of any obligation to pay money, under this
Agreement if and only to the extent that it becomes impossible for either Party
to so perform as a result of any occurrence or event which is beyond the
reasonable control, and does not result from any fault or

                                       23
<PAGE>   25

negligence, of the Party affected (each, a "Force Majeure Event"), including
any act of God, strike or any other labor disturbance, act of a public enemy,
war, act of terrorism, riot, any other civil disturbance, fire, storm,
lightning, flood, earthquake, any other natural disasters, explosion, materials
shortage, breakage or accident involving facilities, equipment or systems, any
order or regulation or restriction imposed by any Governmental Authority,
failure of a contractor or subcontractor caused by a Force Majeure Event and
transportation delays or stoppages.

       (b)   If a Party shall rely on the occurrence of a Force Majeure Event
as a basis for being excused from performance of its obligations under this
Agreement, then the Party relying on such occurrence shall (i) provide prompt
written notice of such Force Majeure Event to the other Party giving an
estimate of its expected duration and the probable impact on the performance of
its obligations hereunder, (ii) exercise its reasonable best efforts to
continue to perform its obligations under this Agreement, (iii) reasonably and
expeditiously take action to correct or cure the Force Majeure Event (provided,
however, that settlement of strikes or any other labor disturbance will be
completely within the sole discretion of the Party affected by such strike or
labor dispute), (iv) exercise its reasonable best efforts to mitigate or limit
damages to the other Party and (v) provide prompt written notice to the other
Party of the cessation of the Force Majeure Event.

       SECTION 5.3.  Confidentiality. (a) Each Party (the "Receiving Party" )
shall, during the term of this Agreement and for two years after its
termination, keep confidential and shall cause its directors, officers,
affiliates, employees, contractors, agents and other representatives (including
financial advisors, attorneys and accountants) (collectively, the
"Representatives") to keep confidential (except as required by applicable law,
regulation or legal process, and then only after compliance with subsection (b)
of this Section), any and all documents and information (i) relating to (x) in
the case of the Seller, the Buyer Assets or (y) in the case of the Buyer, the
Seller Assets, furnished or disclosed by the other Party (the "Disclosing
Party") in connection with this Agreement or any other Ancillary Agreement or
(ii) learned by the Receiving Party during the course of performance of this
Agreement or any other Ancillary Agreement or in connection with any claim for
indemnification pursuant to Article X of the Sale Agreement (the "Confidential
Information"); provided, however, that the confidentiality obligation hereunder
shall expire two years after any such Confidential Information is first
furnished, disclosed or learned. Except to the extent that any Confidential
Information (i) is or becomes generally available to the public other than as a
result of a disclosure by the Disclosing Party or its Representatives, (ii) is
developed by the Receiving Party or its Representatives

                                       24
<PAGE>   26

independently and without use of, and does not contain or reflect, information
furnished by the Disclosing Party or its Representatives, or (iii) is or
becomes available to the Receiving Party on a nonconfidential basis from a
source (other than the Disclosing Party or its Representatives) which, to the
best of the Receiving Party's knowledge after due inquiry, is not prohibited
from disclosing such information to the Receiving Party by a legal, contractual
or fiduciary obligation to the Disclosing Party, the Receiving Party shall not
release or disclose such Confidential Information to any person who has not
first been advised of the confidentiality provisions of this Section and has
agreed in writing to comply with such provisions, other than to its
Representatives on a need-to-know basis.

       (b)   In the event that the Receiving Party or any of its
Representatives is requested pursuant to, or required by, Applicable Legal
Requirements, regulation or legal process to disclose any of the Confidential
Information, the Receiving Party shall notify the Disclosing Party promptly so
that the Disclosing Party may seek a protective order or other appropriate
remedy or, in the Disclosing Party's sole discretion, waive compliance with the
terms of this Section. In the event that no such protective order or other
remedy is obtained, or that the Disclosing Party does not waive compliance with
the terms of this Section, the Receiving Party shall furnish only that portion
of the Confidential Information which the Receiving Party is advised by counsel
is legally required and shall exercise its reasonable best efforts to obtain
reliable assurance that confidential treatment will be accorded the
Confidential Information so furnished.

       (c)   In the event of litigation relating to the confidentiality
provisions of this Section, if a court of competent jurisdiction determines in
a final, nonappealable order that this Section 5.03 has been breached by a
Party or its Representatives, then such breaching Party shall reimburse the
other Party for its reasonable costs and expenses (including legal fees and
expenses) incurred in connection with all such litigation.

       SECTION 5.4.   Assignment; No Third Party Beneficiaries. (a) This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the Parties and their respective successors and permitted
assigns but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by either Party, including by operation
of law, without the prior written consent of the other Party, except (I) in the
case of Seller (A) to an Affiliate of Seller or a third party in connection
with the transfer of the Transmission System to such Affiliate or third party
or (B) to a lending institution or trustee in connection with a

                                       25
<PAGE>   27

pledge or granting of a security interest in all or any part of the Transmission
System and this Agreement and (ii) in the case of Buyer (A) to an Affiliate of
Buyer in connection with the transfer of the Auctioned Assets to such Affiliate
and (B) to a lending institution or trustee in connection with a pledge or
granting of a security interest in the Auctioned Assets and this Agreement;
provided, however, that no assignment or transfer of rights or obligations by
either Party shall relieve it from the full liabilities and the full financial
responsibility, as provided for under this Agreement, unless and until the
transferee or assignee shall agree in writing to assume such obligations and
duties and the other Party has consented in writing to such assumption.

       (b)   Nothing in this Agreement is intended to confer upon any other
person except the Parties any rights or remedies hereunder or shall create any
third party beneficiary rights in any person.

       (c)   This Agreement shall remain in full force and effect, and
Consolidated Edison Company of New York, Inc. shall be continued to be treated
as the "Seller" for purposes of this Agreement, regardless of whether the sale
of its generating assets (or any other transactions contemplated by the Sale
Agreement) are made through a "qualified intermediary" pursuant to Section
7.06(b) of the Sale Agreement.

       SECTION 5.5. Independent Contractor Status. Nothing in this Agreement is
intended to create an association, trust, partnership or joint venture between
the Parties, or to impose a trust, partnership or fiduciary duty, obligation or
liability on or with respect to either Party and nothing in this Agreement
shall be construed as creating any relationship between Seller and Buyer other
than that of independent contractors.

       SECTION 5.6.   Notices. Unless otherwise specified herein, all notices
and other communications hereunder shall be in writing and shall be deemed
given (as of the time of delivery or, in the case of a telecopied
communication, of confirmation) if delivered personally, telecopied (which is
confirmed) or sent by overnight courier (providing proof of delivery) to the
Parties at the following addresses (or at such other address for a Party as
shall be specified by like notice)

                        if to Seller, to:

                               Consolidated Edison Company of New York, Inc.

                                       26
<PAGE>   28

                               4 Irving Place
                               New York, NY  10003
                               Telecopy No.:  (212) 677-0601
                               Attention:  General Counsel

                        if to Buyer, to

                               NRG Energy, Inc.
                               1221 Nicollet Mall, Suite 700
                               Minneapolis, MN 55403-2445
                               Telecopy No.:  (612) 373-5392
                               Attention:  General Counsel

       SECTION 5.7.  Extension; Waiver. Either Party may (i) extend the time
for the performance of any of the obligations or other acts of the other Party
or (ii) waive compliance by the other Party with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a Party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such Party. The failure of a Party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights. Notwithstanding anything herein to the
contrary, to the extent that either Party fails, in any particular instance, to
take affirmative steps to exercise its rights to witness, inspect, observe or
approve the activities of the other Party as contemplated by this Agreement,
such rights shall, solely with respect to such instance, be deemed waived in
respect of such testing, calibration, adjustment and maintenance interval or
such operation or maintenance activities, equipment tests, installation,
construction pr other modifications, respectively.

       SECTION 5.8.  Amendment and Modification.  (a)  This Agreement may be
amended, modified or supplemented only by an instrument in writing signed on
behalf of each of the Parties.

       (b)   The Parties agree to, from time to time upon the reasonable
request of either Party, negotiate in good faith and execute and deliver
amendments to this Agreement, including in response to regulatory,
technological, operational or other changes, including in respect of the ISO or
the ISO Rules, affecting the Generating Facilities or the Transmission System
or the electric power industry generally.

                                       27
<PAGE>   29

       SECTION 5.9.  Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless of
the laws that might otherwise govern under applicable principles of conflicts
of law).

       SECTION 5.10. Counterparts.  This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together shall constitute one and the same instrument.

       SECTION 5.11. Interpretation. When a reference is made in this Agreement
to an Article, Section, Schedule or Exhibit, such reference shall be to an
Article or Section of, or Schedule or Exhibit to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement .are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation" or equivalent words. The words
"hereof", "herein" and "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. All terms defined in this Agreement
shall have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein. 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. Any agreement, instrument, statute,
regulation, rule or order defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument,
statute, regulation, rule or order as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes, regulations, rules or orders) by
succession of comparable successor statutes, regulations, rules or orders and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.

       SECTION 5.12. Jurisdiction and Enforcement. (a) Each of the Parties
irrevocably submits to the exclusive jurisdiction of (i) the Supreme Court of
the State of New York, New York County and (ii) the United States District
Court for the Southern District of New York, for the purposes of any suit,
action or other proceeding arising out of this Agreement or any transaction
contemplated hereby. Each of the Parties agrees to commence any action, suit or
proceeding relating hereto either in the United States District Court for the
Southern District of New York or, if such suit, action or proceeding may not be
brought in such court for jurisdictional

                                       28
<PAGE>   30

reasons, in the Supreme Court of the State of New York, New York County. Each
of the Parties further agrees that service of process, summons, notice or
document by hand delivery or U.S. registered mail at the address specified for
such Party in Section 5.06 (or such other address specified by such Party from
time to time pursuant to Section 5.06) shall be effective service of process
for any action, suit or proceeding brought against such Party in any such
court. Each of the Parties irrevocably and unconditionally waives any objection
to the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in (i) the Supreme Court of
the State of New York, New York County, or (ii) the United States District
Court for the Southern District of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.

       (b)   The Parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the Parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement, this being in addition to any other remedy to which they are
entitled at law or in equity.

       SECTION 5.13. Entire Agreement. This Agreement, the Sale Agreement, the
Confidentiality Agreement and the other Ancillary Agreements, including the
Exhibits, Schedules, documents, certificates and instruments referred to herein
or therein and other contracts, agreements and instruments contemplated hereby
or thereby embody the entire agreement and understanding of the Parties in
respect of the transactions contemplated by this Agreement. There are no
restrictions, promises, representations, warranties, covenants or undertakings
other than those expressly set forth or referred to herein or therein. This
Agreement, the Sale Agreement and the other Ancillary Agreements supersede all
prior agreements and understandings between the Parties with respect to the
transaction contemplated by this Agreement other than the Confidentiality
Agreement.

       SECTION 5.14.  Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this. Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
Parties shall negotiate

                                       29
<PAGE>   31

in good faith to modify this Agreement so as to effect the original intent of
the Parties as closely as possible to the fullest extent permitted by applicable
law in an acceptable manner to the end that the transactions contemplated hereby
are fulfilled to the extent possible.

       SECTION 5.15.   Conflicts. Except as otherwise provided in the Sale
Agreement, in the event of any conflict or inconsistency between the terms of
this Agreement and the terms of the Sale Agreement, the terms of the Sale
Agreement shall prevail. Except as otherwise provided herein, in the event of
any conflict or inconsistency between the terms of this Agreement and the terms
of any other Ancillary Agreement (other than the Arthur Kill Continuing Site
Agreement), the terms of this Agreement shall prevail.

                                       30
<PAGE>   32

       SECTION 5.16.  Agreement Not Applicable to Arthur Kill Parcel.
Notwithstanding any other provision herein to the contrary, this Agreement
shall not apply to any of the respective assets or operations of the Parties at
the Arthur Kill Parcel.

       IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed
by their respective duly authorized officers as of the date first above
written.

                         CONSOLIDATED EDISON COMPANY OF
                         NEW YORK, INC.,

                              by /s/ Joan S. Freilich
                                ----------------------------------------------
                                Name:     Joan S. Freilich
                                Title:    Executive Vice President & CFO

                         NRG ENERGY, INC.,

                              by /s/ Craig A. Mataczynski
                                ----------------------------------------------
                                Name:     Craig A. Mataczynski
                                Title:    President

                                       31<PAGE>   1
                                                                   Exhibit 10.63

                            INTERCONNECTION AGREEMENT

                                     BETWEEN

                        NIAGARA MOHAWK POWER CORPORATION

                                       AND

                                HUNTLEY POWER LLC

                                                            Date: April 14, 1999

<PAGE>   2

       This INTERCONNECTION AGREEMENT (hereinafter referred to as the
"AGREEMENT") is made as of ___________ 1999, between NIAGARA MOHAWK POWER
CORPORATION (hereinafter referred to as "NIAGARA MOHAWK") and HUNTLEY POWER LLC,
(hereinafter referred to as the "PRODUCER").

       WHEREAS, PRODUCER'S ability to deliver and sell ELECTRICITY to NIAGARA
MOHAWK and/or other purchasers from the PRODUCTION FACILITY is contingent on the
PRODUCTION FACILITY remaining interconnected to the TRANSMISSION SYSTEM through
the INTERCONNECTION FACILITY.

       NOW THEREFORE, in consideration of the mutual obligations and
undertakings set forth herein, the parties to this AGREEMENT covenant and agree
as follows:

                                   ARTICLE I
                                  DEFINITIONS

The terms listed below shall have the following meanings when used in this
INTERCONNECTION AGREEMENT.

1.1    This AGREEMENT shall become effective as of the date first above written
       (the "EFFECTIVE DATE").

1.2    "INTERCONNECTION POINT" is the point at which the PRODUCTION FACILITY is
       connected to the INTERCONNECTION FACILITY as indicated on a one-line
       diagram included as part of Exhibit A.

1.3    "DELIVERY POINT" is the point at which the INTERCONNECTION FACILITY is
       connected to the TRANSMISSION SYSTEM as indicated on a one-line diagram
       included as part of Exhibit A.

1.4    "ELECTRICITY" shall mean electric capacity and/or energy produced by the
       PRODUCTION FACILITY.

1.5    "FERC" shall mean the Federal Energy Regulatory Commission or successor
       organization.

<PAGE>   3

1.6    "GOOD UTILITY PRACTICE" shall mean any of the practices, methods and acts
       engaged in or approved by a significant portion of the electric utility
       industry during the relevant time period, or any of the practices,
       methods and acts which, in the exercise of reasonable judgment in light
       of the facts known at the time the decision was made, could have been
       expected to accomplish the desired result at the lowest reasonable cost
       consistent with good business practices, reliability, safety and
       expedition. Good Utility Practice is not intended to be limited to the
       optimum practice, method, or act, to the exclusion of all others, but
       rather to be acceptable practices, methods, or acts generally accepted in
       the region and consistently adhered to by NIAGARA MOHAWK. GOOD UTILITY
       PRACTICE shall include, but not be limited to North American Electric
       Reliability Council ("NERC") Criteria & Guidelines, Northeast Power
       Coordinating Council ("NPCC") Criteria & Guidelines, New York State
       Reliability Council ("NYSRC") if any, and New York Power Pool ("NYPP")
       criteria, rules and standards, as they may be amended from time to time
       including the rules, guidelines and criteria of any successor
       organization to the foregoing entities.

1.7    "HAZARDOUS SUBSTANCE(S)" shall mean those substances, materials, products
       or wastes which are classified as hazardous or toxic under any applicable
       federal, state or local law, or any regulations promulgated thereunder,
       effective the date of execution of this AGREEMENT, and the presence of
       which requires redemption, removal or cleanup under this AGREEMENT.

1.8    "INTERCONNECTION FACILITY" shall include all those facilities and NIAGARA
       MOHAWK PROPERTIES on which such facilities are located between the
       INTERCONNECTION POINT and the DELIVERY POINT, necessary to effect the
       transfer of ELECTRICITY, produced at the PRODUCTION FACILITY into NIAGARA
       MOHAWK'S TRANSMISSION SYSTEM, including those facilities identified in
       more particularity in Exhibit A to this AGREEMENT.

1.9    "NIAGARA MOHAWK PROPERTIES" shall mean those parcels of real property
       and/or easements that NIAGARA MOHAWK uses for its transmission facilities
       upon which portions of the INTERCONNECTION FACILITY have been constructed
       and which property PRODUCER exclusively uses under this AGREEMENT, which
       parcels of real property and/or easements and facilities are described in
       more particularity in Exhibit A hereto.

                                       2
<PAGE>   4

1.10   "PRODUCTION FACILITY" shall mean PRODUCER'S Huntley generating facility
       with a maximum output of 760 MW located in the Town of Tonawanda, County
       of Erie, New York.

1.11   "TRANSMISSION SYSTEM" shall mean NIAGARA MOHAWK'S TRANSMISSION SYSTEM,
       including any modifications subsequent to the date of this AGREEMENT.

1.12   "ELECTRIC SYSTEM BULLETIN No. 756" shall mean NIAGARA MOHAWK'S Electric
       System Bulletin 756, dated December, 1997, and all subsequent revisions,
       as it may be amended from time to time.

1.13   "INDEPENDENT SYSTEM OPERATOR" ("ISO") shall mean an organization formed
       in accordance with FERC order (s) to administer the operation of the
       transmission system, provide equal access to the transmission system of
       New York State, and to maintain system reliability.

1.14   "ISLANDING" shall mean the separation of PRODUCER'S generation from
       NIAGARA MOHAWK'S electric system while continuing to serve NIAGARA
       MOHAWK'S isolated load.

1.15   "INTERCONNECTION STUDIES" shall mean the necessary studies, identified in
       Paragraph 8.2.2, in the event it becomes necessary to modify the
       INTERCONNECTION FACILITY or to construct new or additional facilities,
       NIAGARA MOHAWK shall perform those studies that, in the judgement of
       NIAGARA MOHAWK, are necessary to determine (a) an appropriate
       INTERCONNECTION POINT (b) the equipment and facilities necessary and
       desirable for the construction and operation of new or additional or
       modified facilities (c) the interconnection voltage (d) the estimated
       costs of facilities and/or the costs for NIAGARA MOHAWK'S design, review,
       assistance and inspection of facilities to be designed and constructed by
       PRODUCER (e) the costs of any new reinforcements to or additions of new
       facilities to NIAGARA MOHAWK'S TRANSMISSION SYSTEM required or
       recommended to be made in order for NIAGARA MOHAWK to interconnect with
       PRODUCER'S PRODUCTION FACILITY.

1.16   "SERVICE POINT' is the point at which the PRODUCTION FACILITY is
       connected to the TRANSMISSION SYSTEM for retail delivery of ELEC-

                                       3
<PAGE>   5

TRICITY by NIAGARA MOHAWK to the PRODUCTION FACILITY as indicated on a one-line
diagram included as part of Exhibit A.

                                   ARTICLE II
                           AGREEMENT TO INTERCONNECT
                    DESCRIPTION OF INTERCONNECTION FACILITY

2.1    NIAGARA MOHAWK and PRODUCER agree to remain interconnected in accordance
       with the terms agreed to herein.

2.2    NIAGARA MOHAWK and PRODUCER shall be interconnected by means of the
       INTERCONNECTION FACILITY, which NIAGARA MOHAWK shall operate, own and
       maintain, at the PRODUCER's expense.

2.3    The PRODUCTION FAC1LITY shall include all facilities and equipment on the
       PRODUCER's side of the INTERCONNECTION POINT as indicated on Exhibit A.
       PRODUCER agrees that the installation of the electrical equipment and the
       operation of the PRODUCTION FACILITY must meet or exceed the requirements
       of NIAGARA MOHAWK'S ELECTRIC SYSTEM BULLETIN No. 756. Notwithstanding the
       foregoing, NIAGARA MOHAWK acknowledges and agrees to the following
       limitations for the existing PRODUCTION FACILITY as it pertains to
       NIAGARA MOHAWK'S ELECTRIC SYSTEM BULLETIN No. 756:

       2.3.1  If at the date of this AGREEMENT the PRODUCTION FACILITY does not
              conform to NIAGARA MOHAWK'S ELECTRIC SYSTEM BULLETIN No. 756, but
              was built in accordance with GOOD UTILITY PRACTICE and does not
              present any adverse impact on NIAGARA MOHAWK'S TRANSMISSION SYSTEM
              as determined by NIAGARA MOHAWK in its reasonable discretion, then
              it is not the intent of this AGREEMENT to cause the PRODUCER'S
              PRODUCTION FACILITY to immediately upgrade to full compliance with
              ELECTRIC SYSTEM BULLETIN No. 756. Any upgrades required to protect
              NIAGARA MOHAWK'S TRANSMISSION SYSTEM from adverse impacts will be
              listed in Exhibit B and must be completed within ninety (90) days
              of signing this AGREEMENT unless otherwise mutually agreed upon by
              both parties.

                                       4
<PAGE>   6

       2.3.2  The parties agree that it is the intent of this AGREEMENT to
              require the PRODUCER'S PRODUCTION FACILITY to conform to ELECTRIC
              SYSTEM BULLETIN No. 756 and therefore, agree that as additions,
              modifications and replacements to PRODUCER'S PRODUCTION FACILITY
              are implemented, the additions, modifications and replacements
              will conform to ELECTRIC SYSTEM BULLETIN No. 756. If the PRODUCER
              upgrades the system protection or upgrades technology employed at
              the PRODUCTION FACILITY (for example, but not limited to,
              repowering), if in NIAGARA MOHAWK'S reasonable discretion, it is
              necessary for safety, such portion of the PRODUCER'S PRODUCTION
              FACILITY, as is necessary, will be brought into full compliance
              with the requirements of ELECTRIC SYSTEM BULLETIN No. 756, at that
              time.

       2.3.3  If PRODUCER relies on NIAGARA MOHAWK'S system protection equipment
              and practices for protection of PRODUCTION FACILITY equipment,
              PRODUCER agrees to indemnify, defend, and save NIAGARA MOHAWK, its
              agents and employees, harmless from, and against any loss, damage,
              liability (civil or criminal), cost, suit, charge, expense
              (including reasonable attorneys fees) or cause of action, arising
              from any damage to the PRODUCTION FACILITY resulting from such
              reliance, except if such loss, damage, liability, cost, suit,
              charge, expense or cause of action is the result of NIAGARA
              MOHAWK's willful misconduct or gross negligence.

       2.3.4  NIAGARA MOHAWK reserves the right to operate the first means of
              disconnect on the PRODUCER'S side of the INTERCONNECTION POINT in
              accordance with GOOD UTILITY PRACTICE. PRODUCER reserves the right
              to operate the circuit breakers on NIAGARA MOHAWK'S side of the
              INTERCONNECTION POINT for synchronization and disconnection of
              Generators 63, 64, 65 and 66 in accordance with GOOD UTILITY
              PRACTICE.

       2.3.5  Upon implementation of an ISO and at NIAGARA MOHAWK'S sole
              discretion, the requirements, rules and regulations of the ISO may
              govern requirements of ELECTRIC SYSTEM BULLETIN No. 756.

2.4    PRODUCER recognizes that neither this AGREEMENT nor the PRODUCER'S
       financial support of the INTERCONNECTION FACILITIES

                                       5
<PAGE>   7

       confers upon it any right to transmit electricity over NIAGARA MOHAWK'S
       TRANSMISSION SYSTEM other than through the INTERCONNECTION FACILITIES.

2.5    NIAGARA MOHAWK shall use due diligence, in accordance with GOOD UTILITY
       PRACTICE, to operate and maintain the INTERCONNECTION FACILITIES and to
       have them available for the transmission of electricity. NIAGARA MOHAWK
       shall consult with PRODUCER regarding the timing of scheduled maintenance
       of the INTERCONNECTION FACILITY, which might reasonably be expected to
       affect PRODUCER'S PRODUCTION FACILITY. NIAGARA MOHAWK shall, to the
       extent practicable, schedule any maintenance to coincide with PRODUCER'S
       scheduled outage. NIAGARA MOHAWK does not, however, guarantee or warrant
       uninterrupted availability of the INTERCONNECTION FACILITIES or
       TRANSMISSION SYSTEM. Curtailment of deliveries over the INTERCONNECTION
       FACILITIES or TRANSMISSION SYSTEM shall be governed by the transmission
       agreement or agreements between NIAGARA MOHAWK and the PRODUCER.

2.6    PRODUCER hereby grants NIAGARA MOHAWK all necessary rights of way,
       easements, and licenses as NIAGARA MOHAWK may reasonably require to
       install, operate, maintain, replace and remove NIAGARA MOHAWK'S
       facilities, including adequate and continuing rights of access to
       PRODUCER'S property for any purpose reasonably related to this AGREEMENT.
       PRODUCER hereby agrees to execute such grants, deeds, licenses,
       instruments or other documents as NIAGARA MOHAWK may require to enable it
       to record such rights of way, easements and licenses.

2.7    NIAGARA MOHAWK hereby grants PRODUCER all necessary rights of way,
       easements, and licenses as PRODUCER may reasonably require to install,
       operate, maintain, replace and remove PRODUCER'S facilities, including
       adequate and continuing rights of access to NIAGARA MOHAWK'S property for
       any purpose reasonably related to this AGREEMENT. NIAGARA MOHAWK hereby
       agrees to execute such grants, deeds, licenses, instruments or other
       documents as PRODUCER may require to enable it to record such rights of
       way, easements and licenses.

                                       6
<PAGE>   8

                                  ARTICLE III
                   REPRESENTAT1ONS AND WARRANTIES OF PARTIES

3.1    PRODUCER is a limited liability company duly organized and validly
       existing under the laws of the State of Delaware. PRODUCER is qualified
       to do business under the laws of the State of New York, is in good
       standing under the laws of the State of New York, has the power and
       authority to own its properties, to carry on its business as. now being
       conducted, and to enter into this AGREEMENT and the transactions
       contemplated herein and perform and carry out all covenants and
       obligations on its part to be performed under and pursuant to this
       AGREEMENT, and is duly authorized to execute and deliver "this AGREEMENT"
       and consummate the transactions contemplated herein.

3.2    PRODUCER is not prohibited from entering into this AGREEMENT and
       discharging and performing all covenants and obligations on its part to
       be performed under and pursuant to this AGREEMENT. The execution and
       delivery of this AGREEMENT, the consummation of the transactions
       contemplated herein and the fulfillment of and compliance with the
       provisions of this AGREEMENT will not conflict with or constitute a
       breach of or a default under any of the terms, conditions or provisions
       of any law, rule or regulation, any order, judgment, writ, injunction,
       decree, determination, award or other instrument or legal requirement of
       any court or other agency of government, the agreement of limited
       partnership of PRODUCER or any contractual limitation, corporate
       restriction or outstanding trust indenture, deed of trust, mortgage, loan
       agreement, lease, other evidence of indebtedness or any other agreement
       or instrument to which PRODUCER is a party or by which it or any of its
       property is bound and will not result in a breach of or a default under
       any of the foregoing. This AGREEMENT is the legal, valid and binding
       obligation of PRODUCER enforceable in accordance with its terms, except
       as limited by applicable reorganization, insolvency, liquidation,
       readjustment of debt, moratorium, or other similar laws affecting the
       enforcement of rights of creditors generally as such laws may be applied
       in the event of a reorganization, insolvency, liquidation, readjustment
       of debt or other similar proceeding of or moratorium applicable to
       PRODUCER and by general principles of equity (regardless of whether such
       enforceability is considered in a proceeding in equity or at law.)

                                       7
<PAGE>   9

3.3    NIAGARA MOHAWK is a corporation duly organized, validly existing and
       qualified to do business under the laws of the State of New York, is in
       good standing under its certificate of incorporation and the laws of the
       State of New York, has the corporate authority to own its properties, to
       carry on its business as now being conducted, and to enter into this
       AGREEMENT and the transactions contemplated herein and perform and carry
       out all covenants and obligations on its part to be performed under and
       pursuant to this AGREEMENT, and is duly authorized to execute and deliver
       this AGREEMENT and consummate the transactions contemplated herein.

3.4    NIAGARA MOHAWK is not prohibited from entering into this AGREEMENT and
       discharging and performing all covenants and obligations on its part to
       be performed under and pursuant to this AGREEMENT pending review and
       acceptance of the terms of this AGREEMENT by the FERC or successor
       organization. The execution and delivery of this AGREEMENT and upon its
       acceptance for filing by the FERC, the consummation of the transactions
       contemplated herein and the fulfillment of and compliance with the
       provisions of this AGREEMENT will not conflict with or constitute a
       breach of or a default under any of the terms, conditions or provisions
       of any law, rule or regulation, any order, judgment, writ, injunction,
       decree, determination, award or other instrument or legal requirement of
       any court or other agency of government, the certificate of incorporation
       or bylaws of NIAGARA MOHAWK or any contractual limitation, corporate
       restriction or outstanding trust indenture, deed of trust, mortgage, loan
       agreement, lease, other evidence of indebtedness or any other agreement
       or instrument to which NIAGARA MOHAWK is a party or by which it or any of
       its property is bound and will not result in a breach of or a default
       under any of the foregoing. This AGREEMENT is the legal, valid and
       binding obligation of NIAGARA MOHAWK upon its acceptance for filing by
       the FERC becomes enforceable in accordance with its terms, except as
       limited by later order of the FERC, applicable reorganization,
       insolvency, liquidation, readjustment of debt, moratorium, or other
       similar laws affecting the enforcement of rights of creditors generally
       as such laws may be applied in the event of a reorganization, insolvency,
       liquidation, readjustment of debt or other similar proceeding of or
       moratorium applicable to PRODUCER and by general principles of equity
       (regardless of whether such enforceability is considered in a proceeding
       in equity or at law).

                                       8
<PAGE>   10

                                   ARTICLE IV
                  MODIFICATION TO THE INTERCONNECTION FACILITY

4.1    NIAGARA MOHAWK shall retain the discretion to determine whether, when,
       and in what manner replacements or upgrades to the INTERCONNECT1ON
       FACILITIES shall be installed. NIAGARA MOHAWK shall exercise that
       discretion in accordance with GOOD UTILITY PRACTICE. NIAGARA MOHAWK shall
       use reasonable efforts to schedule and coordinate with PRODUCER to
       minimize disruption of PRODUCERS planned operations of its PRODUCTION
       FACILITY. Any such replacements or upgrades that are installed shall be
       deemed to be INTERCONNECTION FACILITIES for purposes of this AGREEMENT.

4.2    NIAGARA MOHAWK shall notify the PRODUCER if it determines that a
       replacement or upgrade to any portion of the INTERCONNECTION FACILITIES
       is necessary or advisable. The actual cost of designing, permitting,
       installing and operating the replacement or upgrade shall be included in
       the charges calculated in accordance with Article VIII. PRODUCER shall
       also be responsible for all costs related to the PRODUCTION FACILITY, if
       any, caused by said replacement and/or upgrade.

4.3    If PRODUCER plans any additions, modifications or replacements to the
       PRODUCTION FACILITY, PRODUCER shall use reasonable efforts to give
       NIAGARA MOHAWK not less than one (1) year prior written notice thereof
       accompanied by appropriate plans, specifications, information and
       operating instructions impacting NIAGARA MOHAWK'S electric operations, of
       any such addition, modification or replacement. All such additions,
       modifications or replacements shall meet NIAGARA MOHAWK'S ELECTRIC SYSTEM
       BULLETIN No. 756, NERC, NPCC, NYPP, NYSRC, or its respective successors,
       the standards of GOOD UTILITY PRACTICE and shall be subject to the
       approval of NIAGARA MOHAWK, which approval shall not unreasonably be
       withheld.

4.4    PRODUCER shall be responsible for the costs of any modifications to the
       INTERCONNECTION FACILITIES that arise from changes to the PRODUCTION
       FACILITY in accordance with this AGREEMENT.

4.5    If, during the term of this AGREEMENT, NIAGARA MOHAWK determines that it
       is necessary to relocate, rearrange, abandon, or retire its TRANSMIS-

                                       9
<PAGE>   11

       SION SYSTEM, so that a change is required to a section of the
       INTERCONNECTION FACILITY, NIAGARA MOHAWK shall put forth its best efforts
       to give the PRODUCER no less than one (1) year's written notice of such
       relocation or rearrangement and shall use all reasonable efforts to defer
       such relocation or rearrangement until the INTERCONNECTION FACILITY can
       be reconfigured so that service may continue without interruption.

4.6    If NIAGARA MOHAWK is required or ordered by governmental authority to
       relocate, rearrange, abandon, or retire its TRANSMISSION SYSTEM requiring
       modification to the INTERCONNECTION FACILITY, NIAGARA MOHAWK shall put
       forth its best efforts to promptly so notify PRODUCER.

4.7    If relocation, rearrangement, abandonment, or retirement is required (as
       referred to in paragraphs 4.5 and 4.6), NIAGARA MOHAWK shall perform or
       have performed, at PRODUCER'S expense, the studies necessary to identify
       modifications to the INTERCONNECTION FACILITY and shall inform the
       PRODUCER of its estimate of the costs of the construction of the modified
       INTERCONNECTION FACILITY, and PRODUCER shall at its option either (i)
       reimburse NIAGARA MOHAWK for the actual costs of the construction of such
       modification in accordance with Article VIII of this AGREEMENT; (ii)
       construct, at its own expense, a new INTERCONNECTION FACILITY subject to
       the terms of this AGREEMENT; or (iii) terminate this AGREEMENT, upon no
       less than thirty (30) days written notice to NIAGARA MOHAWK.

4.8    If the relocation, rearrangement, abandonment, or retirement is ordered
       or required by governmental authority, NIAGARA MOHAWK shall use best
       efforts to obtain compensation on behalf of PRODUCER from such
       governmental authority for its mutually agreed upon share of the costs of
       such relocation or rearrangement, but in no event shall NIAGARA MOHAWK be
       responsible on its own account for reimbursing PRODUCER for any costs
       associated with such relocation or rearrangement.

4.9    If the PRODUCER elects to construct, at its own expense, a new section of
       the INTERCONNECTION FACILITY subject to the terms of this AGREEMENT, then
       the PRODUCER shall assign all rights, tide and interest in such new
       section of the INTERCONNECTION FACILITY to NIAGARA MOHAWK upon completion
       of construction and shall execute all necessary documents to effectuate
       transfer of ownership thereof to NIAGARA MO-

                                       10
<PAGE>   12

       HAWK. PRODUCER shall obtain any necessary permits, authorizations and
       rights-of-way for the new section of the INTERCONNECTION FACILITY, in
       accordance with this AGREEMENT, the costs thereof to be borne by the
       PRODUCER If the PRODUCER elects to construct a new section of the
       INTERCONNECTION FACILITY, NIAGARA MOHAWK shall own, operate and maintain,
       at PRODUCER's expense, any such new section as part of the
       INTERCONNECTION FACILITY, and PRODUCER shall reimburse NIAGARA MOHAWK for
       all costs of operating and maintenance expenses for any new section of
       the INTERCONNECTION FACILITY in accordance with Article VIII.

4.10   PRODUCER acknowledges and agrees that NIAGARA MOHAWK reserves the rights
       and ability to deliver ELECTRICITY to all customers. If, during the term
       of this AGREEMENT, NIAGARA MOHAWK determines that it is necessary to
       relocate or rearrange the INTERCONNECTION POINT, in order to permit
       NIAGARA MOHAWK access or to deliver electricity to its customers or new
       customers, so that a change is required to a section of the
       INTERCONNECTION FACILITY, NIAGARA MOHAWK shall put forth its best efforts
       to give the PRODUCER no less than one (1) year's written notice of such
       relocation or rearrangement and shall use all reasonable efforts to defer
       such relocation or rearrangement until the INTERCONNECTION FACILITY can
       be reconfigured so that service to PRODUCER may continue without
       interruption. Such relocation or rearrangement as referenced in this
       paragraph 4.10 shall be at NIAGARA MOHAWK's or the customer(s)' expense.

4.11   If PRODUCER plans any unit retirements to the PRODUCTION FACILITY,
       PRODUCER shall put forth its best efforts to give NIAGARA MOHAWK
       reasonable notice. NIAGARA MOHAWK and PRODUCER shall amend this AGREEMENT
       to reflect such unit retirements including but not limited to adjustments
       to Article VIII of this AGREEMENT.

                                       11
<PAGE>   13

                                   ARTICLE V
                                POWER DELIVERIES

5.1    METERING

       5.1.1  NIAGARA MOHAWK shall, at PRODUCER'S expense, provide, own, and
              maintain compatible metering equipment. PRODUCER shall provide
              suitable space within its facilities for installation of the
              metering equipment

       5.1.2  PRODUCER shall be responsible for providing all necessary
              communication equipment and transmission mediums, such as
              telephone lines and any necessary protection for such
              communication equipment and shall furthermore be responsible for
              all communication required by NIAGARA MOHAWK or NYPP or its
              successor.

       5.1.3  All metering equipment installed pursuant to this AGREEMENT and
              associated with the PRODUCTION FACILITY may be routinely tested by
              NIAGARA MOHAWK, in accordance with applicable NIAGARA MOHAWK,
              NYPP, NERC and GOOD UTILITY PRACTICE. PRODUCER may be present at
              such testing.

       5.1.4  If, at any time, any metering equipment is found to be inaccurate
              by more than the limits defined in 16 NYCRR Part 92 as may be
              amended from time to time, NIAGARA MOHAWK shall cause such
              metering equipment to be made accurate or replaced at PRODUCER'S
              expense. Meter readings for the period of inaccuracy shall be
              adjusted so far as the same can be reasonably ascertained;
              provided, however, no adjustment prior to the beginning of the
              preceding month shall be made except by agreement of the parties.
              Each party shall comply with any reasonable request of the other
              concerning the sealing of meters, the presence of a representative
              of the other party when the seals are broken and the tests are
              made, and other matters affecting the accuracy of the measurement
              of ELECTRICITY delivered from the PRODUCTION FACILITY. If either
              party believes that there has been a meter failure or stoppage, it
              shall immediately notify the other.

                                       12
<PAGE>   14

       5.1.5  PRODUCER shall be responsible for purchasing and installing
              software, hardware and/or other technology that may be required to
              read output billing meters.

       5.1.6  Within sixty (60) days of the closing of the sale of the
              PRODUCTION FACILITY by NIAGARA MOHAWK, NIAGARA MOHAWK will take
              all necessary actions to bring the PRODUCTION FACILITY and the
              INTERCONNECTION FACILITY into full compliance with the
              requirements and specifications set forth in Sections 5.1.1
              through 5.1.5. Upon written certification by NIAGARA MOHAWK that
              the PRODUCTION FACILITY and INTERCONNECTION FACILITY are in
              compliance with Sections 5.1.1 through 5.1.5 then all subsequent
              compliance shall be PRODUCER'S responsibility.

5.2    LOSSES

       5.2.1  If the metering equipment and the DELIVERY POINT are not at the
              same location, the metering equipment shall record delivery of
              electricity in a manner that accounts for losses occurring between
              the metering point and the DELIVERY POINT. If the metering
              equipment does not have the capability of accounting for said
              losses, then either party may install metering equipment to
              account for said losses or the meter readings shall be multiplied
              by a loss factor to be mutually agreed to between NIAGARA MOHAWK
              and PRODUCER on the EFFECTIVE DATE to account for said losses
              between the metering point and the DELIVERY POINT. The metering
              point, DELIVERY POINT, associated equipment and distance between
              the metering point and the DELIVERY POINT shall be specified in
              Exhibit A.

5.3    REACTIVE POWER SUPPORT

       5.3.1  PRODUCER is required to provide reactive capability to regulate
              and maintain system voltage at the DELIVERY POINT in conformance
              with ELECTRIC SYSTEM BULLETIN No. 756. NIAGARA MOHAWK or NYPP or
              its successor shall establish a scheduled range of voltages or
              reactive power deliveries to be maintained by the generator.

                                       13
<PAGE>   15

5.4    OPERATING FREQUENCY

5.4.1  PRODUCER is responsible for the proper coordination of any applied
       under/over frequency generator tripping as per 756, Appendix C, Section
       II, A, 2.7. If the PRODUCTION FACILITY elects to employ under frequency
       generator tripping protection, then the under frequency relay set point
       MUST be on or below the under frequency curve referred to in 756,
       Appendix C, Section IV, A., 3.0, Exhibit C-1. Similarly, if the
       PRODUCTION FACILITY elects to employ over frequency generator tripping
       protection, then the over frequency relay set point MUST be on or above
       the over frequency curve referred to in 756, Appendix C, Section IV, A.,
       3.0, Exhibit C-1. If the PRODUCTION FACILITY decides that, after
       consultation with NIAGARA MOHAWK, it cannot meet the under frequency
       -tripping set point limitation referred to in Exhibit C-1, then PRODUCER
       shall agree to fund the cost incurred by NIAGARA MOHAWK to install and
       maintain compensatory load shedding equipment required by the NYSRC. If
       the PRODUCER decides that it cannot meet the over frequency tripping set
       point limitation referred to in Exhibit C-1, PRODUCER shall consult with
       NIAGARA MOHAWK and NIAGARA MOHAWK will notify PRODUCER of any
       consequences associated with that decision.

5.5    OPERATING VOLTAGE

       5.5.1  PRODUCER is expected to adhere to the operating voltage
              performance referred to in 756 Appendix C, Section II, B, 2.2 and
              756 Appendix C, Section IV, B. PRODUCER is responsible for the
              proper coordination of any applied under/over voltage generator
              tripping as per 756, Appendix C, Section II, A, 2.7. If the
              PRODUCER elects to employ over voltage or under voltage
              protection, then the over voltage and under voltage relay settings
              shall be reviewed and approved by NIAGARA MOHAWK.

5.6    ISLANDING

       5.6.1  With reference to 756, Appendix C, Section II, A, 2.4, NIAGARA
              MOHAWK reserves the right to require, allow or prevent the
              ISLANDING of PRODUCER'S generation depending upon the

                                       14
<PAGE>   16

              prevailing NIAGARA MOHAWK electrical system operational needs at
              the time to the extent that PRODUCER'S PRODUCTION FACILITY was
              capable of same just prior to the date of this AGREEMENT.

5.7    PROTECTIVE DEVICE

       5.7.1  PRODUCER shall cooperate with NIAGARA MOHAWK on protective device
              settings and verification in accordance with 756, Appendix B,
              Section II, C and 756, Appendix C, Section V, B.

                                   ARTICLE VI
                              INSURANCE PROVISIONS

6.1    PRODUCER and NIAGARA MOHAWK shall obtain the insurance provided for in
       the Site Agreement between the two dated ________.

                                  ARTICLE VII
                              COMPLIANCE WITH LAWS

7.1    Each Party agrees to comply in all material respects with all applicable
       federal, state and local laws, ordinances, rules, regulations, permits,
       licenses, approvals, certificates, and requirements thereunder in
       connection with all its activities performed pursuant to this AGREEMENT,
       including, but not limited to all design, environmental, regulatory,
       engineering, construction, and property acquisition activities.

7.2    Each Party agrees to indemnify, defend, and save the other Party its
       agents and employees, harmless from, and against any loss, damage,
       liability (civil or criminal), cost, suit, charge, expense (including
       reasonable attorneys fees) or cause of action, arising from violations by
       the indemnifying Party of said laws, ordinances, rules, regulations,
       permits, licenses, approvals, certificates and requirements thereunder.
       Each Party agrees to bear fully all civil and criminal penalties that may
       arise from its activities or from its violations of or its failure to
       comply with the aforementioned laws and requirements, whether such
       penalties are assessed against PRODUCER or NIAGARA MOHAWK.

                                       15
<PAGE>   17

7.3    If either Party observes that any requirement specified in this AGREEMENT
       is at variance with any governing laws, ordinances, rules, regulations,
       permits, licenses, approvals, certificates and requirements thereunder,
       each Party shall promptly notify the other Party in writing before
       incurring any further liability, expense or obligation. NIAGARA MOHAWK
       and PRODUCER shall in good faith attempt to reform this AGREEMENT to
       comply with the aforementioned laws, ordinances, rules, regulations,
       permits, approvals, or certificates. If NIAGARA MOHAWK and PRODUCER, are
       unable to do so, either party may terminate this AGREEMENT.

                                  ARTICLE VIII
                                 COST PAYMENTS

8.1    NIAGARA MOHAWK shall invoice PRODUCER at the start of each calendar
       quarter in an amount equal to NIAGARA MOHAWK'S estimate for that
       quarter's costs and expenses for which NIAGARA MOHAWK is to be reimbursed
       under this AGREEMENT (excluding the charges referenced in paragraph
       8.2.6, 8.2.6.1 and 8.2.6.2), adjusted for the previous quarter's
       differential, if any, between NIAGARA MOHAWK'S estimated and actual
       costs.

8.2    PRODUCER shall reimburse NIAGARA MOHAWK for all of the following costs
       incurred by NIAGARA MOHAWK with respect to the INTERCONNECTION FACILITY
       and Interconnection upgrade facilities:

       8.2.1  All reasonable NIAGARA MOHAWK costs and expenses associated with
              the acquisition, ownership, operation, administration, inspection,
              design review, engineering, surveying, project management and
              coordination, testing of electrical equipment and installation of
              EMS-RTU and metering equipment, construction, financing,
              maintenance, environmental and regulatory permitting and licensing
              of, taxes and transfer of title and interest to, the
              INTERCONNECTION FACILITY, and any modified facility.

       8.2.2  All reasonable NIAGARA MOHAWK costs and expenses in connection
              with INTERCONNECTION STUDIES, if such INTERCONNECTION STUDIES are
              requested by PRODUCER, related to this INTERCONNECTION FACILITY.

                                       16
<PAGE>   18

       8.2.3  All reasonable NIAGARA MOHAWK costs and expenses of acquiring,
              owning, designing, engineering, constructing, financing, taxes,
              environmental permitting, and licensing, or any new or modified
              facilities.

       8.2.4  [Reserved.]

       8.2.5  Any capital costs associated with modifications performed in
              accordance with this AGREEMENT.

       8.2.6  The PRODUCER shall reimburse NIAGARA MOHAWK for any and all
              reasonable costs or expenses that are incurred by NIAGARA MOHAWK
              pursuant to this AGREEMENT for the operation, maintenance and
              repair of the INTERCONNECTION FACILITY.

              8.2.6.1 If requested by NIAGARA MOHAWK, such reimbursement shall
                      be made sufficiently in advance of NIAGARA MOHAWK
                      incurring the aforementioned costs or expense based on
                      NIAGARA MOHAWK's good faith estimate of such costs or
                      expense that may be paid promptly by NIAGARA MOHAWK when
                      due. Upon completion of the work contemplated hereunder,
                      NIAGARA MOHAWK will present PRODUCER with a summary of the
                      actual costs and expense incurred, together with
                      supporting documentation. In the event PRODUCER's advance
                      reimbursement hereunder exceeds NIAGARA MOHAWK's actual
                      costs, NIAGARA MOHAWK will refund PRODUCER's excess
                      payment to PRODUCER within ten (10) days of the date the
                      actual costs and expense summary was presented to
                      PRODUCER. In the event PRODUCER's advance reimbursement
                      hereunder is less than NIAGARA MOHAWK's actual costs,
                      PRODUCER will remit payment for the outstanding balance to
                      NIAGARA MOHAWK within ten (10) days of the date the actual
                      costs and expenses summary was presented to PRODUCER.

              8.2.6.2 Operation, maintenance and repair costs and expenses shall
                      include all reasonable costs and expenses associated with

                                       17
<PAGE>   19

                      operation, inspection, engineering and legal services,
                      contract administration, rights-of-way acquisition,
                      administrative and general, working capital (including
                      material adders, overhead charges, and transportation
                      charges), and allowed earnings and/or rates of return
                      approved by a regulatory body having jurisdiction,
                      incurred with respect to the INTERCONNECTION FACILITY,
                      including but not limited to, the following:

              (i)     Power Delivery
                      Inspections: Monthly substation inspections by a traveling
                      operator to inspect the INTERCONNECTION FACILITY for
                      physical indications of potential problems. This
                      inspection will not be charged if NIAGARA MOHAWK has
                      employees working at the substation in the course of a
                      month able to conduct such inspection in the normal course
                      of their duties.

                      Switching: Periodic switching to remove or install
                      electrical equipment in service for scheduled work
                      activities or during emergency conditions for equipment
                      restoration activities.

                      Disconnects: Maintenance activities associated with
                      disconnects based on work request generated by a traveling
                      operator or as part of equipment maintenance requirements.

                      Breakers: Preventive and corrective maintenance conducted
                      on high voltage circuit breakers based on field
                      observations, problems or per established maintenance
                      procedures intervals. -Relay PM: Preventive and corrective
                      maintenance conducted on relay related problems or per
                      established relay maintenance procedure intervals. -

              8.2.6.3 Notwithstanding the foregoing, operation and maintenance
                      on NIAGARA MOHAWK'S revenue metering for the PRODUCTION
                      FACILITY'S station service shall be in accordance with the
                      rates, term and conditions established in NIAGARA MOHAWK'S
                      Retail Tariff, Public Service Commission No. 207 -
                      Electricity ("the Retail Tariff"), as the same may be
                      modified by the New York State Public Service Commission.

                                       18
<PAGE>   20

              8.2.6.4 PRODUCER, upon thirty (30) days written notice to NIAGARA
                      MOHAWK, shall have the right to audit NIAGARA MOHAWK'S O&M
                      records for the INTERCONNECTION FACILITY on an annual
                      basis.

       8.2.7  Any and all federal, state or local taxes levied or assessed on
              NIAGARA MOHAWK, with respect to the ownership of the
              INTERCONNECTION FACILITY (other than income or excess profits
              tax); provided, however, that NIAGARA MOHAWK and PRODUCER shall
              agree upon an equitable allocation of any such taxes between the
              parties. If any form of tax, other than income or excess profits
              tax, under any present or future federal, state or other law
              different from or in addition to the taxes for which participation
              in or payment by PRODUCER is provided herein or elsewhere in this
              AGREEMENT, should be levied or assessed against or incurred by
              NIAGARA MOHAWK with respect to any property or property right
              arising from NIAGARA MOHAWK'S ownership of the INTERCONNECTION
              FACILITY which different or additional tax would not be required
              to be paid by NIAGARA MOHAWK in the absence of this AGREEMENT and,
              with respect to such different or additional tax, no obligation of
              PRODUCER to participate or pay would have attached under the
              provisions of this AGREEMENT elsewhere than in this paragraph,
              then in such event PRODUCER and NIAGARA MOHAWK shall agree upon an
              equitable allocation of such different or additional tax.

       8.2.8  NIAGARA MOHAWK agrees to cooperate with PRODUCER in attempting to
              minimize costs under this Article, provided PRODUCER reimburses
              NIAGARA MOHAWK for all costs incurred by NIAGARA MOHAWK in
              connection with such cooperation, including reasonable attorneys
              fees, and provided further that PRODUCER shall indemnify, defend,
              and save harmless NIAGARA MOHAWK its agents and employees, against
              any and all penalties, judgments, fines civil or criminal, or
              other costs that may be imposed by any governmental authority as a
              result of actions undertaken at the specific request or
              concurrence of the PRODUCER.

8.3    PRODUCER agrees to pay all invoices within thirty (30) days from date of
       the invoice. If any invoice remains unpaid thirty (30) days from the
       invoice

                                       19
<PAGE>   21

       date, NIAGARA MOHAWK shall apply to the unpaid balance, and PRODUCER
       shall pay, a finance charge at the rate of interest equal to the Prime
       Rate as may from time to time be published in The Wall Street Journal
       under "Money Rates" ("INTEREST RATE"), plus 2% per month, but in no event
       more than the maximum allowed by law.

8.4    Billing Disputes. If PRODUCER, in good faith, disputes an invoice,
       PRODUCER shall immediately notify NIAGARA MOHAWK of the basis for the
       dispute and pay the portion of such statement conceded to be correct no
       later than the due date. Consistent with Section 10.4 herein, if any
       amount withheld under dispute by PRODUCER is ultimately determined (under
       terms herein) to be due to NIAGARA MOHAWK, said funds held in escrow
       shall be paid to NIAGARA MOHAWK within one (1) Business Day of such
       determination along with interest accrued at the INTEREST RATE until date
       paid. Inadvertent overpayments shall be returned by NIAGARA MOHAWK upon
       request or deducted by NIAGARA MOHAWK from subsequent payments, with
       interest accrued at the INTEREST RATE from the date originally paid until
       the date paid or deducted.

8.5    In the event that NIAGARA MOHAWK is the purchaser of power from the
       PRODUCTION FACILITY, any outstanding invoices which the PRODUCER has not
       paid to NIAGARA MOHAWK shall be deducted from the payments due PRODUCER
       by NIAGARA MOHAWK.

                                   ARTICLE IX
                                    NOTICES

9.1    All notices required or permitted under this AGREEMENT shall be in
       writing and shall be personally delivered or sent by certified or
       registered first class mail, postage prepaid, telex, facsimile
       transmission, or overnight express mail or courier service addressed as
       follows:

                                       20
<PAGE>   22

       TO PRODUCER:                         TO      NIAGARA MOHAWK
                                                    POWER CORPORATION:
       HUNTLEY POWER LLC                            MANAGER - TRANSMISSION
       c/o NRG ENERGY, INC.                             & DELIVERY SERVICES
       1221 Nicollet Mall                           300 Erie Boulevard West
       Minneapolis, MN 55403                        Syracuse, New York 13202
       Attn: Vice President & General Counsel       (315) 460-2575
       (612) 373-5392

9.2    Either party may change its address for notices by notice to the other in
       the manner provided above.

9.3    Notwithstanding paragraph 9.1, any notice hereunder, with respect to a
       system emergency or other occurrence requiring prompt attention, may be
       made by telephone provided that such notice is confirmed in writing
       promptly thereafter.

9.4    These representatives as noted in paragraph 9.1 or their designees shall
       be authorized to act on behalf of the parties, and their instructions,
       requests, and decisions will be binding upon the parties as to all
       matters pertaining to this AGREEMENT and the performance of the parties
       hereunder. Only these representatives shall have the authority to commit
       funds or make binding obligations on behalf of the parties. These
       representatives shall be responsible for tracking work, costs, schedules
       and all other matters related to this AGREEMENT, and to the performance
       of any third parties.

                                   ARTICLE X
                              TERM AND TERMINATION

10.1   This AGREEMENT shall become effective as of the date first above written
       (the "EFFECTIVE DATE"), subject to its approval or acceptance for filing
       by the FERC, and shall continue in effect for twenty (20) years.

10.2   This AGREEMENT shall not merge with or be terminated or superseded by any
       future agreement between the parties that does not specifically so
       provide.

                                       21
<PAGE>   23

10.3   In the event PRODUCER abandons the PRODUCTION FACILITY; becomes
       insolvent; or assigns or sublets this AGREEMENT in a manner inconsistent
       with this AGREEMENT, or is violating any of the material conditions,
       terms, obligations, or covenants of this AGREEMENT, NIAGARA MOHAWK may
       terminate this AGREEMENT. Before instituting proceedings before FERC to
       terminate the AGREEMENT, NIAGARA MOHAWK must give PRODUCER written notice
       of the reasons for termination. If within a period of thirty (30) days of
       such notice PRODUCER cures the default or breach cited by NIAGARA MOHAWK
       in such notice, to the reasonable satisfaction of NIAGARA MOHAWK, and
       shall have complied with the provisions of this AGREEMENT, such notice
       shall become null and void and of no effect. Notwithstanding the
       foregoing, NIAGARA MOHAWK and PRODUCER may terminate this AGREEMENT upon
       mutual agreement set forth in writing; provided, however that the
       requesting party provides at least sixty (60) days written notice of
       intent to terminate.

10.4   In the event of a billing dispute as set forth in Section 8.4 of this
       AGREEMENT between NIAGARA MOHAWK and the PRODUCER, NIAGARA MOHAWK will
       not apply to remove the INTERCONNECTION FACILITIES from service or to
       terminate transmission service thereon as long as the PRODUCER: (i)
       continues to make all payments not in dispute and (ii) pays into an
       independent escrow account the portion of the invoice in dispute, pending
       resolution of such dispute. If the PRODUCER fails to meet these two
       requirements, then a default shall be deemed to exist, to which the
       procedures set forth in this section for the disconnection of the
       INTERCONNECTION FACILITIES from service shall apply.

10.5   Termination of this AGREEMENT shall not relieve PRODUCER of any of its
       liabilities and obligations arising hereunder prior to the date
       termination becomes effective, and NIAGARA MOHAWK may take whatever
       judicial or administrative actions as appear necessary or desirable to
       enforce its rights hereunder. The rights specified herein are not
       exclusive and shall be in addition to all other remedies available to
       NIAGARA MOHAWK, either at law or in equity, for default or breach of any
       provision of this AGREEMENT.

10.6   In the event of termination of this AGREEMENT in accordance with Article
       X, NIAGARA MOHAWK will physically disconnect the PRODUCTION FACILITY from
       the TRANSMISSION SYSTEM and at NIAGARA MO-

                                       22
<PAGE>   24

       HAWK'S sole determination remove any or all of NIAGARA MOHAWK'S
       INTERCONNECTION FACILITY equipment.

                                   ARTICLE XI
                                 FORCE MAJEURE

11.1   Neither party shall be considered to be in default or breach hereunder,
       and shall be excused from performance hereunder, if and to the extent
       that it shall be delayed in or prevented from performing or carrying out
       any provisions of this AGREEMENT by reason of storm, flood, lightning
       strikes, earthquake, fire, ice, snow, epidemic, war, invasion, riot,
       civil disturbance, sabotage, explosion, insurrection, military or usurped
       power, strikes, stoppage of labor, labor dispute, failure of contractors
       or suppliers of material, action of any court or governmental authority,
       or any civil or military authority de facto or de jure, change in law,
       act of God or the public enemy, or any other cause beyond either party's
       control; including, without limitation, disconnection or limited
       operation of NIAGARA MOHAWK'S electric system, unscheduled repairs or
       maintenance, fuel or energy shortages, or equipment breakdown.

11.2   The party claiming force majeure shall use due diligence to resume
       performance or the provision of service hereunder as soon as practicable.

11.3   Neither party shall be liable to the other party for or on account of any
       loss, damage, injury or expense, including, but not limited to, special,
       indirect and consequential damages, resulting from or arising out of such
       delay or inability to perform.

                                  ARTICLE XII
                          RELATIONSHIP OF THE PARTIES

12.1   Nothing contained in this AGREEMENT shall be construed or deemed to
       cause, create, constitute, give effect to, or otherwise recognize
       PRODUCER and NIAGARA MOHAWK to be partners, joint venturers, employer and
       employee, principal agent, or any other business association, with
       respect to any matter.

                                       23
<PAGE>   25

12.2   Unless otherwise agreed to in writing signed by both parties, neither
       party shall have any authority to create or assume in the other party's
       name or on its behalf any obligation, express or implied or to act or
       purport to act as the other party's agent or legal empowered
       representative for any purpose whatsoever.

12.3   Neither party shall be liable to any third party in any way for any
       engagement, obligation, commitment, contract, representation or for any
       negligent act or omission to act of the other party, except as expressly
       provided for herein.

12.4   The rights and obligations of the parties shall be limited to those
       expressly set forth herein.

                                  ARTICLE XIII
                       THIRD PARTY BENEFICIARY/ASSIGNMENT

13.1   No person or party shall have any rights or interests, direct or
       indirect, in this AGREEMENT or the services or facilities to be provided
       hereunder, or both, except the parties, theft successors, and authorized
       assigns.

13.2   The parties specifically disclaim any intent to create any rights in any
       person or party as a third-party beneficiary to this AGREEMENT or to the
       services or facilities to be provided hereunder, or both.

13.3   PRODUCER may assign or collaterally assign this AGREEMENT to lenders, or
       any financial institution participating in financing PRODUCER's
       INTERCONNECTION FACILITY or property acquisition, or to any partnerships
       created to operate PRODUCER's facilities, or to any other parties,
       including affiliates or partnerships, upon prior written notification to
       NIAGARA MOHAWK

13.4   PRODUCER agrees to reimburse NIAGARA MOHAWK for costs and expenses
       (including reasonable fees and expenses of NIAGARA MOHAWK'S counsel)
       incurred in connection with NIAGARA MOHAWK'S review, execution and
       delivery of instruments, agreements or documents necessary in connection
       with the PRODUCER'S assignment, transfer, sale or

                                       24
<PAGE>   26

       other disposition of this AGREEMENT or any interest in the
       INTERCONNECTION FACILITY.

13.5   Any assignment in violation of Article XIII shall be considered null and
       void from its inception.

13.6   Any NIAGARA MOHAWK authorized assignment shall not relieve PRODUCER of
       the responsibility of full compliance with the requirements of this
       AGREEMENT.

13.7   PRODUCER shall not make any assignment unless and until its successor in
       interest has agreed to undertake the obligations accepted by PRODUCER
       herein, and has provided written assurances to NIAGARA MOHAWK of
       continued performance and protection against liability upon assignment.

13.8   Assignment contrary to the provisions of this AGREEMENT shall make
       PRODUCER the indemnitor of NIAGARA MOHAWK and its successors, against any
       liabilities and costs, including reasonable attorneys fees as to which
       PRODUCER'S transferee fails to indemnify, defend, and hold harmless
       NIAGARA MOHAWK, its agents, employees and its successors, from and
       against any loss, damage, liability (civil or criminal), cost, suit,
       charge, expense (including reasonable attorneys fees) or cause of action,
       whether unconditionally certain or otherwise, incurred by NIAGARA MOHAWK
       as a result of said assignment or as a result of any dispute between
       PRODUCER and its transferees, or between any subsequent transferees, that
       arises from or relates to any assignment by PRODUCER.

13.9   This AGREEMENT shall bind and inure to the benefit of the parties to this
       AGREEMENT, their successors and permitted assigns.

                                   ARTICLE XIV
                                    APPROVAL

14.1   NIAGARA MOHAWK shall file this AGREEMENT with the appropriate regulatory
       authorities. If such regulatory body substantially modifies the terms and
       conditions of this AGREEMENT, either party shall have the right to
       unilaterally terminate this AGREEMENT.

                                       25
<PAGE>   27

14.2   This AGREEMENT is entered into subject to authorization by, or
       requirements of regulatory authorities having jurisdiction in respect to
       this AGREEMENT.

14.3   Nothing contained in this AGREEMENT shall be construed as affecting in
       any way the right of NIAGARA MOHAWK to unilaterally make application to
       the FERC for a change in rates, terms and conditions under Section 205 of
       the Federal Power Act and pursuant to the Commission's rules and
       regulations.

                                   ARTICLE XV
                                     WAIVER

15.1   No provision of this AGREEMENT may be waived except by mutual agreement
       of the parties as expressed in writing and signed by both parties.

15.2   Any waiver that is not in writing and signed by both parties shall be
       null and void from its inception.

15.3   No express waiver in any specific instance as provided in a required
       writing shall be construed as a waiver of future instances unless
       specifically so provided in the required writing.

15.4   No express waiver of any specific default shall be deemed a waiver of any
       other default whether or not similar to the default waived, or a
       continuing waiver of any other right or default by a party.

15.5   The failure of either party to insist in any one or more instances upon
       the strict performance of any of the provisions of this AGREEMENT, or to
       exercise any right herein, shall not be construed as a waiver or
       relinquishment for the future of such strict performance of such
       provision or the exercise of such right.

                                       26
<PAGE>   28

                                   ARTICLE XVI
                           AMENDMENT AND MODIFICATION

16.1   This AGREEMENT may be amended or modified only if the amendment or
       modification is in writing and executed by both parties. Any amendment or
       modification that is not in writing and signed by both parties shall be
       null and void from its inception.

16.2   No express amendment or modification in any specific instance as provided
       herein shall be construed as an amendment or modification of future
       instances, unless specifically so provided in the required writing. -

16.3   Nothing in this AGREEMENT shall be construed as affecting in any way the
       ability of the PRODUCER to exercise its rights under the Federal Power
       Act and pursuant to FERC's rules and regulations promulgated thereunder.

                                  ARTICLE XVII
                                  GOVERNING LAW

17.1   This AGREEMENT and the rights and obligations of the parties to this
       AGREEMENT shall be governed by and construed in accordance with the laws
       of the State of New York.

17.2   PRODUCER and NIAGARA MOHAWK agree to submit to the jurisdiction of the
       courts in the State of New York for the purposes of interpretation and
       enforcement of this AGREEMENT.

17.3   PRODUCER and NIAGARA MOHAWK may waive personal service by manual delivery
       and agree that service of process on PRODUCER and NIAGARA MOHAWK in any
       action concerning or arising out of this AGREEMENT may be made by
       registered or certified mail, return receipt requested, delivered to
       PRODUCER and NIAGARA MOHAWK at its address set forth in Article IX.

                                       27
<PAGE>   29

                                  ARTICLE XVIII
                               DISPUTE RESOLUTION

18.1   Any claim or dispute, which either party may have against the other,
       arising out of the AGREEMENT shall be submitted in writing to the other
       party not later than sixty (60) days after the circumstances which gave
       rise to the claim or dispute have taken place. The submission of any
       claim or dispute shall include a concise statement of the question or
       issue in dispute, together with relevant facts and documentation to fully
       support the claim.

18.2   If any such claim or dispute arises, the parties shall use their best
       efforts to resolve the claim or dispute, initially through good faith
       negotiations or upon the failure of such negotiations, through
       Alternative Dispute Resolution ("ADR") techniques in accordance with the
       Model Procedure for Mediation of Business Disputes as published by the
       Center for Public Resources; however, either party may terminate its
       participation in ADR during any stage of ADR and proceed under paragraph
       18.3.

18.3   If any claim or dispute arising hereunder is not resolved pursuant to
       paragraph 18.2, either party may, upon giving the other party at least
       ten (10) days prior written notice, initiate litigation to submit such
       claim or dispute for decision by a court of competent jurisdiction.

18.4   Nothing in this Article XVIII shall restrict the rights of any party to
       file a complaint with FERC under relevant provisions of the Federal Power
       Act

                                   ARTICLE XIX
                                  SEVERABILITY

19.1   If any term of this AGREEMENT, or the interpretation or application of
       any term or provision to any prior circumstance, is held to be
       unenforceable, illegal, or invalid by any governmental agency or court of
       competent jurisdiction, the remainder of this AGREEMENT, or the
       interpretation or application of all other terms or provisions to persons
       or circumstances other than those that are unenforceable, illegal, or
       invalid, shall not be affected thereby and each term and provision shall
       be valid and be enforced to the fullest extent permitted by law.

                                       28
<PAGE>   30

                                   ARTICLE XX
                                    HEADINGS

20.1   The headings in this AGREEMENT are included herein for convenience of
       reference only and shall not constitute a part of this AGREEMENT for any
       other purpose, or limit or be used as an aid in construing the provisions
       of this AGREEMENT.

                                   ARTICLE XXI
                        INTEGRATION/MERGER/SURVIVABILITY

21.1   This AGREEMENT sets forth the entire understanding and agreement of the
       parties as to the subject matter of this AGREEMENT and merges and
       supersedes all prior agreements, commitments, representations, writings
       and discussions between the parties with respect to the INTERCONNECTION
       FACILITY.

21.2   The obligations of the PRODUCER shall survive the completion,
       termination, or abandonment of this AGREEMENT and of the PRODUCER'S
       facilities and work.

                                  ARTICLE XXII
                            COMPLIANCE WITH THE NERC

22.1   Both parties agree to comply with any existing or future criteria,
       guides, and procedures established by the NERC or any successor
       organization to ensure the continued reliability of North America's
       interconnected bulk electric systems.

                                 ARTICLE XXIII
                                  COUNTERPARTS

       This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.

                                       29
<PAGE>   31

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.

<TABLE>
<CAPTION>

HUNTLEY POWER LLC                          NIAGARA MOHAWK POWER
                                             CORPORATION
<S>                                        <C>
By: /s/ Craig A. Mataczynski               By: /s/ Clement E. Nadeau
   ------------------------------             ------------------------------

Title: President                           Title: Vice President
      ---------------------------                ---------------------------

Date: 4/15/99                              Date: April 20, 1999
      ---------------------------                ---------------------------
</TABLE>

                                       30

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