Document:

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                                                                   Exhibit 10(G)

________________________________________________________________________________

                             ASSET SALE AGREEMENT

                                    BETWEEN

                             NEVADA POWER COMPANY,

                               NRG ENERGY, INC.

                                      AND

                             DYNEGY HOLDINGS INC.

                                      FOR

                         THE REID GARDNER ASSET BUNDLE

________________________________________________________________________________
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                               TABLE OF CONTENTS
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ARTICLE I
     DEFINITIONS......................................................................................   1
         1.1  Definitions.............................................................................   1

ARTICLE II
     PURCHASE AND SALE................................................................................  14
         2.1  The Sale................................................................................  14
         2.2  Excluded Assets.........................................................................  14
         2.3  Assumed Liabilities.....................................................................  15
         2.4  Excluded Liabilities....................................................................  18
         2.5  License of Non-Transferred Intangible Assets............................................  20

ARTICLE III
     PURCHASE PRICE...................................................................................  21
         3.1  Purchase Price..........................................................................  21
         3.2  Purchase Price Adjustment...............................................................  21
         3.3  Allocation of Purchase Price............................................................  23
         3.4  Proration...............................................................................  24

ARTICLE IV
     THE CLOSING......................................................................................  25
         4.1  Time and Place of Closing...............................................................  25
         4.2  Payment of Purchase Price...............................................................  25
         4.3  Deliveries by Seller....................................................................  25
         4.4  Deliveries by Buyer.....................................................................  26

ARTICLE V
     REPRESENTATIONS AND WARRANTIES OF SELLER.........................................................  27
         5.1  Organization; Qualification.............................................................  27
         5.2  Authority Relative to this Agreement....................................................  28
         5.3  Consents and Approvals; No Violation....................................................  28
         5.4  Reports.................................................................................  29
         5.5  Financial Statements....................................................................  29
         5.6  Undisclosed Liabilities.................................................................  30
         5.7  Absence of Certain Changes or Events....................................................  30
         5.8  Title to Real Property..................................................................  30
         5.9  Leasehold Interests.....................................................................  30
        5.10  Improvements............................................................................  31
        5.11  Insurance...............................................................................  31
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<TABLE>
<S>                                                                                                     <C>
        5.12  Environmental Matters...................................................................  31
        5.13  Labor Matters...........................................................................  32
        5.14  ERISA; Benefit Plans....................................................................  33
        5.15  Real Property Encumbrances..............................................................  33
        5.16  Condemnation............................................................................  33
        5.17  Certain Contracts and Arrangements......................................................  34
        5.18  Legal Proceedings, etc..................................................................  34
        5.19  Permits.................................................................................  35
        5.20  Regulation as a Utility.................................................................  35
        5.21  Taxes...................................................................................  35
        5.22  Title to Personal Property..............................................................  35
        5.23  Water...................................................................................  36
        5.24  Subchapter K Election...................................................................  36

ARTICLE VI
     REPRESENTATIONS AND WARRANTIES OF BUYER..........................................................  36
         6.1  Organization............................................................................  36
         6.2  Authority Relative to this Agreement....................................................  36
         6.3  Consents and Approvals; No Violation....................................................  37
         6.4  Regulation as a Utility.................................................................  38
         6.5  Availability of Funds...................................................................  38

ARTICLE VII
     COVENANTS OF THE PARTIES.........................................................................  38
         7.1  Conduct of Business of the Seller.......................................................  38
         7.2  Access to Information...................................................................  40
         7.3  Expenses................................................................................  42
         7.4  Further Assurances......................................................................  42
         7.5  Public Statements.......................................................................  42
         7.6  Consents and Approvals..................................................................  43
         7.7  Fees and Commissions....................................................................  45
         7.8  Use of Pollution Control Facilities.....................................................  45
         7.9  Tax and Withholding Matters.............................................................  46
        7.10  Supplements to Schedules................................................................  48
        7.11  Employees...............................................................................  48
        7.12  Risk of Loss............................................................................  50
        7.13  Additional Covenants of the Buyer.......................................................  51
        7.14  Surveys and Certain Title Matters.......................................................  51
        7.15  Documentation...........................................................................  52
        7.16  Additional Covenants of the Parties.....................................................  52
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<TABLE>
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ARTICLE VIII
     CLOSING CONDITIONS...............................................................................  53
         8.1  Conditions to Each Party's Obligations to Effect the Transactions Contemplated Hereby...  53
         8.2  Conditions to Obligations of Buyer......................................................  54
         8.3  Conditions to Obligations of Seller.....................................................  56

ARTICLE IX
     INDEMNIFICATION..................................................................................  58
         9.1  Indemnification.........................................................................  58
         9.2  Defense of Claims.......................................................................  59

ARTICLE X
     TERMINATION AND ABANDONMENT......................................................................  61
        10.1  Termination.............................................................................  61
        10.2  Procedure and Effect of Termination.....................................................  62

ARTICLE XI
     MISCELLANEOUS PROVISIONS.........................................................................  63
        11.1  Amendment and Modification..............................................................  63
        11.2  Waiver of Compliance; Consents..........................................................  63
        11.3  No Survival of Representations and Warranties...........................................  63
        11.4  Notices.................................................................................  63
        11.5  Assignment..............................................................................  65
        11.6  Arbitration.............................................................................  67
        11.7  Governing Law...........................................................................  68
        11.8  Counterparts............................................................................  68
        11.9  Interpretation..........................................................................  68
       11.10  Entire Agreement........................................................................  68
       11.11  Bulk Sales or Transfer Laws.............................................................  68
</TABLE>

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                             ASSET SALE AGREEMENT

          ASSET SALE AGREEMENT, dated as of November 16, 2000 (the "Agreement"),
between Nevada Power Company, a Nevada corporation (the "Seller"), NRG Energy,
Inc., a Delaware corporation ("NRG"), and Dynegy Holdings Inc. ("Dynegy"), a
Delaware corporation (collectively, the "Buyer").

          WHEREAS, the Seller owns and operates the "Purchased Assets" (as
defined herein); and

          WHEREAS, the Buyer desires to purchase and assume from the Seller, and
the Seller desires to sell to the Buyer, the Purchased Assets and certain
associated liabilities upon the terms and conditions hereinafter set forth in
this Agreement;

          NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and intending
to be legally bound hereby, the parties hereto agree as follows:

                                   ARTICLE I
                                   ---------
                                  DEFINITIONS
                                  -----------

          1.1  Definitions. As used in this Agreement, the following terms have
               -----------
the meanings specified or referred to in this Section 1.1:

          (1)  "Additional Funds" shall have the meaning set forth in Section
4.6 hereof.

          (2)  "Adjustment Amount" shall have the meaning set forth in Section
3.2(a) hereof.

          (3)  "Adjustment Statement" shall have the meaning set forth in
Section 3.2(a) hereof.

          (4)  "Affiliate" shall have the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.

          (5)  "Agreement" means the Asset Sale Agreement, dated as of November
16, 2000, together with the Schedules and Exhibits thereto.
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          (6)  "Ancillary Agreements" means the Interconnection Agreement, the
Transitional Power Purchase Agreement and the Operating Easement Agreements.

          (7)  "Assignment of Leases" means the Assignment of Leases in the form
of Exhibit A hereto.

          (8)  "Assumed Liabilities" shall have the meaning set forth in Section
2.3 hereof.

          (9)  "Benefit Plans" shall have the meaning set forth in Section
2.4(i) hereof.

          (10) "Benefit Plans of Buyer" shall have the meaning set forth in
Section 7.11(d) hereof.

          (11) "Bill of Sale" means the Bill of Sale to be delivered at the
Closing with respect to the Purchased Assets which constitute personal property
and which are to be transferred at the Closing, substantially in the form of
Exhibit B hereto.

          (12) "Bonds" mean the pollution control bonds, which were used to
finance the Pollution Control Facilities, as more fully described on Schedule
5.15.

          (13) "Business Day" means any day other than Saturday, Sunday and any
day which is a legal holiday or a day on which banking institutions in the State
of New York are authorized by law or other governmental action to close.

          (14) "Buyer" shall have the meaning set forth in the preface hereto.

          (15) "Buyer Representatives" means the Buyer's accountants, counsel,
environmental consultants, financial advisors and other authorized
representatives.

          (16) "Buyer Required Regulatory Approvals" shall have the meaning set
forth in Section 6.3(b) hereof.

          (17) "Buyer's Easements" shall have the meaning set forth in Section
4.3(f) hereof.

          (18) "CDWR" means the California Department of Water Resources.

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          (19) "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. (S)9601, et seq., as amended.
                                                           -------

          (20) "Closing" shall have the meaning set forth in Section 4.1 hereof.

          (21) "Closing Date" shall have the meaning set forth in Section 4.1
hereof.

          (22) "COBRA" means the Consolidated Omnibus Reconciliation Act of
1985, as amended.

          (23) "Code" means the Internal Revenue Code of 1986, as amended.

          (24) "Collective Bargaining Agreements" shall have the meaning set
forth in Section 7.11(a) hereof.

          (25) "Confidentiality Agreement" means the Confidentiality and Auction
Protocols Agreement, dated March 14, 2000, between the Seller and NRG Energy,
Inc., and the Confidentiality and Auction Protocols Agreement dated April 17,
2000, between the Seller and Dynegy Power Corp. (a wholly owned subsidiary of
Dynegy Holdings Inc.).

          (26) "CPUC" means the Public Utility Commission of California or any
successor thereto.

          (27) "CSFB" shall have the meaning set forth in Section 7.7 hereof.

          (28) "Intentionally Left Blank"

          (29) "Direct Claim" shall have the meaning set forth in Section 9.2(c)
hereof.

          (30) "Dispute" shall have the meaning set forth in Section 11.6
hereof.

          (31) "Intentionally Left Blank"

          (32) "Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, activity and use

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limitations, conservation easements, deed restrictions, encumbrances and charges
of any kind.

          (33) "Environmental Audit Agreement" means the proposed Environmental
Audit Agreement which Seller has been seeking to execute with the Nevada
Division of Environmental Protection ("NDEP") relating to Reid Gardner Station.

          (34) "Environmental Laws" means all Federal, state and local laws,
regulations, rules, ordinances, codes, decrees, judgments, directives, or
judicial or administrative orders relating to pollution or protection of the
environment, natural resources or human health and safety, including, without
limitation, laws relating to Releases or threatened Releases of Hazardous
Substances (including, without limitation, ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
transport or handling of Hazardous Substances, laws relating to record keeping,
notification, disclosure and reporting requirements respecting Hazardous
Substances, and laws relating to the management and use of natural resources.

          (35) "Environmental Permits" shall have the meaning set forth in
Section 5.12(a) hereof.

          (36) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

          (37) "ERISA Affiliate" shall have the meaning set forth in Section
2.4(i) hereof.

          (38) "ERISA Affiliate Plans" shall have the meaning set forth in
Section 2.4(i) hereof.

          (39) "Intentionally Left Blank"

          (40) "Intentionally Left Blank"

          (41) "Intentionally Left Blank"

          (42) "Estimated Adjustment Amount" means (i) the Estimated Maintenance
and Capital Expenditures Amount plus (ii) the Estimated Inventory Adjustment
Amount plus (iii) the Estimated Materials and Supplies Adjustment Amount.

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          (43) "Estimated Closing Payment" shall have the meaning set forth in
Section 4.2 hereof.

          (44) "Estimated Inventory Adjustment Amount" means the book value, as
determined by an independent evaluator designated by the Seller and approved by
the Buyer, which approval shall not be unreasonably withheld, of the fuel
inventory priced as the Seller's weighted average fuel costs used at or in
connection with the Purchased Assets as of the date that is ten (10) days before
the Closing Date, which valuation shall be provided to the Buyer by the Seller
no later than five (5) days before the Closing Date.

          (45) "Estimated Maintenance and Capital Expenditures Amount" means the
Seller's estimate of the Maintenance and Capital Expenditures Amount, which
estimate shall be the Seller's good faith reasonable estimate of the Maintenance
and Capital Expenditures Amount actually incurred, as set forth in Schedule
1.1(45) attached hereto as of the date set forth in such Schedule 1.1(45).

          (46) "Estimated Materials and Supplies Adjustment Amount" means the
Seller's good faith reasonable estimate of the book value of materials and
supplies used at or in connection with the Purchased Assets on the Materials and
Supplies Valuation Date.

          (47) "Intentionally Left Blank"

          (48) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

          (49) "Excluded Assets" shall have the meaning set forth in Section 2.2
hereof.

          (50) "Excluded Liabilities" shall have the meaning set forth in
Section 2.4 hereof.

          (51) "Federal Power Act" means the Federal Power Act of 1935, as
amended.

          (52) "FERC" means the Federal Energy Regulatory Commission or any
successor thereto.

          (53) "Final Order" shall have the meaning set forth in Section 8.1(c)
hereof.

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          (54) "Governmental Authority" means any executive, legislative,
judicial, regulatory or administrative agency, body, commission, department,
board, court, tribunal, arbitrating body or authority of the United States or
any foreign country, or any state, local or other governmental subdivision
thereof.

          (55) "Hazardous Substances" means (i) any petrochemical or petroleum
products, oil or coal ash, radioactive materials, radon gas, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid which may contain
levels of polychlorinated biphenyls; (ii) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "restricted hazardous materials," "extremely
hazardous substances," "toxic substances," "contaminants" or "pollutants" or
words of similar meaning and regulatory effect; or (iii) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any applicable Environmental Law.

          (56) "Holding Company Act" means the Public Utility Holding Company
Act of 1935, as amended.

          (57) "Hourly Employees" shall have the meaning set forth in Section
7.11(a) hereof.

          (58) "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.

          (59) "Income Tax" means any federal, state, local or foreign Tax (i)
based upon, measured by or calculated with respect to net income, profits or
receipts (including, without limitation, capital gains Taxes and minimum Taxes)
or (ii) based upon, measured by or calculated with respect to multiple bases
(including, without limitation, corporate franchise taxes) if one or more of the
bases on which such Tax may be based, measured by or calculated with respect to,
is described in clause (i), in each case together with any interest, penalties,
or additions to such Tax.

          (60) "Indemnifiable Losses" shall have the meaning set forth in
Section 9.1(a) hereof.

          (61) "Indemnifying Party" shall have the meaning set forth in Section
9.1(c) hereof.

          (62) "Indemnitee" shall have the meaning set forth in Section 9.1(c)
hereof.

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          (63) "Indenture" means Indenture of Mortgage and Deed of Trust dated
as of October 1, 1953, as amended from time to time between the Seller and
Bankers Trust Company, as successor trustee.

          (64) "Independent Accounting Firm" means Deloitte & Touche LLP or such
other independent accounting firm of national reputation mutually appointed by
the Seller and the Buyer.

          (65) "Independent Appraiser" shall have the meaning set forth in
Section 3.3 hereof.

          (66) "Instrument of Assumption" means the Instrument of Assumption in
the form of Exhibit C attached hereto.

          (67) "Interconnection Agreement" means the Interconnection Agreement,
dated as of November 16, 2000, between the Seller and the Buyer.

          (68) "Inventory Adjustment Amount" shall have the meaning set forth in
Section 3.2(a) hereof.

          (69) "Joint Ownership Obligation" means the required consent of CDWR
as set forth in Section 37.1 of the Participation Agreement for Reid Gardner
Unit No. 4.

          (70) "Joint Ownership Obligation Condition" shall have the meaning set
forth in Section 8.1(d) hereof.

          (71) "Knowledge" means the actual knowledge of the directors and
executive officers of the specified Person, which directors and executive
officers are charged with the responsibility for the particular function as of
the date of the Agreement, or with respect to any certificate delivered pursuant
to the Agreement, the date of delivery of such certificate. In the case of
Seller, "executive officer" includes (i) any person listed on Schedule 1.1(71),
(ii) any person who replaces a person listed on Schedule 1.1(71) between the
date of this Agreement and the Closing Date in a listed position or the
successor to that position and (iii) any current employee of Seller who within
the past twenty-four (24) months has served as a representative to the
coordinating committee for Reid Gardner Unit 4.

          (72) "Leased Assets" shall have the meaning set forth in Section 7.4
hereof.

          (73) "Leases" shall have the meaning set forth in Section 5.9 hereof.

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          (74) "Local 396 LOA" shall have the meaning set forth in Section
7.11(a) hereof.

          (75) "Maintenance and Capital Expenditures Adjustment Amount" shall
have the meaning set forth in Section 3.2(a) hereof.

          (76) "Maintenance and Capital Expenditures Amount" means the aggregate
amount of all funds actually expended on, or for which liabilities were accrued
in accordance with generally accepted accounting principles applied on a
consistent basis with respect to any maintenance expenditures and capital
expenditures beginning on the date of this Agreement and ending on the Closing
Date,  excluding (i) any unscheduled maintenance expenditures or capital
expenditures which are made by the Seller with the Buyer's consent, which shall
not be unreasonably withheld (ii) any maintenance expenditures or capital
expenditures made by Seller in breach of Section 7.1, but including (i) any
Scheduled Maintenance Expenditures or Scheduled Capital Expenditures, made with
respect to the Purchased Assets by the Seller, and (ii) any maintenance
expenditures and capital expenditures which were made by the Seller at the
Buyer's request, beginning on the date of this Agreement and ending on the
Closing Date.

          (77) "Management Employee" shall have the meaning set forth in Section
7.11(b) hereof.

          (78) "Management Transition Plan" means the Management Transition
Plan, Generation Bundled Employees, as detailed in the Generation Divestiture
Severance Packet of the Seller dated July, 2000.

          (79) "Material Adverse Effect" means any change or changes in or
effect on the Purchased Assets that is materially adverse to the business,
results of operations, financial condition or physical condition of the
Purchased Assets, individually or in the aggregate, except for (i) any change or
effect resulting from changes in the international, national, regional or local
wholesale or retail markets for electric power, (ii) any change or effect
resulting from changes in the international, national, regional or local markets
for any fuel used at the Purchased Assets, (iii) any change or effect resulting
from changes in the North American, national, regional or local electric
transmission systems, (iv) any change in applicable laws, judgments, orders or
decrees, (v) any conditions imposed by a Governmental Authority in connection
with the consents or approvals required for the transactions contemplated
hereby, and (vi) any materially adverse change in or effect on the Purchased
Assets which is cured (including by the payment of money) by the Seller before
the Termination Date.

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          (80) "Materials and Supplies Adjustment Amount" shall have the meaning
set forth in Section 3.2 hereof.

          (81) "Materials and Supplies Valuation Date" means the date that is
ten (10) days prior to the Closing Date.

          (82) "Necessary Capital Expenditures" shall have the meaning set forth
in Section 7.1(c) hereof.

          (83) "Necessary Maintenance Expenditures" shall have the meaning set
forth in Section 7.1(e) hereof.

          (84) "Off-Site Location" means any real property other than the Real
Property.

          (85) "Operating Easement Agreements" means the operating easements
providing the right to continue operating and maintaining certain generation and
transmission facilities at the Purchased Assets, each in substantially the form
of Exhibit D or Exhibit E attached hereto.

          (86) "Operating Easements" means the Seller's Easements and/or Buyer's
Easements granted pursuant to the Operating Easement Agreements.

          (87) "OPUC" means the Oregon Public Utility Commission or any
successor thereto.

          (88) "Ownership Interest" means Seller's undivided thirty-two and two-
tenths percent (32.2%) interest in Reid Gardner Unit No. 4.

          (89) "Participation Agreement" means the Participation Agreement for
Reid Gardner Unit No. 4 between CDWR and the Seller dated July 11, 1979.

          (90) "Permits" shall have the meaning set forth in Section 5.19
hereof.

          (91) "Permitted Encumbrances" means (i) those exceptions to title to
the Purchased Assets listed on Schedule 5.8; (ii) subject to (S)(S) 7.14 and
8.2(g) any state of facts that a current survey of the Real Property would
disclose; (iii) with respect to any date before the Closing Date, Encumbrances
under the Indenture or under the pollution control bond indentures of trust
listed in Schedule 5.15; (iv) mortgages, liens, pledges, charges, Encumbrances
and restrictions incurred in connection with the Seller's purchase of properties
and assets after the date of the Seller Balance Sheet, but only if and to the
extent that such mortgage, lien, pledge,

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<PAGE>

charge, Encumbrance or restriction is against such properties or assets and
secures all or a portion of the purchase price therefor; (v) the Buyer's
Easements and the Seller's Easements (in accordance with the Operating Easement
Agreements applicable to such easements and the Interconnection Agreement); (vi)
statutory liens for current Taxes, assessments or other governmental charges not
yet due or delinquent or the validity of which is being contested in good faith
by appropriate proceedings and with respect to which Seller pays the Taxes,
assessments or other government charges under protest; (vii) mechanics',
carriers', workers', repairers' and other similar liens arising or incurred in
the ordinary course of business relating to obligations which are not yet due
and payable or the validity of which are being contested in good faith by
appropriate proceedings in which Seller has posted an appropriate bond to secure
payment or placed sufficient Funds in escrow pending the outcome of such
dispute; (viii) zoning, entitlement, conservation restriction and other land use
and environmental regulations by Governmental Authorities; and (ix) such other
liens, imperfections in or failure of title, charges, easements, restrictions
and Encumbrances which do not materially detract, individually or in the
aggregate, from the value of or materially interfere with the present use of the
Purchased Assets and do not, in the aggregate, have a Material Adverse Effect.

          (92) "Person" means any individual, partnership, joint venture,
corporation, limited liability company, limited liability partnership, trust,
unincorporated organization or Governmental Authority or any department or
agency thereof.

          (93) "Plan" shall have the meaning set forth in Section 7.11(d).

          (94) "Pollution Control Facilities" means the pollution control
facilities relating to the Reid Gardner Station, as more fully described in
Schedule 5.15.

          (95) "PUCN" means the Public Utilities Commission of Nevada or any
successor thereto.

          (96) "Purchase Price" shall have the meaning set forth in Section 3.1
hereof.

          (97) "Purchased Assets" means, subject to the Permitted Encumbrances
all of the right, title and interest in, to and under the real and personal
property, tangible or intangible, of the Seller constituting the Reid Gardner
Station or used principally for generation purposes in connection with such
sites including, without limitation, all of the Seller's right, title and
interest in the following assets: (i) the Real Property described on Schedule
1.1(97)(i) as associated with the Reid Gardner Station (the "Reid Gardner Real
Property"); (ii) all inventories of fuels, supplies, materials and critical
spares located on or in transit to or in transit to the

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Reid Gardner Real Property on the Closing Date; (iii) the machinery, equipment,
vehicles, furniture and other personal property located on or in transit to the
Reid Gardner Real Property on the Closing Date, including, without limitation,
the items of personal property included in Schedule 1.1 (97)(iii) as being
associated with the Reid Gardner Station, and all warranties against
manufacturers or vendors relating thereto, to the extent that such warranties
are transferable without consent or with consent obtained through Seller's
commercially reasonable efforts pursuant to Section 7.6(b); (iv) the Reid
Gardner Unit No. 4 Participation Agreement and the other contracts, agreements
and personal property leases listed on Schedule 1.1 (97)(iv) as being associated
with the Reid Gardner Station and which are assignable without consent or with
consent obtained through Seller's commercially reasonable efforts pursuant to
Section 7.6(b); (v) the Permits listed on Schedule 1.1 (97)(v) as being
associated with the Reid Gardner Station, to the extent transferable without
consent or with consent obtained through Seller's commercially reasonable
efforts pursuant to Section 7.6(b); (vi) all books, operating records,
operating, safety and maintenance manuals, engineering design plans, blueprints
and as-built plans, specifications, procedures and similar items of the Seller
relating specifically to the aforementioned assets other than books of account
associated with the Reid Gardner Station; (vii) the SO2 Allowances identified on
Schedule 1.1 (97)(vii) associated with the Reid Gardner Station; and (viii) any
assets purchased or to be purchased by the Seller pursuant to Section 7.4
associated with the Reid Gardner Station; (ix) all telephones, computer
hardware, firmware, software, and associated licenses located at and used in the
operation of the Reid Gardner Station, including but not limited to the computer
assets listed on Schedule 1.1(97)(iii) but excluding non-material licenses that
cannot be transferred and other intangible assets to be licensed by the Buyer
pursuant to Section 2.5 of this Agreement; and (x) all water rights specifically
associated with the Reid Gardner Station, including but not limited to the water
rights listed on Schedule 5.19(a).

          (98)  "Qualifying Offer of Employment" shall have the meaning set
forth in Section 7.11(b) hereof.

          (99)  "Reid Gardner Station" means the Reid Gardner generating station
located in Clark County, Nevada.  The Seller is the operating agent for Reid
Gardner Unit No. 4, which is jointly owned with CDWR.

          (100) "Reid Gardner Unit No. 4" means the coal-fueled steam-electric
generating unit with a net generating capacity of approximately 275 MW jointly
owned with CDWR in accordance with the terms of the Participation Agreement and
located at the Reid Gardner Station.

          (101) "Real Property" means each parcel of real property owned by the
Seller (or to which the Seller holds an interest therein), including, but not
limited

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to, buildings, structures and improvements located thereon, fixtures contained
therein and appurtenances thereto and easements and other rights relating
thereto and as more fully described on Schedule 5.8.

          (102)  "Release" means release, spill, leak, discharge, dispose of,
pump, pour, emit, empty, inject, leach, dump or allow to escape into or through
the environment.

          (103)  "Remediation" means an action of any kind to address a Release
of Hazardous Substance or the presence of Hazardous Substances at the Purchased
Assets or an Off-Site Location, including any or all of the following activities
to the extent they relate to or arise from the presence of a Hazardous Substance
at the Purchased Assets or an Off-Site Location: (i) monitoring, investigation,
assessment, treatment, cleanup, containment, removal, mitigation, response or
restoration work; (ii) obtaining any permits, consents, approvals or
authorizations of any Governmental Authority necessary to conduct any such
activity; (iii) preparing and implementing any plans or studies for any such
activity; (iv) obtaining a written notice from a Governmental Authority with
jurisdiction over the Purchased Assets or an Off-Site Location under
Environmental Laws that no material additional work is required by such
Governmental Authority; (v) the use, implementation, application, installation,
operation or maintenance of removal actions on the Purchased Assets or an Off-
Site Location, remedial technologies applied to the surface or subsurface soils,
excavation and treatment or disposal of soils at an Off-Site Location, systems
for long-term treatment of surface water or ground water, engineering controls
or institutional controls; and (vi) any other activities reasonably determined
by a party to be necessary or appropriate or required under Environmental Laws
to address the presence or Release of Hazardous Substances at the Purchased
Assets or an Off-Site Location.

          (104)  "Rules" shall have the meaning set forth in Section 11.6
hereof.

          (105)  "Scheduled Capital Expenditures" means those capital
expenditures included on Schedule 1.1(105).

          (106)  "Scheduled Maintenance Expenditures" means those maintenance
expenditures included on Schedule 1.1(106).

          (107)  "SEC" means the Securities and Exchange Commission or any
successor thereto.

          (108)  "Securities Act" means the Securities Act of 1933, as amended.

                                       12
<PAGE>

          (109)  "Seller" shall have the meaning set forth in the preface
hereto.

          (110)  "Seller Agreements" means those agreements listed on Schedule
5.17(a), the Collective Bargaining Agreements and the Management Transition
Plan.

          (111)  "Seller Balance Sheet" shall have the meaning set forth in
Section 5.5 hereof.

          (112)  "Seller Required Regulatory Approvals" shall have the meaning
set forth in Section 5.3(b) hereof.

          (113)  "Seller's Easements" shall have the meaning set forth in
Section 4.4(d) hereof.

          (114)  "Separation Schedule" means the schedule to be delivered to the
Buyer by the Seller by the earlier of March 14, 2001 or 30 days prior to the
Closing Date, which shall delineate the Purchased Assets from the Seller's other
assets and which shall be consistent with the separation schedule summary and
one line drawing attached hereto as Exhibit F.

          (115)  "SO2 Allowance" means an authorization by the Administrator of
the USEPA under the Clean Air Act, 42 U.S.C. (S)7401, et seq., to emit one ton
                                                      -------
of sulfur dioxide during or after a specified calendar year.

          (116)  "Subsidiary", when used in reference to any other person means
any corporation of which outstanding securities having ordinary voting power to
elect a majority of the Board of Directors of such corporation are owned
directly or indirectly by such other person.

          (117)  "Tax" means any tax, charge, fee, levy, penalty or other
assessment (other than any Income Tax) imposed by any U.S. federal, state, local
or foreign taxing authority, including, but not limited to, any excise,
property, sales, transfer, franchise, payroll, withholding, social security or
other tax, including any interest, penalties or additions attributable thereto.

          (118)  "Tax Return" means any return, report, information return,
declaration, claim for refund or other document (including any related or
supporting information) supplied or required to be supplied to any authority
with respect to Taxes and including any supplement or amendment thereof.

                                       13
<PAGE>

          (119)  "Termination Date" shall have the meaning set forth in Section
10.1(b) hereof.

          (120)  "Third Party Claim" shall have the meaning set forth in Section
9.2(a) hereof.

          (121)  "Transitional Power Purchase Agreement" means Transitional
Power Purchase Agreement, dated as of November 16, 2000, between the Buyer and
the Seller.

          (122)  "TPPA Amount" shall have the meaning set forth in Section 3.1
hereof.

          (123)  "USEPA" means the United States Environmental Protection
Agency, or any successor agency thereto.

          (124)  "WARN Act" means the Federal Worker Adjustment Retraining and
Notification Act of 1988, as amended.

                                  ARTICLE II
                                  ----------
                               PURCHASE AND SALE
                               -----------------

          2.1    The Sale.  Upon the terms and subject to the satisfaction of
                 --------
the conditions contained in this Agreement, at the Closing, the Seller shall
sell, assign, convey, transfer and deliver to the Buyer, and the Buyer shall
purchase and acquire from the Seller, free and clear of all Encumbrances (except
for Permitted Encumbrances and the Operating Easement(s) granted in accordance
with the Operating Easement Agreements and the Interconnection Agreement), the
Purchased Assets.

          2.2    Excluded Assets. Notwithstanding any provision herein to the
                 ---------------
contrary, the Purchased Assets shall not include the following (collectively,
the "Excluded Assets"):

          (a)    all cash, cash equivalents, bank deposits, accounts receivable,
and any income, sales, payroll or other tax receivables;

          (b)    the names "Sierra Pacific Resources," "Sierra Pacific Power
Company," "Sierra Pacific," "Nevada Power Company" and "Nevada Power" or any
related or similar trade names, trademarks, service marks or logos;

          (c)    transmission, substation and communication facilities and
related support equipment described in Schedule 2.2(c);

                                       14
<PAGE>

          (d)  any refund, credit penalty payment, adjustment or reconciliation
(i) related to Real Property, personal property or other Taxes paid prior to the
Closing Date in respect of the Purchased Assets, whether such refund, adjustment
or reconciliation is received as a payment or as a credit against future Taxes
payable, or (ii) arising under the Seller Agreements and relating to a period
before the Closing Date;

          (e)  except to the extent specifically required by law and except such
personnel records set forth on Schedule 2.2(e), the personnel records relating
to any employees of the Seller;

          (f)  the rights and assets described in the Separation Schedule as not
part of the Purchased Assets;

          (g)  the SO2 Allowances identified on Schedule 2.2(g);

          (h)  any agreement between Seller and an Affiliate of Seller, except
as disclosed on Schedule 2.2(h); and

          (i)  any agreement for the purchase or sale of energy, capacity or
ancillary services from the Reid Gardner Station, other than the Transitional
Power Purchase Agreement, Interconnection Agreement or as disclosed on Schedule
2.2(i).

          2.3  Assumed Liabilities. On the Closing Date, the Buyer shall deliver
               -------------------
to the Seller the Instrument of Assumption pursuant to which the Buyer shall
assume and agree to discharge to the maximum extent permitted by law, all of the
liabilities and obligations of the Seller, direct or indirect, known or unknown,
absolute or contingent, which relate to the Purchased Assets, other than
Excluded Liabilities, in accordance with the respective terms and subject to the
respective conditions thereof, including, without limitation, the following
liabilities and obligations:

          (a)  all liabilities and obligations of the Seller to be paid or
performed after the Closing Date arising under (i) the Seller Agreements, the
Environmental Permits, the Permits, the Leases, contracts and any other
agreements assigned to the Buyer pursuant to this Agreement in accordance with
the terms thereof, and (ii) the leases, contracts and other agreements entered
into by the Seller with respect to the Purchased Assets after the date hereof
consistent with the terms of this Agreement (including in the case of (i) and
(ii), without limitation, agreements with respect to liabilities for real or
personal property taxes or other Taxes on any of the Purchased Assets); except,
in each case, to the extent such liabilities and obligations, but for a breach
or default by the Seller, would have been paid, performed or

                                       15
<PAGE>

otherwise discharged on or prior to the Closing Date or to the extent the same
arise out of any such breach or default;

          (b)  all liabilities and obligations associated with the Purchased
Assets in respect of Taxes for which the Buyer is liable pursuant to Section 7.9
hereof;

          (c)  any liabilities and obligations for which the Buyer has
indemnified the Seller pursuant to Section 9.1 hereof;

          (d)  all liabilities to employees for which the Buyer is liable
pursuant to Section 7.11 hereof, including the Collective Bargaining Agreements
and the Management Transition Plan;

          (e)  any liability, obligation or responsibility under or related to
former, current or future Environmental Laws or the common law, whether such
liability or obligation or responsibility is known or unknown, contingent or
accrued, arising as a result of or in connection with (i) any violation or
alleged violation of Environmental Law, prior to the Closing Date, with respect
to the ownership or operation of the Purchased Assets, including, without
limitation, any fines or penalties that arise in connection with the ownership
or operation of the Purchased Assets prior to the Closing Date or the costs
associated with correcting any such violations; (ii) loss of life, injury to
persons or property or damage to natural resources (whether or not such loss,
injury or damage arose or was made manifest before the Closing Date or arises or
becomes manifest after the Closing Date), caused (or allegedly caused) by the
presence or Release of Hazardous Substances at, on, in, under, discharged from,
emitted from or migrating from the Purchased Assets prior to the Closing Date,
including, without limitation, Hazardous Substances contained in building
materials at the Purchased Assets or in the soil, surface water, sediments,
groundwater, landfill cells, or in other environmental media at the Purchased
Assets; and (iii) the investigation and/or Remediation (whether or not such
investigation or Remediation commenced before the Closing Date or commences
after the Closing Date) of Hazardous Substances that are present or have been
Released prior to the Closing Date at, on, in, under, discharged from, emitted
from or migrating from the Purchased Assets, including, without limitation,
Hazardous Substances contained in building materials at the Purchased Assets or
in the soil, surface water, sediments, groundwater, landfill cells, or in other
environmental media at the Purchased Assets; provided, as to all of the above,
that nothing set forth in this Section 2.3(e) shall require the Buyer to assume
any liabilities that are expressly excluded in Section 2.4 hereof;

          (f)  any liability, obligation or responsibility under or related to
former, current or future Environmental Laws or the common law, whether such

                                       16
<PAGE>

liability or obligation or responsibility is known or unknown, contingent or
accrued, arising as a result of or in connection with (i) any violation or
alleged violation of Environmental Law, on or after the Closing Date, with
respect to the ownership or operation of the Purchased Assets; (ii) compliance
with applicable Environmental Laws on or after the Closing Date with respect to
the ownership or operation of the Purchased Assets; (iii) loss of life, injury
to persons or property or damage to natural resources caused (or allegedly
caused) by the presence or Release of Hazardous Substances at, on, in, under,
discharged from, emitted from or migrating from the Purchased Assets on or after
the Closing Date, including, without limitation, Hazardous Substances contained
in building materials at the Purchased Assets or in the soil, surface water,
sediments, groundwater, landfill cells, or in other environmental media at the
Purchased Assets; (iv) loss of life, injury to persons or property or damage to
natural resources caused (or allegedly caused) by the off-site disposal,
storage, transportation, discharge, Release, recycling, or the arrangement for
such activities, of Hazardous Substances, on or after the Closing Date, in
connection with the ownership or operation of the Purchased Assets; (v) the
investigation and/or Remediation of Hazardous Substances that are present or
have been released on or after the Closing Date at, on, in, under, discharged
from, emitted from or migrating from the Purchased Assets, including, without
limitation, Hazardous Substances contained in building materials at the
Purchased Assets or in the soil, surface water, sediments, groundwater, landfill
cells or in other environmental media at the Purchased Assets; and (vi) the
investigation and/or Remediation of Hazardous Substances that are disposed,
stored, transported, discharged, Released, recycled, or the arrangement of such
activities, on or after the Closing Date, in connection with the ownership or
operation of the Purchased Assets, at any Off-Site Location; provided, that
nothing set forth in this Section 2.3(f) shall require the Buyer to assume any
liabilities that are expressly excluded in Section 2.4 hereof;

          (g)  all liabilities and obligations of the Seller with respect to the
Purchased Assets under the agreements or consent orders set forth on Schedule
5.12;

          (h)  subject to Sections 7.1(c) and (e), all liabilities incurred by
the Seller with respect to the Maintenance and Capital Expenditures Amount made
with respect to the Purchased Assets by the Seller except for any liabilities
that Buyer has already paid to Seller at Closing as an accrued liability
included in the Estimated Adjustment Amount;

          (i)  all liabilities or obligations relating to leases for the
Purchased Assets; and

          (j)  all other liabilities or obligations exclusively relating to the
Purchased Assets no matter when the events or occurrences giving rise to such
liabilities or obligations took place.

                                       17
<PAGE>

All of the foregoing liabilities and obligations to be assumed by the Buyer
hereunder (excluding any Excluded Liabilities) are collectively referred to
herein as the "Assumed Liabilities."  It is understood and agreed that nothing
in this Section 2.3 shall constitute a waiver or release of any claims arising
out of the contractual relationships between the Seller and the Buyer.  Nothing
in this Section 2.3 shall be construed to require Buyer to assume any liability
excluded by Section 2.4.

          2.4  Excluded Liabilities. The Buyer shall not assume or be obligated
               --------------------
to pay, perform or otherwise discharge the following liabilities (collectively,
the "Excluded Liabilities"):

          (a)  any liabilities or obligations of the Seller in respect of any
Excluded Assets or other assets of the Seller which are not Purchased Assets;

          (b)  any liabilities or obligations in respect of Taxes attributable
to the Purchased Assets for taxable periods ending on or prior to the Closing
Date, except for Taxes for which the Buyer is liable pursuant to Section 7.9(a)
hereof;

          (c)  any liabilities, obligations or responsibilities relating to the
disposal, storage, transportation, discharge, Release, recycling, or the
arrangement for such activities, by the Seller, of Hazardous Substances that
were generated at the Purchased Assets, at any Off-Site Location, where the
disposal, storage, transportation, discharge, Release, recycling or the
arrangement for such activities at such Off-Site Location occurred prior to the
Closing Date, provided that for purposes of this Section 2.4(c), "Off-Site
Location" does not include any location to which Hazardous Substances disposed
of, discharged from, emitted from or Released at the Purchased Assets have
migrated from the Purchased Assets including, but not limited to, surface waters
that have received waste water discharges from the Purchased Assets;

          (d)  any liabilities, obligations or responsibilities relating to (i)
the transmission facilities delineated in the Interconnection Agreement or
Operating Easement Agreements or (ii) any Seller's operations on, or usage of,
the operating easements, including, without limitation, liabilities, obligations
or responsibilities arising as a result of or in connection with (A) any
violation or alleged violation of Environmental Laws and (B) loss of life,
injury to persons or property or damage to natural resources, except to the
extent caused by the Buyer;

          (e)  any liabilities or obligations required to be accrued by the
Seller in accordance with generally accepted accounting principles and the FERC
Uniform System of Accounts on or before the Closing Date with respect to
liabilities

                                       18
<PAGE>

related to the Purchased Assets other than any liability assumed by the Buyer
under Sections 2.3(a), (e) or (f) hereof;

          (f)  any liabilities or obligations relating to any personal injury to
an employee or a third party (including, without limitation, workers'
compensation claims), discrimination, wrongful discharge, unfair labor practice,
property damage, breach of contract or tort filed with or pending before any
court or administrative agency on the Closing Date, or any claim arising out of
an actual event or events of which Seller has Knowledge as of the Closing Date
if it is reasonably foreseeable that such event or events will give rise to a
claim that may be filed with any court or administrative agency, with respect to
liabilities affecting the Purchased Assets, other than any liabilities or
obligations assumed by the Buyer under Section 2.3(e) hereof;

          (g)  any payment obligations of the Seller for goods delivered or
services rendered prior to the Closing;

          (h)  any liabilities or obligations imposed upon, assumed or retained
by the Seller pursuant to the Interconnection Agreement, Operating Easement
Agreements or any other Ancillary Agreement;

          (i)  any liabilities, obligations or responsibilities relating to any
"employee pension benefit plan" (as defined in Section 3(2) of ERISA) maintained
by the Seller and any trade or business (whether or not incorporated) which are
or have ever been under common control, or which are or have ever been treated
as a single employer, with the Seller under Sections 414(b), (c), (m) or (o) of
the Code (an "ERISA Affiliate") or to which the Seller and any ERISA Affiliate
contributed thereunder (the "ERISA Affiliate Plans"), including any
multiemployer plan, maintained by, contributed to, or obligated to contribute
to, at any time, by the Seller or any ERISA Affiliate (hereinafter referred to
as "Benefit Plans"), including any liability (i) to the Pension Benefit Guaranty
Corporation under Title IV of ERISA; (ii) with respect to non-compliance with
the notice and benefit continuation requirements of COBRA; (iii) with respect to
any non-compliance with ERISA or any other applicable laws; or (iv) with respect
to any suit, proceeding or claim which is brought against any Benefit Plan,
ERISA Affiliate Plan, any fiduciary or former fiduciary of any such Benefit Plan
or ERISA Affiliate Plan;

          (j)  liabilities or obligations under Section 2.3(e) that are the
subject of a claim filed with or pending before any court or administrative
agency on or before November 16, 2000, to the extent that any such claim is not
disclosed on Schedule 5.18;

                                       19
<PAGE>

          (k)  liabilities arising under any material intercompany agreement
between Seller and an Affiliate of Seller that is not disclosed on a Schedule to
this Agreement;

          (l)  liabilities arising under any agreement for the purchase or sale
of energy, capacity or ancillary services from the Purchased Assets, other than
the Transitional Power Purchase Agreement, the Interconnection Agreement or as
disclosed on a Schedule to this Agreement;

          (m)  any accrued liability included in the Estimated Adjustment Amount
for which Seller is paid at Closing;

          (n)  any liabilities paid or incurred in connection with obtaining
consents to assignment of Seller Agreements;

          (o)  any liabilities for borrowed money or guarantees of third party
obligations, except purchase money security interests;

          (p)  liabilities with respect to the pollution control Bonds listed on
Schedule 5.15, except for the obligations arising out of the covenants of Buyer
set forth in Section 7.8;

          (q)  liabilities with respect to any accrued payment obligations
incurred by Seller prior to the Closing Date;

          (r)  any liability for which Seller is entitled to payment under any
applicable insurance policy before the application of Section 2.3, to the extent
of such payment; and

          (s)  any allocation of charges to Seller or the owner of the Purchased
Assets by Southwest Gas Corporation of El Paso Natural Gas Company's Risk
Sharing Revenue Stability Charges based on gas transportation or purchases with
respect to the Purchased Assets that occurred before the Closing Date.

          2.5  License of Non-Transferred Intangible Assets. It is understood by
               --------------------------------------------
the parties that trade names of Seller are Excluded Assets, however, such names
appear on certain of the Purchased Assets, such as certain fixtures and
equipment, and on supplies, materials and similar consumable items that will be
on hand at the Purchased Assets at Closing. Notwithstanding that such trade
names are Excluded Assets, Buyer shall be entitled to use such consumable items
for a period of three (3) months following the Closing and shall have up to six
(6) months following the Closing to remove such names from fixed Purchased
Assets, provided that Buyer shall not send correspondence or other materials to
third parties on any

                                       20
<PAGE>

stationery that contains a trade name or trademark of Seller or any Affiliate of
Seller. Seller hereby grants to Buyer a license to use, solely in connection
with the operation of the Reid Gardner Station on and after Closing, such
proprietary computer software of Seller located at the Reid Gardner Station as
is presently used at the Reid Gardner Station exclusively in connection with the
operation of the Reid Gardner Station and that would otherwise be an Excluded
Asset, except for such computer software that is designed to be part of a
networked computer system providing data processing capabilities or services
beyond the Reid Gardner Station and any licenses which are not transferable and
provided that in no event shall Buyer or any successor have access under such
license to Seller's own computer networks. The rights and obligations relating
to the licenses contained in this Section 2.5 will be made the subject of a
separate software and trademark licensing agreement between the parties which
shall address the terms and conditions affecting the irrevocable, fully paid up,
royalty-free, transferable, non-exclusive rights and licenses granted therein,
in which case the parties shall negotiate such terms and conditions in good
faith and deliver such agreement at Closing.

                                  ARTICLE III
                                  -----------
                                PURCHASE PRICE
                                --------------

          3.1  Purchase Price. The purchase price for the Purchased Assets shall
               --------------
be an amount equal to the sum of (i) Five Hundred Thirty Six Million One Hundred
Thousand Dollars ($536,100,000), (ii) the Estimated Adjustment Amount, (iii) the
Adjustment Amount, (iv) any amounts due to Seller in accordance with Section
3.2(d), and (v) any amounts paid by the Seller with respect to Leased Assets
pursuant to Section 7.4 hereof (the "Purchase Price"). Notwithstanding any other
provision of this Agreement, the Purchase Price includes all applicable sales
and similar taxes. As a result of the execution of the Transitional Power
Purchase Agreement, the amount to be paid by Buyer to Seller at Closing shall be
reduced by One Hundred Six Million Three Hundred Thousand Dollars ($106,300,000)
(the "TPPA Amount"), and such reduction is reflected in Section 4.2(v).

          3.2  Purchase Price Adjustment. (a) Within sixty (60) days after the
               -------------------------
Closing, the Seller shall prepare and deliver to the Buyer a statement (the
"Adjustment Statement") which reflects (i) the difference between (A) the
book value, as determined by an independent evaluator designated by the Seller
and approved by the Buyer as of the Closing Date, of all fuel inventory used at
or in connection with the Purchased Assets and (B) the Estimated Inventory
Adjustment Amount (such difference is referred to as the "Inventory Adjustment
Amount"), (ii) the difference between (A) the book value, as determined by an
independent evaluator designated by the Seller and approved by the Buyer as of
the Closing Date, of the materials and supplies used at or in connection with
the Purchased Assets and (B) the

                                       21
<PAGE>

Estimated Materials and Supplies Adjustment Amount (such difference is referred
to as the "Materials and Supplies Adjustment Amount") and (iii) the difference
between (A) the Maintenance and Capital Expenditures Amount and (B) the
Estimated Maintenance and Capital Expenditures Amount (such difference is
referred to as the "Maintenance and Capital Expenditures Adjustment Amount").
The Inventory Adjustment Amount, the Materials and Supplies Adjustment Amount
and the Maintenance and Capital Expenditures Adjustment Amount are referred to
collectively as the "Adjustment Amount." The Adjustment Statement shall be
prepared using the same generally accepted accounting principles, policies and
methods as the Seller has historically used in connection with the calculation
of the items reflected on the Adjustment Statement. The Buyer agrees to
cooperate with the Seller in connection with the preparation of the Adjustment
Statement and related information, and shall provide to the Seller such books,
records and information as may be reasonably requested from time to time.

          (b)  The Buyer may dispute the Inventory Adjustment Amount, the
Materials and Supplies Adjustment Amount or the Maintenance and Capital
Expenditures Amount; provided, however, that the Buyer shall notify the Seller
                     --------  -------
in writing of the disputed amount, and the basis of such dispute, within ten
(10) Business Days of the Buyer's receipt of the Adjustment Statement. In the
event of a dispute with respect to the Inventory Adjustment Amount, the
Materials and Supplies Adjustment Amount or the Maintenance and Capital
Expenditures Amount, the Buyer and the Seller shall attempt to reconcile their
differences and any resolution by them as to any disputed amounts shall be
final, binding and conclusive on the parties. If the Buyer and the Seller are
unable to reach a resolution of such differences within thirty (30) days of
receipt of the Buyer's written notice of dispute to the Seller, the Buyer and
the Seller shall submit the amounts remaining in dispute for determination and
resolution to the Independent Accounting Firm, which shall be instructed to
determine and report to the parties, within thirty (30) days after such
submission, upon such remaining disputed amounts, and such report shall be
final, binding and conclusive on the parties hereto with respect to the amounts
disputed. The fees and disbursements of the Independent Accounting Firm shall be
allocated between the Buyer and the Seller so that the Buyer's share of such
fees and disbursements shall be in the same proportion that the aggregate amount
of such remaining disputed amounts so submitted by the Buyer to the Independent
Accounting Firm that is unsuccessfully disputed by the Buyer (as finally
determined by the Independent Accounting Firm) bears to the total amount of such
remaining disputed amounts so submitted by the Buyer to the Independent
Accounting Firm.

          (c)  Within ten (10) Business Days after the Buyer's receipt of the
Adjustment Statement, the Buyer shall pay all undisputed portions of the
Adjustment Amount.  If there is a dispute with respect to any amount on the
Adjustment Statement, within five (5) Business Days after the final
determination of such disputed

                                       22
<PAGE>

amounts on the Adjustment Statement, the Buyer shall pay to the Seller an amount
equal to the disputed portion of the Adjustment Amount as finally determined to
be payable with respect to the Adjustment Statement; provided, however, that if
                                                     --------  -------
such amount shall be less than zero, then the Seller shall pay to the Buyer the
amount by which such amount is less than zero within five (5) Business Days of
such final determination. All payments made pursuant to this Section 3.2(c)
shall be paid together, with interest thereon for the period commencing on the
Closing Date through the date of payment, calculated at the prime rate of The
Chase Manhattan Bank in effect on the Closing Date, in cash by federal or other
wire transfer of immediately available funds.

          (d)  In addition to this Agreement, the parties have entered into a
separate Asset Sale Agreement dated as of November 16, 2000 which provides for
the sale of the Clark Bundle from Seller to Buyer (the "Clark ASA"). In the
event that Buyer and Seller close under both this Agreement and the Clark ASA,
Buyer shall make an additional payment to Seller in the amount of Twenty Million
Dollars ($20,000,000) at the later to occur of the Closing under this Agreement
or the closing under the Clark ASA, and any such payment pursuant to this
Section 3.2(d) includes all applicable sales and similar taxes.

          3.3  Allocation of Purchase Price. The Buyer and the Seller shall use
               ----------------------------
their good faith best efforts to agree upon an allocation among the Purchased
Assets of the sum of the Purchase Price consistent with Section 1060 of the Code
and the Treasury Regulations thereunder within one-hundred twenty (120) days of
the date of this Agreement but in no event less than thirty (30) days prior to
the Closing. The Buyer and the Seller may jointly agree to obtain the services
of an independent appraiser (the "Independent Appraiser") to assist the parties
in determining fair value of the Purchased Assets for purposes of such
allocation. If such an appraisal is made, both the Buyer and the Seller agree to
accept the Independent Appraiser's determination of the fair value of the
Purchased Assets. The parties shall jointly select the Independent Appraiser.
The cost of the appraisal shall be borne equally by the Buyer and the Seller.
Each of the Buyer and the Seller agrees to file Internal Revenue Service Form
8594, and all federal, state, local and foreign Tax Returns, in accordance with
such agreed allocation. Each of the Buyer and the Seller shall report the
transactions contemplated by this Agreement for federal Income Tax and all other
tax purposes in a manner consistent with the allocation determined pursuant to
this Section 3.3. Each of the Buyer and the Seller agrees to provide the other
promptly with any other information required to complete Form 8594. Each of the
Buyer and the Seller shall notify and provide the other with reasonable
assistance in the event of an examination, audit or other proceeding regarding
the agreed upon allocation of the Purchase Price.

                                       23
<PAGE>

          3.4  Proration. (a) The Buyer and the Seller agree that all of the
               ---------
items normally prorated, including those listed below, relating to the business
and operation of the Purchased Assets shall be prorated as of the Closing Date
or the Effective Date, as the case may be, with the Seller liable to the extent
such items relate to any time period through the Closing Date or the Effective
Date, and the Buyer liable to the extent such items relate to periods subsequent
to the Closing Date or the Effective Date:

               (i)    personal property, real estate, occupancy and any other
     Taxes, assessments and other charges, if any, on or with respect to the
     business and operation of the Purchased Assets.  In addition, in the event
     that the Seller is subject to Taxes, assessments and other charges on
     property of which the Purchased Assets comprises only a portion, the
     portion of such Taxes, assessments and other charges allocated to the
     Purchased Assets and subject to proration by this Section 3.4 shall be
     determined by reference to the relative value of the Purchased Assets, as
     determined by the Purchase Price paid by the Buyer, compared with the value
     of the Seller's property subject to such Taxes, assessments and other
     charges, as assessed by the relevant taxing authority;

               (ii)   rent, Taxes and other items payable by or to the Seller
     under any of the Seller Agreements to be assigned to and assumed by the
     Buyer hereunder;

               (iii)  any permit, license or registration fees with respect to
     any Environmental Permit or other Permit; and

               (iv)   sewer rents and charges for water, telephone, electricity
     and other utilities.

          (b)  In connection with such proration, in the event that actual
figures are not available at the Closing Date or the Effective Date, the
proration shall be based upon the actual amount of such Taxes or fees for the
preceding year (or appropriate period) for which actual Taxes or fees are
available and such Taxes or fees shall be reprorated upon request of either the
Seller or the Buyer made within sixty (60) days of the date that the actual
amounts become available. The Seller and the Buyer agree to furnish each other
with such documents and other records as may be reasonably requested in order to
confirm all adjustment and proration calculations made pursuant to this Section
3.4.

                                       24
<PAGE>

                                  ARTICLE IV
                                  ----------
                                  THE CLOSING
                                  -----------

          4.1  Time and Place of Closing. Upon the terms and subject to the
               -------------------------
satisfaction of the conditions contained in this Agreement, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 4 Times Square, New
York, New York, at 10:00 a.m., local time, on the first Business Day following
the date on which all of the conditions to each party's obligations hereunder
have been satisfied or waived or such other place or time as the parties may
mutually agree, provided that such date shall not occur prior to June 1, 2001,
unless the parties mutually agree to an earlier date. The date and time at which
the Closing actually occurs is hereinafter referred to as the "Closing Date."

          4.2  Payment of Purchase Price. Upon the terms and subject to the
               -------------------------
satisfaction of the conditions contained in this Agreement, in consideration of
the aforesaid sale, assignment, conveyance, transfer and delivery of the
Purchased Assets, the Buyer shall pay or cause to be paid to the Seller the
Purchase Price. The portion of the Purchase Price to be paid at Closing shall be
as follows: (i) an amount equal to the sum of $536,100,000, plus (ii) any
amounts with respect to Leased Assets to be paid pursuant to Section 7.4 hereof,
plus (iii) the Estimated Adjustment Amount for the Closing, plus (iv) any
amounts then due to Seller in accordance with Section 3.2(d), and less (v) the
TPPA Amount (the "Estimated Closing Payment"), by wire transfer of immediately
available funds or by such other means as are agreed to by the Seller and the
Buyer.

          4.3  Deliveries by Seller. At the Closing, the Seller shall deliver to
               --------------------
the Buyer the following:

          (a)  The Bill of Sale, duly executed by the Seller for the personal
property included in the Purchased Assets;

          (b)  The executed consents to transfer the Seller Agreements, the
Environmental Permits and the Permits, to the extent required hereunder or under
applicable law;

          (c)  Each Ancillary Agreement required to be delivered under this
Agreement, duly executed by the Seller;

          (d)  The certificate and opinion of counsel as contemplated by Section
8.2 hereof;

                                       25
<PAGE>

          (e)  One or more deeds of conveyance transferring the Seller's
interest in the Real Property to the Buyer, without covenant or warranty of
title other than as provided in the Form of Grant, Bargain, Sale Deed attached
as Exhibit G hereto, duly executed and acknowledged by the Seller and in
recordable form subject to Permitted Encumbrances and retaining to the extent
necessary any existing easements in favor of the Seller with respect to Real
Property conveyed to the Buyer, each substantially in the form of Exhibit G
attached hereto;

          (f)  One or more easements to the extent necessary to evidence the
right of the Buyer to use the Real Property of the Seller (the "Buyer's
Easements") associated with the Purchased Assets, duly executed and acknowledged
by the Seller and in recordable form, each substantially in the form of Exhibit
H attached hereto;

          (g)  The Assignment of Leases, in the form of Exhibit A attached
hereto, assigning to the Buyer all of the Seller's right, title and interest as
lessor (or lessee, as the case may be) under the Leases;

          (h)  Copies of the resolutions adopted by the board of directors of
the Seller, certified by the secretary of the Seller, as having been duly and
validly adopted and as being in full force and effect, authorizing the execution
and delivery by the Seller of this Agreement, the Ancillary Agreements, the Bill
of Sale and other closing documents described in this Agreement to which the
Seller is a party, and the performance by the Seller of its obligations
hereunder and thereunder;

          (i)  All such other instruments of assignment or conveyance as shall,
in the reasonable opinion of the Buyer and its counsel, be necessary to transfer
to the Buyer the Purchased Assets in accordance with this Agreement and the
Ancillary Agreements, and where necessary or desirable, in recordable form; and

          (j)  Such other agreements, documents, instruments and writings as are
required to be delivered by the Seller at or prior to the Closing Date pursuant
to this Agreement, the Ancillary Agreements or otherwise required in connection
herewith or therewith.

          4.4  Deliveries by Buyer. At the Closing, the Buyer shall deliver to
               -------------------
the Seller the following:

          (a)  The Estimated Closing Payment by wire transfer of immediately
available funds or by such other means as are agreed to by the Seller and the
Buyer;

          (b)  Each Ancillary Agreement required to be delivered under this
Agreement, duly executed by the Buyer;

                                       26
<PAGE>

          (c)  The certificate and opinion of counsel as contemplated by Section
8.3 hereof;

          (d)  One or more easements to the extent necessary to evidence the
right of Seller to use the Real Property of Buyer (the "Seller's Easements"), to
the extent necessary for the Seller to continue and maintain its transmission
and distribution business, in favor of the Seller with respect to Real Property
conveyed to the Buyer, duly executed and acknowledged by the Buyer, each
substantially in the form of Exhibit I attached hereto, and the Buyer shall bear
any transfer or similar tax incurred in connection herewith as set forth in
Section 7.9 hereof;

          (e)  The Instrument of Assumption, duly executed by the Buyer
providing for the assumption of all of the Seller's right, title and interest as
lessor (or lessee as the case may be) under the Leases;

          (f)  All such other instruments of assumption as shall, in the
reasonable opinion of the Seller and its counsel, be necessary for the Buyer to
assume the Assumed Liabilities in accordance with this Agreement;

          (g)  Copies of the resolutions adopted by the board of directors of
the Buyer, certified by the secretary of the Buyer, as having been duly and
validly adopted and as being in full force and effect, authorizing the execution
and delivery by the Buyer of this Agreement, the Ancillary Agreements and other
closing documents described in this Agreement to which the Buyer is a party, and
the performance by the Buyer of its obligations hereunder and thereunder; and

          (h)  Such other agreements, documents, instruments and writings as are
required to be delivered by the Buyer at or prior to the Closing Date pursuant
to this Agreement, the Ancillary Agreements or otherwise required in connection
herewith or therewith.

                                   ARTICLE V
                                   ---------
                   REPRESENTATIONS AND WARRANTIES OF SELLER
                   ----------------------------------------

          The Seller represents and warrants to the Buyer as follows:

          5.1  Organization; Qualification. The Seller is a corporation duly
               ---------------------------
organized, validly existing and in good standing under the laws of the State of
Nevada and has all requisite corporate power and authority to own, lease, and
operate its properties and to carry on its business as is now being conducted.
The Seller is duly qualified or licensed to do business as a foreign corporation
and is in

                                       27
<PAGE>

good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so duly qualified or
licensed and in good standing would not have a Material Adverse Effect. The
Seller has heretofore delivered to the Buyer complete and correct copies of its
Certificate of Incorporation and Bylaws as currently in effect.

          5.2  Authority Relative to this Agreement. The Seller has full
               ------------------------------------
corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby and
thereby.  The execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the board of directors of the
Seller and no other corporate proceedings on the part of the Seller are
necessary to authorize this Agreement or the Ancillary Agreements or to
consummate the transactions contemplated hereby and thereby.  This Agreement and
the Ancillary Agreements have been duly and validly executed and delivered by
the Seller, and assuming that this Agreement and the Ancillary Agreements
constitute valid and binding agreements of the Buyer, subject to the receipt of
the Seller Required Regulatory Approvals and the Buyer Required Regulatory
Approvals, constitute valid and binding agreements of the Seller, enforceable
against the Seller in accordance with their terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting or relating to enforcement of creditors' rights
generally or general principles of equity.

          5.3  Consents and Approvals; No Violation. (a) Except as set forth in
               ------------------------------------
Schedule 5.3(a), and other than obtaining the Seller Required Regulatory
Approvals and the Buyer Required Regulatory Approvals, neither the execution and
delivery of this Agreement or the Ancillary Agreements by the Seller nor the
sale by the Seller of the Purchased Assets pursuant to this Agreement or the
Ancillary Agreements shall (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation or Bylaws of the Seller, (ii)
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority or regulatory authority, except (x)
where the failure to obtain such consent, approval, authorization or permit, or
to make such filing or notification, would not have a Material Adverse Effect or
(y) for those requirements which become applicable to the Seller as a result of
the specific regulatory status of the Buyer (or any of its Affiliates) or as a
result of any other facts that specifically relate to the business or activities
in which the Buyer (or any of its Affiliates) is or proposes to be engaged;
(iii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, agreement or other instrument
or obligation to which the Seller is a party or by which the Seller, or any of
the Purchased Assets may be

                                       28
<PAGE>

bound, except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained or
which, in the aggregate, would not have a Material Adverse Effect; or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Seller, or any of its assets, which violation would have a
Material Adverse Effect.

          (b)  Except as set forth in Schedule 5.3(b) and except for (i) any
required approvals under the Federal Power Act, (ii) approvals or other actions
by the PUCN, the CPUC and/or the OPUC, (iii) the approval, if required, of the
SEC pursuant to the Holding Company Act, and (iv) the filings by the Seller and
the Buyer required by the HSR Act and the expiration or earlier termination of
all waiting periods under the HSR Act (the filings and approvals referred to in
clauses (i) through (iv) above are collectively referred to as the "Seller
Required Regulatory Approvals"), no declaration, filing or registration with, or
notice to, or authorization, consent or approval of any Governmental Authority
or regulatory authority is necessary for the consummation by the Seller of the
transactions contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not
obtained or made, shall not, in the aggregate, have a Material Adverse Effect
and other than the Permits and Environmental Permits.

          5.4  Reports. Since January 1, 1996, the Seller, pursuant to the
               -------
Securities Act, the Exchange Act, the applicable State public utility laws, the
Federal Power Act and the Holding Company Act, has filed or caused to be filed
with the SEC, the applicable state or local utility commissions or regulatory
bodies, or the FERC, as the case may be, all material forms, statements, reports
and documents (including all exhibits, amendments and supplements thereto)
required to be filed by them with respect to the business and operations of the
Seller as it relates to the Purchased Assets under each of the Securities Act,
the Exchange Act, the applicable State public utility laws, the Federal Power
Act and the Holding Company Act and the respective rules and regulations
thereunder, all of which complied in all material respects with all applicable
requirements of the appropriate act and the rules and regulations thereunder in
effect on the date each such report was filed.

          5.5  Financial Statements. The Seller has previously furnished to the
               --------------------
Buyer (i) balance sheets of the Seller as of June 30, 2000, and (ii) the related
statements of income and retained earnings and changes in financial position of
the Seller for the fiscal year then ended. The balance sheet of the Seller as of
June 30, 2000 is referred to herein as the "Seller Balance Sheet." Each of the
balance sheets included in the financial statements referred to in this Section
5.5 (including the related notes thereto) presents fairly the financial position
of the Seller as of their respective dates, and the other related statements
included therein (including the related notes thereto) present fairly the
results of operations and changes in financial

                                       29
<PAGE>

position for the periods then ended, all in conformity with generally accepted
accounting principles applied on a consistent basis, except as otherwise noted
therein.

          5.6  Undisclosed Liabilities. Except as set forth in Schedule 5.6, the
               -----------------------
Seller has no liability or obligation relating to the business or operations of
the Purchased Assets, secured or unsecured (whether absolute, accrued,
contingent or otherwise, and whether due or to become due), of a nature required
by generally accepted accounting principles to be reflected in a corporate
balance sheet or disclosed in the notes thereto, which are not accrued or
reserved against in the Seller Balance Sheet or disclosed in the notes thereto
in accordance with generally accepted accounting principles, except those which
either were incurred in the ordinary course of business, whether before or after
the date of the Seller Balance Sheet, or those which in the aggregate are not
material to the Purchased Assets.

          5.7  Absence of Certain Changes or Events. Except as set forth in
               ------------------------------------
Schedule 5.7, or in the reports, schedules, registration statements and
definitive proxy statements filed by the Seller with the SEC, and except as
otherwise contemplated by this Agreement, since the date of the Seller Balance
Sheet there has not been:  (i) any Material Adverse Effect; (ii) any damage,
destruction or casualty loss, whether covered by insurance or not, which had a
Material Adverse Effect; (iii) any entry into any agreement, commitment or
transaction (including, without limitation, any borrowing, capital expenditure
or capital financing) by the Seller, which is material to the business or
operations of the Purchased Assets, except for non-material agreements,
commitments or transactions in the ordinary course of business or as
contemplated herein; or (iv) any change by the Seller, with respect to the
Purchased Assets, in accounting methods, principles or practices except as
required or permitted by generally accepted accounting principles.

          5.8  Title to Real Property. Set forth in Schedule 5.8 is a true and
               ----------------------
complete list of the Real Property of the Seller which is part of the Purchased
Assets. The Seller has good and marketable title to all of the Real Property
(including easements for access and utilities), subject only to Permitted
Encumbrances.

          5.9  Leasehold Interests. Schedule 5.9 lists, as of the date of this
               -------------------
Agreement, all Real Property leases (the "Leases") relating to the Purchased
Assets under which the Seller is a lessee, lessor or under which Seller
otherwise has any interest and which are to be assigned to, and assumed by, the
Buyer on the Closing Date. Except as set forth in Schedule 5.9, to the Seller's
Knowledge, all such Leases are valid, binding and enforceable in accordance with
their terms, and are in full force and effect; there are no existing material
defaults by the Seller thereunder; and no event has occurred which (whether with
or without notice, lapse of time or both) would constitute a material default
thereunder. Subject only to Permitted Encum-

                                       30
<PAGE>

brances, Seller has valid and effective leasehold rights in each Lease in which
Seller is the lessee.

          5.10 Improvements. Except as set forth in Schedule 5.10, the Seller
               ------------
has not received any written notices from any Governmental Authority stating or
alleging that any improvements with respect to the Purchased Assets have not
been constructed in compliance with applicable law. Except as set forth in
Schedule 5.10, no written notice has been received by the Seller from any
Governmental Authority requiring or advising as to the need for any repair,
alteration, restoration or improvement in connection with the Purchased Assets.

          5.11 Insurance. Except as set forth in Schedule 5.11, all material
               ---------
policies of fire, liability, workers' compensation and other forms of insurance
purchased or held by and insuring the Purchased Assets are in full force and
effect, all premiums with respect thereto covering all periods up to and
including the date as of which this representation is being made have been paid,
and no notice of cancellation or termination has been received with respect to
any such policy which was not replaced on substantially similar terms prior to
the date of such cancellation. Except as described in Schedule 5.11, as of the
date of this Agreement, the Seller has not been refused any insurance with
respect to the Purchased Assets nor has its coverage been limited by any
insurance carrier to which it has applied for any such insurance or with which
it has carried insurance during the last twelve (12) months.

          5.12 Environmental Matters. (a) Except as set forth in Schedule 5.12,
               ---------------------
in any public filing by the Seller pursuant to the Securities Act or the
Exchange Act, or in any environmental site assessment prepared by or for the
Seller and made available to the Buyer, the Seller holds, and is in substantial
compliance with, all material permits, licenses and governmental authorizations
(the "Environmental Permits") required for the Seller to operate the Purchased
Assets under applicable Environmental Laws, and to the Knowledge of the Seller,
the Seller is otherwise in compliance with applicable Environmental Laws with
respect to the Purchased Assets except for such failures to hold or comply with
required Environmental Permits, or such failures to be in compliance with
applicable Environmental Laws, which, in the aggregate, are not reasonably
likely to have a Material Adverse Effect. The Seller's Environmental Permits are
set forth on Schedule 5.12.

          (b)  To Seller's Knowledge and except as set forth in Schedule 5.12,
Seller has not received any request for information, or been notified in writing
or orally that it is a potentially responsible party, under CERCLA or any
similar State law with respect to any of the Purchased Assets, except for such
liability under such laws as would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect.

                                       31
<PAGE>

          (c)  Except as set forth in Schedule 5.12, with respect to the
Purchased Assets, the Seller has not entered into or agreed to any consent
decree or order, and is not subject to any judgment, decree, or judicial order
relating to compliance with any Environmental Law or to investigation or cleanup
of Hazardous Substances under any Environmental Law, except such consent decrees
or orders, judgments, decrees or judicial orders that would not, individually or
in the aggregate, be reasonably likely to have a Material Adverse Effect and has
no Knowledge of any pending investigation under any Environmental Law related to
the Purchased Assets, other than as contemplated by the Environmental Audit
Agreement, if applicable, between Nevada Power Company and the Nevada Division
of Environmental Protection related to Reid Gardner Station except for such
investigations that would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect and further, Seller shall disclose to
Buyer in writing any Remediation or investigation relating to the Purchased
Assets that is commenced after the date of this Agreement and prior to the
Closing Date.

          (d)  To Seller's Knowledge, Seller has disclosed and made available to
Buyer true, complete and correct copies of any material report, study,
investigation, audit, analysis, test or monitoring in the possession of or
initiated or prepared by Seller within the 5 years preceding the date of this
Agreement pertaining to any environmental matter relating to the Purchased
Assets, including without limitation, compliance with Environmental Laws or
employee safety.

          (e)  The representations and warranties made in this Section 5.12 are
the Seller's exclusive representations and warranties relating to environmental
matters.

          5.13 Labor Matters. The Seller has previously delivered to the Buyer
               -------------
copies of all labor union and Collective Bargaining Agreements relating to the
Purchased Assets to which the Seller is a party or is subject. With respect to
its employees at the Purchased Assets, except to the extent set forth in
Schedule 5.13 and except for such matters as shall not have a Material Adverse
Effect, to the Seller's Knowledge: (i) the Seller is in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours; (ii) the Seller has not received
written notice of any unfair labor practice charge or complaint against the
Seller pending before the National Labor Relations Board; (iii) there is no
labor strike, slowdown or stoppage actually pending or threatened against or
affecting the Seller; (iv) the Seller has not received notice that any
representation petition respecting the employees of the Seller has been filed
with the National Labor Relations Board; (v) no arbitration proceeding arising
out of or under collective bargaining agreements is pending against the Seller;
and (vi) the Seller has not experienced any primary work stoppage since at least
December 31, 1995.

                                       32
<PAGE>

          5.14 ERISA; Benefit Plans. (a) Except as set forth in Schedule
               --------------------
5.14(a)(i), with respect to its employees at the Purchased Assets, the Seller
has fulfilled its obligations under the minimum funding requirements of Section
302 of ERISA, and Section 412 of the Code, with respect to each "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) and each such plan
is in compliance in all material respects with the presently applicable
provisions of ERISA and the Code. The Seller has not incurred any liability
under Section 4062(b) of ERISA to the Pension Benefit Guaranty Corporation in
connection with any employee pension benefit plan relating to employees at the
Purchased Assets which is subject to Title IV of ERISA. Except as set forth in
Schedule 5.14(a)(ii), the Internal Revenue Service has issued a letter for each
employee pension benefit plan determining that such plan is exempt from United
States Federal Income Tax under Sections 401(a) and 501(a) of the Code, and
there has been no occurrence since the date of any such determination letter
which has adversely affected such qualification, and no withdrawal liability has
been incurred by or asserted against the Seller with respect to any employee
pension benefit plan which is a "multiemployer plan" (as defined in Section
3(37) of ERISA).

          (b)  Schedule 5.14(b) lists, as of the date of this Agreement, all
deferred compensation, pension, profit-sharing and retirement plans, including
multiemployer plans, and all material bonus and other employee benefit or fringe
benefit plans maintained or with respect to which contributions are made by the
Seller in respect of employees who are the employees of the Seller who work at
the Purchased Assets. Accurate and complete copies of all such plans, other than
multiemployer plans, have been made available to the Buyer.

          5.15 Real Property Encumbrances. Schedule 5.15 describes the
               --------------------------
indentures of trust concerning the Pollution Control Facilities at the Reid
Gardner Station (the "Bond Indentures") and the Indenture. At or before Closing,
Seller shall cause the Purchased Assets to be released from the liens of the
Indenture and the Bond Indentures. Copies of any surveys in the Seller's
possession or any policies of title insurance currently in force and in the
possession of the Seller with respect to the Real Property will be delivered by
the Seller to the Buyer pursuant to Section 7.14.

          5.16 Condemnation. Neither the whole nor any part of the Real Property
               ------------
or any other real property or rights leased, used or occupied by the Seller in
connection with the ownership or operation of the Purchased Assets is subject to
any pending suit for condemnation or other taking by any public authority, and,
to the Knowledge of the Seller, no such condemnation or other taking is
threatened or contemplated.

                                       33
<PAGE>

          5.17 Certain Contracts and Arrangements. (a) Except for (i) the Seller
               ----------------------------------
Agreements listed in Schedule 5.17(a) or any other Schedule hereto, (ii)
contracts, agreements, personal property leases, commitments, understandings or
instruments which shall expire prior to the Closing Date, (iii) non-material
agreements with suppliers, distributors and sales representatives entered into
in the ordinary course of business, and (iv) contracts, agreements, personal
property leases, commitments, understandings or instruments with a value less
than $250,000 or with annual payments less than $50,000 the Seller is not a
party to any written contract, agreement, personal property lease, commitment,
understanding or instrument which is material to the business or operations of
the Purchased Assets. Without limiting the generality of the foregoing, Seller
represents and warrants that to Seller's Knowledge the Participation Agreement
and the following MOAs, 14, 22, 24, 25, 28 (Revision No. 1), 30, 34, 37, 39, 44
(Revision No. 1), 45, 48, 55, 56, 62, 65, 72, 73, 74, 76, 77, 81 and 86
(collectively, the "Participation Agreement") constitute the agreement between
the Seller and CDWR concerning the ownership and operation of Reid Gardner Unit
4, except where an agreement or MOA not listed above is not material, either
individually or in the aggregate.

          (b)  Except as disclosed in Schedule 5.17(b), each material Seller
Agreement constitutes a valid and binding obligation of the parties thereto and
is in full force and effect and may be transferred to the Buyer pursuant to this
Agreement and shall continue in full force and effect thereafter, in each case
without breaching the terms thereof or resulting in the forfeiture or impairment
of any rights thereunder.

          (c)  Except as set forth in Schedule 5.17(c), there is not, under any
of the Seller Agreements, any default or event which, with notice or lapse of
time or both, would constitute a default on the part of the Seller, except, with
respect to the Seller Agreements only, such events of default and other events
as to which requisite waivers or consents have been obtained or which would not,
in the aggregate, have a Material Adverse Effect. Except as set forth in
Schedule 5.17(c), Seller has not received written or other notice of a default
concerning a Seller Agreement, nor has Seller received any written or other
notice that a party intends to cancel or terminate a Seller Agreement.

          5.18 Legal Proceedings, etc. Except as set forth in Schedule 5.18 or
               -----------------------
in any filing made by the Seller pursuant to the Securities Act or the Exchange
Act, there are no claims, actions, proceedings or investigations pending, and to
Seller's Knowledge no claims, actions, proceedings or investigations threatened,
against the Seller relating to the Purchased Assets before or by any court,
Governmental Authority or regulatory authority or body acting in an adjudicative
capacity, which, if adversely determined, would have a Material Adverse Effect.
Except as set forth in Schedule 5.18, the Seller is not subject to any
outstanding judgment, rule,

                                       34
<PAGE>

order, writ, injunction or decree of any court, Governmental Authority or
regulatory authority relating to the Purchased Assets which has a Material
Adverse Effect.

          5.19 Permits. The Seller has all material permits, licenses,
               -------
franchises and other governmental authorizations, consents and approvals (other
than with respect to the Environmental Permits addressed in Section 5.12)
(collectively, "Permits"), as set forth in Schedule 5.19(a), necessary to
operate the Purchased Assets as presently operated, except where the failure to
have such Permits does not have a Material Adverse Effect. Except as set forth
in Schedule 5.19(b), with respect to the Purchased Assets, the Seller has not
received any written notification, and does not otherwise have Knowledge, that
it is in violation of any of such Permits, or any law, statute, order, rule,
regulation, ordinance or judgment of any Governmental Authority or regulatory
body or authority applicable to the Purchased Assets, except for notifications
of violations which would not, in the aggregate, have a Material Adverse Effect.
The Seller is in compliance with all Permits, laws, statutes, orders, rules,
regulations, ordinances, or judgments of any Governmental Authority or
regulatory body or authority applicable to the Purchased Assets, except for
violations which, in the aggregate, do not have a Material Adverse Effect.

          5.20 Regulation as a Utility. The Seller and certain of its affiliates
               -----------------------
are regulated as public utilities in the States of Nevada and California. Except
as set forth on Schedule 5.20, the Seller is not subject to regulation as a
public utility or public service company (or similar designation) by the United
States, any State of the United States, any foreign country or any municipality
or any political subdivision of the foregoing.

          5.21 Taxes. The Seller has, in respect of the Purchased Assets, (i)
               -----
filed all Tax Returns required to be filed other than those Tax Returns the
failure of which to file would not have a Material Adverse Effect, and (ii) paid
in full or all material Taxes shown to be due on such Tax Returns. Except as set
forth in Schedule 5.21, the Seller has not received any notice of deficiency or
assessment from any taxing authority with respect to liabilities for Taxes of
the Seller in respect of the Purchased Assets, which have not been fully paid or
finally settled, and any such deficiency shown in such Schedule 5.21 is being
contested in good faith through appropriate proceedings. Except as set forth in
Schedule 5.21, there are no outstanding agreements or waivers extending the
applicable statutory periods of limitation for Taxes associated with the
Purchased Assets for any period.

          5.22 Title to Personal Property. Schedule 1.l(97)(iii) sets forth a
               --------------------------
true and complete list of the material machinery, equipment, vehicles, furniture
and other tangible personal property located on the Real Property and used in
the operation of the Reid Gardner Station as of the date of this Agreement
("Personal

                                       35
<PAGE>

Property"). The Seller has good and marketable title to the Personal Property
(or valid and effective leasehold rights in the case of leased Personal
Property).

          5.23 Water. Seller holds rights, by contract, permit, easement,
               -----
resolution, ordinance and otherwise, sufficient to enable Seller to legally
take, transport and deliver water to the Reid Gardner Station at rates and in
quantities sufficient to operate the Reid Gardner Station in the manner in which
it has historically been operated.

          5.24 Subchapter K Election. Seller has elected pursuant to Treas Reg
               ---------------------
Section 1.761-2(b)(2)(ii) to be excluded from all of Subchapter K of the
Internal Revenue Code for federal income tax purposes with respect to the
Reid Gardner Unit 4.  Seller, and to Seller's Knowledge California Department of
Water Resources, have not taken a position inconsistent with the exclusion
election or applied to revoke the election.  To Seller's Knowledge, no taxing
authority has at any time asserted that the Reid Gardner Unit 4 or the joint
ownership of Reid Gardner Unit 4 by Seller and California Department of Water
Resources was taxable as a partnership or other entity, and Seller has no
Knowledge of any intent of any taxing authority to do so.

                                  ARTICLE VI
                                  ----------
                    REPRESENTATIONS AND WARRANTIES OF BUYER
                    ---------------------------------------

          The Buyer represents and warrants to the Seller as follows:

          6.1  Organization. Each of NRG and Dynegy is a corporation duly
               ------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as is now being conducted.
Each of NRG and Dynegy is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so duly
qualified or licensed and in good standing would not have a Material Adverse
Effect. Each of NRG and Dynegy has heretofore delivered to the Seller complete
and correct copies of its Certificate of Incorporation and Bylaws (or other
similar governing documents), as currently in effect.

          6.2  Authority Relative to this Agreement. Each of NRG and Dynegy has
               ------------------------------------
full corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Ancillary

                                       36
<PAGE>

Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the board of directors of the
Buyer and no other corporate proceedings on the part of NRG and Dynegy are
necessary to authorize this Agreement or the Ancillary Agreements or to
consummate the transactions contemplated hereby and thereby. This Agreement and
the Ancillary Agreements have been duly and validly executed and delivered by
NRG and Dynegy, and assuming that this Agreement and the Ancillary Agreements
constitute valid and binding agreements of the Seller, subject to the receipt of
the Buyer Required Regulatory Approvals and the Seller Required Regulatory
Approvals, constitutes a valid and binding agreement of NRG and Dynegy,
enforceable against NRG and Dynegy in accordance with their terms, except that
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally or general principles of equity.

          6.3  Consents and Approvals; No Violation. (a) Except as set forth in
               ------------------------------------
Schedule 6.3(a), and other than obtaining the Buyer Required Regulatory
Approvals and the Seller Required Regulatory Approvals, neither the execution
and delivery of this Agreement or the Ancillary Agreements by NRG or Dynegy nor
the purchase by NRG or Dynegy of the Purchased Assets pursuant to this Agreement
or the Ancillary Agreements shall (i) conflict with or result in any breach of
any provision of the Certificate of Incorporation or Bylaws (or other similar
governing documents) of NRG or Dynegy, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority or regulatory authority, except (x) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not have a Material Adverse Effect or (y) for those
requirements which become applicable to NRG or Dynegy as a result of the
specific regulatory status of the Seller (or any of its Affiliates) or as a
result of any other facts that specifically relate to the business or activities
in which the Seller (or any of its Affiliates) is or proposes to be engaged;
(iii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, agreement, lease or other instrument or
obligation to which NRG or Dynegy or any of their respective subsidiaries is a
party or by which any of their respective assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained.

          (b)  Except as set forth in Schedule 6.3(b) and except for (i) filings
and approvals required by Section 203 of the Federal Power Act, (ii) a specific
determination by the appropriate state commission(s) that allowing the Purchased
Assets to be an eligible facility (1) will benefit consumers, (2) is in the
public interest, and (3) does not violate State law, as contemplated by Section
32(c) of the Holding Company Act, 15 USC section 79z-5a(c), (iii) an Exempt
Wholesale

                                       37
<PAGE>

Generator determination made by FERC under Section 32 of the Holding Company
Act, 15 USC Section 79z-5a, and (iv) the filings by NRG, Dynegy and the Seller
required by the HSR Act and the expiration or earlier termination of all waiting
periods under the HSR Act (the filings and approvals referred to in Schedule
6.3(b) and clauses (i), (ii) and (iii) are collectively referred to as the
"Buyer Required Regulatory Approvals"), no declaration, filing or registration
with, or notice to, or authorization, consent or approval of any Governmental
Authority or regulatory body or authority is necessary for the consummation by
the Buyer of the transactions contemplated hereby, other than such declarations,
filings, registrations, notices, authorizations, consents or approvals which, if
not obtained or made, shall not in the aggregate, have a Material Adverse
Effect.

          6.4  Regulation as a Utility. NRG Energy, Inc., is a subsidiary of a
               -----------------------
public utility holding company registered under the Holding Company Act. Dynegy
Holdings Inc. is neither a public utility company nor a public utility holding
company under the Holding Company Act. Except as set forth in Schedule 6.4, the
Buyer is not subject to regulation as a public utility or public service company
(or similar designation) by the United States, any State of the United States,
any foreign country or any municipality or any political subdivision of the
foregoing.

          6.5  Availability of Funds. The Buyer has sufficient funds available
               ---------------------
to it or has received binding written commitments from responsible financial
institutions to provide sufficient funds on the Closing Date to pay the Purchase
Price.

                                  ARTICLE VII
                                  -----------
                           COVENANTS OF THE PARTIES
                           ------------------------

          7.1  Conduct of Business of the Seller. Except as described in
               ---------------------------------
Schedule 7.1, during the period from the date of this Agreement to the Closing
Date, the Seller shall operate and maintain the Purchased Assets according to
its ordinary and usual course of business consistent with good industry practice
and with Schedules 1.1(94) (Scheduled Capital Expenditures) and 1.1(95)
(Scheduled Maintenance Expenditures). Without limiting the generality of the
foregoing, and, except as contemplated in this Agreement or as described in
Schedule 7.1, prior to the Closing Date, without the prior written consent of
the Buyer (unless such consent would be prohibited by law), the Seller shall not
with respect to the Purchased Assets:

          (a)  (i) create, incur or assume any material amount of indebtedness
for money borrowed, other than in the ordinary course of business, including
obligations in respect of capital leases but excluding purchase money mortgages
granted in connection with the acquisition of property in the ordinary course of

                                       38
<PAGE>

business; or (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person except in the ordinary course of business;

          (b)  make any material change in the operations of the Purchased
Assets including, without limitation, the levels of fuel inventory and materials
and supplies customarily maintained by the Seller;

          (c)  except as set forth in Schedule 1.1(105), make any capital
expenditures with respect to the Purchased Assets, except that the Seller shall
make any capital expenditures (i) requested by the Buyer, provided that the
Buyer shall reimburse the Seller for such capital expenditures as part of the
Adjustment Amount and (ii) deemed necessary by the Seller and consented to by
the Buyer, whose consent shall not be unreasonably withheld ("Necessary Capital
Expenditures"); provided, however, that if the Buyer requests that the Seller
                --------  -------
make enhancements with a cost in excess of the cost of any Necessary Capital
Expenditure, the Buyer shall reimburse the Seller for the cost of such
enhancement to the extent that the cost of such enhancement exceeds the cost of
the Necessary Capital Expenditures as part of the Adjustment Amount;

          (d)  sell, lease (as lessor), transfer or otherwise dispose of, any of
the Purchased Assets, other than assets used, consumed or replaced in the
ordinary course of business consistent with good industry practice and not
mortgage or pledge, or impose or suffer to be imposed any Encumbrance on, any of
the Purchased Assets other than Permitted Encumbrances;

          (e)  except as set forth in Schedule 1.1(106), make any maintenance
expenditures, except that the Seller shall make any maintenance expenditures (i)
requested by the Buyer, provided that the Buyer shall reimburse the Seller for
such maintenance expenditures as part of the Adjustment Amount and (ii) deemed
necessary by the Seller and consented to by the Buyer, whose consent shall not
be unreasonably withheld ("Necessary Maintenance Expenditures"); provided,
                                                                 --------
however, that if the Buyer requests that the Seller make enhancements/upgrades
-------
with a cost in excess of the cost of any Necessary Maintenance Expenditure, the
Buyer shall reimburse the Seller for the cost of such enhancements/upgrades to
the extent the cost of such enhancements/upgrades exceeds the cost of the
Necessary Maintenance Expenditure as part of the Adjustment Amount;

          (f)  amend any of the Seller Agreements;

          (g)  enter into or amend any real or personal property Tax agreement,
treaty or settlement;

                                       39
<PAGE>

          (h)  execute, enter into or amend any agreement, order, decree or
judgment relating to any Permit other than non-material renewals of Permits in
the ordinary and usual course of business consistent with past practice;

          (i)  enter into any commitment for the purchase or sale of fuel
(whether commodity or transportation) that Seller intends to assign to Buyer
having a term of greater than 365 days that extends beyond December 31, 2001 if
the aggregate payment under such commitment is expected to exceed $1,000,000 or
if the aggregate payments under such commitment and all other then outstanding
commitments not previously consented to by the Buyer would be expected to exceed
$1,500,000;

          (j)  except for the Transitional Power Purchase Agreement, enter into
any wholesale sales agreements having a term extending beyond the Closing Date,
where the sale of energy is expected to be supplied via the Purchased Assets;

          (k)  sell, lease or otherwise dispose of SO2 Allowances, except those
listed in Schedule 2.2(g) or to the extent necessary to operate the Purchased
Assets in accordance with this Section 7.1; or

          (l)  enter into (i) any contract, agreement, commitment or
arrangement, whether written or oral, with respect to any of the transactions
set forth in the foregoing paragraphs (a) through (k) or (ii) otherwise enter
into any material new contract, agreement, commitment or arrangement affecting
the Purchased Assets that will survive Closing other than contracts, agreements,
commitments or arrangements entered into in the ordinary and usual course of
business consistent with Good Utility Practice (as defined in the Transitional
Power Purchase Agreement) and having a term of twelve (12) months or less and a
value of $250,000 or less ($1 million in the aggregate), provided, that such per
contract and aggregate limitations imposed in this subparagraph (l) shall not
apply to commitments for the purchase or sale of fuel pursuant to subparagraph
(i) of this section (with Buyer's consent to a contract, agreement or commitment
that otherwise complies with this subsection (ii) but exceeds the preceding term
and value limits not to be unreasonably withheld or delayed), and (iii) Seller
shall provide Buyer with prompt notice with respect to any contract, agreement,
commitment or arrangement entered into in accordance with the provisions of
subsection (ii) of this paragraph.

          7.2  Access to Information. (a) Between the date of this Agreement and
               ---------------------
the Closing Date, the Seller shall, during ordinary business hours and upon
reasonable notice (i) give the Buyer and the Buyer Representatives reasonable
access to all books, records, plants, offices and other facilities and
properties constituting the Purchased Assets to which access by Buyer is not
prohibited by law excluding information relating to employee records other than
the information described on

                                       40
<PAGE>

Schedule 2.2(e), (ii) subject to Seller's approval of Buyer's selection (not to
be unreasonably withheld) Buyer shall appoint a representative and beginning
sixty (60) days prior to Closing such representative shall be permitted to make
reasonably frequent visits on reasonable notice to the Purchased Assets for the
purpose of performing reasonable inspections thereof; (iii) cause those persons
in the positions listed on Schedule 1.1(71) and its advisors to furnish the
Buyer with such financial and operating data and other information with respect
to the Purchased Assets as the Buyer may from time to time reasonably request;
(iv) cause those persons in the positions listed on Schedule 1.1(71) and its
advisors to furnish the Buyer a copy of each report, schedule or other document
filed or received by them with the SEC, PUCN, CPUC or FERC with respect to the
Purchased Assets; and (v) at Buyer's reasonable request, make those persons in
the positions listed on Schedule 1.1(71) and its advisors available during
regular business hours for reasonable time periods to answer Buyer's questions
concerning the Purchased Assets and their operation; provided, however, that (A)
                                                     --------  -------
any such investigation shall be conducted in such a manner as not to interfere
unreasonably with the operation of the Purchased Assets, (B) the Seller shall
not be required to take any action which would constitute a waiver of the
attorney-client privilege and (C) the Seller need not supply the Buyer with any
information which the Seller is under a legal obligation not to supply.
Notwithstanding anything in this Section 7.2 to the contrary, (i) the Seller
shall only furnish or provide such access to medical records as is required by
law and (ii) the Buyer shall not have the right to perform or conduct any
environmental sampling or testing at, in, on or underneath the Purchased Assets.

          (b)  All information furnished to or obtained by the Buyer and the
Buyer Representatives pursuant to this Section 7.2 shall be subject to the
provisions of the Confidentiality Agreement and shall be treated as "Evaluation
Material" (as defined in the Confidentiality Agreement) except for items
acquired by Buyer as part of the Purchased Assets including but not limited to
any books, operation records, operating, safety and maintenance manuals,
engineering design plans, blueprints and as-built plans, specifications and
procedures.

          (c)  Subject to Buyer's rights under the last sentence of this Section
7.2(c), for a period of ten (10) years after the Closing Date, the Seller and
its representatives shall have reasonable access to all of the books and records
of the Purchased Assets, as the case may be, transferred to the Buyer hereunder
to the extent that such access may reasonably be required by the Seller in
connection with matters relating to or affected by the operation of the
Purchased Assets prior to the Closing Date.  Such access shall be afforded by
the Buyer upon receipt of reasonable advance notice and during normal business
hours.  The Seller shall be solely responsible for any costs or expenses
incurred by them pursuant to this Section 7.2(c).  If the Buyer shall desire to
dispose of any such books and records prior to the expiration of such ten-year
period, the Buyer shall, prior to such disposition, give the Seller

                                       41
<PAGE>

a reasonable opportunity at the Seller's expense, to segregate and remove such
books and records as the Seller may select.

          7.3  Expenses. Except to the extent specifically provided herein,
               --------
whether or not the transactions contemplated hereby are consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by the party incurring such costs and
expenses except that the costs, expenses and premium incurred to obtain title
insurance shall be shared equally by Buyer and Seller at Closing.

          7.4  Further Assurances. Subject to the terms and conditions of this
               ------------------
Agreement, each of the parties hereto shall use all commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the sale of the Purchased Assets
pursuant to this Agreement including, without limitation, the use of the
Seller's and the Buyer's commercially reasonable efforts to obtain all Permits
and Environmental Permits necessary for the Buyer to operate the Purchased
Assets. From time to time after the date hereof, without further consideration,
the Seller shall, at its own expense, execute and deliver such documents to the
Buyer as the Buyer may reasonably request in order more effectively to vest in
the Buyer good title to the Purchased Assets. From time to time after the date
hereof, the Buyer shall, at its own expense, execute and deliver such documents
to the Seller as the Seller may reasonably request in order to more effectively
consummate the sale of the Purchased Assets pursuant to this Agreement. To the
extent that any personal property lease, relating to any assets (the "Leased
Assets") which are principally used by the Seller for generation purposes at the
Purchased Assets, cannot be assigned to the Buyer, the Seller shall, with
Buyer's written consent (which consent shall not be unreasonably withheld), use
its commercially reasonable efforts to acquire title to such Leased Assets and
to include them in the Purchased Assets before the Closing Date. The Seller's
reasonable costs associated with acquiring title to such Leased Assets shall be
paid by the Buyer as part of the Purchase Price. The Leased Assets are
identified as such on Schedule 1.1(97)(iii).

          7.5  Public Statements. The parties shall consult with each other
               -----------------
prior to issuing any public announcement, statement or other disclosure with
respect to this Agreement or the transactions contemplated hereby and neither
party may issue any such public announcement, statement or other disclosure
without having first received the written consent of the other party, except as
may be required by law and except that the parties may make public
announcements, statements or other disclosures with respect to this Agreement
and the transactions contemplated hereby to the extent and under the
circumstances in which the parties are expressly

                                       42
<PAGE>

permitted by the Confidentiality Agreement to make disclosures of "Evaluation
Material" (as defined in the Confidentiality Agreement).

          7.6  Consents and Approvals. (a) The Seller and the Buyer shall each
               ----------------------
file or cause to be filed with the Federal Trade Commission and the United
States Department of Justice any notifications required to be filed under the
HSR Act and the rules and regulations promulgated thereunder with respect to
the transactions contemplated hereby.  The parties shall consult with each other
as to the appropriate time of filing such notifications and shall use their best
efforts to make such filings at the agreed upon time, to respond promptly to any
requests for additional information made by either of such agencies, and to
cause the waiting periods under the HSR Act to terminate or expire at the
earliest possible date after the date of filing.

          (b)  The Seller and the Buyer shall cooperate with each other and (i)
promptly prepare and file all necessary documentation, (ii) effect all necessary
applications, notices, petitions and filings and execute all agreements and
documents, (iii) use all commercially reasonable efforts to obtain the transfer
or reissuance to the Buyer of all necessary Environmental Permits, Permits,
consents, approvals and authorizations of all governmental bodies and (iv) use
all commercially reasonable efforts to obtain all necessary consents, approvals
and authorizations of all other parties, in the case of each of the foregoing
clauses (i), (ii), (iii) and (iv), necessary or advisable to consummate the
transactions contemplated by this Agreement (including, without limitation, the
Seller Required Regulatory Approvals and the Buyer Required Regulatory
Approvals, all consents, approvals and authorizations of all governmental bodies
to the transfer, reissuance or modification of the Permits and Environmental
Permits as necessary to enable Buyer to operate the Purchased Assets at and
after Closing substantially as they had been operated immediately prior to the
Closing Date, and FERC approval of the Ancillary Agreements and the Generation
Tariff applicable to the Purchased Assets) or required by the terms of any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument to which the Seller or the Buyer
is a party or by which either of them is bound.  The Seller shall have the right
to review and approve in advance all characterizations of the information
relating to Purchased Assets; and each of the Seller and the Buyer shall have
the right to review and approve in advance all characterizations of the
information relating to the transactions contemplated by this Agreement which
appear in any filing made in connection with the transactions contemplated
hereby.  The parties hereto agree that they shall consult with each other with
respect to the transferring to the Buyer or the obtaining by the Buyer of all
such necessary Environmental Permits, Permits, consents, approvals and
authorizations of all third parties and governmental bodies.  The Seller and the
Buyer shall designate separate counsel with respect to all applications,
notices, petitions and filings (joint or otherwise) relating to this Agreement
and the transactions contem-

                                       43
<PAGE>

plated hereby on behalf of the Seller, on the one hand and the Buyer on the
other hand, with all governmental bodies.

          (c)  To the extent that a consent to an assignment of any material
Seller Agreement cannot be obtained before the Closing Date, the Seller shall
enter into all such agreements with the Buyer as are necessary to give the Buyer
the rights, obligations and burdens of such Seller Agreements. Without limiting
the generality of the foregoing, if on May 1, 2000 (or, if earlier, the date
that is thirty (30) days before the expected Closing Date), Seller has not yet
obtained the consent of the California Department of Water Resources ("CDWR") to
the assignment of the Participation Agreement, the parties shall negotiate
diligently to agree upon a back-to-back energy management agreement or other
arrangement (the "EMA") that will confer upon Buyer economic benefits equivalent
to the ownership of Reid Gardner Unit 4 effective as of June 1, 2000 (or such
earlier or later date as all Closing conditions other than CDWR's consent to the
assignment of the Participation Agreement have been satisfied or waived or are
expected to be accomplished at Closing in accordance with this Agreement). If
CDWR has not consented to the assignment of the Participation Agreement but all
other conditions to Closing have been satisfied or waived or are expected to be
accomplished at Closing in accordance with this Agreement, Seller shall retain
title to Reid Gardner Unit 4 and the assets and permits reasonably required to
operate Reid Gardner Unit 4 ("Reid Gardner Unit 4 Assets"), and the parties
shall enter into the EMA at Closing. Seller shall thereafter continue to use
diligent efforts to obtain CDWR's consent to Seller's assignment of the
Participation Agreement. Within thirty (30) days of the date on which such
consent has been obtained on terms and conditions acceptable to Buyer, Seller
shall assign its interest in the Participation Agreement and convey the Reid
Gardner Unit 4 assets to Buyer. The parties shall use diligent efforts to enable
Buyer to acquire Reid Gardner Units 1-3 and associated Purchased Assets at
Closing, while entering into the EMA only with respect to Reid Gardner Unit 4;
provided, however, that if separation cannot be accomplished such that Reid
Gardner Station can continue to operate as it has been in the past at and after
Closing, Seller shall retain the Purchased Assets comprising the Reid Gardner
Station and the EMA shall apply to all of them.

          (d)  The parties hereto shall consult with each other prior to
proposing or entering into any stipulation or agreement with any Federal, State
or local Governmental Authority or agency or any third party in connection with
any Federal, State or local governmental consents and approvals legally required
for the consummation of the transactions contemplated hereby and shall not
propose or enter into any such stipulation or agreement without the other
party's prior written consent, which consent shall not be unreasonably withheld.

                                       44
<PAGE>

          (e)  Seller shall use commercially reasonable efforts to defend and
support the form of Generation Tariff applicable to the Purchased Assets in the
form on file with FERC as of November 14, 2000. Seller shall file with FERC and
use commercially reasonable efforts to defend and support the Transitional Power
Purchase Agreement and Interconnection Agreement. Seller shall, at Buyer's
request, file a certificate of concurrence in and shall use all commercially
reasonable efforts to support (i) any filing with the FERC that Buyer is
required to make in order to sell energy, capacity and ancillary service
pursuant to the Transitional Power Purchase Agreement, and (ii) any tariff filed
by Buyer with FERC and containing terms and conditions equivalent to the
applicable terms and conditions of the Generation Tariff previously filed by
Seller with FERC and applicable to the Purchased Assets, provided, however
Seller's obligation to support such filings shall continue only until such
filings have been approved by FERC. Seller shall not propose or enter into any
stipulation or agreement except for any stipulation pending as of the date of
this Agreement modifying the form of such tariffs or agreements without Buyer's
consent, which Buyer shall not unreasonably withhold. Buyer and Seller shall
cooperate in defending and supporting such tariffs and agreements.

          (f)  The Seller shall prepare and submit an application to the PUCN in
which the Seller shall seek approval of the sale of both the Purchased Assets
hereunder and the Clark Bundle and at Buyer's request Seller shall include in
such application a statement reflecting Buyer's preferences and priorities with
respect to the transactions contemplated by this Agreement and the Clark ASA.

          7.7  Fees and Commissions. The Seller and the Buyer each represent and
               --------------------
warrant to the other that, except for Credit Suisse First Boston ("CSFB"), which
is acting for and at the expense of the Seller, no broker, finder or other
Person is entitled to any brokerage fees, commissions or finder's fees in
connection with the transaction contemplated hereby by reason of any action
taken by the party making such representation. The Seller and the Buyer shall
pay to the other or otherwise discharge, and shall indemnify and hold the other
harmless from and against, any and all claims or liabilities for all brokerage
fees, commissions and finder's fees (other than as described above) incurred by
reason of any action taken by such party.

          7.8  Use of Pollution Control Facilities. (a) Prior to June 1, 2019,
               -----------------------------------
October 1, 2011 or October 1, 2023, as applicable, the Buyer shall not use any
of the Pollution Control Facilities in any manner which would cause (i) interest
on any of the Bonds to become includible in the gross income of the owners of
such Bonds for purposes of federal income taxation or (ii) the disallowance of
any deductions for interest expense payable by the Seller to which the Seller
would otherwise be entitled; provided, however, that no violation of this
                             --------  -------
Section 7.8 shall be deemed to

                                       45
<PAGE>

have occurred solely as a result of such facilities being (A) unused, (B)
abandoned or (C) sent to a landfill.

          (b)  The Buyer shall give the Seller reasonable access to any
Pollution Control Facilities included in the Purchased Assets and the books and
records with respect to such facilities.

          (c)  The Buyer shall fully cooperate with the issuers of the Bonds and
the Seller and its counsel in connection with any audit, investigation or
proceeding with respect to the Bonds or the Seller's interest expense deduction
with respect thereto by the Internal Revenue Service, the SEC or any other
entity.

          7.9  Tax and Withholding Matters. (a) Notwithstanding any other
               ---------------------------
provision of this Agreement, the Purchase Price includes all applicable sales
and similar taxes (but not real property transfer taxes) imposed by the State of
Nevada as the result of the transaction ("Included Taxes"). Buyer shall bear all
real estate transfer taxes. At the Closing, Seller shall deliver to Buyer a
receipt for Buyer's payment of Included Taxes, and a separate closing
certificate setting forth Seller's calculation of the purchase price for that
portion of the Purchased Assets with respect to which Included Taxes are
anticipated by Seller to be due, as well as Seller's calculation, in the
exercise of reasonable judgment, of the amount of those Included Taxes. Seller
shall also include in this certificate its unqualified representation, warranty
and covenant, which shall survive Closing notwithstanding any other provision of
this Agreement, that the amount of taxes so established is in fact the entire
and correct amount of Included Taxes. Seller is aware that, because of Seller's
familiarity with the Purchased Assets and their previous treatment for tax,
accounting and other purposes, Buyer is relying on Seller's calculation of such
Included Taxes. Seller shall, as provided by the laws of the State of Nevada,
pay over to the Nevada Department of Taxation the Included Taxes. To the extent,
if any, that the State of Nevada requires payment of Included Taxes in an amount
higher than that certified by Seller, after all opportunity for challenge or
rehearing or appeal has been exhausted (provided that Seller bears the costs
                                        --------
thereof as incurred), Seller shall immediately adjust its books, nunc pro tunc,
by decreasing the purchase price of the Purchased Assets by an amount equal to
such additional Included Taxes, which amount shall constitute Included Taxes
collected by Seller from Buyer. Seller shall then deliver to Buyer a corrected
receipt for payment of Included Taxes and remit to the Nevada Department of
Taxation the additional Included Taxes due. The foregoing is in addition to
Buyer's right to recover damages for breach of Seller's representation, warranty
and covenant in an amount equal to any Included Taxes required to be paid by
Buyer (after exhausting all opportunity for appeal or rehearing, provided that
                                                                 --------
Seller bears the costs thereof as incurred). Seller represents and warrants that
this Section 7.9(a) is enforceable (which representation and warranty shall
survive Closing notwithstanding any contrary provision in this

                                       46
<PAGE>

Agreement) and shall deliver a reasoned opinion at Closing confirming that this
provision will be enforceable against Seller. The party responsible for
remitting a Tax shall, at its own expense, file, to the extent required by law,
all necessary Tax Returns, receipts and other documentation with respect to the
Tax. If reasonably requested by the party responsible for paying a Tax the other
party shall join in the execution of Tax Returns, receipts or other
documentation. Notwithstanding the foregoing, the parties shall work together in
good faith and each at its own expense to minimize all transfer, sales and
similar taxes and shall not make any payment to the Nevada Department of
Taxation if the amount of payment is being disputed by either party until all
opportunity for challenge or rehearing or appeal has been exhausted (provided
                                                                     --------
that Seller bears the costs thereof as incurred).

          (b)  With respect to Taxes to be prorated in accordance with Section
3.4 hereof only, the Buyer shall prepare and timely file all Tax Returns
required to be filed with respect to the Purchased Assets, if any, and shall
duly and timely pay all such Taxes shown to be due on such Tax Returns. The
Buyer's preparation of any such Tax Returns shall be subject to the Seller's
approval, which approval shall not be unreasonably withheld. The Buyer shall
make such Tax Returns available for the Seller's review and approval no later
than twenty (20) days prior to the due date for filing such Tax Return. Within
ten (10) days after receipt of such Tax Return, the Seller shall pay to the
Buyer its proportionate share of the amount shown as due on such Tax Return
determined in accordance with Section 3.4 hereof. In addition to any amount of
reimbursement due in accordance with Section 3.4 hereof, Buyer shall reimburse
Seller for any Nevada property taxes incurred by Seller which relate to the
Purchased Assets and have a lien date after the Closing Date. The amount of such
reimbursement shall be determined based upon the proportion of (i) the
"historical cost less depreciation" of the Purchased Assets to (ii) the total
historical cost less depreciation of all the assets reported on Seller's Nevada
Operating Property Appraisal Report.

          (c)  Each of the Buyer and the Seller shall provide the other with
such assistance as may reasonably be requested by the other party in connection
with the preparation of any Tax Return, any audit or other examination by any
taxing authority, or any judicial or administrative proceedings relating to
liability for Taxes, and each shall retain and provide the requesting party with
any records or information which may be relevant to such return, audit or
examination, proceedings or determination. Any information obtained pursuant to
this Section 7.9 or pursuant to any other section hereof providing for the
sharing of information or review of any Tax Return or other schedule relating to
Taxes shall be kept confidential by the parties hereto.

          (d)  Seller shall remain responsible for any liabilities and all tax
filings, proceedings and other tax matters involving the ownership of Reid
Gardner

                                       47
<PAGE>

Unit 4 to the extent arising from or relating to the breach of Seller's
representation and warranty in Section 5.24 of this Agreement, whether such
breach occurs with respect to periods before or after the Closing Date. The
provisions of Section 7.9 shall survive for a period of two years.

          (e)  The provisions of Section 7.9 shall survive until 30 days after
the expiration of all applicable tax statutes of limitation.

          7.10 Supplements to Schedules. Prior to the Closing Date, the Seller
               ------------------------
shall promptly supplement or amend the Schedules required by Article V with
respect to any matter hereafter arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described in
such Schedules. No supplement or amendment of any Schedule made pursuant to this
Section 7.10 shall be deemed to cure any breach of any representation or
warranty made in this Agreement unless the parties agree thereto in writing.

          7.11 Employees. (a) Schedule 7.11(a) sets forth all collective
               ---------
bargaining agreements to which the Seller is a party in connection with the
Purchased Assets (the "Collective Bargaining Agreements"), as well any Letters
of Agreement between Seller and IBEW Local 396 ("Local 396 LOA"), letters of
intent, or other such agreements or understandings related to the sale and
transfer of certain plants. The Buyer shall offer employment to begin as of the
Closing Date to the Seller's employees who work at the Purchased Assets and who
are included in the bargaining units covered by the Collective Bargaining
Agreements ("Hourly Employees"). The Buyer shall assume the Collective
Bargaining Agreements, and all of the Seller's obligations under such
agreements.

          (b)  Continued Employment. The Buyer shall, as of the Closing Date,
               --------------------
make a Qualifying Offer of Employment (as defined herein) to each employee of
Seller who (i) worked at or directly serviced the Purchased Assets and (ii) was
an employee of the Seller immediately prior to the Closing Date, other than (x)
Hourly Employees and (y) Directors (each such employee who accepts a Qualifying
Offer of Employment is a "Management Employee"). An offer of employment shall be
deemed a "Qualifying Offer of Employment" if (A) the proposed base salary and
level of incentive compensation is at least 90% of the employee's base salary
and level of incentive compensation immediately prior to the Closing Date and
(B) the proposed principal place of employment is within one hundred (100) miles
of the employee's principal place of employment immediately prior to the Closing
Date.

          (c)  Benefit Continuation.  Subject to applicable law, the Buyer shall
               --------------------
maintain for a period of at least one year after the Closing Date, without
interruption, such employee compensation, welfare and benefit plans, programs,
policies and fringe benefits covering Management Employees that will be as
eco-

                                       48
<PAGE>

nomically similar, in the aggregate, as those provided pursuant to those
employee compensation, welfare and benefit plans, programs, policies and fringe
benefits of the Seller and their subsidiaries as in effect immediately prior to
the Closing Date. To the extent permissible under the terms of the Benefit Plans
of Buyer and required by applicable law, the Buyer shall waive all limitations
as to preexisting conditions exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Management Employees
under any Benefit Plans of Buyer that are welfare benefit plans that such
employees may be eligible to participate in after the Closing Date, other than
limitations or waiting periods that are already in effect with respect to such
employees and that have not been satisfied as of the Closing Date under any
welfare benefit plan maintained for the Management Employees immediately prior
to the Closing Date.

          (d)  Service Credit. The Management Employees shall be given credit
               --------------
for all service with the Seller or its subsidiaries (and service credited by
Seller or such subsidiary), to the same extent as such service was credited for
such purpose by Seller or such subsidiary, under all employee benefit plans,
programs and policies of the Buyer in which they become participants (the
"Benefit Plans of Buyer") for purposes of eligibility, vesting, benefit accrual
and determination of level of benefits. Notwithstanding the foregoing, such
service with the Seller shall be recognized for purposes of benefit accrual
under a defined benefit pension plan or a retiree medical plan (a "plan")
sponsored by the Buyer only if assets and liabilities are transferred to the
Buyer's plan and trust from the Seller's plan and trust.

          (e)  Assumptions.  The Buyer shall assume only those obligations that
               -----------
are required to be assumed by the Buyer under the Collective Bargaining
Agreement or obligations for which there was a transfer of assets and
liabilities to the Buyer's plan and trust from the Seller's plan and trust.
Absent such transfer of plan assets and liabilities, benefits accrued under such
Benefits Plans of Seller and all benefits currently payable as of the Closing
Date shall be and shall remain the obligation of the Seller. Any individual
covered under any such Benefit Plan of Seller that is a Group Health Plan (as
defined in Section 4980B(g)(2) of the Code and Section 607(l) of ERISA) and who
is eligible for continued coverage under such Group Health Plan as of the
Closing Date, shall continue to be covered under such Group Health Plan after
Closing pursuant to the provisions of COBRA.

          (f)  Severance Plan.  The Buyer shall maintain the Management
               --------------
Transition Plan for a period of eighteen (18) months following the Closing Date
and shall give all Management Employees service credit for purposes of
determining the level of benefits thereunder in the same manner as set forth in
Section 7.11(d) hereof. Each of the Buyer and the Seller shall be responsible
for 50% of any payments required under the Management Transition Plan for any
Management Employee

                                       49
<PAGE>

terminated without Cause (as defined in the Management Transition Plan) within
eighteen (18) months following the Closing Date.

          (g)  WARN Act.  The Seller shall perform timely and discharge all
               --------
requirements, if any, under the WARN Act and under applicable state and local
laws and regulations for the notification of its employees arising from the sale
of the Purchased Assets to the Buyer up to and including the Closing Date.  The
Buyer shall cooperate with the Seller to provide the Seller with such
information as may be needed from the Buyer for inclusion in such notices,
including providing the Seller at least ninety (90) days prior to the date on
which the Closing is anticipated to occur (or such date to which the Buyer and
the Seller mutually agree) with a list of all of the Seller's employees to whom
the Buyer shall make offers of employment.  After the Closing Date, the Buyer
shall be responsible for performing and discharging all requirements under the
WARN Act and under applicable state and local laws and regulations for the
notification of its employees with respect to the Purchased Assets.

          7.12 Risk of Loss. (a) From the date hereof through the Closing Date,
               ------------
all risk of loss or damage to the property included in the Purchased Assets
shall be borne by the Seller.

          (b)  If, before the Closing Date all or any portion of the Purchased
Assets are taken by eminent domain, or is the subject of a pending or (to the
Knowledge of the Seller) contemplated taking which has not been consummated, the
Seller shall notify the Buyer promptly in writing of such fact. If such taking
would have a Material Adverse Effect, the Buyer and the Seller shall negotiate
in good faith to settle the loss resulting from such taking (including, without
limitation, by making a fair and equitable adjustment to the Purchase Price)
and, upon such settlement, consummate the transaction contemplated by this
Agreement pursuant to the terms of this Agreement. If no such settlement is
reached within sixty (60) days after the Seller has notified the Buyer of such
taking, then the Buyer or the Seller may, if such taking relates to the
Purchased Assets, terminate this Agreement pursuant to Section 10.1(f) hereof.

          (c)  If, before the Closing Date all or any material portion of the
Purchased Assets are damaged or destroyed by fire or other casualty, the Seller
shall notify the Buyer promptly in writing of such fact.  If such damage or
destruction would have a Material Adverse Effect and the Seller has not notified
the Buyer of its intention to cure such damage or destruction within fifteen
(15) days after its occurrence, the Buyer and the Seller shall negotiate in good
faith to settle the loss resulting from such casualty (including, without
limitation, by making a fair and equitable adjustment to the Purchase Price)
and, upon such settlement, consummate the transactions contemplated by this
Agreement pursuant to the terms of this Agreement.  If no such settlement is
reached within sixty (60) days after the Seller

                                       50
<PAGE>

has notified the Buyer of such casualty, then the Buyer or the Seller may
terminate this Agreement pursuant to Section 10.1(f) hereof.

          7.13 Additional Covenants of the Buyer. Notwithstanding any other
               ---------------------------------
provision hereof, Buyer covenants and agrees that, for a period of five (5)
years commencing on the Closing Date, Buyer shall not transfer the Purchased
Assets, or any material portion of the Purchased Assets, to any entity or
Affiliate of such entity who at that time is the owner of any bundle of
generation assets previously owned by Seller within the southern regions of
Nevada, as such regions are described in the Offering Memorandum dated as of
March 2000, as supplemented from time to time.  Buyer further covenants and
agrees that, in the event that Buyer transfers the Purchased Assets or any
material portion of the Purchased Assets during such five (5) year period, Buyer
shall obtain from its transferee a covenant and agreement which restricts such
transferee's ability to transfer the Purchased Assets that is substantially
similar to Buyer's covenant and agreement in the first sentence of this Section
7.13 and an additional covenant and agreement that is substantially similar to
that of this sentence, and each such covenant and agreement shall survive and
remain in effect until five (5) years from the Closing Date as defined in this
Agreement.  The covenants and agreements contained in this Section 7.13 shall
survive Closing and shall continue in effect for a period of five (5) years
commencing on the Closing Date.

          7.14 Surveys and Certain Title Matters. Within thirty (30) days after
               ---------------------------------
the date of this Agreement, Seller shall deliver to Buyer final surveys of the
Real Property showing the location of (a) all exceptions listed in the
preliminary title reports referred to in Schedule 5.8, (b) the easements to be
retained and granted as described in Schedule 5.8, (c) all rights-of-way and
easements for water and gas pipelines owned or used in connection with the
operation of the Reid Gardner Station, and (d) all roads, rail spurs, and
crossing and other access routes owned or controlled by Seller used in
connection with the operation of the Reid Gardner Station. On or before the
thirtieth (30th) day (the "Notice Date") after Buyer has received the final
surveys of the Real Property, Buyer may notify Seller in writing that Buyer
disapproves of any matter disclosed by the final surveys that, individually or
in the aggregate, (in Buyer's reasonable judgment) materially interferes with
the operation and maintenance of the Reid Gardner Station, or that, individually
or in the aggregate has a Material Adverse Effect. Buyer's failure to so notify
Seller on or before the Notice Date shall be deemed an approval of matters
disclosed by and located in the final surveys; likewise, any matters not
disapproved in a notice from Buyer to Seller on or before the Notice Date shall
be deemed approved by Buyer as disclosed by and located in the final surveys. If
any new matters are disclosed by a revised survey, supplemental preliminary
title report or title commitment, Buyer shall have fifteen (15) days from the
date on which it receives a notice disclosing the new matter(s) in reasonable
detail to approve or disapprove of the new matter(s)

                                       51
<PAGE>

asset forth above. Seller shall cooperate with the Title Insurer and Buyer, to
the extent necessary, to clear any such disapproved matters. The exceptions
shown in the preliminary title reports that are approved by the Buyer as of the
date of this Agreement are listed in Schedule 5.8, subject to Buyer's review of
final surveys. If Buyer and Seller disagree about whether Buyer has properly
disapproved a matter under this Section 7.14, the parties shall meet within ten
(10) Business Days of the Notice Date to negotiate in good faith to settle their
disagreement. In addition, Seller and Buyer shall cooperate in good faith to
create and describe such Operating Easements as may be reasonably required or
desirable to serve the Purchased Assets or Seller's property to the extent not
already covered by the Operating Easements described in Schedule 5.8.

          7.15 Documentation. Within sixty (60) days after the date of this
               -------------
Agreement, Seller shall make available to Buyer copies of all material
contracts, leases and permits including all amendments thereto (in either
electronic or hard copy format) pertaining to the Purchased Assets which to
Seller's Knowledge are a complete set.

          7.16 Additional Covenants of the Parties. (a) The parties shall work
               -----------------------------------
together in good faith to address transition issues and to identify any
transition services that Seller would be able to provide for a reasonable period
after Closing. If any such services are identified, the parties shall enter into
an agreement to be delivered at Closing describing the terms and conditions on
which Seller shall provide such transition services, including a provision which
limits the charges for such services to Seller's actual reasonable costs.

          (b)  Buyer and Seller shall negotiate in good faith to agree upon a
clearance procedure at least thirty (30) days before the expected Closing Date
that could make unnecessary certain disconnect switches shown in the one line
drawing included in Exhibit F that have not yet been installed.  If Buyer and
Seller so agree, they shall promptly amend the one line drawing, the Separation
Schedule and the separation schedule summary to reflect their agreement.  In any
event Seller shall be solely responsible for all costs associated with the
acquisition and installation of any such switches and related equipment.

          (c)  Seller shall use its commercially reasonable efforts to enter
into the Environmental Audit Agreement before Closing.

                                       52
<PAGE>

                                 ARTICLE VIII
                                 ------------
                              CLOSING CONDITIONS
                              ------------------

          8.1  Conditions to Each Party's Obligations to Effect the Transactions
               -----------------------------------------------------------------
Contemplated Hereby. The respective obligations of each party to effect the
-------------------
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions:

          (a)  The waiting period under the HSR Act applicable to the
consummation of the transactions contemplated hereby shall have expired or been
terminated;

          (b)  No preliminary or permanent injunction or other order or decree
by any federal or state court which prevents the consummation of the
transactions contemplated hereby or by the Ancillary Agreements shall have been
issued and remain in effect (each party agreeing to use its reasonable best
efforts to have any such injunction, order or decree lifted) and no statute,
rule or regulation shall have been enacted by any State or Federal government or
Governmental Authority in the United States which prohibits the consummation of
the transactions contemplated hereby or by the Ancillary Agreements;

          (c)  All Federal, State and local government consents and approvals
required for the consummation of the transactions contemplated hereby or by the
Ancillary Agreements, including, without limitation, the Seller Required
Regulatory Approvals, the Buyer Required Regulatory Approvals, and all approvals
of FERC required to enable the parties to perform their respective obligations
under the Ancillary Agreements, shall have become Final Orders (a "Final Order"
for purposes of this Agreement means a final order after all opportunities for
rehearing are exhausted (whether or not any appeal thereof is pending) that has
not been revised, stayed, enjoined, set aside, annulled or suspended, with
respect to which any required waiting period has expired; and as to which all
conditions to effectiveness prescribed therein or otherwise by law, regulation
or order have been satisfied) with such terms and conditions as shall have been
imposed by the Governmental Authority issuing such Final Order and such Final
Orders shall not have imposed terms and conditions which would have a material
adverse effect on the business, results of operations or financial condition of
the Purchased Assets; and

          (d)  All consents and approvals required under the terms of any note,
bond, mortgage, indenture, contract or other agreement to which the Seller or
the Buyer, or any of their subsidiaries, is a party for the consummation of the
transactions contemplated hereby shall have been obtained, including, without
limitation, the receipt by Seller of the required consent relating to the Joint
Ownership Obligation (the "Joint Ownership Obligation Condition"), other than
those (i)

                                       53
<PAGE>

which if not obtained, would not, in the aggregate, have a Material Adverse
Effect, or (ii) for which an agreement as described in Section 7.6(c) hereof has
been entered into.

          8.2  Conditions to Obligations of Buyer. The obligation of the Buyer
               ----------------------------------
to effect the transactions contemplated by this Agreement shall be subject to
the fulfillment at or prior to the Closing Date of the following additional
conditions:

          (a)  There shall not have occurred and be continuing, a Material
Adverse Effect;

          (b)  The Seller shall have performed and complied with in all material
respects the covenants and agreements contained in this Agreement required to be
performed and complied with by it on or prior to the Closing Date, and the
representations and warranties of the Seller set forth in this Agreement shall
be true and correct in all material respects as of the date of this Agreement
and as of the Closing Date as though made at and as of the Closing Date, and the
Buyer shall have received a certificate to that effect signed by an authorized
officer of the Seller;

          (c)  The Buyer shall have received a certificate from an authorized
officer of the Seller, dated the Closing Date, to the effect that to the best of
such officer's knowledge, the conditions set forth in Sections 8.2(a) and (b)
hereof have been satisfied;

          (d)  The Buyer shall have received an opinion from Woodburn & Wedge,
P.C., dated the Closing Date and satisfactory in form and substance to the Buyer
and its counsel, substantially to the effect that:

               (1)  The Seller is a corporation organized, existing and in good
standing under the laws of the State of Nevada and has the corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to consummate the transactions contemplated hereby and thereby, and the
execution and delivery of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by requisite corporate action taken on the part of the Seller;

               (2)  This Agreement and the Ancillary Agreements have been
executed and delivered by the Seller and (assuming that the Seller Required
Regulatory Approvals and the Buyer Required Regulatory Approvals are obtained)
are valid and binding obligations of the Seller, enforceable against the Seller
in accordance with their terms, except that such enforcement thereof may be
limited by (A) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally, and (B) general principles
of equity (regardless

                                       54
<PAGE>

of whether enforceability is considered in a proceeding at law or in equity) and
except to the extent that the right to indemnification and contribution
contained therein may be limited by state or federal securities laws or the
public policy underlying such laws;

               (3)  The execution, delivery and performance of this Agreement
and the Ancillary Agreements by the Seller shall not constitute a violation of
the Certificate of Incorporation or Bylaws of the Seller; and

               (4)  No declaration, filing or registration with, or notice to,
or authorization, consent or approval of any Governmental Authority is necessary
for the consummation by the Seller of the Closing other than (i) the Seller
Required Regulatory Approvals, (ii) such declarations, filings or registrations
with, or notices to, or authorizations, consents or approvals relating to
Permits and Environmental Permits and (iii) such declarations, filings or
registrations with, or notices to, or authorizations, consents or approvals
which, if not obtained or made, would not, in the aggregate have a Material
Adverse Effect.

          As to any matter contained in such opinion which involves the laws of
any jurisdiction other than the Federal laws of the United States or the laws of
the State of Nevada, such counsel may rely upon opinions of counsel admitted in
such other jurisdictions.  Any opinions relied upon by such counsel as aforesaid
shall be delivered together with the opinion of such counsel.  Such opinion may
expressly rely as to matters of fact upon certificates furnished by the Seller
and appropriate officers and directors of the Seller and by public officials;

          (e)  The Seller shall have executed and delivered, as of the Closing,
each of the Ancillary Agreements to be executed by the Seller and all required
approvals and conditions relating to the Ancillary Agreements shall have been
obtained or satisfied;

          (f)  Neither the PUCN nor the Nevada legislature shall have issued any
order or passed any legislation the effect of which would be to cause the Buyer,
as the owner of the Purchased Assets or the seller of electric power, energy or
capacity therefrom, to be regulated as to the wholesale pricing of such electric
power, energy or capacity, or to be regulated for any purposes as a public
utility under Nevada law; and

          (g)  First American Title Company (or an Affiliate thereof) or another
Title Insurer acceptable to Buyer (the "Title Insurer") shall be willing to
issue at regular rates ALTA owner's, or lessee's, as the case may be, extended
coverage policies of title insurance (1990 Form B) (the "Title Policies"), with
the general survey and creditors' rights exceptions removed, in amounts equal to
the

                                       55
<PAGE>

portion of the Purchase Price allocated to such interests, showing title to the
Real Property vested in Buyer, subject to transfer of the Real Property to
Buyer.  The Title Policies shall show title vested in Buyer subject only to
Permitted Encumbrances (not including the lien of the Indenture and the Bond
Indentures, from which the Purchased Assets are to be released at or before
Closing).  Seller shall cooperate with the Title Insurer and Buyer, to the
extent necessary, to clear any defects of title.  The first sentence of this
paragraph shall be deemed to be satisfied either by (i) the issuance of the
Title Policies, subject only to Permitted Encumbrances, at Closing, or (ii) by
the Title Insurer's delivery at the Closing of written commitments or binders
(dated as of the Closing but insuring title as of the date title conveyance
documents are recorded), to issue the Title Policies, subject only to Permitted
Encumbrances, within a reasonable time after the Closing Date, subject to actual
transfer of the Real Property.  If the Title Insurer is unwilling to issue any
such Title Policy, it shall be required to provide Buyer and Seller, in writing,
with notice setting forth the reason(s) for such unwillingness as soon as
practicable.  Seller shall have the right to seek to cure any defect which is
the reason for such unwillingness, and to extend the Closing and the Termination
Date, if necessary, for a period of up to thirty (30) Business Days to provide
to Seller the opportunity to cure; and

          (h)  Without limiting the generality of Section 8.1(a) of this
Agreement, Buyer shall have received the necessary consents, approvals and
authorizations required to transfer, re-issue or modify Permits and
Environmental Permits as needed to enable Buyer to operate the Purchased Assets
at and after the Closing Date substantially consistent with Seller's historical
operation.

          8.3  Conditions to Obligations of Seller. The obligation of the Seller
               -----------------------------------
to effect the transactions contemplated by this Agreement shall be subject to
the fulfillment at or prior to the Closing Date of the following additional
conditions:

          (a)  The Buyer shall have performed in all material respects its
covenants and agreements contained in this Agreement required to be performed on
or prior to the Closing Date;

          (b)  The representations and warranties of the Buyer set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though made at and as of the
Closing Date;

          (c)  The Seller shall have received a certificate from an authorized
officer of the Buyer, dated the Closing Date, to the effect that, to the best of
such officer's knowledge, the conditions set forth in Sections 8.3(a) and (b)
hereof have been satisfied;

                                       56
<PAGE>

          (d)  The Seller shall have received an opinion from Stoel Rives LLP
and/or Lionel Sawyer & Collins, counsel for the Buyer, dated the Closing Date
and satisfactory in form and substance to the Seller and its counsel,
substantially to the effect that:

               (1)  Each of NRG and Dynegy is a corporation organized, existing
and in good standing under the laws of the State of Delaware and has the
corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby and
thereby; and the execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby have
been duly authorized by all requisite corporate action taken on the part of the
Buyer;

               (2)  this Agreement and the Ancillary Agreements have been
executed and delivered by the Buyer and (assuming that the Seller Required
Regulatory Approvals and the Buyer Required Regulatory Approvals are obtained)
are valid and binding obligations of the Buyer, enforceable against the Buyer in
accordance with their terms, except that such enforcement thereof may be limited
by (A) bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and (B) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefore may be brought;

               (3)  the execution, delivery and performance of this Agreement
and the Ancillary Agreements by the Buyer shall not constitute a violation of
the Certificate of Incorporation or Bylaws (or other similar governing
documents), as currently in effect, of the Buyer; and

               (4)  no declaration, filing or registration with, or notice to,
or authorization, consent or approval of any Governmental Authority is necessary
for the consummation by the Buyer of the Closing other than the Buyer Required
Regulatory Approvals, all of such Buyer Required Regulatory Approvals having
been obtained and being in full force and effect with such terms and conditions
as shall have been imposed by any applicable Governmental Authority.

          As to any matter contained in such opinion or opinions which involve
the laws of any jurisdiction other than the federal laws of the United States
and the States of Oregon and Nevada, such counsel may rely upon opinions of
counsel admitted to practices in such other jurisdictions.  Any opinions relied
upon by such counsel as aforesaid shall be delivered together with the opinion
of such counsel.  Such opinion may expressly rely as to matters of facts upon
certificates furnished by

                                       57
<PAGE>

appropriate officers and directors of the Buyer and its subsidiaries and by
public officials; and

          (e)  The Buyer shall have executed and delivered, as of the Closing,
each of the Ancillary Agreements to be executed by the Buyer and all required
approvals and conditions relating to the Ancillary Agreements have been obtained
or satisfied.

                                  ARTICLE IX
                                  ----------
                                INDEMNIFICATION
                                ---------------

          9.1  Indemnification.  (a) The Seller shall indemnify, defend and hold
               ---------------
harmless the Buyer from and against any and all claims, demands or suits (by any
Person), losses, liabilities, damages (including consequential or special
damages), obligations, payments, costs, Taxes and expenses (including, without
limitation, the costs and expenses of any and all actions, suits, proceedings,
assessments, judgments, settlements and compromises relating thereto and
reasonable attorneys' fees and reasonable disbursements in connection therewith)
to the extent the foregoing are not paid by insurance, (collectively,
"Indemnifiable Losses"), asserted against or suffered by the Buyer relating to,
resulting from or arising out of (i) any breach by the Seller of any covenant or
agreement of the Seller contained in this Agreement or (ii) the Excluded
Liabilities.

          (b)  The Buyer shall indemnify, defend and hold harmless the Seller
from and against any and all Indemnifiable Losses asserted against or suffered
by the Seller relating to, resulting from or arising out of (i) any breach by
the Buyer of any covenant or agreement of the Buyer contained in this Agreement
or the Ancillary Agreements or (ii) the Assumed Liabilities.

          (c)  Either the person required to provide indemnification under this
Agreement (the "Indemnifying Party") or the person entitled to receive
indemnification under this Agreement (the "Indemnitee") may assert any offset or
similar right in respect of its obligations under this Section 9.1 based upon
any actual or alleged breach of any covenant or agreement contained in this
Agreement or the Ancillary Agreements.

          (d)  Any Indemnitee having a claim under these indemnification
provisions shall make a good faith effort to recover all losses, damages, costs
and expenses from insurers of such Indemnitee under applicable insurance
policies so as to reduce the amount of any Indemnifiable Loss hereunder. The
amount of any Indemnifiable Loss shall be reduced (i) to the extent that the
Indemnitee receives any insurance proceeds with respect to an Indemnifiable Loss
and (ii) to take into

                                       58
<PAGE>

account any Tax or Income Tax benefit recognized by the Indemnitee arising from
the recognition of the Indemnifiable Loss, net of any Tax or Income Tax
detriment, and any payment actually received with respect to an Indemnifiable
Loss.

          (e)  The expiration, termination or extinguishment of any covenant,
agreement, representation or warranty shall not affect the parties' obligations
under this Section 9.1 if the Indemnitee provided the Indemnifying Party with
proper notice of the claim or event for which indemnification is sought prior to
such expiration, termination or extinguishment.

          (f)  The rights and remedies of the Seller and the Buyer under this
Article IX are exclusive and in lieu of any and all other rights and remedies
which the Seller and the Buyer may have under this Agreement or otherwise for
monetary relief with respect to (i) any breach or failure to perform any
covenant or agreement set forth in this Agreement or (ii) the Assumed
Liabilities or the Excluded Liabilities, as the case may be. Without limiting
the foregoing, with respect to the Purchased Assets, the Buyer, for itself and
its Affiliates, does hereby irrevocably release, hold harmless and forever
discharge the Seller from any and all claims of any kind or character, whether
known or unknown, hidden or concealed, resulting from or arising out of or in
connection with Hazardous Substances or any Environmental Law, other than those
liabilities and obligations set forth in Section 2.4(c) hereof. In furtherance
of the foregoing, the Buyer, for itself and on behalf of its Affiliates, hereby
irrevocably waives any and all rights and benefits with respect to such claims
that it now has, or in the future may have conferred upon it by virtue of any
statute, regulation or common law principle which provides that a general
release does not extend to claims which a party does not know or suspect to
exist in its favor at the time of executing the release, if knowledge of such
claims would have materially affected such party's settlement with the obligor.
In this connection, the Buyer hereby acknowledges that it is aware that factual
matters now unknown to it may have given, or hereafter may give, rise to claims
that are presently unknown, unanticipated and unsuspected, and it further agrees
that this release has been negotiated and agreed upon in light of that
awareness, and the Buyer, for itself and on behalf of its Affiliates,
nevertheless hereby intends irrevocably to release the Seller from the claims
described in this Section 9.1(f).

          9.2  Defense of Claims. (a) If any Indemnitee receives notice of the
               -----------------
assertion of any claim or of the commencement of any claim, action, or
proceeding made or brought by any Person who is not a party to this Agreement or
any Affiliate of a party to this Agreement (a "Third Party Claim") with respect
to which indemnification is to be sought from an Indemnifying Party, the
Indemnitee shall give such Indemnifying Party reasonably prompt written notice
thereof, but in any event not later than ten (10) calendar days after the
Indemnitee's receipt of notice of such Third Party Claim. Such notice shall
describe the nature of the Third Party

                                       59
<PAGE>

Claim in reasonable detail and shall indicate the estimated amount, if
practicable, of the Indemnifiable Loss that has been or may be sustained by the
Indemnitee. The Indemnifying Party shall have the right to participate in or, by
giving written notice to the Indemnitee, to elect to assume the defense of any
Third Party Claim at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, and the Indemnitee shall cooperate in good
faith in such defense at such Indemnitee's own expense.

          (b)  If within ten (10) calendar days after an Indemnitee provides
written notice to the Indemnifying Party of any Third Party Claim the Indemnitee
receives written notice from the Indemnifying Party that such Indemnifying Party
has elected to assume the defense of such Third Party Claim as provided in the
last sentence of Section 9.2(a) hereof, the Indemnifying Party shall not be
liable for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof; provided, however, that if the Indemnifying
                                     --------  -------
Party fails to take reasonable steps necessary to defend diligently such Third
Party Claim within twenty (20) calendar days after receiving notice from the
Indemnitee that the Indemnitee believes the Indemnifying Party has failed to
take such steps, the Indemnitee may assume its own defense, and the Indemnifying
Party shall be liable for all reasonable expenses thereof.  Without the prior
written consent of the Indemnitee, the Indemnifying Party shall not enter into
any settlement of any Third Party Claim which would lead to liability or create
any financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder.  If a firm offer is
made to settle a Third Party Claim without leading to liability or the creation
of a financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying Party shall
give written notice to the Indemnitee to that effect.  If the Indemnitee fails
to consent to such firm offer within ten (10) calendar days after its receipt of
such notice, the Indemnitee may continue to contest or defend such Third Party
Claim and, in such event, the maximum liability of the Indemnifying Party as to
such Third Party Claim shall be the amount of such settlement offer, plus
reasonable costs and expenses paid or incurred by the Indemnitee up to the date
of such notice.

          (c)  Any claim by an Indemnitee on account of an Indemnifiable Loss
which does not result from a Third Party Claim (a "Direct Claim") shall be
asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, stating the nature of such claim in reasonable detail and indicating
the estimated amount, if practicable, but in any event not later than ten (10)
calendar days after the Indemnitee becomes aware of such Direct Claim, and the
Indemnifying Party shall have a period of thirty (30) calendar days within which
to respond to such Direct Claim. If the Indemnifying Party does not respond
within such thirty (30) calendar day period, the Indemnifying Party shall be
deemed to have accepted such claim. If

                                       60
<PAGE>

the Indemnifying Party rejects such claim, the Indemnitee shall be free to seek
enforcement of its rights to indemnification under this Agreement.

          (d)  If the amount of any Indemnifiable Loss, at any time subsequent
to the making of an indemnity payment in respect thereof, is reduced by
recovery, settlement or otherwise under or pursuant to any insurance coverage,
or pursuant to any claim, recovery, settlement or payment by or against any
other entity, the amount of such reduction, less any costs, expenses or premiums
incurred in connection therewith (together with interest thereon from the date
of payment thereof at the prime rate then in effect of The Chase Manhattan
Bank), shall promptly be repaid by the Indemnitee to the Indemnifying Party.
Upon making any indemnity payment, the Indemnifying Party shall, to the extent
of such indemnity payment, be subrogated to all rights of the Indemnitee against
any third party in respect of the Indemnifiable Loss to which the indemnity
payment relates; provided, however, that (i) the Indemnifying Party shall then
                 --------  -------
be in compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of its
Indemnifiable Loss, any and all claims of the Indemnifying Party against any
such third party on account of such indemnity payment are hereby made expressly
subordinated and subjected in right of payment to the Indemnitee's rights
against such third party. Without limiting the generality or effect of any other
provision hereof, each such Indemnitee and Indemnifying Party shall duly execute
upon request all instruments reasonably necessary to evidence and perfect the
foregoing subrogation and subordination rights. Nothing in this Section 9.2(d)
shall be construed to require any party hereto to obtain or maintain any
insurance coverage.

          (e)  A failure to give timely notice as provided in this Section 9.2
shall not affect the rights or obligations of any party hereunder except if, and
only to the extent that, as a result of such failure, the party which was
entitled to receive such notice was actually prejudiced as a result of such
failure.

                                   ARTICLE X
                                   ---------
                          TERMINATION AND ABANDONMENT
                          ---------------------------

          10.1 Termination. (a) This Agreement may be terminated at any time
               -----------
prior to the Closing Date, by mutual written consent of the Buyer and the
Seller.

          (b)  This Agreement may be terminated by the Seller or the Buyer if
(i) the transactions contemplated hereby shall not have been consummated on or
before eighteen (18) months from the date of this Agreement (the "Termination
Date"); provided, however, that the right to terminate this Agreement under this
        --------  -------
Section 10.1(b) shall not be available to either Seller or Buyer if its failure
to fulfill

                                       61
<PAGE>

any obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing Date to occur on or before such date; provided, further,
                                                             --------  -------
that if on the Termination Date the conditions to the Closing set forth in
Section 8.1(c) shall not have been fulfilled but all other conditions to the
Closing shall be fulfilled or shall be capable of being fulfilled, then the
Termination Date shall be the date which is twenty-four (24) months from the
date of this Agreement.

          (c)  This Agreement may be terminated by either the Seller or the
Buyer if (i) any Governmental Authority or regulatory body, the consent of which
is a condition to the obligations of the Seller and the Buyer to consummate the
transactions contemplated hereby, shall have determined not to grant its consent
and all appeals of such determination shall have been taken and have been
unsuccessful, or (ii) any court of competent jurisdiction in the United States
or any State shall have issued an order, judgment or decree permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
hereby and such order, judgment or decree shall have become final and
nonappealable.

          (d)  This Agreement may be terminated by the Buyer, if there has been
a material violation or breach by the Seller of any agreement, representation or
warranty contained in this Agreement which has rendered the satisfaction of any
condition to the obligations of the Buyer impossible and such violation or
breach has not been waived by the Buyer.

          (e)  This Agreement may be terminated by the Seller, if there has been
a material violation or breach by the Buyer of any agreement, representation or
warranty contained in this Agreement which has rendered the satisfaction of any
condition to the obligations of the Seller impossible and such violation or
breach has not been waived by the Seller.

          (f)  This Agreement may be terminated by either the Seller or the
Buyer in accordance with the provisions of Sections 7.12(b) or (c) hereof.

          10.2 Procedure and Effect of Termination. In the event of termination
               -----------------------------------
of this Agreement and abandonment of the transactions contemplated hereby by
either or both of the parties pursuant to Section 10.1 hereof, written notice
thereof shall forthwith be given by the terminating party to the other party and
this Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by any of the parties hereto. If this
Agreement is terminated as provided herein:

          (a)  such termination shall be the sole remedy of the parties hereto
with respect to breaches of any agreement, representation or warranty contained
in this Agreement and none of the parties hereto nor any of their respective
trustees,

                                       62
<PAGE>

directors, officers or Affiliates, as the case may be, shall have any liability
or further obligation to the other party or any of their respective trustees,
directors, officers or Affiliates, as the case may be, pursuant to this
Agreement, except in each case as stated in this Section 10.2 and in Sections
7.2(b), 7.3 and 7.7 hereof; and

          (b)  all filings, applications and other submissions made pursuant to
this Agreement, to the extent practicable, shall be withdrawn from the agency or
other person to which they were made.

                                  ARTICLE XI
                                  ----------
                           MISCELLANEOUS PROVISIONS
                           ------------------------

          11.1 Amendment and Modification. Subject to applicable law, this
               --------------------------
Agreement may be amended, modified or supplemented only by written agreement of
the Seller and the Buyer.

          11.2 Waiver of Compliance; Consents. Except as otherwise provided in
               ------------------------------
this Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.

          11.3 No Survival of Representations and Warranties. Each and every
               ---------------------------------------------
representation and warranty contained in this Agreement and each and every
covenant contained in this Agreement (other than the covenants in Sections 2.5,
3.2, 3.3, 3.4, 7.1(d), 7.1(f), 7.1(g), 7.1(h), 7.1(i), 7.1(j), 7.1(k), 7.1(l)(i)
and 7.1(1)(ii), 7.2(b), 7.2(c), 7.3, 7.4, 7.5, 7.6(c), 7.6(e), 7.7, 7.8, 7.9,
7.11, 7.13, 7.16(b) (which covenants shall survive for a period of one year or
otherwise in accordance with their terms), 9.1 and 9.2 hereof) shall expire
with, and be terminated and extinguished by, (i) the consummation of the sale of
the Purchased Assets and the transfer of the Assumed Liabilities pursuant to
this Agreement and shall not survive the Closing Date, or (ii) the termination
of this Agreement pursuant to Section 10.1 hereof or otherwise; and none of the
Seller, the Buyer or any officer, director, trustee or Affiliate of either of
them shall be under any liability whatsoever with respect to any such
representation or warranty.

          11.4 Notices. All notices and other communications hereunder shall be
               -------
in writing and shall be deemed given if delivered personally or by facsimile
transmission, telexed or mailed by overnight courier or registered or certified
mail (return receipt requested), postage prepaid, to the parties at the
following addresses

                                       63
<PAGE>

(or at such other address for a party as shall be specified by like notice,
provided that notices of a change of address shall be effective only upon
receipt thereof):

          (a)  If to the Seller, to:

               Nevada Power Company
               c/o Sierra Pacific Resources
               6100 Neil Road
               Reno, Nevada 89511
               Attention: William E. Peterson
               Telecopy:  (775) 834-5959

               with copies to:

               Skadden, Arps, Slate, Meagher & Flom LLP
               4 Times Square
               New York, New York 10036-6522
               Attention: Sheldon S. Adler, Esq.
               Telecopy:  (212) 735-2000

          (b)  if to the Buyer, to:

               NRG Energy, Inc.
               Symphony Towers
               Suite 2740
               750 "B" Street
               San Diego, CA 92101-8129
               Attention: David Lloyd, Esq.
               Telecopy:  (619) 615-7663

               Dynegy Holdings Inc.
               1000 Louisiana Street, Suite 5800
               Houston, TX 77002
               Attention: Alisa B. Johnson, Esq.
               Telecopy:  (713) 767-8508

                                       64
<PAGE>

               with copies to:

               Stoel Rives LLP
               900 SW Fifth Avenue
               Suite 2300
               Portland, OR 97204-1268
               Attention: William H. Holmes, Esq.
               Telecopy:  503-220-2480

          11.5 Assignment. This Agreement and all of the provisions hereof shall
               ----------
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but, except as provided in Section
11.5, neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any party hereto, including by operation of law
without the prior written consent of the other party, nor is this Agreement
intended to confer upon any other Person except the parties hereto any rights or
remedies hereunder.

          For purposes of this Agreement, subject to Section 7.13, the term
"Affiliate Assignee" shall refer to any direct or indirect subsidiary of Buyer
and any constituent partner or participant in Buyer (if Buyer is a partnership,
joint venture, consortium or other association or organization) to whom any of
Buyer's rights and obligations under this Agreement are assigned in compliance
with the requirements of this Section. For purposes of this Agreement,
"Financing Entity" shall mean any Person designated by Buyer to Seller as a
lessor in connection with any Off-Balance Sheet Lease Facility, and "Permitted
Assignee" shall mean any Affiliate Assignee or Financing Entity, as the case may
be. For purposes of this Agreement, "Off-Balance Sheet Lease Facility" shall
mean any long-term lease of the Purchased Assets, where the lease is accounted
for by Buyer on its financial statements, prepared in accordance with GAAP, as
an operating lease, whether or not such transaction is a leveraged lease (in
which the Financing Entity is the owner of the Purchased Assets for U.S. federal
income tax purposes), or a synthetic lease, tax ownership operating lease, tax
retention Operating lease or similar lease transaction where Buyer is treated as
owner of the leased property for U.S. federal income tax purposes.
Notwithstanding any contrary provisions contained in this Agreement, the parties
agree that, before and after the Closing, Buyer, in its sole discretion, may
assign any or all of its rights and obligations arising under this Agreement or
any Ancillary Agreement to one or more Permitted Assignees, provided that,
                                                            --------
unless Seller shall agree to alternative arrangements in writing, no such
assignment shall relieve Buyer of any obligation or liability to Seller under
this Agreement or under any Ancillary Agreement, and provided further that,
                                                     -------- -------
unless Seller shall agree to alternative arrangements in writing, the following
shall apply:

                                       65
<PAGE>

          (a)  Buyer shall provide Seller with prompt written notice of any such
assignment.

          (b)  No such assignment shall be effected if the making of the
assignment will result in Seller's or Buyer's inability to obtain any consent or
authorization reasonably required to consummate the transactions contemplated by
this Agreement or to avoid economic detriment to the Seller arising from the
consummation of such transactions.

          (c)  Irrespective of any such assignment or the identity of the party
or parties executing any Ancillary Agreements:

               (i)   Buyer shall remain jointly and severally liable to Seller
     and to third parties with respect to any Assumed Liabilities transferred to
     or undertaken by a Permitted Assignee, and shall remain jointly and
     severally liable to Seller with respect to any other covenant, obligation
     or liability to Seller under this Agreement or under an Ancillary Agreement
     that is transferred to, or undertaken by, a Permitted Assignee, including
     without limitation, the payment of all sums due to Seller hereunder or
     under an Ancillary Agreement, it being understood that all such covenants,
     obligations and liabilities shall constitute the direct and primary
     obligation of Buyer to Seller (and to third parties in the case of the
     Assumed Liabilities); and

               (ii)  Without limiting the generality of the foregoing, if and
     to the extent that the application of any principle of law or of common law
     would construe the retention by Buyer of the direct and primary obligation
     to perform any and all obligations, liabilities or covenants assigned to or
     assumed or undertaken by a Permitted Assignee to be a guaranty by the Buyer
     of the Permitted Assignee's performance, then the Buyer hereby irrevocably,
     absolutely and unconditionally guarantees to Seller the full, prompt and
     faithful performance by such Permitted Assignee of all covenants and
     obligations to be performed by such Permitted Assignee under this Agreement
     and any Ancillary Agreement assigned to such Permitted Assignee.

          (d)  Buyer further hereby agrees that a separate action or actions may
be brought and prosecuted against Buyer for any such covenant, obligation or
liability assigned to a Permitted Assignee, whether action is brought against
the pertinent Permitted Assignee or whether such Permitted Assignee is joined in
any such action or actions (Buyer hereby waiving any right to require Seller to
proceed against a Permitted Assignee).

          (e)  Buyer hereby authorizes Seller, without notice and without
affecting Buyer's liability hereunder, from time to time to (i) renew,
compromise,

                                       66
<PAGE>

extend, accelerate, or otherwise change the terms of any obligation of a
Permitted Assignee hereunder or under any Ancillary Agreement with the agreement
of such Permitted Assignee, (ii) take and hold security for the obligations of
any such Permitted Assignee and exchange, enforce, waive and release any such
security, and (iii) apply such security and direct the order or manner of sale
thereof as Seller in its discretion may determine.

          (f)  Buyer hereby further waives:

               (i)   Any defense that may arise by reason of the incapacity or
     lack of authority of any Permitted Assignee;

               (ii)  Any defense based upon a statute or rule of law which
     provides that the obligations of a surety must be neither larger in amount
     nor in other respects more burdensome than those of the principal;

               (iii) Any duty on the part of Seller to disclose to Buyer any
     facts that Seller may now or hereafter know about a Permitted Assignee; and

          (g)  So long as Buyer has any obligation to Seller under this
Agreement or the Ancillary Agreements, as to any Affiliate Assignee (but not any
Financing Entity), any right to subrogation, reimbursement, exoneration or
contribution or any other rights that would result in Buyer being deemed a
creditor of a Permitted Assignee under the federal Bankruptcy Code or any other
law, in each case resulting from the existence or performance of obligations of
a Permitted Assignee hereunder or under any Ancillary Agreement.

          11.6 Arbitration. Any dispute, controversy or claim arising out of or
               -----------
relating to this agreement, or the breach, termination or validity hereof (a
"Dispute"), shall be finally settled by arbitration in accordance with the then-
prevailing Commercial Arbitration Rules of the American Arbitration Association,
as modified herein (the "Rules"). The place of arbitration shall be Nevada.
There shall be three arbitrators, of whom the Seller shall appoint one and of
whom the Buyer shall appoint one. The two arbitrators so appointed shall select
a third arbitrator who shall act as the chairman of the tribunal. If any
arbitrator is not appointed within the time limits provided herein or in the
Rules, such arbitrator shall be appointed by the American Arbitration
Association. The arbitral tribunal is not empowered to award damages in excess
of compensatory damages, and each party hereby irrevocably waives any right to
recover punitive, exemplary or similar damages with respect to any dispute. Any
arbitration proceedings, decision or award rendered hereunder and the validity,
effect and interpretation of this arbitration provision shall be governed by the
Federal Arbitration Act, 9 U.S.C. (S)(S) 1-16, and judgment upon any award may
be entered in any court of competent jurisdiction.

                                       67
<PAGE>

          11.7  Governing Law. This Agreement shall be governed by and construed
                -------------
in accordance with the laws of the State of Nevada (regardless of the laws that
might otherwise govern under applicable Nevada principles of conflicts of law)
as to all matters, including but not limited to matters of validity,
construction, effect, performance and remedies.

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

          11.9  Interpretation. The article and section headings contained in
                --------------
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.

          11.10 Entire Agreement. This Agreement, including the documents,
                ----------------
exhibits, schedules, certificates and instruments referred to herein, and the
Confidentiality Agreement embody the entire agreement and understanding of the
parties hereto 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. It is expressly acknowledged and agreed that there are no restrictions,
promises, representations, warranties, covenants or undertakings of the Seller
contained in any material made available to the Buyer pursuant to the terms of
the Confidentiality Agreement (including the Offering Memorandum, dated March
2000) as supplemented, or the correspondence relating to the divestiture of
Seller's generation assets previously made available to the Buyer by the Seller
and CSFB. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such transactions other than the
Confidentiality Agreement ; (i) provided, however, that the paragraph in the
                                --------  -------
Confidentiality Agreement entitled "Non-Disclosure of Interest in Power
Generation Assets" is, only with respect to the Purchased Assets, superceded by
Section 7.5 of this Agreement, and (ii) in the event of any conflict between
Section 7.2(b) of this Agreement and the Confidentiality Agreement, Section
7.2(b) shall control.

          11.11 Bulk Sales or Transfer Laws. The Buyer acknowledges that the
                ---------------------------
Seller shall not comply with the provision of any bulk sales or transfer laws of
any jurisdiction in connection with the transactions contemplated by this
Agreement. The Buyer hereby waives compliance by the Seller with the provisions
of the bulk sales or transfer laws of all applicable jurisdictions.

                                       68
<PAGE>

          IN WITNESS WHEREOF, the Seller and the Buyer have caused this Asset
Sale Agreement for the Reid Gardner Bundle to be signed by their respective duly
authorized officers as of the date first above written.

                                      NEVADA POWER COMPANY

                                      By:______________________________________
                                      Name:  William E. Peterson
                                      Title: Sr. Vice President, General
                                             Counsel And Corporate Secretary

                                      NRG ENERGY, INC.

                                      By:______________________________________
                                      Name:  Craig A. Mataczynski
                                      Title: Senior Vice President

                                      DYNEGY HOLDINGS INC.

                                      By:______________________________________
                                      Name:  Edward P. Hermann
                                      Title: Attorney-in-Fact<PAGE>

                                                                   Exhibit 10(H)

                      TRANSITIONAL POWER PURCHASE AGREEMENT

                                 BY AND BETWEEN

                              NEVADA POWER COMPANY

                                       AND

                             REID GARDNER POWER LLC

DATED:  NOVEMBER 16, 2000

ASSET BUNDLE:  REID GARDNER
<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section                                                                                      Page
-------                                                                                      ----
<S>                                                                                          <C>
 1.     DEFINITIONS.........................................................................    1
 2.     TERM................................................................................    7
 3.     SECURITY............................................................................    9
 4.     SUPPLY SERVICE......................................................................   10
 5.     NOTIFICATION........................................................................   14
 6.     PRICING OF ENERGY AND ANCILLARY SERVICES............................................   15
 7.     INVOICING AND PAYMENTS..............................................................   16
 8.     REGULATORY APPROVALS................................................................   19
 9.     COMPLIANCE..........................................................................   20
10.     INDEMNIFICATION.....................................................................   20
11.     LIMITATION OF LIABILITY.............................................................   22
12.     FORCE MAJEURE.......................................................................   22
13.     DISPUTES............................................................................   24
14.     NATURE OF OBLIGATIONS...............................................................   26
15.     SUCCESSORS AND ASSIGNS..............................................................   27
16.     REPRESENTATIONS.....................................................................   28
17.     DEFAULT AND REMEDIES................................................................   29
18      FACILITY ADDITIONS AND MODIFICATIONS................................................   30
19.     COORDINATION........................................................................   30
20.     EMERGENCY AND NONEMERGENCY CONDITION RESPONSE.......................................   30
21.     OUTAGE SCHEDULING...................................................................   31
22.     REPORTS.............................................................................   31
23.     COMMUNICATIONS......................................................................   32
24.     NOTICES.............................................................................   33
25.     MERGER..............................................................................   33
26.     HEADINGS............................................................................   33
27.     COUNTERPARTS AND INTERPRETATION.....................................................   33
28.     SEVERABILITY........................................................................   34
29.     WAIVERS.............................................................................   34
30.     AMENDMENTS..........................................................................   34
31.     TIME IS OF THE ESSENCE..............................................................   35
32.     APPROVALS...........................................................................   35
33.     PLR SERVICE.........................................................................   36
34.     CONFIDENTIALITY.....................................................................   36
35.     CHOICE OF LAW.......................................................................   37

Exhibits                                                                                     Page
--------                                                                                     ----
EXHIBIT A      ASSET BUNDLE CAPACITIES AND OPERATING PARAMETERS............................   A-1
EXHIBIT B      PRICE FLOOR OF ENERGY, PRICE CEILING OF ENERGY, AND PRICE OF
               ANCILLARY SERVICES   .......................................................   B-1
EXHIBIT C      SUPPLIER'S MONTHLY INVOICE..................................................   C-1
EXHIBIT D      BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS.................................   D-1
EXHIBIT E      YEAR END TRUE-UP INVOICE....................................................   E-1
EXHIBIT F      NOTICES, BILLING AND PAYMENT INSTRUCTIONS...................................   F-1
EXHIBIT G      FORM OF AVAILABILITY NOTICE.................................................   G-1
EXHIBIT H      FORM OF GUARANTEE...........................................................   H-1
EXHIBIT I      COMPANY OBSERVED HOLIDAYS...................................................   I-1
EXHIBIT J      ADJUSTMENTS TO TPPA AMOUNT..................................................   J-1
EXHIBIT K      ADJUSTMENTS TO MINIMUM ANNUAL TAKE..........................................   K-1
EXHIBIT L      ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE....................................   L-1
EXHIBIT M      ASSET BUNDLE CONTRACTUAL AND OPERATIONAL CONSTRAINTS........................   M-1
</TABLE>
<PAGE>

                     TRANSITIONAL POWER PURCHASE AGREEMENT

This Agreement is made and entered into as of November 16, 2000 by and between
Nevada Power Company, a Nevada corporation ("Buyer"), and Reid Gardner Power
LLC, a Delaware limited liability company (the "Supplier"). Buyer and Supplier
are referred to individually as a "Party" and collectively as the "Parties."

WITNESSETH:

WHEREAS, Buyer is selling its Reid Gardner generating station and other assets
associated therewith to NRG Energy, Inc., a Delaware corporation, and Dynegy
Holdings Inc., a Delaware corporation, both affiliates of Supplier (the "Asset
Sale");

WHEREAS, notwithstanding the Asset Sale, Buyer expects that it has been
designated as the Provider of Last Resort ("PLR") for its Nevada retail electric
customers who are unable to obtain electric service from an alternative seller
or who fail to select an alternative seller. The load required to serve such
customers, plus the customers under those wholesale sales agreements existing at
the Effective Date, is referred to herein as Buyer's Transitional Resource
Requirement; and

WHEREAS, as a result of the Asset Sale, Buyer will no longer have its interest
in the Reid Gardner generating station as a source of supply for its
Transitional Resource Requirement; and

WHEREAS, Supplier has or is willing to secure the necessary resources to provide
a portion of Buyer's Transitional Resource Requirement; and

WHEREAS, Buyer desires to purchase from Supplier and Supplier desires to sell
Energy and Ancillary Services under contract to Buyer; and

NOW, THEREFORE, in consideration of the mutual covenants, representations and
agreements hereinafter set forth, and intending to be legally bound hereby, the
Parties agree as follows:

1.       DEFINITIONS

         1.1      Format.

                  1.1.1    References to Articles and Sections herein are
                           cross-references to Articles and Sections,
                           respectively, in this Agreement, unless otherwise
                           stated.

                  1.1.2    Any parts of this Agreement which are incorporated by
                           reference shall have the same meaning as if set forth
                           in full text herein.

                                       2
<PAGE>

         1.2      Definitions. As used in this Agreement, the following terms
                  -----------
                  shall have the meanings set forth below:

                  1.2.1    "Agreement" means this Agreement together with the
                            ---------
                           Exhibits attached hereto, as such may be amended from
                           time to time.

                  1.2.2    "Adjusted Replacement Cost of Energy" means the
                            -----------------------------------
                           Replacement Cost of Energy that will be due from
                           Supplier after True-up in accordance with the
                           provisions of Section 7.5. Example determinations of
                           the Adjusted Replacement Cost of Energy are shown on
                           Exhibit E.

                  1.2.3    "Ancillary Services" means those capacity-related
                            ------------------
                           services as listed in Exhibit B as well as the Energy
                           component of such services. These services are
                           defined in Buyer's OATT.

                  1.2.4    "Asset Bundle" means the Reid Gardner generating
                            ------------
                           station(s) and other assets associated therewith
                           pursuant to the terms of the Asset Sale Agreement.

                  1.2.5    "Asset Bundle Capacity" means, with respect to each
                            ---------------------
                           unit listed in Exhibit A, the net generating capacity
                           (in megawatts ("MW")) of such unit, as modified from
                           time to time in accordance with Section 5.2, Section
                           20, and Section 21, and not to exceed at any time the
                           net capacity for each unit listed in Exhibit A. Asset
                           Bundle Capacity shall also mean, as the context
                           requires, the Energy (in megawatt-hours ("MWh")) and
                           the Ancillary Services which the units would be
                           capable of producing if they operated at the capacity
                           level described in the first sentence of this Section
                           1.2.5. Notwithstanding any provision of this
                           Agreement, the portion of the Asset Bundle Capacity
                           attributable to Reid Gardner Unit 4 shall at no time
                           exceed the net generating capacity in megawatts, the
                           Energy, or the Ancillary Services to which Supplier
                           is entitled, as of the Effective Date of this
                           Agreement, under the Participation Agreement (as
                           defined in the Asset Sale Agreement).

                  1.2.6    "Asset Sale" has the meaning set forth in the
                            ----------
                           Recitals.

                  1.2.7    "Asset Sale Agreement" means the Agreement between
                            --------------------
                           Buyer and Supplier's affiliates, NRG Energy, Inc., a
                           Delaware corporation, and Dynegy Holdings Inc., a
                           Delaware corporation, dated as of November 16, 2000,
                           to purchase Buyer's Asset Bundle.

                  1.2.8    "Asset Sale Closing" means the transfer of Buyer's
                            ------------------
                           ownership of the Asset Bundle through the
                           consummation of the Asset Sale pursuant to the terms
                           of the Asset Sale Agreement.

                  1.2.9    "Average Cost of Delivered Energy" means the total
                            --------------------------------
                           cost of Delivered Energy for the Contract Year after
                           the application of the Annual True-up Mechanism from
                           Section 7.5 divided by the total Delivered Energy

                                       3
<PAGE>

                           for the Contract Year. Example determinations of
                           Average Cost of Delivered Energy are shown on Exhibit
                           E.

                  1.2.10   "Availability Notice" means a notice delivered from
                            -------------------
                           time to time by Supplier to Buyer pursuant to Section
                           5.2 notifying Buyer of changes in the availability of
                           the Asset Bundle.

                  1.2.11   "Business Day" means any day other than Saturday,
                            ------------
                           Sunday, and any day that is an observed holiday by
                           Buyer as shown on Exhibit I.

                  1.2.12   "Buyer's OATT" means Buyer's then-effective Open
                            ------------
                           Access Transmission Tariff, as it may be amended,
                           which has been accepted for filing by the FERC.

                  1.2.13   "CALPX" means the California Power Exchange and any
                            -----
                           successor entity thereto.

                  1.2.14   "Confidential Information" has the meaning set forth
                            ------------------------
                           in Section 34.

                  1.2.15   "Contract Year" means, with respect to the first
                            -------------
                           Contract Year, the period beginning on the Effective
                           Date and, with respect to each subsequent Contract
                           Year, the period immediately following the end of the
                           preceding Contract Year, and in each case ending on
                           the earlier of the date which is twelve (12) months
                           thereafter or the termination date of this Agreement.

                  1.2.16   "Control Area Operator" means an entity or
                            ---------------------
                           organization, and its representatives, which is
                           responsible for operating and maintaining the
                           reliability of the electric power system(s) within
                           the Transmission System. The Control Area Operator is
                           also referred to as the transmission operator.

                  1.2.17   "Credit Amount" shall mean an amount equal to the
                            -------------
                           TPPA Amount, plus an additional amount equal to
                           $40/MWh multiplied by 395 megawatts, multiplied by
                           the number of hours remaining in this Agreement until
                           March 1, 2003.

                  1.2.18   "Delivered Amount" means, with respect to any
                            ----------------
                           Dispatch Hour, the Energy delivered by Supplier to
                           Buyer at the designated Point(s) of Delivery during
                           such Dispatch Hour, whether or not such Energy was
                           generated by the Asset Bundle, plus any additional
                           amounts pursuant to Section 4.1.2, Section 4.1.3 and
                           the Ancillary Services provided by Supplier for Buyer
                           during any Dispatch Hour pursuant to the terms of
                           this Agreement.

                  1.2.19   "Derating" means a reduction to the Asset Bundle
                            --------
                           Capacity.

                                       4
<PAGE>

                  1.2.20   "Dispatch Hour" means the prescribed hour(s) when
                            -------------
                           Energy is to be delivered by Supplier to Buyer at the
                           designated Point(s) of Delivery and the prescribed
                           hour(s) when Ancillary Services are to be provided to
                           the ISA by Supplier on behalf of Buyer.

                  1.2.21   "EDU" means electric distribution utility, the
                            ---
                           organization with the responsibility for the
                           distribution of energy over Buyer's distribution
                           system to retail end-users.

                  1.2.22   "Effective Date" means the date that this Agreement
                            --------------
                           becomes effective which shall be the date on which
                           the Closing Date, as defined in the Asset Sale
                           Agreement, actually occurs.

                  1.2.23   "Emergency Condition" shall mean a public declaration
                            -------------------
                           by the ISA or Control Area Operator that the
                           Transmission System is in danger of imminent voltage
                           collapse or uncontrollable cascading outages.

                  1.2.24   "Energy" means electricity (measured in MWh) and
                            ------
                           associated power-producing capacity to be provided by
                           Supplier to Buyer pursuant to this Agreement. Also
                           known as "firm energy and associated firm capacity".

                  1.2.25   "Event of Default" has the meaning set forth in
                            ----------------
                           Section 17 hereof.

                  1.2.26   "FERC" means the Federal Energy Regulatory Commission
                            ----
                           and any successor agency thereto.

                  1.2.27   "Force Majeure" has the meaning set forth in Section
                            -------------
                           12 hereof.

                  1.2.28   "GAAP" means Generally Accepted Accounting Principles
                            ----
                           for the United States.

                  1.2.29   "Good Utility Practice" means the applicable
                            ---------------------
                           practices, methods, and act:

                           (i)   required by applicable Laws, permits and
                                 reliability criteria, whether or not the Party
                                 whose conduct at issue is a member thereof, and
                           (ii)  otherwise engaged in or approved by a
                                 significant portion of the United States
                                 electric utility industry during the relevant
                                 time period, which, in the exercise of
                                 reasonable judgement in light of the facts
                                 known at the time the decision was made, could
                                 have been expected to accomplish the desired
                                 result at a reasonable cost consistent with
                                 good business practices, safety, environmental
                                 protection, economy and expediency. 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
                                 practices, methods or acts generally accepted
                                 in the United States electric utility industry.

                                       5
<PAGE>

                  1.2.30   "Governmental Authority" means any foreign, federal,
                            ----------------------
                            state, local, tribal or other governmental,
                            regulatory or administrative agency, court,
                            commission, department, board, or other governmental
                            subdivision, legislature, rulemaking board,
                            tribunal, arbitrating body, or other governmental
                            authority.

                  1.2.31   "Gross Replacement Costs of Energy" means Buyer's
                            ---------------------------------
                            Replacement Cost of Energy prior to adjustment for
                            the amount that Buyer would have paid for the Energy
                            if Supplier had delivered the Energy to Buyer.
                            Example determinations of Gross Replacement Costs of
                            Energy are shown on Exhibit D.

                  1.2.32   "Guarantee" has the meaning set forth in Section
                            ---------
                            3.1.2 hereof.

                  1.2.33   "Guarantor" has the meaning set forth in Section
                            ---------
                            3.1.2 hereo

                  1.2.34   "Invoiced Replacement Costs" means the Replacement
                            --------------------------
                            Costs which have been billed to Supplier or
                            subtracted from payments to Supplier in accordance
                            with the provisions of Section 4.2 and Section 7.4.

                  1.2.35   "ISA" means the Mountain West Independent System
                            ----
                            Administrator, or the regional transmission
                            organization authorized with the responsibility for
                            the scheduling and administration of Energy and
                            Ancillary Services over, through and within the
                            Transmission System in coordination with other
                            interconnected entities to provide transmission
                            services. The ISA is also referred to herein as
                            transmission administrator.

                  1.2.36   "ISA's OATT" means the ISA's then-effective
                            ----------
                            Open Access Transmission Tariff, as it may be
                            amended, which has been accepted for filing by the
                            FERC.

                  1.2.37   "Law" means any law, treaty, code, rule, regulation,
                            ---
                            order, determination, permit, certificate,
                            authorization, or approval of an arbitrator, court
                            or other Governmental Authority which is binding on
                            a Party or any of its property.

                  1.2.38   "Market Price of Energy" has the meaning set forth
                            ----------------------
                            in Section 6.2.1.

                  1.2.39   "Minimum Annual Energy Take" has the meaning set
                            --------------------------
                            forth in Section 4.1.2.

                  1.2.40   "Minimum Hourly Energy Take" has the meaning set
                            --------------------------
                            forth in Section 4.1.3.

                  1.2.41   "Minimum Investment Grade Rating" of a Person means
                            -------------------------------
                            that such Person has a minimum credit rating on its
                            senior unsecured debt

                                       6
<PAGE>

                            securities of at least two of the following ratings:
                            (i) BBB as determined by Standard & Poor's
                            Corporation, (ii) Baa2 as determined by Moody's
                            Investors Service, Inc., or (iii) a comparable
                            rating by another nationally recognized rating
                            service reasonably acceptable to Buyer.

                  1.2.42   "Minimum Tangible Net Worth" means the total book
                            --------------------------
                            value of shareholder's equity less the balance of
                            goodwill, as reported on the latest quarterly
                            balance sheet prepared in accordance with Generally
                            Accepted Accounting Principles (GAAP).

                  1.2.43   "NERC" means the North American Electric Reliability
                            ----
                            Council and any successor entity thereto.

                  1.2.44   "Nonemergency Condition" shall mean the
                            ----------------------
                            determination, direction or order by the ISA, or
                            Control Area Operator to Supplier and/or Buyer to
                            change the Supply Amount which is not a result of or
                            due to an Emergency Condition. A Nonemergency
                            Condition includes an insufficiency of Ancillary
                            Services to securely operate the Transmission
                            System.

                  1.2.45   "Operating Representatives" means the persons
                            -------------------------
                            designated to transmit and receive routine operating
                            and emergency communications required under this
                            Agreement.

                  1.2.46   "Party" has the meaning set forth in the preamble of
                            -----
                            this Agreement.

                  1.2.47   "Permitted Deratings" means those reductions to the
                            -------------------
                            Asset Bundle Capacity of which Supplier may notify
                            Buyer from time to time in an Availability Notice
                            pursuant to Section 5.2.

                  1.2.48   "Person" means any natural person, partnership,
                            ------
                            limited liability company, joint venture,
                            corporation, trust, unincorporated organization, or
                            governmental entity or any department or agency
                            thereof.

                  1.2.49   "Point of Delivery" means the point (s) which has
                            -----------------
                            (have) been specified as the Interconnection
                            Point(s) in the Interconnection Agreement between
                            Buyer and Supplier, dated November 16, 2000, as it
                            may be amended from time to time, as well as any
                            alternative locations agreed upon pursuant to
                            Section 4.1.6.

                  1.2.50   "Price Ceiling of Energy" means the ceiling price of
                            -----------------------
                            Energy as stated in Exhibit B.

                  1.2.51   "Price Floor of Energy" means the floor price of
                            ---------------------
                            Energy as stated in Exhibit B.

                                       7
<PAGE>

                  1.2.52   "Provider of Last Resort (PLR)" has the meaning set
                            -----------------------------
                            forth in the Recitals.

                  1.2.53   "PUCN" means the Public Utilities Commission of
                            ----
                            Nevada and any successor entity thereto.

                  1.2.54   "Replacement Costs" means with respect to a period of
                            -----------------
                            time, the difference between (a) the actual costs,
                            including without limitation related penalties and
                            transmission costs, incurred by Buyer to replace any
                            shortfall between (1) the Supply Amount and (2) the
                            Delivered Amounts of Energy, (or in the case of
                            Ancillary Services the Supplier's schedule of
                            Ancillary Services) during such period and (b) the
                            payments the Supplier would have been entitled to in
                            respect of such shortfall in delivery; provided that
                            Replacement Costs shall also be subject to the
                            annual true-up mechanism set forth in Section 7.5.

                  1.2.55   "Supply Amount" means, with respect to each Dispatch
                            -------------
                            Hour, the amount of Energy and Ancillary Services,
                            not to exceed the Asset Bundle Capacity for such
                            Dispatch Hour, requested by Buyer to be delivered by
                            Supplier during any Dispatch Hour. The Supply Amount
                            for any Dispatch Hour shall be determined pursuant
                            to Section 5.1.

                  1.2.56   "Total Amount of Energy Replaced" means the summation
                            -------------------------------
                            of Replacement Energy as shown on Exhibit E.

                  1.2.57   "TPPA Amount" means $106,300,000 as such amount may
                            -----------
                            be adjusted pursuant to Section 2.3.

                  1.2.58   "Transitional Resource Requirement" or "TRR" means
                            ---------------------------------
                            the Energy and loss compensation necessary for Buyer
                            to meet its obligations as a Provider of Last Resort
                            (PLR) for Nevada and under those wholesale sales
                            agreements existing at the Effective Date.

                  1.2.59   "Transmission System" means the transmission
                            -------------------
                            facilities constituting Buyer's control area, as of
                            the date this Agreement is executed, plus any
                            modification, upgrade or expansion of, or additions
                            to, such facilities.

                  1.2.60   "WSCC" means the Western Systems Coordinating Council
                            ----
                            and any successor entity thereto.

2.       TERM

         2.1      Term. Unless terminated earlier pursuant to the terms of this
                  ----
                  Agreement, the term of this Agreement shall commence on the
                  Effective Date and continue until the earlier of the effective
                  date of an order by a Governmental Authority terminating
                  Buyer's PLR responsibility, or March 1, 2003. Supplier shall
                  provide service under this Agreement commencing on the first
                  hour on the day after the Effective Date.

         2.2      Termination.
                  -----------

                                       8
<PAGE>

                  2.2.1    Except pursuant to Sections 2.2.2 or 17.4, this
                           Agreement may not be terminated without the explicit
                           prior written approval of Buyer.

                  2.2.2    If, prior to the Asset Sale Closing, the FERC or any
                           other Governmental Authority places conditions on or
                           requires revisions of this Agreement which have a
                           material adverse effect on Supplier or Buyer, the
                           Parties agree to negotiate in good faith those
                           amendments to the Agreement reasonably needed to
                           preserve the bargain between the Parties. If the
                           Parties fail to negotiate mutually acceptable
                           amendments to this Agreement within sixty (60) days
                           of such action by the FERC or other Governmental
                           Authority, either Party may terminate the Agreement
                           after first notifying the other Party in writing at
                           least ten (10) Business Days prior to the termination
                           date; provided that neither Party may exercise a
                           right of termination pursuant to this Section 2.2.2
                           after the Asset Sale Closing.

                  2.2.3    This Agreement may be terminated with the mutual
                           agreement of the Parties.

                  2.2.4    Any termination of this Agreement pursuant to this
                           Section 2 shall not take effect until FERC either
                           authorizes the termination or accepts a written
                           notice of termination.

         2.3      Effect of Termination.
                  ---------------------

                  2.3.1    Adjustment of TPPA Amount. If the Effective Date of
                           -------------------------
                           this Agreement is before June 1, 2001, the TPPA
                           Amount shall be adjusted to equal (1) the TPPA Amount
                           multiplied by (2) 100% plus the sum of the monthly
                           adjustments from Exhibit J for each month or portion
                           thereof between the Effective Date and June 1, 2001.
                           An example calculation is shown on Exhibit J.

                           If the Effective Date of this Agreement is after June
                           1, 2001, the TPPA Amount shall be adjusted to equal
                           (1) the TPPA Amount multiplied by (2) 100% minus the
                           sum of the monthly adjustments from Exhibit J for
                           each month or portion thereof between June 1, 2001
                           and the Effective Date. An example calculation is
                           shown on Exhibit J.

                           If this Agreement is terminated before March 1, 2003,
                           Supplier shall pay to Buyer an amount, in accordance
                           with the provisions of Section 7, equal to the TPPA
                           Amount which existed before any adjustment in
                           accordance with the first or second paragraph of this
                           Section 2.3.1, multiplied by the sum of the monthly
                           adjustments for each month or portion thereof between
                           the date on which this Agreement is terminated and
                           March 1, 2003. An example calculation is shown on
                           Exhibit J.

                  2.3.2    Any default or termination of this Agreement shall
                           not release either

                                       9
<PAGE>

                           Party from any applicable provisions of this
                           Agreement with respect to:

                           2.3.2.1  The payment of liquidated damages pursuant
                                    to Sections 4.2, 12, 17, 18, or 21.

                           2.3.2.2  Indemnity obligations contained in Section
                                    10, to the extent of the statute of
                                    limitations period applicable to any third
                                    party claim.

                           2.3.2.3  Limitation of liability provisions contained
                                    in Section 11.

                           2.3.2.4  Payment of any unpaid amounts in respect of
                                    obligations arising prior to or resulting
                                    from termination.

                           2.3.2.5  For a period of one (1) year after the
                                    termination date, the right to raise a
                                    payment dispute and the resolution thereof
                                    pursuant to Section 13.

                           2.3.2.6  The resolution of any dispute submitted
                                    pursuant to Section 13 prior to, or
                                    resulting from, termination.

3.       SECURITY

         3.1      Supplier Certification; Guarantee. As a condition of Buyer's
                  ---------------------------------
                  execution of, and continuing compliance with, this Agreement,
                  Supplier shall at Supplier's option comply with the provisions
                  of either Section 3.1.1 or Section 3.1.2.

                  3.1.1    Supplier Certification. Supplier shall (a) provide a
                           ----------------------
                           certificate from a duly authorized corporate officer
                           of Supplier certifying that, as of the Effective
                           Date, Supplier has a credit rating equal to or higher
                           than the Minimum Investment Grade Rating; or (b) post
                           a letter of credit in a form reasonably acceptable to
                           Buyer in the amount of the Credit Amount from a
                           financial institution with each of: (i) a credit
                           rating of A2 or better from Moody's Investors
                           Service, Inc., (ii) a credit rating of A or better
                           from Standard & Poor's Corporation, and (iii) a
                           Minimum Tangible Net Worth ("MTNW") of one (1)
                           billion dollars.

                  3.1.2    Guarantee. In the alternative to the provisions of
                           ---------
                           Section 3.1.1, the Supplier may provide a corporate
                           guarantee, in form and substance as set forth in
                           Exhibit H, made by an entity (the "Guarantor") that:

                           3.1.2.1  has a credit rating equal to or higher than
                                    the Minimum Investment Grade Rating,
                                    together with a certificate from a duly
                                    authorized corporate officer of such
                                    Guarantor certifying that, as of the
                                    Effective Date, such Guarantor has a credit
                                    rating equal to or higher than the Minimum
                                    Investment Grade Rating; or

                                       10
<PAGE>

                           3.1.2.2  has a MTNW of no less than one (1) billion
                                    dollars, together with a certificate from a
                                    duly authorized corporate officer of such
                                    Guarantor certifying that, as of the
                                    Effective Date, such Guarantor has a MTNW of
                                    no less than one (1) billion dollars; or

                           3.1.2.3  posts a letter of credit in a form
                                    reasonably acceptable to Buyer in the amount
                                    of the Credit Amount from a financial
                                    institution with each of: (i) a credit
                                    rating of A2 or better from Moody's
                                    Investors Service, Inc., (ii) a credit
                                    rating of A or better from Standard & Poor's
                                    Corporation, and (iii) a Minimum Tangible
                                    Net Worth ("MTNW") of one (1) billion
                                    dollars.

         3.2      Compliance.
                  ----------

                  3.2.1    Reporting. If at any time during the term of this
                           ---------
                           Agreement, Standard & Poor's Corporation, Moody's
                           Investors Service, Inc. or another nationally
                           recognized firm downgrades the credit rating of
                           Supplier, the Guarantor, or the financial institution
                           that issued the letter of credit, as applicable, then
                           Supplier shall provide Buyer with written notice of
                           such change of circumstance within two (2) Business
                           Days of any such change. In the event such a
                           downgrade also constitutes an Event of Default
                           pursuant to Section 17, the requirements of this
                           Section 3.2.1 are in addition to, and not in lieu of,
                           the requirements of Section 17.

4.       SUPPLY SERVICE

         4.1      Obligations of the Parties.
                  --------------------------

                  4.1.1    Supply Amount. Supplier shall be required to provide
                           -------------
                           the Supply Amount in any Dispatch Hour. As provided
                           in Section 5.1, Buyer shall makereasonable efforts to
                           ensure that the Supply Amount is no greater than
                           necessary to satisfy Buyer's TRR.

                           4.1.1.1  With the Buyer's prior consent, not to be
                                    unreasonably withheld or delayed, Supplier
                                    shall be entitled to generate or otherwise
                                    procure the Supply Amount from sources other
                                    than the Asset Bundle.

                           4.1.1.2  Supplier shall deliver the Supply Amount to
                                    Buyer during the Dispatch Hour on a
                                    continuous basis at the Point(s) of Delivery
                                    and shall schedule the Supply Amount in
                                    accordance with the Buyer's OATT or the
                                    ISA's OATT, as applicable.

                           4.1.1.3  The Buyer at its sole discretion shall
                                    designate the allocation of the Supply
                                    Amount between Energy and

                                       11
<PAGE>

                                    Ancillary Services in accordance with the
                                    notification provisions of Section 5.

                                    4.1.1.3.1 The Parties recognize that
                                              operation of the Asset Bundle is
                                              subject to, and thus the Supply
                                              Amount at times may be limited by,
                                              the operational parameters of the
                                              Asset Bundle. The Parties further
                                              recognize that the consolidation
                                              of two or more generating units
                                              into an Asset Bundle precludes
                                              contractual provisions addressing
                                              such operational parameters in a
                                              matter normally applied to Energy
                                              purchases from specified
                                              generating units. Consequently,
                                              Supplier will have the right to
                                              raise concerns regarding the
                                              effect of such operational
                                              parameters upon Buyer's scheduling
                                              requests, and Buyer will make good
                                              faith efforts to alleviate
                                              Supplier's concerns.

                                    4.1.1.3.2 The Parties further recognize that
                                              the Asset Bundle also is subject
                                              to the contractual and operating
                                              constraints set forth in Exhibit
                                              M.

                  4.1.2    Minimum Annual Energy Take. The Buyer shall accept a
                           --------------------------
                           minimum annual energy take during each Contract Year.
                           The Minimum Annual Energy Take shall be set forth on
                           Exhibit A.

                           4.1.2.1  Buyer's Obligation to Take. If Buyer is
                                    --------------------------
                                    unwilling to accept the Minimum Annual
                                    Energy Take for any Contract Year, as may be
                                    adjusted pursuant to Section 4.1.2.2, the
                                    difference (in MWh) between the Supply
                                    Amount of Energy (including consideration
                                    for Energy that would have been taken but
                                    was unavailable due to Permitted Deratings
                                    or Force Majeure, as well as the Total
                                    Amount of Energy Replaced) and the Minimum
                                    Annual Energy Take shall be billed at the
                                    Price Ceiling of Energy less the Price Floor
                                    of Energy. An example of the monthly
                                    determination of the amount of Energy to be
                                    credited against the Minimum Annual Energy
                                    Take is shown on Exhibit L.

                           4.1.2.2  Adjustments to Minimum Annual Energy Take.
                                    -----------------------------------------
                                    Buyer shall have the right to reduce the
                                    Minimum Annual Energy Take if the number of
                                    customers taking electric service from Buyer
                                    falls below the number of customers on
                                    December 31, 2000. Adjustments will be
                                    applicable, on a pro rata basis, on the
                                    first (1st) day of the month immediately
                                    following Supplier's receipt of Buyer's
                                    notice of adjustment. Buyer shall provide
                                    supporting data in

                                       12
<PAGE>

                                    reasonable detail to support its
                                    calculations. An example of the calculation
                                    of a revised Minimum Annual Energy Take is
                                    shown on Exhibit K.

                  4.1.3    Minimum Hourly Energy Take. The Buyer shall accept a
                           --------------------------
                           Minimum Hourly Energy Take for any Dispatch Hour if
                           the Supply Amount, or a portion thereof, is provided
                           to Buyer from the Asset Bundle. The Minimum Hourly
                           Energy Take is stated in Exhibit A.

                           4.1.3.1  Buyer's Obligation to Take. If Buyer is
                                    --------------------------
                                    unwilling to accept the Minimum Hourly
                                    Energy Take, the difference (in MWh) between
                                    the Supply Amount of Energy (including
                                    consideration for Energy that would have
                                    been taken but was unavailable due to
                                    Permitted Deratings or Force Majeure, as
                                    well as the Total Amount of Energy Replaced)
                                    and Minimum Hourly Energy Take shall be
                                    billed at the Price Ceiling of Energy less
                                    the Price Floor of Energy.

                  4.1.4    Supplier Rights to Output. Supplier may sell to
                           -------------------------
                           others any portion of the Asset Bundle Capacity in
                           excess of the Supply Amount.

                  4.1.5    Point(s) of Delivery. Supplier shall deliver, and
                           --------------------
                           Buyer shall take delivery of, the Supply Amount of
                           Energy at the Point(s) of Delivery. Subject to
                           Section 4.1.6.2, Supplier shall be responsible for
                           all costs associated with delivery of the Supply
                           Amount of Energy to the Point(s) of Delivery.

                  4.1.6    Alternative Points of Delivery. For any Dispatch
                           ------------------------------
                           Hour, either Party may designate one or more
                           alternative Points of Delivery, subject to the other
                           Party's prior approval and consistent with the
                           Buyer's OATT or the ISA's OATT, as applicable, such
                           approval not to be unreasonably withheld or delayed.

                           4.1.6.1  If Supplier has designated an alternative
                                    Point of Delivery, Supplier shall be
                                    responsible for all costs of delivery to
                                    such alternative Point of Delivery.

                           4.1.6.2  If Buyer has designated an alternative Point
                                    of Delivery, Buyer shall be responsible for
                                    all costs of delivery to such alternative
                                    Point of Delivery.

                  4.1.7    Fuel. Buyer shall have no responsibility for any fuel
                           ----
                           procurement or fuel transportation costs or
                           activities associated with the Asset Bundle during
                           the term of this Agreement.

                  4.1.8    Resale. Except as provided in the next sentence, the
                           ------
                           Supply Amount may be resold by Buyer only as
                           necessary to satisfy Buyer's TRR. If, after
                           submitting the request of the Supply Amount pursuant
                           to Section

                                       13
<PAGE>

                           5.1, the Buyer determines that the scheduled Supply
                           Amount, together with purchases scheduled under
                           Buyer's other Transitional Power Purchase Agreements,
                           exceeds Buyer's most current projected TRR, then the
                           Buyer also shall resell at wholesale that amount of
                           Energy in excess of Buyer's actual TRR as necessary
                           to balance its load and resources.

                  4.1.9    Right to Review. Buyer and Supplier each shall have
                           ---------------
                           the right to review during normal business hours the
                           relevant books and records of the other Party to
                           confirm the accuracy of such as it pertains to
                           transactions under this Agreement. The review shall
                           be consistent with standard business practices and
                           shall follow reasonable notice to the other Party.
                           Reasonable notice for a review of the previous
                           month's records shall be at least a twenty-four (24)
                           hour period from a Business Day to a subsequent
                           Business Day. If a review is requested of other than
                           the previous month's records, then notice of that
                           request shall be provided with a minimum of seven (7)
                           calendar days written notice by the requesting Party.
                           The notice shall specify the period to be covered by
                           the review. The Party providing records can make
                           reasonable requests that the receiving Party keep the
                           records confidential, and the receiving Party shall
                           take reasonable steps to accommodate such requests.

          4.2     Liquidated Damages.
                  ------------------

                  4.2.1    If the Delivered Amount of Energy is less than the
                           Supply Amount of Energy in any Dispatch Hour during a
                           month, and Replacement Costs computed in respect of
                           such month are greater than zero, then Supplier shall
                           reimburse Buyer for such Replacement Costs. If
                           Supplier's schedule of Ancillary Services is less
                           than the Supply Amount of Ancillary Services in any
                           Dispatch Hour during a month, Supplier shall
                           reimburse Buyer for such Replacement Costs for the
                           difference between Supplier's schedule and the Supply
                           Amount of Ancillary Services. An example of the
                           methodology used to calculate Replacement Costs is
                           provided in Exhibit D.

                  4.2.2    Supplier also shall be responsible for any costs
                           incurred by Buyer associated with a violation of
                           reliability criteria (including but not limited to
                           imbalance costs or penalties) due to a deviation
                           between the Supply Amount and Delivered Amount.

                  4.2.3    The Parties recognize and agree that the payment of
                           such amounts by Supplier pursuant to this Section 4.2
                           is an appropriate remedy in the event of such a
                           failure and that any such payment does not constitute
                           a forfeiture or penalty of any kind, but rather
                           constitutes actual costs to Buyer under the terms of
                           this Agreement.

                                       14
<PAGE>

         4.3      Supplier Operating Representative. Supplier shall provide and
                  ---------------------------------
                  maintain a twenty-four (24) hour seven (7) day per week
                  communication link with Buyer's control center and with
                  Buyer's schedulers. Supplier's Operating Representatives shall
                  be available to address and make decisions on all operational
                  matters under this Agreement on a twenty-four (24) hour seven
                  (7) day per week basis.

5.       NOTIFICATION

         5.1      Scheduling Notification. Buyer shall provide Supplier with a
                  -----------------------
                  request of the Supply Amount no later than twenty-four (24)
                  hours before day-ahead bids must be submitted to the CALPX.
                  Buyer shall make reasonable efforts to ensure that the request
                  of the Supply Amount is no greater than that amount then
                  projected to be necessary to satisfy Buyer's TRR. In addition,
                  for each Supply Amount request, the change in the Supply
                  Amount from one (1) hour to the next hour shall be no greater
                  than the ramping capability of the units within the Asset
                  Bundle as shown in Exhibit A.

         5.2      Availability Notification.
                  -------------------------

                  5.2.1    No later than 5:00 a.m. (Pacific Time) of each day,
                           Supplier shall deliver to Buyer an Availability
                           Notice in the form set forth in Exhibit G.

                  5.2.2    Availability Notices shall provide, for the
                           ninety-six (96) hour period starting at 6:00 a.m.
                           (Pacific Time) that day, Supplier's hourly projection
                           of the unavailability or derating ("Derating") of the
                           Asset Bundle compared to the Asset Bundle Capacity
                           figures stated for each unit in Exhibit A. Each
                           Availability Notice also shall contain, as
                           applicable:

                           (a)      the units which are subject to a Derating;
                           (b)      the magnitude of the Derating;
                           (c)      the hours during which the Derating is
                                    expected to apply;
                           (d)      the cause of the Derating;
                           (e)      the extent, if any, to which the Derating is
                                    attributable to a Permitted Derating; and
                           (f)      the projected Asset Bundle Capacity for each
                                    unit during the period covered by the
                                    Availability Notice, pursuant to Section
                                    5.2.4 below.

                  5.2.3    If and to the extent a Derating is the result of one
                           or more of the following causes, it shall be a
                           Permitted Derating:

                           (a)      approved planned outages pursuant to Section
                                    21;
                           (b)      response to an Emergency Condition as
                                    described in Section 20; or
                           (c)      subject to the limitations expressed in
                                    Section 12.5, a Force Majeure event.

                                       15
<PAGE>

                  5.2.4    In respect of any Dispatch Hour, the Asset Bundle
                           Capacity of each unit shall be the Asset Bundle
                           Capacity figure stated in Exhibit A minus any
                           Permitted Derating applicable during such hour.

                  5.2.5    Neither the Asset Bundle Capacity nor the Supply
                           Amount shall be reduced by Deratings which are not
                           Permitted Deratings. Supplier shall be responsible
                           for all Replacement Costs, pursuant to Section 4.2.1,
                           caused by Deratings that are not Permitted Deratings.

6.       PRICING OF ENERGY AND ANCILLARY SERVICES

         6.1      Overview. The price of Energy paid by Buyer to Supplier shall
                  --------
                  be based upon a designated hourly market price, subject to
                  monthly floor, monthly ceiling, and annual true-up provisions.
                  The Price Floor of Energy will ensure that Supplier will
                  receive an average price for Energy for each month which is
                  not less than the price stated in Exhibit B. The Price Ceiling
                  of Energy provision provides that the average price of Energy
                  paid to Supplier each month and for each year shall not exceed
                  the price stated in Exhibit B.

         6.2      Price of Energy.
                  ---------------

                  6.2.1    Market Price of Energy. In respect of any Dispatch
                           ----------------------
                           Hour, the designated Market Price of Energy shall be
                           the South of Path 15 ("SP 15") hourly market-clearing
                           price in the day-ahead market from the CALPX as
                           published at the following Web Site (or its successor
                           web site)
                           http://www.calpx.com/prices/index_prices_dayahead_
                           --------------------------------------------------
                           trading.html. Should this hourly market in the day-
                           ------------
                           ahead market not exist for the entire term, the
                           Parties shall agree upon a similar market price
                           index.

                  6.2.2    Price Floor of Energy. The Price Floor of Energy is
                           ---------------------
                           stated in Exhibit B and shall not change during the
                           term of this Agreement.

                  6.2.3    Price Ceiling of Energy. The Price Ceiling of Energy
                           -----------------------
                           is stated in Exhibit B and shall not change during
                           the term of this Agreement.

         6.3      Pricing of Ancillary Services. The price of the capacity
                  -----------------------------
                  component of Ancillary Services is stated in Exhibit B. The
                  price of Ancillary Services shall not change during the term
                  of the Agreement. Supplier shall make available to Buyer and
                  Buyer shall offer to pass through the Energy portion of
                  Ancillary Services with respect to the Supply Amount to the
                  ISA, or Control Area Operator, at the Price Ceiling of Energy
                  (plus expected direct transaction costs). The net proceeds
                  shall be credited to the Supplier pursuant to Section 7.

         6.4      Price Revisions. The Parties waive any and all rights to seek
                  ---------------
                  to revise the provisions of this Agreement, including the
                  prices stated, pursuant to Sections 205 and/or 206 of the
                  Federal Power Act.

                                       16
<PAGE>

7.       INVOICING AND PAYMENTS

         7.1      Invoicing and Payment. On or before the tenth (10th) day of
                  ---------------------
                  each month, Supplier shall send to Buyer an invoice setting
                  forth the Supply Amount, Delivered Amount, the Market Price of
                  Energy pursuant to Section 6.2.1 for each Dispatch Hour in the
                  previous month, any amount due in accordance with Section 7.13
                  and the total due from Buyer. The invoice shall be calculated
                  based upon data available to Supplier and shall be in
                  accordance with this Section 7 and Exhibit C. Buyer shall
                  promptly notify Supplier if Buyer in good faith disputes any
                  portion of the invoice, stating in reasonable detail the
                  reason for the dispute.

         7.2      Monthly Invoice Calculation. On each monthly invoice, Supplier
                  ---------------------------
                  shall calculate the following amounts:

                  7.2.1    The Delivered Amount in respect of each Dispatch Hour
                           multiplied by the corresponding Market Price of
                           Energy pursuant to Section 6.2.1, summed over the
                           billing period;

                  7.2.2    Sum of the Delivered Amounts in respect of all
                           Dispatch Hours of the billing period multiplied by
                           the Price Ceiling of Energy;

                  7.2.3    Sum of the Delivered Amounts in respect of all
                           Dispatch Hours of the billing period multiplied by
                           the Price Floor of Energy;

                  7.2.4    For each Dispatch Hour of the billing period, the
                           shortfall, if any, between the Supply Amount and the
                           Delivered Amount (and in the case of Ancillary
                           Services the shortfall between the Supply Amount of
                           Ancillary Services and Supplier's schedule of
                           Ancillary Services);

                  7.2.5    The Supply Amount of Ancillary Service for each
                           dispatch hour multiplied by the price of Ancillary
                           Services as stated in Exhibit B; and

                  7.2.6    The Delivered Amount of Energy related to Ancillary
                           Services for each dispatch hour multiplied by the
                           Price Ceiling of Energy as stated in Exhibit B.

                  7.2.7    If applicable, any amount to be calculated in
                           accordance with Section 7.13.

         7.3      Supplier's Invoice. Supplier will invoice the lesser of the
                  ------------------
                  amounts calculated in Sections 7.2.1 and 7.2.2, provided that
                  if the amount calculated in Section 7.2.1 is less than the
                  amount calculated in Section 7.2.3, Supplier shall invoice
                  Buyer the amount calculated in Section 7.2.3. Supplier shall
                  also include in its invoice the amounts calculated in Sections
                  7.2.5, 7.2.6 and 7.2.7. If the Delivered Amount exceeds the
                  Supply Amount, Buyer shall not be obligated to pay for the
                  excess amount. Buyer shall pay Supplier for the amounts
                  invoiced pursuant to Section 7.2.6 upon Buyer's receipt of
                  payment from ISA or Control Area Operator. Examples of this
                  monthly invoice calculation (and annual true-up process) are

                                       17
<PAGE>

                  contained in Exhibit C.

         7.4      Buyer's Invoice. In the event any shortfall occurs pursuant to
                  ---------------
                  Section 7.2.4 or payment is due to Buyer pursuant to Section
                  7.13, Buyer shall within ten (10) Business Days of receipt of
                  Supplier's invoice deliver to Supplier a Buyer's invoice
                  detailing any Replacement Costs or other payment due. Buyer
                  shall provide supporting data in reasonable detail to support
                  its calculations of Replacement Costs. Supplier shall promptly
                  notify Buyer if Supplier in good faith disputes any portion of
                  the invoice, stating in reasonable detail the reason for the
                  dispute. If the Buyer's invoice results in an amount due from
                  Supplier to Buyer, Buyer may offset such amount from its
                  payment of Supplier's corresponding invoice.

                  Buyer shall have the right to adjust the invoices issued in
                  accordance with this Section 7.4 if Buyer incurs Replacement
                  Costs that were not known when earlier invoices were issued.
                  Adjusted invoices shall be issued within thirty (30) days of
                  the date on which the additional Replacement Costs become
                  known. Buyer shall provide supporting data in reasonable
                  detail to support its calculations of Replacement Costs.
                  Supplier shall promptly notify Buyer if Supplier in good faith
                  disputes any portion of the invoice, stating in reasonable
                  detail the reason for the dispute. If the Buyer's adjusted
                  invoice results in an amount due from Supplier to Buyer, Buyer
                  may offset such amount from its payment of Supplier's
                  corresponding invoice.

         7.5      Annual True-Up Mechanism for Energy.
                  -----------------------------------

                  7.5.1    The annual true-up mechanism will provide adjustments
                           among the Parties with respect to each Contract Year
                           in the following scenarios:

                           (a)      If (i) the Price Ceiling of Energy
                                    multiplied by the hourly Delivered Amount of
                                    Energy summed over the Contract Year is less
                                    than or equal to (ii) the Market Price of
                                    Energy for each hour pursuant to Section
                                    6.2.1 multiplied by the Delivered Amount of
                                    Energy for each hour during the Contract
                                    Year, Supplier shall subtract (x) the amount
                                    invoiced by Supplier for Energy pursuant to
                                    Section 7.3 summed of over the Contract Year
                                    from (y) the Price Ceiling of Energy
                                    multiplied by the hourly Delivered Amount of
                                    Energy summed over the Contract Year. If the
                                    difference calculated in accordance with the
                                    preceding sentence is greater than or equal
                                    to zero, Buyer shall pay the difference to
                                    Supplier. If the difference is less than
                                    zero, Supplier shall refund the difference
                                    to Buyer.

                           (b)      If (i) the Price Ceiling of Energy
                                    multiplied by the hourly Delivered Amount of
                                    Energy summed over the Contract Year is
                                    greater than or equal to (ii) the Market
                                    Price of Energy for each hour pursuant to
                                    Section 6.2.1 multiplied by the Delivered
                                    Amount of Energy for each hour during the
                                    Contract Year, Supplier shall

                                       18
<PAGE>

                                    subtract (x) the amount invoiced by Supplier
                                    for Energy pursuant to Section 7.3 summed of
                                    over the Contract Year from (y) the Market
                                    Price of Energy multiplied by the hourly
                                    Delivered Amount of Energy summed over the
                                    Contract Year. If the difference calculated
                                    in accordance with the preceding sentence is
                                    greater than or equal to zero, Buyer shall
                                    pay the difference to Supplier. If the
                                    difference is less than zero, Supplier shall
                                    refund the difference to Buyer.

                           (c)      If Buyer incurred Replacement Costs for
                                    energy during the Contract year, Supplier
                                    shall multiply the Total Amount of Energy
                                    Replaced during the Contract Year by the
                                    Average Cost of Delivered Energy after
                                    true-up as determined in accordance with
                                    Section 7.5.1 (a) or 7.5.1 (b). If the
                                    amount so obtained is greater than the sum
                                    of the monthly Gross Replacement Costs of
                                    Energy from Buyer's Invoices for the
                                    Contract Year, the Adjusted Replacement Cost
                                    of Energy for the Contract Year shall be
                                    zero. If the amount so obtained is less than
                                    the sum of the monthly Gross Replacement
                                    Costs of Energy from Buyer's Invoices for
                                    the Contract Year, the Adjusted Replacement
                                    Cost of Energy for the Contract Year shall
                                    be the sum of the monthly Gross Replacement
                                    Costs of Energy less the amount obtained in
                                    accordance with the first sentence of this
                                    Section 7.5.1(c).

                                    If the Adjusted Replacement Cost of Energy
                                    is greater than the sum of the monthly
                                    Invoiced Replacement Costs of Energy from
                                    Buyer's Invoices for the Contract Year,
                                    Supplier shall pay the difference to Buyer.
                                    If the sum of the monthly Invoiced
                                    Replacement costs of Energy is greater than
                                    the Adjusted Replacement Cost of Energy,
                                    Buyer shall pay the difference to Seller.

                  7.5.2    True-up adjustments will be calculated by Supplier
                           within twenty (20) days after each Contract Year.
                           Examples of the true-up calculations and invoice form
                           are set forth in Exhibit E. Interest shall be
                           calculated pursuant to 18 CFR Section 35.19a and
                           shall be included in the true-up invoice. Invoices
                           for true-up adjustments shall be submitted by
                           Supplier within thirty (30) days after the end of the
                           Contract Year. Payments for such invoices shall be
                           due from Buyer thirty (30) days from receipt of the
                           true-up invoice.

         7.6      Invoice Disagreements. Should there be a good faith dispute
                  ---------------------
                  over any invoice, the Parties shall promptly seek resolution
                  pursuant to Section 13. Pending resolution of the invoice
                  dispute, payment shall be made or offsets or credits taken, as
                  applicable, based upon the undisputed portion of the invoice.

         7.7      Adjustments. Upon resolution of the dispute, the prevailing
                  -----------
                  Party shall be entitled

                                       19
<PAGE>

                  to receive the disputed amount, as finally determined to be
                  payable along with interest (calculated pursuant to 18 C.F.R.
                  ss. 35.19a through the date of payment. No invoice (or payment
                  covered thereby) shall be subject to adjustment unless notice
                  or request for adjustment is given within one (1) year of the
                  date payment thereunder was due.

         7.8      Method of Payment. Subject to Sections 7.3, 7.6 and 7.7, Buyer
                  -----------------
                  shall remit all amounts due by wire or electronic fund
                  transfer, pursuant to Supplier's invoice instructions, no
                  later than thirty (30) days after receipt of the invoice.

         7.9      Overdue Payments. Overdue payments shall bear interest from
                  ----------------
                  and including, the due date to the date of payment on the
                  unpaid portion calculated pursuant to 18 C.F.R.ss.35.19a.

         7.10     Buyer Right to Offset. Buyer shall have the right to offset
                  ---------------------
                  any amounts Supplier owes to Buyer, including Replacement
                  Costs (except for such amounts disputed in good faith by
                  Supplier), against the amounts owed by Buyer to Supplier.

         7.11     Taxes. Each Party shall pay ad valorem and other taxes
                  -----
                  attributed to its facilities and services provided. Supplier
                  shall not include any taxes of any kind in its invoices to
                  Buyer. The prices of Energy and Ancillary Services shall not
                  change during the term of this Agreement as a result of any
                  changes in local, state or federal taxes, fees or levies.

         7.12     Late Invoices. If either Party submits an invoice outside of
                  -------------
                  the time deadlines set forth herein, that Party shall not
                  forfeit its rights to collect the amounts due thereunder,
                  provided that such invoice is no more than six (6) months
                  late, and provided that changes to invoices remain subject to
                  the deadline in Section 7.7.

         7.13     Termination Prior to March 1, 2003. Notwithstanding any other
                  ----------------------------------
                  provision herein, in the event that this Agreement is
                  terminated before March 1, 2003 and as a result of such
                  termination Buyer is entitled to a payment in accordance with
                  Section 2.3.1, Supplier shall include an amount calculated in
                  accordance with Section 2.3.1 and Exhibit J, to be paid by
                  Supplier to Buyer in the next monthly invoice submitted to
                  Buyer following such termination.

8.       REGULATORY APPROVALS

         8.1      This Agreement will be filed with the FERC and any other
                  appropriate regulatory agencies by the appropriate Party as
                  may be required.

9.       COMPLIANCE

         9.1      Each Party shall comply with all relevant Laws and shall, at
                  its sole expense, maintain in full force and effect all
                  relevant permits, authorizations, licenses, and other
                  authorizations material to the maintenance of facilities and
                  the performance of obligations under this Agreement.

                                       20
<PAGE>

         9.2      Each Party and its representatives shall comply with all
                  relevant requirements of any authorized Control Area Operator,
                  ISA, and/or EDU to ensure the safety of its employees and the
                  public, and to ensure electric system reliability and
                  integrity, material to the performance of this Agreement.

         9.3      Buyer and Supplier shall perform or cause to be performed,
                  their obligations under this Agreement in all material
                  respects in accordance with Good Utility Practices. Supplier
                  covenants and agrees that as of the Effective Date it or its
                  permitted assignee shall (a) have the right to control the
                  operation of the Asset Bundle and (b) be willing and able to
                  perform its obligations under this Agreement.

10.      INDEMNIFICATION

         10.1  To the fullest extent permitted by law, a Party to this Agreement
               ("the Indemnifying Party") shall indemnify, defend and hold
               harmless the other Party, its parent, affiliates, and successors
               and agents (each an "Indemnified Party") from and against any and
               all claims, demands, suits, obligations, payments, liabilities,
               costs, judgments, damages, losses or expenses asserted by third
               parties against an Indemnified Party and arising out of, relating
               to, or resulting from the Indemnifying Party's breach of, or the
               negligent performance of its obligations under this Agreement.

               10.1.1   Such indemnity shall also extend to actual courts costs,
                        attorneys' fees, expenses and other liabilities incurred
                        in the defense of any claim, action or proceeding,
                        including negotiation, settlement, defense and appeals,
                        to which this indemnification obligation applies. In
                        furtherance of the foregoing indemnification and not by
                        way of limitation thereof, the Indemnifying Party hereby
                        waives any defense it otherwise might have against the
                        Indemnified Party under applicable workers' compensation
                        laws.

               10.1.2   In claims against any Indemnified Party by an agent of
                        the Indemnifying Party, or anyone directly or indirectly
                        employed by them or anyone for whose acts they may be
                        liable, the indemnification obligation under this
                        Section 10 shall not be limited by a limitation on
                        amount or type of damages, compensation or benefits
                        payable by or for the Indemnifying Party or a
                        subcontractor under workers' or workmen's compensation
                        acts, disability benefit acts or other employee benefit
                        acts.

               10.1.3   Such indemnity shall also extend to all costs and
                        expenses incurred by the Indemnified Party in any action
                        or proceeding to enforce the provisions of this
                        Agreement, but only if and to the extent the Indemnified
                        Party prevails in such action or proceeding.

         10.2  No Negation of Existing Indemnities; Survival. Each Party's
               ---------------------------------------------
               indemnity

                                       21
<PAGE>

               obligations hereunder shall not be construed to negate, abridge
               or reduce other rights or obligations or indemnity which would
               otherwise exist at law or equity. The obligations contained
               herein shall survive any termination, cancellation, or suspension
               of this Agreement to the extent that any third party claim is
               commenced during the applicable statute of limitations period.

          10.3 Indemnification Procedures.
               --------------------------

               10.3.1   Any Party seeking indemnification under this Agreement
                        shall give the other Party notice of such claim promptly
                        but in any event on or before thirty (30) days after the
                        Party's actual knowledge of such claim or action. Such
                        notice shall describe the claim in reasonable detail,
                        and shall indicate the amount (estimated if necessary)
                        of the claim that has been, or may be sustained by, said
                        Party. To the extent that the other Party will have been
                        actually and materially prejudiced as a result of the
                        failure to provide such notice, such notice will be a
                        condition precedent to any liability of the other Party
                        under the provisions for indemnification contained in
                        this Agreement.

               10.3.2   In any action or proceeding brought against an
                        Indemnified Party by reason of any claim indemnifiable
                        hereunder, the Indemnifying Party may, at its sole
                        option, elect to assume the defense at the Indemnifying
                        Party's expense, and shall have the right to control the
                        defense thereof and to determine the settlement or
                        compromise of any such action or proceeding.
                        Notwithstanding the foregoing, an Indemnified Party
                        shall in all cases be entitled to control its defense in
                        any action if it:

                        (i)   may result in injunctions or other equitable
                              remedies in respect of the Indemnified Party which
                              would affect its business or operations in any
                              materially adverse manner;

                        (ii)  may result in material liabilities which may not
                              be fully indemnified hereunder; or

                        (iii) may have a significant adverse impact on the
                              business or the financial condition of the
                              Indemnified Party (including a material adverse
                              effect on the tax liabilities, earnings or ongoing
                              business relationships of the Indemnified Party)
                              even if the Indemnifying Party pays all
                              indemnification amounts in full.

               10.3.3   Subject to Section 10.3.2, neither Party may settle or
                        compromise any claim for which indemnification is sought
                        under this Agreement without the prior consent of the
                        other Party; provided, however, said consent shall not
                        be unreasonably withheld or delayed.

11.      LIMITATION OF LIABILITY

                                       22
<PAGE>

         11.1     Responsibility for Damages: Except as otherwise provided
                  --------------------------
                  herein or to the extent of the other Party's negligence or
                  willful misconduct, each Party shall be responsible for all
                  physical damage to or destruction of the property, equipment
                  and/or facilities owned by it and its affiliates and any
                  physical injury or death to natural Persons resulting
                  therefrom, regardless of who brings the claim and regardless
                  of who caused the damage, and shall not seek recovery or
                  reimbursement from the other Party for such damage; provided,
                  that in any such case the Parties will exercise Due Diligence
                  to remove the cause of any disability at the earliest
                  practicable time.

         11.2     No Consequential Damages: To the fullest extent permitted by
                  ------------------------
                  law and notwithstanding other provisions of this Agreement, in
                  no event shall a Party, or any of its Agents, be liable to the
                  other Party, whether in contract, warranty, tort, negligence,
                  strict liability, or otherwise, for special, indirect,
                  incidental, multiple, consequential (including but not limited
                  to lost profits or revenues and lost business opportunities),
                  or punitive damages related to or resulting from performance
                  or nonperformance of this Agreement or any activity associated
                  with or arising out of this Agreement. For purposes of
                  clarification, Replacement Costs shall not be considered
                  consequential or incidental damages under this Section 11.2.
                  In addition, this limitation on liability shall not apply with
                  respect to claims pursuant to Section 10 hereof.

         11.3     Survival: The provisions of this Section 11 shall survive any
                  --------
                  termination, cancellation, or suspension of this Agreement.

12.      FORCE MAJEURE

         12.1     An event of "Force Majeure" shall be defined as any
                  interruption or failure of service or deficiency in the
                  quality or quantity of service or any other failure to perform
                  any of its obligations hereunder to the extent such failure
                  occurs without fault or negligence on the part of that Party
                  and is caused by factors beyond that Party's reasonable
                  control, which by the exercise of reasonable diligence that
                  Party is unable to prevent, avoid, mitigate or overcome,
                  including:

                  (i)   acts of God or the public enemy, such as storms,
                        flood, lightning, and earthquakes,

                  (ii)  failure, threat of failure, or unscheduled withdrawal
                        of facilities from operation for maintenance or
                        repair, and including unscheduled transmission and
                        distribution outages,

                  (iii) sabotage of facilities and equipment,

                  (iv)  civil disturbance,

                  (v)   strike or labor dispute,

                  (vi)  action or inaction of a court or public authority, or

                                       23
<PAGE>

                  (vii) any other cause of similar nature beyond the
                        reasonable control of that Party.

         12.2     Economic hardship of either Party shall not constitute Force
                  Majeure under this Agreement. Notwithstanding this, if Buyer
                  suffers an event of Force Majeure it shall be relieved of its
                  obligation to take delivery of, or otherwise pay for, Energy
                  and Ancillary Services under this Agreement for the duration
                  of the event of Force Majeure. In addition, if Buyer is unable
                  to have Energy and Ancillary Services delivered from the
                  Point(s) of Delivery to its service territory due to an outage
                  on the Transmission System, that shall be considered a Force
                  Majeure event and shall relieve Buyer of performance for the
                  extent of the event.

         12.3     In the event of a Force Majeure, neither Party shall be
                  considered in default under this Agreement or responsible to
                  the other Party in tort, strict liability, contract or other
                  legal theory for damages of any description, and affected
                  performance obligations shall be extended by a period equal to
                  the term of the resultant delay, but in no event shall exceed
                  the term of the Agreement, provided that the Party relying on
                  a claim of Force Majeure:

                  (i)   provides 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)  exercises all reasonable efforts to continue to
                        perform its obligations under this Agreement;

                  (iii) expeditiously takes action to correct or cure the
                        event or condition excusing performance so that the
                        suspension of performance is no greater in scope and
                        no longer in duration than is dictated by the
                        problem; provided, however, that settlement of
                        strikes or other labor disputes will be completely
                        within the sole discretion of the Party affected by
                        such strike or labor dispute;

                  (iv)  exercises all reasonable efforts to mitigate or limit
                        damages to the other Party; and

                  (v)   provides prompt notice to the other Party of the
                        cessation of the event or condition giving rise to
                        its excuse from performance.

         12.4     Notwithstanding the above provisions, a Force Majeure event
                  shall excuse Supplier from its obligation to deliver the
                  Supply Amount pursuant to Section 4 of this Agreement only for
                  the first forty-eight (48) hours of the Force Majeure event.
                  After such forty-eight (48) hour period, Supplier must either
                  deliver the Supply Amount at the Point(s) of Delivery or pay
                  liquidated damages pursuant to Section 4.2 of this Agreement.
                  Provided that, to the extent a Force Majeure event is caused
                  by an outage on the Transmission System, Supplier shall be
                  excused

                                       24
<PAGE>

                  from its obligations to deliver the Supply Amount for the
                  duration of the outage.

         12.5     If Supplier has notified Buyer of an event of Force Majeure,
                  and if Supplier so requests, Buyer will attempt to replace the
                  Supply Amount that is not excused in accordance with Section
                  12.4 with Energy or Ancillary Services from another Asset
                  Bundle. However, Buyer's inability to acquire such replacement
                  Energy or Ancillary Services shall not excuse Supplier from
                  Supplier's obligation to deliver the Supply Amount not
                  otherwise excused in accordance with Section 12.4

13.      DISPUTES

         13.1     Any action, claim or dispute which either Party may have
                  against the other arising out of or relating to this Agreement
                  or the transactions contemplated hereunder, or the breach,
                  termination or validity thereof (any such claim or dispute, a
                  "Dispute") shall be submitted in writing to the other Party.
                  The written submission of any Dispute shall include a concise
                  statement of the question or issue in dispute together with a
                  statement listing the relevant facts and documentation that
                  support the claim.

         13.2     The Parties agree to cooperate in good faith to expedite the
                  resolution of any Dispute. Pending resolution of a Dispute,
                  the Parties shall proceed diligently with the performance of
                  their obligations under this Agreement.

         13.3     The Parties shall first attempt in good faith to resolve any
                  Dispute through informal negotiations by the Contract
                  Representatives. In the event that the Contract
                  Representatives are unable to satisfactorily resolve the
                  Dispute within thirty (30) days from the receipt of notice of
                  the Dispute, either Party may by written notice to the other
                  Party refer the Dispute to its respective senior management
                  for resolution as promptly as practicable. If the Parties'
                  senior management are unable to resolve the Dispute within
                  forty-five (45) days from the date of such referral,
                  thereafter the Parties may agree in writing to extend the time
                  period of such senior management negotiations. In the event
                  the Parties' senior management do not resolve the dispute
                  within the prescribed or extended time period, either Party
                  may initiate arbitration through the serving and filing of a
                  demand for arbitration and the Parties expressly agree that
                  arbitration in accordance with this Section 13 shall be the
                  exclusive means to further resolve any Dispute and hereby
                  irrevocably waive their right to a jury trial with respect to
                  any Dispute, provided that at any time:

                  13.3.1   A request made by a Party for provisional remedies
                           requesting preservation of the Parties' respective
                           rights and obligations under the Agreement may be
                           resolved by a court of law located in the County of
                           the principal place of business of Buyer.

                  13.3.2   Nothing in this Agreement shall preclude, or be
                           construed to preclude, any Party from filing a
                           petition or complaint with the FERC or PUCN with
                           respect to any arbitrable Dispute over which said
                           agency has jurisdiction. In such case, the other
                           Party may request the FERC or

                                       25
<PAGE>

                           PUCN, as applicable, to reject or to waive
                           jurisdiction. If jurisdiction is rejected or waived
                           with respect to all or a portion of the Dispute, the
                           portion of the Dispute not so accepted by the FERC or
                           PUCN, as applicable, shall be resolved through
                           arbitration in accordance with this Agreement. To the
                           extent that the FERC or PUCN, as applicable, asserts
                           or accepts jurisdiction over the Dispute, the
                           decision, finding of fact or order of FERC shall be
                           final and binding, subject to judicial review under
                           the Federal Power Act or Nevada Revised Statutes and
                           subject to the provisions of Section 2.2.2. Any
                           arbitration proceedings that may have commenced with
                           respect to the Dispute prior to the assertion or
                           acceptance of jurisdiction by the FERC or PUCN, as
                           applicable, shall be terminated to the extent the
                           FERC or PUCN accepts or asserts jurisdiction over
                           such Dispute.

         13.4     Unless otherwise agreed by the Parties, any arbitration
                  initiated under this Agreement shall be conducted in
                  accordance with the following:

                  13.4.1   Arbitrations shall be held within the County of the
                           principal place of business of Buyer.

                  13.4.2   Except as otherwise modified herein, the arbitration
                           shall be conducted in accordance with the "Commercial
                           Arbitration Rules" of the American Arbitration
                           Association ("AAA") then in effect.

                  13.4.3   Arbitration shall be conducted by one neutral
                           arbitrator who shall be selected pursuant to the AAA
                           rules and the following:

                           13.4.3.1 The Parties agree that the list of potential
                                    arbitrators provided by the AAA shall, if
                                    available, contain twenty (20) candidates,
                                    and at least fifty percent (50%) of the
                                    candidates shall be members of the AAA
                                    National Energy Panel.

                           13.4.3.2 The Parties also agree that each shall be
                                    allowed to strike the names of five
                                    candidates before ranking the remaining
                                    candidates and returning the list to the AAA
                                    in accordance with the Commercial
                                    Arbitration Rules. If the Parties are unable
                                    to agree on an arbitrator, such arbitrator
                                    shall be appointed by the AAA.

                           13.4.3.3 The arbitrator shall not have any current or
                                    past substantial business, financial, or
                                    personal relationships with either Party (or
                                    their Affiliates) and shall not be a vendor,
                                    supplier, customer, employee, consultant, or
                                    competitor to either of the Parties or their
                                    Affiliates.

                           13.4.3.4 The arbitrator shall be authorized only to
                                    interpret and apply the provisions of this
                                    Agreement or any related agreements entered
                                    into under this Agreement and shall

                                       26
<PAGE>

                                    have no power to modify or change any
                                    provision of this Agreement. The arbitrator
                                    shall have no authority to award punitive or
                                    multiple damages or any damages inconsistent
                                    with this Agreement. The arbitrator shall
                                    within thirty (30) days of the conclusion of
                                    the hearing, unless such time is extended by
                                    agreement of the Parties, notify the Parties
                                    in writing of his or her decision, stating
                                    his or her reasons for such decision and
                                    separately listing his or her findings of
                                    fact and conclusions of law. Judgment on the
                                    award may be entered in any court having
                                    jurisdiction.

         13.5     The Parties shall proceed with the arbitration expeditiously,
                  and the arbitration shall be concluded within five (5) months
                  of the filing of the demand for arbitration pursuant to this
                  Section 13 in order that the decision may be rendered within
                  six (6) months of such filing, unless the arbitrator extends
                  such time at the request of a Party upon a showing of good
                  cause or upon agreement of the Parties.

         13.6     Any arbitration proceedings, decision or award rendered
                  hereunder and the validity, effect and interpretation of any
                  arbitration agreement shall be governed by the Federal
                  Arbitration Act of the United States, 9 U.S.C. ss.ss. 1 et
                  seq.

         13.7     The decision of the arbitrator shall be final and binding on
                  both Parties and may be enforced in any court having
                  jurisdiction over the Party against which enforcement is
                  sought.

         13.8     The fees and expenses of the arbitrator shall be shared by the
                  Parties equally, unless the decision of the arbitrator shall
                  specify some other apportionment of such fees and expenses.
                  All other expenses and costs of the arbitration shall be borne
                  by the Party incurring the same.

14.      NATURE OF OBLIGATIONS

         14.1     Except where specifically stated in this Agreement to be
                  otherwise, the duties, obligations, and liabilities of the
                  Parties shall be several; not joint or collective. The
                  provisions of this Agreement shall not be construed to create
                  an association, trust, partnership, or joint venture; to
                  impose a trust or partnership duty, obligation, or liability
                  or agency relationship on or with regard to either Party.

         14.2     Nothing in this Agreement nor any action taken hereunder shall
                  be construed to create any duty, liability, or standard of
                  care to any person not a Party to this Agreement. Each Party
                  shall be individually and severally liable for its own
                  obligations under this Agreement.

         14.3     By this Agreement, neither Party dedicates any part of its
                  facilities or the service provided under this Agreement to the
                  public.

15.      SUCCESSORS AND ASSIGNS

                                       27
<PAGE>

         15.1     This Agreement may be assigned, without express written
                  consent of the other Party, as follows:

                  15.1.1   Buyer may assign this Agreement or assign or delegate
                           its rights and obligations under this Agreement, in
                           whole or in part, if such assignment is made to an
                           affiliate, parent, subsidiary, successor or any
                           party, provided that such assignee operates all or a
                           portion of the PLR or if such assignment is required
                           by Law or applicable regulations.

                  15.1.2   Supplier also may assign this Agreement as provided
                           in Section 11.5 of the Asset Sale Agreement; provided
                           that such assignment is to an entity that (a) has the
                           right to control the operation of the Asset Bundle
                           and (b) is willing and able to perform its
                           obligations under this Agreement.

         15.2     Supplier may, without the consent of Buyer, assign, transfer,
                  pledge or otherwise dispose of its rights and interests
                  hereunder to a trustee, lending institution, or any Person for
                  the purposes of financing or refinancing the Asset Bundle,
                  including upon or pursuant to the exercise of remedies under
                  such financing or refinancing, or by way of assignments,
                  transfers, conveyances of dispositions in lieu thereof;
                  provided, however, that no such assignment or disposition
                  shall relieve or in any way discharge Supplier or such
                  permitted assignee from the performance of its duties and
                  obligations under this Agreement. Buyer agrees to execute and
                  deliver such documents as may be reasonably necessary to
                  accomplish any such assignment, transfer, conveyance, pledge
                  or disposition of rights hereunder for purposes of the
                  financing or refinancing of the Asset Bundle, so long as
                  Buyer's rights under this Agreement are not thereby materially
                  altered, amended, diminished or otherwise impaired.

         15.3     Either Party may, without the consent of the other Party,
                  assign this Agreement to a successor to all or substantially
                  all of the assets of such Party by way of merger,
                  consolidation, sale or otherwise, provided such successor
                  assumes and becomes liable for all of such Party's duties and
                  obligations hereunder including Section 3 hereof.

         15.4     Except as stated above, 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, said consent not to
                  be unreasonably withheld. Any assignment of this Agreement in
                  violation of the foregoing shall be, at the option of the
                  non-assigning Party, void.

         15.5     Except as set forth above, no assignment or transfer of rights
                  or obligations under this Agreement by a Party shall relieve
                  said Party from full liability and financial responsibility
                  for the performance thereof after any such transfer or
                  assignment unless and until the transferee or assignee shall
                  agree in writing to assume the obligations and duties of said
                  Party under this Agreement and the other Party has consented
                  in writing to such assumption; said consent not to be
                  unreasonably withheld.

                                       28
<PAGE>

         15.6     This Agreement and all of the provisions hereof are binding
                  upon, and inure to the benefit of, the Parties and their
                  respective successors and permitted assigns.

16.      REPRESENTATIONS

         16.1     Representations of the Parties. The Parties represent and
                  ------------------------------
                  warrant each to the other as follows:

                  16.1.1   Incorporation. Buyer is a corporation duly
                           -------------
                           incorporated, validly existing and in good standing
                           under the laws of the State of Nevada. Supplier is a
                           limited liability company duly organized, validly
                           existing and in good standing under the laws of the
                           State of Delaware. Both Buyer and Supplier have all
                           requisite corporate power and authority to own, lease
                           and operate their material assets and properties and
                           to carry on their business as now being conducted.

                  16.1.2   Authority. The Party has full corporate power and
                           ---------
                           authority to execute and deliver this Agreement and,
                           subject to the procurement of applicable regulatory
                           approvals, to carry out the actions required of it by
                           this Agreement. The execution and delivery of this
                           Agreement and the transactions contemplated hereby
                           have been duly and validly authorized by all
                           necessary corporate action required on the part of
                           the Party. The Agreement has been duly and validly
                           executed and delivered by the Party and, assuming
                           that it is duly and validly executed and delivered by
                           the other Party, constitutes a legal, valid and
                           binding agreement of the Party.

                  16.1.3   Compliance With Law. The Party represents and
                           -------------------
                           warrants that it is not in violation of any
                           applicable Law, or applicable regulation, which
                           violation could reasonably be expected to materially
                           adversely affect the other Party's performance of its
                           obligations under this Agreement. The Party
                           represents and warrants that it will comply with all
                           Laws, and regulations applicable to its compliance
                           with this Agreement, non-compliance with which would
                           reasonably be expected to materially adversely affect
                           either Party's performance of its obligations under
                           this Agreement.

                  16.1.4   Representations of Both Parties. The representations
                           -------------------------------
                           in this Section 16 shall continue in full force and
                           effect for the term of this Agreement.

17.      DEFAULT AND REMEDIES

         17.1     An Event of Default hereunder shall be deemed to have occurred
                  upon a Party's (Defaulting Party) failure to comply with any
                  material obligation imposed upon it by this Agreement.
                  Examples of an Event of Default include, but are not limited
                  to the following:

                  (i)      Failure to make any payments due under this
                           Agreement;

                                       29
<PAGE>

                  (ii)     Failure to deliver the Supply Amount for a period of
                           five (5) consecutive days;

                  (iii)    Failure to follow the directions of a Control Area
                           Operator, ISA, EDU, WSCC, NERC, PUCN, FERC, or any
                           successor thereto where following such directions is
                           required hereunder;

                  (iv)     Supplier not being in compliance with Section 3; and

                  (v)      Failure of the Guarantor to be in compliance with the
                           terms of the Guarantee delivered under Section 3.1.2.

         17.2     An Event of Default shall be excused:

                  17.2.1   In the event such Event of Default was caused by
                           Force Majeure provided that the Party claiming a
                           Force Majeure complies with the requirements of
                           Section 12; and

                  17.2.2   In the event such Event of Default was caused by
                           transmission and distribution outages or disruptions.

         17.3     Unless excused, in an Event of Default the Non-Defaulting
                  Party shall be entitled to provide written notice (or verbal
                  notice in case of emergency followed by written notice) of the
                  Event of Default to the Defaulting Party and to specify a cure
                  period, which cure period shall be a minimum of thirty (30)
                  days.

         17.4     If an Event of Default is not cured by the Defaulting Party
                  during the cure period specified by the Non-Defaulting Party,
                  the Non-Defaulting Party shall be entitled to those remedies
                  which are not inconsistent with the terms of this Agreement,
                  including termination and the payment of liquidated damages. A
                  Defaulting Party shall not be liable to the Non-Defaulting
                  Party for any punitive, consequential or incidental damages.
                  For purposes of clarification, Replacement Costs shall not be
                  considered consequential or incidental damages under this
                  Section 17.4.

         17.5     Notwithstanding this Section 17, liquidated damages shall be
                  paid to Buyer pursuant to Sections 4.2, 12, 18, and 21.

18.      FACILITY ADDITIONS AND MODIFICATIONS

         18.1     Supplier shall be entitled to make additions and modifications
                  to the Asset Bundle subject to the following:

                  18.1.1   To the extent additions and modifications interfere
                           with the operation of the Asset Bundle in providing
                           the Supply Amount to Buyer beyond the limits for
                           planned outages set forth in Section 21, liquidated
                           damages shall be paid to Buyer pursuant to Section
                           4.2.

                  18.1.2   Supplier shall use reasonable efforts to minimize any
                           adverse impact on

                                       30
<PAGE>

                           Buyer during the course of making such additions and
                           modifications.

                  18.1.3   Such additions and modifications shall be conducted
                           in accordance with Good Utility Practice, and all
                           applicable Laws, regulations, reliability criteria
                           and the Interconnection Agreement between Buyer and
                           Supplier, dated November 16, 2000, as it may be
                           amended from time to time.

         18.2     Supplier shall seek Buyer's prior written approval for all
                  Supplier's additions or modifications to the Asset Bundle
                  which might reasonably be expected to have an adverse effect
                  upon Buyer with respect to operations or performance under
                  this Agreement.

19.      COORDINATION

         19.1     Upon knowledge thereof, each Party shall promptly give notice
                  to the other Party of any labor dispute which is delaying or
                  threatens to delay the timely performance of this Agreement,
                  which shall include a description of the general nature of the
                  dispute.

20.      EMERGENCY AND NONEMERGENCY CONDITION RESPONSE

         20.1     Buyer and Supplier shall comply with any applicable
                  requirement of any Governmental Authority, NERC, WSCC, ISA,
                  Control Area Operator, transmission operator, EDU or any
                  successor of any of them, regarding the reduced or increased
                  generation of the Asset Bundle in the event of an Emergency
                  Condition or Nonemergency Condition.

         20.2     Supplier shall not be obligated to deliver the Supply Amount
                  and no liquidated damages shall become due, if the Supply
                  Amount is reduced in the event of an Emergency Condition or a
                  Nonemergency Condition.

         20.3     Each Party shall provide prompt verbal notice to the other
                  Party of any Emergency Condition or Nonemergency Condition.

         20.4     Either Party may take reasonable and necessary action to
                  prevent, avoid or mitigate injury, danger, damage or loss to
                  its own equipment and facilities, or to expedite restoration
                  of service; provided, however, that the Party taking such
                  action shall give the other Party prior notice if at all
                  possible before taking any action. However, this Section 20.4
                  shall not be construed to supersede Sections 20.2 and 20.3.

21.      OUTAGE SCHEDULING

         21.1     Supplier shall request Buyer's approval prior to any
                  inspections, proposed planned outages or other non-forced
                  outages (all hereinafter referred to as "planned outages") of
                  the Asset Bundle so as to minimize the impact on the
                  availability of the Asset Bundle. Under no circumstances shall
                  Supplier conduct a

                                       31
<PAGE>

                  planned outage without the express prior consent of Buyer
                  pursuant to this Section 21.

         21.2     Planned Outages.
                  ---------------

                  21.2.1   Within sixty (60) days following the Effective Date
                           of this Agreement and on or before October 1 of each
                           Contract Year, Supplier shall provide Buyer with a
                           schedule of proposed planned outages for the period
                           beginning on the date of such proposed schedule for
                           the following twelve (12) months. The proposed
                           planned outage schedule will designate days for each
                           unit in which the Asset Bundle Capacity will be
                           reduced in part or total for each such unit. Each
                           proposed schedule shall include all applicable
                           information, including but not limited to the
                           following: Month, day and time of requested outage;
                           facilities impacted (such as Unit and description);
                           duration of outage; purpose of outage; amount of
                           capacity (in MWs) which is derated; other conditions
                           and remarks; and name of contact and phone number.

                  21.2.2   Buyer shall promptly review Supplier's proposed
                           schedule and shall either require modifications or
                           approve the proposed schedule. Supplier shall use its
                           best efforts to accomplish all planned outages in
                           accordance with the approved schedule. Supplier shall
                           be responsible to Buyer for Replacement Costs (i) if
                           any outage period exceeds its approved schedule,
                           provided that changes to the approved schedule may be
                           requested by either Party and each Party shall make
                           reasonable efforts to accommodate such changes,
                           provided further the Buyer shall have no obligation
                           to agree to Supplier's revisions to the approved
                           planned outage schedule; and (ii) if Supplier
                           conducts a planned outage without the consent of
                           Buyer as provided herein.

22.      REPORTS

         22.1     Supplier shall promptly provide Buyer with copies of any
                  orders, decrees, letters or other written communications to or
                  from any Governmental Authority asserting or indicating that
                  Supplier and/or its Asset Bundle is in violation of Laws which
                  relate to Supplier, or operations or maintenance of the Asset
                  Bundle and which may have an adverse effect on Buyer. Supplier
                  shall use reasonable efforts to keep Buyer appraised of the
                  status of any such matters.

23.      COMMUNICATIONS

         23.1     Supplier's Operating Representatives shall be available
                  twenty-four (24) hours per day for communications with the
                  Control Area Operator and/or the ISA and Buyer to facilitate
                  the operations contained in this Agreement.

         23.2     Supplier shall, at its expense, maintain and install real-time
                  communications equipment at the Asset Bundle to maintain
                  communications between personnel on site at the Asset Bundle,
                  Buyer and the Control Area Operator at all times. Supplier
                  shall provide at its expense:

                                       32
<PAGE>

                  (i)      Ringdown voice telephone lines, and

                  (ii)     Equipment to transmit to and receive telecopies from
                           Buyer and the Control Area Operator.

         23.3     Supplier shall immediately report to Buyer any "Abnormal
                  Condition" that has or may occur, and provide all pertinent
                  information, including but not limited to the following:

                  (i)      A description of the "Abnormal Condition" and the
                           actions to be taken to alleviate the "Abnormal
                           Condition";

                  (ii)     The expected duration including the beginning and
                           ending time of the "Abnormal Condition"; and

                  (iii)    The amount of any adjustment to the current (real
                           time) level of Energy and Ancillary Services.

         23.4     Cause of the Condition.
                  ----------------------

                  23.4.1   An "Abnormal Condition" shall include without
                           limitation any conditions that, to Supplier's
                           knowledge, have or are reasonably likely to:

                           (i)     Adversely affect Supplier's ability to
                                   provide Energy and Ancillary Services to
                                   Buyer;

                           (ii)    Cause an unplanned reduction in the amount of
                                   delivery of Energy and Ancillary Services to
                                   Buyer; or

                           (iii)   Cause an unplanned isolation of the Asset
                                   Bundle from the transmission system.

         23.5     Supplier shall immediately notify Buyer after such "Abnormal
                  Condition" has been alleviated.

24.      NOTICES

         24.1     All notices hereunder shall, unless specified otherwise, be in
                  writing and shall be addressed, except as otherwise stated
                  herein, to the Parties as set forth in Exhibit F.

         24.2     All written notices or submittals required by this Agreement
                  shall be sent either by hand-delivery, regular first class
                  U.S. mail, registered or certified U.S. mail postage paid
                  return receipt requested, overnight courier delivery,
                  electronic mail

                                       33
<PAGE>

                  or facsimile transmission and will be effective and deemed to
                  have been received on the date of receipt personally, on the
                  date and time as documented by method of delivery if during
                  normal business hours or on the next succeeding Business Day,
                  or on the third (3rd) Business Day following deposit with the
                  U.S. mail if sent regular first class U.S. mail.

         24.3     Notices of an Event of Default pursuant to Section 17 and or
                  Force Majeure pursuant to Section 12 may not be sent by
                  regular first class U.S. mail.

         24.4     Any payments required to be made under this Agreement shall be
                  made to the Party as set forth in Exhibit F.

         24.5     Each Party shall have the right to change, at any time upon
                  written notice to the other Party, the name, address and
                  telephone numbers of its representatives under this Agreement
                  for purposes of notices and payments.

25.      MERGER

         25.1     The Agreement contains the entire agreement and understanding
                  between the Parties with respect to all of the subject matter
                  contained herein, thereby merging and superseding all prior
                  agreements and representations by the Parties with respect to
                  such subject matter.

         25.2     In the event of any conflict between this Agreement and the
                  Asset Sale Agreement, the terms of the Asset Sale Agreement
                  shall govern.

26.      HEADINGS

         26.1     The headings or section titles contained in this Agreement are
                  inserted solely for convenience and do not constitute a part
                  of this Agreement between the Parties, nor should they be used
                  to aid in any manner in the construction of this Agreement.

27.      COUNTERPARTS AND INTERPRETATION

         27.1     This Agreement may be executed in any number of counterparts,
                  each of which shall be deemed an original.

         27.2     In the event an ambiguity or question of intent or
                  interpretation arises, this Agreement shall be construed as if
                  drafted jointly by the Parties and no presumption or burden of
                  proof shall arise favoring or disfavoring any Party by virtue
                  of authorship of any of the provisions of this Agreement.

         27.3     Any reference to any federal, state, local, or foreign statute
                  or law shall be deemed also to refer to all rules and
                  regulations promulgated thereunder, unless the context
                  requires otherwise.

                                       34
<PAGE>

         27.4     The word "including" in this Agreement shall mean "including
                  without limitation".

28.      SEVERABILITY

         28.1     If any term, provision or condition of this Agreement is held
                  to be invalid, void or unenforceable by a court or
                  Governmental Authority of competent jurisdiction and such
                  holding is subject to no further appeal or judicial review,
                  then such invalid, void, or unenforceable term, provision or
                  condition shall be deemed severed from this Agreement and all
                  remaining terms, provisions and conditions of this Agreement
                  shall continue in full force and effect, unless, however, the
                  effect of the severance would vitiate the intent of the
                  Parties hereto, as determined by either Party in its
                  reasonable discretion.

         28.2     The Parties shall endeavor in good faith to replace such
                  invalid, void, or unenforceable provisions with a valid and
                  enforceable provision which achieves the purposes intended by
                  the Parties to the greatest extent permitted by law.

29.      WAIVERS

         29.1     No failure or delay on the part of a Party in exercising any
                  of its rights under this Agreement or in insisting upon strict
                  performance of provisions of this Agreement, no partial
                  exercise by either Party of any of its rights under this
                  Agreement, and no course of dealing between the Parties shall
                  constitute a waiver of the rights of either Party under this
                  Agreement. Any waiver shall be effective only by a written
                  instrument signed by the Party granting such waiver, and such
                  shall not operate as a waiver of, or estoppel with respect to,
                  any subsequent failure to comply therewith.

30.      AMENDMENTS

         30.1     The Parties shall negotiate in good faith to determine
                  necessary amendments, if any, to this Agreement, provided that
                  in negotiating such amendments the Parties shall attempt, in
                  good faith, to reasonably preserve the bargain initially
                  struck in this Agreement if any Governmental Authority, FERC,
                  any state or the PUCN, implements a change in any Law or
                  applicable regulation that materially affects or is reasonably
                  expected to materially affect Buyer's PLR service under this
                  Agreement.

         30.2     The Parties shall meet to discuss the impact of any changes in
                  Buyer's OATT or the ISA's OATT, as applicable, or any rule or
                  practice of NERC, WSCC, or any other Governmental Authority on
                  the terms of this Agreement upon request by either Party
                  during the term of this Agreement.

         30.3     In the event that it is deemed necessary to amend this
                  Agreement, the Parties will attempt to agree upon such
                  amendment and will submit such mutually agreed upon
                  amendment(s) to the FERC for filing and acceptance.

                                       35
<PAGE>

         30.4     Amendments to this Agreement shall be in writing and shall be
                  executed by an authorized representative of each Party.

31.      TIME IS OF THE ESSENCE

         31.1     Time is of the essence of this Agreement and in the
                  performance of all of the covenants and conditions hereof.

32.      APPROVALS

         32.1     Each Party's performance under this Agreement is subject to
                  the condition that all requisite governmental and regulatory
                  approvals for such performance are obtained in form and
                  substance satisfactory to the other Party in its reasonable
                  discretion. Each Party shall use best efforts to obtain all
                  required approvals and shall exercise due diligence and shall
                  act in good faith to cooperate and assist each other in
                  acquiring any regulatory approval necessary to effectuate this
                  Agreement. Further, the Parties agree to reasonably support
                  the other Party in any associated regulatory proceedings,
                  including by being a witness on behalf of the other Party.

         32.2     Notwithstanding the provisions of Section 2.2.2 of this
                  Agreement, if any Governmental Authority in its review of the
                  Agreement places conditions on or requires revisions of the
                  Agreement that have no more than a de minimus effect on
                  Supplier or Buyer, the Parties agree to execute an amendment
                  to this Agreement reasonably acceptable to each Party
                  incorporating such conditions or revisions.

         32.3     This Agreement is made subject to present or future state or
                  federal laws, regulations, or orders properly issued by state
                  or federal bodies having jurisdiction.

         32.4     The Parties hereto agree to execute and deliver promptly, at
                  the expense of the Party requesting such action, any and all
                  other and further instruments, documents and information which
                  may reasonably be necessary or appropriate to give full force
                  and effect to the terms and intent of this Agreement.

33.      PLR SERVICE

         33.1     The Agreement is premised on Buyer providing PLR service.
                  Notwithstanding anything to the contrary contained herein, if
                  Nevada retail electricity restructuring (including
                  implementation of retail customer choice of electricity
                  suppliers) is delayed beyond the Effective Date of this
                  Agreement, the Parties shall continue to perform this
                  Agreement in all respects pursuant to the terms and conditions
                  hereof as if Buyer was the PLR and Buyer's retail and
                  wholesale customers shall be considered as the TRR.

                                       36
<PAGE>

34.      CONFIDENTIALITY

         34.1     Confidential Information. Certain information provided by a
                  ------------------------
                  Party (the "Disclosing Party") to the other Party (the
                  "Receiving Party") in connection with the negotiation or
                  performance of this Agreement may be considered confidential
                  and/or proprietary (hereinafter referred to as "Confidential
                  Information") by the Disclosing Party. To be considered
                  Confidential Information hereunder, such information must be
                  clearly labeled or designated by the Disclosing Party as
                  "confidential" or "proprietary" or with words of like meaning.
                  If disclosed orally, such information shall be clearly
                  identified as confidential and such status shall be confirmed
                  promptly thereafter in writing.

         34.2     Treatment of Confidential Information. The Receiving Party
                  -------------------------------------
                  shall treat any Confidential Information with at least the
                  same degree of care regarding its secrecy and confidentiality
                  as the Receiving Party's similar information is treated within
                  the Receiving Party's organization. The Receiving Party shall
                  not disclose the Confidential Information of the Disclosing
                  Party to third parties (except as stated hereinafter) nor use
                  it for any purpose other than the negotiation or performance
                  of this Agreement, without the express prior written consent
                  of the Disclosing Party. The Receiving Party further agrees
                  that it shall restrict disclosure of Confidential Information
                  as follows:

                  34.2.1   Disclosure shall be restricted solely to its agents
                           as may be necessary to enforce the terms of this
                           Agreement after advising those agents of their
                           obligations under this Section 34.2.

                  34.2.2   In the event that the Receiving Party is requested,
                           pursuant to or as required by applicable Law or by
                           legal process, to disclose any Confidential
                           Information, the Receiving Party shall provide the
                           Disclosing Party with prompt notice of such request
                           or requirement in order to enable Disclosing Party to
                           seek an appropriate protective order or other remedy
                           and to consult with Disclosing Party with respect to
                           Disclosing Party taking steps to resist or narrow the
                           scope of such request or legal process. The Receiving
                           Party agrees not to oppose any action by the
                           Disclosing Party to obtain a protective order or
                           other appropriate remedy. In the absence of such
                           protective order, and provided that the Receiving
                           Party is advised by its counsel that it is compelled
                           to disclose the Confidential Information, the
                           Receiving Party shall:

                           (i)      furnish only that portion of the
                                    Confidential Information which the Receiving
                                    Party is advised by counsel is legally
                                    required; and

                           (ii)     use its commercially reasonable best
                                    efforts, at the expense of the Disclosing
                                    Party, to ensure that all Confidential
                                    Information so disclosed will be accorded
                                    confidential treatment.

         34.3     Excluded Information. Confidential Information shall not be
                  --------------------
                  deemed to include

                                       37
<PAGE>

                  the following:

                  34.3.1   information which is or becomes generally available
                           to the public other than as a result of a disclosure
                           by the Receiving Party;

                  34.3.2   information which was available to the Receiving
                           Party on a non-confidential basis prior to its
                           disclosures by the Disclosing Party; and

                  34.3.3   information which becomes available to the Receiving
                           Party on a non-confidential basis from a person other
                           than the Disclosing Party or its representative who
                           is not otherwise bound by a confidentiality agreement
                           with Disclosing Party or its agent or is otherwise
                           not under any obligation to Disclosing party or its
                           agent not to disclose the information to the
                           Receiving Party.

         34.4     Injunctive Relief Due to Breach. The Parties agree that
                  -------------------------------
                  remedies at law may be inadequate to protect each other in the
                  event of a breach of this Section 34, and the Receiving Party
                  hereby in advance agrees that the Disclosing Party shall be
                  entitled to seek and obtain, without proof of actual damages,
                  temporary, preliminary and permanent injunctive relief from
                  any court or Governmental Authority of competent jurisdiction
                  restraining the Receiving Party from committing or continuing
                  any breach of this Section 34.

35.      CHOICE OF LAW

         35.1     This Agreement and the rights and obligations of the Parties
                  shall be construed and governed by the Laws of: (i) the State
                  of Nevada as if executed and performed wholly within that
                  state; and (ii) the Federal Power Act, to the extent the
                  rights and obligations of the Parties are covered by such act.

                                       38
<PAGE>

IN WITNESS WHEREOF, the Parties hereto have caused this Transitional Power
Purchase Agreement for the Reid Gardner Bundle to be executed by their duly
authorized representative on the date set forth below.

NEVADA POWER COMPANY                         REID GARDNER POWER LLC

----------------------                       ----------------------------
By:     William E. Peterson                  By:    Edward P. Hermann
Title:  Senior Vice President, General       Title: Vice President
Counsel, and Corporate Secretary
Date: November 16, 2000                      Date: November 16, 2000

                                       39
<PAGE>

                                   EXHIBIT A
                              REID GARDNER BUNDLE
                ASSET BUNDLE CAPACITY AND OPERATING PARAMETERS

===============================================================================
   UNIT      NET SUMMER             NET           RAMP RATE   MINIMUM HOURLY
            CAPABILITY (MW)  WINTERCAPABILITY(MW)   (MW)/HOUR  ENERGY TAKE (MW)
-------------------------------------------------------------------------------
Unit 1            110                 110               60            50
Unit 2            110                 110               60            50
Unit 3            110                 110               60            50
Unit 4*           260                 260              100            24
-------------------------------------------------------------------------------
Total             590                 590              280           174
===============================================================================

                                       Minimum Annual Energy Take: 2,550,000 MWh

* The portion of the Asset Bundle Capacity attributable to Reid Gardner Unit 4
shall at no time exceed the net generating capacity in megawatts, the Energy, or
the Ancillary Services to which Supplier is entitled, as of the Effective Date,
under the Participation Agreement (as defined in the Asset Sale Agreement).

For purposes of this Exhibit A, the summer months shall consist of June through
September, and the winter months shall consist of the months of January through
May and the months of October through December.

                                      A-1
<PAGE>

                                    EXHIBIT B
                               REID GARDNER BUNDLE
                      ENERGY AND ANCILLARY SERVICES PRICES

Energy Prices*
-------------
         Price Floor of Energy:             $ 23.83 per MWh
         Price Ceiling of Energy:           $ 41.44 per MWh

Ancillary Service Prices*
------------------------
         Regulation and Frequency Response:
                  Summer On-Peak:           $28.61 per MW-reserved per hour
                  Summer Off-Peak:          $16.35 per MW-reserved per hour
                  Winter On-Peak:           $16.33 per MW-reserved per hour
                  Winter Off-Peak:          $9.33 per MW-reserved per hour
         Operating Reserve - Spinning Reserve:
                  Summer On-Peak:           $23.35 per MW-reserved per hour
                  Summer Off-Peak:          $13.34 per MW-reserved per hour
                  Winter On-Peak:           $13.32 per MW-reserved per hour
                  Winter Off-Peak:          $7.61 per MW-reserved per hour
         Operating Reserve - Supplemental Reserve:
                  Summer On-Peak:           $23.35 per MW-reserved per hour
                  Summer Off-Peak:          $13.34 per MW-reserved per hour
                  Winter On-Peak:           $13.32 per MW-reserved per hour
                  Winter Off-Peak:          $7.61 per MW-reserved per hour

The summer months shall consist of the months of June through September. The
winter months shall consist of the months of January through May and the months
of October through December.

The On-Peak periods shall consist of Hour Ending (HE) 0700 through HE 2200 PPT,
Monday through Saturday. The Off-Peak periods shall consist of HE 0100 through
HE 0600, HE 2300 and HE 2400 PPT, Monday through Saturday; HE 0100 through HE
2400 PPT Sunday and additional Off-Peak days (holidays) as designated annually
by WSCC.

                                                       *SUBJECT TO FERC APPROVAL
                                                       -------------------------

                                      B-1
<PAGE>

                                    EXHIBIT C
                               REID GARDNER BUNDLE
                           SUPPLIER'S MONTHLY INVOICE

   A         Price Ceiling of Energy           $41.44  /MWh
   B         Price Floor of Energy             $23.83  /MWh

<TABLE>
<CAPTION>
MONTH 1 - ENERGY
----------------
                   C                   D               E                   F                     G                      H
    Dispatch  Asset Bundle         Delivered       Supplier          Market Price          Market Price x         Market Price x
      Hour    Capacity MWh)      Energy (MWh)   Shortfall (MWh)    of Energy ($/MWh)      Delivered Energy    Asset Bundle Capacity
      ----    ------------       -----------    --------------     -----------------      ----------------    ---------------------
                                                   (C - D)                                    (D x F)            (C x F)
    <S>       <C>                <C>            <C>                <C>                    <C>                 <C>
        1        590                590              -                  40.00                $23,600.00            $23,600.00
        2        590                590              -                  40.00                 23,600.00             23,600.00
        3        590                530             60                  40.00                 21,200.00             23,600.00
        4        590                530             60                  40.00                 21,200.00             23,600.00
        5        460                450             10                  30.00                 13,500.00             13,800.00
        6        490                490              -                  30.00                 14,700.00             14,700.00
        7        580                560             20                  20.00                 11,200.00             11,600.00
        8        590                590              -                  20.00                 11,800.00             11,800.00
        9        590                590              -                  20.00                 11,800.00             11,800.00
       10        590                590              -                  25.00                 14,750.00             14,750.00
--------------------------------------------------------------------------------------------------------------------------------
               5,660              5,510            150                                      $167,350.00         $  172,850.00

I.  Sum of (Delivered Energy times corresponding hourly Market Price)            Sec 7.2.1  $167,350.00
     IT.     Sum of (Asset Bundle Capacity times corresponding  hourly Market Price)                            $  172,850.00

J.  Sum of hourly Delivered Energy multiplied by the  Price Ceiling of Energy    Sec 7.2.2  $228,334.40
     JT.     Sum of hourly Asset Bundle Capacity multiplied by the Price Ceiling of Energy                      $  234,550.40

K.  Sum of hourly Delivered Energy multiplied by the Price Floor of Energy       Sec 7.2.3  $131,303.30
     KT.     Sum of hourly Asset Bundle Capacity multiplied by the Price Floor of Energy                        $  134,877.80

L.  Invoiced Amount - Energy                               Sec 7.3            (K ** I ** J) $167,350.00

M.  Theoretical Amount for Expected Performance                              (KT ** IT  ** JT)                  $  172,850.00
</TABLE>
**  less than
*** Greater than

<TABLE>
<CAPTION>
MONTH 1 - ANCILLARY SERVICE CAPACITY - REGULATION AND FREQUENCY RESPONSE
------------------------------------------------------------------------
                       N                 O              P               Q                   R                         S
                  Schedule of        Ancillary
  Dispatch         Ancillary         Capacity         Supplier    Capacity Price of   Price x Ancillary        Price x Schedule
    Hour         Capacity (MW)     Supplied (MW)   Shortfall (MW)  Services ($/MW)    Capacity Supplied       of Ancillary Services
    ----         -------------     -------------   --------------  --------------     -----------------       ----------------------
                                                      (N - O)                             (O x Q)                   (N x Q)
   <S>           <C>               <C>             <C>             <C>                <C>                     <C>
     1                -                 -               -              16.35            $      -                 $        -
     2                -                 -               -              16.35                   -                          -
     3                -                 -               -              28.61                   -                          -
     4                -                 -               -              28.61                   -                          -
</TABLE>

                                      C-1
<PAGE>

                                    EXHIBIT C
                               REID GARDNER BUNDLE
                           SUPPLIER'S MONTHLY INVOICE

<TABLE>
<S>                 <C>               <C>              <C>             <C>                <C>                        <C>
     5               30                30               -              28.61              858.30                     858.30
     6                -                 -               -              28.61                   -                          -
     7                -                 -               -              28.61                   -                          -
     8                -                 -               -              28.61                   -                          -
     9                -                 -               -              28.61                   -                          -
    10                -                 -               -              28.61                   -                          -
-------------------------------------------------------------------------------------------------------------------------------
                     30                30               -                               $ 858.30                $    858.30

T.  Invoiced Amount - Ancillary Service Capacity - Regulation
    and Frequency Response                                          Sec 7.2.5           $ 858.30

U.  Theoretical Amount for Expected Performance                                                                  $   858.30
</TABLE>

MONTH 1 - ANCILLARY SERVICE CAPACITY - SPINNING RESERVE
-------------------------------------------------------
<TABLE>
<CAPTION>
                      V               W              X               Y                        Z                   AA
Dispatch        Schedule of        Ancillary      Supplier     Capacity Price of      Price x Ancillary     Price x Schedule
                 Ancillary         Capacity
  Hour         Capacity (MW)     Supplied (MW)  Shortfall (MW)  Services ($/MW)      Capacity Supplied    of Ancillary Services
  ----         -------------     -------------  --------------  ---------------      -----------------    ---------------------
                                                   (V - W)                                (W x Y)               (V x Y)
<S>            <C>               <C>            <C>             <C>                  <C>                  <C>
   1                  -                -              -              13.34              $        -          $        -
   2                  -                -              -              13.34                       -                   -
   3                  -                -              -              23.35                       -                   -
   4                  -                -              -              23.35                       -                   -
   5                 80               80              -              23.35                1,868.00            1,868.00
   6                 80               60             20              23.35                1,401.00            1,868.00
   7                  -                -              -              23.35                       -                   -
   8                  -                -              -              23.35                       -                   -
   9                  -                -              -              23.35                       -                   -
  10                  -                -              -              23.35                       -                   -
------------------------------------------------------------------------------------------------------------------------------
                    160              140             20                                  $3,269.00        $   3,736.00

AB.    Invoiced Amount - Ancillary Service Capacity - Spinning Reserve     Sec 7.2.5     $3,269.00

AC.    Theoretical Amount for Expected Performance                                                        $   3,736.00

<CAPTION>
MONTH 1 - ANCILLARY SERVICE CAPACITY - SUPPLEMENTAL RESERVE
-----------------------------------------------------------
                             AD           AE             AF                AG                  AH                    AI
       Dispatch       Schedule of      Ancillary      Supplier     Capacity Price of     Price x Ancillary     Price x Schedule
                       Ancillary       Capacity
         Hour         Capacity (MW)  Supplied (MW)  Shortfall (MW)  Services ($/MW)    Capacity Supplied       of Ancillary Services
         ---          -------------  ------------   --------------  ---------------    -----------------      ----------------------
       <S>            <C>            <C>            <C>             <C>                <C>                    <C>
                                                                                           (AE x AG)                (AD x AG)
           1               -                -             -              13.34            $         -               $          -
           2               -                -             -              13.34                      -                          -
           3               -                -             -              23.35                      -                          -
           4               -                -             -              23.35                      -                          -
           5              10               10             -              23.35                 233.50                     233.50
           6              10               10             -              23.35                 233.50                     233.50
           7              10               10             -              23.35                 233.50                     233.50
</TABLE>

                                      C-2
<PAGE>

                                    EXHIBIT C
                               REID GARDNER BUNDLE
                           SUPPLIER'S MONTHLY INVOICE

<TABLE>
<S>                      <C>              <C>           <C>             <C>                   <C>                      <C>
           8               -                -             -              23.35                      -                          -
           9               -                -             -              23.35                      -                          -
          10               -                -             -              23.35                      -                          -
---------------------------------------------------------------------------------------------------------------------------------
                          30               30             -                                   $700.50                  $  700.50

AJ.    Invoiced Amount - Ancillary Service Capacity - Supplemental Reserve     Sec 7.2.5      $700.50

AK.    Theoretical Amount for Expected Performance                                                                     $  700.50
</TABLE>

MONTH 1 - ANCILLARY SERVICE ENERGY
----------------------------------
<TABLE>
<CAPTION>
                   AL                AM              AN                AO                 AP                     AQ
 Dispatch      Schedule of    Ancillary Energy     Supplier      Price Ceiling of  Price x Ancillary      Price x Schedule
                Ancillary
   Hour        Energy (MWh   Supplied (MWh)    Shortfall (MWh)   Energy ($/MWh)      Energy Supplied     of Ancillary Energy
   ----        -----------   --------------    ---------------   --------------      ---------------     -------------------
                                                   (AL - AM)                          (AM x AO)              (AL x AO)
 <S>           <C>           <C>               <C>                <C>                <C>                 <C>
     1               -               -                 -             41.44            $          -           $        -
     2               -               -                 -             41.44                       -                    -
     3               -               -                 -             41.44                       -                    -
     4               -               -                 -             41.44                       -                    -
     5              40              40                 -             41.44                1,657.60             1,657.60
     6              30              10                20             41.44                  414.40             1,243.20
     7              10              10                 -             41.44                  414.40               414.40
     8               -               -                 -             41.44                       -                    -
     9               -               -                 -             41.44                       -                    -
    10               -               -                 -             41.44                       -                    -
---------------------------------------------------------------------------------------------------------------------------------
                    80              60                20           $414.40               $2,486.40            $3,315.20

AR.    Invoiced Amount - Ancillary Services Energy      Sec 7.2.6                        $2,486.40

AS.    Theoretical Amount for Expected Performance                                                            $3,315.20

MONTH 1 - TOTAL INVOICE AMOUNT             Sec 7.3    (L + T + AB + AJ + AR)   $174,664.20
==========================================================================================================================
</TABLE>

MONTH 2 - ENERGY
----------------

<TABLE>
<CAPTION>
                               C             D             E               F                  G                H
        Dispatch         Asset Bundle    Delivered      Supplier      Market Price      Market Price x   Market Price x
          Hour         Capacity (MWh)  Energy (MWh) Shortfall (MWh)  of Energy $/MWh)  Delivered Energy  Asset Bundle Cap.
          ----         --------------  ------------ ---------------  ----------------  ----------------  -----------------
                                                       (C - D)                              (D x F)          (C x F)
<S>                    <C>             <C>          <C>              <C>               <C>               <C>
           1                 590         590             -                45.00            $26,550.00       $26,550.00
           2                 590         590             -                45.00             26,550.00        26,550.00
           3                 590         530            60                45.00             23,850.00        26,550.00
           4                 590         530            60                55.00             29,150.00        32,450.00
</TABLE>

                                      C-3
<PAGE>

                                    EXHIBIT C
                               REID GARDNER BUNDLE
                           SUPPLIER'S MONTHLY INVOICE

<TABLE>
<S>                          <C>        <C>            <C>                <C>            <C>              <C>
       5                     460         450            10                55.00             24,750.00        25,300.00
       6                     490         490             -                55.00             26,950.00        26,950.00
       7                     580         560            20                35.00             19,600.00        20,300.00
       8                     590         590             -                35.00             20,650.00        20,650.00
       9                     590         590             -                35.00             20,650.00        20,650.00
      10                     590         590             -                40.00             23,600.00        23,600.00
----------------------------------------------------------------------------------------------------------------------
                            5,660       5,510           150                               $242,300.00      $249,550.00

I.     Sum of (Delivered Energy times corresponding hourly Market Price)  Sec 7.2.1       $242,300.00
         IT.   Sum of (Asset Bundle Capacity times corresponding                                           $249,550.00

J.     Sum of hourly Delivered Energy multiplied by the                   Sec 7.2.2       $228,334.40
         JT.   Sum of hourly Asset Bundle Capacity multiplied by the  Price Ceiling of Energy              $234,550.40

K.     Sum of hourly Delivered Energy multiplied by the Price Floor of Energy   Sec 7.2.3 $131,303.30
         KT.   Sum of hourly Asset Bundle Capacity multiplied by the Price Floor of Energy                 $134,877.80

L.    Invoiced Amount -  Energy                               Sec 7.3                 (I > J)              $228,334.40

M.    Theoretical Amount for Expected Performance                                    (IT > JT)             $234,550.40
</TABLE>

MONTH 3 - ENERGY
----------------
<TABLE>
<CAPTION>
                          C              D           E                    F                     G                  H
    Dispatch         Asset Bundle    Delivered    Supplier          Market Price         Market Price x     Market Price x
      Hour         Capacity (MWh)  Energy (MWh) Shortfall (MWh)    of Energy ($/MWh)     Delivered Energy   Asset Bundle Cap.
      ----         --------------  ------------ ---------------    -----------------     ----------------   -----------------
                                                     (C - D)                                  (D x F)          (C x F)
<S>                <C>             <C>          <C>                <C>                   <C>                <C>
       1                590            590             -                 30.00            $ 17,700.00         $ 17,700.00
       2                590            590             -                 20.00              11,800.00           11,800.00
       3                590            530            60                 20.00              10,600.00           11,800.00
       4                590            530            60                 20.00              10,600.00           11,800.00
       5                460            450            10                 15.00               6,750.00            6,900.00
       6                490            490             -                 15.00               7,350.00            7,350.00
       7                580            560            20                 15.00               8,400.00            8,700.00
       8                590            590             -                 15.00               8,850.00            8,850.00
       9                590            590             -                 15.00               8,850.00            8,850.00
      10                590            590             -                 15.00               8,850.00            8,850.00
-------------------------------------------------------------------------------------------------------------------------
                      5,660          5,510           150                                  $ 99,750.00         $102,600.00

I.     Sum of (Delivered Energy times corresponding hourly Market Price)       Sec 7.2.1  $ 99,750.00
        IT.    Sum of (Asset Bundle Capacity times corresponding hourly Market Price)                         $102,600.00

J.     Sum of hourly Delivered Energy multiplied by the Price Ceiling of       Sec 7.2.2  $228,334.40
       Energy
        JT.    Sum of hourly Asset Bundle Capacity multiplied by the Price Ceiling of Energy                  $234,550.40
</TABLE>

                                      C-4
<PAGE>

                                    EXHIBIT C
                               REID GARDNER BUNDLE
                           SUPPLIER'S MONTHLY INVOICE

<TABLE>
<S>                                                                    <C>                  <C>                  <C>
K.     Sum of hourly Delivered Energy multiplied by the PriceFloor of  Sec 7.2.3            $ 131,303.30
       Energy
       KT.     Sum of hourly Asset Bundle Capacity multiplied by the Price Floor of Energy                       $134,877.80

L.    Invoiced Amount -                                 Sec 7.3              (I ** K)      $ 131,303.30
       Energy

M.    Theoretical Amount for Expected Performance                           (IT ** KT)                          $134,877.80
</TABLE>

**  less than
*** Greater than

For the purposes of this example, the portions of the monthly invoices
attributable to Ancillary Services for the second and third months were assumed
to be the same as the corresponding portions for the first month.

                                      C-5

<PAGE>

                                    EXHIBIT D
                               REID GARDNER BUNDLE
                        BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS

MONTH 1 - ENERGY
----------------

<TABLE>
<CAPTION>
                         A               B *                C *                   D
    Dispatch        Replacement   Replacement Cost    Replacement Cost    Gross Replacement
      Hour         Energy (MWh)   of Energy ($/MWh)      of Energy         Cost of Energy
      ----         ------------   -----------------      ---------         --------------
                                                                             (A x B) + C
     <S>           <C>            <C>                 <C>                  <C>
        1                0                       na       $  0.00             $    0.00
        2                0                       na          0.00                  0.00
        3               60                    35.00        100.00              2,200.00
        4               60                    30.00         50.00              1,850.00
        5               10                    30.00         50.00                350.00
        6                0                       na          0.00                  0.00
        7               20                    25.00          0.00                500.00
        8                0                       na          0.00                  0.00
        9                0                       na          0.00                  0.00
       10                0                       na          0.00                  0.00
------------------------------------------------------------------------------------------------
                        150                                                   $        4,900.00

E.     Gross Replacement Cost of Energy                                       $        4,900.00
F.     Theoretical Supplier's Invoice Amount for Expected Performance         $      172,850.00
G.     Actual Supplier's Invoice Amount                                              167,350.00
                                                                           --------------------
H.     Avoided Payment to Supplier                        (F - G)             $        5,500.00
I.     Invoiced Replacement Cost - Energy                 (E ** H)            $            0.00
</TABLE>

**  less than
*** Greater than

MONTH 1 - ANCILLARY SERVICE CAPACITY - REGULATION AND FREQUENCY RESPONSE
------------------------------------------------------------------------

<TABLE>
<CAPTION>
                         J               K *                L *                   M
    Dispatch        Replacement   Replacement Cost    Replacement Cost    Gross Replacement
      Hour         Capacity (MW)  of Capacity ($/MW)    of Capacity       Cost of Capacity
      ----         ------------   ------------------  -------------       ----------------
                                                                             (J x K) + L
    <S>            <C>            <C>                 <C>                 <C>
        1                0                       na        $0.00               $0.00
        2                0                       na         0.00                0.00
        3                0                       na         0.00                0.00
        4                0                       na         0.00                0.00
        5                0                       na         0.00                0.00
        6                0                       na         0.00                0.00
        7                0                       na         0.00                0.00
        8                0                       na         0.00                0.00
        9                0                       na         0.00                0.00
       10                0                       na         0.00                0.00
-------------------------------------------------------------------------------------------
                         0                                                    $      0.00

N.     Gross Replacement Cost of Ancillary Capacity -                         $      0.00
       Regulation & Frequency Response
O.     Theoretical Supplier's Invoice Amount for Expected Performance         $    858.30
P.     Actual Supplier's Invoice Amount                                            858.30
                                                                             --------------
Q.     Avoided Payment to Supplier                            (O - P)         $      0.00
R.     Invoiced Replacement Cost - Ancillary Capacity         (N = Q)         $      0.00
</TABLE>

                                      D-1
<PAGE>

                                   EXHIBIT D
                             REID GARDNER BUNDLE
                  BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS

MONTH 1 - ANCILLARY SERVICE CAPACITY - SPINNING RESERVE
-------------------------------------------------------

<TABLE>
<CAPTION>
                          S               T *                U *                   V
    Dispatch        Replacement   Replacement Cost    Replacement Cost    Gross Replacement
      Hour         Capacity (MW)  of Capacity ($/MW)   of Capacity       Cost of Capacity
      ----         -------------  ------------------   -----------       ----------------
                                                                             (S x T) + U
     <S>           <C>            <C>                  <C>               <C>
        1                0                       na         $0.00              $  0.00
        2                0                       na          0.00                 0.00
        3                0                       na          0.00                 0.00
        4                0                       na          0.00                 0.00
        5                0                       na          0.00                 0.00
        6               20                    40.00        100.00               900.00
        7                0                       na          0.00                 0.00
        8                0                       na          0.00                 0.00
        9                0                       na          0.00                 0.00
       10                0                       na          0.00                 0.00
-----------------------------------------------------------------------------------------------
                        20                                                     $         900.00

W.    Gross Replacement Cost of Ancillary Capacity - Spinning Reserve          $         900.00
X.     Theoretical Supplier's Invoice Amount for Expected Performance          $       3,736.00
Y.     Actual Supplier's Invoice Amount                                                3,269.00
                                                                            -------------------
Z.     Avoided Payment to Supplier                         (X - Y)             $         467.00
AA.     Invoiced Replacement Cost - Ancillary Capacity     (W > Z)             $         433.00
</TABLE>

MONTH 1 - ANCILLARY CAPACITY - SUPPLEMENTAL RESERVE
---------------------------------------------------

<TABLE>
<CAPTION>
                        AB              AC *                AD *                 AE
    Dispatch        Replacement   Replacement Cost    Replacement Cost    Gross Replacement
      Hour         Capacity (MW)  of Capacity ($/MW)    of Capacity       Cost of Capacity
      ----         -------------  ------------------  ----------------    ----------------
                                                                           (AB x AC) + AD
    <S>            <C>             <C>                 <C>                <C>
        1                0                       na        $0.00                $0.00
        2                0                       na         0.00                 0.00
        3                0                       na         0.00                 0.00
        4                0                       na         0.00                 0.00
        5                0                       na         0.00                 0.00
        6                0                       na         0.00                 0.00
        7                0                       na         0.00                 0.00
        8                0                       na         0.00                 0.00
        9                0                       na         0.00                 0.00
       10                0                       na         0.00                 0.00
-----------------------------------------------------------------------------------------------
                         0                                                      $         0.00

AF.     Gross Replacement Cost of Ancillary Capacity - Supplemental Reserve     $         0.00
AG.     Theoretical Supplier's Invoice Amount for Expected Performance          $       700.50
AH.     Actual Supplier's Invoice Amount                                                700.50
                                                                            -------------------
AI.     Avoided Payment to Supplier                          (AG - AH)          $         0.00
</TABLE>

                                      D-2
<PAGE>

                                   EXHIBIT D
                             REID GARDNER BUNDLE
                  BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS

<TABLE>
<CAPTION>
AJ.     Invoiced Replacement Cost - Ancillary Capacity       (AF = AI)          $         0.00

MONTH 1 - ANCILLARY SERVICE ENERGY
----------------------------------

                        AK              AL *                AM *                 AN
    Dispatch        Replacement   Replacement Cost    Replacement Cost    Gross Replacement
      Hour         Energy (MWh)   of Energy ($/MWh)     of Energy **       Cost of Energy
      ----         ------------   -----------------   --------------       --------------
                                                                           (AK x AL) + AM
     <S>           <C>            <C>                 <C>                  <C>
        1                0                       na        $0.00                    0.00
        2                0                       na         0.00                    0.00
        3                0                       na         0.00                    0.00
        4                0                       na         0.00                    0.00
        5                0                       na         0.00                    0.00
        6               20                    50.00        20.00                1,020.00
        7                0                       na         0.00                    0.00
        8                0                       na         0.00                    0.00
        9                0                       na         0.00                    0.00
       10                0                       na         0.00                    0.00
-----------------------------------------------------------------------------------------------------
                        20                                                     $          1,020.00

AO.  Gross Replacement Cost of Ancillary Energy                                $          1,020.00
AP.  Theoretical Supplier's Invoice Amount for Expected Performance            $          3,315.20
AQ.  Actual Supplier's Invoice Amount                                                     2,486.40
AR.  Avoided Payment to Supplier                      (AP - AQ)                $            828.80
AS.  Invoiced Replacement Cost - Ancillary Energy     (AO > AR)                $            191.20

MONTH 1 - TOTAL INVOICE AMOUNT            (I + R + AA + AJ + AS)               $            624.20
==================================================================================================
</TABLE>

MONTH 2 - ENERGY
----------------

<TABLE>
<CAPTION>
                         A               B *                C *                   D
    Dispatch        Replacement   Replacement Cost    Replacement Cost    Gross Replacement
      Hour         Energy (MWh)   of Energy ($/MWh)      of Energy         Cost of Energy
      ----         ------------   -----------------      ---------         --------------
                                                                             (A x B) + C
     <S>           <C>            <C>                  <C>                 <C>
        1                0                 na                $0.00                 0.00
        2                0                 na                 0.00                 0.00
        3               60              40.00               200.00             2,600.00
        4               60              55.00               100.00             3,400.00
        5               10              48.00               200.00               680.00
        6                0                 na                 0.00                 0.00
        7               20              35.00               300.00             1,000.00
        8                0                 na                 0.00                 0.00
        9                0                 na                 0.00                 0.00
       10                0                 na                 0.00                 0.00
-----------------------------------------------------------------------------------------------
                        150                                                   $7,680.00
</TABLE>

                                      D-3
<PAGE>

                                   EXHIBIT D
                             REID GARDNER BUNDLE
                  BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS

<TABLE>
<S>                                                                         <C>
E.     Gross Replacement Cost of Energy                                      $        7,680.00
F.     Theoretical Supplier's Invoice Amount for Expected Performance        $      234,550.40
G.     Actual Supplier's Invoice Amount                                             228,334.40
                                                                             -----------------
H.     Avoided Payment to Supplier                        (F - G)            $        6,216.00
I.     Invoiced Replacement Cost - Energy                 (E *** H)          $        1,464.00
</TABLE>

**  less than
*** Greater than

MONTH 3 - ENERGY
----------------

<TABLE>
<CAPTION>
                         A               B *                C *                   D
    Dispatch        Replacement   Replacement Cost    Replacement Cost    Gross Replacement
      Hour         Energy (MWh)   of Energy ($/MWh)      of Energy         Cost of Energy
      ----         ------------   -----------------      ---------         --------------
                                                                             (A x B) + C
    <S>            <C>            <C>                  <C>                 <C>
        1                0                 na                $0.00                  0.00
        2                0                 na                 0.00                  0.00
        3               60              27.00               100.00              1,720.00
        4               60              22.00                50.00              1,370.00
        5               10              22.00                 0.00                220.00
        6                0                 na                 0.00                  0.00
        7               20              22.00                50.00                490.00
        8                0                 na                 0.00                  0.00
        9                0                 na                 0.00                  0.00
       10                0                 na                 0.00                  0.00
-----------------------------------------------------------------------------------------------------
                       150                                                     $        3,800.00

E.     Gross Replacement Cost of Energy                                        $        3,800.00
F.     Theoretical Supplier's Invoice Amount for Expected Performance          $      134,877.80
G.     Actual Supplier's Invoice Amount                                               131,303.30
                                                                               -----------------
H.     Avoided Payment to Supplier                        (F - G)              $        3,574.50
I.     Invoiced Replacement Cost - Energy                 (E ** H)             $          225.50
</TABLE>

**  less than
*** Greater than

For the purposes of this example, the portions of the monthly invoices
attributable to Ancillary Services for the second and third months were assumed
to be the same as the corresponding portions for the first month.

                                   EXHIBIT E
                              REIN GARDNER BUNDLE
                           YEAR END TRUE-UP INVOICE

A    Price Ceiling of Energy            $         41.44 /MWh
B    Price Floor of Energy              $         23.83 /MWh

EXAMPLE 1
---------

<TABLE>
<CAPTION>
               C                        D                          E                              F                        G
           Delivered             Market Price x             Price Ceiling x                Price Floor x           Super's Invoiced
Month    Energy (MWh)           Delivered Energy           Delivered Energy               Delivered Energy          Amount - Energy
-----    ------------           ----------------           ----------------               ----------------         ----------------
<S>      <C>                    <C>                        <C>                            <C>                      <C>
                                                                 (A X C)                       (B x C)
  1           5,510             $    167,350,00            $   228,303,30                 $   131,303,30               167,350,00
  2           5,510                  242,300,00                228,334,40                     131,303,30               228,334,40
</TABLE>
                                      D-4
<PAGE>

                                    EXHIBIT E
                               REID GARDNER BUNDLE
                            YEAR END TRUE-UP INVOICE

<TABLE>
<S>            <C>          <C>               <C>               <C>                      <C>
     3          5,510           99,750.00        228,334.40        131,303.30               131,303.30
     4          5,900          283,200.00        244,496.00        140,597.00               244,496.00
     5          5,900          259,600.00        244,496.00        140,597.00               244,496.00
     6          5,700          250,800.00        236,208.00        135,831.00               236,208.00
     7          5,900          271,400.00        244,496.00        140,597.00               244,496.00
     8          5,900          259,600.00        244,496.00        140,597.00               244,496.00
     9          5,360          241,200.00        222,118.40        127,728.80               222,118.40
    10          5,900          247,800.00        244,496.00        140,597.00               244,496.00
    11          5,900          300,900.00        244,496.00        140,597.00               244,496.00
    12          5,600          257,600.00        232,064.00        133,448.00               232,064.00
------------------------------------------------------------------------------------------------------
   Total       68,590       $2,881,500.00     $2,842,369.60     $1,634,499.70            $2,684,354.10

(Total of Column D) > (Total of Column E) therefore Annual True-up calculated
-----------------------------------------------------------------------------
under Section 7.5.1(a)
----------------------

H.  Annual True-up - Delivered Energy                        (Total E - Total G)          $158,015.50
I.  Average Cost of Delivered Energy after True-up ($/MWh)   (Total E / Total C)          $     41.44
</TABLE>

<TABLE>
<CAPTION>
                  J                K                    L                 M                      N
             Replacement   Replacement Energy  Gross Replacement  Adjusted Replacement Invoiced Replacement
   Month     Energy (MWh)    x Average Cost     Cost of Energy      Cost of Energy       Cost of Energy
   -----     ------------    --------------     --------------      --------------       --------------
                                (I x J)
<S>          <C>            <C>                 <C>               <C>                    <C>
     1           150                            $ 4,900.00                                  $      0.00
     2           150                              7,680.00                                     1,464.00
     3           150                              3,800.00                                       225.50
     4             0                                  0.00                                         0.00
     5             0                                  0.00                                         0.00
     6             0                                  0.00                                         0.00
     7             0                                  0.00                                         0.00
     8             0                                  0.00                                         0.00
     9             0                                  0.00                                         0.00
    10             0                                  0.00                                         0.00
    11             0                                  0.00                                         0.00
    12             0                                  0.00                                         0.00
--------------------------------------------------------------------------------------------------------
   Total         450           $18,648.00       $16,380.00                  $0.00           $  1,689.50

O.    Annual True-up - Replacement Costs                      (Total N - Total M)           $  1,689.50

Total Annual True-up *                                              (H + O)                 $159,705.00
=======================================================================================================
</TABLE>

EXAMPLE 2
---------
<TABLE>
<CAPTION>
                 C                D                 E                 F                   G
              Delivered      Market Price x   Price Ceiling x    Price Floor x    Supplier's Invoiced
   Month     Energy (MWh)   Delivered Energy  Delivered Energy  Delivered Energy    Amount - Energy
   ------    ------------   ----------------  ----------------  ----------------    ---------------
                                                  (A x C)           (B x C)
<S>          <C>            <C>               <C>               <C>               <C>
     1          5,510       $  167,350.00     $  228,334.40     $  131,303.30       $  167,350.00
     2          5,510          242,300.00        228,334.40        131,303.30          228,334.40
     3          5,510           99,750.00        228,334.40        131,303.30          131,303.30
</TABLE>

                                      E-2
<PAGE>

                                    EXHIBIT E
                               REID GARDNER BUNDLE
                            YEAR END TRUE-UP INVOICE

<TABLE>
<S>            <C>           <C>               <C>               <C>                 <C>
     4          5,900          224,200.00        244,496.00        140,597.00          224,200.00
     5          5,900          218,300.00        244,496.00        140,597.00          218,300.00
     6          5,700          193,800.00        236,208.00        135,831.00          193,800.00
     7          5,900          283,200.00        244,496.00        140,597.00          244,496.00
     8          5,900          200,600.00        244,496.00        140,597.00          200,600.00
     9          5,360          203,680.00        222,118.40        127,728.80          203,680.00
    10          5,900          206,500.00        244,496.00        140,597.00          206,500.00
    11          5,900          259,600.00        244,496.00        140,597.00          244,496.00
    12          5,600          218,400.00        232,064.00        133,448.00          218,400.00
-------------------------------------------------------------------------------------------------
   Total       68,590       $2,517,680.00     $2,842,369.60     $1,634,499.70       $2,481,459.70

(Total of Column E) > (Total of Column D) therefore Annual True-up calculated
-----------------------------------------------------------------------------
under Section 7.5.1(b)
----------------------

H.    Annual True-up - Delivered Energy                         (Total D - Total G)           $36,220.30
I.    Average Cost of Delivered Energy after True-up ($/MWh)    (Total D / Total C)           $    36.71
</TABLE>

<TABLE>
<CAPTION>
                    J                K                       L                    M                  N
             Replacement   Replacement Energy      Gross Replacement   Adjusted Replacement Invoiced Replacement
   Month     Energy (MWh)    x Average Cost         Cost of Energy        Cost of Energy      Cost of Energy
   -----     ------------    --------------         --------------        --------------      --------------
                                (I x J)
<S>          <C>           <C>                      <C>               <C>                   <C>
     1           150                                 $ 4,900.00                                     $     0.00
     2           150                                   7,680.00                                       1,464.00
     3           150                                   3,800.00                                         225.50
     4             0                                       0.00                                           0.00
     5             0                                       0.00                                           0.00
     6             0                                       0.00                                           0.00
     7             0                                       0.00                                           0.00
     8             0                                       0.00                                           0.00
     9             0                                       0.00                                           0.00
    10             0                                       0.00                                           0.00
    11             0                                       0.00                                           0.00
    12             0                                       0.00                                           0.00
--------------------------------------------------------------------------------------------------------------
   Total         450           $16,517.80            $16,380.00                  $0.00              $ 1,689.50

O.    Annual True-up - Replacement Costs                        (Total N - Total M)                 $ 1,689.50
Total Annual True-up *                                              (H + O)                         $37,909.80
==============================================================================================================

EXAMPLE 3
---------

<CAPTION>
                  C                D                 E                 F                   G
              Delivered      Market Price x   Price Ceiling x    Price Floor x    Supplier's Invoiced
   Month     Energy (MWh)   Delivered Energy  Delivered Energy  Delivered Energy    Amount - Energy
   -----     ------------   ----------------  ----------------  ----------------    ---------------
                                                  (A x C)           (B x C)
<S>          <C>            <C>               <C>               <C>                <C>
     1          5,510         $167,350.00       $228,334.40       $131,303.30         $167,350.00
     2          5,510          242,300.00        228,334.40        131,303.30          228,334.40
     3          5,510           99,750.00        228,334.40        131,303.30          131,303.30
     4          5,900          188,800.00        244,496.00        140,597.00          188,800.00
</TABLE>

                                      E-3
<PAGE>

                                    EXHIBIT E
                               REID GARDNER BUNDLE
                            YEAR END TRUE-UP INVOICE

<TABLE>
<S>            <C>          <C>              <C>               <C>                 <C>
     5          5,900          177,000.00        244,496.00        140,597.00          177,000.00
     6          5,700          159,600.00        236,208.00        135,831.00          159,600.00
     7          5,900          153,400.00        244,496.00        140,597.00          153,400.00
     8          5,900          159,300.00        244,496.00        140,597.00          159,300.00
     9          5,360          134,000.00        222,118.40        127,728.80          134,000.00
    10          5,900          147,500.00        244,496.00        140,597.00          147,500.00
    11          5,900          123,900.00        244,496.00        140,597.00          140,597.00
    12          5,600          123,200.00        232,064.00        133,448.00          133,448.00
-------------------------------------------------------------------------------------------------
  Total        68,590       $1,876,100.00     $2,842,369.60     $1,634,499.70       $1,920,632.70

(Total of Column E) > (Total of Column D) therefore Annual True-up calculated
-----------------------------------------------------------------------------
under Section 7.5.1(b)
----------------------

H.    Annual True-up - Delivered Energy                         (Total D - Total G)         $(44,532.70)
I.    Average Cost of Delivered Energy after True-up ($/MWh)    (Total D / Total C)         $     27.35
</TABLE>

<TABLE>
<CAPTION>
                  J                K                 L                 M                   N
             Replacement   Replacement Energy  Gross Replacement  Adjusted Replacement Invoiced Replacement
   Month     Energy (MWh)    x Average Cost     Cost of Energy      Cost of Energy        Cost of Energy
   -----     ------------  -----------------    --------------      --------------        --------------
                                (I x J)
<S>          <C>           <C>                 <C>                <C>                  <C>
     1           150                            $ 4,900.00                                 $          0.00
     2           150                              7,680.00                                        1,464.00
     3           150                              3,800.00                                          225.50
     4             0                                  0.00                                            0.00
     5             0                                  0.00                                            0.00
     6             0                                  0.00                                            0.00
     7             0                                  0.00                                            0.00
     8             0                                  0.00                                            0.00
     9             0                                  0.00                                            0.00
    10             0                                  0.00                                            0.00
    11             0                                  0.00                                            0.00
    12             0                                  0.00                                            0.00
----------------------------------------------------------------------------------------------------------
   Total         450           $12,308.57       $16,380.00             $4,071.43           $      1,689.50

O.    Annual True-up - Replacement Costs                        (Total N - Total M)        $     (2,381.93)
Total Annual True-up *                                              (H + O)                $    (46,914.63)
==========================================================================================================
</TABLE>

EXAMPLE 4
---------

<TABLE>
<CAPTION>
                  C                D                 E                 F                   G
              Delivered      Market Price x   Price Ceiling x    Price Floor x    Supplier's Invoiced
   Month     Energy (MWh)   Delivered Energy  Delivered Energy  Delivered Energy    Amount - Energy
   -----     ------------   ----------------  ----------------  ----------------    ---------------
                                                  (A x C)           (B x C)
<S>          <C>            <C>               <C>               <C>                <C>
     1          5,510         $167,350.00       $228,334.40       $131,303.30         $167,350.00
     2          5,510          242,300.00        228,334.40        131,303.30          228,334.40
     3          5,510           99,750.00        228,334.40        131,303.30          131,303.30
     4          5,900          129,800.00        244,496.00        140,597.00          140,597.00
</TABLE>

                                      E-4
<PAGE>

                                    EXHIBIT E
                               REID GARDNER BUNDLE
                            YEAR END TRUE-UP INVOICE

<TABLE>
<S>          <C>           <C>                <C>              <C>                 <C>
     5          5,900          100,300.00        244,496.00        140,597.00          140,597.00
     6          5,700          131,100.00        236,208.00        135,831.00          135,831.00
     7          5,900          135,700.00        244,496.00        140,597.00          140,597.00
     8          5,900           82,600.00        244,496.00        140,597.00          140,597.00
     9          5,360           96,480.00        222,118.40        127,728.80          127,728.80
    10          5,900          112,100.00        244,496.00        140,597.00          140,597.00
    11          5,900           70,800.00        244,496.00        140,597.00          140,597.00
    12          5,600          106,400.00        232,064.00        133,448.00          133,448.00
-------------------------------------------------------------------------------------------------
   Total       68,590       $1,474,680.00     $2,842,369.60     $1,634,499.70       $1,767,577.50

(Total of Column E) > (Total of Column D) therefore Annual True-up calculated
-----------------------------------------------------------------------------
under Section 7.5.1(b)
----------------------

H.    Annual True-up - Delivered Energy                         (Total F - Total G)       $(133,077.80)
I.    Average Cost of Delivered Energy after True-up ($/MWh)    (Total F / Total C)       $      23.83
</TABLE>

<TABLE>
<CAPTION>
                  J                K                 L                     M                   N
             Replacement   Replacement Energy  Gross Replacement  Adjusted Replacement Invoiced Replacement
   Month     Energy (MWh)    x Average Cost     Cost of Energy       Cost of Energy      Cost of Energy
   -----     -----------     --------------     --------------       --------------      --------------
                                (I x J)
<S>          <C>            <C>                <C>                 <C>                   <C>
     1           150                          $   4,900.00                                $          0.00
     2           150                              7,680.00                                       1,464.00
     3           150                              3,800.00                                         225.50
     4             0                                  0.00                                           0.00
     5             0                                  0.00                                           0.00
     6             0                                  0.00                                           0.00
     7             0                                  0.00                                           0.00
     8             0                                  0.00                                           0.00
     9             0                                  0.00                                           0.00
    10             0                                  0.00                                           0.00
    11             0                                  0.00                                           0.00
    12             0                                  0.00                                           0.00
---------------------------------------------------------------------------------------------------------
   Total         450        $  10,723.50      $  16,380.00        $   5,656.50            $      1,689.50

O.    Annual True-up - Replacement Costs                        (Total N - Total M)       $     (3,967.00)
Total Annual True-up *                                              (H + O)               $   (137,044.80)
=========================================================================================================
</TABLE>

* Positive Total Annual True-up is indicative of a payment form Buyer to
Supplier; Negative Total Annual True-up is indicative of a payment form Supplier
to Buyer.

                                      E-5
<PAGE>

                                   EXHIBIT F
                   NOTICES, BILLING AND PAYMENT INSTRUCTIONS

Supplier:
--------

a) Agreement Notices:        Name and Address: __________________________
   ------------------
                             Phone: _____________________________________
                             Fax:   _____________________________________

b) Payment Check:            Name and Address: __________________________
   --------------

c) Payment Wire Transfer:    Bank: ______________________________________
   ----------------------
                             ABA #: _____________________________________
                             For:   Supplier's Name _____________________
                             Account No: ________________________________
                             For: _______________________________________

d) Invoices:                 Name and Address: __________________________
   --------
                             Phone: _____________________________________
                             Fax: _______________________________________

e) Operating Notifications:
   -----------------------

    i)   (Management, if required)

    ii)  Pre-Schedule:       Phone: _____________________________________
                             Fax: _______________________________________

    iii) Real Time:          Phone: _____________________________________
                             Fax: _______________________________________

    iv)  Monthly Checkout    Phone: _____________________________________
         Person:             Fax: _______________________________________

                                      F-6
<PAGE>

Buyer:
-----

a) Agreement Notices:
   -----------------
    Address:        Gary Craythorn
                    Manager, Resource Contracts
                    Nevada Power Company
                    6226 West Sahara Avenue, M/S 26A
                    Las Vegas, Nevada 89146
    Phone:          702/367-5425
    Fax:            702/227-2455
    E-mail:         gcraythorn@nevp.com

b) Invoices:
   --------

    US Post Office:    (Via Certified Mail)      Overnight Delivery
    --------------                               ------------------
    Address:       Nevada Power Company          Address:  Nevada Power Company
                   Attn: Kathy Crews             Attn: Kathy Crews
                   P.O. Box 230, M/S 20          6226 West Sahara Ave., M/S 20
                   Las Vegas, Nevada 89151       Las Vegas, Nevada 89146
    Telephone:     702/227-2476
    Fax:           702/367-5096
    E-mail:        kcrews@nevp.com

<TABLE>
<CAPTION>
c) Schedules:
   ---------
   <S>                                                    <C>
    i)   Pre-Schedule: Primary Name:   Rick Engebretson   Phone:  702/862-7195
                                                          E-mail: rengebretson@nevp.com
                       Alternate Name: Tim Schuster       Phone:  702/862-7194
                                                          E-mail: tschuster@nevp.com
                                                          Fax:    702/227-2404
    ii)  Real Time:                                       Phone:  702/862-7106
                                                          Fax:    702/227-2404
    iii) Monthly Checkout:             Kathy Crews        Phone:  702/227-2476
                                                          Fax:    702/367-5096
                                                          E-mail: kcrews@nevp.com
</TABLE>

d) Control Area/Transmission:
   -------------------------
    i)  Reliability Dispatch:      Phone:(702) 451-2026
                                   Fax:(702) 862-7113
    ii) Transmission Dispatch:     Phone:(702) 451-8346
                                   Fax:(702) 862-7113

                                      F-7
<PAGE>

                                    EXHIBIT G

                          FORM OF AVAILABILITY NOTICE*

Date of Notice:

Time of Notice:

Supplier:

Name of Supplier's Representative:

Buyer:

Asset Bundle:

Availability Dates (96 hours total):

<TABLE>
<CAPTION>
                          A               B                C             D                E              F             G

Availability  Hour   Available from   Total Derating of    Permitted    Asset Bundle    Available    Total Derating  Permitted
  Date      Ending    Valmy   Unit     Valmy Unit (MW)    Derating       Capacity of    from Valmy   Of    Valmy     Derating of
  ----      ------            ----     --------------   Unit 1 (MW)    Unit 1 (MW)     Unit 2 (MW)   Unit 2 (MW)     Unit 2 (MW)
                      1 (MW)                            -----------    -----------     ----------    -----------     -----------
                      -----
<S>          <C>      <C>             <C>               <C>            <C>            <C>            <C>             <C>
                     (A *** or = ____) (___ - A)       (C) *** or = B) (A - C)       (E *** or = ___) (___ - E)      (B *** or = F)

              0600

              0700

              0800

              0900

              1000

              1100

              1200

              1300

              1400

              1500

              1600

              1700

              1800

              1900

              2000

              2100

              2200

              2300

              2400

              0100

              0200

              0300

              0400

              0500

              0600

              0700

               :

         (96 hours total)

               :

              300

              400

              500

<CAPTION>

                             H              I**                     J

                         Asset bundle    Alternative    Cause and Expected Duration of
Availability  Hour         Capacity of     Point(s) of    Deratings and Identification
   Date      Ending       Unit 2 (MW)       Delivery       Permitted Deratings
   ----      ------        ----------       -------        -------------------
<S>         <C>         <C>              <C>            <C>
                             (G - E)

              0600

              0700

              0800

              0900

              1000

              1100

              1200

              1300

              1400

              1500

              1600

              1700

              1800

              1900

              2000

              2100

              2200

              2300

              2400

              0100

              0200

              0300

              0400

              0500

              0600

              0700

               :

         (96 hours total)

               :

              300

              400

              500
</TABLE>
*   The Parties' operational personnel shall develop a similar form for the
    other generating units in the bundle.

**  The Parties' operational personnel shall develop the necessary procedure
    to document requests and responses to utilize Alternative Point(s) of
    Delivery.

***  less than
**** Greater than
                                      G-1
<PAGE>

                                    EXHIBIT H
                                FORM OF GUARANTEE

         This Guarantee is entered into as of November 16, 2000 by NRG Energy,
Inc., a Delaware corporation, and Dynegy Holdings Inc., a Delaware corporation
(each, a "Guarantor"), on behalf of Reid Gardner Power LLC, a Delaware limited
liability company ("Supplier"), in favor of and for the benefit of Nevada Power
Company, a Nevada corporation ("NPC"). NPC is sometimes referred to herein as
"Beneficiary".

         WHEREAS, Supplier and NPC are entering into a Transitional Power
Purchase Agreement dated as of November 16, 2000 (the "TPPA") by which Supplier
has agreed to sell and NPC has agreed to buy Energy and Ancillary Services (as
defined in the TPPA) produced by the Reid Gardner generating station being sold
by NPC; and

         WHEREAS, it is a condition to the obligation of NPC to enter into the
TPPA for Guarantor to guarantee the Supplier's obligations under the TPPA in an
amount not to exceed the Credit Amount (as defined in the TPPA) (the "Guarantied
Obligations").

         1. Guarantee. Each Guarantor jointly and severally, and irrevocably and
unconditionally, guaranties, as primary obligor and not merely as surety, the
due and punctual payment in full of all Guarantied Obligations (including
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C.(S)362(a)).

         In the event that all or any portion of the Guarantied Obligations is
paid by Supplier, the obligations of Guarantor hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) is rescinded or recovered directly
or indirectly from the Beneficiary as a preference, fraudulent transfer or
otherwise, and any such payments that are so rescinded or recovered shall
constitute Guarantied Obligations (to the extent such payments, in the
aggregate, do not exceed the Credit Amount).

         Subject to the other provisions of this Section 1, upon failure of
Supplier to pay any of the Guarantied Obligations when and as the same shall
become due, the Guarantors will upon demand pay, or cause to be paid, in cash,
to NPC, an amount equal to the aggregate of the unpaid Guarantied Obligations to
the extent due. In the event the Guarantors fail to pay the Guarantied
Obligations, each and every default in the payment shall give rise to a separate
cause of action and separate causes of action may be brought hereunder as each
such cause of action arises. In no event shall the amount recoverable hereunder
by Beneficiary from the Guarantors, singly or jointly, ever exceed the Credit
Amount (as defined in the TPPA).

         2. Expenses. Each Guarantor agrees to reimburse NPC for all reasonable
costs and expenses (including, without limitation, the reasonable fees and
expenses of legal counsel) in connection with (i) any default by such Guarantor
hereunder and any enforcement or collection proceeding resulting therefrom,
including, without limitation, all manner of participation in or other
involvement with bankruptcy, insolvency, receivership, foreclosure, winding up
or liquidation proceedings of or involving the Guarantor, judicial or regulatory
proceedings of or

                                      H-3
<PAGE>

involving the Guarantor and workout, restructuring or other negotiations or
proceedings of or involving the Guarantor (whether or not the workout,
restructuring or transaction contemplated thereby is consummated) and (ii) the
enforcement of this Section 2.

         3. Guarantee Absolute; Continuing Guarantee. The obligations of each
Guarantor hereunder are joint and several, irrevocable, absolute, independent
and unconditional, and shall not be affected by any circumstance which
constitutes a legal or equitable discharge of a guarantor or surety other than
payment in full of the Guarantied Obligations. In furtherance of the foregoing
and without limiting the generality thereof, the Guarantors agree that: (a) this
Guarantee is a guarantee of payment when due and not of collectibility; (b) the
obligations of each Guarantor hereunder are independent of the obligations of
Supplier under the TPPA and a separate action or actions may be brought and
prosecuted against either Guarantor whether or not any action is brought against
the Supplier and whether or not the Supplier is joined in any such action or
actions; and (c) either Guarantor's payment of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or abridge the
Guarantors' liability for any portion of the Guarantied Obligations that has not
been paid. This Guarantee is a continuing guarantee and shall be binding upon
the Guarantors and its successors and assigns.

         4. Actions by Beneficiary. The Beneficiary may from time to time,
without notice or demand and without affecting the validity or enforceability of
this Guarantee or giving rise to any limitation, impairment or discharge of the
Guarantors' liability hereunder, (a) renew, extend, accelerate or otherwise
change the time, place, manner or terms of payment of the Guarantied
Obligations, (b) settle, compromise, release or discharge, or accept or refuse
any offer of performance with respect to, or substitutions for, the Guarantied
Obligations or any agreement relating thereto and/or subordinate the payment of
the same to the payment of any other obligations, (c) request and accept other
guaranties of the Guarantied Obligations and take and hold security for the
payment of this Guarantee or the Guarantied Obligations, (d) release, exchange,
compromise, subordinate or modify, with or without consideration, any security
for payment of the Guarantied Obligations, any other guaranties of the
Guarantied Obligations, or any other obligation of any Person with respect to
the Guarantied Obligations, (e) enforce and apply any security hereafter held by
or for the benefit of the Beneficiary in respect of this Guarantee or the
Guarantied Obligations and direct the order or manner of sale thereof, or
exercise any other right or remedy that the Beneficiary may have against any
such security, and (f) exercise any other rights available to NPC under the
TPPA.

         5. No Discharge. This Guarantee and the obligations of each Guarantor
hereunder shall be valid and enforceable and shall not be subject to any
limitation, impairment or discharge for any reason (other than payment in full
of the Guarantied Obligations), including without limitation the occurrence of
any of the following, whether or not Guarantor shall have had notice or
knowledge of any of them: (a) any failure to assert or enforce or agreement not
to assert or enforce, or the stay or enjoining, by order of court, by operation
of law or otherwise, of the exercise or enforcement of, any claim or demand or
any right, power or remedy with respect to the Guarantied Obligations or any
agreement relating thereto, or with respect to any other guarantee of or
security for the payment of the Guarantied Obligations, (b) any waiver or

                                      H-4
<PAGE>

modification of, or any consent to departure from, any of the terms or
provisions of any other guarantee or security for the Guarantied Obligations,
(c) the Guarantied Obligations, or any agreement relating thereto, at any time
being found to be illegal, invalid or unenforceable in any respect, (d) the
application of payments received from any source to the payment of indebtedness
other than the Guarantied Obligations, even if the Beneficiary might have
elected to apply such payment to any part or all of the Guarantied Obligations,
(e) any failure to perfect or continue perfection of a security interest in any
collateral which secures any of the Guarantied Obligations, (f) any defenses,
set-offs or counterclaims which the Supplier may assert against the Beneficiary
in respect of the Guarantied Obligations, including but not limited to failure
of consideration, breach of warranty, payment, statute of frauds, statute of
limitations, accord and satisfaction (other than the right to set off or recoup
overdue undisputed payments due from Beneficiary under the TPPA), and (g) any
other act or thing or omission, or delay to do any other act or thing, which may
or might in any manner or to any extent vary the risk of either Guarantor as an
obligor in respect of the Guarantied Obligations.

         6. Waivers for the Benefit of Beneficiary. Each Guarantor waives, for
the benefit of Beneficiary, until the Guarantied Obligations are paid in full:
(a) any right to require the Beneficiary, as a condition of payment or
performance by the Guarantors, to (i) proceed against the Supplier, any other
guarantor of the Guarantied Obligations or any other Person, (ii) proceed
against or exhaust any security held from the Supplier, any other guarantor of
the Guarantied Obligations or any other Person, or (iii) pursue any other remedy
in the power of the Beneficiary; (b) any defense arising by reason of the
incapacity, lack of authority or any disability or other defense of the Supplier
including, without limitation, any defense based on or arising out of the lack
of validity or the unenforceability of the Guarantied Obligations or any
agreement or instrument relating thereto or by reason of the cessation of the
liability of the Supplier from any cause other than payment in full of the
Guarantied Obligations; (c) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal; (d) (i) any
principles or provisions of law, statutory or otherwise, that are or might be in
conflict with the terms of this Guarantee and any legal or equitable discharge
of Guarantors' obligations hereunder, (ii) the benefit of any statute of
limitations affecting Guarantors' liability hereunder or the enforcement hereof,
(iii) any rights to set-offs, recoupments and counterclaims, and (iv)
promptness, diligence and any requirement that the Beneficiary protect, secure,
perfect or insure any lien on any property subject thereto; (e) notices,
demands, presentments, protests, notices of protest, notices of dishonor and
notices of any action or inaction, including acceptance of this Guarantee; and
(f) to the fullest extent permitted by law, any defenses or benefits that may be
derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, or which may conflict with the terms of this Guarantee.

         7. Waiver of Rights Against Supplier. Until the Guarantied Obligations
are paid in full, each Guarantor waives any claim, right or remedy, direct or
indirect, that such Guarantor now has or may hereafter have against the Supplier
or any of its assets in connection with this Guarantee or the performance by
such Guarantor of its obligations hereunder, in each case whether such claim,
right or remedy arises in equity, under contract, by statute, under common law
or otherwise and including without limitation (a) any right of subrogation,
reimbursement or

                                      H-5
<PAGE>

indemnification that such Guarantor now has or may hereafter have against the
Supplier, (b) any right to enforce, or to participate in, any claim, right or
remedy that the Beneficiary now has or may hereafter have against the Supplier,
and (c) any benefit of, and any right to participate in, any collateral or
security hereafter held by the Beneficiary. Each Guarantor further agrees that,
to the extent the waiver or agreement to withhold the exercise of its rights of
subrogation, reimbursement and indemnification as set forth herein is found by a
court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification such Guarantor may have
against the Supplier or against any collateral or security shall be junior and
subordinate to any rights the Beneficiary may have against Supplier, to all
right, title and interest the Beneficiary may have in any such collateral or
security, and to any right the Beneficiary may have against such other
guarantor.

         8. Representations and Warranties of Guarantor. Each Guarantor
represents and warrants to NPC as follows:

         (a) it is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation. Such Guarantor has the
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted.

         (b) it has the corporate power and authority to execute and deliver
this Guarantee and to consummate the transactions contemplated hereby. The
execution and delivery of this Guarantee and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of such Guarantor, and no other corporate proceedings on the
part of such Guarantor, including the approval of its shareholders, are
necessary to authorize this Guarantee or to consummate the transactions so
contemplated. This Guarantee has been duly and validly executed and delivered by
such Guarantor and constitutes a valid and binding agreement of such Guarantor,
enforceable against such Guarantor in accordance with its terms.

         (c) There are no legal or arbitral proceedings by or before any
governmental or regulatory authority or agency, now pending or (to such
Guarantor's knowledge) threatened against such Guarantor or its subsidiaries
that could reasonably be expected to have a material adverse effect on the
consolidated financial condition, operations or business taken as a whole of it
and its subsidiaries, except as set forth in periodic filings by such Guarantor
with the Securities and Exchange Commission.

         (d) The representations and warranties made herein will remain true
until such Guarantor has fulfilled its obligations to pay in full the Guaranteed
Obligations.

         9. Set Off. In addition to any other rights the Beneficiary may have
under law or in equity, if any amount shall at any time be due and owing by
either Guarantor to the Beneficiary under this Guarantee, the Beneficiary is
authorized at any time or from time to time, without notice (any such notice
being expressly waived), to set off and to appropriate and to apply any
indebtedness of the Beneficiary owing to such Guarantor and any other property
of such

                                      H-6
<PAGE>

Guarantor held by the Beneficiary to or for the credit or the account of such
Guarantor against and on account of the Guarantied Obligations and liabilities
of such Guarantor to the Beneficiary under this Guarantee.

         10. Disputes. Any action, claim or dispute arising out of or relating
to this Guarantee (any such action, claim or dispute, a "Dispute") shall be
submitted in writing to the other Party. In the event the Guarantors and NPC are
unable to resolve the Dispute satisfactorily within thirty (30) days from the
receipt of notice of the Dispute, either the Guarantors or NPC may initiate
arbitration through the serving and filing of a demand for arbitration. The
Guarantors and NPC expressly agree that such arbitration shall be the exclusive
means to further resolve any Dispute and hereby irrevocably waive their right to
a jury trial with respect to any Dispute, provided that at any time a request
made for provisional remedies requesting preservation of respective rights and
obligations under the Guarantee may be resolved by a court of law located in the
County of the principal place of business of NPC. Arbitration shall be conducted
in accordance with Sections 13.4, 13.5, 13.6, 13.7, and 13.8 of the TPPA.

         11. Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Guarantee, and no consent to any departure by
either Guarantor therefrom, shall in any event be effective without the written
concurrence of NPC and, in the case of any such amendment or modification,
either Guarantor. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.

         12. Miscellaneous. It is not necessary for Beneficiary to inquire into
the capacity or powers of either Guarantor or Supplier or the officers,
directors or any agents acting or purporting to act on behalf of any of them.
The rights, powers and remedies given to Beneficiary by this Guarantee are
cumulative and shall be in addition to and independent of all rights, powers and
remedies given to Beneficiary by virtue of any statute or rule of law or in the
TPPA. Any forbearance or failure to exercise, and any delay by Beneficiary in
exercising, any right, power or remedy hereunder shall not impair any such
right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.

         In case any provision in or obligation under this Guarantee shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

         This Guarantee shall inure to the benefit of Beneficiary and its
respective successors and assigns.

         13. Notices. All notices, requests, demands, waivers, consents and
other communications hereunder shall be in writing, shall be delivered either in
person, by telegraphic, facsimile or other electronic means, by overnight air
courier or by mail, and shall be deemed to have been duly given and to have
become effective (a) upon receipt if delivered in person or by telegraphic,
facsimile or other electronic means, (b) one (1) business day after having been

                                      H-7
<PAGE>

delivered to an air courier for overnight delivery or (c) three (3) business
days after having been deposited in the U.S. mails as certified or registered
mail, return receipt requested, all fees prepaid, directed to the parties at the
following addresses:

         If to Guarantors, addressed to:   David Lloyd, Esq.
                                           NRG Energy, Inc.
                                           Symphony Towers
                                           Suite 2740
                                           750 "B" Street
                                           San Diego, CA 92101-8129
                                           Facsimile:   (619) 615-7663

                                           Alisa B. Johnson, Esq.
                                           Dynegy Holdings Inc.
                                           1000 Louisiana Street, Suite 5800
                                           Houston, TX 77002
                                           Facsimile:   (713) 767-8508

              with copies to:              William H. Holmes, Esq.
                                           Stoel Rives LLP
                                           900 SW Fifth Avenue
                                           Suite 2300
                                           Portland, OR 97204-1268
                                           Facsimile:   503-220-2480

         If to NPC, addressed to:          William E. Peterson
                                           Nevada Power Company
                                           6100 Neil Road
                                           Reno, Nevada 89511
                                           Facsimile: (775) 834-5959

         IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered by its officers thereunto duly authorized as of the date
first written above.

NRG ENERGY, INC.                         DYNEGY HOLDINGS INC.

--------------------------------         --------------------------------
By:      Craig A. Mataczynski            By:      _______________________
Title:   President                       Title:   _______________________
Address: 901 Marquette Ave., Suite 2300  Address: 1000 Louisiana St., Suite 5800
         Minneapolis, MN 55402                    Houston, TX 77002

                                      H-8
<PAGE>

                                    EXHIBIT I

                            COMPANY OBSERVED HOLIDAYS

       New Year's Day                      January 1/st/
       Martin Luther King's Day            Third Monday in January
       President's Day                     Third Monday in February
       Memorial Day (observed)             Last Monday in May
       Independence Day                    July 4/th/
       Labor Day                           First Monday in September
       Veteran's Day                       November 11/th/
       Thanksgiving Day                    Fourth Thursday in November
       Thanksgiving Friday                 Friday after Thanksgiving
       Christmas Eve                       December 24/th/
       Christmas Day                       December 25/th/

Holidays falling on Saturday will be observed on the preceding Friday and those
falling on Sunday will be observed on the following Monday.

                                      I-1
<PAGE>

                                   EXHIBIT J
                              REID GARDNER BUNDLE
                          ADJUSTMENTS TO TPPA AMOUNT

<TABLE>
<CAPTION>
                               Monthly                                Monthly
               Month         Adjustment                Month         Adjustment
             ----------------------------           ---------------------------
             <S>             <C>                    <C>              <C>
                 Mar-01              3.7%               Mar-02             2.9%
                 Apr-01              3.2%               Apr-02             2.7%
                 May-01              4.8%               May-02             4.0%
                 Jun-01              5.6%               Jun-02             4.5%
                 Jul-01              8.8%               Jul-02             9.2%
                 Aug-01              8.3%               Aug-02             7.3%
                 Sep-01              8.8%               Sep-02             7.1%
                 Oct-01              4.4%               Oct-02             3.4%
                 Nov-01              3.8%               Nov-02             2.5%
                 Dec-01              3.9%               Dec-02             2.5%
                 Jan-02              3.1%               Jan-03             2.6%
                 Feb-02              2.5%               Feb-03             2.1%
</TABLE>

Example 1 - Effective Date of Agreement is April 15, 2001
---------------------------------------------------------

A.    TPPA Amount:                            $15,000,000

<TABLE>
<S>                     <C>                  <C>                <C>              <C>
                             B                    C                 D
                          Monthly            Applicable         Applicable
          Month         Adjustment            Portion *         Adjustment
--------------------------------------------------------------------------
                                                                 (B x C)
              Apr-01              3.2%                   50.0%         1.6%
              May-01              4.8%                  100.0%         4.8%
--------------------------------------------------------------------------
          Total                                                        6.4%

E.  Total of Monthly Applicable Adjustments                                              6.4%
F   Adjusted TPPA Amount                                  (A x (1+D))            $15,960,000
============================================================================================
</TABLE>

Example 2 - Effective Date of Agreement is September 15, 2001
-------------------------------------------------------------

G.    TPPA Amount:                            $15,000,000

<TABLE>
<CAPTION>
                                   H                    I                 J
                                Monthly            Applicable         Applicable
                Month         Adjustment            Portion *         Adjustment
----------------------------------------------------------------------------------------
                                                                     (H x I)
<S>                           <C>                  <C>               <C>
              Jun-01              5.6%                  100.0%                 5.6%
              Jul-01              8.8%                  100.0%                 8.8%
              Aug-01              8.3%                  100.0%                 8.3%
----------------------------------------------------------------------------------------
</TABLE>

                                      J-1
<PAGE>

                                   EXHIBIT J
                              REID GARDNER BUNDLE
                          ADJUSTMENTS TO TPPA AMOUNT

              Sep-01              8.8%                   50.0%         4.4%
--------------------------------------------------------------------------
          Total                                                       27.1%

<TABLE>
<S>                                                       <C>                <C>
K.  Total of Monthly Applicable Adjustments                                         27.1%
L   Adjusted TPPA Amount                                  (G x (1-K))        $10,935,000
========================================================================================
</TABLE>

Example 3 - Termination Date of December 31, 2002
-------------------------------------------------

M.    TPPA Amount:                            $15,000,000

<TABLE>
<CAPTION>
                                   N                    O                 P
                                Monthly            Applicable         Applicable
                Month         Adjustment           Portion **         Adjustment
----------------------------------------------------------------------------------
                                                                        (N x O)
<S>                           <C>                  <C>                <C>              <C>
              Jan-03              2.6%                  100.0%         2.6%
              Feb-03              2.1%                  100.0%         2.1%
----------------------------------------------------------------------------------
          Total                                                        4.7%

Q.  Total of Monthly Applicable Adjustments                                                 4.7%
R   Payment Amount                                          (M x Q)                    $705,000
===============================================================================================
</TABLE>

*  The applicable portion of the month is the number of days in the month during
which deliveries of energy from Supplier to Buyer were made divided by the
number of days in the month.

** The applicable portion of the month is the number of days in the month during
which deliveries of energy from Supplier to Buyer would have been made divided
by the number of days in the month.

                                      J-2
<PAGE>

                                   EXHIBIT K
                              REID GARDNER BUNDLE
                      ADJUSTMENTS TO MINIMUM ANNUAL TAKE

<TABLE>
<CAPTION>
         A               B                C             D              E             F
                     Base Number      Base Energy   Sales per       Current       Adjusted
                                                                    Number        Energy
        Class *      of Customers       Sales        Customer
                                         (MWh)         (MWh)    of Customers    Sales (MWh)
-------------------------------------------------------------------------------------------
                                       (C / B)                                  (D x E) **
<S>                  <C>              <C>           <C>         <C>             <C>
     Residential             475,000    5,800,000           12      470,000     5,738,947
     Commercial               65,000    2,800,000           43       60,000     2,584,615
     Industrial                1,000    4,900,000                       800     3,600,000
     Street Lighting               5      130,000                         5       130,000
     Other Retail                 50      600,000                        50       600,000
     Wholesale                     5      850,000                         5       850,000
-------------------------------------------------------------------------------------------
                             541,060   15,080,000                   530,860    13,503,563

     G.  Adjustment to Minimum Annual Take                     (F / C)              89.55%
     H.  Minimum Annual Take from Exhibit A (MWh)                               2,550,000
     I.  Revised Minimum Annual Take (MWh)                     (G x H)          2,283,525

     J                  K
Month During      Applicable Min.

Contract Year     Annual Take(MWh)
---------------------------------
       1              2,550,000
       2              2,550,000
       3              2,550,000
       4              2,550,000
       5              2,283,525
       6              2,283,525
       7              2,283,525
       8              2,167,500
       9              2,167,500
      10              2,040,000
      11              2,040,000
      12              2,040,000
---------------------------------
     Total           27,505,575

L.  Minimum Take for Contract Year (MWh)       (Total of K / 12)          2,292,131
</TABLE>

*  As reported on Buyer's FERC Form 1
** Adjusted Energy Sales for the remaining Industrial, Street Lighting, Other
   Retail, and Wholesale customers will be based upon actual sales during the
   base period.

                                      K-1
<PAGE>

                                   EXHIBIT L
                              REID GARDNER BUNDLE
                   ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE

<TABLE>
<CAPTION>
    A           B            C              D            E *            F           G **
Dispatch     Supply      Delivered      Permitted       Force      Replacement   Applicable
  Hour    Amount (MWh)  Energy (MWh)  Derating(MWh)  Majeure(MWh)  Energy(MWh)  Energy(MWh)
--------------------------------------------------------------------------------------------
                                                                                 (C+D+E+F)
<S>       <C>           <C>           <C>            <C>           <C>          <C>
        1           590          590                                                     590
        2           590          590                                                     590
        3           590          590                                                     590
        4           590          590                                                     590
        5           590          590                                                     590
        6           590          570              20                                     590
        7           590          570              20                                     590
        8           590          570                                         20          590
        9           590          590                                                     590
       10           590          590                                                     590
       11           590          590                                                     590
       12           590          590                                                     590
       13           590            0                          590                        590
       14           590            0                          590                        590
       15           590            0                          590                        590
       16           590            0                          590                        590
       17           590          540                                         30          570
       18           590          590                                                     590
       19           590          590                                                     590
       20           590          590                                                     590
       21           590          590                                                     590
       22           590          590                                                     590
       23           590          590                                                     590
       24           560          560                                                     560
       25           540          540                                                     540
       26           510          510                                                     510
       27           540          510              30                                     540
       28           560          560                                                     560
       29           590          590                                                     590
       30           590          590                                                     590
       31           590          590                                                     590
       32           590          590                                                     590
</TABLE>

                                      K-2
<PAGE>

                                   EXHIBIT L
                              REID GARDNER BUNDLE
                   ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE

<TABLE>
<S>              <C>          <C>            <C>       <C>      <C>      <C>
       33           590          590                                        590
       34           590          590                                        590
       35           590          590                                        590
       36           590          590                                        590
-------------------------------------------------------------------------------
    total        21,000       18,500         70        2,360    50       20,980
</TABLE>

*  Includes energy excused because of Supplier's and Buyer's events of Force
   Majeure
** G cannot be greater than B

                                   EXHIBIT M
                              REID GARDNER BUNDLE
                    CONTRACTUAL AND OPERATIONAL CONSTRAINTS

1. For the purposes of this Exhibit M, "Constrained Capacity" shall mean that
   portion of the Asset Bundle Capacity that has been designated as being
   subject to contractual and operational constraints in accordance with the
   provisions of this Exhibit M.

2. Section 4.1.4 of the Agreement, which addresses Supplier's right to Asset
   Bundle Capacity in excess of the Supply Amount, shall not be applicable to
   Constrained Capacity.

3. Asset Bundle Capacity scheduled in accordance with Section 5.1 of the
   Agreement, which addresses Buyer's notifications to Supplier, shall not be
   deemed to include Constrained Capacity unless Buyer's schedules specifically
   designate Constrained Capacity as being applicable to the schedules.

4. The Asset Bundle Capacity described in the following table shall be deemed
   Constrained Capacity.

<TABLE>
<CAPTION>
    ---------------------------------------------------------------------------------------
    Asset Bundle     Source of Capacity     Annual Limit     Monthly Limit     Daily Limit
    ---------------------------------------------------------------------------------------
    <S>              <C>                   <C>               <C>               <C>
    Reid Gardner       Unit 4 Peaking      1,500 hours at    300 hours at      12 hours at
                      (235 MW summer)/1/   max. capacity     max. capacity    max. capacity
    ---------------------------------------------------------------------------------------
</TABLE>

____________________
/1/  As defined in Section 12.2 of the Participation Agreement (as defined in
     the Asset Sale Agreement).

                                      L-2
<PAGE>

                                   EXHIBIT L
                              REID GARDNER BUNDLE
                   ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE
<TABLE>
<S>              <C>          <C>            <C>       <C>      <C>      <C>
       33           590          590                                        590
       34           590          590                                        590
       35           590          590                                        590
       36           590          590                                        590
                                             70        2,360    50       20,980
    total        21,000       18,500
</TABLE>

*  Includes energy excused because of Supplier's and Buyer's events of Force
   Majeure
** G cannot be greater than B

                                   EXHIBIT M
                              REID GARDNER BUNDLE
                    CONTRACTUAL AND OPERATIONAL CONSTRAINTS

1. For the purposes of this Exhibit M, "Constrained Capacity" shall mean that
   portion of the Asset Bundle Capacity that has been designated as being
   subject to contractual and operational constraints in accordance with the
   provisions of this Exhibit M.

2. Section 4.1.4 of the Agreement, which addresses Supplier's right to Asset
   Bundle Capacity in excess of the Supply Amount, shall not be applicable to
   Constrained Capacity.

3. Asset Bundle Capacity scheduled in accordance with Section 5.1 of the
   Agreement, which addresses Buyer's notifications to Supplier, shall not be
   deemed to include Constrained Capacity unless Buyer's schedules specifically
   designate Constrained Capacity as being applicable to the schedules.

4. The Asset Bundle Capacity described in the following table shall be deemed
   Constrained Capacity.

<TABLE>
<CAPTION>
    ---------------------------------------------------------------------------------------
    Asset Bundle     Source of Capacity     Annual Limit     Monthly Limit     Daily Limit
    ---------------------------------------------------------------------------------------
    <S>              <C>                   <C>               <C>               <C>
    Reid Gardner       Unit 4 Peaking      1,500 hours at    300 hours at      12 hours at
                      (235 MW summer)1      max. capacity    max. capacity    max. capacity
    ---------------------------------------------------------------------------------------
</TABLE>

____________________
1   As defined in Section 12.2 of the Participation Agreement (as defined in the
    Asset Sale Agreement).

                                      L-2

                                       70

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