Document:

Exhibit 10.2

                      THIRD AMENDMENT

                           to the

                 INTERCONNECTION AGREEMENT

                    ,dated May 1, 1992,

                           among

             INDIANAPOLIS POWER & LIGHT COMPANY

                            and

                      PSI ENERGY, INC.

                            and

                   CINERGY SERVICES, INC.

                    Dated June 30, 1995

             INDIANAPOLIS POWER & LIGHT COMPANY
            FEDERAL ENERGY REGULATORY COMMISSION
                 Rate Schedule FERC No. 23

                     CINERGY COMPANIES
            FEDERAL ENERGY REGULATORY COMMISSION
                 Rate Schedule FERC No. 10

INDEX

SECTION ONE:   Agreement As Amended

               Interconnection Agreement Between
               Indianapolis Power & Light Company, and
               The Cincinnati Gas & Electric Company,
               PSI Energy, Inc., and CINergy Services, Inc.,
               dated June 30, 1995

SECTION TWO:   Agreement As Signed

               Interconnection Agreement Between
               Indianapolis Power & Light Company, and
               The Cincinnati Gas & Electric Company,
               PSI Energy, Inc., and CINergy Services, Inc.,
               dated June 30, 1995

                      THIRD AMENDMENT
                           TO THE

                 INTERCONNECTION AGREEMENT

                           AMONG

             INDIANAPOLIS POWER & LIGHT COMPANY

                            and

                      PSI ENERGY, INC.
                 AND CINERGY SERVICES, INC.

     0.01 THIS THIRD AMENDMENT, dated on the 30th day of June
1995,  among  INDIANAPOLIS POWER & LIGHT COMPANY (hereinafter
referred  to as "IPL"), a corporation organized and  existing
under  the laws of the State of Indiana and PSI ENERGY,  INC.
(hereinafter  referred to as "PSI"), a corporation  organized
and  existing  under the laws of the State  of  Indiana,  and
CINERGY  SERVICES, INC. (hereinafter referred to as  "CINergy
Services"),  a corporation organized and existing  under  the
laws of the State of Delaware.  IPL, PSI and CINergy Services
are sometimes hereinafter referred to individually as "Party"
and collectively as "Parties" where appropriate.
                    W I T N E S S E T H:

     0.02  WHEREAS, There is now in force and effect  between
IPL and PSI an Interconnection Agreement, dated as of May  1,
1992,   (said  Interconnection  Agreement  being  the   Ninth
Supplement to the 1962 Interconnection Agreement between  IPL
and PSI, herein called the "1992 Agreement"); and

     0.03  WHEREAS,  The  Cincinnati Gas &  Electric  Company
("CG&E")  and  PSI  merged on October 24,  1994,  and  formed
CINergy Corp. with CG&E and PSI now being called the "CINergy
Operating Companies"; and

     0.04 WHEREAS, CG&E, PSI and CINergy Services are parties
to  a  Service Agreement, dated March 2, 1994, which has been
approved  by the Securities and Exchange Commission  and  the
Indiana  Utility  Regulatory Commission (IURC),  under  which
CINergy  Services  will act as PSI*s agent  in  administering
PSI*s interconnection agreements and the three companies  are
also  parties to an Operating Agreement, dated March 2, 1994,
on  file  with and accepted by the FERC and approved  by  the
IURC   under   which  CINergy  Services  will  dispatch   the
generating units of CG&E, PSI and CINergy Services; and

     0.05  WHEREAS,  the Parties desire to  modify  the  1992
Agreement, as hereinafter set forth; and

     0.06  NOW,  THEREFORE, in consideration of the  premises
and mutual covenants and agreements of the Parties, as herein
set forth, the Parties hereby agree as follows:

                         ARTICLE 1
             PROVISIONS FOR, AND CONTINUITY OF
                  INTERCONNECTED OPERATION

          1.01.    Interconnection  Points.   The  respective
138,00 volt and 345,000 volt transmission systems of IPL  and
PSI are presently interconnected at the following points:

     (i)   The 138kV Five Points Interconnection Point
     (ii)  The 345kV Whitestown Interconnection Point

     (iii) The 345kV Gwynneville Interconnection Point
     (iv)  The 138kV Petersburg Interconnection Point
     (v)   The 345kV Petersburg Interconnection Point
     (vi)  The 138kV Centerton Interconnection Point
     (vii) The 138kV Carmel Tap Point

          1.02.  Future Interconnection Points.  The services
provided  for  by  the 1992 Agreement may  also  be  rendered
through  such other points of interconnection as the  Parties
may later agree upon by amending the 1992 Agreement.

          1.03.  Synchronous Operation.  The Parties mutually
agree  that, except as provided in Service Schedule D hereof,
their  respective  systems will be continuously  operated  in
parallel  (except in cases of interruption of  such  parallel
operation due to mutually agreed upon maintenance or  due  to
causes  beyond  the control of either Party, or  due  to  the
necessity of an interruption of parallel operation  in  order
that  the  native  load directly served by either  Party  may
continue  to receive adequate service from such  Party).   If
synchronous  operation of the systems  through  a  particular
line   or   lines  become  interrupted  either  manually   or
automatically because of any of the above-stated reasons, the
Parties  shall  cooperate so as to remove the cause  of  such
interruption as soon as practicable and restore such line  or
lines to normal operating condition.

          1.03.1.   Inadvertent Flow.  It is recognized  that
     in  interconnected system operation, power and  reactive
     flow  will  exist on an interconnection due to scheduled
     power flow from either Party to third parties or between
     third  parties.   This inadvertent  power  flow  depends
     mainly  on  the  design of the internal systems  of  the
     Parties and the interconnected system, and the schedules
     of power flows on the interconnections.

          1.03.2.   Interruption of Operation.   If,  in  the
     sole  judgment  of either Party, the power  or  reactive
     flow over the interconnection facilities of either Party
     is  excessive  to  the extent that  it  jeopardizes  the
     reliability of either Party*s service to its  customers,
     the   Parties  shall  attempt  to  agree  upon  adequate
     corrective   measures  to  eliminate  or  control   such
     excessive  power  or  reactive flow; provided,  however,
     that in the event such a situation exists, the Party  so
     burdened shall have the right, with notice when possible
     to the other Party, to open and leave open one or all of
     the  interconnections between the respective systems  of
     the Parties until corrective action has been taken.  The
     Parties  further  agree  to  study  and  negotiate   the
     installation,  ownership, and  cost  of  any  additional
     equipment  necessary to effect a long-term  solution  to
     any  such excessive loading as herein described  in  the
     event  either Party determines that this interconnection
     contributes  to the excessive loading and requests  such
     negotiation.

          1.04.   Maintenance  of  Equipment.   Each  of  the
Parties   shall  keep,  or  shall  cause  to  be  kept,   the
transmission lines together with all associated equipment and
appurtenances that are located on their respective  sides  of
the  Interconnection Points specified in Section 1.01 hereof,
or  agreed   upon  pursuant  to Section  1.02  hereof,  in  a
suitable  condition of repair at all times, each at  its  own
expense,  in order that said transmission lines will  operate
in  a  reliable  and satisfactory manner and  in  order  that
reduction  in  the  effective capacity of  said  transmission
lines will be avoided to the extent practicable.

                         ARTICLE 2
                  SERVICES TO BE RENDERED

          2.01.   Interconnection Services Schedules.  It  is
the  purpose  of  the  Parties to seek  and  realize,  on  an
equitable  basis,  all  benefits  which  may  be  practicably
effected   through   coordination  in   the   operation   and
development of their respective systems.  It is understood by
the  Parties that such benefits may be realized  by  each  of
them  by  carrying  out  under stated  terms  and  conditions
various  interconnection services and transactions  that  may
from time to time include among others:
     (i)   The furnishing of emergency service,
     (ii)  The  interchange, sale, and purchase of  energy  to
           effect operating economies,
     (iii) The  sale and purchase of short term electric
           power  and  energy available on the system  of  one
           Party and needed on the system of the other, and
     (iv)  The  transmission of power and energy on the  basis
           of simultaneous transfers.

In furtherance of such purpose, the Parties shall create, and
continue  the  functioning  of, an  Operating  Committee,  as
provided in Article 7 hereof.

          2.02.     Specific Terms and Conditions.  Since the
specific  services  to  be rendered in  furtherance  of  such
purpose will vary during the term of the 1992 Agreement,  and
the  terms  and  conditions applicable to such  services  may
require  modification from time to time, it is intended  that
such   specific   services  and  the  terms  and   conditions
applicable  thereto  will be set forth in  Service  Schedules
mutually  agreed  upon  between the  parties.   Such  Service
Schedules,   unless   and  until  changed,   terminated,   or
supplemented,  shall  be  those  specified  in  Section  2.03
hereof.   If  a Service Schedule under the 1992 Agreement  is
changed or supplemented, such Service Schedule shall be fully
restated in order to reflect such change or supplement.

          2.03.   Service Schedules.  The respective  Service
Schedules designated

Service Schedule A - Emergency Service
Service Schedule B - Interchange Energy
Service Schedule C - Short Term Power and Energy
Service Schedule D - Carmel Southeast Tap Power & Energy Transfer

have been agreed upon between the Parties, are identified  as
Exhibits  I,  II,  III,  and IV, respectively,  to  the  1992
Agreement and are attached hereto and made a part hereof  the
same  as if incorporated herein.  It is contemplated  by  the
Parties  that  all  additional mutually agreed  upon  Service
Schedules  will  be  made a part of the 1992  Agreement  upon
presentation and acceptance thereof.

          2.04.   Out-Of-Pocket  Costs.   The  term  "Out-of-
Pocket Cost" of energy from generating units on the system of
a Party shall consist of any costs that are directly incurred
by  IPL or PSI by reason of its generation of such energy and
which  otherwise would not have been incurred by such  system
including,  but  not  limited  to,  fuel,  labor,  operation,
maintenance,  start-up,  fuel  handling,  taxes,   regulatory
commission charges, and emission allowances.

"Out-of-Pocket Cost" of energy purchased from a  third  party
by the supplying Party shall consist of the total amount paid
therefore  by the supplying Party which otherwise  would  not
have  been  paid by such Party, plus any cost which otherwise
would not have been incurred, including, but not limited  to,
regulatory    commission   charges,   emission    allowances,
transmission losses and taxes related to such transaction.

Tax  expenses will be the expenses that are incurred as taxes
either  in  connection with the sale or  production  of  such
energy.

     2.05.  Emission Allowances.  The federal Clean Air  Act,
as  amended,  42  U.S.C. Section 7401  et  seq.  (hereinafter
referred  to as "Clean Air Act"), establishes certain  annual
maximum  sulfur dioxide ("SO2") levels, stated  in  terms  of
required  emission  allowances, for  flue  gases  emitted  by
electric generating units, including units operated  by  IPL,
PSI  and  other  electric utilities who may  supply  electric
energy  for  transactions  under this  1992  Agreement.   The
generator of the electric energy supplied and delivered under
this  1992 Agreement is required by the Clean Air Act to have
adequate  "allowances" (as defined by Section 402(3)  of  the
Clean Air Act in conjunction with Section 403(f) of the Clean
Air  Act) in order to generate such electric energy.  To  the
extent  that either IPL or PSI are required by the Clean  Air
Act to have additional allowances by reason of its generation
of  electric  energy  to be supplied by it  under  this  1992
Agreement,  which allowances would otherwise  not  have  been
required  by such supplying Party, then, unless the supplying
Party  otherwise  agrees  in  advance  in  writing,  at   the
discretion  of the supplying Party, the Party receiving  such
energy  shall  be  responsible for the  cost  or  the  actual
furnishing (without cost to the supplying Party) of  adequate
allowances to the supplying Party in order for such Party  to
supply  such  energy under this Agreement. The Parties  shall
establish,  by  mutual agreement, appropriate  procedures  in
order  to  carry  out  the provisions of this  Section  2.05,
including a statement of costs before any transactions  under
the  Service  Schedules attached hereto are  started.   Also,
prior  to  implementation  of  every  transaction  under  the
Service Schedules attached hereto, the purchasing Party  must
declare  whether  they  will  pay  in  cash  or  return   SO2
Allowances  in-kind  for any consumption  of  SO2  Allowances
directly attributed to such transaction, if any.

It  shall  be  the responsibility of the supplying  Party  to
provide  the receiving Party, before the transaction  begins,
with  a statement of the estimated emission allowance charges
associated with the transaction which the supplying Party  is
seeking  to  add  to  the  rates  to  be  charged  under  the
applicable Service Schedule.  Failure of the supplying  Party
to provide a statement of such charges before the transaction
begins shall constitute a waiver of the recovery of any  such
costs.   In  establishing such procedures, the Parties  shall
recognize that the determination of the additional allowances
required  in  order  to generate the electric  energy  to  be
supplied  hereunder is subject to variables  contingent  upon
the  loading and operating conditions on the system where the
actual  generation occurs.  The procedures so established  by
the  Parties  shall  be  in  accord  with  sound  engineering
principles  of  power plant and system operation,  and  shall
require the furnishing of such additional allowances at  such
times  and  in  such  amounts as will  be  equitable  to  the
supplying Party.

When  IPL  is the supplier of energy and emission allowances,
the   recovery  of  the  applicable  costs  for  the   actual
furnishing  of  adequate  allowances  in  order  for  IPL  to
generate  and supply such energy will be implemented  in  the
following manner:
     (1)   The Buyer shall compensate IPL for the consumption
of  Sulfur  Dioxide  Emissions Allowances ("SO2  Allowances")
directly attributed to electric energy sales by IPL to  Buyer
under  the  Service Schedules.  Such compensation  shall,  at
Buyer*s  option,  be made by either supplying  IPL  with  the
number  of SO2 Allowances directly attributed to such  energy
sales, or by reimbursing IPL for the incremental cost of such
number  of  SO2 Allowances, rounded to the nearest whole  SO2
Allowance.

(1)  If   Buyer  opts  to  reimburse  IPL  in  cash  for  SO2
     Allowances associated with Buyer*s energy purchases  for
     the  month,  the  cash amount due  at  billing  will  be
     determined  by multiplying the number of SO2  Allowances
     attributed  to the sale by the incremental cost  of  the
     SO2 Allowances, as determined in Subsection 2(b) of this
     Section 2.05, at the time of the sale.

     If  Buyer opts to reimburse IPL in SO2 Allowances, Buyer
     will record or transfer to IPL*s account, the number  of
     SO2  Allowances  calculated  below,  at  the  time  cash
     settlement  for the energy is due.  In all cases,  Buyer
     will  transfer  to  IPL*s  account  the  number  of  SO2
     Allowances  due  IPL  for calendar year  no  later  than
     January  15 of the following year.  "Transfer  to  IPL*s
     account" shall mean, for purposes of the Amendment,  the
     transfer  by  the USEPA of the requisite number  of  SO2
     Allowances  to  IPL*s Allowance Tracking System  account
     and  the  receipt  by  IPL  of  the  Allowance  Transfer
     Confirmation.

(2)  Determination of SO2 Emission Allowances Due IPL

     (a)  Number of SO2 Allowances
          The number of SO2 Allowances directly attributed to
          an  energy sale made by IPL shall be determined for
          each  hour,  by  determining the contribution  from
          each  of the unit(s) from which the energy sale  is
          being  made  for  that hour.  For  each  unit,  the
          emission rate in pounds of SO2 per million Btu will
          be determined each month, from fuel sulfur content,
          control   equipment  performance,  and   continuous
          emissions monitoring data.  The emission  rate  and
          the  unit  heat rate will be used to determine  the
          SO2 Allowances used per megawatt-hour ("MWH").  The
          energy from each unit attributable to the sale, and
          the  SO2 Allowances per MWH for each unit, will  be
          used  to  determine  the number of  SO2  Allowances
          attributable to the sale.
     (b)  Cost of SO2 Allowances

          The   incremental  SO2  Allowance  cost   used   to
          determine  economic  dispatch of  IPL*s  generating
          units in any month, will also be the basis used  to
          determine compensation for IPL*s energy sales.  The
          incremental SO2 Allowances cost, in dollars per ton
          of  SO2, shall be determined each month and will be
          based on the Cantor Fitzgerald offer price for  SO2
          Allowances,  or  if  such is  not  available,  then
          another nationally recognized SO2 Allowance trading
          market   price  or  market  price  index,  at   the
          beginning  of  the month.  The SO2 Allowance  value
          may  be  changed at any time during  the  month  to
          reflect  the  more  current  incremental  cost,  or
          market  price, for SO2 Allowances.  Buyer  will  be
          notified  of the new SO2 Allowance value  prior  to
          dispatch of IPL energy to Buyer.

     When   PSI  is  the  supplier  of  energy  and  emission
     allowances, the recovery of the applicable costs for the
     actual  furnishing of adequate allowances in  order  for
     PSI   to  generate  and  supply  such  energy  will   be
     implemented in the following manner:

(1)  The  current  Environmental  Protection  Agency  ("EPA")
     auction price to value emission allowances will be  used
     for  energy  sales transactions.  The dispatch  criteria
     may  be  revised  from  time to  time  if  the  emission
     allowance purchases on the average are determined to  be
     significantly different than the EPA auction price.

(2)  For each hour in which there is a transaction for energy
     services  using  an Out-of-Pocket Cost rate  under  this
     1992 Agreement, PSI will:

     (a)  identify the generation sources used to provide the
          transaction*s energy by identifying the energy that
          would  not  have been used had the transaction  not
          been  in effect that hour by using the same  after-
          the-fact incrementing costing model that is used to
          calculate  the incremental cost of fuel under  this
          1992 Agreement;

     (b)  determine,   using  the  following   formula,   the
          quantity  of  emission allowances  related  to  the
          energy   transaction:   (i)   by   calculating   an
          incremental   heat   rate   for   the   appropriate
          generating  unit and the corresponding  incremental
          SO2  emission levels, as determined by the computer
          based tools, for the identified units dispatched to
          serve  the transaction; (ii) applying the following
          formula  for each such unit; (iii) adding  together
          the  total  number  of  tons of  SO2  produced  per
          million  BTU (i.e., British Thermal Unit)  of  fuel
          burned  by each such unit for the transaction;  and
          (iv)  letting one (1) emission allowance equal  one
          (1) ton of SO2 so produced.

# OF UNITS
E  [MBTU SALE - MBTU NO SALE] * [SO2] * [100%-SE]
             100%

MBTU SALE = Million BTU consumed on unit n with sale.
MBTU NO SALE = Million BTU consumed on unit n without sale.
SO2 = Tons of SO2 produced per million BTU of fuel burned.
SE = Scrubber Efficiency in %.

          PSI  will  perform periodic tests to  maintain  the
          accuracy   and  validity  of  such  emission   rate
          information.  Because some generating  sources  may
          not be subject to the Clean Air Act during Phase  I
          or  Phase  II thereunder, there will be no emission
          allowance  charges included for the utilization  of
          such  an  energy source while it is not subject  to
          such  requirements.   One  (1)  emission  allowance
          shall  be  assigned to each ton of SO2  emitted  to
          serve   the  transaction.  Fractions  of   emission
          allowance tons will be rounded up to the next whole
          number  when  the fraction is equal to  or  greater
          than  .5 and rounded down when the fraction is less
          than .5.

     (3)  The  purchasing  Party  of energy  shall  have  the
          option   of   purchasing  or   providing   emission
          allowances  for  each transaction.  The  purchasing
          Party  shall notify PSI of its election to purchase
          or  provide emission allowances prior to the  start
          of   the  transaction.   The  running  quantity  of
          emission  allowances charged or furnished  will  be
          shown  on  the  monthly invoices to the  purchasing
          Party.

     (4)  When  the  purchasing  Party of  energy  elects  to
          purchase the emission allowances from PSI, then the
          quantity  of  emission  allowances  used  will   be
          included  as  part of the charges  on  the  monthly
          invoices to the purchasing Party.

     (5)  By  January 15th of the year following the calendar
          year   in  which  the  transaction  occurred,   the
          purchasing  Party  of  energy  shall  transfer  the
          appropriate  emission allowances  to  PSI  for  the
          emission  allowances used when the  allowances  are
          provided in kind.
     (6)  PSI   has   adopted   the  same  incremental   cost
          calculation   to  value  emission  allowances   for
          dispatch    criteria   as   for   billing    energy
          transactions.
                         ARTICLE 3
                     SERVICE CONDITIONS

     3.01.      Control  of System Disturbance.   Each  Party
shall  maintain and operate its system so as to minimize,  in
accordance  with sound operating practice, the likelihood  of
disturbance originating in either Party*s system which  might
cause  impairment to the service of the system of  the  other
Party or of any system interconnected with the system of  the
other Party.

     3.02.     Control of Kilovar Exchange.  It is the intent
that neither Party shall be obligated to deliver kilovars for
the benefit of the other Party; also that neither Party shall
be  obligated to receive kilovars when to do so may introduce
objectionable  operating  conditions  on  its  system.    The
Operating   Committee   shall   be   responsible   for    the
establishment  of  operating  procedures  and  schedules   in
respect  of carrying kilovar loads by one Party*s system  for
the  other Party*s system in order to secure adequate service
and economical use of facilities of both Parties* systems and
in  respect  of  proper  charges, if  any,  for  the  use  of
facilities  carrying  kilovar  loads.   In  discharging  such
duties, the Operating Committee shall recognize that  in  the
transmission  and delivery of power and energy hereunder  the
carrying  of  kilovar loads by either Party, in harmony  with
sound  engineering principles of transmission operation  with
their   systems  interconnected,  is  subject   to   numerous
variables  contingent  upon loading and operating  conditions
existing simultaneously on the systems of both Parties.   The
operating  procedures  and schedules so  established  by  the
Operating  Committee shall be in accord with such  principles
and  shall require each Party to carry kilovar loads at  such
times  and  in  such  amounts as will be  equitable  to  both
Parties.

     3.03.     Control of Unscheduled Power Deliveries.   The
Parties  shall  exercise  due  diligence  and  foresight   in
carrying  out  all  matters  related  to  the  providing  and
operating of their respective electric power resources so  as
to  minimize  to  the  extent practicable deviations  between
actual  and scheduled deliveries of electric power and energy
between their systems.  The Parties shall provide and install
on   their   respective   systems  such   communication   and
telemetering facilities as are essential to so minimize  such
deviations   and,  in  developing  and  executing   operating
procedures  that  will enable the Parties  to  avoid  to  the
extent practicable deviation from scheduled deliveries, shall
fully  cooperate with each other and with third parties whose
systems are either directly or indirectly interconnected with
the  systems  of  the Parties and who of necessity,  together
with  the Parties, must unify their efforts cooperatively  to
achieve  effective  and  efficient interconnected  operation.
The  Parties  recognize, however, that,  despite  their  best
efforts  to  prevent  the  same,  unscheduled  deliveries  of
electric  energy from one Party to the other may  occur.   In
such  event,  electric energy delivered  hereunder  shall  be
settled  for by the return of equivalent energy.   Equivalent
energy shall be returned at times when the load conditions of
the  Party receiving it are equivalent to the load conditions
of such Party at the time the energy for which it is returned
was  delivered  or, if such Party elects to  have  equivalent
energy  returned  under  different conditions,  it  shall  be
returned  in such amounts, to be agreed upon by the Operating
Committee,   as   will  compensate  for  the  difference   in
conditions.

                         ARTICLE 4
              DELIVERY POINTS, MEETING POINTS,
                        AND METERING

     4.01.       Delivery   Points.   All   electric   energy
delivered  under the 1992 Agreement shall be of the character
commonly  known as three-phase sixty Hertz energy, and  shall
be  delivered  at the Interconnection Points specified  under
Section 1.01 hereof, at a nominal voltage of 138,000 volts at
the  Five Points and Centerton Interconnection Points, at the
138KV Petersburg Interconnection Point, and at the Carmel Tap
Point;  and  at  a nominal voltage of 345,000  volts  at  the
Whitestown and Gwynneville Interconnection Points, and at the
345KV  Petersburg Interconnection Point; and  at  such  other
points  and voltages as hereafter may be agreed upon  by  the
parties pursuant to Section 1.02 hereof.

     4.02.      Billing  Based on Scheduled Transaction.   As
IPL  and  PSI  systems are interconnected with other  systems
forming  a  network, it is recognized that,  because  of  the
physical  and  electrical characteristics of  the  facilities
involved, a part or all of the energy being transferred  from
one  Party  to the other may flow through such other  systems
rather than through the point or points of connection between
the systems of the Parties.  A part or all of the power being
transferred  between other systems in the  network  may  flow
through the point or points of connection between the systems
of the Parties, and as a result be included in the demand and
energy   meter   readings  at  the   point   or   points   of
interconnection.  Therefore, all billings shall be  based  on
scheduled  transactions  or upon methods  determined  by  the
Operating  Committee  which may result  from  development  of
arrangements  with  other interconnected  systems  and  which
provide  a  basis  for accounting for the  power  and  energy
transfers actually contracted for between the Parties.
     4.03.      Metering Points.  Electric power  and  energy
supplied  and  delivered under the 1992  Agreement  shall  be
measured  by  suitable  metering  equipment  which  shall  be
provided,  owned and maintained by PSI or ILP  as  designated
below at the following metering points:

     (i)  138,000 volt metering equipment installed by PSI at
          the  Five  Points Substation; 138,000 volt metering
          equipment   installed  by  PSI  at  the   Centerton
          Substation;  138,000  and  345,000  volt   metering
          equipment   installed  by  IPL  at  the  Petersburg
          Station;  345,000 volt metering equipment installed
          by  IPL  at its Sunnyside Substation and  at  PSI*s
          Gwynneville and Whitestown Substations; and 12.47kV
          metering  equipment installed by PSI at its  Carmel
          Southeast Substation, and

     (ii) At  such other locations as hereafter may be agreed
          upon  by  the  Parties  pursuant  to  Section  1.02
          hereof.

     4.04.       Metering   Equipment.    Suitable   metering
equipment at the metering points as described in Section 4.03
above  shall  include electric meters, potential and  current
transformers,  and  such  other  appurtenances  as  shall  be
necessary  to  give for each direction of flow the  following
quantities:   (i)  an automatic record of the  kilowatt-hours
for each clock-hour, and (ii) a continuous integration record
of the kilowatt-hours.

     4.05.      Measurement of Electric Energy.  Measurements
of  electric  energy for the purpose of effecting settlements
under  the 1992 Agreement shall be made by standard types  of
electric  meters  installed and maintained (unless  otherwise
provided  for in the Agreement) by the owner at the  metering
points  described in Section 4.03 above.  The timing  devices
of all meters having such devices shall be maintained in time
synchronism as closely as practicable.

     The meters shall be sealed and the seals shall be broken
only  upon  occasions when the meters are  to  be  tested  or
adjusted.   for  the purpose of checking the records  of  the
metering  equipment  installed  by  one  of  the  Parties  as
hereinabove provided, the other Party shall have the right to
install  check  metering equipment at the aforesaid  metering
points.  Metering equipment so installed by one Party on  the
premises of the other Party, unless otherwise provided for in
the  1992  Agreement, shall be owned and  maintained  by  the
Party  installing  such equipment.  Upon termination  of  the
1992  Agreement,  the  Party owning such  metering  equipment
shall  remove  it  from  the premises  of  the  other  Party.
Authorized representatives of both Parties shall have  access
at  all reasonable hours to the premises where the meters are
located and to the records made by the meters.

     4.06.     Testing and Access to Meters and Records.  The
aforesaid metering equipment shall be tested by the owner  at
suitable   intervals   and  its  accuracy   of   registration
maintained  in accordance with good practice.  On request  of
either  Party, a special test may be made at the  expense  of
the  Party requesting such special test.  Representatives  of
both  Parties shall be afforded the opportunity to be present
at  all routine or special tests and upon occasions when  any
readings,  for purposes of settlements hereunder,  are  taken
from meters not bearing an automatic record.

     4.07.      Adjustments Due to Inaccuracies.  If  at  any
test  of  metering equipment an inaccuracy shall be disclosed
exceeding  two percent, the account between the  Parties  for
service  theretofore delivered shall be adjusted  to  correct
for   the  inaccuracy  disclosed  over  the  shorter  of  the
following  two periods:  (i) for the thirty (30)  day  period
immediately  preceding the day of the test, or (ii)  for  the
period  that  such  inaccuracy  may  be  determined  to  have
existed.  Should the metering equipment described in  Section
4.04  above at any time fail to register, the electric  power
and  energy  delivered  shall be determined  from  the  check
meters,  if installed, or otherwise shall be determined  from
the best available data.

                         ARTICLE 5
                   RECORDS AND STATEMENTS

     5.01.      Records.   In  addition  to  records  of  the
metering provided for in Article 4 hereof, the Parties  shall
keep  in  duplicate such other records as may  be  needed  to
afford  a clear history of the various deliveries of electric
energy  made by one Party to the other and of the  clock-hour
integrated demands in kilowatt-hours delivered by  one  Party
to the other.  In maintaining such records, the Parties shall
effect  such  segregations  and allocations  of  demands  and
electric  energy  delivered  into  classes  representing  the
various   services  and  conditions  as  may  be  needed   in
connection  with settlements under the 1992  Agreement.   The
originals of all such records shall be retained by the  Party
keeping  the  records and the duplicates shall  be  delivered
monthly to the other Party, except that the Parties may agree
upon a different time interval for such delivery.

     5.02.      Statements.  As promptly as practicable after
the  end of each calendar month, the Parties shall prepare  a
statement  setting  forth  the  electric  power  and   energy
transactions  between the Parties during such month  in  such
detail  and  with  such segregations as  may  be  needed  for
operating records or for settlements under the provisions  of
the 1992 Agreement.
                         ARTICLE 6
                   BILLINGS AND PAYMENTS

     6.01.      Billing Period. Unless otherwise agreed  upon
by  the  Parties,  the calendar month shall be  the  standard
billing period for all settlements under the 1992 Agreement.

     6.02.      Billing Scheduled Transactions.  All  billing
shall  be  based  on scheduled transactions unless  otherwise
determined as provided in Section 4.02 hereof.

     6.03.     Billing Payments.  All bills for amounts  owed
by  one  Party to the other Party shall be due on  the  first
business day following the twentieth (20th) day after the end
of  the calendar month or period service was rendered, or  on
the  fifteenth  (15th) business day following  receipt  of  a
bill,  whichever  is  later.   Payments  shall  be  made   by
electronic  transfer  or  by such  other  mutually  agreeable
method  as shall cause such payment to be available  for  the
account of the payee on or before the due date.  Interest  on
unpaid  amounts,  both principal and interest,  shall  accrue
daily  at  the then current prime interest rate per annum  of
The  Chase Manhattan Bank, N.A., New York, New York, plus two
percent (2%) per annum, or the maximum rate permitted by law,
whichever  is  less, from the date due until  the  date  upon
which payment is made.

     6.04.      Estimated  Billing Factors.   In  order  that
bills  may  be rendered promptly after the end  of  the  each
month,  it  may be necessary, from time to time, to  estimate
certain  factors involved in calculating the monthly billing.
Adjustments for errors in such estimates shall be included in
the  bill  for the month following the time when  information
becomes available to make such corrections or adjustments  in
the billing for the preceding month or months.

     6.05.      Billing  Disputes.  If a Party  disputes  the
correctness of a bill, such Party will, nevertheless, pay the
undisputed  portion of such bill, plus a minimum of  one-half
(1/2)  of the disputed amount, and shall submit to the  other
Party  a written statement detailing the items disputed.   If
the Parties are unable to agree upon the disputed items, such
items  shall  be  submitted to the  Operating  Committee  for
further action consistent with the 1992 Agreement.
                         ARTICLE 7
                    OPERATING COMMITTEE

     7.01.      Operating Committee Organization and  Duties.
To  coordinate the operation of their respective  generation,
transmission,  and substation facilities in  order  that  the
benefits of the 1992 Agreement may be realized by the Parties
to   the  fullest  practicable  extent,  the  Parties   shall
establish  a  committee of authorized representatives  to  be
known  as the Operating Committee.  Each of the Parties shall
designate in writing delivered to the other Party, the person
who  is  to  act  as its authorized representative  (the  "OC
Representative") on said committee (and the person or persons
who may serve as Alternate whenever the OC Representative  is
unable  to  act).   The OC Representative  and  Alternate  or
Alternates   shall   each  be  persons  familiar   with   the
generation, transmission, and substation facilitates  of  the
system  of the Party he represents, and each shall  be  fully
authorized  (i) to cooperate with the other OC Representative
(or  Alternates) and (ii) as the need arises and  subject  to
the  declared intentions of the Parties as herein  set  forth
and to the terms hereof and the terms of any other agreements
then  in  effect between the Parties, to determine and  agree
from time to time upon the following:

     (i)  All  matters  pertaining  to  the  coordination  of
          maintenance  of  the  generation  and  transmission
          facilities of the Parties.

     (ii) All  matters  pertaining to the  control  of  time,
          frequency,  energy  flow, kilovar  exchange,  power
          factor,  voltage, and other similar matters bearing
          upon the satisfactory synchronous operation of  the
          systems of the Parties.

     (iii)      Such  other matters not specifically provided
          for herein upon which cooperation, coordination and
          agreement  as to quantity, time, method, terms  and
          conditions  are  necessary,  in  order   that   the
          operation of the respective systems of the  Parties
          may  be  coordinated to the end that the  potential
          benefits  anticipated  by  the  Parties   will   be
          realized to the fullest extent practicable.

     7.02.      Operating Committee Access.  For the  purpose
of inspection and reading of meters, checking of records, and
all  other pertinent matters, the OC Representative and their
Alternates  shall have the right of entry at  any  reasonable
time  to all property of the Parties used in connection  with
the performance of the 1992 Agreement.

     7.03.      Unanimous Action.  All actions taken by  said
Operating  Committee must be by unanimous vote or consent  of
all OC Representatives (including Alternates acting during OC
Representatives* absence).

     7.04.      Expenses.  The expenses for establishing  and
maintaining   the   Operating   Committee   shall   be    the
responsibility  of each individual Party as  regards  to  its
respective personnel.  Any expenses jointly incurred by  said
Operating  Committee in carrying out its duties,  other  than
for  the Parties* personnel, shall be shared equally  by  the
Parties.

     7.05.       Authority  to  Amend  or  Supplement.    The
Operating  Committee  may  recommend  changes  to  the   1992
Agreement,  but  said  Operating  Committee  shall  not  have
authority to amend or supplement the 1992 Agreement.

                         ARTICLE 8
            CONTINUITY AND SUSPENSION OF SERVICE
               RELATIVE RESPONSIBILITIES AND
                      LIABILITY LIMITS

     8.01.      Continuity and Suspension of  Service.   Each
Party  shall  exercise  reasonable  care  and  foresight   to
maintain  continuity  of  service as  provided  in  the  1992
Agreement.   In  no event shall one Party be  liable  to  the
other Party or its customers for loss or damage arising  from
failure  to provide or for the interruption or suspension  of
any  service  provided for herein.  Each Party  reserves  the
right to suspend service without liability at such times  and
for  such  periods and in such manner as it deems  advisable,
including, without limitation, suspensions for the purpose of
making  necessary adjustments to, changes in, or repairs  on,
its  facilities and to suspend service in cases where, in its
sole  opinion, the continuance of service to the other  Party
would  endanger persons or property.  Both Parties shall  use
their  best  efforts  to provide each other  with  reasonable
notice in the event of suspension of service.

     8.02.     Relative Responsibilities.  Each Party assumes
all responsibility for receipt and delivery of electricity on
its   system  to  and  from  the  Points  of  Interconnection
specified  in Section 1.01 hereof or agreed upon pursuant  to
Section    1.02   hereof.    Neither   Party   assumes    any
responsibility    with   respect   to    the    construction,
installation, maintenance or operation of the system  of  the
other  Party or of the systems of third parties, in whole  or
in  part.  In no event shall one Party be liable to the other
Party  for  damage  or  injury to  any  person  or  property,
whatsoever,  arising,  accruing or  resulting  from,  in  any
manner,   the   receiving,   transmission,   control,    use,
application  or  distribution  of  said  electric  power  and
energy.   Each  Party  shall  use  reasonable  diligence   to
maintain  its facilities in proper and serviceable condition,
and   shall   take  reasonable  steps  and  precautions   for
maintaining  the services agreed to be provided and  received
under  the  1992 Agreement.  Each Party shall be  responsible
for  its  own  compliance  with all applicable  environmental
regulations and shall bear all costs arising from its failure
to comply with such environmental regulations.

     8.03.      Limitation of Liability.  In no  event  shall
one  Party  be  liable to the other Party for  any  indirect,
special, incidental or consequential damages with respect  to
any claim arising out of the 1992 Agreement.

                         ARTICLE 9
                     TERM OF AGREEMENT

     9.01.      The  term of the 1992 Agreement  and  of  the
annexed  Service Schedules shall begin as of May 1, 1992  and
(except for Service Schedule D) shall continue through  April
30,  2022 (the "Initial Term"); thereafter, the Agreement and
Service  Schedules (except Service Schedule D) shall continue
for successive terms of three (3) years each unless and until
terminated  by  either Party by giving notice  to  the  other
Party  of  its  intention to terminate the 1992 Agreement  at
least  two (2) years prior to the end of the Initial Term  or
any  successive term; provided, that the 1992 Agreement shall
not  be deemed to have terminated until all prior commitments
for  sales  or purchases of power and energy hereunder  shall
have  been  fulfilled and all payments shall have been  made.
The  term of Service Schedule D shall be as provided therein.
Any  notice  of termination hereunder shall be given  to  the
President or Chief Operations Officer of a Party with a  copy
to the OC Representative of such Party.

                         ARTICLE 10
                          WAIVERS

     10.01.     Any  waiver at any time by  either  party  of
their  rights  with  respect to  a  default  under  the  1992
Agreement,  or  with respect to any other matter  arising  in
connection  with  the 1992 Agreement shall not  be  deemed  a
waiver with respect to any subsequent default or matter.  Any
delay,  short  of  the  statutory period  of  limitation,  in
asserting  or  enforcing any right under the  1992  Agreement
shall not be deemed a waiver of such right.

                         ARTICLE 11
                           TAXES

     11.01.     If  at any time during the term hereof  there
should  be levied or assessed against either Party any direct
tax  by  any  taxing authority on the capacity or energy  (or
both)  generated, purchased, sold, transmitted,  interchanged
or  exchanged by it, which tax is in addition to or different
from  the  forms  of such direct tax as are being  levied  or
assessed as of the date hereof and such direct tax results in
increasing the cost of either or both the Parties in carrying
out  the provisions of the 1992 Agreement, then such increase
shall be reflected in the charges for capacity or energy  (or
both)  furnished  by one Party to the other hereunder  as  is
necessary  in order to make adequate and equitable allowances
for such tax.

                         ARTICLE 12
                          NOTICES

     12.01.     Notices Relating to Provisions  of  the  1992
Agreement.   Except as herein otherwise provided, any  notice
which  may be given to or made upon either Party by the other
Party,  under  any of the provisions of the  1992  Agreement,
shall  be  in  writing  unless it is  otherwise  specifically
provided herein, and shall be treated as duly delivered  when
the  same is either (a) personally delivered to the President
or  Chief  Operations  Officer of  the  other  Party  or  (b)
deposited  in  the  United States mail, postage  prepaid  and
properly  addressed  to  the President  or  Chief  Operations
Officer  of  the other Party; provided, however, that  either
Party may alter its recipient for notice hereunder by written
notice  to  the other Party in accordance with the provisions
of this Section 12.01.

     12.02.     Notices of An Operating Nature.  Any  notice,
request  or  demand  pertaining to matters  of  an  operating
nature  may  be  served in person or by United  States  mail,
messenger, telephone, or telegraph, facsimile transmission or
orally,  as circumstances dictate, from the OC Representative
of  one  Party  to the OC Representative of the other  Party;
provided,  that should the same not be written,  confirmation
thereof  shall  be  made in writing as  soon  as  practicable
thereafter, upon request of the Party being served.

                         ARTICLE 13
                   REGULATORY AUTHORITIES

     13.01.     Regulatory Authority.  The 1992 Agreement  is
made   subject  to  the  authority  of  the  Federal   Energy
Regulatory  Commission  or any other governmental  regulatory
agency having jurisdiction in the premises and, if any of the
terms and conditions hereof are altered or made impossible of
performance  by  order,  rule,  or  regulation  of  any  such
regulatory agency, and the Parties hereto are unable to agree
upon  a  modification of such terms and conditions that  will
satisfy  such order, rule, or regulation, then neither  Party
shall be liable to the other for failure thereafter to comply
with  such  terms and conditions; provided,  that  if  either
Party deems that the failure of such performance results in a
substantial  breach  of  the 1992 Agreement,  then  the  1992
Agreement may be terminated forthwith upon thirty (30)  days*
advance written notice.

     13.02.     Amendments.   The  1992  Agreement  and   the
annexed  Service Schedules may be amended by mutual agreement
of the Parties, which amendment shall be in writing and shall
become  effective  in accordance with Section  13.01  hereof.
The  rates  and  charges  set forth in  the  annexed  Service
Schedules are subject to amendment and change, and each party
reserves  the  right from time to time to seek  unilaterally,
from any regulatory agency having jurisdiction, amendments or
changes  in  its  rates  and charges  set  forth  therein  in
accordance with the applicable law.  Nothing contained in the
1992   Agreement,  any  annexed  Service  Schedule   or   any
supplements  thereto shall be construed as affecting  in  any
way   the   right  of  either  Party  unilaterally  to   make
application  to the Federal Energy Regulatory Commission  (or
any  successor regulatory agency having jurisdiction)  for  a
change  in  rates under Section 205 of the Federal Power  Act
and   pursuant  to  the  Commission*s  Rules  and  Regulation
promulgated  thereunder  (or under  comparable  statutes  and
regulations   of   a  successor  regulatory   agency   having
jurisdiction).

                         ARTICLE 14
                       MISCELLANEOUS

     14.01.    No Partnerships; Tax Matters.  Notwithstanding
any  provision  of  the 1992 Agreement to the  contrary,  the
Parties  do  not  intend to create hereby any joint  venture,
partnership, association taxable as a corporation,  or  other
entity  for the conduct of any business for profit,  and  any
construction of the 1992 Agreement to the contrary which  has
an  adverse tax effect on either Party shall render the  1992
Agreement null and void from its inception.

     14.02.     Computation of Time.  In computing any period
of  time prescribed or allowed by the 1992 Agreement, the day
of  the  act,  event,  or default from which  the  designated
period  of time begins to run shall be excluded but the  last
day  of  such  period  shall  be included,  unless  it  is  a
Saturday, Sunday, or legal holiday, in which event the period
shall run until the end of the next business day which is not
a Saturday, Sunday, or legal holiday.

     14.03.     Section Headings Not to Affect Meaning.   The
descriptive  headings of the Articles, Sections,  Subsections
and  paragraphs of the 1992 Agreement have been inserted  for
convenience only and shall not modify or restrict any of  the
terms and provisions thereof.

                         ARTICLE 15
                         ASSIGNMENT

     15.01.     The 1992 Agreement shall inure to the benefit
of,  and  be  binding  upon,  the respective  successors  and
assigns of the Parties, but the assignment thereof by a Party
shall not relieve such Party, without the written consent  of
the  other Party, of any obligation to supply, or to take and
pay for, as the case may be, the services hereunder.

                         ARTICLE 16
             ENTIRE AGREEMENT CONTAINED HEREIN

     16.01.      The  1992  Agreement  contains  the   entire
agreement  between  the  Parties in respect  of  the  subject
matter  hereof,  and  there  are no  other  understanding  or
agreements between the Parties in respect thereof;  provided,
however,  that nothing contained in the 1992 Agreement  shall
be  deemed  to affect in any manner whatsoever any rights  or
claims either Party may have against the other Party pursuant
to any other agreement in effect before the effective date of
the  1992 Agreement with respect to any matter, including any
right  or claim to payments after the effective date  of  the
1992 Agreement pursuant to other preexisting agreements.

                         ARTICLE 17
                 1962 AGREEMENT SUPERSEDED

     17.01.    The 1992 Agreement constitutes an amendment to
and  complete restatement of the 1962 Agreement and, as such,
supersedes  the 1962 Agreement from and after  the  date  the
1992 Agreement becomes effective.

                         ARTICLE 18
              AGENCY OF CINERGY SERVICES, INC.

     18.01.     CINergy  Services joins in the  execution  of
this Agreement for the sole purpose of serving and acting  as
agent for PSI.

IN WITNESS WHEREOF the Parties have caused the 1992 Agreement
to  be executed by their respectable duly authorized officers
and  their respective corporate seal to be hereunder  affixed
as of the date first above mentioned.

INDIANAPOLIS POWER & LIGHT
(IPL)

By:  /s/ John R. Brehm
     John R. Brehm
     Senior Vice President
     Finance and
     Information Services

Attest:

By:  /s/ Bryan G. Tabler
     Bryan G. Tabler
     Senior Vice President
     Secretary and
     General Counsel

CINERGY SERVICES, INC.
(CINergy Services)

By:  /s/ Terry E. Bruck
     Terry E. Bruck
     Group Vice President

PSI ENERGY, INC.
(PSI)

By:  /s/ John M. Mutz
     John M. Mutz
     President

               EXHIBIT I
               (First Revision)

                     SERVICE SCHEDULE A

                     EMERGENCY SERVICE

SECTION 1 - DURATION

1.1   This Service Schedule A, being a part of and under  the
Interconnection Agreement (referred to herein  as  the  "1992
Agreement"),  dated  as  of May 1, 1992,  among  Indianapolis
Power  &  Light  Company (hereinafter called "IPL")  and  PSI
Energy,  Inc.,  formerly  named  Public  Service  Company  of
Indiana,   Inc.  (hereinafter  called  "PSI")   and   CINergy
Services, Inc. (hereinafter called "CINergy Services"), shall
become  effective  as  of the effective  date  of  the  Third
Amendment,  dated  June 30, 1995, to the 1992  Agreement  and
shall continue in effect throughout the duration of the  1992
Agreement.   IPL,  PSI  and CINergy  Services  are  sometimes
hereinafter   referred   to  individually   as   "Party"   or
collectively as "Parties" where appropriate.

SECTION 2 - SERVICES TO BE RENDERED

2.1   Conditional  Service.  Subject  to  the  provisions  of
Subsection 2.2 of this Section 2, in the event of a breakdown
or other emergency in or on the system of any Party involving
either sources of power or transmission facilities, or  both,
impairing  or jeopardizing the ability of the Party suffering
the  emergency to meet the loads of its system, another Party
shall  deliver  to  such Party electric  energy  that  it  is
requested  to deliver; provided, however, that a Party  shall
not  be  obligated to deliver such energy which, in its  sole
judgment,  it cannot deliver without interposing a hazard  to
or  economic burden upon its operations or without  impairing
or jeopardizing the other load requirements of its system and
provided further, that a Party shall be obligated to  deliver
electric  energy to another Party for a period in  excess  of
forty-eight   (48)  consecutive  hours  during   any   single
emergency.

2.2    Non-performance.   The  Parties  recognize  that   the
delivery of electric energy as provided in Subsection 2.1  of
this  Section  2  is  subject to  two  conditions  which  may
preclude the delivery of such energy as so provided:  (a) the
Party  requested to deliver electric energy may be  suffering
an  emergency  in or on its own system as described  in  said
Subsection  2.1,  or  (b)  the  system  of  a  Party  may  be
delivering   electric  energy,  under  a   mutual   emergency
interchange   agreement,   to   the   system    of    another
interconnected company which is suffering any emergency in or
on its system.  Under conditions as cited under (a) above,  a
Party  shall not be considered to be in default hereunder  if
it is unable to comply with the provisions of said Subsection
2.1.   Under  conditions as cited under (b)  above,  a  Party
shall  not be considered to be in default hereunder if it  is
unable to comply with the provisions of said Subsection  2.1;
provided,  however, that such Party shall make  every  effort
consistent  with  the terms of its contract with  said  other
interconnected  company  to  make  the  electric  energy   as
provided in Subsection 2.1 available to another Party  hereto
as soon as possible.
2.3   Reserve Generating Capacity Review.  If at any time the
record over a reasonable prior period shows clearly that  one
of  the  Parties has failed to deliver energy  in  accordance
with  and  subject  to the provisions of Subsection  2.1  and
Subsection 2.2 of this Section 2, a Party, by written  notice
given  to  another Party, may call for a joint study  by  the
Parties  of  the reserve generating capacity in and  provided
for  their respective systems and of their respective  system
transmission facilities affecting the supply and delivery  of
power  and energy under the 1992 Agreement.  It shall be  the
purpose of such study to determine the adequacy or inadequacy
of  reserve  generating capacity and transmission  facilities
being  provided  to  meet  the requirements  of  the  Parties
respective  systems, reflecting obligations  under  the  1992
Agreement, and, if inadequate, the extent of the burden  that
a  Party may be placing upon another Party.  If it should  be
found  that  a Party is placing an unreasonable  burden  upon
another Party, the Party causing such burden shall take  such
measures  as are necessary to remove the burden from  another
Party,  or the Parties shall enter into such arrangements  as
shall  provide for equitable compensation to the Party  being
burdened.

SECTION 3 - COMPENSATION

3.1  When IPL is the Supplying Party:

     3.11   Emergency Energy delivered that is  generated  by
IPL shall be settled for, at the option of IPL, either by the
return  of  equivalent energy at a mutually  acceptable  time
upon  request of IPL or by payment of the greater of (a) 110%
of the Out-Of-Pocket Cost (such cost being as of the delivery
point  or points, as referred to in Section 4.01 of the  1992
Agreement,  taking  into account electrical  losses  incurred
from  the  source or sources of such energy to  the  delivery
point  or points) of supplying such energy, or (b) $0.10  per
kilowatt-hour.

     3.12   Emergency Energy delivered that is  purchased  by
IPL from a third party shall be settled for by payment of  an
energy charge of 100% of the Out-Of-Pocket Cost paid therefor
by  IPL,  plus an amount to be agreed upon by the Parties  at
the time of the transactions of up to 4.6 mills per kilowatt-
hour  (consisting  of up to 3.6 mills per  kilowatt-hour  for
bulk  transmission  charge plus 1 mill per kilowatt-hour  for
difficult  to  quantify  energy-related  costs),   plus   any
transmission losses resulting on IPL's system on  account  of
the  transaction,  and  plus any taxes  incurred  by  IPL  on
account of the transaction.

3.2  When PSI is the Supplying Party:

     3.21   Emergency Energy delivered that is  generated  by
     PSI  shall  be settled for by payment of the greater  of
     (a)  110% of the Out-Of-Pocket Cost (such cost being  as
     of  the interconnection point or points, as referred  to
     in  Section  4.01  or  the 1992 Agreement,  taking  into
     account  electrical losses incurred from the  source  or
     sources  of such energy to the interconnection point  or
     points) of supplying such energy.  Non-firm transmission
     service  per  the  provisions of the  CINergy  Services,
     Inc., FERC Electric Tariff, Original Volume No. 3,  Non-
     Firm Point-to-Point Transmission Service Standard Tariff
     -  NFT  (or any successor transmission tariff of similar
     service)  must  be obtained, or (b) $100  per  megawatt-
     hour.

     3.22   Emergency Energy delivered that is  purchased  by
     PSI  from a third party shall be settled for by  payment
     of the greater of (a) of an energy charge of 100% of the
     Out-Of-Pocket Cost paid therefor by PSI plus  $1.00  per
     megawatt-hour  (for difficult to quantify energy-related
     costs),  plus any transmission losses resulting  on  the
     system of the CINergy Operating Companies on account  of
     the  transaction.  Non-firm transmission service per the
     provisions of the CINergy Services, Inc., FERC  Electric
     Tariff,  Original Volume No. 3, Non-Firm  Point-to-Point
     Transmission  Service  Standard Tariff  -  NFT  (or  any
     successor  transmission tariff of similar service)  must
     be  obtained, and plus any regulatory commission charges
     and taxes incurred by PSI on account of the transaction,
     or (b) $100 per megawatt-hour.

3.3   If  the  option  of  returning  electric  energy  under
Subsection  3.11 is exercised, then it shall be  returned  at
times when the load conditions of the Party receiving it  are
equivalent to the load conditions of such Party at  the  time
the energy for which it is returned was delivered or, if such
Party   elects  to  have  equivalent  energy  returned  under
different  conditions, it shall be returned in such  amounts,
to  be  agreed  upon  by the Operating  Committee  under  the
Agreement, as will compensate the Party for the difference in
conditions.

               EXHIBIT II
               (First Revision)

                     SERVICE SCHEDULE B

                     INTERCHANGE ENERGY

SECTION 1 - DURATION

1.1   This Service Schedule B, being a part of and under  the
Interconnection Agreement (referred to herein  as  the  "1992
Agreement"),  dated  as  of May 1, 1992,  among  Indianapolis
Power  &  Light  Company (hereinafter called "IPL")  and  PSI
Energy,  Inc.,  formerly  named  Public  Service  Company  of
Indiana,   Inc.  (hereinafter  called  "PSI")   and   CINergy
Services, Inc. (hereinafter called "CINergy Services"), shall
become  effective  as  of the effective  date  of  the  Third
Amendment,  dated  June 30, 1995 to the  1992  Agreement  and
shall continue in effect throughout the duration of the  1992
Agreement.   IPL,  PSI  and CINergy  Services  are  sometimes
hereinafter   referred   to  individually   as   "Party"   or
collectively as "Parties" where appropriate.

SECTION 2 - SERVICES TO BE RENDERED

     Economy Energy

2.1   It is recognized that from time to time that any of the
Parties  may  have  electric energy (herein  called  "Economy
Energy")  available from surplus capacity either on  its  own
system  or from sources outside its own system, or both,  and
that  Economy Energy could be supplied to another Party at  a
cost  that would result in operating savings to such  another
Party.    Such  operating  savings  would  result  from   the
displacement  of  electric energy  that  otherwise  would  be
supplied from capacity either on such other Party's system or
from sources outside its own system, or both. To promote  the
economy  of  electric power supply and to  achieve  efficient
utilization of production capacity, any Party, whenever it in
its  sole  judgment determines Economy Energy  is  available,
may,  but shall not be obligated to, offer Economy Energy  to
another Party.  Promptly upon receipt of any such offer  said
Party  shall notify the offering Party of the extent to which
it   desires  to  use  such  Economy  Energy,  and  schedules
providing  the  periods and extent of use shall  be  mutually
agreed upon by the Parties.  Such energy is non-firm and  may
be  withdrawn by the supplying Party with a ten  (10)  minute
notification.  A transaction made by PSI and CINergy Services
under  this Service Schedule B shall not extend beyond twelve
(12) months.

     Non-Displacement Energy

2.2   It  is  further  recognized  that  from  time  to  time
occasions  will arise when the effecting of transactions,  as
provided  in  Subsection  2.1 of  this  Section  2,  will  be
impracticable,  but at the same time one of the  Parties  may
have   electric   energy  (herein  called   "Non-Displacement
Energy")  which it is willing to make available from  surplus
capacity either on its own system or from sources outside its
own  system, or both, that can be utilized advantageously for
short   intervals  by  another  Party.   It  shall   be   the
responsibility  of  the Party desiring the  receipt  of  Non-
Displacement Energy to initiate the receipt and  delivery  of
such energy.  Any Party desiring such receipt of energy shall
inform another Party of the extent to which it desires to use
Non-Displacement  Energy, and whenever in its  sole  judgment
such  another  Party determines that it has  Non-Displacement
Energy  available, schedules providing the periods and extent
of  use  shall  be mutually agreed upon by the Parties.   Any
Party  shall  not  be obligated to make any  Non-Displacement
Energy available to another Party.

2.3   PSI may reduce or discontinue the supply of Hourly Non-
Displacement  Energy  at any time.  To the  extent  possible,
however,  PSI  shall  advise IPL of its intention  to  reduce
materially   or  discontinue  the  supply  of   Hourly   Non-
Displacement Energy.

2.4   PSI  shall  supply  Daily and  Weekly  Non-Displacement
Energy  for three (3) hours after they have notified  IPL  of
its  intention to discontinue such supply of energy; however,
PSI  shall  be under no obligation to continue the supply  of
said  energy  for  more  than  three  (3)  hours  after  said
notification.

2.5   A  transaction made by PSI under Subsection  2.2  above
shall not extend beyond twelve (12) months.

SECTION 3 - COMPENSATION

     Economy Energy

3.1   The charge for Economy Energy purchased by a Party from
another Party shall be based on the principle that the  Party
purchasing it shall pay the Out-Of-Pocket Cost (including all
operating,  maintenance, tax, regulatory commission  charges,
transmission  losses and other expenses incurred  that  would
not  have  been incurred if the energy had not been supplied)
being at the interconnection points (as defined in Article  4
of  the  1992 Agreement), of the Party supplying such  energy
and  that the resulting savings to the receiving Party  shall
be  equally  shared  by the supplying and receiving  Parties.
Prior  to any transaction involving the delivery and  receipt
of  Economy Energy, authorized representatives of the Parties
shall determine and agree upon the compensation applicable to
such  transaction.  Compensation so agreed upon shall not  be
subject to later review or adjustment.  PSI shall dedicate an
amount   at  the  time  of  the  transactions  for   non-firm
transmission  service  per  the  provisions  of  the  CINergy
Services, Inc., FERC Electric Tariff, Original Volume No.  3,
Non-Firm Point-to-Point Transmission Service Standard  Tariff
- -  NFT  (or  any  successor transmission  tariff  of  similar
service) from its portion of the resulting savings.

3.2   When  Economy Energy is obtained from or  delivered  to
other  systems  interconnected  with  the  Parties,  but  not
signatories to the 1992 Agreement, payments shall be based on
the  Out-Of-Pocket  Cost  of the supplying  Party  or  system
providing  the energy and an allocation of the gross  savings
which are defined as the difference between (1) what such Out-
Of-Pocket  Costs of the receiving Party or system would  have
been  to  generate  such energy, and (2)  such  Out-Of-Pocket
Costs  of the supplying Party or system providing the energy.
Such allocation shall be made as provided in Subsections 3.21
and 3.22 hereinbelow:

     3.21 The  transmitting Party shall be paid (a) its costs
          of  purchasing the energy supplied,  plus  (b)  its
          costs  of  additional transmission losses plus  (c)
          the following:

          (1)  When  IPL is such transmitting Party:  Fifteen
               percent  (15%) of the gross savings  remaining
               after   deducting   all  such   payments   for
               transmission losses.

          (2)  When PSI is the transmitting Party, they shall
               receive  the  greater of (a) 15% (such  charge
               pertains  to  the reservation of transmission)
               of the gross savings remaining after deducting
               all  such payments for transmission losses  or
               (b)  the  sum  of  a demand  charge  rate  per
               megawatt  reserved per hour at the  time  such
               Economy   Energy  is  reserved  for   non-firm
               transmission service per the provisions of the
               CINergy  Services, Inc., FERC Electric Tariff,
               Original Volume No. 3, Non-Firm Point-to-Point
               Transmission Service Standard Tariff - NFT (or
               any  successor transmission tariff of  similar
               service),  plus  $1.00 per megawatt-hour  (for
               difficult  to quantify energy-related  costs),
               plus any transmission losses resulting on  the
               system  of the CINergy Operating Companies  on
               account  of  the  transaction  and  plus   any
               regulatory   commission  charges   and   taxes
               incurred by PSI on account of the transaction.

     3.22 The supplying Party or system shall be paid its Out-
          Of-Pocket  Cost of providing the energy, plus  one-
          half of the gross savings remaining after deducting
          all  (b)  and  (c)  payments made under  Subsection
          3.21.   The  receiving Party  or  system  shall  be
          entitled to the other one-half of the gross savings
          remaining after deducting all (b) and (c)  payments
          made under Subsection 3.21.

     Non-Displacement Energy

3.3   Non-Displacement Energy delivered  hereunder  shall  be
settled  for either by the return of equivalent energy  (only
in  the  case where IPL is the supplying Party)  or,  at  the
option of the Party that supplied such energy, by payment  of
an  energy  charge  of up to 110% of the  Out-Of-Pocket  Cost
(such  cost  being  as of the delivery point  or  points,  as
provided  in Section 4.01 of Article 4 of the 1992 Agreement,
taking  into  account  electrical losses  incurred  from  the
source  or sources of such energy to said delivery  point  or
points)  to  the supplying Party generating such energy  plus
(the  applicable demand charge rates per this Subsection  are
limited by Subsections 3.7 and 3.8):
     3.31 When IPL is the supplying Party:

          3.31.1   IPL,  at its option, may impose  a  demand
          charge  of  up to 48.6 mills per kilowatt  reserved
          per  hour, but the total demand charge in  any  one
          day  shall  be no more than the product  of  $0.778
          times  the highest amount in kilowatts reserved  in
          any hour during the day.  Or,

          3.31.2   IPL, at its option, may choose  to  supply
          such  energy  without imposing a demand  charge  in
          which  case  no  additional  payment  is  included.
          However, if this option is chosen, the cost of such
          energy will be calculated as 110% of the actual Out-
          Of-Pocket Cost (such cost being as of the  delivery
          point  or  points, as provided in Section  4.01  of
          Article  4  of  the  1992  Agreement,  taking  into
          account electrical losses incurred from the  source
          or sources of such energy to said delivery point or
          points)  to  the  supplying Party  generating  such
          energy.

     3.32  When PSI is the supplying Party by payment of  the
following:

     (1)  For energy generated, the agreed upon demand charge
          rate  of  up to $50 per megawatt-hour (such  charge
          pertains  to  the production component  only),  the
          total demand charge in any one day shall be no more
          than the product of $797 and the greatest amount of
          megawatts reserved in any hour during said day  and
          the  total charge in any one week shall be no  more
          than  the product of $4,781 and the greatest number
          of megawatts reserved in any hour during said week.
          Non-firm transmission service per the provisions of
          the  CINergy Services, Inc., FERC Electric  Tariff,
          Original  Volume  No.  3,  Non-Firm  Point-to-Point
          Transmission Service Standard Tariff - NFT (or  any
          successor  transmission tariff of similar  service)
          must be obtained;

     (2)  For  daily energy which is purchased by PSI from  a
          third  party  for economic reasons to  meet  system
          needs but in subsequent system resources accounting
          calculations  is determined to have  been  used  to
          supply  a Daily Non-Displacement Energy transaction
          and  for which PSI stands by to supply from its own
          resources:  (a) the amount paid by PSI to the third
          party  for  such  energy,  plus  (b)  the  cost  of
          transmission losses, regulatory commission  charges
          and  taxes incurred which would not otherwise  have
          been incurred, plus (c) $1.00 per megawatt-hour for
          difficult-to-quantify energy  related  costs,  and,
          plus  (d) up to $50 per megawatt-hour (such  charge
          pertains  to  the production component  only),  the
          total  charge in any one day shall be no more  than
          the  product  of  $797 and the greatest  number  of
          megawatts reserved in any hour during said day  and
          the  total charge in any one week shall be no  more
          than  the product of $4,781 and the greatest number
          of megawatts reserved in any hour during said week.
          Non-firm transmission service per the provisions of
          the  CINergy Services, Inc., FERC Electric  Tariff,
          Original  Volume  No.  3,  Non-Firm  Point-to-Point
          Transmission Service Standard Tariff - NFT (or  any
          successor  transmission tariff of similar  service)
          must be obtained.

     3.33 If  equivalent energy is returned to IPL, it  shall
          be  returned  at times when the load conditions  of
          the  Party receiving it are equivalent to the  load
          conditions of such Party at the time the energy for
          which  it  is  returned was delivered or,  if  such
          Party  elects  to  have equivalent energy  returned
          under different conditions, it shall be returned in
          such  amounts,  to be agreed upon by the  Operating
          Committee, as will compensate for the difference in
          conditions.

3.4   Non-Displacement Energy delivered under Subsection  2.2
above  that is purchased by the supplying Party from  another
interconnected system which is not a signatory  to  the  1992
Agreement  ("Third Party") at the request  of  the  receiving
Party shall be settled for as follows:

3.41 When  IPL  is the supplying Party, by a payment  of  100
     percent of the amount paid to such Third Party,  plus  a
     demand  charge  in an amount to be agreed  upon  by  the
     Parties  at  the time of the reservation of  up  to  3.6
     mills  per  kilowatt reserved per hour,  but  the  total
     demand  charge in any one day shall be no more than  the
     product  of $0.058 times the highest amount in kilowatts
     reserved  in any hour during the day, plus  1  mill  per
     kilowatt-hour  (for difficult to quantify energy-related
     costs),  plus  the cost of any quantifiable transmission
     losses,  taxes, and other expenses incurred  that  would
     not  have been incurred if such transaction had not been
     made.

3.42 When  PSI  is  the  supplying Party:   by  (a)  non-firm
     transmission service per the provisions of  the  CINergy
     Services,  Inc.,  FERC Electric Tariff, Original  Volume
     No.  3,  Non-Firm  Point-to-Point  Transmission  Service
     Standard  Tariff  -  NFT (or any successor  transmission
     tariff  of similar service) must be obtained and (b)  an
     energy  charge  of 100% of the Out-of-Pocket  Cost  paid
     therefor  by  PSI,  plus  $1.00 per  megawatt-hour  (for
     difficult  to quantify energy-related costs),  plus  any
     transmission  losses  resulting on  the  system  of  the
     CINergy   Operating   Companies  on   account   of   the
     transaction, and plus any regulatory commission  charges
     and taxes incurred by PSI on account of the transaction.

3.5   Notwithstanding  the  rates stated  in  Subsection  3.3
above,  when  IPL  is  the supplying Party,  if  the  "demand
charge"  option of Section 3.31.1 is chosen, the sum  of  the
demand and energy charges for each specific reservation  made
pursuant  to  Section 2.2 of this Service  Schedule  B  which
includes a demand charge shall not:
     (1)  exceed the total of:

          (i)  The   product  of  the  number  of   kilowatts
               reserved   for  such  reservation  times   the
               maximum  hourly demand charge specified  above
               in Subsection 3.3; and

          (ii) The  product  of  the number of kilowatt-hours
               sup-plied for such reservation times  110%  of
               the  average cost per kilowatt-hour of  energy
               generated by IPL's Petersburg Unit No.  4  for
               the  last preceding month during which it  was
               run; or

     (2)  be  less than 100% of the total Out-Of-Pocket  Cost
          of  supplying the Non-Displacement Energy for  such
          reservation.

3.6   Notwithstanding  the  rates stated  in  Subsection  3.3
above, when PSI and CINergy Services are the supplying Party,
the  sum  of the demand and energy charges for each  specific
reservation  made  pursuant to Section 2.2  of  this  Service
Schedule B shall not:

     (1)  exceed the total of:

           (i) The   product  of  the  number  of   megawatts
               reserved   for  such  reservation  times   the
               maximum  hourly demand charge specified  above
               in Subsection 3.3; and plus
          (ii) The  product  of  the number of megawatt-hours
               supplied  for such reservation times  110%  of
               the  average cost per megawatt-hour of  energy
               generated  by the CINergy Operating Companies*
               Zimmer  Unit No. 1 and Gibson Unit No.  5  for
               the preceding month; nor

     (2)  be  less than 100% of the total Out-Of-Pocket  Cost
          of  supplying the Non-Displacement Energy for  such
          reservation.

3.7   The  aggregate instant total capacity of all IPL  sales
under  this and other Service Schedules which are a  part  of
this  and  other IPL Agreements, for which the rates  charged
have been supported on the basis that total revenues will not
exceed the costs of Petersburg Unit No. 4, is limited to  515
MW.

3.8   The  total power of all sales by the CINergy  Operating
Companies   and  CINergy  Services  under  this   and   other
agreements  of  the CINergy Operating Companies  and  CINergy
Services,  for  which  the  agreed  upon  demand  charge   is
determined based on Zimmer Unit No. 1 and Gibson Unit No.  5,
is  limited  to 925 MWs (CINergy Operating Companies*  Zimmer
Unit  No. 1 Net Demonstrated Capability of 612 MWs and Gibson
Unit  No.  5  Net Demonstrated Capability of 313 MWs)  on  an
hourly basis.  For sales in excess of the capacity limitation
of  925  MWs noted above, the rate shall consist of an energy
charge  of  up  to 110% of Out-of-Pocket Cost  and  a  demand
charge  of  up  to  $ 13 per megawatt per hour  (such  charge
pertains to the production component only), the total  charge
in  any one day shall be no more than the product of $209 and
the  greatest number of megawatts reserved in any hour during
said  day  and the total charge in any one week shall  be  no
more  than  the product of $1,252 and the greatest number  of
megawatts  reserved in any hour during said  week.   Non-firm
transmission  service  per  the  provisions  of  the  CINergy
Services, Inc., FERC Electric Tariff, Original Volume No.  3,
Non-Firm Point-to-Point Transmission Service Standard  Tariff
- -  NFT  (or  any  successor transmission  tariff  of  similar
service)  must be obtained; but in no event shall  the  total
revenue  (energy charge and demand charge combined)  be  less
than  100% of the Out-of-Pocket Costs for supplying the  Non-
Displacement  Energy  for such reservation.   Notwithstanding
all  previous Subsections, when power is sold under both this
Subsection and Subsection 3.3 in any month, the total  demand
charge will be the applicable weighted average demand charges
in  this Subsection and Subsection 3.3.  Such weighting  will
be  developed  by adding the number of hours that  power  was
provided  under  this Subsection times the applicable  demand
charge  under  this Subsection and the number of  hours  that
power  was provided under Subsection 3.3 times the applicable
demand  charge in Subsection 3.3, with the sum being  divided
by  the applicable number of hours of the transaction (month,
week, day or hours).

               EXHIBIT III
               (First Revision)

                     SERVICE SCHEDULE C

                SHORT TERM POWER AND ENERGY

SECTION 1 - DURATION

1.1   This Service Schedule C, being a part of and under  the
Interconnection Agreement (referred to herein  as  the  "1992
Agreement"),  dated  as  of May 1, 1992,  among  Indianapolis
Power  &  Light  Company (hereinafter called "IPL")  and  PSI
Energy,  Inc.,  formerly  named  Public  Service  Company  of
Indiana,   Inc.  (hereinafter  called  "PSI")   and   CINergy
Services, Inc. (hereinafter called "CINergy Services"), shall
become  effective  as  of the effective  date  of  the  Third
Amendment,  dated  June 30, 1995, to the 1992  Agreement  and
shall continue in effect throughout the duration of the  1992
Agreement.   IPL,  PSI  and CINergy  Services  are  sometimes
hereinafter   referred   to  individually   as   "Party"   or
collectively as "Parties" where appropriate.

SECTION 2 - SERVICES TO BE RENDERED

2.1   Any  Party,  by  giving the other Parties  notice,  may
reserve  from  the other Parties (a) electric power  ("Weekly
Short  Term Power") for periods of one or more weeks  or  (b)
electric power ("Daily Short Term Power") for periods of  one
or more days whenever the Party requested to reserve the same
is  willing  to  make such power available.   Under  ordinary
circumstances such reservation shall extend for not less than
a  calendar week if it begins with Sunday or for the  balance
of  the calendar week if it begins with any day subsequent to
Sunday; however, under unusual circumstances, the Parties may
mutually  agree upon a reservation of Daily or  Weekly  Short
Term  Power  for a lesser number of days.  In all  cases  the
Party  asked to supply Daily or Weekly Short Term Power shall
be  the sole judge as to the amounts and periods that it  has
electric  power  available that may be  reserved  by  another
Party  as Short Term Power.  A transaction made by any  Party
under  this Service Schedule C shall not extend beyond twelve
(12) months.

     2.11  Prior to each reservation of Weekly or Daily Short
Term  Power,  the  number of megawatts to  be  reserved,  the
period of the reservation, the terms of such reservation, and
the  source of such power if the supplying Party is  in  turn
reserving such power from another interconnected system which
is  not  a  signatory to the 1992 Agreement ("Third  Party"),
shall  be determined by the Parties.  Such reservation  shall
be  confirmed  in writing at the request of  any  Party.   If
during  such period the conditions arise that could not  have
been  reasonably foreseen at the time of the reservation  and
cause  the  reservation  to be burdensome  to  the  supplying
Party,  such Party may by oral notice to the reserving Party,
such  oral  notice  to  be  later  confirmed  in  writing  if
requested  by  any  Party,  reduce the  number  of  megawatts
reserved by such amount and for such time as it shall specify
in  such  notice, but kilowatts reserved hereunder  that  the
supplying  Party is in turn reserving from a Third Party  may
be  reduced only to the extent they are reduced by such Third
Party.

     2.12  During each period that Weekly or Daily Short Term
     Power  has  been reserved, the Party that has agreed  to
     supply such power shall upon call by the reserving Party
     deliver  associated electric energy  ("Weekly  or  Daily
     Short  Term Energy") to the reserving Party  as  of  the
     interconnection point or points, as provided in  Section
     4.01 of Article 4 of the 1992 Agreement at a rate during
     each hour of up to and including the number of megawatts
     reserved.

SECTION 3 - COMPENSATION

3.1  Weekly Short-Term Power and Energy

     3.1.1   Except as otherwise provided in Subsection 3.1.3
     below,  when IPL is the supplying Party, PSI  shall  pay
     all   of   the  following  which  are  applicable   (the
     applicable  demand  charge rate per this  Subsection  is
     limited by Subsection 3.5):

          (a)  for  any week that Weekly Short-Term Power and
               Energy is reserved, a demand charge rate to be
               agreed  upon by the Parties at the  time  such
               Weekly   Short-Term  Power   and   Energy   is
               reserved,  at  a  rate  of  up  to  $3.89  per
               kilowatt reserved, except, for each day (other
               than  Sunday)  during any part  of  which  the
               amount  of  such Weekly Short-Term  Power  and
               Energy  is  reduced by IPL, the  total  demand
               charge shall be reduced by one-sixth (1/6)  of
               said  agreed upon demand charge rate for  each
               megawatt of the reduction;

          (b)  for Weekly Short-Term Energy delivered that is
               generated  by  IPL,  an energy  charge  to  be
               agreed upon by the Parties at the time of  the
               transaction of up to 110% of the Out-Of-Pocket
               Cost    (such   cost   being   as    of    the
               interconnection point or points, as defined in
               Article  4 of the 1992 Agreement, taking  into
               account  electrical losses incurred  from  the
               source  or  sources  of  such  energy  to  the
               interconnection point or points) of  supplying
               such energy;

          (c)  for Weekly Short-Term Energy delivered that is
               purchased by IPL from a Third Party, an energy
               charge of 100% of the Out-Of-Pocket Cost  paid
               therefor  by  IPL,  plus  one  (1)  mill   per
               kilowatt-hour  of such purchased  energy  (for
               difficult  to quantify energy-related  costs),
               plus  any  transmission  losses  resulting  on
               IPL*s  system  on account of the  transaction,
               and  plus any taxes incurred by IPL on account
               of the transaction.

     3.1.2   Except as otherwise provided in Subsection 3.1.3
     below,  when PSI is the supplying Party, IPL  shall  pay
     all   of   the  following  which  are  applicable   (the
     applicable  demand  charge rate per this  Subsection  is
     limited by Subsection 3.6):

          (a)  for  any week that Weekly Short-Term Power and
               Energy is reserved, a demand charge rate to be
               agreed  upon by the Parties at the  time  such
               Weekly   Short-Term  Power   and   Energy   is
               reserved.  Said demand charge rate shall be at
               a  rate  of up to $4,781 per megawatt reserved
               (such   charge  pertains  to  the   production
               component  only), except for each  day  (other
               than  Sunday)  during any part  of  which  the
               amount  of  such Weekly Short-Term  Power  and
               Energy  is  reduced by PSI, the  total  demand
               charge shall be reduced by one-sixth (1/6)  of
               said  agreed upon demand charge rate  (rounded
               to  the  nearest $0.10 per megawatt) for  each
               megawatt    of   the   reduction.     Non-firm
               transmission service per the provisions of the
               CINergy  Services, Inc., FERC Electric Tariff,
               Original Volume No. 3, Non-Firm Point-to-Point
               Transmission Service Standard Tariff - NFT (or
               any  successor transmission tariff of  similar
               service) must be obtained;

          (b)  for Weekly Short-Term Energy delivered that is
               generated  by  PSI,  an energy  charge  to  be
               agreed upon by the Parties at the time of  the
               transaction of up to 110% of the Out-Of-Pocket
               Cost    (such   cost   being   as    of    the
               interconnection point or points, as defined in
               Article  4 of the 1992 Agreement, taking  into
               account  electrical losses incurred  from  the
               source  or  sources  of  such  energy  to  the
               interconnection point or points) of  supplying
               such energy;

          (c)  for Weekly Short-Term Energy delivered that is
               purchased by PSI from a Third Party, an energy
               charge of 100% of the Out-Of-Pocket Cost  paid
               therefor  by PSI, plus $1.00 per megawatt-hour
               of  such  purchased energy (for  difficult  to
               quantify   energy-related  costs),  plus   any
               transmission losses resulting on the system of
               the CINergy Operating Companies on account  of
               the   transaction,  and  plus  any  regulatory
               commission charges and taxes incurred  by  PSI
               on account of the transaction.

     3.1.3   When  Weekly  Short-Term  Power  and  Energy  is
     purchased  by  the supplying Party from  a  Third  Party
     specifically  for  the  reserving Party,  the  reserving
     Party shall pay the supplying Party all of the following
     which are applicable:

     (a)  the  demand  charge paid therefor by the  supplying
          Party  to  the Third Party for such electric  power
          and energy;

     (b)  when IPL is the supplying Party:

          (1)  for  any week such Weekly Short-Term Power and
               Energy  is reserved, a demand charge rate  per
               kilowatt  to be agreed upon by the Parties  at
               the  time  such  Weekly Short-Term  Power  and
               Energy  is reserved, at a rate of up to  $0.29
               per kilowatt reserved (such charge pertains to
               the  reservation  of  transmission).   In  the
               event  the  amount  of such Weekly  Short-Term
               Power  and  Energy  is reduced  by  IPL,  said
               demand  charge shall be reduced by the sum  of
               (i)  one-sixth (1/6) of the said  agreed  upon
               weekly rate per kilowatt of the reduction  for
               each day (other than Sunday) during which such
               reduction   is   in  effect,  and   (ii)   the
               reduction,  if any, in the demand charge  paid
               by IPL to the Third Party;

     (c)  when PSI is the supplying Party:
          (1)  Non-firm   transmission   service   per    the
               provisions of the CINergy Services, Inc., FERC
               Electric Tariff, Original Volume No.  3,  Non-
               Firm  Transmission Service Standard  Tariff  -
               NFT  (or any successor transmission tariff  of
               similar  service)  must be  obtained.  In  the
               event  the  amount  of such Weekly  Short-Term
               Power  and  Energy  is reduced  by  PSI,  said
               demand  charge shall be reduced by the sum  of
               (i)  one-sixth (1/6) of the said  agreed  upon
               weekly rate per megawatt of the reduction  for
               each day (other than Sunday) during which such
               reduction   is   in  effect,  and   (ii)   the
               reduction,  if any, in the demand charge  paid
               by PSI to the Third Party;

          (2)  for each megawatt-hour purchased by PSI from a
               Third Party to supply Weekly Short-Term Energy
               delivered during such period, an energy charge
               of   100%  of  the  Out-Of-Pocket  Cost   paid
               therefor  by PSI, plus $1.00 per megawatt-hour
               (for   difficult  to  quantify  energy-related
               costs), plus any transmission losses resulting
               on   the   system  of  the  CINergy  Operating
               Companies  on account of the transaction,  and
               plus  any  regulatory commission  charges  and
               taxes  incurred  by  PSI  on  account  of  the
               transaction.

3.2  Daily Short-Term Power and Energy

     3.2.1   Except as otherwise provided in Subsection 3.2.3
     below,  when IPL is the supplying Party, PSI  shall  pay
     all   of   the  following  which  are  applicable   (the
     applicable  demand  charge rate per this  Subsection  is
     limited by Subsection 3.5):

     (a)  for  any day that Daily Short-Term Power and Energy
          is reserved, a demand charge rate to be agreed upon
          by  the  Parties at the time such Daily  Short-Term
          Power  and Energy is reserved, at a rate of  up  to
          $0.778  per kilowatt reserved, except, for any  day
          during  any part of which the amount of such  Daily
          Short-Term Power and Energy is reduced by IPL,  the
          agreed upon demand charge will only be paid for the
          power still available;

     (b)  for  Daily  Short-Term  Energy  delivered  that  is
          generated by IPL, an energy charge of up to 110% of
          the  Out-of-Pocket Cost (such cost being as of  the
          interconnection  point  or points,  as  defined  in
          Article  4  of  the  1992  Agreement,  taking  into
          account electrical losses incurred from the  source
          or  sources  of  such energy to the interconnection
          point or points) of supplying such energy;

     (c)  for  Daily  Short-Term  Energy  delivered  that  is
          purchased  by  IPL  from a Third Party,  an  energy
          charge  of  100%  of  the Out-of-Pocket  Cost  paid
          therefor  by  IPL, plus one (1) mill per  kilowatt-
          hour  of  such  purchased energy (for difficult  to
          quantify    energy-related   costs),    plus    any
          transmission  losses resulting on IPL*s  system  on
          account  of  the  transaction, and plus  any  taxes
          incurred by IPL on account of the transaction.

3.2.2   Except  as  otherwise provided  in  Subsection  3.2.3
below, when PSI is the supplying Party, IPL shall pay all  of
the  following  which are applicable (the  applicable  demand
charge  rates  per this Subsection are limited by  Subsection
3.6):

     (a)  for  any day that Daily Short-Term Power and Energy
          is reserved, a demand charge rate to be agreed upon
          by  the  Parties at the time such Daily  Short-Term
          Power  and Energy is reserved.  Said demand  charge
          rate  shall be at a rate of up to $797 per megawatt
          reserved  (such  charge pertains to the  production
          component only), the total charge in any week shall
          be  no  more  than the product of  $4,781  and  the
          greatest  number of megawatts reserved in  any  day
          during  said  week, except for any day  during  any
          part  of  which the amount of such Daily Short-Term
          Power and Energy is reduced by PSI, the agreed upon
          demand charge will only be paid for the power still
          available.  Non-firm transmission service  per  the
          provisions  of  the  CINergy Services,  Inc.,  FERC
          Electric  Tariff, Original Volume No.  3,  Non-Firm
          Point-to-Point Transmission Service Standard Tariff
          -  NFT  (or  any successor transmission  tariff  of
          similar service) must be obtained;

     (b)  for  Daily  Short-Term  Energy  delivered  that  is
          generated by PSI, an energy charge of up to 110% of
          the  Out-of-Pocket Cost (such cost being as of  the
          interconnection  point  or points,  as  defined  in
          Article  4  of  the  1992  Agreement,  taking  into
          account electrical losses incurred from the  source
          or  sources  of  such energy to the interconnection
          point or points) of supplying such energy;

     (c)  for  Daily  Short-Term  Energy  delivered  that  is
          purchased  by  PSI  from a Third Party,  an  energy
          charge  of  100%  of  the Out-of-Pocket  Cost  paid
          therefor  by  PSI, plus $1.00 per megawatt-hour  of
          such  purchased energy (for difficult  to  quantify
          energy-related costs), plus any transmission losses
          resulting  on  the system of the CINergy  Operating
          Companies on account of the transaction,  and  plus
          any   regulatory  commission  charges   and   taxes
          incurred by PSI on account of the transaction.

     3.2.3   When  Daily  Short-Term  Power  and  Energy   is
     purchased  by  the supplying Party from  a  Third  Party
     specifically  for  the  reserving Party,  the  reserving
     Party shall pay the supplying Party all of the following
     which are applicable:

     (a)  the  demand  charge paid therefor by the  supplying
          Party  to  the Third Party for such electric  power
          and energy;

     (b)  when IPL is the supplying Party:

          (1)   for  any day such Daily Short-Term Power  and
          Energy is reserved, a demand charge per kilowatt to
          be  agreed  upon by the Parties at  the  time  such
          Daily Short-Term Power and Energy is reserved, at a
          rate  of  up to $0.058 per kilowatt reserved  (such
          charge    pertains    to   the    reservation    of
          transmission).   In the event the  amount  of  such
          Daily  Short-Term Power and Energy  is  reduced  by
          IPL, said demand charge shall be reduced by the sum
          of (i) one-sixteenth (1/16) of the said agreed upon
          daily  rate per kilowatt of the reduction for  each
          hour  in any day during which such reduction is  in
          effect,  such  reduction not to exceed  the  agreed
          upon  demand  charge for such  day,  and  (ii)  the
          reduction, if any, in the demand charge paid by IPL
          to the Third Party;

          (2)  for each kilowatt-hour purchased by IPL from a
          Third  Party  to  supply  Daily  Short-Term  Energy
          delivered  during such period, an energy charge  of
          100%  of  the  Out-of-Pocket Cost paid therefor  by
          IPL,  plus  one  (1)  mill per  kilowatt-hour  (for
          difficult  to quantify energy-related costs),  plus
          any  transmission losses resulting on IPL*s  system
          on  account of the transaction, and plus any  taxes
          incurred by IPL on account of the transaction;
     (c)  when PSI is the supplying Party:

          (1)    Non-firm   transmission  service   per   the
          provisions  of  the  CINergy Services,  Inc.,  FERC
          Electric  Tariff, Original Volume No.  3,  Non-Firm
          Transmission Service Standard Tariff - NFT (or  any
          successor  transmission tariff of similar  service)
          must  be obtained. In the event the amount of  such
          Daily  Short-Term Power and Energy  is  reduced  by
          PSI, said demand charge shall be reduced by the sum
          of (i) one-sixteenth (1/16) of the said agreed upon
          daily  rate per megawatt of the reduction for  each
          hour in any day during which any such reduction  is
          in  effect, such reduction not to exceed the agreed
          upon  demand  charge for such  day,  and  (ii)  the
          reduction, if any in the demand charge paid by  PSI
          to the Third Party;
          (2)  for each megawatt-hour purchased by PSI from a
          Third  Party  to  supply  Daily  Short-Term  Energy
          delivered  during such period, an energy charge  of
          100%  of  the  Out-of-Pocket Cost paid therefor  by
          PSI, plus $1.00 per megawatt-hour (for difficult to
          quantify    energy-related   costs),    plus    any
          transmission losses resulting on the system of  the
          CINergy  Operating  Companies  on  account  of  the
          transaction,  and  plus  any regulatory  commission
          charges and taxes incurred by PSI on account of the
          transaction.

3.3   Notwithstanding  the rates stated  in  the  Subsections
3.1.1,  3.1.3,  3.2.1  and  3.2.3  above,  when  IPL  is  the
supplying Party, the sum of the demand and energy charges for
each  specific reservation made pursuant to Section 2 of this
Service Schedule C shall not:

     (1)  exceed the total of:

            (i)   the  product  of  the number  of  kilowatts
          reserved  for  such reservation times  the  maximum
          Weekly   or  Daily  demand  charge,  whichever   is
          applicable,  specified above in Subsections  3.1.1,
          3.1.3, 3.2.1 and 3.2.3, as appropriate; and

          (ii)   the  product of the number of kilowatt-hours
          supplied  for such reservation times  110%  of  the
          average  cost per kilowatt-hour of energy generated
          by  IPL's  Petersburg  Unit  No.  4  for  the  last
          preceding month during which it was run; or

     (2)   be less than 110% of the total Out-Of-Pocket  Cost
     of supplying the Short Term Energy for such reservation.

3.4   Notwithstanding the rates stated in Subsections  3.1.2,
3.1.3,  3.2.2 and 3.2.3 above, when PSI and CINergy  Services
are  the  supplying Party, the sum of the demand  and  energy
charges  for  each  specific  reservation  made  pursuant  to
Section 2 of this Service Schedule C shall not:

     (1)  exceed the total of:

          (i) the product of the number of megawatts reserved
          for  such  reservation times the maximum Weekly  or
          Daily   demand  charge,  whichever  is  applicable,
          specified above in Subsections 3.1.2, 3.1.3,  3.2.2
          and 3.2.3, as appropriate, and plus

          (ii)  the  product of the number of  megawatt-hours
          supplied  for such reservation times  110%  of  the
          average  cost per megawatt-hour of energy generated
          by the CINergy Operating Companies* Zimmer Unit No.
          1  and  Gibson Unit No. 5 for the preceding  month;
          nor

     (2)   be  less than 100% of the Out-Of-Pocket  Costs  of
     supplying the Short Term Energy for such reservation.

3.5   The  aggregate instant total capacity of all IPL  sales
under  this and other Service Schedules which are a  part  of
this  and  other IPL Agreements, for which the rates  charged
have been supported on the basis that total revenues will not
exceed  the  costs of Petersburg Unit No. 4,  is  limited  to
515MW.

3.6   The  total power of all sales by the CINergy  Operating
Companies   and  CINergy  Services  under  this   and   other
agreements  of  the CINergy Operating Companies  and  CINergy
Services,  for  which  the  agreed  upon  demand  charge   is
determined based on Zimmer Unit No. 1 and Gibson Unit No.  5,
is  limited  to 925 MWs (CINergy Operating Companies*  Zimmer
Unit  No. 1 Net Demonstrated Capability of 612 MWs and Gibson
Unit  No.  5  Net Demonstrated Capability of 313 MWs)  on  an
hourly basis.  For sales in excess of the power limitation of
925  MWs  noted above, the rate shall consist  of  an  energy
charge  of  up  to 110% of Out-of-Pocket Cost  and  a  demand
charge  of  up to $1,252 per megawatt per week  or  a  demand
charge  of up to $209 per megawatt per day, the total  charge
in  any  one week shall be no more than the product of $1,252
and  the  greatest number of megawatts reserved in  any  hour
during  said  week  (such charge pertains to  the  production
component  only).   Non-firm  transmission  service  per  the
provisions  of  the  CINergy Services,  Inc.,  FERC  Electric
Tariff,   Original  Volume  No.  3,  Non-Firm  Point-to-Point
Transmission Service Standard Tariff - NFT (or any  successor
transmission tariff of similar service) must be obtained; but
in no event shall the total revenue (energy charge and demand
charge combined) be less than 100% of the Out-of-Pocket Costs
of  supplying  the  Short-Term Energy for  such  reservation.
Notwithstanding all previous Subsections, when power is  sold
under  both this Subsection and Subsection 3.1.2 in any week,
the  total demand charge will be the weighted average  demand
charges  in  this  Subsection  and  Subsection  3.1.2.   Such
weighting  will  be developed by adding the number  of  hours
that  power  was  provided under this  Subsection  times  the
demand  charge under this Subsection and the number of  hours
that  power  was  provided under Subsection 3.1.2  times  the
demand  charge  in  Subsection 3.1.2,  with  such  sum  being
divided by the total number of hours in the week.  Also, when
power is sold under both this Subsection and Subsection 3.2.2
in  any  day,  the total demand charge will be  the  weighted
average  demand  charges  in this Subsection  and  Subsection
3.2.2.  Such weighting will be developed by adding the number
of  hours that power was provided under this Subsection times
the  demand  charge under this Subsection and the  number  of
hours  that  power was provided under Subsection 3.2.2  times
the  demand charge in Subsection 3.2.2, with such  sum  being
divided by the total number of hours in the day.

               EXHIBIT IV
               (SECOND REVISION)

                     SERVICE SCHEDULE D

   CARMEL SOUTHEAST TAP NETWORK POWER AND ENERGY TRANSFER

SECTION 1 - DURATION

1.1   This  Service Schedule, being a part of and  under  the
Interconnection Agreement (referred to herein  as  the  "1992
Agreement")  dated  as  of May 1, 1992  between  Indianapolis
Power  &  Light  Company (hereinafter called "IPL")  and  PSI
Energy,  Inc.,  formerly  named  Public  Service  Company  of
Indiana,   Inc.,  (hereinafter  called  "PSI")  and   CINergy
Services, Inc. (hereinafter called "CINergy Services"), shall
become  effective as of the earlier date of either  September
1,  1995 or the effective date of the Third Amendment,  dated
June  30,  1995, and shall continue in effect through  August
31,  1996,  unless extended as provided in Section 6  hereof.
IPL,  PSI  and  CINergy  Services are  sometimes  hereinafter
referred  to  individually  as  "Party"  or  collectively  as
"Parties" where appropriate.

SECTION 2 - FACILITIES TO BE PROVIDED

2.1  PSI shall provide, install, operate and maintain, at its
own  expense, during the term of this Service Schedule  D  as
defined in Section 6 hereof, the following facilities:
     (i)  At its Carmel Southeast Substation - a 138,000 volt
three-phase  interrupting device, a  24/40  MVA  transformer,
12,470  volt  metering  equipment,  relaying,  switching,   a
supervisory  control  remote terminal unit,  a  communication
circuit  from  the  supervisory unit to IPL*s  Load  Dispatch
Office  and  appurtenant equipment, all  of  which  shall  be
subject  to  the  prior  approval  of  IPL.   PSI  shall   be
responsible  for  installing,  owning  and  maintaining   all
necessary  protection equipment required by  IPL  to  protect
IPL*s  facilities associated with Carmel Tap.   PSI*s  remote
terminal  unit shall provide data acquisition, remote  status
and  control of the load and allow PSI to provide  real  time
dispatch  of their generation to their load as well  as  load
control  while IPL will be provided real time breaker  status
and load data.
     (ii) A  138,000  volt  transmission line extending  from
          Carmel  Southeast Substation to Transmission  Tower
          Number  7 (Map Section 173A) on IPL's 138,000  volt
          North-River   Road   (132-57)  transmission   line,
          together with a 138,000 volt tap at such tower,  to
          be known as the Carmel Tap Point.

2.2   IPL  shall provide, install, operate and  maintain,  as
direct  assignment facilities at the sole benefit and expense
of PSI, during the term of the Carmel Tap Point as defined in
Section 6 hereof, a 138,000 volt two-way switching point with
supervisory   controlled  138,000  volt   line   interrupting
disconnect  switches  and associated  facilities  such  as  a
switch  tower,  supervisory terminal unit  and  communication
circuit at the Carmel Tap Point.

SECTION 3 - SERVICES TO BE RENDERED

3.1   The Parties hereto mutually agree that their respective
radial  distribution systems will not be operated in parallel
through  the  Carmel Tap Point.  Electric energy supplied  by
IPL  to  PSI  at  the  Carmel Tap Point will  be  treated  as
capacity  and  energy simultaneously transferred  into  IPL's
system by PSI through the other interconnection points of the
Parties  and  will  be  used  only  to  supply  the  ultimate
consumers  of PSI who are or may be served from PSI's  Carmel
Southeast  Substation.  Any capacity or energy  delivered  by
IPL   to   PSI  through  the  Carmel  Tap  Point   shall   be
simultaneously  supplied by PSI to IPL  through  any  of  the
interconnection points of the Parties.  PSI*s supplied energy
shall include an adder of approximately 3%-5% to the capacity
and  energy  delivered to the Carmel Tap by IPL to compensate
IPL  for capacity and energy losses occurring on IPL*s system
and  PSI*s  tapped  transmission line  and  transformer  bank
(metered at secondary voltage) due to the transfer of  energy
to the Carmel Tap Point.

3.2  IPL shall provide PSI with the following services:

     1)   Firm,  network  transmission  service  including  a
          capacity reservation (34,500 volt, 138,000 volt and
          above) of up to and including 20 MW*s (measured  at
          the other IPL/PSI interconnection points as defined
          in   the   1992   Agreement).  Said   service   and
          reservation  shall be planned for and  provided  on
          the  same basis as IPL*s firm native load customers
          only  during  the term of this service schedule  as
          set forth in Section 6 herein of this Agreement.

     2)   Non-firm transmission service (34,500 volt, 138,000
          volt  and  above)  up  to  and  including  30  MW*s
          (measured  at  the  other  IPL/PSI  interconnection
          points  in the 1992 Agreement) in addition  to  the
          firm  transmission listed in Point 1  above.   Said
          non-firm  service  shall be  on  an  as  available,
          interruptible basis when requested by PSI.

Upon  IPL*s  request,  PSI shall immediately  curtail  and/or
interrupt  its  firm load served by the 20  MW  firm  network
transmission  and reservation service on the  same  basis  as
IPL*s  firm  native load customers.  If PSI*s demand  exceeds
their  reservation (herein called "excess loading") PSI shall
demonstrate  that all such demand exceeding their reservation
is  1) immediately interruptible by contract or 2) that  such
excess  loading  occurred due to emergency switching  lasting
less  than  a  total  of two (2) weeks within  any  six-month
period.   Otherwise such excess loading shall be  treated  as
having automatically increased PSI*s reservation, for billing
purposes  only, until IPL is satisfied PSI has taken  actions
to  permanently  eliminate such excess  loading.   IPL  shall
coordinate  non-emergency maintenance outages  with  PSI  and
provide  a  minimum notification by 12:00  noon  of  the  day
before the scheduled outage.

3.3   IPL  and  PSI  shall periodically  conduct  independent
and/or  joint  studies of their future systems to  serve  the
Indianapolis northeast metropolitan area.  PSI shall annually
update and provide IPL with their ten year demand projections
for  the Carmel Tap Point.  If such studies indicate problems
due  to  PSI*s  20  MW reservation or projected  increase  in
reservation, then IPL and PSI shall jointly or independently,
as  soon as practicable, develop plans and estimates of  cost
for   the   installation  of  any  additional  equipment   or
facilities necessary to effect a long term solution  to  such
problem  so  that  transmission  services  hereunder  may  be
reliably continued in accordance with IPL standards.

IPL*s studies of this service cover the first five years  and
identified facilities during that period which may need to be
upgraded   if   area  demand  grows  faster  than   presently
projected.  If facility upgrades are required, PSI shall  pay
annual  carrying  costs on a monthly basis  during  the  time
period from the in-service date of the facilities until IPL*s
area  load increases by the amount of PSI*s 20 MW reservation
plus  actual  and projected increases in reservation  (herein
called  "period  of advancement") after which  the  remaining
costs  shall  be rolled into IPL*s rate analysis.   Any  time
PSI*s  reservation, as determined under 3.2  above,  requires
IPL  to install facilities in advance of its need, PSI  shall
pay annual carrying cost on such facilities during the period
of  advancement.  Increased reservations beyond 20 MWs  shall
be treated as interruptible until all necessary facilities to
reliably accommodate these loads are placed in service.   IPL
will not increase or upgrade the capacity of its existing  or
planned  transmission facilities in order to provide  service
under this Agreement if doing so would unduly 1) impair IPL*s
system  reliability or 2) jeopardize the benefits of  service
or  3)  increase  the cost of service to  IPL*s  Native  Load
Customers  and other customers to whom IPL has a pre-existing
contractual obligation.

In  the  event PSI does not elect to continue its reservation
after the term of this Service Schedule, PSI shall pay 1) the
stranded cost of all IPL*s facilities directly assignable  to
providing  firm  service  for PSI*s reservation  and  2)  the
remaining  annual  cost  on a monthly  basis  of  all  system
improvements from the termination date until IPL*s area  load
increase  equals  the  amount of PSI*s reservation.   In  the
event  IPL  can*t  obtain regulatory approvals  for  facility
modifications  needed  to increases PSI*s  reservation,  then
firm  service  shall not be provided for the  amount  of  the
increased service reservation.

3.4  PSI shall provide for ancillary services such as dynamic
reactive  var/voltage support, all generation reserves,  real
time generation dispatch, load following and dispatch control
services  needed to support the operation of the  Carmel  Tap
Point.

3.5   IPL  shall file with the FERC an amendment  to  Service
Schedule D for all direct assignment facilities (not  covered
in  Section  2.2) to be provided for PSI by  IPL  under  this
Service  Schedule  and  for  all costs  for  advanced  system
improvements during the "period of advancement"  due  to  the
PSI  transmission reservation provided under Service Schedule
D.   FERC*s failure to accept the cost assignments for either
direct   assignment   facilities   and/or   advanced   system
improvements due to the PSI network load service provided  in
this  Service  Schedule D shall result in 1) IPL  terminating
its  obligation  to  provide and plan for PSI*s  transmission
reservation as covered in Section 3.2 and Section  3.3  above
or  2)  PSI may elect to reduce the level and/or firmness  of
PSI*s  transmission  reservation so  that  additional  direct
assignment  facilities  and/or  system  improvement  facility
advancements won*t be needed or 3) PSI may elect to terminate
service provided hereunder provided that upon termination  of
this  Service Schedule D by PSI, PSI shall remain responsible
for  paying IPL all costs remaining for all direct assignment
facilities  provided by IPL and all remaining costs  for  all
advanced  system improvements attributed to  PSI  during  the
period  of advancement where said facilities have been  filed
with and accepted by the FERC including the direct assignment
facilities  provided  initially  under  Section   2.2.    The
stranded  cost  of the direct assignment facilities  provided
under  Section 2.2 shall be calculated and marked up for  tax
effects  as  shown in Attachment 1 and shall be paid  by  PSI
within 30 days of receipt of the bill from IPL.
SECTION 4 - DEVIATIONS IN DELIVERIES AT CARMEL TAP POINT

4.1   The  Parties agree that with respect to the Carmel  Tap
Point, PSI shall simultaneously supply (including adjustments
for  losses)  to IPL from PSI*s other interconnection  points
with  IPL  the capacity and energy delivered to PSI  by  IPL.
The  Parties  recognize,  however, that  despite  their  best
efforts  to  simultaneously supply and deliver  capacity  and
energy  (including adjustments for losses) deviations between
actual  and  scheduled energy transfers may occur.   Electric
energy resulting from such deviations shall, at the option of
IPL, be settled for either by return of equivalent energy  or
by  payment of Out-Of-Pocket Costs. If equivalent  energy  is
returned,  it shall be returned at times when the  generating
costs of IPL are equivalent to the generating costs of IPL at
the  time  of  the  deviations or,  if  IPL  elects  to  have
equivalent  energy  returned under different  conditions,  it
shall  be  returned  in such amounts, to be  mutually  agreed
upon,   as   will  compensate  IPL  for  the  difference   in
conditions.

IPL,  at its option, may elect to bill for such Out-Of-Pocket
Costs, plus ten percent of such cost, for any energy supplied
over  and  above that scheduled by PSI for any hour or  hours
during the billing period.  Such costs shall be determined at
the Carmel Tap Point by taking into account electrical losses
incurred  from the source or sources of such energy  to  said
Tap Point.

4.2   If IPL elects to bill for any energy supplied over  and
above that scheduled by PSI for any hour or hours during  the
billing period where the energy was supplied by a Third Party
then  in accordance with the FERC Order 84 the maximum amount
to  be  billed by IPL to PSI shall be 100% of the Third Party
demand  and  energy charge plus 1 mill/kwhr (the 1  mill/kwhr
adder  is applicable only to transactions with a duration  of
less  than one year) plus IPL*s network transmission rate  as
accepted by the FERC under this Service Schedule D.

SECTION 5 - COMPENSATION

5.1   FIRM  SERVICE  - Electric power measured  in  kilowatts
supplied  by PSI and delivered at the Carmel Tap Point  under
the 1992 Agreement by IPL to PSI shall be billed on a monthly
basis the annual cost of IPL*s transmission system multiplied
by  the  ratio  of the sum of PSI*s twelve 20 MW reservations
divided  by  IPL*s  annual system peak  demand  which  equals
$283,200  annually as calculated in the cost support Appendix
A.   The loss factors consisting of a 3-5% adder, as noted in
Section  3.1  hereof, shall include PSI*s radial transmission
line  and  transformer bank associated with  the  Carmel  Tap
Point  and  IPL*s 34,500 volt and above transmission  system.
The loss factors shall include PSI*s radial transmission line
and transformer bank associated with the Carmel Tap Point and
IPL*s  transmission  system.   The  loss  factors  shall   be
determined  by  the annual transmission system  loss  studies
performed  by  IPL  and  PSI.   Also,  increases   in   PSI*s
reservation shall be billed by using the same methodology.
5.2   NON-FIRM SERVICE - Electric power measured in kilowatts
supplied  by PSI and delivered at the Carmel Tap Point  under
the 1992 Agreement by IPL to PSI shall be billed at $1.18 per
kilowatt-month plus $0.01 per kilowatt-month for IPL dispatch
control.  This demand charge for non-firm service applies  to
usage above PSI*s firm service reservation and shall be based
upon  the  difference in maximum hourly demand  in  kilowatts
measured  and the amount of PSI*s reservation in the calendar
month  of  billing.  The loss factors consisting  of  a  3-5%
adder,  as  noted in Section 3.1 hereof, shall include  PSI*s
radial transmission line and transformer bank associated with
the  Carmel  Tap  Point  and  IPL*s  34,500  volt  and  above
transmission system.  The loss factors shall be determined by
the  annual transmission system loss studies performed by IPL
and PSI.

5.3   DIRECT ASSIGNMENT FACILITIES - PSI shall pay IPL  on  a
monthly  basis  IPL*s annual charges on the  total  installed
cost   of  the  facilities  provided  in  Section  2.2  above
multiplied by IPL*s annual carrying charges as calculated  in
Attachment 1 and revisions will be filed with the FERC.

SECTION 6 - TERM OF AGREEMENT

6.1   This  Service Schedule shall terminate August 31,  1996
unless PSI notifies IPL at least six (6) months prior to such
termination date that it desires to continue service  to  the
Carmel  Tap  Point;  provided  however,  that  any  continued
service  is  subject  to  such terms and  conditions  as  are
mutually agreed to by the Parties.

Fourth Amendment

                         June 26, 1996

Mr. Ron C. Snead
Cinergy Corporation
139 East Fourth Street
Cincinnati, OH  45201

  Re:  IPL/PSI Interconnection Agreement - Service Schedule D

Dear Ron:

This is to confirm the phone conversation on June 10, 1996,
in which you and Jerry Fohey, Director, Electric System
Planning, discussed extending our agreement regarding
transmission service IPL provides PSI Energy at the Carmel
Southeast Tap by one year to and including August 31, 1997.
You indicated that PSI Energy was agreeable to so extending
Service Schedule D (Carmel Southeast Tap Network Power and
Energy Transfer).

Please confirm by signature below, Cinergy's agreement that
the existing Service Schedule D, under which IPL currently
provides service to PSI Energy at the Carmel Southeast Tap,
will be extended by one year to and including August 31,
1997, with the same rates, terms and conditions.  Further,
Cinergy and IPL agree that PSI Energy also has the option to
take transmission service for the Carmel Southeast Tap under
any open access transmission tariffs that may be filed by IPL
and which become effective after the date of this letter
agreement.

Three original copies of this letter are provided for your
signature.  Please return two signed copies to IPL.

                              Regards,

                              /s/ John C. Berlier, Jr.

                              John C. Berlier, Jr.
                              Vice President - Resource
Planning & Rates

Enclosures

ACKNOWLEDGEMENT

By: /s/ John C. Procario

Title:  General Manager

Company:   Cinergy

Fifth Amendment

                        June 10, 1997

Mr. Ron C. Snead
Cinergy Corporation
139 East Fourth Street
Cincinnati, OH  45201

  Re:  IPL/PSI Interconnection Agreement - Service Schedule D

Dear Ron:

This letter seeks to extend our existing agreement regarding
transmission service IPL provides PSI Energy at the Carmel
Southeast Tap, which expires August 31.  IPL proposes to
extend Service Schedule D (Carmel Southeast Tap Network Power
and Energy Transfer), a part of the existing interconnection
agreement between IPL and Cinergy, dated June 30, 1995, by
one year, to and including August 31, 1998.

Please confirm by signature below, Cinergy's agreement that
the existing Service Schedule D, under which IPL currently
provides service to PSI Energy at the Carmel Southeast Tap,
will be extended by one year to and including August 31,
1998, with the same rates, terms and conditions.  Further,
Cinergy and IPL agree that PSI Energy also has the option to
take transmission service for the Carmel Southeast Tap under
any open access transmission tariffs that may be filed by IPL
and which become effective after the date of this letter
agreement.

Three original copies of this letter are provided for your
signature.  Please return one signed original copy to me and
retain one copy for your files.

                              Regards,

                              /s/ John C. Berlier

                              John C. Berlier
                              Vice President
                              Resource Planning & Rates

Enclosures

ACKNOWLEDGEMENT

By: /s/ John C. Procario

Title:  Vice President
     Electric System Operations

Company:   Cinergy Corp.

                       SIXTH AMENDMENT
                           TO THE
                  INTERCONNECTION AGREEMENT
                            AMONG
             INDIANAPOLIS POWER & LIGHT COMPANY
                      PSI ENERGY, INC.
                 AND CINERGY SERVICES, INC.

0.01 THIS SIXTH AMENDMENT, dated on the 16th day of December,
1997, among INDIANAPOLIS POWER & LIGHT COMPANY ("IPL"), PSI
ENERGY ("PSI"), INC., and CINERGY SERVICES, INC. ("Cinergy
Services").  IPL, PSI, and Cinergy Services are referred to
individually as "Party" and collectively as "Parties" where
appropriate.

                         WITNESSETH:

0.02 WHEREAS, There is now in force and effect between IPL,
PSI, and Cinergy Services an Interconnection Agreement, dated
as of May 1, 1992 (the "1992 Agreement"); and

0.03 WHEREAS, the Parties desire to modify the 1992
Agreement, and

0.04 NOW, THEREFORE, in consideration of the premises and
mutual covenants and agreements of the Parties, as herein set
forth, the Parties agree as follows:

1.01 The following provisions of the 1992 Agreement are
modified as follows:

     1.01.1     Section 4.01 of the 1992 Agreement shall read
as follows:

     "4.01.  Delivery Points.  All electric energy
     delivered under the 1992 Agreement shall be of the
     character commonly known as three-phase sixty Hertz
     energy, and shall be delivered at the
     Interconnection Points specified under Section 1.01
     hereof, at a nominal voltage of 138,000 volts at
     the Five Points and Centerton Interconnection
     Points, at the 138 kV Petersburg Interconnection
     Point, and at the Carmel Tap Point; and at a
     nominal voltage of 345,000 volts at the Whitestown
     and Gwynneville Interconnection Points, and at the
     345 kV Petersburg Interconnection Point; and at
     such other points and voltages as hereafter may be
     agreed upon by the Parties pursuant to Section 1.02
     hereof.  In addition to the interconnection points
     provided in Sections 1.01 and 1.02, PSI may request
     IPL deliver electric energy under the 1992
     Agreement at interconnection points IPL may have
     with third parties (hereinafter referred to as
     "Alternate Delivery Points")."

     1.01.2     Section 4.03 of the 1992 Agreement shall read
as follows:

     "4.03.  Metering Points.  Electric power and energy
     supplied and delivered under the 1992 Agreement
     shall be measured by suitable metering equipment
     which shall be provided, owned and maintained by
     PSI or IPL as designated below at the following
     metering points:

          (i)  138,000 volt metering equipment installed
               by PSI at the Five Points Substation;
               138,000 volt metering equipment installed
               by PSI at the Centerton Substation;
               138,000 and 345,000 volt metering
               equipment installed by IPL at the
               Petersburg Station; 345,000 volt metering
               equipment installed by IPL at its
               Sunnyside Substation and at PSI's
               Gwynneville and Whitestown Substations;
               and 12.47 kV metering equipment installed
               by PSI at its Carmel Southeast
               Substation, and

          (ii) At such other locations as hereafter may
               be agreed upon by the Parties pursuant to
               Section 1.02 hereof.

     Electric power and energy supplied and delivered at
     the Alternate Delivery Points specified in Section
     4.01 shall be measured by metering equipment either
     provided, owned and maintained by IPL or third
     parties.  Such metering equipment shall not be
     subject to Sections 4.04 through 4.07 but shall
     meet the reasonable requirements of the Operating
     Committee."

     1.01.3     Section 6.03 of the 1992 Agreement shall read
as follows:

     "6.03.  Billing Payments.  All bills for amounts
     owed by one Party to the other Party shall be due
     on the first business day following the fifteenth
     (15th) day after the end of the calendar month or
     period service was rendered, or on the tenth (10th)
     business day following receipt of a bill, whichever
     is later.  Payments shall be made by electronic
     transfer or by such other mutually agreeable method
     as shall cause such payment to be available for the
     account of the payee on or before the due date.
     Interest on unpaid amounts, both principal and
     interest, shall accrue daily at the then current
     prime interest rate per annum of The Chase
     Manhattan Bank, N.A., New York, New York, plus two
     percent (2%) per annum, or the maximum rate
     permitted by law, whichever is less, from the date
     due until the date upon which payment is made."

     1.01.4     Section 7.01 of the 1992 Agreement shall read
as follows:

     "7.01.  Operating Committee Organization and
     Duties.  To coordinate the operation of their
     respective generation,  transmission, and
     substation facilities in order that the benefits of
     the 1992 Agreement may be realized by the Parties
     to the fullest practicable extent, the Parties
     shall establish a committee of authorized
     representatives to be known as the Operating
     Committee.  Each of the Parties shall designate in
     writing delivered to the other Party, the person
     who is to act as its authorized representative (the
     "OC Representative") on said committee (and the
     person or persons who may serve as Alternate
     whenever the OC Representative is unable to act).
     The OC Representative and Alternate or Alternates
     shall each be persons familiar with the generation,
     transmission, and substation facilitates of the
     system of the Party he represents, and each shall
     be fully authorized (i) to cooperate with the other
     OC Representative (or Alternates) and (ii) as the
     need arises and subject to the declared intentions
     of the Parties as herein set forth and to the terms
     hereof and the terms of any other agreements then
     in effect between the Parties, to determine and
     agree from time to time upon the following:

          (i)  All matters pertaining to the
               coordination of maintenance of the
               generation and transmission facilities of
               the Parties.

          (ii) All matters pertaining to the control of
               time, frequency, energy flow, kilovar
               exchange, power factor, voltage, and
               other similar matters bearing upon the
               satisfactory synchronous operation of the
               systems of the Parties.

          (iii)     Such other matters not specifically
               provided for herein upon which
               cooperation, coordination and agreement
               as to quantity, time, method, terms and
               conditions are necessary, in order that
               the operation of the respective systems
               of the Parties may be coordinated to the
               end that the potential benefits
               anticipated by the Parties will be
               realized to the fullest extent
               practicable.

          (iv) All matters pertaining to the delivery of
               electric power and energy pursuant to the
               1992 Agreement."

     1.01.5     Section 8.02 of the 1992 Agreement shall read
as follows:

     "8.02.  Relative Responsibilities.  Each Party
     assumes all responsibility for receipt and delivery
     of electricity on its system to and from the Points
     of Interconnection specified in Section 1.01 hereof
     or agreed upon pursuant to Section 1.02 hereof or
     as requested by PSI pursuant to Section 4.01.
     Neither Party assumes any responsibility with
     respect to the construction, installation,
     maintenance or operation of the system of the other
     Party or of the systems of third parties, in whole
     or in part.  In no event shall one Party be liable
     to the other Party for damage or injury to any
     person or property, whatsoever, arising, accruing
     or resulting from, in any manner, the receiving,
     transmission, control, use, application or
     distribution of said electric power and energy.
     Each Party shall use reasonable diligence to
     maintain its facilities in proper and serviceable
     condition, and shall take reasonable steps and
     precautions for maintaining the services agreed to
     be provided and received under the 1992 Agreement.
     Each Party shall be responsible for its own
     compliance with all applicable environmental
     regulations and shall bear all costs arising from
     its failure to comply with such environmental
     regulations."

2.01 This Sixth Amendment shall be effective as of February
15, 1998 or as of the date it becomes effective under
applicable regulations or orders of FERC, whichever is later.

3.01 This Sixth Amendment is made subject to the jurisdiction
of any governmental authorities having jurisdiction in the
premises.

IN WITNESS WHEREOF, the Parties have caused this Sixth
Amendment to the 1992 Agreement to be executed by their
respective duly authorized officers, as of the day, month and
year first above-written.

INDIANAPOLIS POWER & LIGHT COMPANY

By /s/  Ramon L. Humke
        Ramon L. Humke, President and
             Chief Operating Officer

CINERGY SERVICES, INC.

By /s/ Michael E. Martin
       Michael E. Martin, Vice President

PSI ENERGY, INC.

By /s/ John Mutz
       John Mutz, President

Seventh Amendment

                        June 11, 1998

Mr. Ron C. Snead
Cinergy Corporation
139 East Fourth St.
Cincinnati, OH 45201

Re:  IPL/PSI Interconnection Agreement - Service Schedule D

Dear Mr. Snead:

This letter seeks to extend our existing agreement regarding
transmission service IPL provides PSI Energy at the Carmel
Southeast Tap, which expires August 31.  IPL proposes to
extend Service Schedule D (Carmel Southeast Tap Network Power
and Energy Transfer), a part of the existing interconnection
agreement between IPL and Cinergy, dated June 30, 1995, by
one year, to include August 31, 1999.

Please confirm by signature below, Cinergy's agreement that
the existing Service Schedule D, under which IPL currently
provides service to PSI at the Carmel Southeast Tap, will be
extended by one year to and including August 31, 1999, with
the same rates, terms and conditions.  Further, Cinergy and
IPL agree that PSI Energy also has the option to take
transmission service for Carmel Southeast Tap under any open
access transmission tariffs that may be filed by IPL and
which become effective after the date of this letter
agreement.

Two original copies of this letter are provided for your
signature.  Please return one signed original copy to me and
retain one copy for your files.

                              Regards,

                              /s/ Michael G. Banta
                              Michael G. Banta,
                              Vice President
                              and Assistant General Counsel

ACKNOWLEDGEMENT

By: /s/ John C. Procario
        John C. Procario

Title: Vice President

Company: Cinergy Services, Inc., acting as agent for and on behalf of
         PSI Energy, Inc.

Eighth Amendment

                        June 18, 1999

Mr. Ron Snead
Cinergy Corporation
139 East Fourth Street
Cincinnati, OH  45201

RE:  IPL/PSI INTERCONNECTION AGREEMENT - Service Schedule D

Dear Mr. Snead:

This letter seeks to extend our existing agreement regarding
transmission service IPL provides PSI Energy at the Carmel
Southeast Tap, which expires August 31, 1999.  IPL proposes to
extend Service Schedule D (Carmel Southeast Tap Network Power
and Energy Transfer), a part of the existing interconnection
agreement between IPL and Cinergy, dated June 30, 1995, by one
year, to include August 31, 2000.

Please confirm by signature below, Cinergy's agreement that the
existing Service Schedule D, under which IPL currently provides
service to PSI at the Carmel Southeast Tap, will be extended by
one year to and including August 31, 2000, with the same rates,
terms and conditions.  Further, Cinergy and IPL agree that PSI
Energy also has the option to take transmission service for
Carmel Southeast Tap under any open access transmission tariffs
that may be filed by IPL and which become effective after the
date of this letter agreement.

Two original copies of this letter are provided for your signature.
Please return one signed original copy to me and retain one for
your files.

                        Respectfully,

                        /s/ Ralph E. Canter
                        Ralph E. Canter,
                        Senior Vice President,
                        Customer Services
REC:rly

ACKNOWLEDGEMENT

By: /s/ John C. Procario
        John C. Procario

Title: Vice President

Company: Cinergy Services, Inc., acting as agent for and on behalf of
         PSI Energy, Inc.

                         NINTH AMENDMENT

                             TO THE

                    INTERCONNECTION AGREEMENT

                              AMONG

               INDIANAPOLIS POWER & LIGHT COMPANY

                        PSI ENERGY, INC.

                   AND CINERGY SERVICES, INC.

                         Effective as of

                         NINTH AMENDMENT
                             TO THE
                    INTERCONNECTION AGREEMENT
                              AMONG
               INDIANAPOLIS POWER & LIGHT COMPANY
                        PSI ENERGY, INC.
                   AND CINERGY SERVICES, INC.

     Pursuant to Order No. 888, Indianapolis Power & Light
Company (IPL) restates the rates for service provided by IPL
under the Interconnection Agreement as the following:

1)   The Interconnection Agreement provides for IPL sales of
capacity and energy under service schedules described as:

          Service Schedule A - Emergency Service
          Service Schedule B - Interchange Energy
          Service Schedule C - Short Term Power and Energy

2)   The wholesale generation component of the rate applicable to
service under these Service Schedules A through D shall be the
bundled rate minus the transmission and ancillary service rates
provided in Section 3 of this Amendment.

     Where the Service Schedules provide for compensation to IPL
in the form of equivalent energy, such return of equivalent
energy shall be made of the generation component, with the
transmission and ancillary services related to such return of
equivalent energy arranged pursuant to and assessed as provided
in Section 3 of this Amendment.

3)   Transmission and ancillary services necessary to effectuate
sales under the Interconnection Agreement shall be arranged by
IPL under and subject to the rates, terms, and conditions of
IPL's Open Access Transmission Tariff.  The rates for point-to-
point transmission service and the two ancillary services
necessary to effectuate such sales are provided below.  IPL will
provide either Short-Term Firm Point-to-Point or Non-Firm Point-
to-Point transmission service and ancillary services for
Scheduling, System Control and Dispatch (Scheduling Service), and
Reactive Supply and Voltage Control from Generation Sources
(Reactive Supply Service).  IPL will not provide Regulation and
Frequency Response Service, Energy Imbalance Service, Operating
Reserve-Spinning Reserve Service, or Operating Reserve-
Supplemental Reserve Service in connection with sales under the
Interconnection Agreement, and there will be no charge for such
services in connection with the sales under the Interconnection
Agreement.

     The rates for both Short-Term Firm and Non-Firm Point-to-
Point Service are:  $ 930.00/MW of reserved capacity for monthly
service, $215.00/MW of reserved capacity for weekly service,
$43.00/MW of reserved capacity for on-peak daily service, and
$30.70/MW of reserved capacity for off-peak daily service, with
the daily service capacity charges capped at the weekly rates.
Non-Firm Point-to-Point service is available on an hourly basis
at $2.69/MW for on-peak hours and $1.28/MWH for off-peak hours
with the maximum hourly charges capped at the daily rates.

     For Scheduling Service, the monthly rate is $10.00/MW of
reservation, the weekly rate is $3.00/MW, the daily rate is
$0.60/MW, and the hourly rate is $0.04/MWH.  The sum of the
hourly charges is capped at the daily rate, the sum of the daily
charges is capped at the weekly rate, and the sum of the weekly
charges is capped at the monthly rate.

     For Reactive Supply Service, the monthly rate is $110.00/MW
of reservation, the weekly rate is $25.00/MW, the daily rate is
$5.00/MW, and the hourly rate is $0.31/MWH.  The sum of the
hourly charges is capped at the daily rate, the sum of the daily
charges is capped at the weekly rate, and the sum of the weekly
charges is capped at the monthly rate.

     If transmission and ancillary services are obtained by PSI
Energy and Cinergy Serivces, Inc. under Indianapolis Power &
Light Company's Open Access Transmission Tariff, there will be no
charge related to transmission and ancillary service assessed
under the Interconnection Agreement.  A service agreement under
Indianapolis Power & Light Company's Open Access Transmission
Tariff is on file as of the effective date of this Ninth
Amendment to govern service to PSI Energy and Cinergy Serivces,
Inc. for this power sale, and charges for transmission and
ancillary services for this power sale will be assessed to PSI
Energy and Cinergy Serivces, Inc. under the Open Access
Transmission Tariff.Exhibit 10.5

================================================================================

                         RECEIVABLES PURCHASE AGREEMENT

                          dated as of December 20, 1996

                                      Among

                       INDIANAPOLIS POWER & LIGHT COMPANY

                                       And

                             IPL FUNDING CORPORATION

================================================================================

<PAGE>

                                TABLE OF CONTENTS

SECTION                                  HEADING                            PAGE

ARTICLE I         PURCHASE AND SETTLEMENTS.....................................1

  Section 1.1.      Sale.......................................................1
  Section 1.2.      Purchase Price.............................................1
  Section 1.3.      Administration of Receivables..............................2
  Section 1.4.      The Company's Rights.......................................3
  Section 1.5.      Protection of Ownership Interest of the Company............3
  Section 1.6.      Contractual Payment Obligations............................4
  Section 1.7.      Servicing Agent............................................4

ARTICLE II        REPRESENTATIONS AND WARRANTIES...............................5

  Section 2.1.      Representations and Warranties of the Originator...........5
  Section 2.2.      Representations and Warranties of the Company..............7

ARTICLE III       CONDITIONS PRECEDENT.........................................7

  Section 3.1.      Conditions to Closing......................................7
  Section 3.2.      Other Transaction Documents................................8

ARTICLE IV        COVENANTS....................................................8

  Section 4.1.      Affirmative Covenants of the Originator....................8

ARTICLE VI        MISCELLANEOUS................................................9

  Section 5.1.      Term of Agreement..........................................9
  Section 5.2.      Assignment of Receivables Purchase Agreement...............9
  Section 5.3.      No Waiver; Remedies.......................................10
  Section 5.4.      Amendments, etc...........................................10
  Section 5.5.      Notices...................................................10
  Section 5.6.      Governing Law; Submission to Jurisdiction; Integration....10
  Section 5.7.      Severability; Counterparts................................10
  Section 5.8.      Assignment................................................11
  Section 5.9.      Headings..................................................11
  Section 5.10.     Costs and Expenses........................................11
  Section 5.11.     No Partnership or Joint Venture...........................11

EXHIBITS

Exhibit A         Credit and Collection Policy
Exhibit B         Form of Subordinated Note
Exhibit C         Location of Records
Exhibit D         Corporate Names; Trade Names; Assumed Names

<PAGE>

                         RECEIVABLES PURCHASE AGREEMENT

     RECEIVABLES PURCHASE AGREEMENT (this "Agreement"), dated as of December 20,
1996,  among  Indianapolis  Power & Light  Company  (the  "Originator")  and IPL
Funding Corporation, an Indiana corporation (the "Company"). Certain capitalized
terms used herein are defined in Schedule I hereto.

     The parties hereto agree as follows:

                                    ARTICLE I
                            PURCHASE AND SETTLEMENTS

     Section  1.1.  Sale.  (a)  Subject  to the  terms  and  conditions  hereof,
commencing on the Initial  Purchase  Date,  the  Originator  hereby sells to the
Company,  and the  Company  hereby  acquires  from  the  Originator,  all of the
Originator's  right,  title and interest in the  Purchased  Receivables  and all
Collections  thereon.  The Originator intends such sale to be a true sale of all
rights and interests of the  Originator in the  Receivables  in existence on the
Initial  Purchase  Date and of each  Receivable  thereafter  generated  as it is
created until the Originator Termination Date for the Originator.

     Section 1.2.  Purchase  Price.  (a) On the Initial  Purchase  Date and each
Workday thereafter until the Originator Termination Date for the Originator, the
Company  shall  pay to the  Originator  a  purchase  price  for  each  Purchased
Receivable  (other  than an  Excluded  Receivable)  of the  Originator  (and not
previously sold to the Company  hereunder)  equal to the outstanding  balance of
such  Purchased  Receivable  in  existence  on the  Determination  Date for such
Receivable.  Such purchase price shall be paid through two methods.  First,  the
Company  may  pay  to the  Originator  a  portion  of  such  purchase  price  by
transferring  to the Originator  monies then held by the Company,  solely to the
extent such monies do not constitute  Collections  required to be distributed to
the Agent under the Receivables Sale Agreement or necessary as part of a reserve
for liabilities of the Company  established by the Company in its sole judgment.
Second,  the Company shall pay the remaining  purchase price by crediting to the
Subordinated  Note such  remaining  amount of the purchase  price payable to the
Originator.  On the Initial  Purchase Date, at least  $5,000,000 of the purchase
price  payable  to the  Originator  on the  Initial  Purchase  Date  shall so be
credited to the  Subordinated  Note. On each Monthly  Settlement  Date occurring
after the Initial  Purchase Date, the difference  between (x) the total purchase
price payable for all Purchased  Receivables  originated  during the  Settlement
Period ending on such Monthly  Settlement Date that were not in existence on the
Initial  Purchase  Date and (y) the amount of such  purchase  price paid in cash
during that Settlement  Period shall be credited to the  Subordinated  Note. For
any  Settlement  Period that the amount of such cash payments to the  Originator
exceeds the aggregate  purchase price payable for Purchased  Receivables  during
the Settlement  Period,  such excess shall be applied on the Monthly  Settlement
Date  for  such  Settlement  Period  to  reduce  the  principal  amount  of  the
Subordinated Note.

     (b) The  Originator  and the  Company  shall  each  independently  take all
necessary action to record properly the sales  contemplated by this Agreement to
reflect the Company's ownership of all Purchased Receivables.  To the extent the
sale of any Purchased Receivable or Collection under this Agreement is deemed to
be a financing for any applicable legal purpose, the Originator hereby grants to
the  Company  a  security  interest  in all of the  Originator's  rights  in the
Purchased  Receivables it originated and their  Collections to secure the claims
of the Company to such Purchased  Receivables  and all of their  Collections and
other proceeds.

     (c) None of the  Company,  the  Agent,  nor any  Purchaser  shall  have any
obligation  or  liability  to any  Obligor  or other  customer  or client of the
Originator  to perform any of the  obligations  of the  Originator in connection
with any Receivable or otherwise.

     Section  1.3.  Administration  of  Receivables.  (a)  Consistent  with  the
Company's  ownership of the  Purchased  Receivables,  the Company shall have all
rights to and shall be  solely  responsible  for  servicing,  administering  and
collecting the Purchased Receivables.  The Company may appoint any Person as its
agent to perform such services.

     (b) The  Originator  shall,  on the date  hereof and as each new  Purchased
Receivable is originated by it,  deliver to the Company (or the Company's  agent
appointed  pursuant to Section  1.7) all Records and evidence of the creation of
each Purchased Receivable.

     (c) Upon the occurrence of a Lock-Box  Event,  the Originator  shall direct
all Obligors to make all  payments on all  Purchased  Receivables  to a Lock-Box
Account. Upon the occurrence of a Lock-Box Event, if the Originator nevertheless
receives any such payments it shall hold all cash,  checks and other instruments
received by it in trust and promptly  (but in any event within two Business Days
after receipt) remit all such  Collections,  duly endorsed or with duly executed
instruments  of  transfer  in the  case of  checks  or other  instruments,  to a
Lock-Box Account.

     (d) The Originator hereby authorizes the Company (or the Company's agent or
assignee) to notify the Obligors on the Purchased  Receivables,  or any of them,
of the Company's  ownership of the Purchased  Receivables.  The Originator  also
hereby  authorizes  the Company (or the  Company's  agent or assignee) to notify
such Obligors,  or any of them, of the Company's  assignment of interests in the
Purchased  Receivables  to the  Agent,  for the  benefit of the  Purchasers,  in
accordance with the terms of Article III of the Receivables Sale Agreement.

     (e) The  Originator  hereby  agrees that the Company has the  absolute  and
unlimited  right,  itself or through its agent, to commence and settle any legal
action to enforce collection of any Purchased Receivable or to foreclose upon or
repossess any portion thereof.

     (f) The  Originator  hereby grants to the Company an  irrevocable  power of
attorney, with full power of substitution,  coupled with an interest, to take in
the  name of the  Originator  all  steps  necessary  or  advisable  to  endorse,
negotiate  or  otherwise  realize  on  any  item  constituting  proceeds  of any
Purchased  Receivable.  Without  limiting the generality of the  foregoing,  the
Originator  hereby  authorizes the Company to take any and all steps in the name
of the Originator and on behalf of the Originator necessary or desirable, in the
determination of the Company, to collect any and all amounts or portions thereof
due under any and all Purchased Receivables, including endorsing the name of the
Originator  on  checks  and  other  instruments   representing  Collections  and
enforcing any Purchased Receivable.

     (g)  Unless an  Obligor  otherwise  specifies  or  another  application  is
required by contract or law,  any  payment  received by the  Originator  from an
Obligor  shall be applied  as a  Collection  of  Purchased  Receivables  of such
Obligor  (starting  with  the  oldest  such  Receivable)  and  remitted  to  the
Collection Agent as such.

     (h) In connection with the creation, servicing,  administering, and (to the
extent the Originator is appointed to perform  collection  functions pursuant to
Section 1.7)  collecting  of the Purchased  Receivables,  the  Originator  shall
exercise  the same care and  diligence  it would  exercise in  handling  similar
matters for its own  account  and will  comply at all times and in all  material
respects  with  the  terms  of the  Transaction  Documents  and the  Credit  and
Collection Policy.

     Section 1.4. The Company's  Rights.  (a) The Company (or its  successors or
assigns) shall retain,  and use for its own benefit,  the  Collections and other
proceeds of all Purchased  Receivables,  and the  Originator  shall not have any
interest of any kind in or to any such Collections or other proceeds.

     (b) The Company shall have no obligation to account for, to replace,  or to
return  all or any  portion  of the  Purchased  Receivables  to the  Originator,
without regard to whether the Collections  and other proceeds  derived from such
Purchased  Receivables  are in  excess  of the  purchase  price  paid  for  such
Purchased Receivables.

     (c) The  Company  shall  have the  unrestricted  right to  further  assign,
transfer,  deliver,  hypothecate,  subdivide or  otherwise  deal with all or any
portion of the Purchased Receivables.

     (d) The Company (or its successors or assigns) shall have the sole right to
retain any gains or profits  created  by buying,  selling or holding  all or any
portion of the Purchased Receivables.

     Section  1.5.  Protection  of  Ownership  Interest  of  the  Company.   The
Originator  will, at its expense,  promptly  execute and deliver all instruments
and documents and take all action  necessary or that the Company may  reasonably
request  to  perfect  or  protect  the  Company's  ownership  of  the  Purchased
Receivables  and their  Collections  or to enable the  Company to  exercise  and
enforce  any  of its  rights  hereunder.  At the  request  of the  Company,  the
Originator shall also execute and file financing statements, amendments thereto,
and  continuation  or  assignments  thereof  and  deliver to the  Company or its
designee all contracts and Records (including all multiple originals of any such
contract)   relating  to  the  Purchased   Receivables,   with  any  appropriate
endorsement  or  assignment  requested  by the  Company.  To the fullest  extent
permitted by  applicable  law,  the Company  shall be permitted to sign and file
continuation   statements  relating  to  the  Purchased  Receivables  and  their
Collections  and  amendments   thereto  and  assignments   thereof  without  the
Originator's  signature.  A  reproduction  of this Agreement or of any financing
statement shall be sufficient as a financing statement. The Originator shall not
change its name,  identity or corporate structure (within the meaning of Section
9-402(7) of any applicable  UCC) or relocate its chief  executive  office or any
office or location  where  Records are kept unless it shall have:  (i) given the
Company and the Agent at least 20 days' advance notice and (ii) delivered to the
Company and the Agent all financing statements,  instruments and other documents
requested  by the  Company  or the  Agent in  connection  with  such  change  or
relocation.  The  Originator  shall at all times  maintain  its chief  executive
offices  within a  jurisdiction  in the USA (other  than the states of  Florida,
Maryland  and  Tennessee)  in which  Article 9 of the UCC is in  effect.  If the
Originator  moves its chief  executive  office to a location that imposes Taxes,
fees or other  charges to perfect the  interests of the Company in the Purchased
Receivables,  the  Originator  shall pay all such amounts and any other costs or
expenses  incurred to maintain  the  enforceability  of this  Agreement  and the
ownership of the Company of the Purchased Receivables.

     Section 1.6. Contractual Payment Obligations.  The Originator hereby agrees
as follows:

          (a) If on any day the outstanding balance of a Purchased Receivable is
     reduced or  canceled  as a result of any  defective  or  rejected  goods or
     services,  any cash  discount or  adjustment  (including as a result of the
     application   of  any   special   refund   or   other   discounts   or  any
     reconciliation),  any setoff or credit (whether such claim or credit arises
     out of the same, a related,  or an unrelated  transaction) or other similar
     reason not  arising  from the  financial  inability  of the  Obligor to pay
     undisputed  indebtedness,  the Originator  shall pay to the Company on such
     day the amount of such reduction or cancellation in the outstanding balance
     of such Purchased Receivable.

          (b) If on any day any  representation,  warranty,  covenant  or  other
     agreement of the Originator is not true (as of the date such representation
     or  warranty  is made or  deemed  made)  or (in the case of a  covenant  or
     agreement)  is not  satisfied for a Purchased  Receivable,  the  Originator
     shall  pay to the  Company  on such  day the  outstanding  balance  of such
     Purchased Receivable in full.

     The Company  shall have no recourse to the  Originator  with respect to any
Purchased Receivable otherwise than pursuant to this Section 1.6.

     Section 1.7.  Servicing Agent. (a) Until the Company (or the Agent pursuant
to the Receivables  Sale Agreement)  gives contrary  notice,  the Company hereby
appoints  the  Originator  as its agent (and as  sub-collection  agent under the
terms of the Receivables  Sale Agreement) for the servicing,  administering  and
collecting of the Purchased  Receivables,  and the Orignator hereby accepts such
appointment  and agrees to perform such duties in accordance with the applicable
terms and conditions of the Receivables  Sale Agreement.  The Originator  hereby
further agrees not to voluntarily  resign as agent for the Company in connection
with such servicing,  administering  and collecting  functions.  The Company may
replace the Originator as its agent (and  sub-collection  agent) at any time for
any reason.

     (b) As  servicing  agent for the  Company,  the  Originator  shall take all
actions  necessary or advisable to collect each Purchased  Receivable  with care
and diligence and shall perform all other servicing  activities  related to such
Receivables as are required by the Collection  Agent pursuant to the Receivables
Sale Agreement, including providing reports and other information concerning the
Purchased  Receivables required to be furnished by the Collection Agent pursuant
to the Receivables Sale Agreement.

     (c) In consideration  for the Originator  services pursuant to this Section
1.7, for so long as the Originator  performs such duties,  the Company shall pay
to the  Originator  a cash fee of  $50,000  per  month  payable  on the  Monthly
Settlement Date for the immediately  preceding  month.  The parties hereto agree
such  servicing  fee is a fair  market  value  fee for the  servicing  functions
required hereby.

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

     Section  2.1.  Representations  and  Warranties  of  the  Originator.   The
Originator  represents  and  warrants,  on the date  hereof and on the date each
Receivable is created,  that each  representation and warranty  concerning it or
the Receivables  that is contained in the Receivables Sale Agreement is true and
correct and that:

          (a) Perfection of Ownership Interest.  Immediately  preceding its sale
     of each  Purchased  Receivable  hereunder,  the Originator was the owner of
     such  Purchased  Receivable  purported  to be sold,  free and  clear of any
     Adverse  Claims,  and each the sale  hereunder  constitutes  a valid  sale,
     transfer  and  assignment  of all  of the  Originator's  right,  title  and
     interest in, to and under the Purchased Receivables,  free and clear of any
     Adverse  Claims.  On or before the date hereof and before the generation by
     the Originator of any new  Receivable,  all financing  statements and other
     documents  required to be recorded or filed in order to perfect and protect
     the  Company's  ownership  interest  in the  Purchased  Receivables  of the
     Originator against all creditors of and purchasers from the Originator will
     have been duly filed in each filing office necessary for such purpose,  and
     all filing fees and taxes, if any,  payable in connection with such filings
     shall have been paid in full.

          (b) Creation of Receivables. The Originator has exercised at least the
     same  degree  of  care  and  diligence  in the  creation  of the  Purchased
     Receivables  as it  has  exercised  in  connection  with  the  creation  of
     receivables originated by it and not sold hereunder.

          (c) Credit and Collection  Policy.  The Originator has complied in all
     material  respects with its Credit and Collection  Policy in regard to each
     Purchased  Receivable,  except for  instances  of  non-compliance  with the
     Credit and Collection  Policy that would not have a material adverse effect
     on the collectability of any material amount of the Receivables.

          (d) Enforceability of Contracts. Each Purchased Receivable is a legal,
     valid and binding  obligation of the related Obligor to pay the outstanding
     balance of the Purchased Receivable created thereunder, enforceable against
     the  Obligor  in  accordance  with  its  terms,   (subject  to  bankruptcy,
     insolvency,  fraudulent transfer, reorganization and moratorium and similar
     laws of general applicability relating to or affecting auditors' rights and
     to  general  equity  principles)  without  being  subject  to any  defense,
     deduction,  offset or  counterclaim  and the Originator has fully performed
     its obligations under such contract.

          (e)  Compliance  with Laws. No Purchased  Receivable  contravenes  any
     laws, rules or regulations applicable thereto or to the Originator.

          (f)  Chief  Executive  Office  and  Location  of  Records.  The  chief
     executive  office of the  Originator  is located at the  address  set forth
     beneath its signature hereto,  and such offices have been so located for at
     least six months before the date hereof.  The offices where the  Originator
     keeps all Records are located at the  addresses  described  on Exhibit C or
     such  other  locations  of which  the  Company  has been  given  notice  in
     accordance  with Section 1.5 and where all actions  required by Section 1.5
     have been completed.

          (g) Good Title.  Upon the creation of each new  Receivable  and on the
     Initial Purchase Date for then existing Receivables, the Company shall have
     a valid and perfected first priority  ownership  interest in each Purchased
     Receivable at the time of such creation or purchase,  free and clear of any
     Adverse Claim.

          (h) Names.  Except as described in Exhibit D, the  Originator  has not
     used any corporate names,  trade names or assumed names other than its name
     set forth on the signature pages of this Agreement.

          (i)  Assignability  and   Confidentiality.   No  Purchased  Receivable
     requires the Obligor thereon to consent to the transfer, sale or assignment
     of the rights to payment of the  Originator  under such  Receivable  nor is
     subject to a  confidentiality  provision  that  purports  to  restrict  the
     ability  of the  Company to  exercise  its  rights  under  this  Agreement,
     including its right to review the contract.

          (j) Bulk Sales, No Fraudulent Conveyance.  No transaction contemplated
     hereby  requires  compliance with or will become subject to avoidance under
     any bulk sales act or similar  law. No  purchase  hereunder  constitutes  a
     fraudulent  transfer  or  conveyance  under any  United  States  federal or
     applicable  state  bankruptcy  or insolvency  laws or is otherwise  void or
     voidable under such or similar laws or principles or for any other reason.

     Section 2.2.  Representations  and  Warranties of the Company.  The Company
represents and warrants that:

          (a) Corporate  Existence and Power.  The Company is a corporation duly
     organized,  validly  existing  and in good  standing  under the laws of its
     state of incorporation and has the corporate power required to carry on its
     business  as now  conducted  and  is  qualified  to do  business  in  every
     jurisdiction where such qualification is necessary, except where failure to
     so qualify  would not have an adverse  effect on its ability to perform its
     obligations hereunder.

          (b) Corporate and Governmental  Authorization;  No Contravention.  The
     execution,  delivery and  performance  by the Company of this Agreement are
     within its  corporate  powers,  have been duly  authorized by all necessary
     corporate  action,  require no action by or in respect of, or filing  with,
     any  governmental  body,  agency or  official  (except as  contemplated  by
     Section 1.5) and do not  contravene,  or  constitute a default  under,  any
     provision  of  applicable  law,  rule  or  regulation  or of the  Company's
     certificate  or articles of  incorporation  or by-laws or of any agreement,
     judgment,  injunction,  order,  decree or other instrument binding upon the
     Company  or  result  in the  creation  or  imposition  of any lien or other
     Adverse Claim on any assets of the Company.

          (c) Binding Effect.  This Agreement  constitutes the legal,  valid and
     binding  obligation  of the  Company,  enforceable  against  the Company in
     accordance with its terms,  subject to bankruptcy,  insolvency,  fraudulent
     transfer,  reorganization  and  moratorium  and  similar  laws  of  general
     applicability  relating to or  affecting  creditors'  rights and to general
     equity principles.

                                   ARTICLE III
                              CONDITIONS PRECEDENT

     Section  3.1.  Conditions  to Closing.  On or before the date of  execution
hereof, each of the following documents and instruments shall be delivered,  all
of which  shall be in form  and  substance  acceptable  to the  Company  and the
Originator:

          (a) A copy of the resolutions of the board of directors of the Company
     and the  Originator,  certified by its  secretary  or assistant  secretary,
     approving  this  Agreement  and the other  documents  to be delivered by it
     hereunder.

          (b) The  certificate or articles of  incorporation  of the Company and
     the Originator that it is a corporation certified by the Secretary of State
     of its state of incorporation.

          (c) Good  standing  certificates  for the Company  and the  Originator
     issued by the Secretaries of State of the states of  incorporation  of each
     such  Person  and the states in which each such  Person's  chief  executive
     office is located.

          (d) A  certificate  of the  secretary  or  assistant  secretary of the
     Company and the  Originator  certifying (i) the names and signatures of the
     officers  authorized on its behalf to execute this  Agreement and any other
     documents to be delivered by it hereunder (on which  certificate  the other
     parties may  conclusively  rely until such time as the other  parties shall
     receive  from it a revised  certificate  meeting the  requirements  of this
     subsection   (d))  and  (ii)  a  copy  of  its  by-laws  and   articles  of
     incorporation.

          (e)  Originals  of  proper  UCC-1  financing   statements  naming  the
     Originator  as  "seller",  the  Company  as  "purchaser",  and the Agent as
     "assignee" for filing in all appropriate jurisdictions.

          (f) UCC search  reports  from the office of the  Secretary of State of
     Indiana covering the Originator.

          (g) Such other  approvals,  opinions  or  documents  as the Company or
     Agent may reasonably request.

     Section 3.2. Other Transaction  Documents.  All conditions precedent to the
execution,  delivery and effectiveness of the other  Transaction  Documents have
been fulfilled.

                                   ARTICLE IV
                                    COVENANTS

     Section 4.1. Affirmative Covenants of the Originator. The Originator hereby
covenants  and agrees with the Company and each  Purchaser  that at all times on
and after the date hereof, unless compliance is waived pursuant to Section 5.4:

          (a) General  Information.  The Originator shall furnish to the Company
     and to each Purchaser such  information as the Company or any Purchaser may
     from time to time reasonably request.

          (b)  Furnishing  of  Information   and  Inspection  of  Records.   The
     Originator  will furnish to the Company from time to time such  information
     concerning the Receivables as the Company shall request, including listings
     identifying  the Obligor and the outstanding  balance for each  Receivable.
     The  Originator  will  permit,  at any time and  from  time to time  during
     regular business hours upon reasonable  notice,  the Company and (under the
     conditions in Section 5.1(e) of the  Receivables  Sale Agreement) the Agent
     and any Purchaser or agents or representatives of any of the foregoing, (i)
     to  examine  and make  copies  of and  abstracts  from all  Records  in its
     possession  as agent for the  Company  pursuant  to Section 1.7 and (ii) to
     visit the  offices  and  properties  of the  Originator  for the purpose of
     examining such Records,  and to discuss matters  relating to Receivables or
     the  Originator's  performance  hereunder  with  any  of  the  officers  or
     employees of the Originator having knowledge of such matters.

          (c)  Keeping  of  Records  and  Books.  The  Originator  will have and
     maintain (A) administrative and operating procedures  (including an ability
     to recreate Records if originals are destroyed),  (B) adequate  facilities,
     personnel  and  equipment  and  (C)  all  Records  and  other   information
     reasonably  necessary  for  collection  the  Receivables  originated by the
     Originator  (including Records adequate to permit the daily  identification
     of each new such  Receivable and all  Collections  of, and  adjustments to,
     each existing such  Receivable).  The Originator  will give the Company and
     the Agent prior notice of any change in such  administrative  and operating
     procedures.

          (d) Performance and Compliance with  Receivables.  The Originator will
     at its expense  timely and fully  perform  and comply with all  obligations
     required to be observed by it in connection with the Receivables.

          (e) Credit and Collection  Policy. The Originator will comply with its
     Credit and  Collection  Policy in all  material  respects in regard to each
     Receivable originated by it.

          (f) Receivables Sale Agreement. The Originator will perform and comply
     with each covenant and other  undertaking in the Receivables Sale Agreement
     that the Company undertakes to cause the Originator to perform,  subject to
     any grace periods for such performance provided for in the Receivables Sale
     Agreement.

                                    ARTICLE V
                                  MISCELLANEOUS

     Section 5.1. Term of Agreement.  This  Agreement  shall  terminate upon the
later to occur of (i) the termination of the Receivables  Sale Agreement or (ii)
the  indefeasible  payment in full of all obligations owed by the Originator and
the Company to the other hereunder.

     Section 5.2. Assignment of Receivables  Purchase Agreement.  The Originator
hereby  acknowledges that on the date hereof the Company has assigned all of its
right,  title and interest in, to and under this  Agreement to the Agent for the
benefit of the Purchasers  pursuant to the  Receivables  Sale Agreement and that
the  Agent  and  the  Purchasers  are  third  party  beneficiaries  hereof.  The
Originator  hereby  further  acknowledges  that all provisions of this Agreement
shall inure to the  benefit of the Agent and the  Purchasers,  including  in the
enforcement of any provision  hereof to the extent set forth in the  Receivables
Sale  Agreement,  but that  neither the Agent nor any  Purchaser  shall have any
obligations  or duties  under this  Agreement.  The  Originator  hereby  further
acknowledges that the execution and performance of this Agreement are conditions
precedent for the Agent and the  Purchasers to enter into the  Receivables  Sale
Agreement and that the  agreement of the Agent and the  Purchasers to enter into
the  Receivables  Sale  Agreement  will  directly  or  indirectly   benefit  the
Originator and constitutes  good and valuable  consideration  for the rights and
remedies of the Agent and each Purchaser with respect hereto.

     Section  5.3. No Waiver;  Remedies.  No failure or delay on the part of any
party in  exercising  any  power,  right or remedy  under this  Agreement  shall
operate as a waiver  thereof,  nor shall any single or partial  exercise  of any
such power,  right or remedy preclude any other further  exercise thereof or the
exercise of any other power,  right or remedy.  The rights and remedies provided
in this  Agreement are  cumulative  and  nonexclusive  of any rights or remedies
provided by law. Any waiver of this  Agreement  shall be  effective  only in the
specific instance and for the specific purpose for which given.

     Section 5.4.  Amendments,  etc. No amendment,  supplement,  modification or
waiver of any  provision of this  Agreement  nor consent to any departure by any
party  therefrom  shall in any event be  effective  unless  the same shall be in
writing and signed by the  Originator  and the Company and  consented  to by the
Agent and the Instructing Group.

     Section 5.5.  Notices.  Unless otherwise  specified,  all notices and other
communications  hereunder shall be in writing  (including by telecopier or other
facsimile  communication),  given to the  appropriate  Person at its  address or
telecopy number set forth on the signature pages hereof or at such other address
or telecopy  number as such Person may specify,  and effective  when received at
the address specified by such Person.  The number of days for any advance notice
required  hereunder may be waived (orally or in writing) by the Person receiving
such notice and, in the case of notices to the Agent, the consent of each Person
to which the Agent is required to forward such notice.

     Section 5.6. Governing Law;  Integration.  This Agreement shall be governed
by and  construed  in  accordance  with the  internal  laws  (and not the law of
conflicts)  of the  State of  Indiana.  This  Agreement  contains  the final and
complete integration of all prior expressions by the parties hereto with respect
to the subject matter hereof and shall constitute the entire agreement among the
parties hereto with respect to the subject matter hereof,  superseding all prior
oral or written conflicting understandings.

     Section 5.7. Severability;  Counterparts. This Agreement may be executed in
any  number  of  counterparts  and  by  different  parties  hereto  in  separate
counterparts,  each of which when so executed  shall be deemed to be an original
and all of  which  when  taken  together  shall  constitute  one  and  the  same
agreement.   Any   provisions  of  this   Agreement   which  are  prohibited  or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other jurisdiction.

     Section  5.8.  Assignment.  This  Agreement  shall (i) be binding  upon the
Company and the Originator and their respective  successors and assigns and (ii)
inure to the benefit of and be  enforceable  by the Agent for the benefit of the
Purchasers to the extent set forth in the  Receivables  Sale Agreement and their
respective  successors,  transferees and assigns;  provided,  however,  that the
obligations of the Originator hereunder may not be assigned or delegated without
the prior written consent of the Agent and the Instructing  Group,  and any such
purported assignment or delegation absent such consent shall be void.

     Section 5.9.  Headings.  Article and Section  headings  used herein are for
convenience  and reference  only,  are not part of this Agreement and are not to
affect the construction  of, or to be taken into  consideration in interpreting,
this Agreement.

     Section 5.10.  Costs and Expenses.  The Originator  shall pay its costs and
expenses hereunder.

     Section 5.11. No Partnership or Joint  Venture.  Nothing  contained in this
Agreement  shall be deemed or  construed  by the parties  hereto or by any third
person to create the relationship of principal and agent or of partnership or of
joint venture.

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

                                       IPL FUNDING CORPORATION

                                       By: /s/ Steven L. Meyer
                                          --------------------------------------
                                       Title:  Treasurer
                                             --------------

                                       Address:      One Monument Circle
                                                     Suite 747
                                                     Indianapolis, Indiana 46204
                                       Telephone:      (317) 261-5134
                                       Telecopy:       (317) 261-8288

                                       INDIANAPOLIS POWER & LIGHT COMPANY

                                       By: /s/ John R. Brehm
                                          --------------------------------------
                                       Title: SVP, Finance and Information
                                                 Services
                                             --------------

                                       Address:      One Monument Circle
                                                     Indianapolis, Indiana 46204
                                       Telephone:      (317) 261-8995
                                       Telecopy:       (317) 630-5763

<PAGE>
                                   SCHEDULE I
                                   DEFINITIONS

     Capitalized  terms used  herein that are  defined in the  Receivables  Sale
Agreement have the same meaning herein as in the Receivables Sale Agreement.  In
addition,  the  following  terms have the  meanings  set forth,  or referred to,
below:

     "Agreement" is defined in the first paragraph hereof.

     "Determination  Date" means,  with respect to any Receivable,  the later to
occur of (i) the date hereof and (ii) the date such Receivable is created.

     "Excluded Receivable" means any Receivable that is a Charge-Off.

     "Initial Purchase Date" means December 30, 1996.

     "Monthly Settlement Date" means the fifteenth (15th) day of each month (or,
if such day is not a Business Day, the following Business Day).

     "Subordinated  Note" means the revolving  promissory note in  substantially
the form of Exhibit B issued by the Company to the Originator.

     "Originator  Termination Date" means, the earliest to occur of (i) the date
of the occurrence of a Bankruptcy  Event affecting the Originator,  and (ii) the
Business  Day  designated  by the Company or the  Originator  as the  Originator
Termination  Date upon at least thirty days'  notice to the  Originator  and the
Agent.

     "Purchased  Receivables" means each and every Receivable  originated by the
Originator now existing or hereafter  arising before the Originator  Termination
Date.

     "Purchaser" means each "Purchaser" under the Receivables Sale Agreement.

     "Receivables Sale Agreement" means the Receivables Sale Agreement, dated as
of the date  hereof,  among the  Company,  ABN AMRO  Bank  N.V.,  as Agent,  the
Liquidity Providers party thereto, ABN AMRO Bank N.V. as Enhancer,  and Windmill
Funding Corporation.

     "Settlement Period" means, for any Monthly Settlement Date, the immediately
preceding calendar month.

     "Workday"  means a day in which  the  Originator  and the  Company  conduct
business.

     The foregoing  definitions shall be equally applicable to both the singular
and plural forms of the defined terms.  Unless otherwise  inconsistent  with the
terms of this Agreement,  all accounting terms used herein shall be interpreted,
and all accounting  determinations  hereunder  shall be made, in accordance with
GAAP. Amounts to be calculated  hereunder shall be continuously  recalculated at
the time any information relevant to such calculation changes.

     For purposes of this Agreement,  all terms used in Article 9 of the UCC and
not specifically defined in this Agreement shall be defined herein as such terms
are defined in the UCC as in effect in the State of Indiana.

<PAGE>

                                    EXHIBIT A
                          CREDIT AND COLLECTION POLICY

                 To Be Inserted by Indiana Power & Light Company

<PAGE>
                                    EXHIBIT B
                            FORM OF SUBORDINATED NOTE

<PAGE>
                                    EXHIBIT C
                               LOCATION OF RECORDS

         One Monument Circle
         Indianapolis, Indiana 46204

<PAGE>
                                    EXHIBIT D
                   CORPORATE NAMES; TRADE NAMES; ASSUMED NAMES

         IPL

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