Document:

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                                                                   EXHIBIT 10.60

                                 SITE AGREEMENT

                                 By and Between

                        NIAGARA MOHAWK POWER CORPORATION

                                       and

                             OSWEGO HARBOR POWER LLC

                              Dated August 19, 1999

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                                 SITE AGREEMENT

       This Site Agreement is entered into on August 19, 1999(the "Agreement")
by and between Niagara Mohawk Power Corporation ("Seller") a New York
corporation, and Oswego Harbor Power LLC ("Buyer"), a Delaware limited
liabilitycompany (individually each a "Party" and collectively the "Parties").

                                    RECITALS

       WHEREAS, Seller, NIRG Energy, Inc., a Delaware corporation ("NRG") and
Buyer have entered into an Asset Sales Agreement dated April 1. 1999, for the
sale of certain of Seller's electric generating assets;

       WHEREAS, NRG has assigned all of its rights and obligations under the
Asset Sales Agreement to Buyer;

       WHEREAS, Seller intends to continue to operate Seller's transmission and
distribution businesses from their present locations;

       WHEREAS, in the Asset Sales Agreement, Seller has agreed to transfer to
Buyer certain designated real and personal properties, contracts, and licenses
constituting certain of Seller's electric generating assets and has retained
certain designated real and personal properties, contracts and licenses
associated with Seller's transmission and distribution businesses; and

       WHEREAS, Seller requires access to parts of the electric generating
assets acquired by Buyer and Buyer requires access to parts of the transmission
and distribution assets retained by Seller to conduct their respective
businesses.

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

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                                    ARTICLE 1

                                   DEFINITIONS

       1.1    Wherever used in this Agreement with initial capitalization, the
following terms shall have the meanings specified or referred to in this Article
1. Any term with initial capitalization not defined herein, has the meaning set
forth in the ASA or the Interconnection Agreement.

       1.2    "Asset Sales Agreement" or "ASA" shall mean the Asset Sales
Agreement dated as of April 1, 1999, between Niagara Mohawk Power Corporation,
NTRG and Buyer.

       1.3    "Black Start Capability" shall mean the ability of a generating
unit or station to go from a shutdown condition to an operating cqndition and
start delivering power without assistance from the electric system.

       1.4    "C losing(s)" shall have the meaning set forth in the ASA.

       1.5    "Closing Date" shall have the meaning set forth in the ASA.

       1.6    "Declaration Easement" shall mean the Oswego Declaration(s)of
Easements made by Seller.

       1.7    "Delivery Point" shall the meaning set forth in the ASA.

       1.8    "Distribution System" shall mean Niagara Mohawk's distribution
equipment operated for delivery of electric energy to interconnected customers
unless otherwise noted.

       1.9    "Easement" shall have the meaning set forth in the ASA.

       1.10   "Electric System Bulletin No. 756" or "ESB756" shall mean Niagara
Mohawk Power Corporation's Electric System Bulletin 756, dated December 1997,
attached as Schedule B to this Agreement, as it may be amended or revised from
time to time.

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       1.11   Energy Management System" or "EMS" shall mean Seller's computer
based system used primarily for the real time operation of Seller's existing
power generation, transmission and distribution facilities.

       1.12   "Environmental Laws" shall have the meaning set forth in the ASA.

       1.13   "Excluded Assets" shall have the meaning set forth in the ASA.

       1.14   "FERC" shall mean the Federal Energy Regulatory Commission.

       1.15   "Good Utility Practice" shall mean any of the practices, methods
and acts engaged in or approved by a significant portion of the electric
industry during the relevant time period, or any of the practices, methods and
acts which, in the exercise of reasonable judgment in light of the facts known
at the time the decision was made, could have been expected to accomplish the
desired result at a reasonable cost consistent with good business practices,
reliability, safety and expedition. Good Utility Practice is not intended to be
limited to the optimum practice, method, or act, to the exclusion of all others,
but rather to be acceptable practices, methods, or acts generally accepted in
the regior. and consistently adhered to by the Seller and Buyer. Good Utility
Practice shall include, but not be limited to, North American Electric
Reliability Council ("NERC"), Northeast Power Coordinating Council ("NPCC"), and
New York Power Pool ("NYPP") or successor organizations policies, criteria,
guidelines, rules and standards, as they may be amended or reused from time to
time.

       1.16   "Hazardous Substances" shall have the meaning set forth in the
ASA.

       1.17   "Interconnection Agreement" shall mean the separate
Interconnection Agreement dated as of July 30, 1999 between Niagara Mohawk Power
Corporation and Buyer pertaining to the electric generating facilities included
in the Purchased Assets.

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       1.18   "Interconnection Facility" shall have the meaning set forth in the
Interconnection Agreement.

       1.19   "Interconnection Point" shall have the meaning set forth in the
Interconnection Agreement.

       1.20   "Maintain" shall mean plan construct, reconstruct, install,
inspect, repair~replace, operate, patrol, maintain, use, modernize, expand,
upgrade, modify or other similar activities.

       1.21   "Metering Point" ("MP") shall mean the location of instrument
transformers used to measure current and voltage for the purpose of power and
energy metering. These locations are shown, in part, on the interconnection
diagrams included in Appendix A.

       1.22   "NYPP" shall mean New York Power Pool or its successor.

       1.23   "NYPP Tariff' shall mean the New York Power Pool's Open Access
Transmission Tariff as filed with FERC , as revised or amended from time to
time.

       1.24   "NERC" shall mean North American Electric Reliability Council.

       1.25   "NPCC" shall mean Northeast Power Coordinating Council, a regional
reliability coordination body.

       1.26   "Primary Systems" shall mean bulk power equipment such as
transformers, circuit breakers, rigid or strain bus and other equipment
operating at or above 600 volts.

       1.27   "Purchased Assets" shall have the meaning set forth in the ASA.

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       1.28   "Qualified Personnel" shall mean individuals (i) who meet the
standards and requirements set forth at 29 C.F.R. Section 1910.269(a)(2) (1998),
as amended; and (ii) if performing switching, tagging or grounding of electrical
equipment, who are appropriately trained and meet the qualifications and
requirements to switch, tag and ground electrical equipment as set forth in
"Switching and Tagging Rules" attached as Schedule H to this Agreement and
"Testing and Grounding for the Protection of Employees" attached as Schedule I
to this Agreement.

       1.29   "Release" shall have the meaning set forth in the ASA.

       1.30   "Revenue Metering Point" shall mean the location on the power
system where electrical measurements of power and energy supplied or received in
all four quadrants (kW, kWH, 1CVAR, 1CVARH, etc.) are determined for the purpose
of reconciliation between the parties. These quantities are either measured
directly by instrumentation installed at the metering point or determined
indirectly through the application of compensation factors to themeasurements
made by instrumentation installed in proximity to the revenue metering point,
which is generally shown as the Delivery Point on the interconnection diagrams
in Appendix A.

       1.31   "Revenue Meters" shall mean all kWH, kVAH, and kVARH meters pulse
isolation relays, pulse conversion relays, associated totalizing and Remote
Access Pulse Recorder (RAPR) equipment required to measure the transfer of
energy between the Parties.

       1.32   "Right of Way Access" shall mean the existing gates, roadways,
paths or other means of access required to gain entry to the Transmission or
Distribution System assets located on or within the property or facilities of
the other Party.

       1.33   "Routine Inspection and Maintenance" shall mean any inspection
and/or work required pursuant to Good Utility Practice on either Party's
property

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or facilities to ensure and maintain reliable substation, transmission, and
distribution operations.

       1.34   "Secondary Systems" shall mean control or power circuits that
operate below 600 volts, ac or dc, including but not limited to any hardware;
control or protective devices, cables, conductor, electric raceways, secondary
equipment panels, transducers, batteries, chargers, and voltage and current
transformers where signals or energy may be used by Buyer and/or Seller.

       1.35   "Separation Document" shall mean such documents or exhibits
delineated as such and which have been provided to and adopted by Buyer which
describe the Purchased Assets and Excluded Assets and define and identify the
ownership and dispatch points of demarcation of said, assets.

       1.36   "Service Point" shall mean the point of connection between the
facilities of Seller and the equipment of Buyer.

       1.37   "Shared-Use Equipment" shall mean that equipment that Buyer and
Seller may jointly operate for the benefit of their respective operations as is
identified in Schedule A to this Agreement.

       1.38   "Site" shall mean the location of all the plant equipment and real
property associated with each electric generating facility included in the
Purchased Assets.

       1.39   "Spill Prevention Control and Countermeasure Plan" or "SPCC" shall
mean a plan developed in accordance with 40 C.F.R. Part 112 to be implemented
for onshore facilities that includes physical structures and other measures to
respond to and to prevent spills of oil or hazardous substances from reaching
navigable waters.

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       1.40   "Stormwater Management" shall mean physical structures and other
measures used to collect, store, treat, or dispose of water as a result of rain,
snow, or other precipitation, including snow melt runoff, surface runoff and
drainage.

       1.41   "Stormwater Pollution Prevention Plan" or "SWPPP" shall mean a
plan developed in accordance with 40 C.F.R. Part 122 to be implemented to
control and monitor stormwater discharges associated with industrial or
construction activities.

       1.42   "Switching and Tagging Rules" shall mean the document attached as
Schedule H to this Agreement and as may be amended from time to time.

       1.43   "SPDES" shall mean State Pollutant Discharge Elimination Systems
permit.

       1.44   "Testing and Grounding for the Protection of Employees" shall mean
the document attached as Schedule Ito this Agreement as it may be amended from
time to time.

       1.45   "Transmission System" shall mean Niagara Mohawk's transmission
system including any modifications subsequent to the date of this Agreement.

                                    ARTICLE 2

                         TERM AND DELINEATION OF ASSETS

       2.1    This Agreement shall become effective as of the Closing Date, and
shall continue in full force and effect for 40 years (the "Term"). Upon notice
by either Party at the end of the thirty-eighth (38th) year of a desire to
extend this Agreement, the Parties shall negotiate in good faith to extend this
Agreement on mutually agreeable terms.

       2.2    The points of demarcation between the Purchased Assets and the
Excluded Assets are the service points as set forth in Schedule A of this
Agreement.

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       2.3    Seller shall own the grounding grid, ductbanks, cable raceway, and
drains within the boundaries of Seller's property. Buyer shall own the grounding
grid, ductbanks, cable raceway, and drains within the boundaries of Buyer's
property. For Seller's equipment located on Buyer's property, Seller shall own
the connection to Buyer's ground grid and drains. Seller shall own the cables
attached to Seller's equipment regardless of location. For Buyer's equipment
located on Seller's property, Buyer shall own the connection to Seller's ground
grid and drains. Buyer shall own the cables attached to Buyer's equipment
regardless of location. Both Buyer and Seller shall be responsible for ensuring
continuity of the above items on and between their respective properties.

       2.4    Seller shall own the fencing that immediately surrounds Seller's
property or equipment unless otherwise specified. Buyer shall own all other
fencing on the site. In the event that the parties share a common fencing
location, the Buyer shall own the fence and provide the Seller with all
necessary access to Seller's property and equipment.

       2.5    The Parties agree to work cooperatively over time to supplement
the Separation Document, as necessary, and to take such other reasonable steps
to further clarify the delineation between the Purchased Assets and the Excluded
Assets.

                                    ARTICLE 3

                                   SITE ACCESS

       3.1    The Parties acknowledge Seller has declared and granted permanent
Easements to access, and maintain facilities, systems, and equipment, located on
or in the property or the facilities of each Party for the benefit of the other
Party pursuant to the terms and conditions of the Declaration of Easements.

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       3.2    Each Party shall permit and provide access to all properties and
facilities as may be necessary to enable the other to Maintain its respective
facilities, systems equipment, and property. Each Party shall provide or require
such access in a manner so as not to interfere with the ongoing business
operations, rights, and obligations of the other.

       3.3    Consistent with Article 3.5 below, Seller shall have the right to
enter Buyer's property and facilities at any time with notice to Buyer (except
in emergency) to Maintain Seller's facilities, systems, equipment, and property
as necessary. However, Seller will not have the right to access, operate, modify
or otherwise disturb facilities, systems or equipment owned by the Buyer unless
otherwise provided for in this Agreement.

       3.4    Consistent with Article 3.5 below, Buyer shall have the right to
enter Seller's property and facilities at any time with notice (except in
emergency) to Seller to Maintain Buyer's facilities, systems, equipment and
property as necessary. However, Buyer will not have the right to access,
operate, modify or otherwise disturb facilities, systems or equipment owned by
the Seller unless otherwise provided for in this Agreement.

       3.5    Each Party shall provide to the other all such keys, access codes,
or other access methods necessary to effectuate the rights of access
contemplated by this Article 3. Each Party shall limit access to energized areas
in the other's facilities, systems, equipment and property to Qualified
Personnel.

       3.6    Seller shall conform to Buyer's reasonable site security and
safety procedures before Seller's personnel enter Buyer's property facilities or
for routine measurements, inspections, meter reads and other non-disruptive work
that does not require system or equipment outages. Buyer shall conform to
Seller's reasonable site security and safety procedures before Buyer's personnel
enter Seller's facilities or

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property for routine measurements, inspections, meter reads and other
nondisruptive work that does not require system or equipment outages. Except as
provided in Article 14, for work that will require system or equipment outages
or that is reasonably expected to impact the security or normal operation of
Seller's electric system or Buyer's electric generation activities, the Party
desiring to perform the work shall provide the other Party verbal or electronic
advance notice at least three (3) business days in advance of the date such work
is to commence. Seller shall provide such notice to Buyer's shift supervisor (or
equivalent). Buyer shall provide such notice to Seller's dispatch personnel (or
equivalent). The Parties shall use their best efforts to schedule their work so
as not to interfere with the operations of the other Party.

       3.7    Should either Party decide permanently to abandon the use of any
Easement or portion thereof, such Party shall give the other Party written
notice of such intent and shall.cause a release of said Easement or any portion
thereof to be properly recorded.

       3.8    The Parties may mutually agree to relocate any or all of the
Easement locations provided, however, that the Party requesting the relocation
shall: (i) pay all reasonable costs and expenses associated with the relocation;
and, (ii) execute or obtain in a form reasonably satisfactory to the other Party
and suitable for recording, all instruments necessary to establish the new
Easement location. Both Parties agree to use their best efforts to establish a
mutually agreeable location if requested by a Party.

       3.9    Buyer shall permit Seller access to the site to perform any
required environmental remediation for any liabilities retained by the Seller.
Such work is to be accomplished consistent with Article 3.5.

       3.10   Seller agrees to grant and convey to Buyer such easements and
related rights, if any, with respect to Seller's real property as the Buyer may
reason-

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ably request in connection with the installation of a coal conveyer system
from off-site storage facilities to Buyer's property.

                                    ARTICLE 4

                                   MAINTENANCE

       4.1    Except as provided elsewhere in this Agreement or in the
Interconnection Agreement, each Party shall Maintain its own property (including
removal of waste and trash), systems, facilities equipment and points of access
regardless of location.

       4.2    Buyer shall be responsible for Routine Inspection and Maintenance
of all common use roadways and plant accesses in a safe and efficient manner and
pursuant to Good Utility Practice.

       4.3    Seller shall provide Routine Inspection and Maintenance for Buyer
as set forth in Schedule F to this Agreement.

       4.4    Buyer shall provide Routine Inspection and Maintenance for Seller
as set forth in Schedule C to this Agreement.

       4.5    If the Routine Inspection and Maintenance to be performed will
result in a modification of the facility system or equipment or the construction
of a new facility, the Party desiring to perform such Routine Inspection and
Maintenance shall provide the other Party with the notice and description of the
planned work and otherwise comply with the provisions of set forth in Article 6.

       4.6    Where any ground grid, grounding, ductbanks, cable raceways,
drains or fences are jointly used, each Party is responsible to Maintain these
jointly used items that it owns for the mutual benefit of the parties. Both
Parties will share

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the cost of any improvements to such jointly used items initiated for the
benefit of both Parties on a pro rata basis.

                                    ARTICLE 5

                                EQUIPMENT TESTING

       5.1    Upon Seller's written request, Buyer shall, annually, or when
problems exist with equipment or systems, without cost to Seller, test,
calibrate, verify or validate the telcmetering, data acquisition, protective
relay, fire protection, control equipment or systems, or other equipment or
software connected to or otherwise affecting the operation of Seller's
Transmission or Distribution System. Buyer shall conduct all such tests,
calibrations, verifications and validations in accordance with Good Utility
Practice and ESB756 and shall promptly provide Seller with copies of the results
of any such test, calibration, verification or validation. If Buyer is unable or
unwilling to conduct any such test, calibration, verification or validation
requested by Seller, Seller shall have the right to take any and all actions,
consistent with Good Utility Practice, to protect and ensure the safe and
reliable operation of its Transmission and Distribution Systems including
disconnecting Buyer's facility, systems or equipment from those systems.

       5.2    This Article 5 shall not apply to the Interconnection Facility or
such equipment testing contemplated by Section 5.1 of the Interconnection
Agreement.

                                    ARTICLE 6

                 NEW CONSTRUCTION. MODIFICATIONS OR ALTERATIONS

       6.1    Each Party shall use the best efforts to give the other Party at
least one (I) year's advance written notice of any plan to construct new
facilities or to

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modify or alter any facility, system or equipment that is the object of this
Agreement and to provide sufficient description (including all drawings and
specifications) of such plans as to enable the other Party to reasonably
determine whether the planned activity is likely to impact adversely its
operations. If the new construction, modification or alteration is the result of
a requirement or order of a government authority and one (1) year advance notice
cannot be given, each Party shall use its best effort to give the other Party
such advance written notice as is reasonably possible. To the extent possible,
the Parties agree that any such modification, construction or alteration will be
scheduled to coincide with planned outages.

       6.2    If a Party reasonably determines that the new construction,
modification or alteration planned by the other Party is likely to adversely
impact its operations, it shall, within sixty (60) days of receipt of notice
under Article 6.0, give the other Party written notice of and the basis for that
conclusion. Upon delivery and receipt of such notice, the Parties shall
negotiate in good faith to mitigate the identified likely adverse impact of any
planned new construction modification, or alteration.

       6.3    The Parties acknowledge that it is the intent of this Agreement to
bring all facilities, systems and equipment, located and in use at the electric
generating station(s) to which this Agreement relates, into full compliance,
over time, with ESB756. Accordingly, whenever a Party proceeds with a
modification or alteration to or new construction of any facilities systems
equipment, it shall implement such new construction modification, or alteration
in full compliance with ESB 756. Seller shall have the right to review and
accept or reject any such new construction, modification, or alteration, or any
changes or circumstances that might reasonably be expected to affect its
Transmission or Distribution System or the Interconnection Facility.

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       6.4    Each Party shall, promptly upon completion of any new construction
of or modification or alteratidn to any facility, system, or equipment shared
with the other Party, provide the other Party with all appropriate documentation
in the form of written test records, opQration and maintenance procedures,
material lists or descriptions and a duplicate set of the most current drawings
of such newly constructed, modified or altered facility, equipment or systems
which could reasonably be expected to affect the operations of the other Party,
and including for shared use equipment only, at a minimum, one or more of the
following, as applicable:

System One-Lines -         Single page format drawings used for dispatch and
                           operation purposes.

One-Line Drawings -        Prints which provide a higher level of detail than
                           system one-line drawings and identify on a line
                           basis current and voltage transformer locations,
                           protection relay types, and meter and control
                           connections.

Three-Line Drawings -      Prints which provide the highest level of detail for
                           the facilities in a three-line format with specific
                           current and voltage transformer connections, relay
                           and meter terminations.

Schematic Drawings -       Prints which provide information on apparatus
                           controls, switch developments, etc.

Connection Wiring Drawings -       Prints which describe the physical layout,
                                   relay, terminal block and device locations,
                                   wiring and other construction details.

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Other Physical Drawings -          Prints which include information on
                                   foundations, equipment, layouts grounding,
                                   panel constructions, etc.

       6.5    This Article 6 shall not apply to the Interconnection Facility.

                                    ARTICLE 7

                                   INSPECTIONS

       7.1    Each Party shall, at its own expense, have the right to inspect or
observe the maintenance activities, equipment tests, installation, construction,
or other modifications to the other Party's facilities, systems, or equipment
which might reasonably be expected to affect adversely the observing Party's
operations. The Party desiring to inspect or observe shall give the other Party
written notice of its desire to inspect or observe. When such notice is given,
the Parties shall coordinate their activities so as to reasonably accommodate
the noticing Party's right to inspect or observe.

       7.2    If the inspecting/observing Party identifies any deficiency or
defect which might reasonably be expected to impact adversely the operations of
the inspecting/observing Party, said Party shall notify the other Party of the
deficiency or defect. Upon receipt of such a notice of deficiency or defect, the
Party owning the facility, system or equipment shall, in good faith, make any
corrections necessitated by Good Utility Practice. If a Party is unable or
unwilling to make such corrections, necessitated by Good Utility Practice, the
other Party shall have the right to take such measures, consistent with Good
Utility Practice, necessary to ensure that its own facilities, systems and
equipment are secure and safe.

       7.3    This Article 7 shall not apply to the Interconnection Facility.

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                                    ARTICLE 8

                         TRANSMISSION, DISTRIBUTION AND
                          TELECOMMUNICATION STRUCTURES

       8.1    The Parties acknowledge that certain structures located at the
site (including those associated with transmission, distribution and
telecommunications activities) are essential both to Buyer's generation
operations and Seller's distribution and transmission operations. The Party
owning such structures shall Maintain them pursuant to Good Utility Practice.
The Parties shall, within ninety (90) days of the Closing, jointly undertake an
initial inspection of all such structures. After the initial inspection, the
Parties shall establish a mutually agreeable schedule for further regular
inspections of such structures.

       8.2    The Party owning such transmission, distribution or
telecommunication structures shall prepare a written report summarizing each
inspection and describing any loose hardware, foundation problems, guy, shield
or ground wire deficiencies, corrosion or other observed defects. A copy of each
such report shall be provided promptly to the other Party. The Party owning the
structure shall be responsible for correcting any noted deficiency, corrosion,
or observed defects within 12 months of the date of the inspection during which
the deficiency, corrosion or defect was identified or in such shorter time as
may be dictated by Good Utility Practice.

       8.3    Each Party shall, after providing advance written notice to and
obtaining approval from the other Party, such approval not to be unreasonably
withheld, at its own expense, have the right to modify, add or upgrade
communication equipment including but not limited to antennae, wave guides and
cables on the other Party's transmission, distribution or telecommunication
structures, provided

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that said upgrades have no long term adverse impact upon the other Party's
operations and shall not require the other Party to incur any costs, unless
compensated.

       8.4    This Article 8 shall not apply to the Interconnection Facility.

                                    ARTICLE 9

                    INFORMATION REPORTING AND INVESTIGATIONS

       9.1    The Parties agree that from time to time Seller may request and
Buyer shall promptly provide accurate, complete, and reliable information needed
by Seller for the operation, maintenance, planning of its Transmission or
Distribution System. Such information may include, but may not be limited to,
metered values for MW, Mvar, voltage, current, amp, frequency, breaker status
indication, or any other information reasonably required by Seller for reliable
operation of its Transmission or Distribution System pursuant to Good Utility
Practice. Such information, reports or data shall be gathered for electronic
transmittal to Seller using the EMS where available.

       9.2    Buyer shall cooperate with Seller in the investigation of any
disturbance or misoperation to the Transmission or Distribution System that may
occur. Buyer shall provide equipment, operational data (such as relay targets),
fault recorder data, and other such data as is needed to assist the Seller in
determining the root cause of any such disturbance or misoperation. Each Party
shall be responsible for its own costs related to any such investigation. 1.1

       9.3    Notwithstanding anything to the contrary in this Agreement, any
obligation set forth in this Agreement for Buyer to provide information,
reports, or data to Seller shall be subject to the following limitations: (i)
such information, reports, or data shall be subject to the confidentiality
provisions of the ASA; (ii) Buyer shall be required to provide such information,
reports or data only to the extent

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Seller reasonably requires such information to Maintain its Transmission or
Distribution System pursuant to Good Utility Practice and to verify conformance
with ESB 756; and (iii) Seller shall use any information provided by Buyer
pursuant to this Agreement only for the purposes of Maintaining its Transmission
or Distribution System pursuant to Good Utility Practice.

       9.4    If Buyer concludes that a request to provide any information,
report, or data requested by Seller is covered by any of the limitations set
forth in Article 9.2, Buyer shall promptly advise Seller in writing of that fact
and the basis for its conclusion. Buyer shall, nevertheless, provide Seller with
the requested information, report or data if Seller advises Buyer in writing
that such information, report or data: (i) comprises real tithe generating
information; (ii) is required as a result of, or to enable Seller in a timely
flishion, to respond to or prevent, any emergency condition; (iii) is required
to enable Seller in a timely fashion to Maintain the safety and reliability of
the Transmission or Distribution System or to avoid endangering life or
property; or (iv) is otherwise required by Seller before a dispute between the
Parties regarding the appropriateness of Seller's request can be resolved in
order for Seller to Maintain the Transmission or Distribution System pursuant to
Good Utility Practice. The Parties agree to cooperate in good faith to expedite
a mutually acceptable resolution of any dispute arising under this Article.

                                   ARTICLE 10

                          NOTICE OF ALARMS OR PROBLEMS

       10.1   Each Party shall provide the other with prompt notice of any
alarms, identified actual or potential problems, any safety issue or any other
issue that may have an immediate adverse effect on the other's facilities,
system or equipment located on or in each other's property or facility, the
Interconnection

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Facility as identified in the Interconnection Agreement or the switchyard
immediately serving the Buyer's equipment. This notice shall be verbal and
provided immediately upon identification of such an event.

                                   ARTICLE 11

                                 LOCAL SERVICES

       11.1   The Parties agree that, due to the integration of certain control
schemes, revenue metering applications, and communication networks, among other
things, it is cost effective to provide each other with certain local services
as set forth herein. The Parties shall usc their best efforts to ensure that
such local services provided by one Party to the other Party shall be available
at all times and on the terms and conditions specified herein.

       11.2   Each Party agrees to provide the other with such current,
potential, metering and contact outputs as are required for the operation of
protection and control systems as set forth on Schedule C and F to this
Agreement.

       11.3   Seller shall install, at Seller's expense, revenue meters to
provide data required by Seller at all Service Points mutually agreed upon prior
to closing. After closing, metering will be provided consistent with tariffs for
Seller's supply customers.

       11.4   Unless otherwise provided for in this Agreement, Buyer and Seller
shall agree upon an equitable allocation of charges for electric service for all
Shared Use Equipment. Seller shall provide to Buyer such other service as set
forth in Schedule F to this Agreement.

       11.5   Buyer shall provide Seller with ac and dc service power in the
quantities, levels, and locations as exists prior to Closing and as set forth in
Schedule C to this Agreement.

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       11.6   Buyer shall provide Seller with heating, ventilation, air
conditioning, lighting, and other building services for relay, control and
communications room, offices, control houses or other related transmission or
distribution areas or spaces within Buyer's facilities set forth in Schedule C
to this Agreement.

       11.7   Buyer shall provide Seller, at no cost to Seller; with
uninterrupted, dedicated cable connection and access for Seller's
telecommunications equipment.

       11.8   Buyer shall provide Seller, with such office, storage and building
spaces as set forth in Schedule C to this Agreement.

       11.9   Buyer shall provide Seller and Maintain for Seller's benefit such
fire protection systems as exist at the Site at the time of Closing which are
required to protect Seller's assets located in Buyer's facilities, and water or
CO2 systems, as applicable and in accordance with National Fire Protection
Association codes, up to Seller's property line or easement, whichever is closer
to Seller's equipment and facilities. Such systems shall include, but not be
limited to, all necessary control and supply equipment so as to perform as a
fully functional system.

       11.10  Unless specified herein or otherwise agreed to in writing, each of
these services will be provided on an actual cost basis. In each instance,
Seller shall have the right to audit Buyer's books and records to verify the
cost determination.

                                   ARTICLE 12

                          REMOTE TERMINAL UNITS (RTUs)

       12.1   Each Party shall, unless prohibited by regulation, make available
to the other, at no cost, all data with respect to any on-Site RTU that the
other Party

                                       20
<PAGE>   22

requests, that is necessary to operate equipment or systems or to respond to any
regulatory inquiries.

       12.2   The Parties agree when replacement of an on-Site RTU is required
due to technical obsolescence, catastrophic failure, or otherwise by mutual
agreement, that: (i) Buyer shall be responsible for all hardware and
installation costs for RTUs used solely for the operation of Buyer's facilities;
(ii) Buyer shall be responsible for RTU hardware and installation costs for RTUs
owned by Seller that are used for interconnection data telemetry to the Seller's
EMS pursuant to ESB 756; and, (iii) Seller shall be responsible for all RTU
hardware and installation costs for RTUs owned by Seller which are used solely
for the operation of Seller's Transmission or Distribution System. Separate RTUs
shall be installed at Buyer's expense for each Party's use under (i) and (ii)
above.

       12.3   Each Party shall maintain their respective RTUs in good working
condition so as not to compromise the other Party's ability to obtain data
pursuant to Article 12.0 or to compromise the other Party's operational control
of its facilities, systems or equipment.

                                   ARTICLE 13

                                PROTECTION RELAYS

       13.1   On-Site protection relays required by ESB 756 for over current,
under and over voltage, under and over frequency and other protection relays as
may be required by Seller shall be owned by the Buyer. If Seller is required in
accordance with Good Utility Practice to install a protection relay and requests
Buyer to install such relay at a location where one does not exist, Buyer shall
do so promptly at its own cost. Seller will provide Buyer with the required
settings for all protection relays and Buyer shall comply with the settings
provided by Seller.

                                       21
<PAGE>   23

       13.2   This Article 13 shall not apply to the Interconnection Facility.

                                   ARTICLE 14

                              EMERGENCY PROCEDURES

       14.1   Seller shall provide Buyer with prompt verbal or electronic
notification of Transmission System or Distribution System emergencies which may
reasonably be expected to affect Buyer's immediate operation of its facilities.
This notification shall be to the station shift supervisor or equivalent

       14.2   Buyer shall provide Seller with prompt verbal or electronic
notification of generation equipment emergencIes which may reasonably be
expected to affect Seller's operations. This notification shall be to the
Seller's dispatch personnel or equivalent

       14.3   If, in the good faith judgment of a Party, an emergency endangers
or could endanger life or property, the Party recognizing the emergency shall
take such action as maybe reasonable and necessary to prevent, avoid, or
mitigate injury, danger, or loss. If, however, the emergency involves electrical
equipment associated with the Transmission or Distribution System, Buyer shall
notify Seller's dispatch personnel (or equivalent) prior to performing any
switching operations.

                                   ARTICLE 15

                                     SAFETY

       15.1   Each Party shall be solely responsible for and assume all
liability for the safety and supervision of its own employees, agents,
representatives, and subcontractors.

       15.2   Each Party shall comply with the Switching and Tagging Rules and
the Testing and Grounding for Protection of Employees procedures at (i) all

                                       22
<PAGE>   24

Primary and Secondary System equipment interconnections or Service Points and on
all of Seller's facilities, systems, equipment and property to which Buyer or
Seller has access pursuant to this Agreement, and (ii) when operating the switch
which is the first means of disconnect on the Buyer's side of the
Interconnection Facility.

       15.3   Buyer shall Maintain and be responsible for all switching, tagging
and grounding of Buyer's facilities, systems, equipment, and property. Seller
shall Maintain and be responsible for all switching, tagging and grounding of
Seller's facilities, systems, equipment and property.

       15.4   Each Party shall be responsible for and shall train, test, and
certify its own Qualified Personnel to perform relevant work under this
Agreement.

                                   ARTICLE 16

                            ENVIRONMENTAL PROCEDURES

       16.1   Each Party shall provide the other Party with immediate verbal
notification and then follow up by written notification within 24 hours of
occurrence of any Release of Hazardous Substances or any type of remediation
activity that could reasonably be expected to adversely affect the other Party.

       16.2   If applicable, Buyer shall allow Seller to use at no cost existing
groundwater monitoring wells located at the Site for conducting Seller's
remediation and monitoring of environmental conditions on Seller's property.
Buyer shall be responsible for the repair and maintenance of existing
groundwater monitoring wells at the Site.

       16.3   Seller will have the right to discharge at no cost stormwater
runoff from Seller's property across Buyer's property under the authority of the
Buyer's SPDES permit where such permits exist and is permitted by applicable
law.

                                       23
<PAGE>   25

       16.4   Each Party shall be responsible for the storage and off-site
disposal of all Hazardous Waste generated by the use, operation, maintenance,
relocation or removal of its equipment that are located on the property or at
any facility of the other Party.

       16.5   Neither Party shall make changes to the site topography or
accesses, including but not limited to grading or drainage, that could
reasonably be expected to affect the other Party's facilities or common use
drainage or pollution controls systems, without the prior written consent of the
other Party, such consent not to be unreasonably withheld.

       16.6   Buyer shall incorporate into its own emergency planning documents,
including but not limited to SPCC and SWPPP plans, hazardous Substances
contingency planning and emergency response contingencies relating to Seller's
facilities, systems and equipment which are located on Buyer's property or
within Buyer's facilities.

       16.7   Neither Party shall knowingly take any actions which might
reasonably be expected to have an adverse environmental impact upon the
operations of the other Party without prior written notification and agreement
between the Parties.

       16.8   Buyer shall grant to Seller such reasonable requests for an
easements for drainage of stormwater from land retained by Seller across Buyers'
property pursuant to the terms of the Declaration of Easements. These easements
shall include the right to use Buyer's property (including trench drains,
valves, pipelines, leach fields, oil water separator, wastewater treatment
facility, and other fixtures), equipment or portions of the Buyer's property, as
applicable, for drainage, discharge, retention, or percolation of stormwater
runoff

                                       24
<PAGE>   26

       16.9   Seller shall comply with the requirements of: (i) Buyer's SPCplan
that applies to discharges from Seller's retained properties; and (ii) Buyer's
SPDES permit that applies to discharges from Seller's retained land.

                                   ARTICLE 17

                                     AUDITS

       17.1  Upon written request, each Party shall have the right to audit the
other's accounts and records pertaining to transactions under this Agreement.
Any audit requested pursuant to this Article shall be conducted at a mutually
acceptable time at the offices where such accounts and records are maintained.
Any audit undertaken pursuant to this Article shall be limited to those portions
of such accounts and records of the audited Party that relate to services
provided to the auditing Party. Upon request, the auditing Party shall promptly
provide the audited Party with the audit report and all supporting materials. To
the extent that audited information includes information deemed confidential by
the audited Party, the auditing Party shall at its sole expense, retain an
independent auditor to perform the audit, and the confidentiality provisions of
the ASA shall apply to such auditor.

                                   ARTICLE 18

                  COST RESPONSIBILITIES AND BILLING PROCEDURES

       18.1   Each Party shall provide the other with an invoice for all
payments due for reimbursable services provided to the other Party under this
Agreement during the preceding calendar month on or before the 10th business day
of the calendar month. Unless services are provided on a lump sum basis, each
invoice shall describe the services performed or provided. Each invoice shall be
paid within thirty (30) days of the date of issuance. All payments shall be made
in U.S.

                                       25
<PAGE>   27

dollars and in immediately available funds payable to the other Party,
or by wire transfer to a bank named by the invoicing Party. In the event that
payment is not received by the date due, that payment shall bear the interest at
the Citibank prime rate for U.S. currency as established from time to time from
and including the date on which payment was due but excluding the date the
payment is actually received. Payment of invoices by either Party shall not
relieve the paying Party from any responsibilities or obligations it has under
this Agreement; nor shall it constitute a waiver of any claims arising
hereunder.

       18.2   If either Party in good faith, disputes any part of an invoice
issued by the other Party, the disputing Party shall immediately notify the
other Party and provide a written explanation of the basis for such dispute. The
undisputed portion of the invoiced amount shall be paid by the disputing Party
by the due date of the invoice. If any amount withheld under dispute is
ultimately determined to be due, it shall be paid within one (I) day of such
determination with interest at the Citibank prime rate for U.S. currency as
established from time to time from and including the date any such underpayment
or overpayment was originally due but excluding the date on which such
underpayment or overpayment is paid. No payment obligation shall be subject to
this Article unless a notice of dispute is given with respect thereto within 30
days of the date payment of the invoice is due.

       18.3   This Article 18 shall not apply to the Interconnection Facility.

                                   ARTICLE 19

                                  DOCUMENTATION

       19.1   Each Party shall provide the other Party with all appropriate
documentation including but not limited to written test records, operation and
maintenance procedures, drawings, material lists, descriptions, or calibrations

                                       26
<PAGE>   28

whenever a Party makes an alteration, change, or modification to its property,
facilities, systems or equipment that could reasonably be expected to affect the
operations of the other Party.

       19.2   This Article 19 shall not apply to the Interconnection Facility.

                                   ARTICLE 20

                            SELLER'S RIGHT TO OPERATE

       20.1   Seller shall have the right to operate Buyer's dc power systems,
components of protection and metering circuits, EMS equipment, secondary circuit
components, communication equipment, and building facilities, software,
documentation, and structural components associated with the foregoing, as are
necessary for Seller, in Seller's reasonable determination, to operate and/or
maintain its Transmission and Distribution Systems if: Buyer or Buyer's
assignee, successor, transferee or other entity legally responsible for Buyer's
obligations shall cease operations at the Site or fail to comply with any
material obligations or duties set forth in this Agreement, which cessation or
failure has or reasonably threatens to have a material adverse affect on the
operation of Seller's Transmission or Distribution System. Before Seller may
exercise its rights under this Article, Seller shall give Buyer or Buyer's
assignee, successor, transferee or other entity legally responsible for Buyer's
obligations under this Agreement written notice of Seller's intent to exercise
its rights under this Article. Such notice shall specify the actual or alleged
failure of Buyer or Buyer's assignee, successor, transferee's or other legally
responsible entity to comply with such obligations or duties. Seller shall then
be entitled to exercise its rights under this Article only if Buyer or Buyer's
assignee, successor transferee or other legally responsible entity fails to
remedy such failure within (i) ten (10) days after the receipt of such notice,
or (ii) such longer period, not to exceed sixty (60) days

                                       27
<PAGE>   29

after the receipt of such notice, as is necessary to remedy the failure if the
failure cannot be reasonably remedied within ten (10) days and Buyer or Buyer's
assignee, successor or transferee commences action to remedy such failure within
ten (10) days and takes, or permits Seller to take, interim measures to minimize
the adverse impacts of the failure on the Transmission andlor Distribution
System. Notwithstanding the foregoing, if, in the Seller's judgment exercised
pursuant to Good Utility Practice, Seller concludes that the failure endangers
life or property or impair or create a significant risk to the safety,
reliability, stability, or integrity of the Transmission System or Distribution
System, then, consistent with Article 14, Seller may implement its rights under
this Article as necessary in its judgment to avert such condition.

                                   ARTICLE 21

              DAMAGE TO SYSTEMS. FACILITIES, EQUIPMENT AND PROPERTY

       21.1   Each Party shall be responsible to the other for any physical
damage or destruction it causes to the facilities, systems, equipment or
property of the other Party.

       21.2   The Party causing physical damage to or destruction of shared use
cables, facilities, systems, or equipment or other shared use property shall be
responsible for all repair and/or replacement costs. If neither Party is
responsible for any such damage or destruction, all repair and/or replacement
costs shall be shared by both Parties on a pro rata basis based upon their usage
of said cables, facilities, systems, equipment or other shared use property. 1.1

       21.3   Degradation to or routine replacement of shared use cables,
facilities, systems, equipment or other shared use property at the Site shall be
evenly divided between the Parties for replacement or corrective costs up to
$25,000 per

                                       28
<PAGE>   30

incident. Costs in excess of $25,000 per incident shall be shared pro rata
between the Parties based upon usage of such shared use cables, facilities,
systems, equipment or other shared use property.

       21.4   The obligations under this Article shall not be limited in any way
by any limitation on either Party's insurance.

                                   ARTICLE 22

                        PERSONAL INJURY, INDEMNIFICATION

       22.1   The obligations under this Article shall not be limited in any way
by any limitation on either Party's insurance.

       22.2   To the fullest extent allowed by law, each Party shall indemnify,
defend, and save harmless the other party, its agents and employees, from and
against any loss, damage, liability, cost, suit, charge, expense, or cause of
action, whether unconditionally certain or otherwise, as they exist on the
effective date of this Agreement or arise at any time thereafter (including but
not limited to fees and disbursements of counsel incurred by the indemnified
Party in any action or proceeding between the Party indemnifying and the
indemnified Party or between the indemnified Party and any third party or
otherwise), arising out of any damage or injury to its property or property of
third parties (including real property, personal property and environmental
damages), or persons, (including injuries resulting in death), directly or
indirectly caused by or arising out of or in any way connected with this
Agreement, or the work performed hereunder, or any facilities, systems,
equipment or property used by the other Party, its agents, employees,
contractors, and suppliers; provided however, each Party shall be liable for all
claims of the Party's own employees arising out of any provision of the Workers'
Compensation Law.

                                       29
<PAGE>   31

       22.3   In the event that the claims, damages, losses, judgments, or
settlements are the result of the negligence of both Parties, each Party shall
be liable to the extent or degree of their respective negligence, as determined
by mutual agreement of both Parties, or in the absence thereof, as determined by
adjudication of comparative negligence.

       22.4   The indemnifying Party shall take prompt action to defend and
indemnify the other Party against claims, actual or threatened, but in no event
later than notice by the indemnified Party to the indemnifying Party of the
service of a notice, summons, complaint, petition or other service of a process
against the indemnified Party alleging damage, injury, liability, or expenses
attributed in any way to this Agreement, the work, acts, fault, negligence,
equipment, materials, systems, facilities, personnel, or property of the
indemnifying Party, it's agents, employees; contractors or suppliers. The
indemnifying Party shall defend any such claim or threatened claim, including as
applicable, engagement of legal counsel, to respond to, defend, settle, or
compromise any claim or threatened claim.

       22.5   The indemnifying Party understands and agrees that it is
responsible for any and all costs and expenses incurred by indemnified Party to
enforce this indemnification provision.

       22.6   The obligations set forth in this Article 22 shall survive
completion of any work, labor or services which is the subject matter of this
Agreement and shall survive the termination or expiration of this Agreement.

                                   ARTICLE 23

                                    INSURANCE

       23.1   Each Party shall maintain at its own cost and expense, fire,
liability, worker's compensation, and other forms of insurance relating to their

                                       30
<PAGE>   32

property, facilities, systems, equipment in the manner, and amounts, and for the
duration set forth in Schedule L to this Agreement. Each Party shall have the
right, exercisable no more often than once every five (5) years, to require that
the minimum liability of insurance coverage then in effect hereunder be
increased by each party to the commercially reasonable levels carried by the
owners of comparable properties in the marketplace of the properties.

       23.2   Each Party shall promptly provide the other Party with either a
Certificate of Insurance or Evidence of Insurance letter for all coverage as set
forth in Schedule 1 to this Agreement, at the following address:

                        For Niagara Mohawk Power Corporation:
                            Attn: Risk Management, Bldg. A-1
                            300 Erie Boulevard West
                            Syracuse, NY 13202

                        For Buyer:
                             Attn:  Executive Director, Risk Management
                             NRG Energy, Inc.
                             1221 Nicollet Mall, Suite 700
                             Minneapolis, MN 55403
                             (612)373-5306
                             Facsimile: (612) 373-8804

Such certificates or letters, and any renewals or extensions thereof, shall
provide that at least ninety (90) days prior written notice shall be given to
the other Party in the event of any cancellation or diminution of coverage and
shall outline the amount of deductibles or self-insured retention which shall be
for the account of that Party. Any waiver of right of subrogation
responsibilities should be noted on the certificate.

       23.3   Each Party shall be named as additional insureds on the general
liability insurance policies set forth in Schedule L to this Agreement as
regards liability under this Agreement; and each Party shall on behalf of
itself, its parents,

                                       31
<PAGE>   33

affiliates, overseers, and assigns, waive its rights of recovery against the
other for any loss or damage covered by such policy.

       23.4   The failure of either Party to comply with the requirements of
this Article 23, or the complete or partial failure of an insurance carrier to
protect or indemnify fully the other Party, or the inadequacy of the insurance,
shall not in any way lessen or affect the obligations or liabilities of each
Party to the other.

       23.5   In the event either Party uses contractors or sub-contractors in
connection with this Agreement, the using Party shall require afl such
contractors and sub-contractors to provide the same insurance coverage as
required in Schedule L to this Agreement.

       23.6   If any insurance coverage required in Schedule L to this Agreement
is not secured, maintained or is canceled before expiration of this Agreement,
and the Party obligated by this Agreement to obtain and/or to maintain such
insurance fails immediately to procure other insurance, the other Party has the
right to procure such insurance and to charge the cost thereof to Party failing
to obtain, maintain or replace such insurance.

       23.7   Each Party shall furnish the other's Risk Management department
with copies of any accident or incident report(s) it receives from any insurance
carrier covering accidents or incidents occurring in connection with, as a
result of or arising out of this Agreement.

       23.8   Nothing contained in this Article 23 shall be construed as
limiting the extent of the either Party's responsibility for payment of damages
resulting from this Agreement, or limiting, diminishing, or waiving either
Party's obligation to indemnify, defend, and save harmless the other Party as
provided by this Agreement.

                                       32
<PAGE>   34

       23.9   As set forth in Schedule L, each Party may elect to self-insure
specified portions of the insurance obligations set forth in Schedule L to this
Agreement provided such Party meets and complies with the requirements for
insurance set forth in Schedule L.

                                   ARTICLE 24

                                     CLAIMS

       24.1   Each Party shall provide reasonable assistance and cooperation to
the other in the investigation, processing and disposition of any and all
claims, actions and lawsuits, known or unknown, that relate to the Purchased
Assets as of the date of Closing. Such claims shall include claims arising out
of actions or activities occurring at the Purchased Assets prior to Closing,
which have been instituted against Seller within the applicable statue of
limitations under New York Law. Such assistance and cooperation shall include,
but shall not be limited to, participation in pre-trial discovery, inspections,
document production, pre-trial testimony and testimony at trial.

                                   ARTICLE 25

                                  FORCE MAJEURE

       25.1  Notwithstanding anything in this Agreement to the contrary, Buyer
and Seller shall not be liable in damages or otherwise or responsible to the
other for its failure to carry out any of its obligations under this Agreement
if and only to the extent that they are unable to so perform or are prevented
from performing by an event of force maj cure.

       25.2   The term "force majeure" as used herein, means those causes beyond
the reason-

                                       33
<PAGE>   35

able control of the Party affected, which by the exercise of reasonable
diligence that Party is unable to prevent, avoid, mitigate, or overcome,
including the following: any act of God, labor disturbance, act of the public
enemy, war, insurrection, riot, fire, storm or flood, explosion, breakage or
accident to machinery or equipment, order, regulation or restriction imposed by
governmental military or lawfully established civilian authorities, or any other
cause of a similar nature beyond a Party's reasonable control.

       25.3   If a Party shall rely on the occurrence of an event or condition
described above as a basis for being excused from performance of its obligations
under this Agreement, then the Party relying on the event or condition shall:
(i) provide prompt written notice of such force majeure event to the other Party
giving an estimation of its expected duration and the probable impact on the
performance of its obligations hereunder; (ii) exercise all reasonable efforts
to continue to perform its obligations under this Agreement, (iii) expeditiously
take action to correct or cure the event or condition excusing performance;
provided that settlement of strikes or other labor disputes will be completely
within the sole discretion of the Party affected by such strike or labor
dispute; (iv) exercise all reasonable efforts to mitigate or limit damages to
the other Party; and (v) provide prompt notice to the other Party of the
cessation of the event or condition giving rise to its excuse from performance.
All performance obligations hereunder, shall be extended by a period equal to
the term of the resultant delay.

                                   ARTICLE 26

                             GOVERNING LAW, DISPUTES

       26.1   This Agreement and the rights, duties and obligations of the
Parties hereunder shall be governed by and construed, enforced and performed in
accordance with the laws of the State of New York, without regard to principles
of

                                       34
<PAGE>   36

conflicts of law. Any law suits arising under this Agreement shall be
instituted in the Federal and State courts of New York located in the City of
Syracuse, County of Onondaga and each party hereby irrevocably submits to the in
personam jurisdiction of such courts. Each Party herein waives its respective
right to a jury trial with respect to any litigation between the Parties arising
under or in connection with this Agreement.

                                   ARTICLE 27

                     ASSIGNMENT/CHANGE IN CORPORATE IDENTITY

       27.1   This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the Parties hereto and theft respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assigned without the prior
written consent of the other Party, said consent not to be unreasonably
withheld. Any assignment of this Agreement in violation of the foregoing shall
be, at the option of the non-assigning Party, void. Notwithstanding the
foregoing, Buyer or its permitted assignee may assign, transfer, pledge or
otherwise dispose of its right and iiterests hereunder to a trustee or lending
institution (s) for the purposes of financing or refinancing the Purchased
Assets, including upon or pursuant to the exercise of remedies under such
financing or refinancing, or by way of assignments, transfers, conveyances of
dispositions in lieu thereof provided, however, that no such assignment or
disposition shall relieve or in any way discharge Buyer or such assignee from
the performance of its duties and obligations under this Agreement. Seller
agrees to execute and deliver such documents as may be reasonably necessary to
accomplish any such assignment, transfer, conveyance, pledge or disposition of
rights hereunder for purposes of the

                                       35
<PAGE>   37

financing or refinancing of the Purchased Assets, so long as Seller's rights
under this Agreement are not thereby altered, amended, diminished or otherwise
impaired.

       27.2   Except as set forth in this Article 27, no assignment or transfer
of rights or obligations under this Agreement by Buyer shall relieve Buyer from
full liability and financial responsibility for the performance thereof after
any such transfer or assignment unless and until the transferee or assignee
shall agree in writing to assume the obligations and duties of Buyer under this
Agreement and Seller has consented in writing to such assumption; said consent
not to be unreasonably withheld.

       27.3   Except as set forth in this Article 27, no assignment or transfer
of rights or obligations under this Agreement by Seller shall relieve Seller
from full liability and financial responsibility for the performance after any
such transfer or assignment unless and until the transferee or assignee shall
agree in writing to assume the obligations and duties of Seller under this
Agreement and Buyer has consented in writing to such assumption; said consent
not to be unreasonably withheld.

       27.4   If either Party terminates its existence as a corporate entity,
and by merger, acquisition, sale, consolidation, or otherwise, or if all or
substantially all of such Party's assets are transferred to another person or
business entity without complying with this Article 27, the other Party shall
have the right, enforceable in a court of competent jurisdiction, to enjoin the
Party's successor from using the property in any manner inconsistent with this
Agreement

                                       36
<PAGE>   38

                                   ARTICLE 28

                         CONTRACTORS AND SUBCONTRACTORS

       28.1   Nothing in this Agreement shall prevent the Parties from utilizing
the services of contractors and subcontractors as they deem appropriate,
provided, however, the Parties agree that, where applicable, all said
subcontractors shall comply with the terms and conditions of this Agreement.

       28.2   The creation of any subcontract relationship shall not relieve the
hiring Party of any of its obligations under this Agreement. Each Party shall be
fully responsible to the other Party for the acts and/or omissions of any
contractor or subcontractor it hires as if no contract or subcontract had been
made. Any obligation imposed by this Agreement upon the Parties, where
applicable, shall be equally binding upon and shall be construed as having
application to any contractor or subcontractor.

       28.3   No contractor or subcontractor is intended to be or shall be
deemed a third-Party beneficiary of this Agreement.

       28.4   To the fullest extent permitted by law, Buyer shall require its
contractors and subcontractors to indemnify and hold harmless and defend Seller,
its parent and affiliates and their officers, directors, employees, agents, and
assigns from and against any and all claims and/or liability for damage to
property, injury to or death of any person, including Seller's employees,
Buyer's employees and their affiliates' employees, or any other liability
incurred by Seller or its parent or affiliates including all expenses, legal or
otherwise, to the extent caused, by any act or omission, negligent or otherwise,
by said contractor or subcontractor and/or its officers, directors, employees,
agents, and assigns arising out of or connected with the operation of Seller's
and its affiliates or Buyer's and its affiliates' facilities, equip-

                                       37
<PAGE>   39

ment, and property described in this Agreement, regardless of whether caused in
part by a Party indemnified hereunder.

       28.5   To the fullest extent permitted by law, Seller shall require its
contractors and subcontractors to indemnify and hold harmless and defend Buyer,
its parents and affiliates and their officers, directors, employees, agents, and
assigns from and against any and all claims and/or liability for damage to
property, injury to or death of any person, including Seller's employees,
Buyer's employees and their affiliates' employees, or any other liability
incurred by Buyer or its parent or affiliates including all expenses, legal or
otherwise, to the extent caused, by any act or omission, negligent or otherwise,
by said contractor or subcontractor and/or its officers, directors, employees,
agents, and assigns arising out of or connected with the operation of Seller's
and its affiliates or Buyer's and its affiliates' facilities, equip-

       28.6   The obligations under this Article 27 shall not be limited in any
way by any limitation on any such contractor's or subcontractor's insurance.

                                   ARTICLE 29

                                 LABOR RELATIONS

       29.1   Each Party agrees immediately to notify the other verbally and
then in writing, of any labor dispute or anticipated labor dispute which may
reasonably be expected to affect the operations of the other Party.

                                       38
<PAGE>   40

                                   ARTICLE 30

                          INDEPENDENT CONTRACTOR STATUS

       30.1   Nothing in this Agreement shall be construed as creating any
relationship between Seller and Buyer other than that of independent
contractors.

                                   ARTICLE 31

                             LIMITATION OF LIABILITY

       31.1   To the fullest extent permitted by law and notwithstanding any
other provision of this Agreement, except for any third-party indemnity
obligations set forth in Article 22, neither Seller nor Buyer, nor their
respective officers, directors, agents, or employees, successors or assigns,
shall be liable to the other Party or its parent, subsidiaries, affiliates,
officers, directors, agents, employeeE, successors or assigns, for claims,
suits, actions or causes of action for incidental, punitive, special, indirect,
multiple or consequential damages (including attorney's fees or litigation
costs) connected with or resulting from performance or non-performance of this
Agreement, or any actions undertaken in connection with or related to this
Agreement, including without limitation any such damages which are based upon
causes of action for breach of contract, tort (including negligence and
misrepresentation), breach of warranty, strict liability, statute, operation of
law, or any other theory of recovery. The provisions of this Article 31 shall
apply regardless of fault and shall survive termination, cancellation,
suspension, completion or expiration of this Agreement.

       31.2   The remedies set forth in this Agreement are the exclusive
remedies for the liabilities of each Party arising out of or in connection with
this Agreement.

                                       39
<PAGE>   41

                                   ARTICLE 32

                                     NOTICES

       32.1   Unless otherwise provided in is Agreement, all notices, requests,
claims, demands and other communications hereunder shall be in writing and shall
be given (and will be deemed to have been duly given if so given) by hand
delivery, cable, telecopy (confirmed in writing) or telex, or by mail
(registered or certified, postage prepaid) to the respective Party as follows:

                    For Seller:

                                     Niagara Mohawk Power Corporation
                                     300 Erie Boulevard West
                                     Syracuse, New York 13202
                                     Attention: Chief Operating Officer
                                     Facsimile: (315) 428-3111

                    For Buyer:       Oswego Harbor Power LLC
                                     C/o NRG Energy, Inc.
                                     1221 Nicollet Mall, Suite 700
                                     Minneapolis, MN 55403
                                     Attn:  Vice President and General Counsel
                                     Facsimile: (612) 373-5392

                                     With a copy to:

                                     Attn: Commercial Asset Manager,
                                     Oswego Harbor Power LLC
                                     C/o NRG Energy, Inc.
                                     1221 Nicollet Mall, Suite 700
                                     Minneapolis, MN 55403
                                     Facsimile: (612) 373-5430

or such other address as is furnished in writing by such Party. Unless otherwise
provided in this Agreement, notice is deemed to have been given as of the date
so mailed.

                                       40
<PAGE>   42

                                   ARTICLE 33

                                    HEADINGS

       33.1   The descriptive headings of the Articles of this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement.

                                   ARTICLE 34

                                     WAIVER

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

                                   ARTICLE 35

                                  COUNTERPARTS

       35.1   This Agreement may be executed in two or more counterparts, all of
which will be considered one and the same Agreement and each of which will be
deemed an original.

                                   ARTICLE 36

                                  SEVERABILITY

       36.1   In the event that any of the provisions of this Agreement are held
to be unenforceable or invalid by any court of competent jurisdiction, the
Parties shall, to the extent possible, negotiate an equitable adjustment to the
provisions of

                                       41
<PAGE>   43

this Agreement, with a view toward effecting the purpose of this Agreement, and
the validity and enforceability of the remaining provisions hereof shall not be
affected thereby.

                                   ARTICLE 37

                                    AMENDMENT

       37.1   This Agreement may be amended, modified, or supplemented only by
written agreement of both Seller and Buyer.

                                   ARTICLE 38

                                ENTIRE AGREEMENT

       38.1   This Agreement and the Schedules attached thereto, constitute the
entire understanding between the Parties, and supersede any and all previous
understandings, oral or written, which pertain to the subject matter contained
herein or therein. If there is any conflict between this Agreement and either
the Interconnection Agreement or the ASA, both the Interconnection Agreement and
the ASA have precedence over this Agreement.

                                       42
<PAGE>   44

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

O0SWEGO HARBOR POWER LLC                 NIAGARA MOHAWK POWER CORPORATION

By:    /s/ Michael O'Sullivan             By:    /s/ Clement E. Nadeau
     -------------------------------           -------------------------------
Name:  Michael O'Sullivan                 Name:  Clement E. Nadeau
     -----------------------------             -----------------------------
Title: Vice President                     Title: Vice President
      ----------------------------             -----------------------------

                                       43<PAGE>   1
                                                                   EXHIBIT 10.61

                                                                  EXECUTION COPY

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

                      ARTHUR KILL CONTINUING SITE AGREEMENT

                                 By and Between

                  CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.

                                       and

                                NRG ENERGY, INC.

                                   Dated as of

                                January 27, 1999

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

<PAGE>   2

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

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

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

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

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

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

                                    ARTICLE I

                                   Definitions

       Section 1.01. Definitions. As used in this Agreement, all capitalized
terms shall have the meanings ascribed to them in the Sale Agreement unless
otherwise defined in this Agreement and the following terms shall have the
following meanings:

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

<PAGE>   3

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

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

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

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

       "Buyer Parcel" shall have the meaning ascribed thereto in the Arthur Kill
Declaration of Easements Agreement.

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

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

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

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

       "Emergency Low Gas Pressure Trip Switch" means the main supply header
emergency low gas pressure trip switch that monitors natural gas pressure to the
Generating

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

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

       "Points of Interconnection" means the points 6n the Transmission System
where electrical power generated by Buyer will be delivered by Buyer to the
Transmission System or, under certain circumstances, where electric power will
be delivered from the Transmission System to Buyer.

                                       2
<PAGE>   4

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

       "Remedial Action means any action proposed or performed at the Buyer
Parcel that Seller deems necessary under Environmental Laws (including locating
necessary equipment on the Buyer Parcel) to investigate, study, report on,
monitor, remediate, remove, treat, control or prevent the migration of, or
defend litigation or claims arising from, Hazardous Substances which are
Released from or directly as a result of the Transformer Incident.

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

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

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

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

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

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

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

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

                                       3
<PAGE>   5

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

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

       "Transformer Incident" means the fire involving a light and power
transformer at Arthur Kill on September 7, 1998.

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

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

                                   ARTICLE II

                                     General

       Section 2.01. Compliance with Laws and Good Industry Practice.
Notwithstanding any other provision in this Agreement, Seller shall conduct all
its operations in connection with and maintain the Seller Assets, and buyer
shall conduct all its operations in connection with and maintain the Buyer
Assets (a) in accordance with Applicable Legal Requirements and (b) pursuant to
Good Industry Practice. Each of Buyer and Seller shall make all modifications to
facilities, equipment or systems that could reasonably be expected to impact the
Generating Facilities or the Transmission System in accordance with Good
Industry Practice. Except as otherwise provided herein, Seller shall not be
responsible for the operation or maintenance of, or for providing, procuring or
storing spare parts for, the Buyer Assets and Buyer shall not be responsible for
the operation or maintenance of, or for providing, procuring or storing spare
parts for, the Seller Assets, regardless of the location of such Buyer Assets or
Seller Assets, as applicable. "Applicable Legal Requirements" means all laws,
rules, regulations and orders of any Governmental Authority, including
Environmental Laws, from time to time in effect applicable to Seller or Seller
Assets or Buyer or Buyer Assets, as applicable. "Good Industry Practice" means
any of the applicable acts, practices or methods from time to time (i)(A)
required by the NYPP, NYSRC, NPCC or NERC or the ISO or any successor

                                       4
<PAGE>   6

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

       Section 2.02.Inspections. Maintenance. Access and Information. (a)
Inspections and Maintenance. Except as otherwise provided herein, each Party
shall have the right, from time to time upon reasonable advance notice and in
accordance with Applicable Legal Requirements and Good Industry Practice, to
perform routine inspections, measurements, meter readings and maintenance of any
facilities, equipment or. systems owned by such Party that are located on the
premises of the other Party, and such inspecting Party shall reimburse the other
Party for its reasonable costs and expenses in connection therewith, including
that of any escort designated by such other Party to observe such inspection;
provided, however, that the Party performing such inspections, measurements,
meter readings and maintenance shall use its reasonable best efforts to ensure
that such activities do not interfere with the other Party's ordinary course
operations.

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

                                       5

<PAGE>   7

Party in accordance with such other Party's work rules and procedures, including
in respect of the issuance of and requirements for work permits, and other
safety, security and operating protocols and procedures, from time to time in
effect, and the Entering Party shall reimburse such other Party for its
reasonable costs and expenses in connection therewith, including that of any
escort designated by such other Party; provided, however, that Seller shall not
be required to reimburse Buyer in :co1mection therewith to the extent the
Entering Party enters or is present on the premises of Buyer from Monday through
Friday from 7:00 A.M. to 4:00 P.M., or at such times as otherwise agreed by the
Parties. Each Party agrees to be solely responsible, and assume all liability,
for the safety and supervision of its employees, contractors, agents and other
representatives.

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

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

       Section 2.03.  No Interference.  (a) Except as otherwise permitted in the
Sale Agreement, this Agreement or any other Ancillary Agreement, neither Buyer
nor Seller shall service, repair or otherwise maintain any facilities, equipment
or systems owned by the other. To the extent that pursuant to the terms of this
Agreement or any Ancillary Agreement, a party services, repairs or otherwise
maintains or has any other obligations in respect of any facilities, equipment
or systems owned by the other Party, it shall perform such services, repairs and
maintenance, and otherwise discharge such duties in accordance with Applicable
Legal Requirements and Good Industry Practice and in a manner consistent with
that which it applies to facilities, equipment or systems it owns.

       (b)   Buyer shall not operate the Generating Facilities and Seller shall
not operate the Transmission System in any manner that has caused or could
reasonably be expected to cause physical damage to the Seller Assets or the
Buyer Assets, respectively, or otherwise results in or could reasonably be
expected to result in personal injury or loss of life, physical damage or
physical harm to property, the

                                       6
<PAGE>   8

Generating Facilities, the Transmission System or any other transmission system
to which it is interconnected, or damage or harm to System Integrity or public
safety.

       Section 2.04. Emergency Procedures. (a) If an emergency results in or
could reasonably be expected to result in personal injury or loss of life or
damage or harm to property, the Generating Facilities, the Transmission System
or another transmission system to which it is interconnected, System Integrity
or public safety, the Party recognizing such emergency shall provide immediate
verbal notification (to be confirmed in writing as soon as reasonably
practicable) to the other Party, and the Parties agree to cooperate in good
faith (including in respect of the sharing of information) in order to prevent,
avoid or mitigate personal injury or loss of life or damage or harm to property,
the Generating Facilities, the Transmission System or another transmission
system to which it is interconnected, System Integrity or public safety.

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

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

       Section 2.05. Additional Agreements. The Parties agree to, from time to
time upon the reasonable request of either Party, negotiate in good faith and
execute and deliver such additional contracts, agreements, instruments and
documents to implement the terms of this Agreement, including in order to
establish any necessary operating procedures to implement the terms of this
Agreement, and the Parties agree to cooperate in making such filings or
submissions in connection with such amendments, contracts, agreements,
instruments and documents with the appropriate Governmental Authority or other
organization as are required.

                                       7
<PAGE>   9

                                   ARTICLE III

               Continuing Rights, Obligations and Responsibilities

       Section 3.01. Testing and Maintenance. (a) Buyer's Equipment. Buyer shall
at appropriate intervals (at its own expense) or more frequently upon Seller's
reasonable request (in which case Seller shall reimburse Buyer for its
reasonable costs and expenses in connection therewith) (i) test, calibrate,
adjust and maintain pursuant to Good Industry Practice the telemetering, data
acquisition, Protective Relay Systems owned by Buyer and control equipment or
other facilities, equipment or systems or software that Buyer owns and is
connected or related to the Transmission System, or has or could be reasonably
expected to have a material adverse effect on the Transmission System or any
other transmission system to which it is interconnected or on System Integrity,
and (ii) promptly supply Seller with copies of inspection reports, installation
and maintenance documents, test and calibration records, verifications and
validations with respect thereto.

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

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

                                       8
<PAGE>   10

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

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

       Section 3.03. New Construction or Modifications. (a) Right to Modify or
Construct Retained. Except as otherwise provided in this Agreement or in any
other Ancillary Agreement, Seller shall be permitted to add to or modify, or
undertake new construction in respect of, the Transmission System in accordance
with Applicable Legal Requirements and Good Industry Practice and Buyer shall be
permitted to modify or add to the Generating Facilities in accordance with
Applicable Legal Requirements and Good Industry Practice.

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

       (c)   Modifications Affecting the Transmission System or Generating
Facilities. In respect of all construction work, modifications or circuit
changes involving new or existing facilities, equipment, systems or circuits
that could

                                       9

<PAGE>   11

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

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

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

                                       10
<PAGE>   12

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

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

       Section 3.05. Revenue Metering. (a) (i) Seller shall install and own all
Revenue Meter Systems and shall read all Revenue Meters. Buyer shall reimburse
Seller for its reasonable costs and expenses in connection with reading Revenue
Meters that are part of Output Revenue Meter Systems and processing data
received thereby. Seller and Buyer acknowledge that a Revenue Meter System may
be both a Delivery Revenue Meter System and an Output Revenue Meter System.

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

                                       11
<PAGE>   13

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

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

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

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

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

                                       12

<PAGE>   14

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

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

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

       Section 3.06. Information Reporting Systems and Obligations. (a) General.
Without limiting the generality of Section 2.02(c), Buyer shall supply

                                       13

<PAGE>   15

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

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

       Section 3.07. Nondispatchability Notification. If any unit of any of the
Generating Facilities experiences a full or partial forced outage, Buyer shall
immediately notify Seller's Energy Control Center verbally, such notice to be
promptly confirmed in writing, of such unit's outage and the expected duration
thereof.

       Section 3.08. Miscellaneous Services. (a) Services Provided by Seller.
(i) Subject to any suspension in accordance with Section 3.08(a) (ii), Seller
shall upon the request of Buyer provide to Buyer in respect of facilities,
equipment and systems owned by Buyer located on Substation property (A) light
and power service in accordance with the applicable tariff or any other charges
in respect thereof reasonably agreed to by Seller and Buyer and (B) SF(6) gas,
nitrogen gas, compressed air and dielectric fluid, in connection with which
Buyer shall reimburse Seller for a reasonable estimate of its use thereof;
provided, however, that Seller shall not charge Buyer for transmission and
distribution services for power provided in connection

                                       14

<PAGE>   16

with clause (i) (A) above to the extent such charges relate to power transmitted
by Seller on its own behalf.

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

       (b)   Services Provided by Buyer. Buyer acknowledges that any feeders
       owned by Buyer and associated electrical facilities, equipment, systems
and transformers owned by Buyer and connected thereto providing light and power
to the Substations and current transformers and potential transformers owned by
Buyer and used in relay protection circuits that protect Seller Assets are
critical for the sale of Buyer's electric energy and delivery of such electric
energy over the Transmission System and to Seller's operations and System
Integrity and shall take all measures reasonably required for such feeders,
facilities, equipment, systems and transformers to at all times remain in
service. Notwithstanding Section 2.02(b), to the extent that any such feeder,
current transformer or potential transformer fails to remain in service and
Buyer fails to promptly take any :necessary corrective measures, Seller reserves
the right, but shall have no obligation, to take any such measures or perform
servicing or repairs as may be reasonably required in order to cause such feeder
or relay protection circuits to resume service. Buyer shall reimburse Seller for
its reasonable costs and expenses incurred in connection with such corrective
measures and servicing and repairs.

       Section 3.09. Communications Equipment. (a) General. Seller shall, after
providing notice to Buyer, have the right to remove, replace, modify, add or
upgrade, at no cost to Buyer, communication facilities, equipment and systems
including antennae, wave guides and cables located on Buyer's structures or in
Buyer's Generating Facilities; provided, however, that any modification or
upgrade to such modification or upgrade shall be subject to Section 3.03.

       (b)   Access to Communications Rooms. Buyer and Seller shall cooperate in
the implementation of procedures designed to control access to all

                                       15

<PAGE>   17

communications rooms on Buyer's premises in which communications facilities,
equipment or systems owned by Seller are located, including the designation and
periodic review of a list of personnel authorized to enter into and remove,
replace, modify, add or maintain the channel 6 radios which can be~ used by
Buyer to communicate with Seller's Energy Control Center.

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

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

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

                                       16
<PAGE>   18

       Section 3.12. Environmental Matters. (a) Cooperation. Seller and Buyer
agree to cooperate with each other concerning (i) any site plans, surveys,
permits and other similar matters that affect or concern the premises of both
Parties, including any plans to prevent or respond to spills of oil or hazardous
substances into navigable waters or to control and monitor stormwater discharges
associated with industrial or construction activities, required by any
Governmental Authority and (ii) the selection of a response measure or remedial
action and any follow-up or other reports required under applicable
Environmental Laws in connection with any Release described in paragraphs (b)
and (c).

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

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

       (d) Transformer Incident. (i) Buyer shall give Seller and its directors,
officers, employees, contractors, agents and other representatives reasonable
access to the Buyer Parcel in order to take any Remedial Action, and Buyer shall
fully cooperate with Seller in order that Seller may fulfill its obligations
under this Section 3.l2(d).

                                       17
<PAGE>   19

       (ii)  As between Buyer and Seller, Seller shall retain exclusive control
over, and Buyer shall have no right or responsibility to approve or participate
in, any Remedial Action, including communications or agreements with
Governmental Authorities, the selection of consultants and contractors and the
selection and management of any Remedial Action, and Seller shall be solely
responsible for any filings or reports required under any Environmental Law in
connection with any Remedial Action; provided, however, that Seller shall
provide Buyer with (A) any plan for any Remedial Action, any filing or report to
be transmitted~to any Governmental Authority regarding any Remedial Action and
any agreement with any Governmental Authority in connection with any Remedial
Action and (B) copies of any correspondence with any Governmental Authority
regarding any Remedial Action.

       (iii) No Remedial Action taken by Seller pursuant to this Section 3.12(d)
shall obligate Seller to conduct any other testing or remediation that is not
required under any Environmental Law in connection with any Remedial Action, nor
shall this Section 3.12(d) create any obligation to any third party.

       (iv)  In conducting any Remedial Action, Seller agrees to comply in all
material respects with any applicable Environmental Laws.

       Section 3.13. Voltage and Frequency Requirements. Unless otherwise agreed
to in writing by the Parties or specified by the ISO, Buyer shall (a) operate
its interconnected Generating Facilities (i) with automatic voltage regulators
and minimum excitation limiters and shall maintain voltage at the Points of
Interconnection in accordance with Good Industry Practice and (ii) at frequency
settings from time to time specified by Seller with reasonable advance notice to
Buyer and (b) operate within the underfrequency, overfrequency, undervoltage or
overvoltage limits in respect of relays from time to time specified by Seller
with reasonable advance notice to Buyer.

       Section 3.14. Authorized Representation. (a) Buyer Representatives. Buyer
shall designate an individual or individuals who have authority to bind Buyer
hereunder and Seller shall be entitled to rely upon such designation. Buyer
shall also designate an individual or individuals who will be available at the
Generating Facilities 365 days per year and 24 hours per day and shall be
empowered by Buyer to make operational decisions hereunder on Buyer's behalf
("Buyer Operations Manager"). Seller shall also be entitled to rely on
statements, actions and decisions of

                                       18
<PAGE>   20

the Buyer Operations Manager as those of Buyer, unless Buyer specifies otherwise
in writing with respect to certain events.

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

       Section 3.15. Insurance. (a) The Parties agree to carry, at their own
cost and expense and throughout the term of this Agreement, policies of
insurance covering fire, liability, worker's compensation, property all-risk,
comprehensive bodily injury, property damage liability and automobile liability,
products, completed operations, explosion and collapse, contractual and personal
injury liability and other forms of insurance relating to, in the case of Buyer,
the Buyer Assets and, in the case of Seller, the Seller Assets. Such insurance
shall be in such amounts, have such deductibles and retentions and be
underwritten by such companies as would be obtained by a reasonably prudent
electric power business and shall be primary and noncontributory with any
insurance carried by the other Party and it shall not require that such other
Party pay any premium thereunder. Notwithstanding the foregoing, either Party
may self-insure against any of the liabilities set forth in the first sentence
of this Section 3.15 if such Party satisfies all applicable statutory and
regulatory criteria with respect to the self-insurance of the relevant
liability. Upon receipt of any notice of cancellation or expiration of any such
insurance policy, the Party receiving such notice shall immediately give written
notice to the other Party.

       (b)   The Parties agree to furnish each other with certificates of
insurance evidencing the insurance coverage set forth in this Section 3.15 and,
upon reasonable request, a copy of any insurance policy referred to therein.

       (c)   Except for worker's compensation insurance, each Party and its
Affiliates shall be named as additional insureds under the general liability
insurance policies maintained by each Party pursuant to Section 3.15 (a).

                                       19

<PAGE>   21

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

       Section 3.16. Energy Received by Generating Facilities. (a) Buyer agrees
that energy received front any feeder owned by Buyer that receives energy from
Substations shall be used only to provide light and power to the Generating
Facilities and shall not be used in connection with any transmission or
distribution service and that it shall not sell or otherwise supply such energy
to any third party.

       (b)   Without limiting the generality of Section 3.16(a) above, Buyer
agrees that it will use energy derived from any Generating Facility as its usual
and customary source of light and power, and that it shall use energy supplied
from the Substations by feeders owned by Buyer for light and power only when the
applicable light and power transformer or associated equipment is out of
service.

                                   ARTICLE IV

                               Billing Procedures

       Section 4.01. Billing Procedures. Within five Business Days after the
first day of each month, in the case of metered light and power services, or
quarter, in all other cases, each Party shall prepare an invoice for those
reimbursable costs incurred on behalf of, or services provided to, the other
Party under this Agreement during the preceding month or quarter, as the case
may be. Each invoice shall delineate the month in which such costs or services
were incurred or provided, shall fully describe the costs or services incurred
or rendered and shall be itemized to reflect the incurrence of such costs and
the provision of such services. The amount of Buyer's invoice and amount of
Seller's invoice for such month or quarter, as the case may be, shall be netted,
and Buyer or Seller (as the case may be) shall pay the net amount, if any, to
the other Party on or before the twentieth Business Day following receipt of the
other Party's invoice, and any overdue amounts shall bear interest from such
date through the date of payment at the prime rate of The Chase Manhattan Bank
in effect on such date. All payments shall be made in immediately available
funds by wire transfer to a bank named by such Party. Payment of invoices by
either Party shall not relieve the paying Party from any responsibilities or
obligations it has under this Agreement, the Sale Agreement or the Arthur Kill
Declaration of Ease-

                                       20
<PAGE>   22

ments Agreement nor shall it constitute a waiver of any claims arising hereunder
nor shall it prejudice either Party's right to question the correctness of any
billing.

       Section 4.02. Payment Default. In the event of a billing dispute, the
Parties shall continue to provide services to each other as long as the paying
Party (i) continues to make all of the payments not in dispute and (ii) if
requested by the billing Party, pays into an escrow account the disputed portion
of the applicable invoice, pending resolution of such dispute.

                                    ARTICLE V

                            Miscellaneous Provisions

       Section 5.01. Effectiveness and Team. (a) This Agreement shall only
become effective upon the consummation of the Closing and, prior to such time,
shall have no force or effect. If the Sale Agreement is terminated for any
reason prior to the Closing, then this Agreement shall also automatically
terminate and be of no further force or effect.

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

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

                                       21
<PAGE>   23

       Section 5.02. Force Majeure. (a) Notwithstanding anything in this
Agreement to the contrary, neither Party shall have any liability or be
otherwise responsible to the other for its failure to carry out its obligations,
with the exception of any obligation to pay money, under this Agreement if and
only to the extent that it becomes impossible for either Party to so performs as
a result of any occurrence or event which is beyond the reasonable control, and
does not result from any fault or negligence, of the Party affected (each, a
"Force Majeure Event"), including any act of God, strike or any other labor
disturbance, act of a public enemy, war, act of terrorism, riot, any other civil
disturbance, fire, storm, lightning, flood, earthquake, any other natural
disasters, explosion, materials shortage, breakage or accident involving
facilities, equipment or systems, any order or regulation or restriction imposed
by any Governmental Authority, failure of a contractor or subcontractor caused
by a Force Majeure Event and transportation delays or stoppages.

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

       Section 5.03. Confidentiality. (a) Each Party (the "Receiving Party")
shall, during the term of this Agreement and for two years after its
termination, keep confidential and shall cause its directors, officers,
affiliates, employees, contractors, agents and other representatives (including
financial advisors, attorneys and accountants) (collectively, the
"Representatives") to keep confidential (except as required by applicable law,
regulation or legal process, and then only after compliance with subsection (b)
of this Section), any and all documents and information (i) relating to (x) in
the case of the Seller, the Buyer Assets or (y) in the case of the Buyer, the
Seller Assets, furnished or disclosed by the other Party (the "Disclosing
Party") in connection with this Agreement or any other Ancillary Agreement or
(ii) learned by the Receiving Party during the course of performance of this
Agreement or any other Ancillary Agreement or in connection with any claim for
indemnifica-

                                       22
<PAGE>   24

tion pursuant to Article X of the Sale Agreement (the "Confidential
Information"); provided, however, that the confidentiality obligation hereunder
shall expire two years after any such Confidential Information is first
furnished, disclosed or learned. Except to the extent that any Confidential
Information (i) is or becomes generally available to the public other than as a
result of a disclosure by the Disclosing Party or its Representatives, (ii) is
developed by the Receiving Party or its Representatives independently and
without use of, and does not contain or reflect, information furnished by the
Disclosing Party or its Representatives, or (iii) is or becomes available to the
Receiving Party on a nonconfidential basis from a source (other than the
Disclosing Party or its Representatives) which, to the best of the Receiving
Party's knowledge after due inquiry, is not prohibited from disclosing such
information to the Receiving Party by a legal, contractual or fiduciary
obligation to the Disclosing Party, the Receiving Party shall not release or
disclose such Confidential Information to any person who has not first been
advised of the confidentiality provisions of this Section and has agreed in
writing to comply with such provisions, other than to its Representatives on a
need-to-know basis.

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

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

       Section 5.04. Assignment; No Third Party Beneficiaries. (a) This
Agreement and all of the provisions hereof shall be binding upon and inure to
the

                                       23
<PAGE>   25

benefit of the Parties and their respective successors and permitted assigns but
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by either Party, including by operation of law, without the
prior written consent of the other Party, except (i) in the case of Seller (A)
to an Affiliate of Seller or a third party in connection with the transfer of
the Transmission System to such Affiliate or third party or (B) to a lending
institution or trustee in connection with a pledge or granting of a security
interest in all or any part of the Transmission System and this Agreement and
(ii) in the case of Buyer (A) to an Affiliate of Buyer in connection with the
transfer of the Auctioned Assets to such Affiliate and (B) to a lending
institution or trustee in connection with a pledge or granting of a security
interest in the Auctioned Assets and this Agreement; provided, however, that no
assignment or transfer of rights or obligations by either Party shall relieve it
from the full liabilities and the full financial responsibility, as provided for
under this Agreement, unless and until the transferee or assignee shall agree in
writing to assume such obligations and duties and the other Party has consented
in writing to such assumption.

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

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

       Section 5.05. Independent Contractor Status. Nothing in this Agreement is
intended to create an association, trust, partnership or joint venture between
the Parties, or to impose a trust, partnership or fiduciary duty, obligation or
liability on or with respect to either Party and nothing in this Agreement shall
be construed as creating any relationship between Seller and Buyer other than
that of independent contractors.

       Section 5.06. Notices. Unless otherwise specified herein,, all notices
and other communications hereunder shall be in writing and shall be deemed given
(as of the time of delivery or, in the case of a telecopied communication, of
confirmation) if delivered personally, telecopied (which is confirmed) or sent
by overnight

                                       24
<PAGE>   26

courier (providing proof of delivery) to the Parties at the following addresses
(or at such other address for a Party as shall be specified by like notice)

                      if to Seller, to

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

                      if to Buyer, to

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

       Section 5.07. Extension; Waiver. Either Party may (i) extend the time for
the performance of any of the obligations or other acts of the other Party or
(ii) waive. compliance by the other Party with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a Party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such Party. The failure of a Party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights. Notwithstanding anything herein to the
contrary, to the extent that either Party fails, in any particular instance, to
take affirmative steps to exercise its rights to witness, inspect, observe or
approve the activities of the other Party as contemplated by this Agreement,
such rights shall, solely with respect to such instance, be deemed waived in
respect of such testing, calibration, adjustment and maintenance interval or
such operation or maintenance activities, equipment tests, installation,
construction or other modifications, respectively.

       Section 5.08. Amendment and Modification. (a) This Agreement may be
amended, modified or supplemented only by an instrument in writing signed on
behalf of each of the Parties.

                                       25
<PAGE>   27

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

       Section 5.09. Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless of
the laws that might otherwise govern under applicable principles of conflicts
of law).

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

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

                                      26
<PAGE>   28

       Section 5.12. Jurisdiction and Enforcement.  (a)  Each of the Parties
irrevocably submits to the exclusive jurisdiction of (i) the Supreme Court of
the State of New York, New York County and (ii) the United States District
Court for the Southern District of New York, for the purposes of any suit,
action or other proceeding arising out of this Agreement or any transaction
contemplated hereby. Each of the Parties agrees to commence any action, suit or
proceeding relating hereto either in the United States District Court for the
Southern District of New York or, if such suit, action or proceeding may not be
brought in such court for jurisdictional reasons, in the Supreme Court of the
State of New York, New York County. Each of the Parties further agrees that
service of process, summons, notice or document by hand delivery or U.S.
registered mail at the address specified for such Party in Section 5.06 (or
such other address specified by such Party from time to time pursuant to
Section 5.06) shall be effective service of process for any action, suit or
proceeding brought against such Party in any such court. Each of the Parties
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in (i) the Supreme Court of the State of New
York, New York County, or (ii) the United States District Court for the
Southern District of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.

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

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

                                      27
<PAGE>   29

between the Parties with respect to the transaction contemplated by this
Agreement other than the Confidentiality Agreement.

       Section 5.14. Severabi1ity.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
Parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.

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

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

                                      28
<PAGE>   30

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

<TABLE>
<S>                                   <C>
                                                        CONSOLIDATED EDISON COMPANY OF
                                                        NEW YORK, INC.,

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

                                                        NRG ENERGY, INC.

                                                        By /s/ Craig A. Mataczynski
                                                          ----------------------
                                                        Name: Craig A. Mataczynski
                                                        Title: Senior Vice President

</TABLE>

                                      29

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