Document:

<PAGE>

                                                               EXHIBIT 10.1(b)

                                 AMENDMENT NO. 1

                                       TO

                        ASSET PURCHASE AND SALE AGREEMENT

                               DATED JUNE 7, 2000

                                 BY AND BETWEEN

                         POTOMAC ELECTRIC POWER COMPANY

                                       AND

                              SOUTHERN ENERGY, INC.
<PAGE>

                                 AMENDMENT NO. 1
                                       TO
                        ASSET PURCHASE AND SALE AGREEMENT

         THIS AMENDMENT NO. 1 TO ASSET PURCHASE AND SALE AGREEMENT (this
"Amendment") is dated September 18, 2000 and is by and between POTOMAC ELECTRIC
POWER COMPANY, a District of Columbia and Virginia corporation ("Seller"), and
SOUTHERN ENERGY, INC., a Delaware corporation ("Buyer," collectively with
Seller, the Parties).

         WHEREAS, Buyer has agreed to purchase and assume, and Seller has agreed
to sell and assign, the Auctioned Assets (as defined in the Purchase Agreement)
and certain associated liabilities, on the terms and conditions set forth in
that certain Asset Purchase and Sale Agreement, dated June 7, 2000 (the
"Purchase Agreement"); and

         WHEREAS, the parties hereto desire to amend the Purchase Agreement and
the Exhibits and Schedules relating thereto set forth herein.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Buyer and Seller agree as follows:

         1. Defined Terms. Defined terms used in this Amendment and not defined
            -------------
herein shall have the meanings ascribed to them in the Purchase Agreement.

         2. Amendments to Schedule 2.2(a)(iv). Schedule 2.2(a)(iv) to the
            ---------------------------------
Purchase Agreement is hereby amended as follows:

                  (a) Item 1 under Section II (Assigned Contracts other than
PPAs) is hereby deleted and replaced with the following:

                  "Agreement for Sale of No. 2 Fuel Oil to M Street Terminal by
                  and between Potomac Electric Power Company and BP Amoco, dated
                  July 1, 2000."

                  (b) Item 2 under Section II (Assigned Contracts other than
PPAs) is hereby deleted and replaced with the following:

                  "Agreement for Sale of No. 2 Fuel Oil by and between Potomac
                  Electric Power Company and BP Amoco, dated July 1 2000."
<PAGE>

                  (c) Item 3 under Section II (Assigned Contracts other than
PPAs) is hereby deleted in its entirety.

                  (d) Item 4 under Section II (Assigned Contracts other than
PPAs) is hereby deleted with the following:

                  "Agreement for Sale of Fuel Oil by and between Potomac
                  Electric Power Company and Amerada Hess Corporation, dated
                  January 1, 2000."

                  (e) Item 20 under Section II (Assigned Contracts other than
PPAs) is hereby deleted with the following:

                  "Storage and Product Handling Agreement (49-00-07-582) by and
                  between Potomac Electric Power Company and Support Terminals
                  Operating Partnership, L.P., effective July 1, 2000."

                  (f) Item 23 under Section II (Assigned Contracts other than
PPAs) is hereby deleted with the following:

                  "Master Agreement for Purchase of Services by and between
                  Potomac Electric Power Company and General Electric Company,
                  effective April 10, 1984."

                  (g) Item 26 under Section II (Assigned Contracts other than
PPAs) is hereby added to read as follows:

                  "No. 2 Fuel Oil Transportation Agreement by and between
                  Potomac Electric Power Company and Hardesty and Son,
                  Incorporated, dated July 1, 2000."

         3. Amendment to Schedule 2.2(b)(i).
            -------------------------------

                  (a) The lead in sentence in Section VIII is hereby deleted and
replaced with the following:

                  "Seller will retain the following equipment located on Buyer
                  Real Estate and the Potomac River Real Property:"

         4. Amendments to Schedule 5.3(a). Schedule 5.3(a) to the Purchase
            -----------------------------
Agreement is hereby amended as follows:

                  (a) Item 4 is hereby deleted and replaced with the following:
<PAGE>

                  "Master Agreement for Purchase of Services by and between
                  Potomac Electric Power Company and General Electric Company,
                  effective April 10, 1984."

                  (b) Item 5 is hereby deleted and replaced with the following.

                  "Delivery Service Agreement for Chalk Point Electric
                  Generating Facilities by and between Potomac Electric Power
                  Company and Washington Gas Light Company, effective October
                  28, 1993."

                  (c) Items 6, 10, 17 and 18 are hereby deleted in their
                  entirety.

                  (d) Item 8 is hereby deleted and replaced with the following:

                  "Storage and Product Handling Agreement (49-00-07-582) by and
                  between Potomac Electric Power Company and Support Terminals
                  Operating Partnership, L.P., effective July 1, 2000."

                  (e) Item 24 is hereby added to read as follows:

                  "No. 2 Fuel Oil Transportation Agreement by and between
                  Potomac Electric Power Company and Hardesty and Son,
                  Incorporated, dated July 1, 2000."

         5.  Amendments to Exhibits.
             ----------------------

                  (a) Exhibits C-2 (form of Dickerson Easement Agreement), C-3
(form of Chalk Point Easement Agreement) and C-4 (form of Morgantown Easement
Agreement) to the Purchase Agreement are hereby deleted in their entirety and
replaced with the form of Easement Agreements attached as Exhibits A-1 (form of
Dickerson Easement Agreement), A-2 (form of Chalk Point Easement Agreement) and
A-3 (form of Morgantown Easement Agreement) hereto, respectively.

                  (b) Exhibits E-1 (form of Potomac River Interconnection
Agreement), E-2 (form of Morgantown Interconnection Agreement), E-3 (form of
Dickerson Interconnection Agreement) and E-4 (form of Chalk Point
Interconnection Agreement) to the Purchase Agreement are hereby amended as
follows:
<PAGE>

                           (i)   Schedule B to Exhibit E-1 (form of Potomac
River Interconnection Agreement) is hereby amended by inserting the drawings
attached hereto as Exhibit B-1.

                           (ii)  Schedule B to Exhibit E-2 (form of Morgantown
Interconnection Agreement) is hereby amended by inserting the drawings attached
hereto as Exhibit B-2.

                           (iii) Schedule B to Exhibit E-3 (form of Dickerson
Interconnection Agreement) is hereby amended by inserting the drawings attached
hereto as Exhibit B-3.

                           (iv)  Schedule B to Exhibit E-4 (form of Chalk Point
Interconnection Agreement) is hereby amended by inserting the drawings attached
hereto as Exhibit B-4.

                           (v)   Schedules D and E of Exhibits E-1 (form of
Potomac River Interconnection Agreement), E-2 (form of Morgantown
Interconnection Agreement), E-3 (form of Dickerson Interconnection Agreement)
and E-4 (form of Chalk Point Interconnection Agreement) are hereby amended by
inserting (a) Attachments 2 and 3 to Schedule D attached hereto as Exhibit C-1
and (b) Schedule E (Pepco's Interconnection Standards) attached hereto as
Exhibits C-2.

                           (vi) Schedule F to Exhibit E-3 (form of Dickerson
Interconnection Agreement) is hereby replaced with the schedule attached hereto
as Exhibit D.

                           (vii) The table of contents to Exhibit E-4 (form of
Chalk Point Interconnection Agreement) is hereby amended as follows: deleting
Item 3.16 and replacing it with "SMECO CT Units Status Notification."

                           (viii) Header 3.16 of Exhibits E-4 (form of Chalk
Point Interconnection Agreement) is hereby amended by deleting it in its
entirety and replacing it with the following: "SMECO CT Unit Status
Notification."

                           (ix) Schedule G to Exhibit E-1 (form of Potomac River
Interconnection Agreement) is hereby amended by replacing Schedule G thereto
with the Schedule G attached hereto as Exhibit E.

         6. Governing Law. This Amendment is governed by, and shall be
            -------------
construed in accordance with, the laws of the District of Columbia without
regard to principles of conflicts of law.

         7. Modifications and Amendments. This Amendment shall not be modified
            ----------------------------
or amended except by a written instrument executed by both of the Parties.
<PAGE>

         8. Entire Agreement; Severability. This Amendment and the Purchase
            ------------------------------
Agreement constitute the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof. In the event that any portion
of this Amendment or the Purchase Agreement shall be determined to be invalid or
unenforceable, such portion of this Amendment or Purchase Agreement shall be
severable from the other provisions of this Amendment or the Purchase Agreement
which previsions shall be valid, binding upon and enforceable against the
Parties.

         9. Effectiveness; Purchase Agreement. This Amendment shall be of full
            ---------------------------------
force and effect upon its execution and delivery by each of the Parties. Except
as amended by this Amendment, all other terms of the Purchase Agreement shall
continue in fall force and effect and unchanged and are hereby confirmed in all
respects.

         10. Counterparts. This Amendment may be executed in two counterparts,
             ------------
each of which shall be deemed an original, but both of which together shall
constitute one and the same instrument.
<PAGE>

         IN WITNESS WHEREOF, Buyer and Seller have signed and delivered this
Amendment on the day and year set forth above.

WITNESS/ATTEST:                               POTOMAC ELECTRIC POWER COMPANY

                                              By: /s/ Mary Sharpe-Hayes
------------------------------------             -------------------------------
                                                 Name:
                                                 Title:

                                              SOUTHERN ENERGY, INC.

                                              By:
------------------------------------             -------------------------------
                                                 Name:
                                                 Title:
<PAGE>

         IN WITNESS WHEREOF, Buyer and Seller have signed and delivered this
Amendment on the day and year set forth above.

WITNESS/ATTEST:                               POTOMAC ELECTRIC POWER COMPANY

                                              By:
------------------------------------             -------------------------------
                                                 Name:
                                                 Title:

                                              SOUTHERN ENERGY, INC.

/s/ Sandra Wilson                             By: /s/ Anne M. Cleary
------------------------------------             -------------------------------
                                                 Name: Anne M. Cleary
                                                 Title: Vice President<PAGE>

                                                                 EXHIBIT 10.1(c)

                                 AMENDMENT NO. 2

                                       TO

                        ASSET PURCHASE AND SALE AGREEMENT

                               DATED JUNE 7, 2000

                                 BY AND BETWEEN

                         POTOMAC ELECTRIC POWER COMPANY

                                       AND

                              SOUTHERN ENERGY, INC.
<PAGE>

                                 AMENDMENT NO. 2
                                       TO
                        ASSET PURCHASE AND SALE AGREEMENT

              THIS AMENDMENT NO. 2 TO ASSET PURCHASE AND SALE AGREEMENT (this
"Amendment") is dated December __, 2000 and is by and between POTOMAC ELECTRIC
POWER COMPANY, a District of Columbia and Virginia corporation ("Seller"), and
SOUTHERN ENERGY, INC., a Delaware corporation ("Buyer," collectively with
Seller, the "Parties").

              WHEREAS, Buyer has agreed to purchase and assume, and Seller has
agreed to sell and assign, the Auctioned Assets (as defined in the Purchase
Agreement) and certain associated liabilities, on the terms and conditions set
forth in that certain Asset Purchase and Sale Agreement, dated June 7, 2000, as
amended by Amendment No. 1 to Asset Purchase and Sale Agreement, dated September
18, 2000 (the "Purchase Agreement");

              WHEREAS, pursuant to the side letter dated June 7, 2000, Buyer and
Seller agreed to modify the schedules to the Purchase Agreement to correct
scrivener's errors and omissions or erroneous inclusions therein; and

              WHEREAS, the parties hereto desire to amend the Purchase Agreement
and the exhibits and schedules relating thereto as set forth herein.

              NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Buyer and Seller agree
as follows:

         1. Defined Terms. Defined terms used in this Amendment and not defined
            -------------
herein shall have the meanings ascribed to them in the Purchase Agreement.

         2. Amendment to Article IX.
            ------------------------

                  (a) Section 9.1(a) is hereby amended by inserting the
         following sentence at the end thereof:

                          "Notwithstanding the foregoing, the term Transferred
                  Union Employee shall not include any Union Employee who, on or
                  before the Closing Date, has given written notice to Seller of
                  his or her intent to retire from active employment with
                  Seller, and who actually retires under the terms of the
                  Seller's Pension Plan effective January 1, 2001."

                                       1
<PAGE>

                  (b) The fourth sentence of Section 9.3 is hereby deleted in
its entirety and replaced with the following:

                     "Each Transferred Savings Employee shall be afforded the
              option of transferring his or her account balance into the Buyer's
              Savings Plan, including any outstanding loan balances attributable
              to such accounts; provided, however, that if Seller is able to
              obtain a favorable ruling from the Internal Revenue Service to the
              effect that (or determines on the basis of rulings by the Internal
              Revenue Service that) the consummation of the transactions
              contemplated hereby shall constitute a sale of substantially all
              of the assets used in a trade or business within the meaning of
              Section 401(k)(l0) of the Code, or that there has been a
              separation from service as a non-continuation of the same trade or
              business within the meaning of Section 401 (k)(2)(B)(i)(I) of the
              Code, each Transferred Savings Employee shall be afforded the
              option of maintaining his or her account balance under Seller's
              Savings Plan, transferring his or her account balance into Buyer's
              Savings Plan, including any outstanding loan balances attributable
              to such account, rolling over his or her account balance,
              including any outstanding loan balances attributable to such
              accounts into the Buyer's Savings Plan, rolling over his or her
              account balance into an individual retirement account or cashing
              in his or her account balance (subject to applicable withholding
              taxes and penalties)."

                  (c) The seventh sentence of Section 9.3 is hereby deleted in
its entirety and replaced with the following:

                  "In the event that a Transferred Savings Employee shall elect
         to leave his or her account balance in Seller's Savings Plans, Seller
         shall allow the Transferred Employee to repay any outstanding loan
         attributable to such account balance through repayment coupons that the
         Seller shall provide to the Transferred Employee prior to the Closing
         Date."

         4.       Amendment to Section 12.4. The address for Troutman Sanders
                  -------------------------
LLP in Section 12.4 of the Purchase Agreement is hereby deleted and replaced
with the following address:

                          Troutman Sanders LLP
                          401 9th Street N.W.
                          Suite 1000
                          Washington, D.C. 20004
                          Telecopier: (202) 274-2994
                          Attention:  Benjamin L. Israel, Esq.

                                       2
<PAGE>

         5.       Amendments to Schedules.
                  -----------------------

                  5.1 Amendment to Schedule 2.2(a)(iii). Schedule 2.2(a)(iii) is
                      ---------------------------------
hereby deleted in its entirety and replaced with the Schedule 2.2(a)(iii)
attached hereto as Attachment A.

                  5.2 Amendment to Schedule 2.2(a)(v). Schedule 2.2(a)(v) is
                      -------------------------------
hereby deleted in its entirety and replaced with the Schedule 2.2(a)(v) attached
hereto as Attachment B.

                  5.3 Amendment to Schedule 2.2(a)(vi). Schedule 2.2(a)(vi) is
                      --------------------------------
hereby deleted in its entirety and replaced with the Schedule 2.2(a)(vi)
attached hereto as Attachment C.

                  5.4 Amendment to Schedule 2.2(a)(vii). Schedule 2.2(a)(vii) is
                      ---------------------------------
hereby deleted in its entirety and replaced with the Schedule 2.2(a)(vii)
attached hereto as Attachment D.

                  5.5 Amendment to Schedule 2.2(b)(i). Schedule 2.2(b)(i) is
                      -------------------------------
hereby deleted in its entirety and replaced with the Schedule 2.2(b)(i) attached
hereto as Attachment E.

                  5.6 Amendment to Schedule 2.3(a)(iv). Schedule 2.3(a)(iv) is
                      --------------------------------
hereby deleted in its entirety and replaced with the Schedule 2.3(a)(iv)
attached hereto as Attachment F.

                  5.7 Amendment to Schedule 5.5(a). Schedule 5.5(a) is hereby
                      ----------------------------
deleted in its entirety and replaced with the Schedule 5.5(a) attached hereto as
Attachment G.

                  5.8 Amendment to Schedule 5.5(b). Schedule 5.5(b) is hereby
                      ----------------------------
deleted in its entirety and replaced with the Schedule 5.5(b) attached hereto as
Attachment H.

                  5.9 Amendment to Schedule 5.10(c). Exhibit A to Schedule
                      -----------------------------
5.10(c) is hereby deleted in its entirety and replaced with the Exhibit A to
Schedule 5.10(c) attached hereto as Attachment I.

         6.     Amendments to the Exhibits.
                --------------------------

                6.1 Amendment to Exhibit C-4. Section 2.1(f) of Exhibit C-4,
                    ------------------------
the Morgantown Easement Agreement, is hereby deleted in its entirety and
replaced with the following:

                          "(f) An easement of Access to, and the right to use,
                  the parking lots, access roads, driveways and other such
                  facilities located upon the Generator's Real Property,
                  together with the right to use the railroad lines and railroad
                  spurs located upon the Generator's Real Property (such
                  railroad lines and railroad spurs, "Generator's Rail
                  Facilities") for the transportation of machinery and/or
                  similar uses; provided, however, that the easement of Access
                  to Generator's Rail Facilities shall require Generator's prior
                  consent, such consent not to be unreasonably withheld."

                                       3
<PAGE>

                6.2 Amendment to Exhibit E-1. The second sentence of Section
                    ------------------------
4.2.1(b) of Exhibit E-1, the Potomac River Interconnection Agreement, is hereby
deleted in its entirety and replaced with the following: "If applicable, the
Generator shall test the Station's black-start combustion-turbines annually to
confirm that the black-start combustion turbines will start without any external
power supply."

                6.3 Amendment to Exhibit E-3. Schedule C to Exhibit E-3, the
                    ------------------------
Dickerson Interconnection Agreement, is hereby deleted in its entirety and
replaced with the Schedule C attached hereto as Attachment J.

                6.4 Amendment to Exhibit E-4. Schedule C to Exhibit E-4, the
                    ------------------------
Chalk Point Interconnection Agreement, is hereby deleted in its entirety and
replaced with the Schedule C attached hereto as Attachment K.

         7. Governing Law. This Amendment is governed by, and shall be construed
            -------------
in accordance with, the laws of the District of Columbia without regard to
principles of conflicts of law.

         8. Modifications and Amendments. This Amendment shall not be modified
            ----------------------------
or amended except by a written instrument executed by both of the Parties.

         9. Entire Agreement; Severability. This Amendment and the Purchase
            ------------------------------
Agreement constitute the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof. In the event that any portion
of this Amendment or the Purchase Agreement shall be determined to be invalid or
unenforceable, such portion of this Amendment or Purchase Agreement shall be
severable from the other provisions of this Amendment or the Purchase Agreement
which provisions shall be valid, binding upon and enforceable against the
Parties.

         10. Effectiveness Purchase Agreement. This Amendment shall be of full
             --------------------------------
force and effect upon its execution and delivery by each of the Parties except
that the amendments to the Interconnection Agreements contemplated in Sections
6.2, 6.3 and 6.4 above, shall not be effective until they are filed by Pepco
with the Federal Energy Regulatory Commission pursuant to Section 205 of the
Federal Power Act and such filing shall occur within two Business Days of the
Closing Date. Except as amended by this Amendment, all other terms of the
Purchase Agreement shall continue in full force and effect and unchanged and are
hereby confirmed in all respects.

         11. Counterparts. This Amendment may be executed in two counterparts,
             ------------
each of which shall be deemed an original, but both of which together shall
constitute one and the same instrument.

                                       4
<PAGE>

or the Purchase Agreement shall be determined to be invalid or unenforceable,
such portion of this Amendment or Purchase Agreement shall be severable from the
other provisions of this Amendment or the Purchase Agreement which provisions
shall be valid, binding upon and enforceable against the Parties.

         10. Effectiveness Purchase Agreement. This Amendment shall be of full
             --------------------------------
force and effect upon its execution and delivery by each of the Parties except
that the amendments to the Interconnection Agreements contemplated in Sections
6.2, 6.3 and 6.4 above, shall not be effective until they are filed by Pepco
with the Federal Energy Regulatory Commission pursuant to Section 205 of the
Federal Power Act and such filing shall occur within two Business Days of the
Closing Date. Except as amended by this Amendment, all other terms of the
Purchase Agreement shall continue in full force and effect and unchanged and are
hereby confirmed in all respects.

         11. Counterparts. This Amendment may be executed in two counterparts,
             ------------
each of which shall be deemed an original, but both of which together shall
constitute one and the same instrument.

         IN WITNESS WHEREOF, Buyer and Seller have signed and delivered this
Amendment on the day and year set forth above.

SOUTHERN ENERGY, INC.                          POTOMAC ELECTRIC POWER COMPANY

By:                                            By: /s/ Mary Sharpe-Hayes
   ----------------------                         ------------------------------
   Name:                                          Name: Mary Sharpe-Hayes
   Title:                                         Title: Vice President

                                       5
<PAGE>

         IN WITNESS WHEREOF, Buyer and Seller have signed and delivered this
Amendment on the day and year set forth above.

SOUTHERN ENERGY, INC.                          POTOMAC ELECTRIC POWER COMPANY

By: /s/ Elizabeth B. Chandler                  By:
   ----------------------------                   ------------------------------
   Name: Elizabeth B. Chandler                    Name:
   Title: VP                                      Title:

                                       6

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