Document:

Exhibit 10.3.3

                             POWER PURCHASE CONTRACT

                                     BETWEEN

                       SOUTHERN CALIFORNIA EDISON COMPANY

                                       AND

                               ORMAT SYSTEMS INC.

                                TABLE OF CONTENTS
SECTION                          TITLE                                      PAGE

1                PROJECT SUMMARY                                              1

2                DEFINITIONS                                                  2

3                TERM                                                         8

4                GENERATING FACILITY                                          9

5                OPERATING OPTIONS                                           18

6                INTERCONNECTION FACILITIES                                  19

7                METERING                                                    20

8                POWER PURCHASE PROVISIONS                                   21

9                PAYMENT AND BILLING PROVISIONS                              42

10               TAXES                                                       44

11               TERMINATION                                                 45

12               SALE OF GENERATING FACILITY                                 45

13               ABANDONMENT OF PROJECT                                      46

14               LIABILITY                                                   47

15               INSURANCE                                                   50

16               UNCONTROLLABLE FORCES                                       52

17               NONDEDICATION OF FACILITIES                                 54

18               PRIORITY OF DOCUMENTS                                       54

19               NOTICES AND CORRESPONDENCE                                  54

20               PREVIOUS COMMUNICATIONS                                     55

                                      - i -

21              THIRD PARTY BENEFICIARIES                                    55

22              NONWAIVER                                                    55

23              DISPUTES                                                     56

24              SUCCESSORS AND ASSIGNS                                       57

25              EFFECT OF SECTION HEADINGS                                   58

26              TRANSMISSION                                                 58

27              AMENDMENT                                                    59

28              GOVERNING LAW                                                59

29              CONFIDENTIALITY                                              59

30              MULTIPLE ORIGINALS                                           60

                 SIGNATURES                                                  60

                 APPENDIX                                                   A-1

                 APPENDIX B                                                 B-1

                 APPENDIX C                                                 C-1

                                     - ii -

I.  PROJECT SUMMARY
    ---------------

              This Contract is entered into between Southern California Edison
Company ("Edison") and Ormat Systems Inc., a Massachusetts Corporation
("Seller"). Seller is willing to construct, own, and operate a Qualifying
Facility and sell electric power to Edison and Edison is willing to purchase
electric power delivered by Seller to Edison at the Point of Interconnection
pursuant to the terms and conditions set forth as follows:

              1.1  All Notices shall be sent to Seller at the following address:

              Ormat Systems Inc.
              98 South Street
              Hopkinton, MA 01748
              Attn:  President

              1.2  Seller's Generating Facility:
              a.  Nameplate Rating:  18,500 kw.
              b.  Location:  East Mesa, Imperial County, California
              c.  Type (Check One):
                    Cogeneration Facility
                X   Small Power Production Facility

              1.3  Contract Capacity:  15,000 kW

              1.3.1  Estimated as-available capacity:  0 kW.

              1.4  Expected annual production:  120,000,000 kWh.

              1.5  Expected Date of Firm Operation:  September 1, 1985

              1.6  Contract Term:  30 years

              1.7  Operating Options pursuant to Section 5:  (Check One)

              X  Operating Option I. Excess Generator output dedicated to
Edison. No electric service or standby service required from Edison.

                 Operating Option II. Entire Generator output dedicated to
Edison with separate electric service required from Edison.

              1.8 The Capacity Payment option selected by Seller pursuant to
Section 8.1 shall be: (Check One)

                 Option A As-available capacity based upon:

                 Standard Offer No. 1 Capacity Payment Schedule, or

                 Forecast of Annual As-Available Capacity Payment Schedule

              X  Option B - Firm Capacity

              X  Standard Offer No. 2 Capacity Payment Schedule in effect at
time of Contract execution

                 Standard Offer No. 2 Capacity Payment Schedule in effect at
time of Firm Operation

              a. The Contract Capacity Price:  $147 kW-yr.  (Firm Capacity)

             1.9 The Energy Payment Option selected by Seller pursuant to
Section 8.2 shall be: (Check One)

              X  Option I - Forecast of Annual Marginal Cost of Energy in effect
at date of execution of this Contract.  (Appendix B)

                  Option 2 - Levelized Forecast of Marginal Cost of Energy in
effect at date of execution of this Contract.  (Appendix C)

                                       2

              For the energy payment refund pursuant to Section 8.5 under Option
2, Edison's Incremental Cost of Capital is 15 %.

              Seller may change once between Options 1 and 2, provided Seller
delivers written notice of such change at least 90 days prior to the date of
Firm Operation.

              For Option 1 or 2, Seller elects to receive the following
percentages in 20% increments, the total of which shall equal 100%:

              100 percent of Forecast of Annual Marginal Cost of Energy, and

              0 percent of Edison's published avoided cost of energy as updated
periodically and accepted by the Commission.

                          GENERAL TERMS AND CONDITIONS

              2.   DEFINITIONS

              When used with initial capitalizations, whether in the singular or
in the plural, the following terms shall have the following meanings:

              2.1 Adjusted capacity Price: The $/kW-yr capacity purchase price
based on the Capacity Payment Schedule in effect at the time of Contract
execution for the time period beginning on the date of Firm Operation for the
first generating unit and ending on the date of termination or reduction of
Contract Capacity under Capacity Payment Option B.

              2.2 Appendix A: Capacity Payment Schedule - Forecast of Annual As-
Available Capacity

                                       3

              2.3 Appendix B: Energy Payment Schedule - Forecast of Annual
Marginal Cost of Energy

              2.4 Appendix C: Energy Payment Schedule - Levelized Forecast of
Marginal Cost of Energy

              2.5 Capacity Payment Schedule(s): Published capacity payment
schedule(s) as authorized by the commission and in effect at the time of
execution of this Contract for as-available or firm capacity.

              2.6 Commission: The Public Utilities Commission of the State of
California.

              2.7 Contract: This document and Appendices, as amended from time
to time.

              2.8 Contract Capacity: The electric power producing capability of
the Generating Facility which is committed to Edison.

              2.9 Contract Capacity Price: The capacity purchase price from the
Capacity Payment Schedule approved by the commission and in effect on the date
of execution of this Contract for Capacity Payment Option B.

              2.10 Contract Term: Period in years commencing with date of Firm
Operation during which Edison shall purchase electric power from Seller.

              2.11 Current Capacity Price: The $/kw-yr capacity price provided
in the Capacity Payment Schedule determined by the year of termination or
reduction of Contract Capacity, and the number of years from such termination or
reduction to the expiration of the Contract Term for Capacity Payment Option B.

                                       4

              2.12 Edison:  The Southern California Edison Company.

              2.13 Edison Electric System Integrity: The state of operation of
Edison's electric system in a manner which is deemed to minimize the risk of
injury to persons and/or property and enables Edison to provide adequate and
reliable electric service to its customers.

              2.14 Emergency: A condition or situation which in Edison's sole
judgment affects Edison Electric System Integrity.

              2.15 Energy: Kilowatthours generated by the Generating Facility
which are purchased by Edison at the Point of Interconnection.

              2.16 Firm Operation: The date agreed on by the Parties on which
each generating unit of the Generating Facility is determined to be a reliable
source of generation and on which such unit can be reasonably expected to
operate continuously at its effective rating (expressed in kW).

              2.17 First Period: The period of the Contract Term specified in
Section 3.1.

              2.18 Forced Outage: Any outage other than a scheduled outage of
the Generating Facility that fully or partially curtails its electrical output.

              2.19 Generating Facility: All of Seller's generators, together
with all protective and other associated equipment and improvements, necessary
to produce electrical power at Seller's Facility excluding associated land, land
rights, and interests in land.

                                       5

              2.20 Generator: The generator(s) and associated prime mover(s),
which are a part of the Generating Facility.

              2.21 Interconnection Facilities: The electrical interconnection
facilities furnished, at no cost to Edison, by Seller, or by the Interconnecting
Utility on the Seller's behalf, which are appurtenant to, and/or incidental to,
the Project. The Interconnection Facilities shall include, but are not Limited
to, transmission lines and/or distribution lines between the Project and
transmission lines and/or distribution lines of the Interconnecting Utility,
relays, power-circuit breakers, metering devices, telemetering devices, and
other control and protective devices specified by the Interconnecting Utility as
necessary for operation of the Project in parallel with the Interconnecting
Utility's electric system.

              2.22 Interconnecting Utility: The electric utility, or any other
utility which takes delivery of electric energy generated by the Generating
Facility.

              2.23 Operate: To provide the engineering, purchasing, repair,
supervision, training, inspection, testing, protection, operation, use,
management, replacement, retirement, reconstruction, and maintenance of and for
the Generating Facility in accordance with applicable California utility
standards and good engineering practices.

              2.24 Operating Representatives: Individual(s) appointed by each
Party for the purpose of securing effective cooperation and interchange of
information between the Parties in connection with administration and technical
matters related to this Contract.

              2.25 Parties: Edison and Seller.

              2.26 Party: Edison or Seller.

                                       6

              2.27 Peak Months: Those months which the Edison annual system peak
demand could occur. Currently, but subject to change with notice, the peak
months for the Edison system are June, July, August, and September.

              2.28 Point of Interconnection: The point where the electrical
energy generated by the Seller, at the Project, is delivered to the Edison
electric system.

              2.29 Project: The Generating Facility and Interconnection
Facilities required to permit the Generator to deliver electric energy and make
capacity available to Interconnecting Utility.

              2.30 Qualifying Facility: Cogeneration or Small Power Production
Facility which meets the criteria as defined in Title 18, Code of Federal
Regulations, Section 292.201 through 292.207.

              2.31 Renewable Resources: Wind parks, small hydroelectric, solar,
and geothermal resources which produce electric power.

              2.32 Second Period: The period of the Contract Term specified in
Section 3.2.

              2.33 Seller. The Party identified in Section 1.0.

              2.34 Seller's Facility: The premises and equipment of Seller
located as specified in Section 1.2.

              2.35 Small Power Production Facility: The facilities and equipment
which use biomass, waste, or Renewable Resources, including wind, solar,
geothermal, and

                                       7

water, to produce electrical energy as defined in Title 18, Code of Federal
Regulations, Section 292.201 through 292.207.

              2.36 Summer Period: Defined in Edison's Tariff Schedule No. TOU-8
as now in effect or as may hereafter be authorized by the Commission.

              2.37 Tariff Schedule No. TOU-8: Edison's time-of-use energy tariff
for electric service exceeding 500 kW, as now in effect or as may hereafter be
authorized by the Commission.

              2.38 Uncontrollable Forces: Any occurrence beyond the control of a
Party which causes that Party to be unable to perform its obligations hereunder
and which a Party has been unable to overcome by the exercise of due diligence,
including but not limited to flood, drought, earthquake, storm, fire,
pestilence, lightning and other natural catastrophes, epidemic, war, riot, civil
disturbance or disobedience, strike, labor dispute, action or inaction of
government or other proper authority, which may conflict with the terms of this
Contract, or failure, threat of failure or sabotage of facilities which have
been maintained in accordance with good engineering and operating practices in
California. The failure of the Interconnecting Utility to deliver electrical
energy to the Point of Interconnection shall be an Uncontrollable Force only if
such failure is beyond the control of the Interconnecting Utility.

              2.39 Winter Period: Defined in Edison's Tariff Schedule No. TOU-8
as now in effect or as may hereafter be authorized by the commission.

                                       8

              3.  TERM

              This Contract shall be effective upon execution by the Parties and
shall remain effective until either Party gives 90 days prior written notice of
termination to the other Party, except that such notice of termination shall not
be effective to terminate this Contract prior to expiration of the Contract Term
specified in Section 1.6.

              3.1 The First Period of the Contract Term shall commence upon date
of Firm Operation but not later than 5 years from the date of execution of this
Contract.
              a. If the Contract Term specified in Section 1.6 is 15 years, the
First Period of the Contract Term shall be for 5 years.

              b. If the Contract Term specified in Section 1.6 is 20, 25, or 30
years, the First Period of the Contract term shall be for 10 years.

              3.2 The Second Period of the Contract Term shall commence upon
expiration of the First Period and shall continue for the remainder of the
Contract Term.

              4.  GENERATING FACILITY

              4.1 Ownership

              The Generating Facility shall be owned by Seller.

              4.2 Design

              4.2.1 Seller, at no cost to Edison, shall:

              a. Design the Generating Facility.

              b. Acquire all permits and other approvals necessary for the
construction, operation, and maintenance of the Generating Facility.

                                       9

              c. Complete all environmental impact studies necessary for the
construction, operation, and maintenance of the Generating Facility.

              4.2.2 Edison shall have the right to review the design of the
Generating Facility's electrical system and the Seller's Interconnection
Facilities. Edison shall have the right to request modifications to the design
of the Generating Facility's electrical system and the Seller's Interconnection
Facilities. Such modifications shall be required if necessary to maintain Edison
Electric System Integrity. If Seller does not agree to such modifications,
resolution of the difference between the Parties shall be made pursuant to
Section 23.

              4.3 Construction

              Edison shall have the right to review, consult with, and make
recommendations regarding Seller's construction schedule and to monitor the
construction and start-up of the Project. Seller shall notify Edison, as far in
advance of Firm Operation as reasonably possible, of changes in Seller's
Construction Schedule which may affect the date of Firm Operation.

              4.4 Operation

              4.4.1 Edison shall have the right to monitor operation of the
Project and may require changes in Seller's method of operation if such changes
are necessary, in Edison's sole judgment, to maintain Edison Electric System
Integrity.

                                       10

              4.4.2 Seller shall notify, in writing, Edison's Operating
Representative at least 14 days prior to the initial delivery of electrical
energy from the Project to the Point of Interconnection.

              4.4.3 Edison shall have the right to require Seller to curtail or
reduce the delivery of electrical energy from the Project to the Edison electric
system whenever Edison determines, in its sole judgement, that such curtailment
or reduction is necessary to facilitate maintenance of Edison's facilities, or
to maintain Edison Electric System Integrity. If Edison requires Seller to
curtail or reduce the delivery of electrical energy from the Project to the
Edison electric system pursuant to this Section 4.4.3, Seller shall have the
right to continue to serve its total electrical requirements. Each Party shall
endeavor to correct, within a reasonable period, the condition on its system
which necessitates the curtailment or the reduction of delivery of electrical
energy from the Project. The duration of the curtailment or the reduction shall
be limited to the period of time such a condition exists.

              4.4.4 Each Party shall keep the other Party's Operating
Representative informed as to the operating schedule of their respective
facilities affecting each other's operation hereunder, including any reduction
in Contract Capacity availability. In addition, Seller shall provide Edison with
reasonable advance notice regarding its scheduled outages including any
reduction in Contract Capacity availability. Reasonable advance notice is as
follows:

                                       11

               SCHEDULED OUTAGE                   ADVANCE NOTICE
              EXPECTED DURATION                     TO EDISON

       Less than one day                             24 Hours
       One day or more (except major overhauls)        1 Week
       Major overhaul                                6 Months

              4.4.5 Notification by each Party's Operating Representative of
outage date and duration should be directed to the other Party's operating
Representative by telephone.

              4.4.6   Seller shall not schedule major overhauls during Peak
Months.

              4.4.7 Seller shall maintain an operating log at Seller's Facility
with records of: real and reactive power production; changes in operating
status, outages, Protective Apparatus operations; and any unusual conditions
found during inspections. Changes in setting shall also be logged for Generators
which are "block loaded" to a specific kW capacity. In addition, Seller shall
maintain records applicable to the Generating Facility, including the electrical
characteristics of the Generator and settings, adjustments of the Generator
control equipment, and well-field information. Information maintained pursuant
to this Section 4.4.7 shall be provided to Edison, within 30 days of Edison's
request.

              4.4.8 At Edison's request, Seller shall make all reasonable effort
to deliver power at an average rate of delivery at least equal to the Contract
Capacity during periods of Emergency. In the event that the Seller has
previously scheduled an outage coincident

                                       12

with an Emergency, Seller shall make all reasonable efforts to reschedule the
outage. The notification periods listed in Section 4.4.4 shall be waived by
Edison if Seller reschedules the outage.

              4.4.9 Seller shall demonstrate the ability to provide Edison the
specified Contract Capacity within 30 days of the date of Firm Operation.
Thereafter, at least once per year at Edison's request, Seller shall demonstrate
the ability to provide Contract Capacity for a reasonable period of time as
required by Edison. Seller's demonstration of Contract Capacity shall be at
Seller's expense and conducted at a time and pursuant to procedures mutually
agreed upon by the Parties. If Seller fails to demonstrate the ability to
provide the Contract Capacity, the Contract Capacity shall be reduced by
agreement of the Parties pursuant to Section 8.1.2.5.

              4.4.10 The Seller warrants that the Generating Facility meets the
requirements of a Qualifying Facility as of the effective date of this Contract
and continuing through the Contract Term.

              4.4.11 The Seller warrants that the Generating Facility shall, at
all times, conform to all applicable laws and regulations. Seller shall obtain
and maintain any governmental authorizations and permits for the continued
operation of the Generating Facility. If, at any time, Seller does not hold such
authorizations and permits, Seller agrees to reimburse Edison for any loss which
Edison incurs as a result of the Seller's failure to maintain governmental
authorization and permits.

                                       13

              4.4.12 In the event electrical energy from the Project is
curtailed or reduced pursuant to Sections 4.4.3, 16 or 8.4, the Seller, in its
sole discretion, may elect to (i) sell said electrical energy to a third party
or (ii) deliver said electrical energy to a third party for future delivery to
Edison at times and at amounts agreeable to Edison. The Seller shall be
responsible for making all such arrangements. The provisions in this Section
4.4.12 shall only apply for the duration of the curtailment or reduction.

              4.4.13 Seller shall maintain operating communications with the
Edison switching center designated by the Edison Operating Representative. The
operating communications shall include, but not be limited to, system
paralleling or separation, scheduled and unscheduled shutdowns, equipment
clearances, levels of operating voltage or power factors, and daily capacity and
generation reports.

              4.5 Maintenance

              4.5.1 Seller shall maintain the Generating Facility in accordance
with applicable California utility industry standards and good engineering and
operating practices. Edison shall have the right to monitor such maintenance of
the Generating Facility. Seller shall maintain and deliver a maintenance record
of the Generating Facility to Edison's Operating Representatives upon request.

              4.5.2 Seller shall make a reasonable effort to schedule routine
maintenance during Off-Peak Months and expected minimal generation periods for
renewable resources. Outages for scheduled maintenance shall not exceed a total
of 30 peak hours for the Peak Months.

                                       14

              4.5.3   The allowance for scheduled maintenance is as follows:

              a. Outage periods for scheduled maintenance shall not exceed 840
hours (35 days) in any 12-month period. This allowance may be used in increments
of an hour or longer on a consecutive or nonconsecutive basis.

              b. Seller may accumulate unused maintenance hours on a
year-to-year basis up to a maximum of 1,080 hours (45 days). This accrued time
must be used consecutively and only for major overhauls.

              4.6 Any review by Edison of the design, construction, operation,
or maintenance of the Project is solely for the information of Edison. By making
such review, Edison makes no representation as to the economic and technical
feasibility, operational capability, or reliability of the Project. Seller shall
in no way represent to any third party that any such review by Edison of the
Project, including, but not limited to, any review of the design, construction,
operation, or maintenance of the Project by Edison, is a representation by
Edison as to the economic and technical feasibility, operational capability, or
reliability of said facilities. Seller is solely responsible for economic and
technical feasibility, operational capability, and reliability thereof.

              4.7 Edison shall have access to the Seller's geothermal field and
power-generating facilities for the purpose of gathering technical information
and records. The technical information and records shall include, but not be
limited to, drilling data, well-testing data, well-production data and design,
power plant performance data and design,

                                       15

environmental data, brine handling design, and operation and maintenance data.
Edison agrees not to interfere with Seller's rules and operating regulations.

              5. OPERATING OPTIONS

              5.1 Seller shall elect in Section 1.7 to Operate its Generating
Facility pursuant to one of the following options:

              a. Operating Option I: Seller dedicates the excess Generator
output to Edison with no electrical service or standby service required from
Edison.

              b. Operating Option II: Seller dedicates the entire Generator
output to Edison with electrical service required from Edison.

              5.2 After expiration of the First Period of the Contract Term,
Seller may change the Operating Option, but not more than once per year upon at
least 90 days prior written notice to Edison. A reduction in Contract Capacity
as a result of a change in operating options shall be subject to Section
8.1.2.5. Edison shall not be required to remove or reserve capacity of
Interconnection Facilities made idle by a change in operating options. Edison
may dedicate any such idle Interconnection Facilities at any time to serve other
customers or to interconnect with other electric power sources. Edison shall
process requests for changes of operating option in the chronological order
received.

                                       16

              6. INTERCONNECTION FACILITIES

              6.1 Seller shall design, engineer, procure, construct, and test
the Interconnection Facilities in accordance with applicable California utility
standards and good engineering practices and the rules and regulations of the
Interconnecting Utility.

              6.2 The design, installation, operation, maintenance, and
modifications of the Interconnection Facilities shall be at Seller's expense.

              6.3 Seller, at no cost to Edison, shall acquire all permits and
approvals and complete all environmental impact studies necessary for the
design, installation, operation, and maintenance of the Interconnection
Facilities.

              7. METERING

              7.1 All meters and equipment used for the measurement of
electrical power for determining Edison's payments to Seller pursuant to this
Contract shall be provided, owned, and maintained by Edison and/or the
Interconnecting Utility at Seller's expense.

              7.2 If Seller's Generating Facility is rated at a Capacity of 500
kW or greater, then Edison, at its option, may install at Seller's expense,
generation metering and/or telemetering equipment.

              7.3 Edison's or the Interconnecting Utility's meters shall be
sealed and the seals shall be broken only when the meters are to be inspected,
tested, or adjusted by Edison or Interconnecting Utility. Seller shall be given
reasonable notice of testing and have the right to have its Operating
Representative present on such occasions.

                                       17

              7.4 Edison's or Interconnecting Utility's meters installed
pursuant to this Contract shall be tested by Edison or Interconnecting Utility,
at Edison's or Interconnecting Utility's expense, at least once each year and at
any reasonable time upon request by either Party, at the requesting Party's
expense. If Seller makes such request, Seller shall reimburse said expense to
Edison or Interconnecting Utility within thirty days after presentation of a
bill therefor.

              7.5 Metering equipment found to be inaccurate shall be repaired,
adjusted, or replaced by Edison or Interconnecting Utility such that the
metering accuracy of said equipment shall be within plus or minus two percent.
If metering equipment inaccuracy exceeds plus or minus two percent, the correct
amount of Energy and capacity delivered during the period of said inaccuracy
shall be estimated by Edison and agreed upon by the Parties.

              8. POWER PURCHASE PROVISIONS

              Prior to the date of Firm operation, Seller shall be paid for
Energy only pursuant to Edison's published avoided cost of energy based on
Edison's full avoided operating cost as periodically updated and accepted by the
Commission. If at any time electrical energy can be delivered to Edison and
Seller is contesting the claimed jurisdiction of any entity which has not issued
a license or other approval for the Project, Seller, in its sole discretion and
risk, may deliver electrical energy to Edison and for any electrical energy
purchased by Edison Seller shall receive payment from Edison for (i) Energy
pursuant to this Section, and (ii) as-available capacity based on a capacity
price

                                       18

from the Standard Offer No. 1 Capacity Payment Schedule as approved by the
Commission. Unless and until all required licenses and approvals have been
obtained, Seller may discontinue deliveries at any time.

              8.1 Capacity Payments

              Seller shall sell to Edison and Edison shall purchase from Seller
capacity pursuant to the Capacity Payment option selected by Seller in Section
1.8. The Capacity Payment Schedules will be based on Edison's full avoided
operating costs as approved by the Commission throughout the life of this
Contract.

              8.1.1 Capacity Payment Option A -- As-Available Capacity.

              If Seller selects capacity Payment Option A, Seller shall be paid
a Monthly Capacity Payment calculated pursuant to the following formula:

              Monthly Capacity   Payment = (A x D)+(B x D)+(C x D)

              Where A = kWh purchased by Edison during on-peak periods defined
in Edison's Tariff Schedule No. TOU-8.

              B = kWh purchased by Edison during mid-peak periods defined in
Edison's Tariff Schedule No. TOU-8.

              C = kWh purchased by Edison during off-peak periods defined in
Edison's Tariff Schedule No. TOU-8.

              D = The appropriate time differentiated capacity price from either
the Standard Offer No. 1 Capacity Payment Schedule or Forecast of Annual
As-Available Capacity Payment Schedule as specified by Seller in Section 1.8.

                                       19

              8.1.1.1 If Seller specifies the Standard Offer No. 1 Capacity
Payment Schedule in Section 1.8, then the formula set forth in Section 8.1.1
shall be computed with D equal to the appropriate time differentiated capacity
price from the Standard Offer No. 1 Capacity Payment Schedule for the Contract
Term.

              8.1.1.2 If Seller specifies the Forecast of Annual As-Available
Capacity Payment Schedule in Section 1.8, the formula set forth in Section 8.1.1
shall be computed as follows:

              a. During the First Period of the Contract Term, D shall equal the
appropriate time differentiated capacity price from the Forecast of Annual
As-Available Capacity Payment Schedule.

              b. During the Second Period of the Contract Term, the formula
shall be computed with D equal to the appropriate time differentiated capacity
price from Standard Offer No. 1 Capacity Payment Schedule, but not less than the
greater of (i) the appropriate time differentiated capacity price from the
Forecast of Annual As-Available Capacity Payment Schedule for the last year of
the First Period, or (ii) the appropriate time differentiated capacity price
from the Standard Offer No. 1 Capacity Payment Schedule for the first year of
the Second Period.

              8.1.2 Capacity Payment Option B--Firm Capacity Purchase

              If Seller selects Capacity Payment Option B, Seller shall provide
to Edison for the Contract Term the Contract Capacity specified in Section 1.3,
or as adjusted pursuant to Section 8.1.2.6, and Seller shall be paid as follows;

                                       20

              8.1.2.1 If Seller meets the performance requirements set forth in
Section 8.1.2.2, Seller shall be paid a Monthly Capacity Payment, beginning from
the date of Firm Operation equal to the sum of the on-peak, mid-peak, and
off-peak Capacity Period Payments. Each capacity period payment is calculated
pursuant to the following formula:

              Monthly Capacity Period = A x B x C x D

              Payment

              Where A = Contract Capacity Price specified in Section 1.8 based
on the Standard Offer No. 2 Capacity Payment Schedule as approved by the
Commission and in effect on the date of the execution of this Agreement.

               B = Conversion factors to convert annual capacity prices to
monthly payments by time of delivery as specified in Standard Offer No. 2
Capacity Payment Schedule and subject to periodic modifications as approved by
the Commission.

               C = Contract Capacity specified in Section 1.3.

               D =   Period Performance Factor, not to exceed 1.0, calculated as
follows:

              Period Performance Factor = [Period kWh Purchased by Edison
(Limited by the Level of Contract Capacity)]

              [0.8 x Contract Capacity x (Period Hours minus Maintenance Hours
Allowed in Section 4.5.)]

              8.1.2.2   Performance Requirements

              To receive the Monthly Capacity Payment in Section 8.1.2.1, Seller
shall provide the Contract Capacity in each Peak Month for all on-peak hours as
such peak hours are defined in Edison's Tariff Schedule No. TOU-8 on file with
the Commission,

                                       21

except that Seller is entitled to a 20% allowance for Forced
Outages for each Peak Month. Seller shall not be subject to such performance
requirements for the remaining hours of the year.

              a. If Seller fails to meet the requirements specified in Section
8.1.2.2, Seller, in Edison's sole discretion, may be placed on probation for a
period not to exceed 15 months. If Seller fails to meet the requirements
specified in Section 8.1.2.2 during the probationary period, Edison may derate
the Contract Capacity to the greater of the capacity actually delivered during
the probationary period, or the capacity at which Seller can reasonably meet
such requirements. A reduction in Contract Capacity as a result of this Section
8.1.2.2 shall be subject to Section 8.1.2.5.

              b. If Seller fails to meet the requirements set forth in this
Section 8.1.2.2 due to a Forced Outage on the Edison system, or a request to
reduce or curtail delivery under Section 8.4, Edison shall continue Monthly
Capacity Payments pursuant to Capacity Payment Option B. The Contract Capacity
curtailed shall be treated the same as scheduled maintenance outages in the
calculation of the Monthly Capacity Payment.

              8.1.2.3 If Seller is unable to provide Contract Capacity due to
Uncontrollable Forces, Edison shall continue Monthly Capacity Payments pursuant
to Capacity Payment Option B for 90 days from the occurrence of the
Uncontrollable Force. Monthly Capacity Payments payable during a period of
interruption or reduction by reason of an Uncontrollable Force shall be treated
the same as scheduled maintenance outages.

                                       22

              8.1.2.4   Capacity Bonus Payment

              For Capacity Payment Option B, Seller may receive a Capacity Bonus
Payment as follows:

              a.   Bonus During Peak Months

              For a Peak Month, Seller shall receive a Capacity Bonus Payment if
(i) the requirements set forth in Section 8.1.2.2 have been met, and (ii) the
on-peak capacity factor exceeds 85%.

              b.   Bonus During Non-Peak Months

              For a non-peak month, Seller shall receive a Capacity Bonus
Payment if (i) the requirements set forth in Section 8.1.2.2 have been met, (ii)
the on-peak capacity factor for each Peak Month during the year was at least
85%, and (iii) the on-peak capacity factor for the non-peak month exceeds 85%.

              c. For any eligible month, the Capacity Bonus Payment shall be
              calculated as follows:

              Capacity Bonus Payment = A x B x C x D
              Where A = (1.2 x On-Peak Capacity Factor)-1.02

                                       23

              Where the On-Peak Capacity Factor, not to exceed 1.0, is
calculated as follows:

              [Period kWh Purchased by Edison (Limited by the Level of Contract
              Capacity)]

              On-Peak Capacity Factor  =  ((Contract Capacity) x (Period Hours
minus Maintenance Hours Allowed in Section 4.5))

              B = Contract Capacity Price specified in Section 1.8 for Capacity
              Payment Option B

              C = 1/12

              D = Contract Capacity specified in section 1.3

              d. When Seller is entitled to receive a Capacity Bonus Payment,
the Monthly Capacity Payment shall be the sum of the Monthly Capacity Payment
pursuant to Section 8.1.2.1 and the Monthly Capacity Bonus Payment pursuant to
this Section 8.1.2.4.

              8.1.2.5   Capacity Reduction

              a. Seller may reduce the Contract Capacity specified in Section
1.3, provided that Seller gives Edison prior written notice for a period
determined by the amount of Contract Capacity reduced as follows:

  Amount of Contract Capacity
            Reduced                  Length of Notice Required
------------------------------     ----------------------------
      25,000 kW or under                    12 months
      25,001 - 50,000 kW                    36 months
      50,001 - 100,000 kW                   48 months
        over 100,000 kW                     60 months

                                       24

              b. Seller shall refund to Edison with interest at the current
published Federal Reserve Board three months prime commercial paper rate, an
amount equal to the difference between (i) the accumulated Monthly Capacity
Payments paid by Edison pursuant to Capacity Payment Option B up to the time the
reduction notice is received by Edison, and (ii) the total capacity payments
which Edison would have paid if based on the Adjusted Capacity Price.

              c. From the date the reduction notice is received to the date of
actual capacity reduction, Edison shall make capacity payments based on the
Adjusted Capacity Price for the amount of Contract Capacity being reduced.

              d. Seller may reduce Contract Capacity without the notice
prescribed in Section 8.1.2.5(a), provided that Seller shall refund to Edison
the amount specified in Section 8.1.2.5(b) and an amount equal to: (i) the
amount of Contract Capacity being reduced, times (ii) the difference between the
Current Capacity Price and the Contract Capacity Price, times (iii) the number
of years and fractions thereof (not less than one year) by which the Seller has
been deficient in giving the prescribed notice. If the Current Capacity Price is
less than the Contract Capacity Price, only payment under Section 8.1.2.5(b)
shall be due to Edison.

              8.1.2.6 The Parties may agree in writing at any time to adjust the
Contract Capacity. Seller may reduce the Contract Capacity pursuant to Section
8.1.2.5. Seller may increase the Contract Capacity with Edison's approval and
thereafter receive

                                       25

payment for the increased capacity in accordance with the Contract capacity
Price for the Capacity Payment Option selected by Seller for the remaining
Contract Term.

              8.1.2.7 For Capacity Payment Option B, Seller shall be paid for
capacity in excess of Contract Capacity based on the as-available capacity price
in Standard Offer No. 1 Capacity Payment Schedule, as updated and approved by
the Commission.

              8.2   Energy Payments - First Period

              During the First Period of the Contract Term, Seller shall be paid
a Monthly Energy Payment for the electrical energy delivered by the Seller and
purchased by Edison at the Point of Interconnection pursuant to the Energy
Payment Option selected by the Seller in Section 1.9, as follows.

              8.2.1   Energy Payment Option 1 -- Forecast of Annual Marginal
Cost of Energy.

              If Seller selects Energy Payment Option 1, then during the First
Period of the Contract Term, Seller shall be paid a Monthly Energy Payment for
electrical energy delivered by Seller and purchased by Edison at the Point of
Interconnection during each month in the First Period of the Contract Term
pursuant to the following formula:

              Monthly Energy Payment = [(A x D) + (B x D) + (C x D)] x E

              Where A =  kWh purchased by Edison during on-peak periods defined
in Edison's Tariff Schedule No. TOU-8.

              B = kWh purchased by Edison during mid-peak periods defined in
              Edison's Tariff Schedule No. TOU-8.

                                       26

              C = kWh purchased by Edison during off-peak periods defined in
Edison's Tariff Schedule No. TOU-8.

              D =  The sum of:

              (i) the appropriate time differentiated energy price from the
Forecast of Annual Marginal Cost of Energy, multiplied by the decimal equivalent
of the percentage of the forecast specified in Section 1.9, and (ii) the
appropriate time differentiated energy price from Edison's published avoided
cost of energy multiplied by the decimal equivalent of the percentage of the
published energy price specified in Section 1.9.

              E   Energy Loss Adjustment Factor For Remote Generating Sites*

              8.2.2 Energy Payment Option 2 -- Levelized Forecast of Marginal
Cost of Energy. If Seller selects Energy Payment Option 2, then during the First
Period of the Contract Term, Seller shall be paid a Monthly Energy Payment for
electrical energy delivered by Seller and purchased by Edison each month during
the First Period of the Contract Term pursuant to the following formula:

              Monthly Energy Payment = [(A x D) + (B x D) + (C x D)) x E

              Where A = kWh purchased by Edison during on-peak periods defined
in Edison's Tariff schedule No. TOU-8.

----------------------
* The Energy Loss Adjustment Factor For Remote Generating Sites shall be 1.0,
  subject to adjustment by Commission orders and rulings.

                                       27

              B =   kWh purchased by Edison during mid-peak periods defined in
Edison's Tariff Schedule No. TOU-8.

              C =  kWh purchased by Edison during off-peak periods defined in
Edison's Tariff Schedule No. TOU-8.

              D =  The sum of:

              (i) the appropriate time differentiated energy price from the
Levelized Forecast of Marginal Cost of Energy, for the First Period of the
Contract Term multiplied by the decimal equivalent of the percentage of the
levelized forecast specified in Section 1.9, and (ii) the appropriate time
differentiated energy price from Edison's published avoided cost of energy
multiplied by the decimal equivalent of the percentage of the published energy
price specified in section 1.9.

              E =  Energy Loss Adjustment Factor For Remote Generating Sites*

              8.2.2.1   Performance Requirement for Energy Payment Option 2

              During the First Period when the annual forecast referred to in
Section 8.2.1 is greater than the levelized forecast referred to in Section
8.2.2, Seller shall deliver to Edison at least 70 percent of the average annual
kWh delivered to Edison during those previous periods when the levelized
forecast referred to in Section 8.2.2 is greater than

----------------------
* The Energy Loss Adjustment Factor For Remote Generating Sites shall be 1.0,
  subject to adjustment by Commission orders and rulings.

                                       28

the annual forecast referred to in Section 8.2.1. If Seller does not meet the
performance requirements of this Section 8.2.2.1, Seller shall be subject to
Section 8.5.

              8.3 Energy Payment - Second Period

              During the Second Period of the Contract Term, Seller shall be
paid a Monthly Energy Payment for electrical energy delivered by Seller and
purchased by Edison at the Point of Interconnection at a rate equal to 100% of
Edison's published avoided cost of energy as updated periodically and accepted
by the Commission, pursuant to the following formula:

              Monthly Energy Payment  =  kWh purchased by Edison for each
on-peak, mid-peak, and off-peak time period defined in Edison's Tariff Schedule
No. TOU-8
              x Edison's published avoided cost of energy by time of delivery
              for each time period

              x Energy Loss Adjustment Factor for Remote Generating Sites*

              8.4 Edison shall not be obligated to accept or pay for electrical
energy generated by the Generating Facility, and may request Seller whose
Generating Facility is one (1) MW or greater to discontinue or reduce delivery
of electric energy, for not more than 300 hours annually during off-peak hours
when (i) purchases would result in costs

----------------------
* The Energy Loss Adjustment Factor For Remote Generating Sites shall be 1.0,
  subject to adjustment by Commission orders and rulings.

                                       29

greater than those which Edison would incur if it did not purchase
electrical energy from Seller but instead utilized an equivalent amount of
electrical energy generated from another Edison source, or (ii) the Edison
Electric System demand would require that Edison hydro-energy be spilled to
reduce generation.

              8.5   Energy Payment Refund

              If Seller elects Energy Payment Option 2, Seller shall be subject
              to the following:

              8.5.1 If Seller fails to perform the Contract obligations for any
reason during the First Period of the Contract Term, or fails to meet the
performance requirements set forth in section 8.2.2.1, and at the time of such
failure to perform, the net present value of the cumulative Energy payments
received by Seller pursuant to Energy Payment Option 2 exceeds the net present
value of what Seller would have been paid pursuant to Energy Payment Option 1,
Seller shall make an energy payment refund equal to the difference in such net
present values in the year in which the refund is due. The present value
calculation shall be based upon the rate of Edison's incremental cost of capital
specified in Section 1.9.

              8.5.2 Not less than 90 days prior to the date Energy is first
delivered to the Point of Interconnection, Seller shall provide and maintain a
performance bond, surety bond, performance insurance, corporate guarantee, or
bank letter of credit, satisfactory to Edison, which shall insure payment to
Edison of the Energy Payment Refund at any time during the First Period. Edison
may, in its sole discretion, accept another form of

                                       30

security except that in such instance a 1-1/2 percent reduction shall then apply
to the levelized forecast referred to in Section 8.2.2 in computing payments for
Energy. Edison shall be provided with certificates evidencing Seller's
compliance with the security requirements in this Section which shall also
include the requirement that Edison be given 90 days prior written notice of the
expiration of such security.

              8.5.3 If Seller fails to provide replacement security not less
than 60 days prior to the date of expiration of existing security, the Energy
Payment Refund provided in Section 8.5 shall be payable forthwith. Thereafter,
payments for Energy shall be 100 percent of the Monthly Energy Payment provided
in Section 8.2.1.

              8.5.4 If Edison at any time determines the security to be
otherwise inadequate, and so notifies Seller, payments thereafter for Energy
shall be 100 percent of the Monthly Energy Payment provided in Section 8.2.1. If
within 30 days of the date Edison gives notice of such inadequacies, Seller
satisfies Edison's security requirements, Energy Payment Option 2 shall be
reinstated. If Seller fails to satisfy Edison's security requirements within the
30-day period, the Energy Payment Refund provided in Section 8.5 shall be
payable forthwith.

              9.   PAYMENT AND BILLING PROVISIONS

              9.1   For Energy and capacity purchased by Edison:

              9.1.1 Edison shall mail to Seller no later than thirty days after
the end of each monthly billing period (1) a statement showing the Energy and
capacity delivered to Edison during the on-peak, mid-peak, and off-peak periods,
as those periods are specified

                                       31

in Edison's Tariff Schedule No. TOU-8 for that monthly billing period, (2)
Edison's computation of the amount due Seller, and (3) Edison's check in payment
of said amount.

              9.1.2 If the monthly payment period involves portions of two
different published Energy payment schedule periods, the monthly Energy payment
shall be prorated on the basis of the percentage of days at each price.

              9.1.3 If the payment period is less than 27 days or greater than
33 days, the capacity payment shall be prorated on the basis of the average days
per month per year.

              9.1.4 If, within thirty days of receipt of the statement, Seller
does not make a report in writing to Edison of an error, Seller shall be deemed
to have waived any error in Edison's statement, computation, and payment, and
they shall be considered correct and complete.

              9.2 Edison shall bill the Seller, on a monthly basis, for the
costs Edison has incurred in the transmission of the electrical energy from the
Project to the Point of Interconnection pursuant to the provisions of Section
26.

              9.3   Payments Due to contract Capacity Reduction

              9.3.1 The Parties agree that the refund and payments provided in
Section 8.1.2.5 represent a fair compensation for the reasonable losses that
would result from such reduction of Contract Capacity.

              9.3.2 In the event of a reduction in Contract Capacity, the
quantity, in kW, by which the Contract Capacity is reduced shall be used to
calculate the refunds and payments due Edison in accordance with Section
8.1.2.5, as applicable.

                                       32

              9.3.3 Edison shall provide invoices to Seller for all refunds and
payments due Edison under this Section 9 which shall be due within 60 days.

              9.3.4 If Seller does not make payments as required in Section
9.2.3, Edison shall have the right to offset any amounts due it against any
present or future payments due Seller and may pursue any other remedies
available to Edison as a result of Seller's failure to perform.

              9.4   Energy Payment Refund

              Energy Payment Refund is immediately due and payable upon Seller's
failure to perform the contract obligations as specified in Section 8.5.

              10. TAXES

              10.1 Seller shall pay ad valorem taxes and other taxes properly
attributable to the Project. If such taxes are assessed or levied against
Edison, Seller shall pay Edison for such assessment or levy.

              10.2 Seller shall pay ad valorem taxes and other taxes properly
attributed to land, land rights, or interest in land for the Project. If such
taxes are assessed or levied against Edison, Seller shall pay Edison for such
assessment or levy.

              10.3 Seller or Edison shall provide information concerning the
Project to any requesting taxing authority.

              11.   TERMINATION

              This Contract shall terminate if Firm Operation does not occur
within 5 years of the date of Contract execution.

                                       33

              12.   SALE OF GENERATING FACILITY

              12.1 If Seller desires to sell the Generating Facility, Seller
shall promptly offer to Edison, or any entity designated by Edison in its sole
discretion, the right to purchase the Generating Facility. Edison, or any such
entity designated by Edison, shall have up to sixty days following the offer to
accept Seller's offer or reach agreement with Seller.

              12.2 If the Parties are unable to reach a satisfactory agreement
within sixty days following the offer pursuant to Section 12.1, and the
Generating Facility is offered to any third party or parties, Edison, or any
such entity designated by Edison, has the right for thirty days following each
offer to agree to purchase the Generating Facility under the same terms and
conditions, if such terms and conditions are better to Edison than those offered
in Section 12.1. Any offers to sell made more than two years after Edison's
failure to accept a previous offer to sell under Section 12.1, shall again be
subject to the terms of Sections 12.1 and 12.2

              12.3 Notwithstanding the foregoing, Seller shall have the right at
any time to sell or transfer the Generating Facility to an affiliate of Seller
and an affiliate of Seller may sell, transfer, or lease to Seller without giving
rise to any right of first refusal of Edison. An "affiliate" of Seller shall
mean a Party's parent, a Party's subsidiary, or any company of which a Party's
parent is a parent. An "affiliate" of Seller shall also mean a partnership or
joint venture from which the Seller leases and operates the Generating

                                       34

Facility. A "parent" shall mean a company which owns directly or indirectly not
less than 51% of the shares entitled to vote in an election of directors of
another company.

              13.   ABANDONMENT OF PROJECT

              13.1 The Generating Facility shall be deemed to be abandoned if
Seller discontinues operation of the Generating Facility with the intent that
such discontinuation be permanent. Such intent shall be conclusively presumed by
either (i) Seller's notice to Edison of such intent, or (ii) Seller's operation
of the Generating Facility in such a manner that no Energy is generated
therefrom for 200 consecutive days during any period after Firm Operation of the
first generating unit, unless otherwise agreed to in writing by the Parties. If
the Project is prevented from generating Energy due to an Uncontrollable Force,
then such period shall be extended for the duration of the Uncontrollable Force,
not to exceed one year.

              13.2 If Seller abandons the Generating Facility during the term of
this Agreement, Edison, or any entity designated by Edison in its sole
discretion, shall have the right to purchase the Generating Facility pursuant to
the provisions of Section 12.

              14.   LIABILITY

              14.1 Each Party (First Party) releases the other Party (Second
Party), its directors, officers, employees and agents from any loss, damage,
claim, cost, charge, or expense of any kind or nature (including any direct,
indirect or consequential loss, damage, claim, cost, charge, or expense),
including attorney's fees and other costs of litigation incurred by the First
Party, in connection with damage to property of the First

                                       35

Party caused by or arising out of the Second Party's construction, engineering,
repair, supervision, inspection, testing, protection, operation, maintenance,
replacement, reconstruction, use or ownership of its facilities, to the extent
that such loss, damage, claim, cost, charge, or expense is caused by the
negligence of Second Party, its directors, officers, employees, agents, or any
person or entity whose negligence would be imputed to Second Party.

              14.2 Each Party shall indemnify and hold harmless the other Party,
its directors, officers, and employees or agents from and against any loss,
damage, claim, cost, charge, or expense of any kind or nature (including direct,
indirect or consequential loss, damage, claim, cost, charge, or expense),
including attorney's fees and other costs of litigation, incurred by the other
Party in connection with the injury to or death of any person or damage to
property of a third party arising out of the indemnifying Party's construction,
engineering, repair, supervision, inspection, testing, protection, operation,
maintenance, replacement, reconstruction, use, or ownership of its facilities,
to the extent that such loss, damage, claim, cost, charge, or expense is caused
by the negligence of the indemnifying Party, its directors, officers, employees,
agents, or any person or entity whose negligence would be imputed to the
indemnifying Party; provided, however, that each Party shall be solely
responsible for and shall bear all cost of claims brought by its contractors or
its own employees and shall indemnify and hold harmless the other Party for any
such costs including costs arising out of any workers compensation law. Seller
releases and shall defend and indemnify Edison from any claim, cost, loss,
damage, or

                                       36

liability arising from any contrary representation concerning the effect of
Edison's review of the design, construction, operation, or maintenance of the
Project.

              14.3 The provisions of this Section 14 shall not be construed so
as to relieve any insurer of its obligations to pay any insurance claims in
accordance with the provisions of any valid insurance policy.

              14.4 Neither Party shall be indemnified by the other Party under
Section 14.2 for its liability or loss resulting from its sole negligence or
willful misconduct.

              15.   INSURANCE

              15.1 Until Contract is terminated, Seller shall obtain and
maintain in force as hereinafter provided comprehensive general liability
insurance, including contractual liability coverage, with a combined single
limit of not less than $1,000,000 each occurrence. The insurance carrier or
carriers and form of policy shall be subject to review and approval by Edison.

              15.2 Prior to the date Seller's generating facility first delivers
electrical energy to the Point of Interconnection, Seller shall (i) furnish
certificate of insurance to Edison, which certificate shall provide that such
insurance shall not be terminated nor expire except on thirty days prior written
notice to Edison, (ii) maintain such insurance in effect for so long as Seller's
Generating Facility is delivering electrical energy to the Point of
Interconnection, and (iii) furnish to Edison an additional insured endorsement
with respect to such insurance in substantially the following form:
"In consideration of the premium charged, Southern California Edison Company
(Edison)

                                       37

is named as additional insured with respect to all Liabilities arising
out of Seller's use and ownership of Seller's Generating Facility.

              "The inclusion of more than one insured under this policy shall
not operate to impair the rights of one insured against another insured and the
coverages afforded by this policy will apply as though separate policies had
been issued to each insured. The inclusion of more than one insured will not,
however, operate to increase the limit of the carrier's liability. Edison will
not, by reason of its inclusion under this policy, incur liability to the
insurance carrier for payment of premium for this policy.

              "Any other insurance carried by Edison which may be applicable
shall be deemed excess insurance and Seller's insurance primary for all purposes
despite any conflicting provisions in Seller's policy to the contrary."

              15.3 If Seller fails to comply with the provisions of this Section
15, Seller shall, at its own cost, defend, indemnify, and hold harmless Edison,
its directors, officers, employees, agents, assigns, and successors in interest
from and against any and all loss, damage, claim, cost, charge, or expense of
any kind or nature (including direct, indirect or consequential loss, damage,
claim, cost, charge, or expense, including attorney's fees and other costs of
litigation) resulting from the death or injury to any person or damage to any
property, including the personnel and property of Edison, to the extent that
Edison would have been protected had Seller complied with all of the provisions
of this Section 15.

                                       38

              16.   UNCONTROLLABLE FORCES

              16.1 Neither Party shall be considered to be in default in the
performance of any of the agreements contained in this Contract, except for
obligations to pay money, when and to the extent failure of performance shall be
caused by an Uncontrollable Force.

              16.2 If either Party, because of an Uncontrollable Force, is
rendered wholly or partly unable to perform its obligations under this Contract,
the Party shall be executed from whatever performance is affected by the
Uncontrollable Force to the extent so affected provided that:

              (1) The non-performing Party, within two weeks after the
occurrence of the Uncontrollable Force, gives the other Party written notice
describing the particulars of the occurrence;

              (2)   The suspension of performance is of no greater scope and of
no longer duration than is required by the Uncontrollable Force;

              (3) The non-performing Party uses its best efforts to remedy its
inability to perform (this subsection shall not require the settlement of any
strike, walkout, lockout or other labor dispute on terms which, in the sole
judgment of the party involved in the dispute, are contrary to its interest. It
is understood and agreed that the settlement of strikes, walkouts, lockouts or
other labor disputes shall be at the sole discretion of the Party having the
difficulty);

                                       39

              (4) When the non-performing Party is able to resume performance of
its obligations under this Contract, that Party shall give the other Party
written notice to that effect; and

              (5) Capacity payments during such periods of Uncontrollable Force
on Seller's part shall be governed by Section 8.1.2.3.

              16.3 In the event that either Party's ability to perform cannot be
corrected when the Uncontrollable Force is caused by the actions or inactions of
legislative, judicial or regulatory agencies or other proper authority, this
Contract may be amended to comply with the legal or regulatory change which
caused the nonperformance.

              If a Loss of Qualifying Facility status occurs due to an
Uncontrollable Force and Seller fails to make the changes necessary to maintain
its Qualifying Facility status, the Seller shall compensate Edison for any
economic detriment incurred by Edison as a result of such failure.

              17.   NONDEDICATION OF FACILITIES

              Neither Party, by this Contract, dedicates any part of its
facilities involved in this Project to the public or to the service provided
under the Contract, and such service shall cease upon termination of the
Contract.

              18.   PRIORITY OF DOCUMENTS

              If there is a conflict between this document and any Appendix, the
provisions of this document shall govern. Each Party shall notify the other
immediately upon the determination of the existence of any such conflict.

                                       40

              19.   NOTICES AND CORRESPONDENCE

              All notices and correspondence pertaining to this Contract shall
be in writing and shall be sufficient if delivered in person or sent by
certified mail, postage prepaid, return receipt requested, to Seller as
specified in Section 1.1, or to Edison as follows:

              Southern California Edison Company
              Post Office Box 800
              Rosemead, California 91770
              Attention:   Secretary

              All notices sent pursuant to this Section 19 shall be effective
when received, and each Party shall be entitled to specify as its proper address
any other address in the United States upon written notice to the other Party.

              20.   PREVIOUS COMMUNICATIONS

              This Contract contains the entire agreement and understanding
between the Parties, their agents, and employees as to the subject matter of
this contract, and merges and supersedes all prior agreements, commitments,
representations, and discussions between the Parties. No Party shall be bound to
any other obligations, conditions, or representations with respect to the
subject matter of this Contract.

              21.   THIRD PARTY BENEFICIARIES

              This Contract is for the sole benefit of the Parties and shall not
be construed as granting any rights to any person or entity other than the
Parties or imposing obligations on either Party to any person or entity other
than the Parties.

                                       41

              22.   NONWAIVER

              None of the provisions of the Contract shall be considered waived
by either Party except when such waiver is given in writing. The failure of
either Edison or Seller to insist in any one or more instances upon strict
performance of any of the provisions of the Contract or to take advantage of any
of its rights hereunder shall not be construed as a waiver of any such
provisions or the relinquishment of any such rights for the future, but the same
shall continue to remain in full force and effect.

              23.   DISPUTES

              23.1. Any dispute arising between the Parties relating to
interpretation of the provisions of this Contract or to performance of the
Parties hereunder, other than matters which may not be settled without the
consent of an involved insurance company, shall be reduced to writing stating
the complaint and proposed solution and submitted to the appropriate Edison
manager, whose interpretation and decision thereon shall be incorporated into a
written document which shall specify Edison's position and that it is the final
decision of such manager. A copy of such document shall be furnished to Seller
within ten days following the receipt of Seller's written complaint.

              23.2 The decision of such manager pursuant to Section 23.1 shall
be final and conclusive from the date of receipt of such copy by the complaining
Party, unless within thirty days Seller furnishes a written appeal to such
manager. Following receipt of such appeal, a joint hearing shall be held within
fifteen days of said appeal, at which time the Parties shall each be afforded an
opportunity to present evidence in support of their

                                       42

respective positions. Such joint hearing shall be conducted by one authorized
representative of Seller and one authorized representative of Edison and other
necessary persons. Pending final decision of a dispute hereunder, the Parties
shall proceed diligently with the performance of their obligations under this
Contract and in accordance with Edison's position pursuant to Section 23.1.

              23.3 The final decision by the Parties' authorized representatives
shall be made within fifteen days after presentation of all evidence affecting
the dispute, and shall be reduced to writing. The decision shall be final, and
conclusive.

              23.4 If the authorized representatives cannot reach a final
decision within the fifteen-day period, any remedies which are provided by law
may be pursued.

              24.   SUCCESSORS AND ASSIGNS

              Neither Party shall voluntarily assign its rights nor delegate its
duties under this Contract, or any part of such rights or duties, without the
written consent of the other Party, except in connection with the sale or merger
of a substantial portion of its properties. Any such assignment or delegation
made without such written consent shall be null and void. Consent for assignment
shall not be unreasonably withheld. Such assignment shall include, unless
otherwise specified therein, all of Seller's rights to any refunds which might
become due under the Contract. Seller may assign all or any part of its interest
under this Contract to a financing institution to facilitate financing for the
Project by the Seller.

                                       43

              25.   EFFECT OF SECTION HEADINGS

              Section headings appearing in this Agreement are inserted for
convenience only, and shall not be construed as interpretations of text.

              26.   TRANSMISSION

              26.1 Edison shall endeavor to make arrangements with third parties
for the necessary transmission of the electrical energy from the Project to the
Point of Interconnection. Seller shall be responsible for all costs associated
with such transmission of electrical energy, including the cost of transmission
losses from the Project to the Point of Interconnection as determined by Edison
in its sole judgement.

              26.2 If Edison is unable to secure firm transmission service or
equivalent arrangements from third parties which are required to transmit the
electrical energy from the Project to the Point of Interconnection at terms and
conditions satisfactory to Edison in its sole judgement, then Edison shall not
be liable to the Seller for any damages arising from Edison's failure to secure
said transmission service or arrangements nor will Edison be required to
purchase Energy which is not delivered or capacity which is not made available
at the Point of Interconnection.

              27.   AMENDMENT

              If at any time during the term of this Agreement a change in
circumstances not anticipated at the time this Agreement was executed
significantly alters the rights or obligations of either Party, the terms of the
Agreement which are directly affected by the change shall be amended by mutual
agreement of Parties.

                                       44

              28.   GOVERNING LAW

              This Contract shall be interpreted, governed, and construed under
the laws of the State of California as if executed and to be performed wholly
within the State of California.

              29.   CONFIDENTIALITY

              29.1. Except as provided herein, the Parties shall hold all
information in this Contract and all informatin related to or received pursuant
to this Contract as confidential.

              29.2 Neither Party shall disclose any part nor the whole of this
Contract to any third party without the express prior written consent of the
other Party; such consent shall not be unreasonably withheld.

              29.3 From time to time governmental and/or regulatory agencies may
request disclosure of the Contract or Contract-related information from either
Party or both Parties and if such is the case either Party or both Parties may
consent to such disclosure provided, that (i) the requestor(s) be notified by
the disclosing Party that the information being released is confidential, and
that (ii) the disclosing Party inform the other Party, in writing, as to the
nature of the information disclosed and to whom disclosed.

              30.   MULTIPLE ORIGINALS

              This Contract is executed in two counterparts, each of which shall
be deemed an original.

                                       45

                                   SIGNATURES

     IN WITNESS WHEREOF, the Parties hereto have executed this Contract this
13th of June, 1984.

                       SOUTHERN CALIFORNIA EDISON COMPANY

                       By  /s/ Edward A. Myers, Jr.
                          --------------------------------------
                          Name   Edward A. Myers, Jr.
                              ----------------------------------
                          Title  Vice President
                               ---------------------------------

                       ORMAT SYSTEMS INC.

                       By  /s/ Barbara M. Christopher
                          --------------------------------------
                          Name   Barbara M. Christopher
                              ----------------------------------
                          Title  Vice President
                               ---------------------------------

                                       46

--------------------------------------------------------------------------------

                                   APPENDIX A

                       SOUTHERN CALIFORNIA EDISON COMPANY

                            LONG-TERM STANDARD OFFER

                           CAPACITY PAYMENT SCHEDULE -

                   FORECAST OF ANNUAL AS-AVAILABLE CAPACITY(1)

Line          As-Available Capacity(2)
 No.   Year          ($/kW-year)
--------------------------------------
  1    1983               70
  2    1984               76
  3    1985               81
  4    1986               87
  5    1987               94
  6    1988              101
  7    1989              109
  8    1990              117
  9    1991              126
 10    1992              148
 11    1993              158
 12    1994              169
 13    1995              180
 14    1996              194
 15    1997              206

----------
(1)  This forecast to be used in conjunction with Capacity Payment Option A.

(2)  The annual as-available capacity ($/kW-yr) will be converted to a seasonal
     time-of-delivery (CENTS/kWh) value that is consistent with as-available
     time-of-delivery rates current authorized by the Commission for Avoided
     As-Available Capacity.

--------------------------------------------------------------------------------

                                       A-l

--------------------------------------------------------------------------------

                                   APPENDIX B

                       SOUTHERN CALIFORNIA EDISON COMPANY

                            LONG-TERM STANDARD OFFER

                            ENERGY PAYMENT SCHEDULE -

                  FORECAST OF ANNUAL MARGINAL COST OF ENERGY(1)

Line          Annual Marginal Cost of
 No.   Year      Energy (CENTS/kWh)
-------------------------------------
  1    1983              5.3
  2    1984              5.6
  3    1985              5.7
  4    1986              6.0
  5    1987              6.4
  6    1988              6.9
  7    1989              7.6
  8    1990              8.1
  9    1991              8.6
 10    1992              9.3
 11    1993             10.1
 12    1994             10.9
 13    1995             11.8
 14    1996             12.6
 15    1997             13.6

----------
(1)  This forecast to be used in conjunction with Energy Payment Option 1.

(2)  The annual energy payments in the table will be converted to seasonal
     time-of-delivery energy-payment rates that are consistent with the
     time-of-delivery rates currently authorized by the Commission for Avoided
     Energy Cost Payments.

--------------------------------------------------------------------------------

                                       B-l

--------------------------------------------------------------------------------

                                   APPENDIX C

                       SOUTHERN CALIFORNIA EDISON COMPANY

                            LONG-TERM STANDARD OFFER

                            ENERGY PAYMENT SCHEDULE -

                LEVELIZED FORECAST OF MARGINAL COST OF ENERGY(1)

                    5-Year
       Initial     Levelized     Levelized
Line   Year of     Forecast      Forecast
 No.   Delivery   (CENTS/kWh)   (CENTS/kWh)
-------------------------------------------
  1      1983         5.7           6.5
  2      1984         6.0           6.9
  3      1985         6.4           7.3
  4      1986         6.8           7.9
  5      1987         7.3           8.5
  6      1988         7.9           9.1

----------
(1)  Levelized Forecast to be used in conjunction with Energy Payment Option 2.

(2)  The annual energy payments in the table will be converted to seasonal
     time-of-delivery energy payment rates that are consistent with the
     time-of-delivery rates currently authorized by the Commission for Avoided
     Energy Cost Payments.

//

//

//

//

//

//

--------------------------------------------------------------------------------

                                       C-l

--------------------------------------------------------------------------------

                       SOUTHERN CALIFORNIA EDISON COMPANY

            ANNUAL CAPACITY-PAYMENT SCHEDULE FOR STANDARD OFFER NO. 2

                              FIRM POWER PURCHASES

                           EFFECTIVE FEBRUARY 14, 1983

                Year of Firm Operation
Contract   --------------------------------
  Term     1985   1986   1987   1988   1989
-------------------------------------------
    1        81     87     94    101    109
    2        84     90     97    105    113
    3        87     94    101    108    116
    4        90     97    104    112    123
    5        93    100    107    117    128
    6        95    103    112    122    133
    7        98    107    116    126    137
    8       102    110    120    130    141
    9       105    114    124    134    145
   10       108    117    127    137    149
   11       111    120    130    141    152
   12       114    123    133    144    156
   13       117    126    136    147    159
   14       119    129    139    150    162
   15       122    131    142    153    165
   16       124    134    145    156    168
   17       126    136    147    159    171
   18       128    139    149    161    174
   19       131    141    152    163    176
   20       132    143    154    166    179
   21       134    145    156    168    181
   22       136    147    158    170    183
   23       138    148    160    172    185
   24       139    150    162    174    187
   25       141    152    163    176    189
   26       142    153    165    178    191
   27       144    155    166    179    193
   28       145    156    168    181    195
   29       146    157    169    182    196
   30       147    158    170    184    198

--------------------------------------------------------------------------------

                                       E-1Exhibit 10.3.5

                                 AMENDMENT NO. 1

                                       TO

                       POWER PURCHASE AND SALES AGREEMENT

                                     BETWEEN

                               CHEVRON U.S.A. INC.

                                       AND

                           SOUTHERN CALIFORNIA EDISON

                                TABLE OF CONTENTS

Section    Title                                                  Page
-------    -----                                                  ----

 1         PARTIES                                                  1

 2         RECITALS                                                 1

 3         AGREEMENT                                                3

 4         EFFECTIVE DATE                                           3

 5         AMENDMENT TO SECTION 4                                   3

 6         AMENDMENT TO SECTION 14                                  3

 7         AMENDMENT TO SECTION 15                                  7

 8         AMENDMENT TO SECTION 34                                 18

 9         EFFECT OF THIS AMENDMENT NO. 1                          21

10         SIGNATURE CLAUSE                                        21

                               AMENDMENT NO. 1 TO
                   POWER PURCHASE AND SALES AGREEMENT BETWEEN
                          HEBER GEOTHERMAL COMPANY AND
                       SOUTHERN CALIFORNIA EDISON COMPANY

         1. PARTIES

         The Parties to this Amendment No. 1 to the Power Purchase and Sales
Agreement, hereinafter referred to as Amendment No. l, are Heber Geothermal
Company, a California partnership, hereinafter referred to as "HGC" and Southern
California Edison Company, a California corporation, hereinafter referred to as
"Edison," hereinafter sometimes referred to individually as "Party" and
collectively as "Parties."

         2. RECITALS

         This Amendment No. 1 is made with reference to the following facts,
among others:

         2.1 On August 26, 1983, Edison and Chevron U.S.A Inc. executed the
Power Purchase and Sales Agreement to provide the terms and conditions for the
sale by Chevron and purchase by Edison of capacity and energy delivered to the
Point of Interconnection from a 47 MW (net) electrical generating facility
located at Heber, California utilizing geothermal steam as the prime mover
energy source.

         2.2 On August 26, 1983, Chevron assigned and HGC assumed Chevron's
right, title and interest in the Power Purchase and Sales Agreement between
Chevron and Edison, dated August 26, 1983.

         2.3 On March 16, 1984, Chevron and HGC issued a Notice of Intention to
Proceed to Edison. The Notice of Intention to Proceed stated Chevron and HGC's
desire to construct the facilities necessary to proceed with the Power Purchase
and Sales Agreement, dated August 26, 1983.

         2.4 The Public Utilities Commission of the State of California has
issued Decision No. 83-09-054, which authorized the long-term power-purchase
contract, to be known as Standard Offer No. 4, which established the terms and
conditions of the sale of power produced by Qualifying Facilities and the
purchase by Edison of electrical energy therefrom.

         2.5 The Parties wish to provide definitive terms for the exercise of
Seller's option to deliver Net Energy to the Point of Interconnection pursuant
to the terms of Section 34.3 of the Power-Purchase and Sales Agreement by
electing to pay for the upgrade of Edison's 115/92 kV substation facility and
agreeing to pay the flat monthly transmission service cost, as specified in
Section 34.3 of the Power-Purchase and Sales Agreement, commencing on August 1,
1985.

         2.6 The Parties, therefore, desire to amend the Agreement to modify the
provisions covering (i) payments by Edison for energy, (ii) payments by Edison
for capacity and (iii) transmission cost to be paid by HGC as Seller.

         3. Agreement: The Parties agree to amend the Power Purchase and Sales
Agreement as follows:

                                       2

         4. Effective Date: This Amendment No. 1 shall become effective upon
execution by the Parties and consent by Chevron U.S.A., Inc., represented by its
agent Chevron Resources Company.

         5. Amendment to Section 4:

         The last sentence in Section 4.4 is deleted in its entirety and
replaced with the following:

         The prior written notice requirement in this Section 4.4 will apply in
the event Edison reduces Seller's capacity as outlined in Sections 12.2, 13.3
and 15.4.1.3.

         6. Amendment to Section 14:

         Section 14 is deleted in its entirety and replaced with the following:

         Seller shall receive a monthly payment for Net Energy received and
accepted by Edison at the Point of Interconnection pursuant to the provisions of
this Section 14.

         14.1  Net Energy Payments - First Period

         14.1.1 During the First Period of the Contract Term, which shall be
defined as the first 10 years of the Contract Term commencing upon date of
Firm Operation but not later than five years from the date of execution of this
Contract, Seller shall be paid a Monthly Energy Payment for Net Energy received
and accepted by Edison at the Point of Interconnection. The Monthly Energy
Payment shall be based on the Energy Payment Option selected by the Seller prior
to the date of Firm Operation. The Energy Payment Options shall be selected by
the Seller prior to the date of Firm Operation in increments of 10% with a total
equal to 100%.

                                       3

              [100]  %     Energy Payment Option No. 1 -- Forecast of Annual
                           Marginal Cost of Energy in effect at the date of
                           execution of this Amendment No. 1. (Appendix B)

                [0]  %     Energy Payment Option No. 2 -- Edison's Avoided
                           Operating Cost.

         14.1.2 Seller shall be paid a Monthly Energy Payment for Net Energy
received and accepted by Edison at the Point of Interconnection during each
month in the First Period of the Contract Term pursuant to the following
formula:

Monthly Energy Payment = [(A x D) + (B x D) + (C x D)] x E

Where A  =  kWh purchased by Edison during on-peak periods defined in
            Edison's Tariff Schedule No. TOU-8.

      B  =  kwh purchased by Edison during mid-peak periods defined in
            Edison's Tariff Schedule No. TOU-8.

      C  =  kWh purchased by Edison during off-peak periods defined in
            Edison's Tariff Schedule No. TOU-8.

      D  =  The sum of:

               (i) the appropriate time-differentiated energy price from the
Forecast of Annual Marginal Cost of Energy, multiplied by the decimal
equivalent of the percentage of the forecast specified in Section 14.1.1, and
(ii) the appropriate time-differentiated energy price from Edison's Avoided
Operating Cost multiplied by the decimal equivalent of the percentage of
Edison's Avoided Operating Cost specified in Section 14.1.1.

                                       4

      E = Energy Loss Adjustment Factor For Remote Generating Sites*

         14.2 Net Energy Payments - Second Period

         During the Second Period of the Contract Term, which shall be defined
as the period commencing upon expiration of the First Period and continuing for
the remainder of the Contract Term, Seller shall be paid a Monthly Energy
Payment for Net Energy received and accepted by Edison at the Point of
Interconnection based on Edison's Avoided Operating Cost. The Monthly Energy
Payment shall be calculated by the following formula:

Monthly Energy Payment = kWh purchased by Edison for each on-peak, mid-peak, and
off-peak time period defined in Edison's Tariff Schedule No. TOU-8

         x Edison's Avoided Operating Cost by time of delivery for each time
           period

         x Energy Loss Adjustment Factor For Remote Generating Sites*

         7. Amendment to Section 15:

         Section 15 is deleted in its entirety and replaced with the following:

         Seller shall sell to Edison and Edison shall purchase from Seller
Capacity pursuant to the Capacity Payment Option selected by the Seller in
Section 15.1.

--------
*    The Energy Loss Adjustment Factor For Remote Generating Sites shall be 1.0,
     subject to adjustment by Commission orders and rulings.

                                       5

         15.1 The Seller hereby elects Option B from the following Capacity
Payment Options:

         [ ]  Option A - As-Available capacity based upon Forecast of Annual
As-Available Capacity Payment Schedule (Appendix A).

         [X]  Option B - Firm Capacity

         Capacity Payment Schedule contained in Edison's Standard Offer No. 2
for Firm Power Purchases in effect at the time of Amendment No. 1 execution.
Capacity Price (Firm Capacity): $147/kW--Year.

         15.2.1 Capacity Payment Option A -- As Available Capacity.

         If Seller selects Capacity Payment Option A, Seller shall be paid a
Monthly Capacity Payment calculated pursuant to the following formula:

Monthly Capacity Payment = (A x D) + (B x D) + (C x D)

Where A = kWh purchased by Edison during on-peak periods defined in Edison's
          Tariff Schedule No. TOU-8.

      B = kWh purchased by Edison during mid-peak periods defined in Edison's
          Tariff Schedule No. TOU-8.

      C = kWh purchased by Edison during off-peak periods defined in Edison's
          Tariff Schedule No. TOU-8.

      D = The appropriate time differentiated capacity price from the Forecast
          of Annual As-Available Capacity Payment Schedule (Appendix A) or the
          Capacity Payment Schedule contained in Edison's Standard Offer No. 1
          for As-

                                       6

         Available Power Purchases, as updated periodically and accepted by the
         Commission.

         15.2.1.1 During the First Period of the Contract Term, the formula
shall be computed with D equal to the appropriate time-differentiated capacity
price from the Forecast of Annual As-Available Capacity Payment Schedule
(Appendix A).

         15.2.1.2 During the Second Period of the Contract Term, the formula
shall be computed with D equal to the appropriate time-differentiated capacity
price from the Capacity Payment Schedule contained in Edison's Standard Offer
No. 1 for As-Available Power Purchase as updated periodically and accepted by
the Commission, but not less than the greater of (i) the appropriate
time-differentiated capacity price from the Forecast of Annual As-Available
Capacity Payment Schedule (Appendix A) in effect at the end of the First Period,
or (ii) the appropriate time-differentiated capacity price from the Capacity
Payment Schedule contained in Edison's Standard Offer No. 1 for As-Available
Power Purchases for the beginning of the Second Period.

         15.2.2 Capacity Payment Option B - Firm Capacity Purchase

         If Seller selects Capacity Payment Option B, Seller shall provide to
Edison for the Contract Term the Capacity specified in Section 3.6, or as
adjusted pursuant to Section 13.3, and Seller shall be paid as follows:

         15.2.2.1 If Seller meets the performance requirements set forth in
Section 15.2.2.2, Seller shall be paid a Monthly Capacity Payment, beginning
from the date of

                                       7

Firm Operation equal to the sum of the on-peak, mid-peak, and off-peak Capacity
Period Payments. Each capacity period payment is calculated pursuant to the
following formula:

Monthly Capacity Period = A x B x C x D Payment

         Where A = Capacity Price specified in Section 15.1 based on the
                   Capacity Payment Schedule contained in Edison's Standard
                   Offer No. 2 for Firm Power Purchases in effect at the time of
                   Amendment No. 1 execution.

               B = Conversion factors to convert annual capacity prices to
                   monthly payments by time of delivery as specified in Appendix
                   C and subject to periodic modifications as approved by the
                   Commission.

               C = Capacity specified in Section 3.6 or as adjusted pursuant to
                   Section 13.3.

               D = Period Performance Factor: (Period kWh Purchased by Edison
                   (Limited by the Level of

       Period
       Performance
       Factor           = Capacity))
                          ------------------------------------------------------
                          (0.9 x Capacity x (Period Hours minus Allowable
                          Maintenance Hours )

         The Period Performance Factor cannot exceed 1.0. When the allowable
maintenance hours equal the period hours, the Period Performance Factor shall
equal 1.0.

                                       8

         15.2.2.2 Minimum Performance Requirement in Capacity Payment Option B
to Receive Full Capacity Payment:

         a. The Capacity shall be available for all of the on-peak hours as
defined in Tariff Schedule No. TOU-8 in each of the Peak Months subject to a 20%
allowance for Forced Outages for each month.

         b. There is no minimum performance requirement for the rest of the
year.

         15.2.2.3 Capacity Bonus Payment. For Capacity Payment Option B, Seller
may receive a Capacity Bonus Payment as follows:

         a. Bonus During Peak Months. For a Peak Month, Seller shall receive a
Capacity Bonus Payment if (i) the requirements set forth in Section 15.2.2.2
have been met, and (ii) the on-peak capacity factor exceeds 85%.

         b. Bonus During Non-Peak Months

         For a non-peak month, Seller shall receive a Capacity Bonus Payment if
(i) the requirements set forth in section 15.2.2.2 have been met, (ii) the
on-peak capacity factor for each Peak Month during the year was at least 85%,
and (iii) the on-peak capacity factor for the non-peak month exceeds 85%.

         c. For any eligible month, the Capacity Bonus Payment shall be
calculated as follows:

Capacity Bonus Payment = A x B x C x D

         Where A = (1.2 x On-Peak Capacity Factor) - 1.02

                                       9

                   Where the On-Peak Capacity Factor, not to exceed 1.0, is
                   calculated as follows:

On-Peak Capacity Factor  = (Period kWh Purchased by Edison (Limited by the Level
                           of Capacity))
                           -----------------------------------------------------
                           [(Capacity) x (Period Hours minus Allowable
                           Maintenance Hours)]

                      B  =  Capacity Price specified in Section 15.1 for
                            Capacity Payment Option B

                      C  =  1/12

                      D  = Capacity specified in Section 3.6

         d. When Seller is entitled to receive a Capacity Bonus Payment, the
Monthly Capacity Payment shall be the sum of the Monthly Capacity Payment
pursuant to Section 15.2.2.3 and the Monthly Capacity Bonus Payment pursuant to
this Section 15.2.2.3.

         15.2.2.4 For Capacity Payment Option B, Seller shall be paid for
capacity in excess of Capacity as specified in Section 3.6, or as adjusted
pursuant to Section 13.3, based on as-available capacity price contained in
Edison's Standard Offer No. 1 for As-Available Power Purchases Capacity Payment
Schedule, as updated and approved by the Commission.

         15.3 Scheduled Maintenance Allowances

         The allowance for scheduled maintenance is as follows:

                                       10

         15.3.1 Outage periods for scheduled maintenance shall not exceed 840
hours (35 days) in any 12-month period. This allowance may be used in increments
of an hour or longer on a consecutive or nonconsecutive basis.

         15.3.2 Seller may accumulate unused maintenance hours on a year-to-year
basis up to a maximum of 1,080 hours (45 days). This accrued time must be used
only for major overhauls, as such major overhauls are reasonably defined by the
Seller.

         15.4 Failure to Meet Minimum Performance Requirements

         15.4.1 Except when caused by uncontrollable forces, if Seller fails to
meet the minimum performance requirements as set forth in Section 15.2.2.2. The
following shall apply:

         15.4.1.1 Seller may be placed on probation for a period not to exceed
15 months or as otherwise agreed to by the Parties. During this period, the
monthly capacity payment will be based on the level of Capacity actually made
available as calculated in Section 15.2.2.1.

         15.4.1.2 If Seller meets or demonstrates to Edison pursuant to Section
12.2 that it can meet its minimum requirement during the probationary period,
Edison shall reinstate regular capacity payments.

         15.4.1.3 If Seller fails to meet its minimum requirements during the
probationary period Edison may derate the Capacity to the greater of the
Capacity actually made available when the minimum requirements stated in Section
15.2.2.2 were not met, or the Capacity at which Seller is reasonably likely to
meet the minimum

                                       11

requirements. In either case, the quantity by which the Capacity is reduced
shall be Considered terminated without prescribed notice as provided in Section
4.4.

         15.4.2 If Seller is prevented from meeting the minimum performance
requirement because of a schedule outage, a Forced Outage or an Emergency on the
Edison electric system, Edison shall continue to make capacity payments to
Seller. Under Option B, the calculations of capacity payments will treat hours
of Forced Outage and Emergency on the Edison system the same as scheduled
maintenance outages.

         15.4.3 If deliveries are interrupted or reduced because of
uncontrollable forces, Edison shall continue to make capacity payments to Seller
for 90 days from the occurrence of the uncontrolled force event. Under Option B,
the calculation of capacity payments will treat hours of interruption or
reduction by reason of an uncontrollable force, the same as scheduled
maintenance outages with reductions in Capacity treated on a pro rata basis.

         8. Amendment to Section 34:

         Section 34 is deleted in its entirety and replaced with the following:

         34.1 Edison, with Seller's assistance, shall seek to contract with
Interconnecting Utility and/or third parties in order to secure the most
economic transmission path and service costs for the delivery of Net Energy from
the Project to the Point of Interconnection during the Contract Term at terms
and conditions acceptable to Seller. Seller shall be responsible for all costs
including transmission losses, incurred in the delivery of the Net Energy from
the Project to the Point of Interconnection.

                                       12

The exact, mutually agreed-upon transmission service cost shall be established
prior to the Date of Firm Operation and may be adjusted periodically as
necessary. The transmission service payments shall consist of (i) a flat monthly
service charge expressed in dollars per kilowatt per month and (ii) transmission
losses expressed in percentage of Net Energy lost in the transmission of Net
Energy from the Project to the Point of Interconnection.

         34.2 Notwithstanding Section 34.1, for the first five years of the
Contract Term, the Seller shall pay for the transmission of the Net Energy from
the Project to the Point of Interconnection at a transmission service cost based
on a method of transmission comparable to the method which is then in use or
would be negotiated for Edison's geothermal facilities at Brawley and Salton Sea
utilizing transmission facilities in existence at that point in time.
Power-exchange arrangements which are in effect or might be in effect for the
transmission of the energy generated at Edison's geothermal facilities at
Brawley and Salton Sea will apply to the provisions of this Section 34.2 only to
the extent there is uncommitted capacity available in such exchange arrangements
at the date of Firm Operation. The provisions of this Section 34.2 are subject
to the following conditions:

         34.2.1 The date of initial delivery of Net Energy shall occur on or
before August 1, 1985. If Seller does not deliver Net Energy to the Point of
Interconnection by August __, 1985, Seller shall commence making the flat
monthly transmission service payments on August 1, 1985 to retain the benefit of
this Section 34.2.1.

                                       13

         34.2.2 Seller shall upgrade Edison's 115/92 kV interconnection
substation with the Interconnecting Utility by increasing its capacity by 25,000
kVA prior to Date of Firm Operation. Seller shall pay the capital cost of the
upgrade and pay the monthly charges related to the upgrade facilities under the
terms and condition of Edison's Rule No. 2 H for added facilities. If the Seller
is unable to use the upgraded facilities, at any time, then Edison shall have
the right to use such facilities.

         34.3 For the first five years of the Contract Term, the applicable
portion of the Interconnecting Utility electric system shall be considered part
of the Edison electric system for the application of Sections 15.4.2. and
15.4.3.

         34.4 Edison shall prepare and mail a bill to Seller for the
transmission service payments provided for in Sections 34.1 and 34.2 within 30
days of the end of each month. Seller shall pay such bills within 20 calendar
days of the receipt of said bill. The provisions contained within Section 35
shall apply to the records generated in the preparation and mailing of such
bill.

         9. Effect of this Amendment No. 1

         Except as amended herein, all terms, covenants and conditions contained
in the Power Purchase and Sales Agreement shall remain in full force and effect.

                                       14

         10. Signature Clause

         The signatories hereto represent that they have been appropriately
authorized to enter into this Amendment No. 1 on behalf of the Party for whom
they sign. This Amendment No. 1 is hereby executed as of this 11th day of
December, 1984.

                           SOUTHERN CALIFORNIA EDISON COMPANY

                           By /s/ Edward A. Myers
                              ---------------------------------------
                           Name  Edward A. Myers
                           Title Vice President

                           HEBER GEOTHERMAL COMPANY, A
                           PARTNERSHIP DRAVO ENERGY, INC.,
                           PARTNER

                           By /s/ W. H. Balke
                              ---------------------------------------
                           Name W. H. Balke
                                -------------------------------------
                           Title
                                 ------------------------------------

                           CENTENNIAL GEOTHERMAL, INC., PARTNER

                           By /s/ Robert O'Leary
                              ---------------------------------------
                           Name   Robert O'Leary
                                -------------------------------------
                           Title
                                 ------------------------------------

                                       15

                           CHEVRON U.S.A., INC., REPRESENTED BY
                           ITS AGENT, CHEVRON RESOURCES
                           COMPANY HEREBY CONSENTS TO
                           AMENDMENT NO. 1

                           By /s/ C. Dohletron
                              ---------------------------------------
                           Name  C. Dohletron
                           Title Vice-President

--------------------------------------------------------------------------------

                                   APPENDIX A

                       SOUTHERN CALIFORNIA EDISON COMPANY

                            LONG-TERM STANDARD OFFER

                           CAPACITY PAYMENT SCHEDULE -

                   FORECAST OF ANNUAL AS-AVAILABLE CAPACITY(1)

Line          As-Available Capacity(2)
 No.   Year          ($/kW-year)
----   ----   ------------------------
  1    1983              70
  2    1984              76
  3    1985              81
  4    1986              87
  5    1987              94
  6    1988             101
  7    1989             109
  8    1990             117
  9    1991             126
 10    1992             148
 11    1993             158
 12    1994             169
 13    1995             180
 14    1996             194
 15    1997             206

----------
(1)  This forecast to be used in conjunction with Capacity Payment Option A.

(2)  The annual as-available capacity ($/kW-yr) will be converted to a seasonal
     time-of-delivery (CENTS/kWh) value that is consistent with as-available
     time-of-delivery rates currently authorized by the Commission for Avoided
     As-Available Capacity.

--------------------------------------------------------------------------------

Document 14668                         A-l

--------------------------------------------------------------------------------

                                   APPENDIX B

                       SOUTHERN CALIFORNIA EDISON COMPANY

                            LONG-TERM STANDARD OFFER

                            ENERGY PAYMENT SCHEDULE -

                  FORECAST OF ANNUAL MARGINAL COST OF ENERGY(1)

Line          Annual Marginal Cost of
 No.   Year      Energy (CENTS/kWh)
----   ----   -----------------------
  1    1983              5.3
  2    1984              5.6
  3    1985              5.7
  4    1986              6.0
  5    1987              6.4
  6    1988              6.9
  7    1989              7.6
  8    1990              8.1
  9    1991              8.6
 10    1992              9.3
 11    1993             10.1
 12    1994             10.9
 13    1995             11.8
 14    1996             12.6
 15    1997             13.6

----------
(1)  This forecast to be used in conjunction with Energy Payment Option 1.

(2)  The annual energy payments in the table will be converted to seasonal
     time-of-delivery energy-payment rates that are consistent with the
     time-of-delivery rates currently authorized by the Commission for Avoided
     Energy Cost Payments.

--------------------------------------------------------------------------------

Document 14668                         B-l

--------------------------------------------------------------------------------

                                   APPENDIX C

              MONTHLY CAPACITY PERIOD PAYMENT-CONVERSION FACTORS(1)

The following factors are for the conversion of the Capacity Price specified in
Section 15.1 (Firm Capacity) to monthly payments by time period of delivery.
These conversion factors will be subject to periodic change as approved by the
Commission.

           Summer Period   Winter Period
           -------------   -------------
On-Peak       0.13125         0.02094

Mid-Peak      0.00267         0.01054

Off-Peak      0.00000         0.00127

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(1)  The time periods (On-Peak, Mid-Peak, Off-Peak, Summer Period and Winter
     Period) are defined in Tariff Schedule No. TOU-8 and will be subject to
     periodic change as approved by the Commission.

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Document 14668                         C-l

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