Document:

Exhibit 10.7

                               OPERATING AGREEMENT

                                     between

                              Georgia Power Company

                                       and

                             Southern Power Company

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<TABLE>
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                                TABLE OF CONTENTS

ARTICLE 1 Definitions.............................................................................................2
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<S>               <C>                                                                                            <C>
                  1.1 "Fuel Services".............................................................................2
                  1.2 "Generation Facility".......................................................................2
                  1.3 "Governmental Authority"....................................................................3
                  1.4 "Legal Requirements"........................................................................3
                  1.5 "New Investment Projects"...................................................................3
                  1.6 "New Investment Services"...................................................................4
                  1.7 "Operating Services"........................................................................4
                  1.8 "Operation and Maintenance Services"........................................................4
                  1.9 "Prudent Utility Practice"..................................................................4

ARTICLE 2 Operator's Authority and Responsibility with Respect to Operation of the
          -------------------------------------------------------------------------
                  Generation Facilities...........................................................................5
                  ---------------------

                  2.1 Responsibility of Operator..................................................................5
                  2.2 Authorization of Operator...................................................................6
                           2.2.1. Plant Operation and Maintenance.................................................6
                                    (a) Staff and Personnel.......................................................7
                                    (b) Licenses and Permits for Generation Facilities............................7
                                    (c) Reductions in Capacity and Outages at Each Plant..........................7
                                    (d) Events About Which Owner is to be Notified................................8
                                    (e) No Changes to Transmission or Distribution Facilities.....................8
                                    (f) Operation in Accordance with Operating Plan...............................9
                                    (g) Point of Interconnection..................................................9
                           2.2.2. New Investment Services.........................................................9
                           2.2.3. Fuel Services..................................................................10
                  2.3 Retirement, Removal or Addition of Generating Facilities...................................10
                  2.4 Authority to Act as Agent for Owner and Right of Third Parties to Rely on
                           Agency................................................................................11
                  2.5 Assignment of Contracts; Liability and Allocation of Risks.................................11
                           2.5.1 Contracts with Third Parties....................................................11
                           2.5.2 Acceptance of Contract Provisions...............................................12
                           2.5.3 Enforcement of Rights Under Contracts...........................................12
                  2.6 Cooperation of Owner.......................................................................13
                  2.7 Operator Interface Procedure...............................................................14
                  2.8 Plans and Budgets..........................................................................14
                           2.8.1 Strategic Plan..................................................................15
                                    (a) Five-year Operating and Planned Outage Schedule..........................15
                                    (b) Availability and Performance Goals.......................................15
                                    (c) Planned Mandatory Projects...............................................15

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                                    (d) Planned Improvement Projects.............................................16
                                    (e) Authorized Level of Staffing.............................................16
                           2.8.2 Fuel Plan.......................................................................16
                           2.8.3 Operating Budget................................................................17
                           2.8.4 Capital Budget..................................................................17
                           2.8.5 Fuel Budget.....................................................................17
                           2.8.6 Material Contracts..............................................................17
                  2.9 Information and Reports....................................................................17
                           2.9.1 Generation Facility Data........................................................18
                           2.9.2 Generation Facility Budget Reports..............................................18
                           2.9.3 Generation Facility Strategic Plan Reports......................................18
                           2.9.4 Audit Reports...................................................................18
                           2.9.5 Correspondence to and from Regulatory Agencies..................................18
                           2.9.6 Responses to Owner Inquiries....................................................18
                  2.10 Plant Tours...............................................................................19
                  2.11 Management Audit..........................................................................19

ARTICLE 3 Entitlement to Output..................................................................................20
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                  3.1 Entitlement to Output......................................................................20
                  3.2 Determination of Output-Responsibility for Station Service and Losses......................20

ARTICLE 4 Costs, Billing, Accounting and Audit...................................................................20
          ------------------------------------

                  4.1 Cost of Operation and Maintenance..........................................................20
                  4.2 New Investment Costs.......................................................................21
                  4.3 Fuel Costs.................................................................................21
                  4.4 Other Costs Required by Legal Requirements.................................................21
                  4.5 Revision...................................................................................21
                  4.6 Billing....................................................................................22
                  4.7 Payment....................................................................................22
                  4.8 General Accounting Matters.................................................................22
                  4.9 Right to Inspect Records...................................................................22
                  4.10 Disputed Invoice..........................................................................23

ARTICLE 5 Advancement of Funds...................................................................................23
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                  5.1 Advancement of Funds.......................................................................23
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ARTICLE 6 Taxes   24
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                  6.1 Taxes......................................................................................24

ARTICLE 7 Compliance with Provisions of Permits and Requirements of Governmental
          -----------------------------------------------------------------------
                  Agencies.......................................................................................24
                  --------

                  7.1 Compliance with Provisions of Permits and Requirements of Governmental
                           Agencies..............................................................................24

ARTICLE 8 Confidentiality of Information.........................................................................24
          ------------------------------

ARTICLE 9 Damage to Persons or Property; Penalties; Fines........................................................25
          -----------------------------------------------

                  9.1 Applicability of Article...................................................................25
                  9.2 Absence of Warranty........................................................................25
                  9.3 Liabilities to Third Parties and Owner.....................................................25
                  9.4 Willful Misconduct.........................................................................27
                  9.5 Limitation of Liability....................................................................27
                  9.6 Severability...............................................................................28

ARTICLE 10 Insurance.............................................................................................28
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                  10.1 Parties Obligations Generally.............................................................28
                  10.2 Commercial Liability Insurance............................................................29
                  10.3 Workmen's Compensation Insurance..........................................................29
                  10.4 Additional Insurance......................................................................30
                  10.5 Waiver of Subrogation - Allocation and Payment of Premium.................................30

ARTICLE 11 Term   31
           ----

                  11.1 Term......................................................................................31

ARTICLE 12 Remedies..............................................................................................31
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                  12.1 Termination...............................................................................31

ARTICLE 13 Miscellaneous.........................................................................................34
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                  13.1 No Partnership or Joint Venture...........................................................34
                  13.2 Owner's Designated Representatives........................................................34
                  13.3 Operator's Designated Representative......................................................34
                  13.4 Depreciation..............................................................................34
                  13.5 Holidays, Business Days...................................................................34
                  13.6 Owner's Services to be Furnished at Cost..................................................35
                  13.7 Entire Agreement..........................................................................35
                  13.8 Amendments................................................................................35
                  13.9 Notices...................................................................................35
                  13.10 Captions.................................................................................36

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                  13.11 Counterparts.............................................................................36
                  13.12 No Waiver................................................................................36
                  13.13 Singular and Plural......................................................................36
                  13.14 Third Party Beneficiaries................................................................36
                  13.15 Severability.............................................................................36

ARTICLE 14 Successors and Assigns................................................................................37
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                  14.1 Successors and Assigns....................................................................37

ARTICLE 15 Governing Law.........................................................................................37
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                  15.1 Governing Law.............................................................................37

</TABLE>

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                               OPERATING AGREEMENT
                                     between
                              Georgia Power Company
                                       and
                             Southern Power Company

         THIS AGREEMENT is made and entered into this 31st day of July 2001 (the
"Effective Date") by and between Georgia Power Company ("Operator") and Southern
Power Company ("Owner").

                              W I T N E S S E T H:
                               -------------------

         WHEREAS, Operator and Owner are each a wholly-owned subsidiary of The
Southern Company ("Southern"), a registered holding company under the Public
Utility Holding Company Act of 1935 (the "1935 Act"); and

         WHEREAS, Owner owns certain generation stations, plants and other
generation-related facilities within the service territory of Operator and may
construct or acquire additional facilities in the future; and

         WHEREAS,  Owner intends to sell on the wholesale  market the electric
power generated by such  facilities; and

         WHEREAS, Operator owns and operates generation stations, plants and
other related generation facilities and has developed the expertise and
experience to efficiently and economically operate such facilities; and

         WHEREAS, Owner believes that in order to more efficiently and
economically provide for the operation, maintenance, repair, and rehabilitation
of its generating stations, plants and other generation-related facilities, such
activities should be conducted and coordinated by Operator; and

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         WHEREAS, Owner desires that Operator undertake the operation,
maintenance, repair and rehabilitation of its generating stations, plants and
other generation-related facilities identified on Schedule 1, subject to the
receipt of any necessary regulatory approvals, and Operator has agreed to do so
under the terms and conditions set forth below.

         NOW THEREFORE, in consideration of these premises, the parties,
intending to be legally bound, do hereby agree as follows:

                                    ARTICLE 1
                                   Definitions

          As  used  herein,   the  following   terms  and  phrases  shall  have,
respectively, the following meanings:

               1.1 "Fuel  Services"  shall mean work  related to  supplying  and
          managing all necessary fuels for the Generation Facilities, including,
          without limitation,  planning,  procurement,  contract administration,
          fuel quality  assurance,  administration  of payables and receivables,
          and  all   activities   relating   to   procurement,   transportation,
          installation,   monitoring,   repairing,   storage,  reprocessing  and
          disposal of fuel for the Generation Facilities,  related materials and
          waste products.

               1.2 "Generation Facility" shall mean, and refer to, respectively,
          each of the fossil fuel,  hydro-electric and pumped storage generation
          stations,  plants  and other  generation-related  facilities  owned by
          Owner, located within the service territory of Operator and identified
          on  Schedule 1  attached  hereto and  incorporated  herein;  provided,
          however,  that should activities  concerning a Generation  Facility be
          undertaken  with  respect  to one  unit  of  such  station,  plant  or
          facility,  the phrase  "Generation  Facility"  shall mean and refer to
          that unit and related common facilities.  Generation stations,  plants
          and other  generation-related  facilities may be removed from or added
          to the  definition  of  "Generation  Facilities"  as  contemplated  in
          Section 2.3.

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               1.3  "Governmental   Authority"  shall  mean  any  local,  state,
          regional or federal legislative,  regulatory,  administrative,  legal,
          judicial or executive agency,  commission,  department or other entity
          and any person acting on behalf of any such entity.

               1.4 "Legal Requirements" shall mean all laws, codes,  ordinances,
          orders,  judgments,  decrees,  injunctions, licenses, rules, permits,
          approvals,  written  agreements,  regulations and  requirements of or
          issued by every  Goernmental  Authority having jurisdiction over the
          matter in question, whether federal, regional, state or local, which
          may be  applicable  to Operator,  or to Owner,  or to any  Generation
          Facility  or any of the  real  or  personal  property  comprising  the
          Generation  Facilities,  or to services  to  be  provided to  Owner
          hereunder, or the use, occupancy, possession, operation, maintenance,
          construction,  retirement,  acquisition,  installation,  alteration,
          replacement,  reconstruction  or  disposal of any  one or more of the
          Generation Facilities or any part thereof.

               1.5  "New  Investment  Projects"  shall  mean  projects  for  the
          Generation  Facilities  relating to the planning,  design,  licensing,
          acquisition, construction, completion, renewal, improvement, addition,
          repair,  replacement  or  enlargement  of any  Unit  of  Property  (as
          described  in the Federal  Energy  Regulatory  Commission's  "Units of
          Property  for Use in  Accounting  for  Additions  and  Retirements  of
          Electric Plants"),  under  circumstances  where expenditures on or for
          such projects are to be  capitalized  in accordance  with the Electric
          Plant  Instructions  of the Uniform System of Accounts  prescribed for
          Class A and B utilities by the Federal Energy Regulatory Commission.

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               1.6 "New  Investment  Services" shall mean work on or for any New
          Investment  Project,  including,  but not  limited  to, any  planning,
          design,  engineering,  labor,  procurement  of materials and supplies,
          materials  management,  quality  assurance,  training,  security,  and
          environmental  protection,  together  with  maintaining  or  obtaining
          licenses  and  regulatory  approvals  related  thereto,   governmental
          affairs or regulatory  relationships,  administration  of payables and
          receivables, and all other activity required for the safe and reliable
          operation of the New Investment Project and/or the relevant Generation
          Facility or that may be required to comply with Legal Requirements.

               1.7 "Operating Services" shall mean Fuel Services, New Investment
          Services, and Operation and Maintenance Services.

               1.8  "Operation  and  Maintenance  Services"  shall mean work for
          Owner  relating  to the  possession,  management,  control,  start-up,
          operation,   availability,    production   of   energy,   maintenance,
          improvement,  renewal,  replacement, and shutdown,  including, but not
          limited to, any planning, design,  engineering,  labor, procurement of
          materials  and  supplies,  materials  management,  quality  assurance,
          training,  security,  and  environmental  protection,   together  with
          maintaining  or obtaining  licenses and regulatory  approvals  related
          thereto,    governmental   affairs   or   regulatory    relationships,
          administration  of payables and  receivables,  and all other  activity
          required  for  the  safe  and  reliable  operation  of the  Generation
          Facilities or that may be required to comply with Legal Requirements.

               1.9 "Prudent  Utility  Practice"  shall mean at a particular time
          any of the  practices,  methods  and acts engaged in or approved by a
          significant  portion of the electric utility  industry prior to such
          time, or any of the practices, methods and acts which, in the exercise

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          of  reasonable  judgment  in light of the facts known at the time the
          decision was made,  could have been expected to accomplish the desired
          result at the lowest  reasonable cost consistent with good business
          practices,   reliability,  safety  and expedition. "Prudent  Utility
          Practice"  is not  intended  to be limited to the optimum  practice,
          method  or act to the  exclusion  of all  others,  but rather to be a
          spectrum of possible practices, methods or acts having due regard for,
          among other things,  manufacturers' warranties and the requirements of
          governmental agencies of competent jurisdiction.

                                    ARTICLE 2
        Operator's Authority and Responsibility with Respect to Operation
                          of the Generation Facilities

         2.1 Responsibility of Operator. Operator, consistent with such written
guidelines as may be jointly developed with Owner, shall provide and be
responsible for (i) the operation and maintenance of the Generation Facilities
in a safe and reliable manner in accordance with all Legal Requirements and with
Prudent Utility Practice, (ii) the generation of power and energy at the
Generation Facilities to the credit of and for the benefit of the Owner as
economically as is reasonably practicable, (iii) the repair and rehabilitation
of the Generation Facilities as may, from time to time, be necessary,
appropriate or reasonably practicable and advisable and (iv) as and to the
extent deemed by Owner to be necessary or appropriate, the construction of new
or additional non-nuclear generation facilities for Owner. Operator also shall
make such further changes and additions to and retirements from the Generation
Facilities in its service territory as shall be consistent with such operation,
maintenance, repair and rehabilitation. Such services and construction may be
provided by Operator through its own personnel or, in part, by others, including

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without limitation affiliate personnel, under contractual or other arrangements,
including the use of Owner's personnel under the direction and supervision of
Operator.

         2.2 Authorization of Operator. In furtherance of the foregoing, Owner
authorizes Operator, and Operator agrees to provide, Operation and Maintenance
Services and Fuel Services for the Generation Facilities and, as authorized
herein, New Investment Services. Owner hereby authorizes Operator to take all
actions that, in the discretion and judgment of Operator consistent with Prudent
Utility Practice, are deemed necessary or advisable in providing these Operating
Services. Owner hereby authorizes Operator, as operator, to take any and all
action necessary to comply with all Legal Requirements and to take all action
necessary to fulfill any requirements for the safe and reliable operation of the
Generation Facilities. The authority vested in Operator shall include, but not
be limited to, the authority to incur costs, liabilities, and obligations, to
purchase equipment, materials and supplies, to perform and arrange for
performance of work, to select and retain contractors, engineers, consultants,
architect-engineers, attorneys, accountants and other firms or persons, and to
take all actions in connection with the Generation Facilities that are within
the scope set forth above. Without limiting the foregoing, the authority vested
in Operator shall include the following:

                  2.2.1. Plant Operation and Maintenance. Operator shall have
         the authority to possess, operate and maintain the Generation
         Facilities in accordance with policies and decisions established and
         made by Owner. Subject to the provisions of this Agreement, Operator
         shall in accordance with Prudent Utility Practice endeavor to achieve
         reliable performance of each Generation Facility, to maximize the
         capacity and availability factors and minimize forced outage rates and
         durations at each Generation Facility and to produce busbar costs as
         low as reasonably possible.

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                           (a) Staff and Personnel. Subject to the provisions of
                  Section 2.8.1 respecting Strategic Plans and approval of Owner
                  or Owner's designated representative, Operator shall have the
                  authority to select, hire, compensate, control and discharge
                  (when deemed appropriate by Operator) those persons, firms or
                  corporations which are required to satisfy its obligations
                  under this Agreement. Operator shall keep Owner informed of
                  any plans to change either the Operator officer responsible
                  for any of Owner's Generation Facilities or the Operator
                  manager of such Generation Facility. Any input from Owner on
                  such plans will be considered by Operator, but Operator's
                  decisions on personnel matters shall be final. Operator shall
                  also consider any positive or negative comments from Owner
                  regarding the performance of any of Operator's officers or
                  managers, but management decisions on whether to take
                  personnel or salary administration actions shall be made
                  solely by Operator.

                           (b) Licenses and Permits for Generation Facilities.
                  Operator is authorized to obtain and maintain compliance with
                  all licenses, approvals and permits for each Generation
                  Facility from Governmental Authorities required for operation
                  and maintenance of the Generation Facility. Upon mutual
                  agreement of Operator and Owner, or as required by Legal
                  Requirements, Operator will be designated in such licenses,
                  approvals and permits as having operating responsibility for
                  the Generation Facilities.

                           (c) Reductions in Capacity and Outages at Each Plant.
                  Owner recognizes that, in the course of operating the
                  Generation Facilities, it may be necessary to decide whether
                  to operate the Generation Facilities at less than full power

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                  or to terminate or suspend such operations altogether in light
                  of technical, legal, regulatory, safety, economic, power
                  system, testing, or other considerations. Operator recognizes
                  the need to minimize periods of reduced capacity or outages at
                  the Generation Facilities that could have an adverse effect on
                  Owner's power supply system or its cost of providing reliable
                  electric service. Operator will endeavor to consult with Owner
                  concerning any operating conditions which are expected to
                  result in capacity reductions of fifty percent (50%) or more
                  at a Generation Facility or outages at a unit of any
                  Generation Facility, and Operator will only take those actions
                  when they determine they are prudent and necessary from an
                  operating standpoint.

                           (d) Events About Which Owner is to be Notified. In
                  the event of an occurrence at a Generation Facility of any
                  unplanned outage, any significant extension of a planned
                  outage, any unplanned reduction in the capacity of a unit for
                  an extended period, or any event at a Generation Facility or
                  any regulatory action which is likely to attract substantial
                  media attention or to affect substantially the operation of
                  the Generation Facility, Operator shall inform Owner as soon
                  as practical, or in accordance with guidelines acceptable to
                  Owner, after the occurrence of such event.

                           (e) No Changes to Transmission or Distribution
                  Facilities. In order that the safe operation of the Generation
                  Facilities is assured, Owner shall not effect any operating or
                  physical changes to its transmission and distribution
                  facilities which may adversely affect the safe operation of
                  the Generation Facilities without prior consultation with and
                  the concurrence of Operator.

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                           (f) Operation in Accordance with Operating Plan. Each
                  Generation Facility shall be operated in accordance with
                  Prudent Utility Practice and pursuant to an operating plan
                  developed and updated regularly by Operator and Owner and in
                  accordance with Owner's obligations, if any, under any
                  interconnection agreements, power pooling arrangements or
                  other applicable arrangements, as such obligations may
                  presently exist or may hereafter be modified from time to
                  time, including the obligations, if any, of Owner to maintain
                  the design integrity of each Generation Facility under the
                  requirements of the Southeast Electric Reliability Council and
                  the National Electric Reliability Council.

                           (g)   Point of Interconnection.    The point of
                  interconnection between any Generation Facility and
                  Operator's  or a third party's transmission system and the
                  extent of Operator's  operational responsibility  therefor
                  shall be determined from time to time by Owner and Operator.

                  2.2.2.   New Investment Services.  Operator shall  have
          responsibility for all New Investment Services. Operator is authorized
          to  enter  into  such  arrangements  as it deems  appropriate  for the
          Generation   Facilities  and  to  make  all  decisions  regarding  the
          completion of New Investment  Projects that were  contemplated  in the
          construction  budgets  for  the  Generation   Facilities  as  of  this
          acquisition by Owner or that have been approved and provided for in an
          Operating  Budget or Capital Budget under the procedures  contemplated
          in  Section  2.8  and as  applicable  Section  2.3.3.  All  equipment,
          materials and supplies  included in such New  Investment  Projects for
          each  Generation  Facility  shall be acquired in the name of Owner and
          shall be the property of Owner.

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<PAGE>

               2.2.3. Fuel Services. Operator shall have responsibility for Fuel
          Services. Operator is authorized to enter into such arrangements as it
          deems  appropriate  and to make all decisions  regarding fuel and fuel
          services.

         2.3 Retirement, Removal or Addition of Generating Facilities. Owner
shall retain the exclusive authority (i) to determine when the economic life of
the Generation Facility has ended and thereupon to retire the Generation
Facility from commercial operation or (ii) to remove a particular generation
station, plant or other generation-related Facility from the provisions of this
Agreement and to arrange for other means for its operation and maintenance.
Owner and Operator may agree to add new generation stations, plants or other
generation-related facilities of Owner within Operator's service territory to
this Agreement.

                  2.3.1 Retirement. Upon Owner informing Operator of any
         retirement or removal of a Generation Facility, Operator shall take
         such action as may be necessary to reduce operation of the Generation
         Facility or to terminate operation and place the Generation Facility or
         unit in a safe shutdown condition. Owner retains the authority to
         determine whether any to-be-retired Generation Facility should be
         placed in standby status or operated at reduced output for economic
         reasons or Owner's need for the capacity or energy of the Generation
         Facility. Operator shall also take such steps as may be necessary to
         decommission and dispose of and thereafter maintain, to the extent
         necessary, any to-be-retired Generation Facility or any unit thereof
         designated for retirement.

                  2.3.2 Removal. Upon Owner informing Operator of any removal of
         a Generation Facility from this Agreement, Operator shall take such
         action as may be necessary to transfer operational control of such
         Generation Facility, and to comply with the provisions of Sections

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         12.1.2 and 12.1.3, which shall also apply. Upon the transfer of
         operational control of a Generation Facility as contemplated above and
         in Sections 12.1.2 and 12.1.3, such generation station, plant or other
         generation-related facility shall cease to be a "Generation Facility."

                  2.3.3 Addition. Upon Owner and Operator agreeing to the
         addition of a generation station, plant or other generation-related
         facility to this Agreement, such generation station, plant or other
         generation-related facility shall be a "Generation Facility" and shall
         be subject to all of the provisions of this Agreement.

         2.4 Authority to Act as Agent for Owner and Right of Third Parties to
Rely on Agency. In the conduct of the authority vested in Operator in Sections
2.1 and 2.2 above, Owner hereby designates and authorizes Operator to act as its
attorney-in-fact and agent for such purposes, including, without limitation,
authority to enter into and administer contracts on behalf of Owner for
procurement of material, equipment or services and authority to administer
contracts entered into by Owner with respect to the Generation Facilities. As
relates to all third parties, the designation of Operator as agent shall be
binding on Owner. Operator accepts such appointment as agent of Owner. Upon
request from Operator, Owner shall provide written confirmation of this agency
relationship to third parties.

         2.5      Assignment of Contracts; Liability and Allocation of Risks.

                  2.5.1 Contracts with Third Parties. Upon mutual agreement of
         Operator and Owner, Owner shall assign and transfer to Operator those
         contracts with third parties relating to the operation of each
         Generation Facility. Prior to assignment and transfer of such
         contracts, Operator may request Owner to appoint Operator as agent for
         administration of any such contracts. After receipt of any such
         assignment, transfer or authorization to administer, Operator shall
         have the exclusive responsibility for the administration and
         enforcement thereof in accordance with the terms thereof.

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                  2.5.2 Acceptance of Contract Provisions. To the extent
         permitted pursuant to Section 2.8, Operator in such contracts with
         third parties may agree to such matters as limitations on the liability
         of contractors for work performed or materials furnished, restrictions
         on warranties, agreements to indemnify the contractors from liability,
         requirements that Owner be bound by financial protection provisions,
         waivers, releases, indemnifications, limitations of liability and
         further transfers or assignments under such contracts, and other
         similar provisions (each contract with a third party that contains any
         of the provisions, terms or other effects described in this sentence,
         shall be referred to as a "Material Contract"). Owner waives any claims
         against Operator for entering into Material Contracts approved pursuant
         to the process provided in Section 2.8. Owner also agrees to be bound
         by the requirements for financial protection, waivers, releases,
         indemnification, limitation of liability and further transfers or
         assignments that bind Operator as they now exist in existing Material
         Contracts or as they may exist in the future with respect to Material
         Contracts approved or entered into pursuant to such process provided in
         Section 2.8.

               2.5.3  Enforcement of Rights Under  Contracts.  Owner covenants
          that,  Owner  will notify  Operator  in  writing in advance if Owner
          intends  to  threaten suit or bring  suit  against third  parties or
          otherwise make any claim under any contract or arrangement relating to
          any of the Generation Facilities or Operating Services being provided
          by Operator.  If Owner  desires for Operator to threaten or bring suit
          or  otherwise  to  make  any  claim,  or  desires  that such  action
          contemplated by Operator shall not be taken,  Owner shall, by written

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          notice to Operator, request it so to act or refrain from acting. Upon
          Operator's  receipt  of  a  notice  under  one  of  the  previous  two
          sentences,  Owner and Operator shall arrange for  consultation  within
          ten (10) working days  thereafter  on the  questions  raised,  or such
          lesser  period of time as Operator or Owner shall specify in the light
          of circumstances requiring a more expeditious  determination.  Neither
          Operator nor Owner shall make its final determination  whether it will
          or will not  bring any such suit or make any such  claim  until  after
          such  consultation;  however,  the determination by Operator regarding
          the action  that it will or will not take,  shall be final and binding
          (irrespective  of what Owner decides to do), and the decision of Owner
          regarding  the action that it will or will not take will also be final
          and  binding  (irrespective  of what  Operator  decides  to  do).

          2.6 Cooperation of Owner.  Subject to the requirements and procedures
     of  Sections  2.5.2  and 2.8,  and in the case of New  Investment Services
     Section 2.2.2 and as applicable  Section  2.3.3,  Owner agrees that it will
     take all necessary action in a prompt manner to execute any agreements with
     respect to the  provision of Operation  and  Maintenance Services and Fuel
     Services for the Generation Facilities, and New Investment Services, as and
     when  requested by Operator to permit  Operator to carry out its  authority
     and responsibilities pursuant to this Article 2. Operator may request Owner
     to furnish services or assistance,  materials, supplies, licenses, offices
     and real  property  rights  including,  without  limitation,  power supply
     services,   transmission  and  distribution  system  repair,  replacement,
     construction and maintenance,  accounting services,  maintenance personnel,
     security services, and other personnel,  services or assistance as Operator
     may require with respect to any one or more Generation Facilities. Any such
     items which Owner agrees to furnish to Operator shall be provided at cost.

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          2.7  Operator  Interface  Procedure.  Operator  and Owner will jointly
     establish  and  maintain  an  Operator  Interface  Procedure  to govern the
     working  relationships  between the two companies.  The Operator  Interface
     Procedure shall contain  procedures by which Owner can maintain an overview
     of  Generation  Facility  operations,  procedures  for  administering  this
     Operating  Agreement through  designated  executive points of contact,  and
     procedures  to  define  interfaces  for  support  services  and  assistance
     provided by Owner pursuant to Section 2.6 hereof.

          2.8 Plans and Budgets. Strategic Plans, Fuel Plans, Operating Budgets,
     Capital Budgets,  Fuel Budgets and Material Contracts shall be submitted to
     Owner by Operator as provided in Paragraphs  2.8.1 through 2.8.5 below. The
     contents of these plans,  budgets and Material  Contracts  shall conform to
     the  requirements  and  guidelines  established  pursuant  to the  Operator
     Interface  Procedure.  Owner shall  approve or  disapprove  each such plan,
     budget or Material Contract within thirty (30) days after its submittal. In
     the event Owner  disapproves  a plan,  budget or Material  Contract,  Owner
     shall inform  Operator of the basis for such  disapproval.  Operator  shall
     then modify such plan, budget or Material  Contracts as required to make it
     acceptable to Owner and shall resubmit it for approval;  provided, however,
     that in no event shall  Operator be  required to submit  plans,  budgets or
     Material  Contracts  which  would cause  Operator  to operate a  Generation
     Facility in violation of any Legal  Requirements  or in a manner that fails
     to provide reasonable assurance of health and safety to employees. Operator
     shall  attempt  to  provide  Operating  Services  in  accordance  with such
     approved  plans and within the  aggregate  annual  amount of such  budgets.
     Notwithstanding the foregoing,  Operator makes no representation,  warranty
     or promise of any kind as to accuracy  of any such plan or budget,  or that
     any attempt referred to in the preceding  sentence will be successful,  and
     in no event  shall Owner be  relieved  of its  responsibility  to pay costs
     incurred by Operator as required in Article 4 hereof.

                                       14
<PAGE>

                  2.8.1 Strategic Plan. A Strategic Plan for each Generating
         Facility shall be submitted to Owner by Operator no later than July 1
         of each year. Owner may separately approve or disapprove individual
         projects which are classified as planned improvement projects pursuant
         to Paragraph (d) below, but shall otherwise approve or disapprove each
         Strategic Plan in its entirety. Strategic Plans may cover one or more
         Generation Facilities. Each Strategic Plan shall identify key
         assumptions to be used in the preparation of budgets and forecasts,
         including:

                         (a) Five-year  Operating and Planned  Outage  Schedule.
                    This section shall identify the scheduled  operating  cycles
                    and planned  outages for  maintenance  and other work during
                    the  succeeding  five years.  The schedule shall describe in
                    reasonable  detail  the time and  duration  of each  planned
                    outage  and the  maintenance  and other  work  planned to be
                    performed during such outage.

                         (b)  Availability and Performance  Goals.  This section
                    shall  contain  overall  performance  goals  which have been
                    established by Operator for the Generation  Facility for the
                    current year.

                         (c) Planned Mandatory Projects.  A mandatory project is
                    any  project  with a total  estimated  cost in excess of one
                    million  dollars  ($1,000,000) or such other amount as Owner
                    may  establish,  including  but not limited to any  upgrade,
                    replacement,  addition or program,  which is needed in order
                    to support  normal  operations  in  accordance  with Prudent
                    Utility  Practice or in order to comply with  regulatory  or
                    safety  requirements.  The associated schedule and estimated
                    annual funding requirements shall be included.

                                       15
<PAGE>

                           (d) Planned Improvement Projects. An improvement
                  project is any project with a total estimated cost in excess
                  of one million dollars ($1,000,000) or such other amount as
                  Owner may establish, including but not limited to any upgrade,
                  replacement, addition, or program, which is not mandatory as
                  defined in (c) above. Examples of such projects include
                  efforts to improve performance of a Generation Facility or
                  conditions, such as improved Generation Facility capacity or
                  efficiency, enhanced working conditions, and appearance. The
                  associated schedule and estimated annual funding requirements
                  shall be included.

                           (e) Authorized Level of Staffing. This section shall
                  provide the current authorized number of permanent staff
                  positions which are assigned to the Generation Facility and
                  its offsite support. Such number of positions shall be broken
                  down by functional areas (e.g., operations, maintenance,
                  administrative, technical, corporate support), shall include
                  positions which are located either on-site or off-site, and
                  shall include all positions regardless of the actual employer.
                  This section shall also show any estimates of planned changes
                  in such authorized number of positions over the succeeding
                  five years.

                  2.8.2  Fuel  Plan.  A five-year Fuel Plan for each Generation
          Facility  shall be  submitted to Owner by  September 15 of each year.
          Owner shall approve or disapprove each Fuel Plan within thirty days
          after submittal.  Each Fuel Plan shall describe in reasonable detail
          plans for procurement and  tilization of fuel for the  Generation
          Facility and information on disposal of waste  products.  A Fuel Plan
          may cover one or more Generation Facilities.

                                       16
<PAGE>

                  2.8.3 Operating Budget. By September 1 of each year, Operator
         shall submit to Owner a written Operating Budget showing the estimated
         costs of operating and maintaining Owner's Generation Facilities during
         the next calendar year, with a forecast of budget requirements for the
         succeeding four calendar years. Each budget shall be supported by
         detail reasonably adequate for the purpose of review by Owner.

                  2.8.4 Capital Budget. By September 1 of each year, Operator
         shall submit to Owner a written Capital Budget estimate of capital
         expenditures for each of Owner's Generation Facilities for the next
         calendar year, with a forecast of budget requirements for the
         succeeding four calendar years. Each budget shall be supported by
         detail reasonably adequate for the purpose of review by Owner.

                  2.8.5 Fuel Budget. By September 15 of each year, Operator
         shall submit to Owner a written Fuel Budget estimate of fuel
         expenditures for each of Owner's Generation Facilities for the next
         calendar year, with a forecast of budget requirements for the
         succeeding four calendar years. Each budget shall be supported by
         detail reasonably adequate for the purpose of review by Owner.

                  2.8.6 Material Contracts. Reasonably in advance of the time it
         plans to enter into a Material Contract with a third party, Operator
         shall submit to Owner a draft of such Material Contract. Each draft
         Material Contract will be supported with all attachments and sufficient
         information for Owner to evaluate the provisions that render such draft
         a Material Contract.

         2.9  Information  and  Reports.  Operator  shall  furnish to Owner the
     following information and reports:

                                       17
<PAGE>

               2.9.1 Generation  Facility Data. At the time of submittal of each
         Strategic  Plan,  Operator  shall  also  furnish a  comparison  of the
         performance  of  each  Generation   Facility  with  other   generating
         facilities using performance  indicators in common use in the electric
         utility industry or as may be specified by Owner.

               2.9.2 Generation Facility Budget Reports.  Operator shall furnish
         monthly  data  showing  actual costs for  operation  and  maintenance,
         capital expenditures, and direct fuel expenditures with comparisons to
         the respective  budgets.  This report will normally be provided by the
         end of the succeeding month.

               2.9.3  Generation  Facility  Strategic  Plan Reports.  At least
         quarterly,  Operator shall furnish data showing actual performance for
         each unit at each Generation  Facility  compared to goals contained in
         the Strategic Plan for the Generation Facility.

                  2.9.4 Audit Reports. Operator shall make available for review
         by Owner copies of financial or accounting reports concerning Owner's
         Generation Facilities containing the results of audits by or for
         Southern Company Services, Inc., or any affiliate or subsidiary of The
         Southern Company, or by any regulatory agency.

                  2.9.5 Correspondence to and from Regulatory Agencies. At the
         request of Owner, Operator shall furnish to Owner copies of
         correspondence to and from regulatory agencies concerning one or more
         of Owner's Generation Facilities.

               2.9.6 Responses to Owner Inquiries. In addition to the obligation
         of Operator to provide the information as explicitly  required herein,
         Operator shall respond to reasonable  written or verbal  requests from
         Owner for information not otherwise specifically provided for herein.

                                       18
<PAGE>

               2.10  Plant  Tours.  Owner  shall  have  the  right  to have  its
         representatives  and guests visit its Generation  Facilities,  to tour
         the facilities,  and observe activities at the Generation  Facilities;
         provided  that  such  visits  or  tours  will not  interfere  with the
         operation of the Generation  Facilities,  or the security or safety of
         such  facilities.  Owner  shall  assure that its  representatives  and
         guests comply with all applicable rules and regulations in effect at a
         Generation  Facility  whether imposed by Governmental  Authority or by
         Operator.

               2.11  Management  Audit.  Owner shall have the right to conduct a
         management audit, at its own cost, of Operator's performance hereunder
         either  by  Owner   officers  and  employees  or  through  their  duly
         authorized  agents or  representatives.  Operator shall cooperate with
         Owner in the conducting of such audit and, subject to applicable Legal
         Requirements  and the  requirements of vendors,  give Owner reasonable
         access to all contracts,  records and other documents  relating to the
         Generating  Facilities.  Following any such management audit, Operator
         shall  respond to the  findings of such audit if requested to do so by
         Owner. Management audits by Owner shall be scheduled so as to minimize
         the  number  of  audits  required  and  so as to  not  to  exceed  one
         management audit in any consecutive twelve-month period.

                                       19
<PAGE>

                                    ARTICLE 3
                              Entitlement to Output

         3.1 Entitlement to Output. Owner shall be entitled to all of the output
from its Generation Facilities at the time generation in such units occurs.
Subject to Operator's primary responsibility for safe operation of the
Generation Facilities, Owner shall have the right to schedule and dispatch the
capacity and energy needed from the facilities, and Operator shall use its best
efforts to honor such schedule.

         3.2 Determination of Output-Responsibility for Station Service and
Losses. Output of each Generation Facility shall be the gross generation of the
facility, less station service requirements, and less adjustments for losses
experienced. Owner shall be responsible for providing all off-site electric
power required at the Generation Facility whenever the station service and
losses exceed the gross generation of the Generation Facility.

                                    ARTICLE 4
                      Costs, Billing, Accounting and Audit

         4.1 Cost of Operation and Maintenance. Owner shall pay to Operator all
direct costs incurred by Operator relating to Operation and Maintenance Services
for the Generation Facilities (including all costs identified in Section 9.3 and
any costs incurred by Operator as a consequence of termination hereunder). Such
costs shall include all payments made to Operator employees (including payment
of wages, salaries, workmen's compensation and other benefits) relating to work
performed by such employees while on the premises of any of the Generation
Facilities. Operator and Owner acknowledge that all such payments made to

                                       20
<PAGE>

Operator employees, relating to work performed by such employees while on
Generation Facility premises, are effectively made by Owner, since Owner is
responsible for such payments and they are made from funds placed on deposit by
Owner for those purposes. Owner shall also pay to Operator the Generation
Facility allocated share of other of Operator's costs. Allocation of costs to
Operation and Maintenance Services shall be performed in accordance with the
methodology agreed-upon from time to time by Owner and Operator.

         4.2 New Investment Costs. Owner shall pay to Operator all costs
incurred by Operator relating to New Investment Services for the Generation
Facilities, including obligations incurred to third parties, direct costs of
Operator associated with such New Investment Services and the Generation
Facilities' allocated share of Operator's other costs associated with such
activities. Allocation of costs to New Investment Services shall be performed in
accordance with the methodology agreed-upon from time to time by Owner and
Operator pursuant to Section 4.1 hereof.

         4.3 Fuel Costs. Owner shall pay to Operator all direct costs incurred
by Operator relating to Fuel Services for the Generation Facilities and the
Generation Facilities allocated share of other of Operator's costs. Allocation
of costs to Fuel Costs shall be performed in accordance with the methodology
agreed-upon from time to time by Owner and Operator pursuant to Section 4.1
hereof.
         4.4 Other Costs Required by Legal Requirements. Owner shall pay to
Operator all direct costs incurred by Operator and the Generation Facilities'
allocated share of other of Operator's costs associated with any other
activities of Operator relative to the Generation Facilities that are required
to meet Legal Requirements.

         4.5 Revision. Should Operator undertake to perform services for any
other affiliated company or for any non-affiliated company where the cost to
Operator of providing such services affects the cost of Operator to provide
Operating Services pursuant to this Agreement, Operator shall discuss the matter

                                       21
<PAGE>

and reach agreement with Owner respecting the need for or the terms of any
amendment of this Section 4 as may be appropriate to assure the continued
fairness of the determination of the responsibility for costs payable to
Operator hereunder.

         4.6 Billing. Operator shall render to Owner a monthly billing
statement, with detailed data in a computer readable form as reasonably
requested by Owner, no later than the fifth (5th) day of each month detailing
costs incurred for Operation and Maintenance Services during the preceding month
pursuant to Section 4.1; costs incurred for New Investment Services during the
preceding month pursuant to Section 4.2; costs incurred for Fuel Services during
the preceding month pursuant to Section 4.3; and the other costs incurred during
the preceding month pursuant to Section 4.4.

         4.7 Payment. The obligation to make payments as specified herein shall
continue notwithstanding the capability (or lack of capability) of the
Generation Facilities to produce power for any reason.

         4.8 General Accounting Matters. Determinations by Operator on all
accounting matters related to the transactions contemplated by this Agreement
will be in accordance with Generally Accepted Accounting Principles and the
Securities and Exchange Commission's Uniform System of Accounts for Mutual and
Subsidiary Service Companies, utilizing the accrual method of accounting, unless
otherwise specifically provided in this Agreement or mutually agreed by Operator
and Owner or as prescribed by other regulatory agencies having jurisdiction, as
in effect from time to time.

         4.9 Right to Inspect Records. During normal business hours and subject
to conditions consistent with the conduct by Operator of its regular business
affairs and responsibilities, Operator will provide Owner or any auditor
utilized by Owner and reasonably acceptable to Operator, or any nationally

                                       22
<PAGE>

recognized accounting firm retained by Owner, access to Operator's books,
records, and other documents directly related to the performance of Operator's
obligations under this Agreement and, upon request, copies thereof, which
pertain to (a) costs applicable to Operation and Maintenance Services, New
Investment Services, Fuel Services, and Other Costs for Owner's Generation
Facilities to the extent necessary to enable Owner to verify the costs which
have been billed to Owner pursuant to the provisions of this Agreement; (b)
compliance with all environmental Legal Requirements; and (c) matters relating
to the design, construction and operation and retirement of Owner's Generation
Facilities in proceedings before any Governmental Authority.

         4.10 Disputed Invoice. In the event Owner shall question any statement
rendered by Operator in accordance with the provisions of Section 4.1 hereof,
Owner shall nevertheless promptly pay amounts called for by Operator under
Section 4.1 hereof but such payment shall not be deemed to prevent Owner from
claiming an adjustment of any statement rendered.

                                    ARTICLE 5
                              Advancement of Funds

         5.1 Operator shall prepare forecasts, in such frequency, form and
detail as Owner shall direct, of the funds required to pay Operator's
anticipated costs of the services to be provided to Owner and the dates on which
payment of such costs shall become due. Owner shall advance funds to Operator in
such amounts and at such times determined on the basis of such forecasts, to
enable Operator to pay its costs of services on or before payment of such costs
shall be due. Such advances shall be made by deposits or bank transfers to
accounts of Operator with such financial institutions as Operator shall
designate. Any excess funds in such accounts shall be invested by Operator in
accordance with prudent cash management practices and all investment income and
appreciation received on such funds shall be credited against the cost of
service provided to Owner.

                                       23
<PAGE>

                                    ARTICLE 6
                                     Taxes

         6.1 Owner shall report, file returns with respect to, be responsible
for and pay all real property, franchise, business or other taxes, except
payroll and sales or use taxes, arising out of or relating to its ownership of
the Generation Facilities.

                                    ARTICLE 7
                      Compliance with Provisions of Permits
                    and Requirements of Governmental Agencies

         7.1 Owner and Operator shall cooperate in taking whatever action may be
necessary to comply with the terms and provisions of all permits and licenses
for the Generation Facilities and with all applicable lawful requirements of any
federal, state or local agency or regulatory body having jurisdiction in or over
the Generation Facilities.

                                    ARTICLE 8
                         Confidentiality of Information

         8.1 Each party to this Agreement may, from time to time, come into
possession of information of the other parties that is either confidential or
proprietary. Any party having any such information which is known to be
considered by any other party as either confidential or proprietary will not
reproduce, copy, use or disclose (except when required by a Governmental
Authority) any such information in whole or in part for any purpose without the
written consent of the other party. In disclosing confidential or proprietary
information to a Governmental Authority, the disclosing party shall cooperate
with the other party in minimizing the amount of such information furnished. At

                                       24
<PAGE>

the specific request of the other party, the disclosing party will endeavor to
secure the agreement of such Governmental Authority to maintain specified
portions of such information in confidence. Public dissemination of information
by the furnishing party before or after it is furnished shall constitute a
termination of the confidentiality requirement as to that specific information.

                                    ARTICLE 9
                 Damage to Persons or Property; Penalties; Fines

         9.1 Applicability of Article. Since Operator is undertaking its
responsibilities hereunder (i) at cost and (ii) in order to assist Owner in
meeting its responsibilities with respect to its Generation Facilities, the
following provisions shall be applicable to loss or damage to the property of
any or all of the parties hereto (including Generation Facilities property) or
of third parties, or injuries to or loss of life by any person, including
employees of the parties hereto, and to penalties or fines assessed with respect
to the Generation Facilities:

         9.2 Absence of Warranty. Operator does not warrant that its performance
of Operating Services will meet the standards set forth in Sections 2.1 and 2.2
hereof, and its sole obligation if it fails to meet such standards is to
reperform at the request of Owner the deficient work at cost payable by Owner in
a manner that complies with such standards. Owner acknowledges that such
services are not subject to any warranty of any nature, express or implied,
including, without limitation, any warranty of merchantability or fitness for a
particular purpose.

         9.3 Liabilities to Third Parties and Owner. (a) To the fullest extent
provided by law, all liability to third parties other than liability for
Operator's Willful Misconduct (as defined in 9.4 below), fraud or gross
negligence whether arising in contract (including breach of warranty), tort
(including negligence, product liability, breach of fiduciary duty or any other
theory of tort liability), under the laws of real property or otherwise, or as a

                                       25
<PAGE>

result of fines or other penalties imposed by any Governmental Authority, that
results from or is in any way connected with the provision of Operation and
Maintenance Services, New Investment Services, or Fuel Services for the
Generation Facilities shall be borne by Owner in their entirety. Owner shall
indemnify and hold harmless Operator, its agents servants, directors, employees
and affiliates (the "Indemnified Parties") from and against any and all claims,
losses, damages, expenses and costs of any kind, including without limitation
attorneys fees, costs of investigation and court costs, other than those
attributable to Willful Misconduct, fraud or gross negligence of Operator,
whether direct or indirect, on account of or by reason of bodily injuries
(including death) to any person or persons or property damage arising out of or
occurring in connection with the provision of Operation and Maintenance
Services, New Investment Services, or Fuel Services for the Generation
Facilities, whether or not such claims, losses, damages, expenses or costs were
caused by or alleged to have been caused by or contributed to by the active,
passive, affirmative, sole or concurrent negligence or by breach of any
statutory or other duty (whether non-delegable or otherwise) of any of the
Indemnified Parties.

         Except for consequences of Operator's Willful Misconduct or fraud,
Owner and its affiliates, servants, employees, agents and insurers hereby
release, acquit and forever discharge the Indemnified Parties, to the fullest
extent permitted by applicable law, from any and all damages, claims, causes of
action, damage to property of Owner or expenses of whatever kind or nature, that
are in any manner connected with the provision of any Operating Services or the
performance and prosecution of any project or work by any of the Indemnified
Parties for or on behalf of Owner for its Generation Facilities, whether arising
in tort (including negligence, strict liability, breach of fiduciary duty or any
other theory of tort liability), contract (including breach of warranty), under

                                       26
<PAGE>

the laws of real property or otherwise, or as a result of any fine or other
penalty imposed by any Governmental Authority. This release shall be effective
whether or not such claims, causes of action, damages, or expenses were caused
or alleged to have been caused by or contributed to by the active, passive,
affirmative, sole or concurrent negligence or by breach of any statutory or
other duty (whether non-delegable or otherwise) of any of the Indemnified
Parties.

         9.4 Willful Misconduct. As used in this Agreement, the term "Willful
Misconduct" shall mean any act or omission by any of the Indemnified Parties
that is performed or omitted consciously with actual knowledge that such conduct
is likely to result in damage or injury to persons or property; provided,
however, that any such act or omission, if performed or omitted by an
Indemnified Party, shall not be deemed Willful Misconduct unless an officer or
employee of Operator at or above the officer level of Vice President or the
employee level of plant manager shall have expressly authorized such act or
omission. Operator shall exercise reasonable and customary supervision or
control over the activities of its agents, servants and employees, and its
affiliates, so as to minimize the potential for adverse willful actions by such
agents, servants or employees or affiliates; provided, however, that failure of
Operator to prevent such adverse willful actions shall not itself be considered
Willful Misconduct. Liability attributable to Operator's Willful Misconduct,
fraud or gross negligence shall be borne by Operator, subject to the limitations
of liability in Section 9.5 below and the last paragraph of Section 9.3 above in
the case of liability to Owner.

         9.5 Limitation of Liability. Notwithstanding Sections 9.3 and 9.4
hereof, Owner agrees that in no event shall any of the Indemnified Parties be
liable to Owner for any indirect, special, punitive, incidental or consequential
damages including, without limitation, (1) loss of profits or revenues, (2)
damages suffered as a result of the loss of the use of Owner's power system,

                                       27
<PAGE>

Generation Facilities or equipment, (3) cost of purchase of replacement power
(including any differential in fuel or power costs), or (4) cost of capital with
respect to any claim based on or in any way connected with this Agreement
whether arising in contract (including breach of warranty), tort (including
negligence, strict liability, breach of fiduciary duty or any other theory of
tort liability), under the laws of real property or any other legal or equitable
theory of law, or as a result of any fine or other penalty imposed by any
Governmental Authority. Owner shall release, acquit, forever discharge,
indemnify, and hold harmless the Indemnified Parties from and against any claim
by any customer of Owner, or any other third party, for any direct, indirect,
special, punitive, incidental or consequential damages arising out of any
performance or failure to perform under this Agreement. The provisions of this
Section 9.5 shall apply to the fullest extent permitted by law.

         9.6 Severability. In the event that any particular application of any
of the limitations of liability contained in this Article 9 should be finally
adjudicated to be void as a violation of the public policy of the State of
Georgia then such limitation of liability shall not apply with respect to such
application to the extent (but only to the extent) required in order for such
limitation of liability not to be void as a violation of such public policy, and
such limitations of liability shall remain in full force and effect with respect
to all other applications to the fullest extent permitted by law.

                                   ARTICLE 10
                                   Insurance

         10.1 Parties' Obligations Generally. During the term of this Agreement,
Owner and Operator shall make reasonable efforts to procure and maintain in
force such physical damage and loss, public liability, worker's compensation,

                                       28
<PAGE>

officers' liability and other insurance as Owner may deem appropriate with
respect to all losses, damages, liability and claims arising out of Owner's
ownership of its Generation Facilities and Operator's operation thereof and the
provision of Operating Services hereunder. All such insurance policies shall
identify Operator and Owner as additional insureds thereunder as their interests
may appear, and shall contain a waiver of subrogation clause in favor of
Operator and Owner to the extent of the applicable limits of such policies. The
aggregate cost of all insurance, applicable to each Generation Facility and
procured by Operator pursuant to this Agreement, and any payment by Operator of
any deductible, self-insured retention, or co-payment in connection with any
policy claim arising out of Operator's performance of this Agreement shall be
included in the costs of Operating Services. Operator will take steps to meet
the requirements of such insurance policies and cooperate with Owner to furnish
information, establish procedures, erect or change physical facilities and
otherwise meet the requirements of the insurers to maintain coverage in effect
and to collect claims that may be made under such insurance. In the event that
any of the insurance described in this Article 10 is canceled by a party, that
party shall give written notice of such cancellation to the other party at least
sixty (60) days prior to the effective date of such cancellation.

     10.2 Commercial Liability Insurance. Operator will carry insurance to cover
the legal  obligations  to pay  damages  because  of bodily  injury or  property
damage.  The limits and deductibles of such coverage shall be as mutually agreed
by Operator and Owner.

         10.3 Workmen's Compensation Insurance. Operator shall qualify as a
self-insurer in Georgia and with the U.S. Department of Labor for purposes of
the U.S. Longshoreman's and Harbor Worker's Act, but will provide an umbrella
policy to cover benefits in excess of its assumed liability for workmen's
compensation, the Longshoreman's and Harbor Worker's Act, and employers

                                       29
<PAGE>

liability. Owner and Operator acknowledge that, pursuant to the terms of this
Agreement, all premiums for Operator's workmen's compensation insurance and all
payments to Operator employees, including workmen's compensation benefits,
relating to work performed by such employees while on the premises of a
Generation Facility, are effectively made by the Owner, since such premiums and
payments constitute direct charges incurred by Operator in relation to the
performance of Operating Services for such Generation Facility. It is the intent
of Owner and Operator that for purposes of workmen's compensation Owner not be
exposed to greater liability by virtue of this Agreement than Owner would have
if Owner had utilized Owner employees to perform Operating Services. If Operator
and Owner agree, as an alternative, the parties can purchase any such insurance.

         10.4 Additional Insurance. In the event Owner at any time or from time
to time shall have elected to participate in supplemental insurance programs to
cover other risks arising from the ownership and operation of a Generation
Facility, including the extra costs of replacement power, the costs of such
protection shall be borne by Owner.

         10.5 Waiver of Subrogation - Allocation and Payment of Premium. Each
insurance policy obtained by a party hereto shall contain waivers of subrogation
against the other party, if obtainable from the insurer. The aggregate cost of
all insurance, applicable to the Generation Facilities and procured by Operator
pursuant to this Agreement, shall be considered an operating cost subject to
reimbursement under Section 4.1. In the event that any of the foregoing
insurance policies is canceled by a party, that party shall give written notice
of such cancellation to the other party sixty (60) days prior to the effective
date of such cancellation.

                                       30
<PAGE>

                                   ARTICLE 11
                                      Term

         11.1 Term. The term of this Agreement shall commence on the Effective
Date, subject nevertheless to any applicable rules, regulations or approvals of
any regulatory authority whose approval is required. This Agreement shall expire
(i) when all Generation Facilities have been retired and each site has been
returned to a condition acceptable to Owner, all in compliance with Legal
Requirements; (ii) upon termination pursuant to Section 12.1; or (c) upon mutual
agreement of the parties. Owner's obligation to make payments to Operator under
this Agreement that have not been satisfied prior to the expiration of the term
of this Agreement shall survive such expiration of the term.

                  11.1.1 It is recognized in the case of expiration under
         Sections 11.1(i) or 11.1(iii), however, that this Agreement shall not
         expire, unless all necessary regulatory approvals, if any, have been
         obtained to transfer the operating responsibility for all Generation
         Facilities to Owner or Owner's designee. Until the date on which such
         transfer of operating responsibility is accomplished, or as Owner may
         otherwise notify Operator in writing, Operator agrees to continue to
         provide Operating Services for the Generation Facilities.

                                   ARTICLE 12
                                    Remedies
         12.1 Termination. In the event Owner determines that it is in its
interest to do so, or Operator determines that it is in Operator's interest to
do so, either Operator or Owner may at will terminate this Agreement as provided
below. Except as may be otherwise provided in Section 11.1, this Section 12.1
and Article 9 hereof, this right of termination shall be Owner's sole and

                                       31
<PAGE>

exclusive remedy, legal or equitable, for any failure by Operator at any time to
perform its duties, responsibilities, obligations, or functions under this
Agreement, or for any other breach by Operator of this Agreement. The procedure
for exercise of this right of termination shall be as follows:

                  12.1.1 Owner shall give written notice to Operator of Owner's
         determination to terminate this Agreement or Operator shall give
         written notice to Owner of its determination to terminate this
         Agreement.

                  12.1.2 Following the giving of such notice, the parties agree
         to cooperate, in good faith, to accomplish the transfer of operating
         responsibility in a prompt manner, including without limitation
         assigning contracts, transferring employees, and modifying licenses,
         approvals and permits as necessary to reflect such change (including,
         if required to effectuate transfer to Owner for regulatory purposes of
         the operating responsibility for the Generation Facilities).

                  12.1.3 It is recognized that no termination shall be
         accomplished until all necessary regulatory approvals, if any, have
         been obtained to transfer the operating responsibility for all
         Generation Facilities to Owner or Owner's designee. During the period
         between the giving of the notice of determination to terminate, and the
         date on which such transfer of operating responsibility is
         accomplished, Operator agrees to continue the provision of Operating
         Services for the Generation Facilities.

                  12.1.4 Upon receipt of all necessary governmental
         authorization for transfer of operating responsibility for each
         Generation Facility from Operator to Owner or Owner's designee, this
         Agreement shall terminate. Except as may otherwise be provided in
         Section 11.1 and this Section 12.1 and except for the consequences of
         Operator's Willful Misconduct, fraud or gross negligence and the other

                                       32
<PAGE>

         limitations provided in Article 9 hereof, Owner hereby agrees that from
         and after such termination Owner shall indemnify and forever hold
         Operator, its servants, directors, employees, affiliates and its agents
         harmless from and against any and all liability, costs, expenses
         (including reasonable attorneys' fees) and judgments, which may
         thereafter be experienced by Operator, which are in any way related to,
         arise out of or are in connection with the activities of Operator, its
         agents, servants, directors, employees and affiliates under this
         Agreement (whether the cause occurred before or after termination).
         Except as may otherwise be provided in Section 11.1 and this Section
         12.1 and except for the consequences of Operator's Willful Misconduct
         or fraud and the other limitations provided in Article 9 hereof, Owner
         further waives any claim Owner may have against Operator, its officers,
         directors, employees, affiliates and agents for damage to property of
         Owner, that arose out of or in connection with the activities of
         Operator, its officers, directors, employees, affiliates and agents
         under this Agreement. The indemnification and waiver contained herein
         shall survive termination and shall be specifically enforceable by
         Operator against Owner.

                                       33
<PAGE>

                                   ARTICLE 13
                                  Miscellaneous

         13.1 No Partnership or Joint Venture. Nothing in this Agreement shall
be deemed to create or constitute a partnership, joint venture or association
among the parties hereto or any of them, the sole purpose of this Agreement
being limited to providing for the orderly and efficient operation, maintenance,
repair, upgrade, rehabilitation, renewal, replacement, additions and
construction of the Generation Facilities.

         13.2 Owner's Designated Representatives. Owner hereby designates its
President as Owner's Representative, who shall receive notices and
communications from Operator under the provisions of this Agreement and who
shall send to the designated Representative of Operator all notices and
communications under the provisions of this Agreement.

         13.3 Operator's Designated Representative, Operator hereby designates
its President as the Operator Representative, who shall receive notices and
communications from Owner's Representative under the provisions of this
Agreement and who shall send to Owner's Representative all notices and
communications concerning the provisions of this Agreement.

         13.4 Depreciation. Owner shall determine the basis and method it will
use for purposes of depreciation and other matters where investment in
Generation Facilities property is relevant.

         13.5 Holidays, Business Days. Any obligations to perform under this
Agreement, including payment obligations, which shall become due on a
non-business day shall become due upon the next business day. The term "business
day" shall mean any day other than a day on which banking institutions in the
City of Atlanta, Georgia are authorized by law to close.

                                       34
<PAGE>

         13.6 Owner's Services to be Furnished at Cost. To the extent that Owner
may, from time to time, provide goods or services to Operator, Operator shall
pay for such goods and services at Owner's cost determined as herein provided,
which payments shall thereupon be treated as Generation Facilities costs under
Article 4.

         13.7 Entire Agreement. This Agreement constitutes the entire
understanding among the parties hereto, superseding any and all previous
understandings, oral or written, pertaining to the subject matter contained
herein. No party hereto has relied or will rely upon any verbal or written
representation or verbal or written information made or given to such party by
any representative of the other party or anyone on its behalf.

         13.8 Amendments. This Agreement may not be amended, modified, or
terminated, nor may any obligation hereunder be waived verbally, and no such
amendment, modification, termination or waiver shall be effective for any
purpose unless it is in writing, and signed by both parties hereto, and all
necessary regulatory approvals have been obtained.

         13.9 Notices. Any notice, request, consent or other communication
permitted or required by this Agreement shall be in writing and shall be deemed
given when deposited in the United States Mail, first class postage prepaid, and
addressed as follows:

         If to Operator:            Georgia Power Company
                                    333 Piedmont Ave.
                                    Atlanta, GA 30308
                                    Attention: President

         If to Owner:               Southern Power Company
                                    270 Peachtree Street, N.E.
                                    Atlanta, GA  30303
                                    Attention: President

                                       35
<PAGE>

         Unless a different officer or address shall have been designated by the
respective party by notice in writing.

         13.10 Captions. The descriptive captions of the various Articles,
Sections and Paragraphs of this Agreement have been inserted for convenience of
reference only and shall in no way modify or restrict any of the terms and
provisions hereof.

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

         13.12 No Waiver. Failure of any party to enforce any rights or to
require performance of any other party of any of the provisions of this
Agreement shall not release any party of any of its obligations under this
Agreement and shall not be deemed a waiver of any rights of the parties to
insist on performance thereof, or of any of the parties' rights or remedies
hereunder, and in no way shall affect the validity of these terms and conditions
or any part thereof, or the right of any party thereafter to enforce every
provision hereof.

         13.13 Singular and Plural. Throughout this Agreement, whenever any word
in the singular number is used, it shall include the plural unless the context
otherwise requires; and whenever the plural number is used, it shall include the
singular unless the context otherwise requires.

         13.14 Third Party Beneficiaries. This Agreement is for the benefit of
Owner and Operator, and no person or entity other than Owner and Operator is or
shall be entitled to bring any action to enforce any provision of this Agreement
against anyone.

         13.15 Severability. Should any provision of this Agreement be held to
be invalid or unenforceable by a court of competent jurisdiction, the remaining
provisions shall remain in full force and effect, provided that deletion of the
invalid or unenforceable provision does not materially affect the agreement of
the parties contained herein.

                                       36
<PAGE>

                                   ARTICLE 14
                             Successors and Assigns

         14.1 This Agreement and all of the terms and conditions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither this Agreement nor any
of Operator's obligations hereunder shall be assignable by Operator, in whole or
in part, without the express written consent of Owner. Any mortgage indenture
trustee which shall foreclose on substantially all of the electric generation
properties of Owner may, at such trustee's own election, be deemed to be a
successor and assign of Owner under this Agreement.

                                   ARTICLE 15
                                  Governing Law

         15.1     This Agreement shall be construed in accordance with, and to
be governed by, the laws of the State of Georgia.

                                       37
<PAGE>

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

                  "Operator"

                 GEORGIA POWER COMPANY

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

                 "Owner"

                  SOUTHERN POWER COMPANY

                 By:
                    --------------------------------
                     C.B. Harreld
                     Vice President, Comptroller and Chief Financial Officer

                                       38
<PAGE>

                                   SCHEDULE 1

                  SOUTHERN POWER COMPANY GENERATION FACILITIES

GENERATING STATION                                    LOCATION
Plant Dahlberg                                      Jackson County, Georgia

                                       39Exhibit 10.8

                            INTERCONNECTION AGREEMENT

                                 By and Between

                             SOUTHERN POWER COMPANY

                                       and

                              GEORGIA POWER COMPANY

                                       for

                                 PLANT DAHLBERG

                            Dated as of July 31, 2001

<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

<S>                                                                                                               <C>
SECTION 1:  DEFINITIONS............................................................................................1

SECTION 2: INTERCONNECTION SERVICE.................................................................................6

   2.1 SERVICE.....................................................................................................6
   2.2 FACILITY....................................................................................................6
   2.3 PERMITS.....................................................................................................6
   2.4 EASEMENTS AND ACCESS RIGHTS.................................................................................6
   2.5 INTERCONNECTION POINT.......................................................................................7
   2.6 STATION SERVICE ARRANGEMENTS................................................................................7
   2.7 GENERATOR BALANCING SERVICE ARRANGEMENTS....................................................................8
   2.8 INTERCONNECTION PROCEDURES..................................................................................8
   2.9 INTERCONNECTED OPERATION SERVICES...........................................................................8
   2.10 CONTROL AREA OPERATIONS....................................................................................8
   2.11 INADVERTENT FLOW...........................................................................................8

SECTION 3:  TERM, TERMINATION AND DISCONNECTION....................................................................8

   3.1 TERM........................................................................................................9
   3.2 DEFAULT.....................................................................................................9
   3.3 PERMANENT DISCONNECTION.....................................................................................9
   3.4 TEMPORARY DISCONNECTION.....................................................................................9
   3.5 SURVIVAL OF RIGHTS.........................................................................................10

SECTION 4:  OPERATION AND MAINTENANCE OF GENERATOR'S FACILITY.....................................................10

   4.1 GENERAL STANDARDS..........................................................................................10
   4.2 MAINTENANCE AND OPERATION..................................................................................11

SECTION 5:  INTERCONNECTION FACILITIES............................................................................11

   5.1 INTERCONNECTION FACILITIES.................................................................................11
   5.2 COSTS OF INTERCONNECTION FACILITIES........................................................................11
   5.3 ADDITIONAL INTERCONNECTORS.................................................................................11
   5.4 PAYMENT OF COST OF ON-GOING MAINTENANCE AND OPERATION OF THE INTERCONNECTION FACILITIES....................12
   5.5 CARE OF EQUIPMENT..........................................................................................13
   5.6 PAYMENT OF THE COST OF THE INTERCONNECTION FACILITIES......................................................13

SECTION 6:  LIABILITY AND INDEMNIFICATION.........................................................................14

   6.1 REMEDIES FOR BREACH........................................................................................14
   6.2 LIMITATION OF LIABILITY....................................................................................14
   6.3 NO LIABILITY FOR OTHER PARTY'S RESPONSIBILITIES............................................................15
   6.4 RESPONSIBILITY FOR PROPERTY................................................................................15
   6.5 INDEMNIFICATION............................................................................................15

SECTION 7:  METERING, DATA ACQUISITION, AND RELATED PROTECTION EQUIPMENT..........................................16

   7.1 METERING...................................................................................................16
   7.2 DATA ACQUISITION AND PROTECTION EQUIPMENT..................................................................16
   7.3 PAYMENT OF COST OF METERING, DATA ACQUISITION, AND RELATED PROTECTION EQUIPMENT............................17
   7.4 CARE OF EQUIPMENT..........................................................................................17
   7.5 INSPECTION AND TESTING.....................................................................................18
   7.6 INACCURACIES...............................................................................................18

SECTION 8:  INITIAL SYNCHRONIZATION AND FACILITY TESTING..........................................................18

                                       i
<PAGE>

   8.1 FACILITY EVALUATION BASED ON ACTUAL EQUIPMENT DATA.........................................................18
   8.2 IMPLEMENTATION OF CONTROL AND OPERATING PROCEDURES.........................................................19
   8.3 FACILITY INSPECTION........................................................................................19
   8.4 INITIAL SYNCHRONIZATION....................................................................................19
   8.5 REVIEW OF SYNCHRONIZATION TESTS............................................................................19

SECTION 9:  ADMINISTRATION CHARGE.................................................................................20

SECTION 10:  PAYMENT PROCEDURE....................................................................................20

   10.1 BILLING...................................................................................................20
   10.2 FAILURE TO TIMELY PAY.....................................................................................20
   10.3 INTEREST..................................................................................................20
   10.4 CREDITWORTHINESS..........................................................................................21
   10.5 AUDIT RIGHTS..............................................................................................21
   10.6 DISPUTED BILLS............................................................................................21
   10.7 NO WAIVER.................................................................................................21

SECTION 11:  REPRESENTATIONS, WARRANTIES AND COVENANTS............................................................21

   11.1 GENERATOR REPRESENTATIONS, WARRANTIES AND COVENANTS.......................................................21
   11.2 GEORGIA POWER REPRESENTATIONS, WARRANTIES AND COVENANTS...................................................22
   11.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.....................................................23

SECTION 12:  COMPLIANCE WITH LAWS.................................................................................23

   12.1 COMPLIANCE................................................................................................23
   12.2 CHANGE OF LAW.............................................................................................23
   12.3 REGULATORY FILINGS........................................................................................23
   12.4 TAXES.....................................................................................................24

SECTION 13:  INSURANCE............................................................................................24

   13.1 GENERATOR'S INSURANCE.....................................................................................24
   13.2 NOTICE AND CERTIFICATION..................................................................................26

SECTION 14:  FORCE MAJEURE........................................................................................26

   14.1 DEFINITION OF FORCE MAJEURE EVENT.........................................................................26
   14.2 NO BREACH OR LIABILITY....................................................................................26
   14.3 SUSPENSION OF PERFORMANCE.................................................................................27

SECTION 15:  OPERATING COMMITTEE..................................................................................27

   15.1 ESTABLISHMENT OF COMMITTEE................................................................................27
   15.2 DUTIES....................................................................................................27

SECTION 16: ASSIGNMENT............................................................................................28

   16.1 ASSIGNMENT BY GENERATOR...................................................................................28
   16.2 ASSIGNMENT BY GEORGIA POWER...............................................................................29

SECTION 17: MISCELLANEOUS.........................................................................................30

   17.1 GEORGIA POWER'S AGENT.....................................................................................30
   17.2 NO PARTNERSHIP............................................................................................30
   17.3 SUCCESSORS AND ASSIGNS....................................................................................30
   17.4 NO THIRD PARTY BENEFIT....................................................................................30
   17.5 NO AFFILIATE LIABILITY....................................................................................30
   17.6 TIME OF ESSENCE...........................................................................................30
   17.7 NO WAIVER.................................................................................................30
   17.8 AMENDMENTS................................................................................................30
   17.9 NOTICE....................................................................................................31
   17.10 COUNTERPARTS.............................................................................................32

                                       ii
<PAGE>

   17.11 CROSS-REFERENCES.........................................................................................32
   17.12 SECTION HEADINGS.........................................................................................32
   17.13 INCLUDING................................................................................................32
   17.14 GOVERNING LAW............................................................................................32
   17.15 MERGER...................................................................................................32
   17.16 NERC.....................................................................................................32
   17.17 GOOD UTILITY PRACTICES...................................................................................32
   17.18 SAFETY...................................................................................................32
   17.19 CONFIDENTIAL INFORMATION.................................................................................33
   17.20 COOPERATION..............................................................................................33
   17.21 NEGOTIATED AGREEMENT.....................................................................................33
   17.22 SUBCONTRACTORS...........................................................................................33
   17.23 EWG STATUS...............................................................................................34

APPENDIX A  INTERCONNECTION PROCEDURES.............................................................................1

APPENDIX B  SPECIFICATIONS.........................................................................................1

APPENDIX C QUARTERLY ESTIMATED CONSTRUCTION COSTS..................................................................1

</TABLE>

                                       iii
<PAGE>

                            INTERCONNECTION AGREEMENT

         This Interconnection Agreement ("Agreement") is made and entered into
by and between Southern Power Company, organized and existing under the laws of
the State of Delaware and having its principal place of business at Birmingham,
Alabama (hereinafter referred to as the "Generator"), and Georgia Power Company,
a corporation organized and existing under the laws of the State of Georgia and
having its principal place of business at Atlanta, Georgia (hereinafter referred
to as "Georgia Power"). Generator and Georgia Power may be hereinafter referred
to individually as a "Party" and collectively as the "Parties."

                              W I T N E S S E T H:

         WHEREAS, Generator desires to engage in the interconnected operation of
Generator's generating facility with the transmission facilities of the Georgia
Power Electric System; and

         WHEREAS, Generator desires to engage in sales of electric energy to be
generated by Generator's generating facility.

         NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, and other good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the Parties covenant
and agree as follows:

                             SECTION 1: DEFINITIONS

         1.1 In addition to the initially capitalized terms and phrases defined
in the preamble of this Agreement, the following initially capitalized terms and
phrases as and when used in this Agreement shall have the respective meanings
set forth below:

                  1.1.1 "Affiliate" - shall mean, with respect to any Party,
another Person (i) which, directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
such Party, (ii) which, directly or indirectly, of record or beneficially, owns
or holds 10% or more of the shares of any class of capital stock or other
ownership interest of such Party having voting power or (iii) of which 10% or
more of the shares of any of the capital stock or other ownership interest of
the Affiliate having voting power is owned or held, directly or indirectly, of
record or beneficially, by or for such Party. For purposes of this definition,
"control" when used with respect to any entity means the power to direct the
management and policies of such entity, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.

                  1.1.2 "Appendix" or "Appendices" - means any of the schedules,
exhibits and attachments, including the Interconnection Procedures, which are
appended hereto and are incorporated by reference herein and made a part of this
Agreement.

                                       -1-
<PAGE>

                  1.1.3 "Business Day" - means any Day excluding Saturday and
Sunday and excluding any Day on which banking institutions in Georgia are closed
because of a federal holiday.

                  1.1.4 "Day" or "Calendar Day" - means a calendar day unless
otherwise specified.

                  1.1.5    "Effective Date" - shall be July 31, 2001, or such
other date as the FERC shall order.

                  1.1.6 "Emergency" - means a condition or situation associated
with the transmission and distribution of electricity, including voltage
abnormalities, that, in the sole reasonable judgment of Georgia Power, exercised
on a non-discriminatory basis as the transmission asset owner, adversely affects
or is imminently likely to adversely affect: (i) public health, life or
property; (ii) Georgia Power's employees, agents or property; or (iii) Georgia
Power's ability to maintain safe, adequate, and continuous electric service to
its customers and/or the customers of any member of NERC consistent with Good
Utility Practices; provided, however, that if there is no adverse condition
associated with distribution or transmission facilities, then the inability of
Georgia Power to meet its load requirements solely because of insufficient
generation resources shall not constitute an Emergency.

                  1.1.7 "Facility" - means all of Generator's equipment
(including the Generator's Interconnection Equipment), as described in Appendix
B of this Agreement, used to produce electric energy and required for parallel
operation with Georgia Power which equipment is located near the city of Athens,
Jackson County, Georgia.

                  1.1.8    "FERC" - means the Federal Energy Regulatory
Commission and any successor.

                  1.1.9 "Force Majeure Event" - shall have the meaning ascribed
to it in Section 14.1.

                  1.1.10 "Generator" - shall have the meaning ascribed to it in
the first paragraph of this Agreement, and its agents or permitted successors
and assigns.

                  1.1.11 "Generator's Interconnection Equipment" - means all
equipment which is owned, operated, or maintained by or for Generator as such is
described in Appendix B (including without limitation, equipment for connection,
switching, protective relaying and safety) that is required to be installed for
the delivery of electric energy onto the Georgia Power Electric System on behalf
of Generator. Generator's Interconnection Equipment does not include the
Interconnection Facilities.

                  1.1.12 "Georgia ITS" - means the Georgia Integrated
Transmission System, the electric transmission systems owned individually by

                                       -2-
<PAGE>

Georgia Power, Georgia Transmission Corporation, the Municipal Electric
Authority of Georgia and the City of Dalton, Georgia, and operated as an
integrated transmission system.

                  1.1.13 "Georgia Power" - shall have the meaning ascribed to it
in the first paragraph of this Agreement, including any of its agents or
permitted successors and assigns.

                  1.1.14 "Georgia Power Electric System" - means collectively,
the entire network of electric generation, transmission and distribution
facilities, equipment and other devices owned (in whole or in part) or
controlled by Georgia Power, including the Georgia ITS, for the purposes of
generating, transmitting, receiving, and distributing electric energy and
capacity.

                  1.1.15 "Good Utility Practices" - mean, at a particular time,
any of the practices, methods and acts engaged in or approved by a significant
portion of the electric utility industry prior to such time, or any of the
practices, methods and acts which, in the exercise of reasonable judgment in
light of the facts known at the time the decision was made, could have been
expected to accomplish the desired result(s) at a reasonable cost consistent
with good business practices, reliability, safety and expedition. Good Utility
Practices are not intended to be limited to the optimum practice, method or act
to the exclusion of all others, but rather to be a spectrum of possible
practices, methods or acts expected to accomplish the desired results, having
due regard for, among other things, manufacturers' warranties, Legal
Requirements, NERC and SERC guides, and applicable safety and maintenance codes.

                  1.1.16 "Governmental Authority" - means any local, state,
regional or federal administrative, legal, judicial or executive agency, court,
commission, department, taxing authority, or other authority thereof having
jurisdiction over either Party, the Facility, the Interconnection Facilities,
the Generator's Interconnection Equipment, or the Georgia Power Electric System,
whether acting under actual or assumed authority.

                  1.1.17 "Indenture Trustee" - means a trust company chartered
or other Person incorporated under the laws of the United States or a state of
the United States and based in the United States which is the indenture trustee,
mortgagee or secured party under any Indenture.

                  1.1.18 "Initial Synchronization Date" - means the date that
includes the first instant in time when energy generated by the Facility is
delivered to the Georgia Power Electric System at the Interconnection Point.
Such Initial Synchronization Date is projected in Appendix B.

                  1.1.19 "Interconnection Facilities" - means all equipment
which is constructed, owned, operated, or maintained by or for Georgia Power, as
such are generally identified and described in Appendix B, (including without
limitation, equipment for connection, switching, transmission, distribution,
protective relaying and safety) that, in Georgia Power's reasonable judgment, is
required to be installed for the delivery of electric energy onto the Georgia
Power Electric System on behalf of Generator and for the receipt by Generator of
electric service in accordance with Section 2.6 hereof.

                                       -3-
<PAGE>

                  1.1.20 "Interconnection Point" - means the point of
interconnection of Generator's Facility to the Georgia Power Electric System as
defined in the Specifications to this Agreement set forth in Appendix B.

                  1.1.21 "Interconnection Procedures" - means the procedures for
interconnection and operations set forth in Appendix A.

                  1.1.22 "Interconnection Service" - means the services provided
by Georgia Power to Generator to safely and reliably interconnect Generator's
Facility to the Georgia Power Electric System and receive electric energy and
capacity from the Facility at the Interconnection Point pursuant to the terms of
this Agreement and, if applicable, the Tariff.

                  1.1.23 "Interest Rate" - means the prime rate of interest as
published from time to time in the Wall Street Journal or comparable successor
publication.

                  1.1.24   "kW" - means  kilowatts.  In  addition,  "MW" may be
used to mean  megawatts,  which are 1000 kilowatts.

                  1.1.25 "kWh" - means kilowatt-hours. In addition, "MWh" may be
used to mean megawatt-hours, which are 1000 kilowatt-hours.

                  1.1.26 "Legal Requirement" - means any law, code, statute,
regulation, rule, ordinance, treaty, judgment, injunction, order or other
legally binding announcement, directive, published practice or requirement
enacted, issued or promulgated by a Governmental Authority having jurisdiction
over the matter in question, which is valid and applicable to the matter in
question at the time of the Effective Date or anytime thereafter during the Term
of this Agreement.

                  1.1.27 "Lien" - means any and all liens, mortgages,
encumbrances, pledges, claims, leases, charges and security interests of any
kind.

                  1.1.28 "Month" - means a calendar Month, or such other period
as may be mutually agreed by the Parties. "Monthly" has a meaning correlative to
that of Month.

                  1.1.29 "Monthly Administration Charge" - for a particular
Month of the Term, means the Monthly amount to be paid by Generator to Georgia
Power as set forth in Section 9.

                  1.1.30 "NERC" - means the North American Electric Reliability
Council, including any successor thereto and subdivisions thereof.

                  1.1.31 "Party" or "Parties" - means either Georgia Power or
Generator or both.

                  1.1.32   "Permitted  Financing  Assignee"  - shall  have the
meaning  ascribed  to it in Section 16.1 hereof.

                  1.1.33   "Permitted Liens" -  means:

                                       -4-
<PAGE>

                           (a) any Lien on this Agreement and/or Georgia Power's
                  rights, obligations, title or interest in, to and under this
                  Agreement pursuant to that certain First Mortgage Bond
                  Indenture from Georgia Power to The Chase Manhattan Bank,
                  Trustee, dated as of March 1, 1941, or pursuant to any other
                  mortgage or security agreement as heretofore and hereafter
                  amended (the "Indenture");

                           (b) any Lien for taxes, assessments or other
                  governmental charges which are not delinquent or the validity
                  of which is being contested in good faith by appropriate
                  proceedings diligently prosecuted so long as appropriate
                  reserves are maintained in respect of such taxes, assessments
                  or charges; and

                           (c) attachments, judgments and other similar Liens
                  arising in connection with court proceedings, provided that
                  within sixty (60) Days of the attachment thereof (but not less
                  than five (5) Days prior to any execution or sale pursuant
                  thereto), the execution or other enforcement of such Liens is
                  effectively stayed and the claims secured thereby are being
                  contested in good faith and by appropriate proceedings so long
                  as any material risk of liability is covered by a bond, or
                  appropriate reserves are maintained in respect of such
                  proceedings.

                  1.1.34 "Person" - means any individual, corporation, limited
liability company, partnership, joint venture, association, joint stock company,
trust, trustee(s) of a trust, unincorporated organization, or any federal,
state, county, municipal or regional governmental authority, agency, board,
body, instrumentality or court.

                  1.1.35 "Persons Indemnified" - means, when used with respect
to a Party, collectively or individually (as the context might indicate), the
Party, the Party's Affiliates and permitted successors and assigns, and the
directors, officers, representatives, agents and employees of each of them.

                  1.1.36 "Qualified Person" - shall mean any individual,
corporation, limited liability company, partnership, joint venture, association,
joint stock company, trust, trustee(s) of a trust, unincorporated organization,
or any federal, state, county, municipal or regional governmental authority,
agency, board, body, instrumentality or court who is an owner or operator of
transmission facilities, or belongs to a regional transmission organization.

                  1.1.37 "Quarter" - means for each year of the Term four
distinct time periods for planning and budgeting purposes comprised of January
through March, April through June, July through September, and October through
December. "Quarterly" has a meaning correlative to that of Quarter. In the event
that this Agreement becomes effective during any Quarter, the obligations herein
that arise on a Quarterly basis shall begin in the Quarter immediately following
the initial Effective Date of this Agreement.

                  1.1.38   "Quarterly  Estimated  Construction  Cost" - shall
have the meaning set forth in Section 5.6.1.

                                       -5-
<PAGE>

                  1.1.39 "SERC" - means the Southeastern Electric Reliability
Council, including any successor thereto and subdivisions thereof.

                  1.1.40 "Southern Companies" - means, collectively, the
electric utility operating company subsidiaries of Southern Company engaged in
common dispatch and control of generating resources within the Southern Company
Control Area, currently including Alabama Power Company, Georgia Power Company,
Gulf Power Company, Mississippi Power Company, Savannah Electric and Power
Company, and Southern Power Company.

                  1.1.41 "Southern Company Control Area" - means that electric
system of the Southern Companies that has been recognized by NERC and SERC as a
control area.

                  1.1.42 "Specifications" - mean the interconnection
specifications provided in Appendix B to this Agreement, which are attached
hereto and incorporated herein by reference.

                  1.1.43 "Tariff" - means Southern Companies Open Access
Transmission Tariff or a successor arrangement that governs transmission and
interconnection services on the transmission facilities of Georgia Power.

                  1.1.44 "Term" - means the duration of this Agreement as
specified in Section 3.1.

                       SECTION 2: INTERCONNECTION SERVICE

         2.1 Service. Georgia Power shall supply Generator with Interconnection
Service at the Interconnection Point for the Facility in accordance with and for
the Term of this Agreement. Interconnection Service does not include
transmission delivery service beyond the Interconnection Point. Neither Georgia
Power nor any of its Affiliates shall have any obligation under this Agreement
to purchase any power from the Facility, it being the intent and understanding
of the Parties that Generator shall be responsible for its power sales to third
parties.

         2.2      Facility.  The Facility is located near the city of Athens,
Jackson County, Georgia.

         2.3 Permits. Generator shall obtain and maintain, at its sole expense,
any and all governmental permits, certificates or authorizations that Generator
is required to obtain and maintain for the performance of its obligations under
this Agreement. Georgia Power shall obtain and maintain any and all permits,
certificates or authorizations that are required for the construction,
operation, maintenance, and testing of the Interconnection Facilities, the
expense of which shall be paid by Generator in accordance with Section 5.

         2.4      Easements and Access Rights.

                  2.4.1 To the extent that Generator has any such rights,
Generator shall convey to Georgia Power at no cost to Georgia Power any and all
rights of way and easements, including adequate and continued access rights to

                                       -6-
<PAGE>

property of Generator necessary to provide Interconnection Service to Generator.
Generator agrees that such parcel, rights of way, and easements shall survive
termination or expiration of this Agreement, if and to the extent necessary for
the continued use or the removal of the Interconnection Facilities. Such
easements and access rights are specifically intended to permit Georgia Power to
install, operate, maintain, replace and/or remove the Interconnection
Facilities.

                  2.4.2 Upon reasonable advance notice given to Generator,
representatives of Georgia Power (as the transmission asset owner) shall at all
reasonable times have access to the Generator's Interconnection Equipment and to
property owned or controlled by Generator to the extent necessary in order to:
(i) inspect, maintain, and test meters and other Georgia Power equipment; (ii)
interconnect, disconnect (in accordance with Section 3), monitor, or measure
energy generated by the Facility; (iii) inspect the operation, maintenance or
testing of the Generator's Interconnection Equipment; or (iv) take such other
action as may be reasonably necessary to exercise Georgia Power's rights under
this Agreement. Georgia Power shall take reasonable steps to ensure such access
does not materially interfere with the operations, maintenance or testing of the
Facility, and that Georgia Power's use of such property complies with Legal
Requirements with respect to the Facility as well as with Generator's reasonable
policies and procedures applicable to the Facility, including those regarding
safety. Generator shall cooperate in such physical inspections of the
Generator's Interconnection Equipment as may be reasonably required by Georgia
Power. Georgia Power's technical review and inspection of the Generator's
Interconnection Equipment shall not be construed as endorsing the design thereof
nor as any warranty of the safety, durability or reliability of the Facility.

                  2.4.3 To the extent that Georgia Power has any such rights,
Georgia Power agrees to furnish at no cost to Generator any necessary licenses
or other access rights to permit Generator to construct, connect, operate and
maintain its facilities located in Georgia Power's substation or to otherwise
fulfill its obligations under this Agreement. After the Interconnection
Facilities are energized, such access rights for Generator's facilities located
inside the substation shall be exercised by Generator only with supervision by
Georgia Power. Generator shall provide to Georgia Power reasonable notice under
the circumstances of a request for such supervised access to the substation, and
Georgia Power and Generator shall mutually agree upon the date and time of such
supervised access, such agreement not to be unreasonably withheld. In addition
to the aforementioned requirement, in exercising such access rights, Generator
shall not unreasonably disrupt or interfere with normal operations of Georgia
Power's business and shall act consistent with Good Utility Practice.

         2.5      Interconnection  Point.  Georgia Power shall  establish and
maintain the Interconnection  Point, as described in Appendix B to this
Agreement.

         2.6 Station Service Arrangements. Generator is responsible for making
all appropriate arrangements for station service requirements. Generator must
demonstrate, to Georgia Power's reasonable satisfaction, that it has adequate
arrangements in place to supply its station service requirements. If Generator
supplies its running station service on Generator's side of the Interconnection
Point, then energy consumed and demand requirements are deemed to be netted from
Generator's capability. In this same arrangement, starting station service
energy is also assumed to be netted out of energy delivered to the
Interconnection Point.

                                       -7-
<PAGE>

         2.7 Generator Balancing Service Arrangements. Generator is responsible
for ensuring that its actual generation matches its scheduled delivery, on an
integrated clock hour basis (in whole MW), to the Georgia Power Electric System
at the Interconnection Point. Generator shall make arrangements for the supply
of energy and/or capacity when there is a difference between the actual
generation and the scheduled delivery. Generator may satisfy its obligation for
making such generator balancing service arrangements by: (a) obtaining such
service from another entity that (i) has generating resources within the
Southern Company Control Area, (ii) agrees to assume responsibility for
providing generator balancing service to the Generator and (iii) has a control
area coordination services agreement with the Southern Companies that addresses
generator balancing service for all generating resources for which the entity is
responsible; (b) committing sufficient additional unscheduled generating
resources to the control of and dispatch by the Southern Company Control Area
that are capable of supplying any capacity and energy not supplied by the
scheduled resource and entering into a control area coordination services
agreement with the Southern Company Control Area operator that addresses
generator balancing service obligations; (c) entering into an arrangement with
another NERC-approved control area to dynamically schedule the Generator's
Facility out of the Southern Company Control Area and into such other control
area; (d) entering into a generator balancing service agreement with Southern
Companies pursuant to their Generator Balancing Service Tariff on file with
FERC; or (e) in the event the load/generation balancing function of the control
area in which Georgia Power is a participant is provided by an entity other than
Southern Companies, by entering into an alternate arrangement with such control
area service provider.

         2.8 Interconnection Procedures. When the Facility is operated as part
of the Southern Company Control Area, Generator shall comply with the
Interconnection Procedures (Appendix A) for the Facility at all times. When the
Facility is not operated as part of the Southern Company Control Area, the
Operating Committee shall determine which (if any) of the Interconnection
Procedures are not applicable.

         2.9      Interconnected Operation  Services.   Generator retains any
right it may have to pursue compensation for the provision of interconnected
operation  services by making a filing with FERC.  Georgia Power retains any
right it may have to support or oppose such filing.

         2.10     Control  Area  Operations.  Nothing in this  Agreement shall
obligate  Generator to operate the  Facility as a part of the Southern Company
Control Area.

         2.11 Inadvertent Flow. Generator is not a transmission provider; and
Georgia Power shall have no obligation under this Agreement to pay Generator any
charge for flows of electric power and/or energy through Generator's
Interconnection Equipment.

                                       -8-
<PAGE>

                 SECTION 3: TERM, TERMINATION AND DISCONNECTION

         3.1 Term. This Agreement shall become effective on the Effective Date
and shall continue in effect for a period of forty (40) years from the initial
Effective Date unless terminated earlier by mutual written agreement of the
Parties or otherwise pursuant to the provisions of this Agreement subject to any
applicable Legal Requirement, and shall continue thereafter until terminated by
either Party on at least one (1) year's notice.

         3.2      Default.

                  3.2.1 A Party shall be in "Default" under this Agreement, if:
(i) the Party fails to comply with any material term or condition of this
Agreement; (ii) any material representation or warranty of the Party made
pursuant to this Agreement shall prove to be false or misleading in any material
respect when made or deemed made; or (iii) Generator makes an assignment for the
benefit of Generator's creditors, or voluntary or involuntary proceedings in
bankruptcy are instituted seeking to adjudge Generator a bankrupt, or if
Generator be adjudged a bankrupt, or if Generator's affairs are placed in the
hands of any court for administration.

                  3.2.2 This Agreement may be terminated by either Party, upon
written notice, if the other Party is in Default hereunder and such Party (or
its Permitted Financing Assignee) has not cured such breach within thirty (30)
Days following written notice of such breach to the other Party. Provided,
however, that in the event the Default is not capable of being cured within
thirty (30) Days, the Agreement shall not be terminated if the Party in Default
(or its Permitted Financing Assignee) has begun in good faith taking actions to
cure within thirty (30) Days following such written notice and diligently
proceeds to completion.

                  3.2.3 In the event of a Default by either Party and subject to
that Party's right to cure, the non-defaulting Party may pursue any and all
judicial and administrative remedies and relief available to it.

         3.3 Permanent Disconnection. Upon termination of this Agreement
(whether due to the expiration of the Term or due to a Default as described in
Section 3.2), Georgia Power may permanently disconnect the Facility from the
Georgia Power Electric System in accordance with Good Utility Practices.

         3.4      Temporary Disconnection.

                  3.4.1. Georgia Power (as transmission asset owner) may,
consistent with Good Utility Practice and on a non-discriminatory basis, direct
that the Facility be temporarily disconnected from the Georgia Power Electric
System: (i) during an Emergency; (ii) if the operation and output of the
Facility do not meet the requirements of this Agreement (even if Generator has
commenced actions to cure such Default) and such condition could materially
adversely affect the safe and reliable operation of the Georgia Power Electric
System; (iii) if an inspection of the Facility reveals a hazardous condition,
lack of scheduled maintenance or testing, or an operating characteristic of the
Facility that could materially adversely affect the safe and reliable operation
of the Georgia Power Electric System; (iv) if Generator has modified the
Facility or interconnection protective devices in a manner that could reasonably

                                       -9-
<PAGE>

be expected to materially adversely affect the safe and reliable operation of
the Georgia Power Electric System without the knowledge and approval of Georgia
Power; (v) in the event of tampering with, or unauthorized use of, Georgia
Power's equipment; (vi) if the operation of Generator's equipment materially
adversely affects Georgia Power's equipment or the safe and reliable operation
of the Georgia Power Electric System; or (vii) if necessary to construct,
install, maintain, repair, replace, remove, investigate, inspect or test any
part of the Interconnection Facilities or the transmission facilities of Georgia
Power, in accordance with Section 15.2.4.

                  3.4.2 In the event of the occurrence of any of the conditions
described in Section 3.4.1, Georgia Power shall give as much advance notice as
practicable under the circumstances of the need for disconnection of the
Facility to employees of Generator designated from time to time by Generator to
receive such notice. Upon receipt of notice directing disconnection, Generator
shall carry out the required action. Where circumstances do not permit such
advance notice to Generator or Generator's employees, Georgia Power may
disconnect the Facility from the Georgia Power Electric System without such
notice in accordance with Good Utility Practices. Georgia Power shall reconnect
the Facility as soon as reasonably practicable following the cessation or remedy
of the event that led to the temporary disconnection. The Parties agree to
cooperate and coordinate with each other to the extent necessary in order to
restore the Facility, Interconnection Facilities, and the Georgia Power Electric
System to their normal operating state.

                  3.4.3 Generator shall bear any direct cost incurred by Georgia
Power as a result of any disconnection or reconnection caused by Generator's
negligence, intentional wrongdoing, or breach of this Agreement, whether by
affirmative act or omission of Generator. Georgia Power shall bear any direct
cost incurred by Generator as a result of any disconnection or reconnection
caused by Georgia Power's negligence, intentional wrongdoing, or breach of this
Agreement, whether by affirmative act or omission of Georgia Power.

                  3.4.4 Generator reserves the right, in its sole discretion, to
isolate or disconnect its Facility from the Georgia Power Electric System.

         3.5 Survival of Rights. Upon termination or expiration of this
Agreement, the Parties shall be relieved of their obligations under this
Agreement except for the following obligations which shall survive termination
or expiration: (i) the obligation to pay each other all amounts then owed and
not paid under this Agreement; (ii) obligations arising from action or inaction
during the period the Agreement was in effect under the indemnities provided for
in this Agreement; and (iii) any other obligations which the Agreement
specifically indicates shall survive termination or expiration.

          SECTION 4: OPERATION AND MAINTENANCE OF GENERATOR'S FACILITY

         4.1 General Standards. During the Term, Generator shall have the sole
responsibility to, and at its sole expense shall manage, control, operate and
maintain the Facility in accordance with Good Utility Practices and the
requirements set forth in this Agreement. Generator shall operate its generating
equipment in parallel with the Georgia Power Electric System in accordance with
the operating procedures in Appendix A to this Agreement and those established

                                       -10-
<PAGE>

by the Operating Committee in accordance with Section 15 and in accordance with
the requirements of the NERC-recognized control area in which the Facility
operates. All wiring, apparatus and other equipment necessary to receive or
deliver electric energy on Generator's side of the Interconnection Point shall
be supplied, maintained and operated by and at the expense of Generator.

         4.2 Maintenance and Operation. Generator shall maintain and operate the
Facility in accordance with Good Utility Practices. Generator shall not, without
Georgia Power's prior written approval (which shall not be unreasonably withheld
or delayed), make any change to its Facility which might adversely affect the
operation of the Georgia Power Electric System.

                      SECTION 5: INTERCONNECTION FACILITIES

         5.1      Interconnection Facilities.
                  --------------------------

                  5.1.1 Georgia Power shall design, procure, install, and own
the Interconnection Facilities needed for Georgia Power to provide
Interconnection Service to Generator. Georgia Power shall be responsible for
acquiring all necessary real property rights, easements, licenses, and rights of
way and for determining the need for, and the design, construction,
installation, operation, maintenance and testing of any equipment that may be
required for Interconnection Service in a manner consistent with Good Utility
Practices, the Interconnection Procedures and the requirements set forth in this
Agreement. All Interconnection Facilities shall be and remain the property of
Georgia Power. Georgia Power's obligations hereunder are dependent upon its
securing and retaining the necessary rights, easements, privileges, franchises,
permits and equipment for meeting such obligations; provided, however, that
Georgia Power shall exercise reasonable efforts to secure and retain for the
Term of this Agreement those rights, easements, privileges, franchises, permits
and equipment.

                  5.1.2 Following commencement of commercial operation of the
Facility and throughout the Term, Georgia Power shall be responsible for
determining the need for, and the design, construction, installation, operation,
maintenance and testing of any equipment that may be required for
Interconnection Service in a manner consistent with Good Utility Practices, the
Interconnection Procedures and the requirements set forth in this Agreement.

         5.2 Costs of Interconnection Facilities. To the extent consistent with
FERC policy, Generator shall be responsible for, and shall reimburse Georgia
Power for, all costs and expenses reasonably incurred by or on behalf of Georgia
Power in connection with the planning, design, construction, installation,
testing, inspection, ownership, operation and maintenance of all or any part of
the Interconnection Facilities during the Term of this Agreement.

         5.3 Additional Interconnectors. In the instance where an entity other
than Generator seeks to be the first additional Person to interconnect to the
Georgia Power Electric System through the Interconnection Facilities that have
been paid for by Generator (such other Person is referred to as the "Additional
Interconnector") and where the Additional Interconnector seeks to interconnect
for any purpose other than for Georgia Power to make a network upgrade, then

                                       -11-
<PAGE>

Georgia Power agrees that the Additional Interconnector shall be charged a pro
rata share of the cost of its interconnection, as defined hereafter. For
purposes of this subparagraph, the Additional Interconnector's pro rata share of
its cost of interconnection shall be the sum of the incremental cost of
physically interconnecting the Additional Interconnector to the Interconnection
Facilities and the original cost of the Interconnection Facilities paid by
Generator, including the price of the land provided by Generator (the sum of the
incremental cost and the original cost hereafter referred to as "Combined Cost
of Interconnection") and then dividing the Combined Cost of Interconnection by
two (2) in order to determine both Generator's and the Additional
Interconnector's "Pro Rata Share of the Combined Cost of Interconnection."
Georgia Power shall then pay to Generator, or have the Additional Interconnector
pay to Generator, the difference between the original cost of the
Interconnection Facilities paid by Generator and Generator's Pro Rata Share of
the Combined Cost of Interconnection; provided, however, that no such payment
shall be required if it would result in the Generator bearing less than its Pro
Rata Share of the Combined Cost of Interconnection. In the event that Persons
additional and subsequent to the Additional Interconnector seek to interconnect
to the Georgia Power Electric System through the Interconnection Facilities that
have been paid for by Generator (such additional interconnectors referred to as
"Subsequent Additional Interconnectors") and where the Subsequent Additional
Interconnectors seek to interconnect for any purpose other than for Georgia
Power to make a network upgrade, then Georgia Power agrees that the Subsequent
Additional Interconnectors shall be charged a pro rata share of the cost of
their respective interconnection, such cost to be determined in accordance with
the methodology described above, and Georgia Power agrees further that in such
event it shall pay, or have such Subsequent Additional Interconnectors pay to
Generator and Additional Interconnector, reimbursement calculated based on the
method described above, taking into account Generator's Pro Rata Share of the
Combined Cost of Interconnection. Except in accordance with the cost sharing
methodology set forth herein, Generator shall not be responsible for the costs
of any modifications of the Interconnection Facilities that are not caused by
the Generator. In no event shall Generator be obligated to pay any increased
amount as a result of any Additional Interconnector or Subsequent Additional
Interconnector. To the extent that all interconnectors do not have comparable
interconnection points, the Combined Cost of Interconnection shall be adjusted
appropriately.

         5.4      Payment of Cost of On-Going Maintenance and Operation of the
                  Interconnection Facilities

                  5.4.1 Georgia Power shall operate and maintain the
Interconnection Facilities in accordance with Good Utility Practices and in a
non-discriminatory manner.

                  5.4.2 Georgia Power shall develop an estimate of all costs and
expenses to be paid by Generator for the operation and maintenance of the
Interconnection Facilities on an annual basis and provide the annual estimate to
Generator at least eight (8) weeks before December 31 of each year. In the case
of Additional Interconnectors or Subsequent Additional Interconnectors,

                                       -12-
<PAGE>

Generator shall be responsible for up to its pro rata share, calculated in
accordance with Section 5.3, of the costs of operation and maintenance of the
Interconnection Facilities. Generator shall pay one-twelfth (1/12) of such
estimated costs each Month in accordance with Section 10. In addition, Generator
shall pay its pro rata share of all costs reasonably incurred by Georgia Power
(excluding any such costs reimbursed to Georgia Power through insurance
proceeds) to repair and restore the Interconnection Facilities caused by any
Force Majeure Event upon receipt of an invoice in accordance with Section 10.

                  5.4.3 Georgia Power shall true-up this estimate to Georgia
Power's actual costs and expenses within a reasonable period of time after such
actual costs and expenses are known but not less often than annually. In the
event that the actual costs and expenses to be paid by Generator under this
Section 5.4 are more or less than Georgia Power's initial estimate, the
difference (either a credit or an additional charge) shall be reflected on a
subsequent invoice.

         5.5 Care of Equipment. Generator shall exercise care in accordance with
Good Utility Practices to protect the Interconnection Facilities located on
Generator's premises, and agrees to pay the cost of repairs or replacement in
the event of loss or damage to the Interconnection Facilities arising from the
failure of Generator to properly protect those Interconnection Facilities in
accordance with Good Utility Practices.

         5.6      Payment of the Cost of the Interconnection Facilities.

                  5.6.1 Generator shall pay Georgia Power in advance for the
costs incurred related to the installation and construction of the
Interconnection Facilities. Georgia Power shall develop a quarterly payment
schedule that shall be based upon (i) the estimated costs to be incurred by
Georgia Power in the installation and construction of the Interconnection
Facilities, and (ii) the time periods that Georgia Power estimates that such
costs will be incurred by Georgia Power ("Quarterly Estimated Construction
Costs"). A current estimate of the Quarterly Estimated Construction Costs and
the projected payment schedule are attached as Appendix C. Georgia Power may
revise the schedule from time to time to more accurately reflect more current
estimates of costs and/or to incorporate any needed true-up of estimated costs
to actual costs. Georgia Power shall obtain authorization to proceed prior to
proceeding with planning, construction, installation or testing of the
Interconnection Facilities. Generator shall pay such estimated costs as
specified in the payment schedule in accordance with Section 10. Generator shall
have the right to approve any deviation in the scope of the work if such
deviation would result in an estimated increase of ten percent (10%) or more
over the estimated costs. In no event shall Georgia Power collect from Generator
any estimated payment for any costs unless Georgia Power reasonably expects to
actually incur such costs during the forthcoming Quarter.

                  5.6.2 During the construction of the Interconnection
Facilities, Georgia Power shall true-up the estimated payments to Georgia
Power's actual costs and expenses within a reasonable period of time after such
actual costs and expenses are known but not less often than annually. In the
event that the actual costs and expenses to be paid by Generator are more or
less than Georgia Power's estimate, the difference (either a credit or
additional charge) shall be reflected on a subsequent invoice. Georgia Power
shall issue a final cost report within one hundred twenty (120) Days of the
Facility's commercial operation date. The final report shall set forth in
reasonable detail the actual costs of the Interconnection Facilities and shall
true-up the estimated payments to actual costs. To the extent that the final,
actual costs that are Generator's cost responsibility under this Agreement
exceed the estimated costs already paid by Generator, Georgia Power shall
invoice Generator in accordance with Section 10.1. To the extent that the

                                       -13-
<PAGE>

estimated costs already paid by Generator exceed the final, actual costs that
are Generator's cost responsibility under this Agreement, Georgia Power shall
refund to Generator an amount equal to the difference within twenty (20) Days of
the issuance of the final cost report.

                  5.6.3 Georgia Power shall inform Generator on a monthly basis,
and at such other times as Generator reasonably requests, of the status of the
construction and installation of the Interconnection Facilities, including, but
not limited to, the following information: progress to date; a description of
scheduled activities for the next period; the delivery status of all equipment
ordered; and the identification of any event which Georgia Power reasonably
expects may delay construction of, or increase the cost of, the Interconnection
Facilities.

                  5.6.4 Generator reserves the right, upon written notice to
Georgia Power, to suspend at any time all work by Georgia Power associated with
the construction and installation of the Interconnection Facilities. In such
event, Generator shall be responsible for the costs which Georgia Power (i) has
incurred prior to the suspension to the extent such costs previously were
authorized by Generator and (ii) reasonably incurs in suspending such work,
including without limitation, the costs incurred to ensure the safety of persons
and property and the integrity of the Georgia Power Electric System and the
costs incurred in connection with the cancellation of material and labor
contracts, provided such cancellation has been authorized by Generator. Georgia
Power will invoice Generator pursuant to Section 10.1 and agrees to use
reasonable efforts to minimize its costs. If, after such suspension, Generator
does not provide Georgia Power with written notice to proceed within three
hundred sixty-five (365) Days after the notice of suspension, this Agreement
shall be deemed terminated. If this Agreement is deemed terminated, Generator
shall be responsible for costs reasonably incurred in winding up such work and
the costs incurred in connection with the cancellation of material and labor
contracts, to the extent to which Generator has not already reimbursed Georgia
Power for such costs. Any non-returnable equipment that has not already been
installed by Georgia Power shall become the property of Generator "as is" upon
payment of Georgia Power's costs.

                    SECTION 6: LIABILITY AND INDEMNIFICATION

         6.1 Remedies for Breach. Subject to Section 6.2, either Party shall be
liable to the other for any loss resulting directly from any breach of this
Agreement and which at the time of the breach was a reasonable foreseeable
consequence of such breach.

         6.2 Limitation of Liability. NOTWITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT, NEITHER PARTY NOR ITS PERSONS INDEMNIFIED SHALL BE LIABLE TO THE
OTHER PARTY OR ITS PERSONS INDEMNIFIED FOR ANY CLAIMS, SUITS, ACTIONS OR CAUSES
OF ACTION FOR INCIDENTAL, PUNITIVE, SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES
(INCLUDING, WITHOUT LIMITATION, DAMAGES IN THE CHARACTER OF LOSS OF PROFITS OR
REVENUES, DAMAGES SUFFERED BY GENERATOR'S OR GEORGIA POWER'S CUSTOMERS DUE TO
SERVICE INTERRUPTIONS, OR COST OF CAPITAL) CONNECTED WITH, RELATING TO, OR

                                       -14-
<PAGE>

ARISING OUT OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY SUCH DAMAGES
WHICH ARE BASED UPON CAUSES OF ACTION FOR BREACH OF CONTRACT, TORT (INCLUDING
NEGLIGENCE AND MISREPRESENTATION), BREACH OF WARRANTY, STRICT LIABILITY OR
OTHERWISE. THE PROVISIONS OF THIS SECTION 6.2 SHALL APPLY REGARDLESS OF FAULT
AND SHALL SURVIVE TERMINATION, CANCELLATION, SUSPENSION, COMPLETION, OR
EXPIRATION OF THIS AGREEMENT.

         6.3 No Liability for Other Party's Responsibilities. Neither Party nor
its Persons Indemnified assumes any obligation or responsibility of any kind
with respect to the other Party's equipment, including, without limitation,
obligation or responsibility with respect to the condition or operation of said
equipment, except for Generator's obligations and responsibilities hereunder for
the Interconnection Facilities. Neither Party nor its Persons Indemnified shall
be responsible for the transmission, distribution or control of electrical
energy on the other Party's side of the Interconnection Point.

         6.4 Responsibility for Property. Each Party shall be responsible for
all physical damage to or destruction of, or any personal injury or death
associated with, the property, equipment and/or facilities owned by it and
located on its premises, regardless of who brings the claim and regardless of
who caused the damage, and shall not seek recovery or reimbursement from the
other Party or its Persons Indemnified for such damage, except in cases of the
sole negligence or intentional wrongdoing by the other Party or its Persons
Indemnified. Without limiting the generality of the foregoing, neither Party nor
its Persons Indemnified shall be liable for damages or injury arising out of or
resulting from the simple failure (i.e., failure of a device not caused by
breach of contract, negligence or intentional wrongful act) of protective
devices (e.g., circuit breakers).

         6.5      Indemnification.

                  6.5.1 Generator shall at all times indemnify, defend, and hold
harmless Georgia Power and its Persons Indemnified from and against any and all
damages, losses, claims, including claims and actions involving injury to or
death of any person or damage to property, demands, suits, recoveries, costs and
expenses, court cost, attorney fees, and all other obligations, arising out of
or resulting from (i) the Generator's breach of its obligations under this
Agreement or intentional wrongful act, or (ii) misuse, damage to or destruction
of Georgia Power's property properly located, pursuant to this Agreement, on
premises owned, leased or controlled by Generator, except in cases of sole
negligence or intentional wrongdoing by Georgia Power or its Persons
Indemnified, or (iii) activities on Generator's property, except in the case of
sole negligence or intentional wrongdoing by Georgia Power or its Persons
Indemnified.

                  6.5.2 Georgia Power shall at all times indemnify, defend, and
hold harmless Generator and its Persons Indemnified from and against any and all
damages, losses, claims, including claims and actions involving injury to or
death of any person or damage to property, demands, suits, recoveries, costs and
expenses, court cost, attorney fees, and all other obligations, arising out of
or resulting from (i) Georgia Power's breach of its obligations under this
Agreement or intentional wrongful act, or (ii) misuse, damage to or destruction

                                       -15-
<PAGE>

of Generator's property located, pursuant to this Agreement, on premises owned,
leased, or controlled by Georgia Power, except in cases of sole negligence or
intentional wrongdoing by the Generator or its Persons Indemnified, or (iii)
activities on Georgia Power's property, except in the case of sole negligence or
intentional wrongdoing by Generator or its Persons Indemnified.

     SECTION 7: METERING, DATA ACQUISITION, AND RELATED PROTECTION EQUIPMENT

         7.1      Metering.

                  7.1.1 Generator shall be responsible for the purchase,
installation, operation, maintenance, repair and replacement of all metering
equipment necessary to provide information regarding power flow and voltage
conditions at the Interconnection Point. All metering equipment of Generator
shall conform to Good Utility Practices. Prior to its installation, Georgia
Power and Generator shall review the metering equipment to ensure conformance
with Good Utility Practices and Generator shall maintain the metering equipment
in conformance with Good Utility Practices throughout the Term. The metering
equipment described herein does not include station service metering equipment.

                  7.1.2 Electric capacity and energy received by the Georgia
Power Electric System from Generator shall be measured by meters installed at
the Interconnection Point. If and to the extent Generator's meters are not
physically located at the Interconnection Point, the metered amount of energy
shall be adjusted for losses as mutually agreed from the point of metering to
the Interconnection Point in accordance with Good Utility Practices. Any Party
performing such a study to determine the loss adjustment shall provide a copy to
the other Party.

                  7.1.3 Generator shall provide, as required by Good Utility
Practices and requested by Georgia Power, real-time telemetered load signals of
its energy delivered to the Interconnection Point. Generator shall also read the
meters owned by it and shall furnish to Georgia Power all meter readings and
other information reasonably required for operations and for billing purposes
under this Agreement. Such information shall remain available to Georgia Power
for one (1) year or such longer period as may be required by any Legal
Requirement.

                  7.1.4 The Parties agree that the meter readings provided by
the Generator to Georgia Power, under normal circumstances, shall be used as the
official measurement between the Parties of the amount of capacity and energy
delivered from the Facility to the Interconnection Point.

                  7.1.5 Any time during the Term and after initial acceptance of
the accuracy of Generator's telemetered information, if telemetered information
is unavailable to Georgia Power, for any reason, the Generator shall provide
integrated hourly meter readings to Georgia Power each hour until telemetry is
returned to service in conformance with Good Utility Practices and Section
7.1.2.

                                       -16-
<PAGE>

         7.2      Data Acquisition and Protection Equipment.

                  7.2.1 Generator shall be responsible for the purchase,
installation, operation, maintenance, repair and replacement of all data
acquisition equipment, protection equipment, and any other associated equipment
and software, which may be reasonably required at any time during the Term by
either Party for Generator to operate its facilities in parallel with Georgia
Power. Such equipment shall conform to Good Utility Practices. Prior to its
installation, Georgia Power and Generator shall review the equipment and
software required by this Section 7 to ensure conformance with Good Utility
Practices.

                  7.2.2 The selection of real time telemetry and data to be
received by Georgia Power and Generator shall be at the reasonable discretion of
Georgia Power, as deemed by Georgia Power necessary for reliability, security,
revenue metering, and/or monitoring of the Facility's operations in conformance
with Good Utility Practices. This telemetry includes, but is not limited to,
voltages, generator output (MW, MVAR, and MWh) at the Interconnection Point and
breaker status. Georgia Power shall provide to Generator real time telemetry of
Georgia Power's breaker status. To the extent telemetry is required, Generator
shall, at its own expense, install any telemetering equipment, data acquisition
equipment, or other equipment and software necessary at the Facility for the
telemetry of information to Georgia Power.

                  7.2.3 Generator shall be responsible for the reasonable cost
that Georgia Power incurs in making any computer modifications or changes to
Georgia Power's facilities or equipment necessary to implement this Section 7.

         7.3      Payment of Cost of Metering, Data Acquisition, and Related
                  Protection Equipment.

                  7.3.1 Prior to the commencement of Interconnection Service
under this Agreement, Georgia Power shall develop and provide Generator an
estimate of all costs and expenses that may be incurred by Georgia Power in
connection with the installation of equipment and software under Sections 7.1
and 7.2. Georgia Power shall obtain Generator's consent thereto prior to
proceeding with activities in connection with Sections 7.1 and 7.2. Generator
shall pay such estimated costs in accordance with Section 10.

                  7.3.2 Georgia Power shall true-up this estimate to Georgia
Power's actual costs and expenses within a reasonable period of time after such
actual costs and expenses are known but not less often than annually. In the
event that the actual costs and expenses to be paid by Generator to Georgia
Power under Section 7.1 and 7.2 are more or less than Georgia Power's initial
estimate, the difference (either a credit or an additional charge) shall be
reflected on a subsequent invoice.

         7.4 Care of Equipment. Generator shall exercise care in accordance with
Good Utility Practices to protect all equipment of Georgia Power located on
Generator's premises, and agrees to pay the cost of repairs or replacement in
the event of loss or damage to such equipment arising from the failure of
Generator to properly protect such equipment in accordance with Good Utility
Practices.

                                       -17-
<PAGE>

         7.5      Inspection and Testing.

                  7.5.1 Meters, data acquisition, and related protection
equipment at Generator's Interconnection Point shall be tested at least
biennially by Generator in accordance with the provisions for meter testing as
established in American National Standard Institute Code for Electricity
Metering (ANSI) Standard C12.16 for Solid State Electricity Meters, as the same
may be updated from time to time. Representatives of each Party shall be
afforded an opportunity to witness such tests.

                  7.5.2 Generator shall, upon the reasonable request of Georgia
Power, test its meters and data acquisition equipment at the Interconnection
Point used for determining the receipt or delivery of capacity and energy by
Georgia Power. In the event a test shows such equipment to be inaccurate,
Generator shall make any necessary adjustments, repairs or replacements thereon.

         7.6 Inaccuracies. If the metering fails to register, or if the
measurement made by a metering device is found upon testing to vary by more than
one percent (1.0%) from the measurement made by the standard meter used in the
test, an adjustment shall be made correcting all measurements of energy made by
the metering during (i) the actual period when inaccurate measurements were made
by the metering, if that period can be determined to the mutual satisfaction of
the Parties, or (ii) if the actual period cannot be determined to the mutual
satisfaction of the Parties, one-half of the period from the date of the last
test of the metering to the date such failure is discovered or such test is made
(such period herein the "Adjustment Period"). If the Parties are unable to agree
on the amount of the adjustment to be applied to the Adjustment Period, the
amount of the adjustment shall be determined (a) by correcting the error if the
percentage of error is ascertainable by calibration, tests or mathematical
calculation, or (b) if not so ascertainable, by estimating on the basis of
deliveries under similar conditions during the period since the last test. In
the event Generator's metering equipment is found to be insufficiently reliable
and/or inaccurate during any consecutive three (3) Month period, Georgia Power
shall have the right to install suitable metering equipment at the
Interconnection Point for the purpose of checking the meters installed by
Generator, and Generator shall pay all costs related to such metering equipment.

             SECTION 8: INITIAL SYNCHRONIZATION AND FACILITY TESTING

         8.1 Facility Evaluation Based on Actual Equipment Data. Generator
agrees to provide updated application data ("actual equipment data") to Georgia
Power that reflects information provided by equipment manufacturers for the
actual equipment purchased by Generator for this Facility, as soon as it is
available, but not later than ninety (90) Days prior to Initial Synchronization
Date. Georgia Power agrees to review the actual equipment data to identify any
adverse impacts to Georgia Power's Electric System caused by any material change
in the Facility's operation and performance specifications that were not
reasonably identifiable in studies performed using Generator's application data
as initially provided. In the event any such adverse impacts are identified,
Generator is responsible for modifying its equipment to eliminate such
identified adverse impacts.

                                       -18-
<PAGE>

         8.2 Implementation of Control and Operating Procedures. At least
forty-five (45) Days prior to the Initial Synchronization Date, Generator and
Georgia Power will: (a) jointly review the Control and Operating Procedures as
developed by the Operating Committee, under Section 15 of this Agreement; (b)
develop a training schedule for Facility and Georgia Power personnel under the
Control and Operating Procedures; and (c) install and verify that communication
links are complete for: (i) data telemetry, (ii) voice communications between
Generator's Facility and Georgia Power's Transmission System control centers,
and (iii) the transmittal of Facility and transmission system information on the
Southern Company Generator Information Network.

         8.3 Facility Inspection. Consistent with Good Utility Practices and
unless otherwise agreed to by the Parties, all Interconnection Facilities shall
be complete prior to the initial synchronization of the Facility with the
Georgia Power Electric System. Within fifteen (15) Days after written notice is
given to Georgia Power by Generator, an inspection shall be performed by Georgia
Power to insure the proper installation and operation of the interconnection
protective devices. The inspection shall include, without limitation,
verification: (a) that the installation of Generator's equipment at the Facility
is in accordance with the interconnection study; and (b) of proper voltage and
phase rotation.

         8.4 Initial Synchronization. Upon completion of the actions and reviews
required under Sections 8.1, 8.2, and 8.3, Generator may request approval for
initial synchronization of the Facility with the Georgia Power Electric System.
Such request for approval shall be made no less than seven (7) Calendar Days in
advance of the date which the Generator proposes for the Initial Synchronization
Date. Initial synchronization shall not occur without the prior documented
approval of Georgia Power, and such approval shall not be unreasonably withheld.
Representatives of Georgia Power shall have the right to be present during the
initial synchronization and facility testing. The activities under this Section
8, including without limitation, facility inspection, evaluation of actual
equipment data, personnel training, use of Southern Company Generator
Information Network, or the granting of approval to Generator for operation of
the Facility in parallel with the Georgia Power Electric System shall not serve
to relieve Generator of liability for injury, death or damage attributable to
the negligence of Generator, and Georgia Power shall not be responsible as a
result of such activities.

         8.5 Review of Synchronization Tests. No less than forty-five (45) Days
prior to the commercial operation date of the Facility, Generator shall provide
Georgia Power copies of all applicable excitation system field test results
(including chart recordings and actual data points in electronic form) and field
settings, including (if applicable) Power System Stabilizer test results and
settings in a format that conforms to the models previously submitted with the
original application data. These tests include but are not limited to excitation
system open circuit step in voltage tests, and (if applicable) Power System
Stabilizer gain margin and phase compensation tests. Excitation system open
circuit step in voltage test response chart recordings shall be provided showing
generator terminal voltage, field voltage, and field current (exciter field
voltage and current for brushless excitation systems) with sufficient resolution

                                       -19-
<PAGE>

such that the change in voltages and currents are clearly distinguishable. The
excitation system open circuit step in voltage test data points corresponding to
the chart recordings should also be submitted in electronic form. Georgia Power
may require that Generator perform more detailed tests if there are significant
differences between the excitation system open circuit step in voltage test
response and the step response predicted through dynamic simulation of model
data. Any problems identified as a result of changes from application data to
actual field settings of the excitation system including (if applicable) Power
System Stabilizers must be addressed and resolved as soon as practicable by the
Generator in order for the Generator to continue to deliver power to the
Interconnection Point.

                        SECTION 9: ADMINISTRATION CHARGE

         Generator shall pay Georgia Power a Monthly Administration Charge of
$5,000 per Month for all costs and expenses incurred by Georgia Power during
such Month in connection with: (i) Georgia Power's administration of this
Agreement; (ii) any taxes, assessments or other impositions for which Georgia
Power may be liable as a result of any activity undertaken pursuant to this
Agreement; (iii) reading meters; and (iv) accounting for capacity and energy
flowing into or out of Generator's Facility. Georgia Power may revise the amount
of the Monthly Administration Charge on an annual basis by making a filing in
accordance with Section 12.3.

                          SECTION 10: PAYMENT PROCEDURE

         10.1     Billing. Bills shall be issued to Generator in accordance
with the following procedures:

                  10.1.1 Georgia Power shall issue a Quarterly invoice to
Generator for the Quarterly Estimated Construction Costs.

                  10.1.2 Georgia Power shall issue a Monthly invoice to
Generator for the estimated operation and maintenance charge, administrative
charge, and other charges/credits determined pursuant to this Agreement as soon
as practicable following the close of each Month.

                  10.1.3 All amounts owing to Georgia Power from Generator shall
be due and payable in immediately available funds through wire transfer of funds
or other means acceptable to Georgia Power within twenty (20) Calendar Days
after the date of Georgia Power's invoice.

         10.2 Failure to Timely Pay. If Generator fails to pay the amount billed
by Georgia Power within twenty (20) Calendar Days after the date of Georgia
Power's invoice (and such amount is not disputed in accordance with Section
10.6), Georgia Power may, at any time thereafter upon five (5) Business Days
written notice, draw upon the letter of credit (or other form of security) of
Generator to obtain payment for such invoice, as well as reasonable costs
incurred to exercise its rights under this Section 10. In addition, Georgia
Power may, at its option, treat such non-payment as a Default of this Agreement
under Section 3.2 hereof.

         10.3 Interest. Any amount due and payable from Generator to Georgia
Power pursuant to this Agreement that is not received by the due date shall
accrue interest from the due date at the Interest Rate.

                                       -20-
<PAGE>

         10.4 Creditworthiness. Generator shall provide and maintain in effect
during the Term of this Agreement an unconditional and irrevocable letter of
credit (or other form of security reasonably acceptable to Georgia Power,
including an appropriate parent security) as security to meet its
responsibilities and obligations under this Agreement. The unconditional and
irrevocable letter of credit (or other form of security reasonably acceptable to
Georgia Power) shall be in the amount of $3,100,000.00 in immediately available
funds through wire transfer of funds or other means acceptable to Georgia Power
for activities arising prior to commercial operation of the Facility and in the
amount of $175,000 for activities arising from the date of commercial operation
of the Facility. Georgia Power shall be entitled to draw upon such letter of
credit for amounts due it under this Agreement if not paid when due in
accordance with Section 10.1 and not disputed in accordance with Section 10.6.

         10.5 Audit Rights. Either Party shall have the right, during normal
business hours, and upon prior reasonable notice to the other Party to audit
each other's accounts and records pertaining to either Party's performance
and/or satisfaction of obligations arising under this Agreement within one (1)
year from the date of such performance or satisfaction of such obligation,
including specifically, but not limited to, delivery of the final cost report as
provided in Section 5.7.2. Said audit shall be performed at the offices where
such accounts and records are maintained and shall be limited to those portions
of such accounts and records that specifically relate to obligations under this
Agreement. To the extent such accounts and records contain confidential
information, the Parties agree to maintain the confidentiality of such
information consistent with Section 17.19 hereof. In the event an audit reveals
an improper assignment or allocation of costs or an error in billing, the
Parties will make appropriate adjustments (either refunds or additional
payments), with interest, within thirty (30) Days.

         10.6 Disputed Bills. In the event of a billing dispute between
Generator and Georgia Power, Georgia Power shall not terminate this Agreement,
draw on the letter of credit for any disputed amounts, nor disconnect the
Facility for failure to pay the disputed amount if Generator (i) continues to
make all payments not in dispute and (ii), if requested by Georgia Power, pays
into an independent escrow account the portion of the invoice in dispute.

         10.7     No  Waiver.  Payment  of any cost or invoice by  Generator
will not constitute  a waiver of any rights or claims that Generator may have
under or relating to this Agreement.

         SECTION 11: REPRESENTATIONS, WARRANTIES AND COVENANTS

         11.1    Generator Representations, Warranties and Covenants. Generator
makes the following representations, warranties and covenant as the basis
for the benefits and obligations contained in this Agreement:

                  11.1.1 Generator is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, that it
is qualified to do business in the State of Georgia and that it has the power
and authority to own its properties, to carry on its business as now being
conducted and to enter into this Agreement and carry out the transactions
contemplated hereby and perform and carry out all covenants and obligations on
its part to be performed under and pursuant to this Agreement.

                                       -21-
<PAGE>

                  11.1.2 The execution, delivery and performance by Generator of
this Agreement has been duly authorized by all necessary company action, and
does not and shall not require any consent or approval of Generator's Board of
Directors or members, other than those which have been obtained.

                  11.1.3 The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the fulfillment of and
compliance with the provisions of this Agreement, do not and shall not conflict
with or constitute a breach of or a default under, any of the terms, conditions
or provisions of any Legal Requirement, or any partnership agreement, deed of
trust, mortgage, loan agreement, other evidence of indebtedness or any other
agreement or instrument to which Generator is a party or by which it or any of
its property is bound, or result in a breach of or a default under any of the
foregoing.

                  11.1.4 This Agreement is the legal, valid and binding
obligation of the Generator and is enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally or by general equitable principles, regardless of
whether such enforceability is considered in a proceeding in equity or at law.

                  11.1.5 There is no pending or, to the knowledge of Generator,
threatened action or proceeding affecting Generator before any Governmental
Authority which purports to affect the legality, validity or enforceability of
this Agreement as in effect on the date hereof.

         11.2     Georgia Power Representations,  Warranties and Covenants.
Georgia Power makes the following representations, warranties and covenants
as the basis for the benefits and obligations contained in this Agreement:

                  11.2.1 Georgia Power is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia that it is
qualified to do business in the State of Georgia and that it has the corporate
power and authority to own its properties, to carry on its business as now being
conducted and to enter into this Agreement and carry out the transactions
contemplated hereby and perform and carry out all covenants and obligations on
its part to be performed under and pursuant to this Agreement.

                  11.2.2 The execution, delivery and performance by Georgia
Power of this Agreement has been duly authorized by all necessary corporate
action, and does not and shall not require any consent or approval of Georgia
Power's Board of Directors or shareholders, other than those which have been
obtained.

                  11.2.3 This Agreement is the legal, valid and binding
obligation of Georgia Power and is enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally or by general equitable principles, regardless of
whether such enforceability is considered in a proceeding in equity or at law.

                                       -22-
<PAGE>

                   11.2.4 There is no pending or, to the knowledge of Georgia
  Power, threatened action or proceeding affecting Georgia Power before any
  Governmental Authority which purports to affect the legality, validity or
  enforceability of this Agreement as in effect on the date hereof.

                  11.2.5 Georgia Power covenants to Generator that it will file
this Agreement, and any amendments and/or modifications thereto, with FERC in
accordance with all Legal Requirements.

         11.3 Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants made by Generator and by Georgia Power
(as the case may be) in Sections 11.1.1, 11.1.3, 11.1.4, 11.2.1, 11.2.3, and
11.2.5 shall survive the execution and delivery of this Agreement and any action
taken pursuant hereto. The representations, warranties and covenants made by
Generator and Georgia Power (as the case may be) in Sections 11.1.2, 11.1.5,
11.2.2 and 11.2.4 shall be true and accurate as of the date of execution of this
Agreement.

                        SECTION 12: COMPLIANCE WITH LAWS

         12.1 Compliance. Generator represents, warrants and covenants that as
of the Initial Synchronization Date and for the Term, Generator shall (i) be in
compliance with all Legal Requirements with respect to the ownership, operation
and maintenance of Generator's Interconnection Equipment, including without
limitation, all requirements to seek, obtain, maintain, comply with and, as
necessary, renew and modify from time to time, any and all applicable
certificates, licenses, permits and government approvals and all applicable
environmental certificates, licenses, permits and approvals, environmental
impact analysis, and if applicable, the mitigation of environmental impacts, and
(ii) pay all costs, expenses, charges and fees in connection with Section
12.1(i).

         12.2 Change of Law. In the event that after the Execution Date there
are changes to Legal Requirements, including, without limitation, changes to
laws or regulations regulating or imposing a tax, fee or other charge, which
cause Georgia Power to incur additional costs in providing Interconnection
Service under this Agreement, Generator agrees to pay, to the extent consistent
with FERC policy, such reasonable incremental costs incurred by Georgia Power in
complying with such changes to Legal Requirements; provided, however, Generator
shall be entitled to take reasonable action to mitigate, reduce or otherwise
avoid the imposition of any such charges or costs.

         12.3 Regulatory Filings. This Agreement is subject to approval by any
Governmental Authority having jurisdiction over the matters provided herein.
Nothing contained in this Agreement shall be construed as affecting in any way
(i) the right of Georgia Power to unilaterally make application to any and all
Governmental Authorities (including FERC) that may have jurisdiction over this
Agreement for a change in terms and conditions, charges, classification of
service, or for termination of this Agreement pursuant to applicable statutes

                                       -23-
<PAGE>

(including Sections 205 and 206 of the Federal Power Act) and those Governmental
Authorities' rules and regulations or (ii) the ability of Georgia Power to
exercise its rights under the rules and regulations of any Governmental
Authority having jurisdiction over this Agreement. Nothing contained in this
Agreement shall be construed as affecting in any way (i) the right of Generator
to unilaterally make application to any and all Governmental Authorities
(including FERC) that may have jurisdiction over this Agreement for a change in
terms and conditions, charges, classification of service or for termination of
this Agreement pursuant to applicable statutes (including Sections 205 and 206
of the Federal Power Act) and those Governmental Authorities' rules and
regulations or (ii) the ability of Generator to exercise its rights under the
rules and regulations of any Governmental Authority having jurisdiction over
this Agreement. At least thirty (30) Days prior to any such unilateral filing,
the Party intending to make the filing shall notify the other of such intent.
The Parties agree to reasonably cooperate with each other with respect to such
filings and to provide any information reasonably required by the requesting
Party to comply with applicable filing requirements. This Agreement shall be
modified or amended as necessary to reflect binding determinations with respect
to such filings.

         12.4     Taxes.

                  12.4.1 Generator shall not be required to pay taxes associated
with reimbursement of construction costs or transfer of the Interconnection
Facilities constructed by Generator unless Georgia Power is required to pay such
tax. With respect to the payment by Generator of taxes associated with
reimbursement of construction costs or transfer of the Interconnection
Facilities, Georgia Power commits that in the event that any taxing authority,
including but not limited to the Internal Revenue Service, taxes or attempts to
tax the reimbursement or transfer, Georgia Power shall (i) exercise reasonable
efforts to contest and defeat the taxation or attempted taxation of the
reimbursement or transfer; (ii) promptly notify Generator in writing of that
event in the manner provided in Paragraph 17.9 of this Agreement; and (iii)
exercise reasonable efforts to cooperate with Generator in contesting any such
taxation including, for example, allowing Generator to prepare at its own
expense a private letter ruling request or other submission to the Internal
Revenue Service or other taxing authority.

                  12.4.2 Generator shall at all times during the Term pay all
charges, taxes, assessments and fees which may be assessed upon or against the
Facility or upon or against Generator through Georgia Power by a Governmental
Authority in accordance with Legal Requirements by reason of the sale or
purchase of electricity by Generator or from Generator's Facility.

                              SECTION 13: INSURANCE

         13.1 Generator's Insurance. If Generator is no longer an Affiliate of
Georgia Power, Generator, at its expense, shall procure and maintain in effect
during the Term, policies of insurance with insurance companies authorized to
transact insurance in the State of Georgia or adequate self-insurance,
reasonably acceptable to Georgia Power, providing, at a minimum, the coverage
and limits specified and complying with the requirements stated below:

                                       -24-
<PAGE>

                  13.1.1 Worker's Compensation in statutory amounts and
Employer's Liability with a minimum limit of $1,000,000 per person.

                  13.1.2 Commercial General Liability Insurance on an occurrence
basis or AEGIS "claims made" form, with the following coverage and limits:

                  General Aggregate                           $1,000,000
                  Products-Completed Operations-Aggregate     $1,000,000
                  Personal & Advertising Injury               $1,000,000
                  Each Occurrence                             $1,000,000
                  Fire Damage (any one fire)                  $50,000
                  Medical Expense (any one person)            $5,000

                  13.1.3 Business Automobile Liability covering autos of
Generator, including owned, hired and non-owned autos, for Bodily Injury and
Property Damage with a combined single limit of $1,000,000 each occurrence.

                  13.1.4   Excess  Liability in Umbrella Form with a limit of
$4,000,000  each  occurrence, $4,000,000 Aggregate.

                  13.1.5 By signing this Agreement, Generator thereby waives all
rights of subrogation against Georgia Power and its Persons Indemnified with
respect to any claim or loss payable or paid under each of the policies set
forth in 13.1.1, 13.1.2, 13.1.3, and 13.1.4 above and under any property
insurance policy for the Facility that Generator has or acquires.

                  13.1.6 Generator shall cause its insurer(s) to add Georgia
Power and its Persons Indemnified as an Additional Insured on the policies set
forth in 13.1.2, 13.1.3, and 13.1.4 above with respect to liability of Georgia
Power and its Persons Indemnified (a) arising out of the performance of
operations, maintenance, work or services under this Agreement, and (b) arising
out of the conduct contemplated in the ownership, maintenance or use of
Generator's autos, but only to the extent of Generator's indemnity obligations
under this Agreement and the coverages and limits specified in Sections 13.1.2,
13.1.3, and 13.1.4.

                  13.1.7 Subject to the limitations in Section 13.1.6,
Generator's insurance shall be primary insurance with respect to the
installation, operations, maintenance, work, or services contemplated under this
Agreement and insurance of Georgia Power and its Persons Indemnified shall be
excess of the Generator's insurance and shall not contribute with it.

                  13.1.8 To the extent that Generator utilizes deductibles or
self-insurance in connection with the insurance coverage required herein, all
such deductible and self-insured amounts shall be for the account and expense of
Generator and shall not be considered as costs or fees provided for in this
Agreement.

                  13.1.9 If the Generator uses contractors and/or subcontractors
to perform any of the work contemplated under this Agreement, Generator shall
require such contractors and/or subcontractors to maintain in effect insurance
meeting these minimum limits and incorporating the contractual requirements
prescribed by this Section 13.

                                       -25-
<PAGE>

         13.2 Notice and Certification. Each of the above required policies
shall contain a provision whereby the insurance carrier shall notify Georgia
Power at least thirty (30) Days prior to the effective date of cancellation,
non-renewal or material change in any of said policies. Generator shall submit
to Georgia Power a Certificate, signed by an authorized representative of the
insurance carrier, listing the policies, coverage and limits and certifying that
the said policies shall be in effect for the time periods stated in the
Certificate. The obligations for Generator to procure and maintain insurance
shall not be construed to waive or restrict other obligations.

                            SECTION 14: FORCE MAJEURE

         14.1 Definition of Force Majeure Event. For the purposes of this
Agreement, a "Force Majeure Event" as to a Party means any occurrence,
nonoccurrence or set of circumstances that is beyond the reasonable control of
such Party and is not caused by such Party's fault, negligence or lack of due
diligence, including, without limitation, flood, ice, lightning, earthquake,
windstorm or eruption; fire; explosion; invasion, war, civil disturbance,
commotion or insurrection; sabotage or vandalism; military or usurped power; or
act of God or of a public enemy; provided, however, in no event shall (i) the
inability to meet a Legal Requirement or the change in a Legal Requirement; or
(ii) a site specific strike, walkout, lockout or other labor dispute constitute
a Force Majeure Event.

         14.2 No Breach or Liability. Each Party shall be excused from
performing its respective obligations under this Agreement and shall not be
liable in damages or otherwise if and to the extent that it is unable to so
perform or is prevented from performing by a Force Majeure Event, provided that
the non-performing Party shall:

                  14.2.1 Give the other Party notice thereof, followed by
written notice if the first notice is not written, both notices to be given as
promptly as possible after the non-performing Party becomes aware of such Force
Majeure Event, describing the particulars of such Force Majeure Event;

                  14.2.2 Use its reasonable best efforts to remedy its inability
to perform as soon as practicable; provided, however, that this Section 14.2.2
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; provided further, that the settlement of
strikes, lockouts or other labor disputes shall be entirely within the
discretion of the Party having the difficulty; and

                  14.2.3 Resume performance of its obligations under this
Agreement and give the other Party written notice to that effect, as soon as
reasonably practicable following cessation of the Force Majeure Event.

                                       -26-
<PAGE>

         14.3 Suspension of Performance. The suspension of performance due to a
Force Majeure Event shall be of no greater scope and of no longer duration than
is required by such Force Majeure Event. No Force Majeure Event shall extend
this Agreement beyond its stated Term.

                         SECTION 15: OPERATING COMMITTEE

         15.1 Establishment of Committee. At least six (6) months prior to the
estimated Initial Synchronization Date, Generator and Georgia Power shall each
appoint one representative and one alternate to the Georgia Power - Generator
Operating Committee ("Committee"). Each Party shall notify the other party of
its appointment in writing. Such appointments may be changed at any time by
similar notice. The Committee shall meet as necessary, but not less than once
each calendar year, to carry out the duties set forth herein. The Committee
shall hold a meeting at the request of either Party, at a time and place agreed
upon by the representatives. Each representative and alternate shall be a
responsible person working in the day-to-day operations of their respective
electrical facilities. The Committee shall represent the Parties in all matters
arising under this Agreement which may be delegated to it by mutual agreement of
the Parties.

         15.2     Duties.  The duties of the Committee shall include, but are
not limited to, the following:

                  15.2.1 Establish and maintain control and operating
procedures, including those pertaining to information transfers between the
Facility and Georgia Power consistent with the provisions of this Agreement.

                  15.2.2 Establish data requirements and operating record
requirements in accordance with the terms and conditions of this Agreement.

                  15.2.3 Review the requirements, standards, and procedures data
acquisition equipment, protective equipment, and any other equipment or
software.

                  15.2.4 Annually review ten (10) year forecast of maintenance
and availability schedules of Georgia Power's and Generator's facilities at the
Interconnection Point and coordinate the scheduling of outages of and
maintenance on the Interconnection Facilities, the Facility and any other
facilities that impact the normal operation of the Interconnection Facilities.

                  15.2.5 Ensure that information is being provided by each Party
regarding equipment availability.

                  15.2.6   Perform such other duties as may be conferred upon
it by mutual agreement of the Parties.

                  15.2.7 Each Party shall cooperate in providing to the
Committee all information required in the performance of the Committee's duties.
All decisions and agreements, if any, made by the Committee shall be evidenced
in writing. The Committee shall have no power to amend or alter the provisions
of this Agreement.

                                       -27-
<PAGE>

                             SECTION 16: ASSIGNMENT

         16.1     Assignment by Generator.

                  16.1.1 EXCEPT AS EXPRESSLY PERMITTED BELOW OR OTHERWISE AGREED
TO BY THE PARTIES, GENERATOR SHALL NOT ASSIGN, TRANSFER, DELEGATE OR ENCUMBER
THIS AGREEMENT AND/OR ANY OR ALL OF ITS RIGHTS, INTERESTS OR OBLIGATIONS UNDER
THIS AGREEMENT AND ANY ASSIGNMENT, TRANSFER, DELEGATION OR ENCUMBERING BY
GENERATOR (EXCEPT AS PERMITTED BELOW) SHALL BE NULL AND VOID. Notwithstanding
the foregoing, so long as Generator is not in default under or breach of this
Agreement, upon prior written notice to Georgia Power, Generator may
collaterally assign its rights, interests and obligations under this Agreement
to its lender or an agent for the benefit of its lenders providing financing or
refinancing for the design, construction or operation of Generator's Facility in
Jackson County, Georgia (a "Permitted Financing Assignee"); provided, however,
that GENERATOR'S RIGHTS AND OBLIGATIONS (FINANCIAL OR OTHERWISE) UNDER THIS
AGREEMENT SHALL CONTINUE IN THEIR ENTIRETY IN FULL FORCE AND EFFECT AS THE
RIGHTS AND OBLIGATIONS OF A PRINCIPAL AND NOT AS A SURETY. Generator may
collaterally assign its rights, interests and obligations hereunder to multiple
Permitted Financing Assignees, but only if those Permitted Financing Assignees
designate one agent to act for them collectively under this Agreement.

                  16.1.2 Georgia Power shall, upon serving Generator any notice
of Default or the termination of this Agreement, also serve a copy of such
notice upon the Permitted Financing Assignee or, in the case of multiple
Permitted Financing Assignees, the agent of those Permitted Financing Assignees.
No notice of Default purporting to terminate this Agreement shall be deemed to
have been given unless and until a copy thereof shall have been given to the
Permitted Financing Assignee or the agent for multiple Permitted Financing
Assignees. A Permitted Financing Assignee shall be entitled to cure any Default
during any cure period provided herein.

                  16.1.3 The Permitted Financing Assignee shall not be entitled
to assign or transfer this Agreement to any purchaser in foreclosure, purchaser
in lieu of foreclosure or similar purchaser or transferee ("Purchaser in
Foreclosure") unless and until such Purchaser in Foreclosure has (i) executed
and delivered to Georgia Power and is in compliance with an agreement in form
and substance acceptable to Georgia Power whereby such Purchaser in Foreclosure
assumes and agrees to pay and perform all then outstanding and thereafter
arising obligations of Generator under this Agreement and (ii) established to
Georgia Power's reasonable satisfaction that such Purchaser in Foreclosure has
all licenses, permits and approvals and financial and technical wherewithal as
may be required to execute, deliver and perform such agreement. Notwithstanding
the foregoing, all obligations of Generator to Georgia Power under this
Agreement incurred prior to the time the Purchaser in Foreclosure fully assumes
this Agreement shall also be and remain enforceable by Georgia Power against
Generator. Any assignment to a Purchaser in Foreclosure shall be subject to
Georgia Power's rights hereunder.

                                       -28-
<PAGE>

                  16.1.4 So long as Generator is not in Default under or breach
of this Agreement, upon prior written notice to Georgia Power, Generator may
absolutely assign all, but not less than all, of its rights, interests and
obligations under this Agreement to another generator ("Outright Assignee")
provided however, that Generator's obligations under this Agreement shall
continue and Georgia Power shall have no obligations to such Outright Assignee
unless and until such Outright Assignee has (i) executed and delivered to
Georgia Power and is in compliance with an agreement in form and substance
reasonably acceptable to Georgia Power whereby such Outright Assignee assumes
and agrees to pay and perform all thereafter arising obligations of Generator
under this Agreement and (ii) established to Georgia Power's reasonable
satisfaction that such Outright Assignee has all licenses, permits and approvals
and financial and technical wherewithal as may be required to execute, deliver
and perform such agreement. Any assignment to an Outright Assignee shall be
subject to Georgia Power's rights hereunder.

                  16.1.5 Generator shall indemnify, defend and hold harmless
Georgia Power and its Persons Indemnified from and against any and all losses,
liabilities, obligations, claims, demands, damages, penalties, judgments, costs
and expenses, including, without limitation, reasonable attorneys' fees and
expenses, howsoever and by whomsoever asserted, arising out of or in any way
connected with any collateral, outright or other assignment by Generator or any
foreclosure or other exercise of remedies by the Permitted Financing Assignee of
this Agreement or Generator's or the Permitted Financing Assignee's rights or
interests under this Agreement. Notwithstanding any other provision of this
Section 16.1, Generator shall not be obligated to indemnify and hold harmless
Georgia Power from and against any loss, liability, obligation, claim, demand,
damage, penalty, judgment, cost or expense to the extent caused by the sole
negligence or willful misconduct Georgia Power or its Persons Indemnified.

                  16.1.6 No agreement between the Parties modifying, amending,
canceling or surrendering this Agreement shall be effective without the prior
written consent of the Permitted Financing Assignee or, in the case of multiple
Permitted Financing Assignees, the agent of those Permitted Financing Assignees.
Subject to any cure periods provided to the Permitted Financing Assignee in this
Agreement or in any consents to assignment, no such prior written consent is
required for Georgia Power to take unilateral action under this Agreement,
including (without limitation) Sections 3.2, 3.3, 3.4, 10.2, 12.2 and 12.3.

                  16.1.7 Georgia Power agrees to reasonably cooperate with
Generator and any Permitted Financing Assignee in connection with the collateral
assignment of this Agreement; provided, however, that Georgia Power shall not be
obligated to take any action that could, in its judgment, result in an expansion
of its obligations, risks or liabilities or a violation of any law, regulation
or order of a Governmental Authority.

         16.2 Assignment by Georgia Power. So long as Georgia Power is not in
breach of this Agreement, Georgia Power may, at any time, without notice to, or
the consent of, Generator or any other Person, including, without limitation,
any Permitted Financing Assignee, Purchaser in Foreclosure or Outright Assignee,

                                       -29-
<PAGE>

sell, assign, delegate, encumber or transfer to any Indenture Trustee,
Affiliate, any successor by merger or otherwise of Georgia Power or any
Qualified Person, and/or create or permit to exist Permitted Liens against, all
or any part of this Agreement and/or Georgia Power's rights, obligations, title
or interest in, to and under this Agreement. Provided, however, Generator
reserves its right to oppose any such assignment before any Governmental
Authority having jurisdiction.

                            SECTION 17: MISCELLANEOUS

         17.1 Georgia Power's Agent. Wherever this Agreement requires Generator
to provide information, schedules, notice or the like to, or to take direction
from, Georgia Power, Generator shall provide information, schedules, notice or
the like to, or receive from, Georgia Power or such agent of Georgia Power as
Georgia Power may direct from time to time.

         17.2 No Partnership. Generator and Georgia Power do not intend for this
Agreement to, and this Agreement shall not, create any joint venture,
partnership, association taxable as a corporation, or other entity for the
conduct of any business for profit.

         17.3     Successors  and  Assigns.  This  Agreement shall inure to the
benefit of and be binding upon any respective successors and assigns of
Generator and Georgia Power.

         17.4     No Third  Party  Benefit.  Nothing in this Agreement shall be
construed to create any duty, obligation or liability of a Party to any person
or entity not a Party to this Agreement.

         17.5 No Affiliate Liability. Notwithstanding any other provision of
this Agreement, no Affiliate of either Party (including without limitation any
Affiliate acting as either Party's agent where said agent is given certain
authorities pursuant hereto) shall have any liability whatsoever for either
Party's performance, nonperformance or delay in performance under this
Agreement.

         17.6     Time of Essence.  Time is of the essence of this Agreement.

         17.7 No Waiver. Neither Georgia Power's nor Generator's failure to
enforce any provision or provisions of this Agreement shall in any way be
construed as a waiver of any such provision or provisions as to any future
violation thereof, nor prevent it from enforcing each and every other provision
of this Agreement at such time or at any time thereafter. The waiver by either
Georgia Power or Generator of any right or remedy shall not constitute a waiver
of its right to assert said right or remedy, at any time thereafter, or any
other rights or remedies available to it at the time of or any time after such
waiver.

         17.8 Amendments. Except as provided in Section 12.3, this Agreement may
be amended by and only by a written instrument duly executed by each of
Generator and Georgia Power, which has received all approvals of Governmental
Authorities of competent jurisdiction necessary for the effectiveness thereof.

                                       -30-
<PAGE>

         17.9 Notice. Any notice, request, consent or other communication
permitted or required by this Agreement shall be in writing and shall be deemed
given on the Day hand-delivered to the representative identified below, on the
Day of facsimile transmission to the facsimile number stated below, or the third
(3rd) Day after the same is deposited in the United States Mail, first class
postage prepaid, and if given to Georgia Power shall be addressed to:

                  Georgia Power Company
                  Attn: Vice President, Transmission
                  241 Ralph McGill Boulevard
                  Atlanta, Georgia 30308
                  Facsimile: (404) 506-2433

                  with a copy to:

                  Southern Company Services, Inc.
                  Attn: Manager, Transmission Services
                  600 North 18th Street
                  Birmingham, Alabama 35203
                  Facsimile: (205) 257-6663

and if given to Generator, it shall be addressed to:

                  Southern Power Company
                  Attn: Vice President, Generation, Planning and Development
                  600 North 18th Street
                  Bin 15N-8181
                  Birmingham, Alabama 35203
                  Facsimile: (205) 257-5703

                  with a copy to:

                  Southern Company Services, Inc.
                  Attn: Manager, Generation Development
                  600 North 18th Street
                  Bin 15N-8186
                  Birmingham, Alabama 35203
                  Facsimile: (205) 257-6336

                  unless Georgia Power or Generator shall have designated a
different representative or address for itself by written notice to the other.
Generator shall comply with reasonable requirements of Georgia Power regarding
communications with Georgia Power relative to the performance of this Agreement.

                                       -31-
<PAGE>

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

         17.11 Cross-References. All cross-references contained in this
Agreement to Sections, are to the Sections of this Agreement, unless otherwise
expressly noted.

         17.12 Section Headings. The descriptive headings of the various
Sections of this Agreement have been inserted for convenience of reference only
and shall in no way modify or restrict any of the terms or provisions hereof.

         17.13 Including. Wherever the term "including" is used in this
Agreement, such term shall not be construed as limiting the generality of any
statement, clause, phrase or term.

         17.14 Governing Law. The validity, interpretation and performance of
this Agreement, and each of its provisions, are subject to and shall be governed
by applicable federal law, and where not preempted by federal law, by the laws
of the State of Georgia, without giving effect to conflict of laws principles.

         17.15 Merger. This Agreement represents the entire agreement between
the Parties and all previous communications, representations and agreements
between the Parties regarding the subject matter of this Agreement, whether oral
or written, are hereby superseded.

         17.16 NERC. To the extent not inconsistent herewith, Generator shall
comply with any operational specifications and requirements specified by Georgia
Power and all planning standards and operating guidelines of the North American
Electric Reliability Council or its successor.

         17.17    Good  Utility  Practices.  Each Party  shall discharge  its
respective obligations under this Agreement in accordance with Good Utility
Practices.

         17.18 Safety. Each Party shall comply with the applicable provisions of
the National Fire Protection Association Code, the American National Electrical
Code, the National Electrical Safety Code and other applicable code
requirements. Each Party shall furnish and maintain, at its own expense, proper
and adequate facilities, equipment, machinery, tools and supplies necessary to
maintain its facilities and premises as a safe workplace and have available at
all times for use by its employees, agents, independent contractors, suppliers,
vendors and borrowed employees and all safety equipment needed for the
protection of that Party's employees, agents, independent contractors,
suppliers, vendors and borrowed employees against injuries. Each Party shall be
solely responsible for providing for the safety of its facilities and premises
and of its employees, agents, independent contractors, suppliers, vendors and
borrowed employees.

                                       -32-
<PAGE>

         17.19 Confidential Information. Confidential Information shall mean any
confidential and/or proprietary information provided by Georgia Power or
Generator ("Disclosing Party") to the other party ("Receiving Party") and which
is clearly marked or otherwise designated as "CONFIDENTIAL." For purposes of
this Agreement, all design, operating specifications and metering data provided
by Generator shall be deemed confidential regardless of whether it is clearly
marked or otherwise designated as such. Except as otherwise provided herein,
each Party shall hold in confidence and shall not disclose Confidential
Information to any person (except employees, officers, representatives and
agents that agree to be bound by this Section 17 or FERC's Standards of
Conduct). Confidential Information shall not include information that the
Receiving Party can demonstrate: (a) is generally available to the public other
than as a result of a disclosure by the Receiving Party; (b) was in the lawful
possession of the Receiving Party on a non-confidential basis before receiving
it from the Disclosing Party; (c) was supplied to the Receiving Party without
restriction by a third party, who, to the knowledge of the Receiving Party, was
under no obligation to the Disclosing Party to keep such information
confidential; (d) was independently developed by the Receiving Party without
reference to Confidential Information of the Disclosing Party; or (e) was
disclosed with the prior written approval of the Disclosing Party. Georgia
Power, or its agent acting as Transmission Provider under the Tariff, may
release or disclose certain Confidential Information of the Disclosing Party to
other Transmission Providers, SERC, or NERC if necessary or appropriate in
connection with its role as Transmission Provider. If a court, government agency
or entity with the right, power, and authority to do so, requests or requires
either Party, by subpoena, oral deposition, interrogatories, requests for
production of documents, administrative order, or otherwise, to disclose
Confidential Information, that Party shall provide the other Party with prompt
notice of such request(s) or requirement(s) so that the other Party may seek an
appropriate protective order or waive compliance with the terms of this
Agreement. In the absence of a protective order or waiver the Party shall
disclose such Confidential Information which, in the opinion of its counsel, the
Party is legally compelled to disclose. Each Party will use reasonable efforts
to obtain reliable assurance that confidential treatment will be accorded any
Confidential Information so furnished.

         17.20 Cooperation. Each Party to this Agreement shall reasonably
cooperate with the other as to all aspects relating to the performance of its
respective obligations under this Agreement; provided, however, this agreement
of cooperation shall not constitute a waiver or relinquishment of either Party's
rights under this Agreement in law or equity.

         17.21 Negotiated Agreement. The Parties agree that this Agreement is
the result of mutual compromise and shall not be construed as having been
drafted by either Party. The Parties agree to support the acceptance of the
Agreement in its entirety by FERC.

         17.22 Subcontractors. Nothing in this Agreement shall be construed as
preventing either Party from utilizing the services of subcontractors as it
deems appropriate; provided, however, that all such contractors comply with the
applicable terms and conditions of this Agreement. The creation of any
subcontract relationship shall not relieve the retaining Party of any of its
obligations under this Agreement.

                                       -33-
<PAGE>

         17.23 EWG Status. Nothing in this Agreement shall require Generator to
take any action that could result in its inability to obtain, or its loss of,
status as an Exempt Wholesale Generator within the meaning of the Public Utility
Holding Company Act of 1935, as amended.

                                       -34-
<PAGE>

         IN WITNESS WHEREOF, Generator and Georgia Power have caused this
Agreement to be executed by their duly authorized representatives on the Day and
year first above written.

                                   SOUTHERN POWER COMPANY
                                   "Generator"

                                   By:  _________________________

                                   Title:  ________________________

                                   Date:_________________________

                                   GEORGIA POWER COMPANY
                                   "Georgia Power"

                                   By:  _________________________

                                   Title:  ________________________

                                   Date:_________________________

                                       -35-
<PAGE>

                                   APPENDIX A

         INTERCONNECTION PROCEDURESAPPENDIX AINTERCONNECTION PROCEDURES
                           INTERCONNECTION PROCEDURES

         The following requirements apply to Generator's Facility when operated
in parallel with the Georgia Power Electric System.

         A.       Operating Limits.
                  ----------------

                  In order to minimize objectionable and adverse operating
conditions on the electric service provided to other customers by Georgia Power,
the Facility shall meet the following operating criteria:

                  1.       Voltage.
                           -------

                           When Generator is delivering  power to the Georgia
Power Electric System,  Generator shall operate its generation to meet the
voltage schedule,  as measured at the transmission bus serving the Facility,
communicated  by  the  Georgia  ITS  operator.   The current voltage schedules
for the Interconnection Point to the Facility is attached to this Appendix A.
If the Generator cannot hold the voltage schedule but is producing or absorbing
its maximum amount of MVARs for the level of MW  output  that it is then
operating  at,  then  that is  acceptable performance  provided that each unit
of the Generator that is then generating  is  producing  no less  than  0.33
MVAR/MW  x the  unit's Continuous  Rated MW Output or  absorbing  no less than
0.23 MVAR/MW x the unit's Continuous Rated MW Output. For purposes of this
paragraph, the  "Continuous  Rated MW Output" for each of the  Generator's
units comprising  the Facility shall be ten (10) CT's with a total output of
800 MW.

                  2.       Frequency.
                           ---------

                           The Facility shall maintain a nominal operating
frequency of 60 hertz.  Generator may be required to assist in supporting
system frequency if requested by Georgia Power.

                  3.       Governor Characteristics.
                           ------------------------

                           The Facility shall be capable of providing an
immediate and sustained response to abnormal frequency excursions within the
machine design parameters. The governors shall be properly maintained and shall
provide droop characteristics consistent with the requirements of NERC, SERC
and the Georgia Power Electric System. At a minimum, governors shall be fully
responsive to frequency deviations consistent with the requirements of NERC,
SERC and the Georgia Power Electric System during normal operating conditions
only, as defined by Good Utility Practices. In no event shall the governors be
blocked by Generator without the express written permission of Georgia Power.

                                      Appendix A page 1 of 4
<PAGE>

                  4.       Minimum Acceptable Reactive Capability.
                           --------------------------------------

                           a.       Reactive Power Production.  At continuous
rated output, simulations must show  that Generator's Facility shall have the
capability of dynamically supplying at least 0.33 MVARS at the 230 kV
Interconnection Point for each MW supplied when the Facility is tested at 101%
of nominal voltage.

                           b.       Reactive Power Absorption.  The Facility
shall also be capable of dynamically absorbing 0.23 MVARs from the transmission
system for each MW supplied at the 230 kV Interconnection Point during
simulations when the Facility is tested at 104% of nominal voltage. Simple
Cycle combustion turbines used as peaking generation may be exempted from the
MVAR absorption requirements.

                  5.       Harmonics.
                           ---------

                          The Facility shall not introduce excessive  distortion
to the Georgia Power Electric System's voltage profile and current waveforms.
The harmonic distortion measurements shall be made at the transmission facility
serving the Facility and be within the limits specified in the tables below.

                           5.1.     Current Harmonics.
                                    -----------------

                MAXIMUM ALLOWABLE HARMONIC CONTENT (CURRENT)
                          (in percent of total current)
                            Harmonic Order Number (h)

                  h 11     11h 17      17 h 23    23 h35               35h
        ODD       2.0        1.0          0.75       0.30               0.15
       EVEN       0.50      0.25          0.19      0.075               0.04

                          Total current harmonic distortion may not exceed 2.5%

                           5.2.     Voltage Harmonics.
                                    -----------------

                  MAXIMUM ALLOWABLE HARMONIC CONTENT (VOLTAGE)
                                    (in percent)

         For nominal voltage at interconnection point of 69 kV to 115 kV
                        Maximum Individual Harmonic: 1.50
                     Maximum Total Harmonic Distortion: 2.50

        For nominal voltage at interconnection point of 161 kV and above
                        Maximum Individual Harmonic: 1.00
                     Maximum Total Harmonic Distortion: 1.50

                             Appendix A page 2 of 4

<PAGE>

         B.       Generator Step-Up Transformer.
                  -----------------------------

                  To minimize possible adverse effects on other Georgia Power
customers, a power transformer is required between the Facility and the Georgia
Power Electric System. This transformer's windings shall be connected according
to the requirements of Georgia Power.

         C.       Energization of Georgia Power Equipment by Generator.
                  ----------------------------------------------------

                  Generator shall not energize, or de-energize, Georgia Power
equipment. The necessary control devices shall be installed by Generator on the
Facility to prevent the energization of de-energized Georgia Power equipment by
Generator's Facility.

         D.       Synchronization of Generator's Facility.
                  ---------------------------------------

                  Generator is responsible for the synchronization of the
Facility to the Georgia Power Electric System. Georgia Power shall have relaying
on the ring bus segment at the Interconnection Point and Generator must insure
that its Facility is disconnected from Georgia Power whenever a ring bus segment
at the Interconnection Point is de-energized. Georgia Power may re-energize the
ring bus segment by remote control and Georgia Power shall not be responsible
for damage to Facility due to an out of phase condition during re-energization.

         E.       Telemetered Quantities.
                  ----------------------

                  Georgia Power shall provide the data protocol, and Generator
shall install as part of the Interconnection Facilities any equipment necessary
to deliver telemetered signals to Georgia Power specifying the voltage and
watts, vars, and watthours delivered to the Georgia Power Electric System at the
Interconnection Point.

                             Appendix A page 3 of 4
<PAGE>

                                VOLTAGE SCHEDULES

                          AT THE INTERCONNECTION POINT

                             SOUTHERN POWER COMPANY

Commencing with the Effective Date of the Interconnection Agreement, Generator
shall maintain the following voltage schedules as communicated by Georgia Power
from time to time:

Schedule #1 - Southern Company Control Area Maximum Load for the Day greater
than 33,000 MW
                           Operating Time                     Voltage
                           --------------                    --------
                               0000-0700                      236 kV
                               0700-2100                      238 kV
                               2100-2400                      236 kV

Schedule #2 - Southern Company Control Area Maximum Load for the Day between
28,000 and 33,000 MW
                           Operating Time                     Voltage
                            --------------                    --------
                               0000-0700                       235 kV
                               0700-2000                       238 kV
                               2000-2400                       236 kV

Schedule #3 - Southern Company Control Area Maximum Load for the Day between
23,000 and 28,000MW
                           Operating Time                     Voltage
                           --------------                    --------
                               0000-0800                        235 kV
                               0800-1900                        236 kV
                               1900-2400                        236 kV

Schedule #4 - Southern Company Control Area Maximum load for the Day below
23,000 MW

                           Operating Time                     Voltage
                           --------------                    --------
                               0000-0600                       234 kV
                               0600-2100                       236 kV
                               2100-2400                       234 kV

The Georgia ITS system operator's determination of whether Schedule 1, 2, 3, or
4 should be used for a given period shall be based on expectations of system
requirements and conditions. The voltage schedule to be used, for the upcoming
week, shall be communicated to Generator each Friday and at such other times as
changing system requirements and conditions may require.

                             Appendix A page 4 of 4
<PAGE>

                                   APPENDIX B

                                 SPECIFICATIONS
                                       TO
                            INTERCONNECTION AGREEMENT
                                     BETWEEN
                             SOUTHERN POWER COMPANY
                                       AND
                              GEORGIA POWER COMPANY

1.       Location of Interconnection Point:

         The Interconnection Point will be at the Center Primary 230 kV
         Substation located in Jackson County, Georgia.

2.       Projected Dates Generator's Facilities will connect to Georgia Power:

         This is an existing facility, which is currently connected and
         operating with the Georgia Power Electric System.

3.       Description of Interconnection Point:

         The point, as shown on the attached one line diagram, at which the
         Generator's 230 kV conductors connect to the 230 kV breaker line side
         disconnect and bypass switches at the Center Primary 230 kV Substation.

4.       Description of Station Service Connections:

         Should Generator require station service in addition to that which
         Generator can self-provide, separate arrangements will be made by
         Generator.

5.       Description of Generator's Facility:

         The Generator's Facility under this Agreement is an 800 MW Combustion
         Turbine (CT) facility.

6.       Interconnection Facility Requirements:

         The Interconnection Facilities are sufficient to accommodate
         approximately 800 MW.

                                          Appendix B page 1 of 3

<PAGE>
<TABLE>
<CAPTION>

7.       Description of Georgia Power's Interconnection Facilities:

        <S>                                                                      <C>
         Interconnection Facilities under this Agreement include the             Estimated Cost
         following:                                                                (000's)

         1.  230 kV line terminal at the Center Primary 230 kV                         $ 560
             substation.

         2.  Two (2) 230 kV line structures and one (1) span of 230 kV                 $ 326
             line and fiber optic cable between Generator's Facility
             and Center Primary 230 kV  substation.

         3.  Adjustments to existing transmission facilities to provide                $ 240
             for installation of item 2. above

8.       Description of Generator's Interconnection Equipment:

         Interconnection Equipment under this Agreement include the              Estimated Cost
         following:

         1.  Five (5) GSU transformers connected delta on the generator          Owned by Southern Power
             side and solidly grounded wye on the 230 kV side

         2.  Five (5) 230 kV circuit switchers used for GSU protection.         Owned by Southern Power

         3.  230 kV collector bus.                                              Owned by Southern Power

         4.  One (1) 230 kV circuit and fiber optic circuit from                Owned by Southern Power
             Generator's Facility  to the Center Primary 230kV
             Substation (except for item 2 in section 7. Above).

</TABLE>

The specifications for all such equipment in items 7 and 8 above will be
determined in accordance with this Agreement, Georgia Power specifications
provided to the Generator in writing and Good Utility Practices.

                            Appendix B Paged 2 of 3
<PAGE>

                        SOUTHERN POWER COMPANY- DAHLBERG
                               SINGLE LINE DIAGRAM

<PAGE>

                                   APPENDIX C

                               QUARTERLY ESTIMATED
                               CONSTRUCTION COSTS

The Generator's estimated total cost responsibility for the Interconnection
Facilities is $1,126,000.

                             Appendix C Page 1 of 1

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