Document:

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                                                                    Exhibit 10.5
                                                                  EXECUTION COPY

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                           DEVELOPMENT AND OPERATIONS
                               SERVICES AGREEMENT

                                     between

                             AES SAYREVILLE, L.L.C.

                                       and

                               AES RED OAK, L.L.C.

                            Dated as of March 1, 2000

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       830 MW (Net) Gas-Fired Combined Cycle Electric Generating Facility
               Borough of Sayreville, Middlesex County, New Jersey

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                                TABLE OF CONTENTS
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<CAPTION>

                                                                                                                PAGE

<S>                                                                                                              <C>
ARTICLE I DEFINITIONS.............................................................................................1

   SECTION 1.1       DEFINITIONS..................................................................................1

ARTICLE II DEVELOPMENT AND CONSTRUCTION MANAGEMENT................................................................4

   SECTION 2.1       DEVELOPMENT AND CONSTRUCTION MANAGEMENT SERVICES.............................................4
   SECTION 2.2       PAYMENT FOR DEVELOPMENT AND CONSTRUCTION MANAGEMENT SERVICES.................................4

ARTICLE III OPERATION AND MAINTENANCE.............................................................................5

   SECTION 3.1       OPERATING AND MAINTENANCE PERSONNEL AND OTHER SERVICES.......................................5
   SECTION 3.2       PAYMENT FOR OPERATING AND MAINTENANCE SERVICES...............................................5

ARTICLE IV PAYMENT OF FEES........................................................................................7

   SECTION 4.1       PAYMENT OF FEES..............................................................................7

ARTICLE V TERM, TERMINATION AND RELATIONSHIP OF PARTIES...........................................................8

   SECTION 5.1       TERM.........................................................................................8
   SECTION 5.2       TERMINATION..................................................................................8

ARTICLE VI REPRESENTATIONS AND WARRANTIES.........................................................................8

   SECTION 6.1       REPRESENTATIONS AND WARRANTIES OF THE OPERATOR...............................................8
   SECTION 6.2       REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................9

ARTICLE VII ARBITRATION...........................................................................................9

   SECTION 7.1       ARBITRATION..................................................................................9

ARTICLE VIII LIMITATIONS OF LIABILITY............................................................................10

   SECTION 8.1       NO CONSEQUENTIAL DAMAGES....................................................................10
   SECTION 8.2       LIMITATION OF OPERATOR'S LIABILITY..........................................................10

ARTICLE IX FORCE MAJEURE.........................................................................................10

   SECTION 9.1       FORCE MAJEURE...............................................................................10

ARTICLE X INDEMNIFICATION........................................................................................11

   SECTION 10.1      INDEMNIFICATION.............................................................................11

ARTICLE XI MISCELLANEOUS.........................................................................................11

   SECTION 11.1      FURTHER ASSURANCES..........................................................................11
   SECTION 11.2      ENTIRE AGREEMENT............................................................................11
   SECTION 11.3      COUNTERPARTS................................................................................12
   SECTION 11.4      GOVERNING LAW...............................................................................12
   SECTION 11.5      ASSIGNABILITY...............................................................................12
   SECTION 11.6      BINDING EFFECT..............................................................................12
   SECTION 11.7      HEADINGS....................................................................................12
   SECTION 11.8      NOTICES.....................................................................................12
   SECTION 11.9      AMENDMENT...................................................................................13
   SECTION 11.10     NO IMPLIED WAIVER...........................................................................13
   SECTION 11.11     OVERDUE OBLIGATIONS TO BEAR INTEREST........................................................13
   SECTION 11.12     INDEPENDENT CONTRACTOR......................................................................13
   SECTION 11.13     ACCESS......................................................................................13
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                  DEVELOPMENT AND OPERATIONS SERVICES AGREEMENT

         DEVELOPMENT AND OPERATIONS SERVICES AGREEMENT (this "AGREEMENT"), dated
as of March 1, 2000, by and between AES SAYREVILLE, L.L.C. a Delaware limited
liability company (the "OPERATOR"), and AES RED OAK, L.L.C, a Delaware limited
liability company (the "COMPANY") (the Company and Operator, each a "PARTY", and
collectively, the "PARTIES").

                              W I T N E S S E T H:

         WHEREAS, the Company has been organized to develop, construct, own,
operate and maintain the Facility located at the Facility Site;

         WHEREAS, the Company desires that the Operator provide certain
personnel and support services required by the Company for the development and
construction management of the Facility and for operation and maintenance of the
Facility after completion of such development and construction; and

         WHEREAS, the Operator desires to provide such personnel and support
services in accordance with the terms hereof.

         NOW, THEREFORE, in consideration of the agreements and covenants
hereinafter set forth, and intending to be legally bound hereby, the Parties
hereto covenant and agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

SECTION 1.1       DEFINITIONS.

         Capitalized terms not otherwise defined herein shall have the meanings
specified in the Indenture (as defined below). For the purposes of this
Agreement, the rules of construction set forth in the Indenture shall apply as
if such rules were set forth herein. The following terms shall have the meanings
specified below:

         "AES DIRECT COSTS" shall have the meaning specified in the Services
Agreement.

         "AES DIRECT LABOR COSTS" shall have the meaning specified in the
Services Agreement.

         "AES OVERHEAD" shall have the meaning specified in the Services
Agreement.

         "ANNUAL ADJUSTMENT DATE" means each January 1st occurring after the
date hereof.

         "ANNUAL REVISION DATE" means each March 1st occurring after the date
hereof.

         "CAPITAL CONTRIBUTIONS" means the contributions by the Manager to the
Company required pursuant to the LLC Agreement.

                                       1
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         "COMMERCIAL OPERATION DATE" has the meaning specified in the Power
Purchase Agreement.

         "COMPANY" has the meaning specified in the preamble to this Agreement.

         "DIRECT COSTS" means expenditures for all goods and services which, in
the opinion of the Operator, are necessary for the operation, maintenance and
management of the Facility or the performance by the Operator of its obligations
under this Agreement, including but not limited to goods and services (i)
necessary to operate the Facility and all associated facilities and equipment
and (ii) necessary to maintain, repair, replace and otherwise keep the Facility
and all associated facilities and equipment in good and serviceable working
order. Such goods and services shall include without limitation raw materials to
operate the boiler, pollution control equipment and other equipment, including
limestone, magnesium oxide, ammonia, urea, sand and any other additives as
appropriate; utilities, including natural gas, oil, electricity, raw water,
potable water, industrial waste water discharge, sanitary sewer and waste
disposal; transportation charges, including demurrage, for fuel, raw materials,
waste, personnel, equipment, and other items; contract maintenance services,
including electrical, mechanical, civil, chemical and instrumentation and
control; outside shops, warehousing and storage; expendable supplies, including
chemicals, resins, abrasives, lab supplies, protective clothing, paper products,
rags, rope, wire, glue, caulking, soaps, paint, primer and painting supplies,
clean-up supplies and equipment, lubricants and solvents; shop tools and
equipment; equipment rental and leasing; spare and replacement parts, repair and
replacement items and material and upgrading equipment and material;
communications, including telephone, facsimile transmission, postage, express
mail and parcel delivery; office furniture, supplies and equipment, computers
and computer equipment, and reproduction equipment, services and supplies;
mobile equipment and vehicles; insurance premiums; contract employee charges;
community relations programs and expenses; recruiting and training costs,
including advertising, physicals, recruiter fees and the like; professional
services, including legal, accounting, engineering, management and other; safety
arid employee relations expenses (awards, picnics, bonuses, etc.); travel and
business entertainment; taxes (such as sales, property, value added and gross
receipts taxes but excluding taxes based solely on income); and Direct Labor
Costs. Direct Costs shall include but not be duplicative of AES Direct Costs.

         "DIRECT LABOR COSTS" means all labor costs of the Operator, including
but not limited to salaries, wages, overtime pay, shift differentials, fringe
benefits, profit sharing and pension, holiday pay, vacation pay, bonuses,
termination payments, travel and other similar costs of the Operator personnel
primarily engaged in activities at the Site pursuant to this Agreement. Direct
Labor Costs shall not include (i) labor costs related to Operator personnel who
are not primarily located at the Site or (ii) labor costs related to activities
unrelated to the Operator's performance of this Agreement which are undertaken
by Operator personnel who are primarily engaged in activities at the Site.
Direct Labor Costs shall include, but not be duplicative of, AES Direct Labor
Costs.

         "EFFECTIVE DATE" means the date of this Agreement.

         "ELECTRIC DELIVERY POINT" has the meaning specified in the Power
Purchase Agreement.

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         "FINANCING PARTIES" means the Trustee, acting on behalf of the
Bondholders, and any and all other lenders providing the construction or
long-term financing or any refinancing of the Facility pursuant to the Financing
Documents, and any trustee or agent acting in their behalf, including the
Collateral Agent. The term "FINANCING PARTIES" shall not include the Company,
any Affiliate of the Company or any Affiliate of any Partner.

         "FORCE MAJEURE EVENT" shall have the meaning set forth in Section 9.1.

         "INDENTURE" means the Trust Indenture, dated as of March 1, 2000, among
the Company, the Trustee and the Depositary Bank.

         "LLC AGREEMENT" means the Limited Liability Company Agreement of AES
Red Oak, L.L.C., dated as of November 23, 1999, as such agreement may be
amended, modified or supplemented from time to time.

         "MANAGEMENT FEE"' means the monthly fee described in Section
2.2(a)(ii).

         "MANAGER" means AES Red Oak, Inc., the owner of all of the membership
interests in the Company and the Manager of the Company pursuant to the LLC
Agreement.

         "OPERATING AND MAINTENANCE FEE" means the monthly fee described in
Section 3.2(a)(ii).

         "OPERATIONS" means any transaction in the ordinary course of the
Company's business, but does not include the making of Capital Contributions to
the Company or a Capital Event.

         "OPERATOR" has the meaning specified in the preamble to this Agreement.

         "OPERATOR COSTS" means all Direct Costs and Overhead.

         "OPERATOR FEES" means, collectively, the Management Fee and the
Operating and Maintenance Fee.

         "OVERHEAD" means (to the extent not included in Direct Costs) the
Operator's cost of and any expenses related to employee relations, financial
controls, data processing, management and administration, and other similar
services required for performance by the Operator of its obligations under this
Agreement, including labor costs of the Operator's overhead personnel, if any;
PROVIDED, that all Overhead hereunder shall be allocated on a reasonable basis
to services rendered by Operator in the performance of its obligations under
this Agreement. Overhead shall include but not be duplicative of AES Overhead.
Notwithstanding anything herein to the contrary, from and after the Commercial
Operation Date through the remaining term of this Agreement, Overhead payable
under Sections 2.2 and 3.2 with respect to any period shall be deemed in the
aggregate to equal [45%]of Direct Labor Costs for such period.

         "PRIME-BASED RATE" means the interest rate equal to the sum of (i) the
prime commercial lending rate announced by Citibank NA as in effect from time to
time, and (ii) two (2) percentage points, provided that such interest rate shall
in no event be greater than the maximum interest rate permitted by applicable
law.

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         "UNPAID FEE AMOUNT" shall have the meaning set forth in Section 4.1.

                                   ARTICLE II

                     DEVELOPMENT AND CONSTRUCTION MANAGEMENT

         SECTION 2.1      DEVELOPMENT AND CONSTRUCTION MANAGEMENT SERVICES.

         The Parties acknowledge that, under the Financing Documents and the
Project Contracts, the Company has certain obligations to develop and construct
the Facility. In order to assist the Company in the performance of such
obligations, but subject to Section 2.2(b), the Operator shall from the date
hereof until the Commercial Operation Date (i) supervise and manage the
development of the Facility, and the design, engineering and construction of the
Facility in accordance with (a) generally accepted engineering practices, (b)
generally accepted construction procedures, (c) the plans and standards set
forth in the EPC Contract, (d) the requirements of the Power Purchase Agreement
and (e) applicable law; (ii) exercise all rights of the Company under the EPC
Contract and any other contracts for the construction of the interconnection or
other facilities related to the Facility (including, but not limited to,
operational responsibilities arising prior to the Commercial Operation Date);
and (iii) use commercially reasonable efforts to provide the services and
perform the obligations the Company is then obligated to provide and perform
under the EPC Contract and to procure or provide any goods and services
necessary for the completion of the Facility for which provision is not made in
the EPC Contract.

         SECTION 2.2      PAYMENT FOR DEVELOPMENT AND CONSTRUCTION MANAGEMENT
                          SERVICES.

         (a) On the tenth (10th) Business Day of each calendar month following
the date of this Agreement, the Company, upon receipt of an invoice, shall pay
in arrears to the Operator, in consideration for the services provided in the
previous month and described in Section 2.1, as follows:

            (i)   Until the first calendar month following the Commercial
         Operation Date, all Operator Costs after the Effective Date up to said
         calendar month, to the extent the Operator has not been previously paid
         therefor and to the extent it submits cost substantiation therefor, it
         being understood that payment of certain cost items included in
         Operator Costs may be made by the Collateral Agent pursuant to the
         Financing Documents; and

            (ii)  A Management Fee of [$125,000] for each calendar month (or a
         pro rata portion of such fee for any portion of each calendar month)
         from the Effective Date through the Commercial Operation Date (at which
         date such fee shall cease) for services rendered during such calendar
         month (or portion thereof).

         (b) The Operator may suspend the performance of its obligations
hereunder during such time as any amount payable pursuant to Sections 2.2(a)(i)
or (ii) is more than 60 days past due; PROVIDED, HOWEVER, that the Operator
shall not so suspend performance of its obligations hereunder if the amount
payable that is more than 60 days past due hereunder is subject to a good

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faith dispute by the Company as to whether the cost in question was in fact
incurred by the Operator.

                                  ARTICLE III

                            OPERATION AND MAINTENANCE

         SECTION 3.1      OPERATING AND MAINTENANCE PERSONNEL AND OTHER
                          SERVICES.

         The Parties acknowledge that, under the Financing Documents and the
Project Contracts, the Company has certain obligations to maintain and operate
the Facility and in order to assist the Company therewith, but subject to
Section 3.2(c), the Operator shall provide operating personnel and other support
services necessary for the Company to perform its obligations arising out of or
in connection with, the ownership, management, maintenance and operation of the
Facility, including without limitation the following obligations:

(a) Operating and maintaining the Facility in accordance with the Power Purchase
Agreement, the Financing Documents and the practices, standards and procedures
customary in the independent power industry with respect to natural gas-fired
combined cycle electric generating facilities;

(b) Obtaining and maintaining insurance as required under the Financing
Documents and the Project Contracts, without limiting the rights of each of the
Company and the Operator to provide independently for its own additional
insurance coverage;

(c) Maintaining full and complete records of accounts and of technical
operations of the Facility and preparing all reports, statements, data and
information that may be required from time to time under the Financing
Documents, the Project Contracts or by any federal, state, or local governmental
authorities, and retaining records relating to a given year during the term
hereof, other than those records which are necessary to provide a history of the
operation and maintenance of the Facility (which the Operator agrees to retain
for the full term of this Agreement), for a period of at least three years after
the end of such year;

(d) Opening and maintaining bank accounts and performing cash management
functions in connection with the operation of the Facility, including, subject
to the provisions of the Financing Documents, the receipt of revenues generated
by the Company and the payment of all costs, expenses, rentals and taxes
incurred by the Company;

(e)      Preparing all federal, state and local tax returns of the Company; and

(f) Inspecting and testing metering devices used to measure and record natural
gas delivered to the Facility pursuant to the Power Purchase Agreement and
electricity delivered to the Electric Delivery Point pursuant to the Power
Purchase Agreement.

         SECTION 3.2      PAYMENT FOR OPERATING AND MAINTENANCE SERVICES.

             (a)  (i)    On the tenth (10th) Business Day of each calendar month
         following the Commercial Operation Date through the remaining term of
         this Agreement, the

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         Company shall pay in arrears to the Operator, in consideration for the
         services provided in the previous month and described in Section 3.1,
         all Operator Costs incurred prior to and after the Commercial Operation
         Date up to said calendar month to the extent the Operator has not been
         previously paid therefor and to the extent it submits cost
         substantiation therefor, it being understood that payment of certain
         cost items included in Operator Costs may be made by the Collateral
         Agent directly pursuant to the Financing Documents; and

                  (ii)   On each Bond Payment Date commencing with the first
         Bond Payment Date after the Commercial Operation Date, and through the
         remaining term of this Agreement, the Company shall pay in arrears to
         the Operator, in consideration for the services provided in the
         most recent quarter and described in Section 3.1, a quarterly
         Operating and Maintenance Fee of $375,000, as adjusted pursuant to
         Section 3.2(b), (or a pro rata portion of such fee for any portion of
         each calendar quarter) for services rendered during such calendar
         quarter (or portion thereof); PROVIDED, HOWEVER, the Operating and
         Maintenance Fee shall be payable to the Company only to the extent
         that funds are available for such payment pursuant to the Collateral
         Agency Agreement and in accordance with Section 4.1.

             (b) (i)    Effective on each Annual Adjustment Date, the Operating
         and Maintenance Fee shall be adjusted in accordance with the following
         formula:

                  AOMF = [$375,000] x                  EGDP
                                             --------------------------
                                                     O&M Base GDP

         WHERE:

         AOMF = The adjusted Operating and Maintenance Fee.

         EGDP =         The Manager's good faith estimate of the GDPIPD for the
                        calendar quarter immediately preceding such Annual
                        Adjustment Date.

         O&M Base GDP = The GDPIPD for the first quarter 2000.

             (ii)      Effective on each Annual Revision Date, the Operating and
Maintenance Fee for the calendar year in which such calculation is made shall be
recalculated in accordance with the following formula:

                 RAOMF = [$375,000] x                  AGDP
                                             --------------------------
                                                     O&M Base GDP

         WHERE:

         RAOMF =        The readjusted Operating and Maintenance Fee.

         AGDP =         The actual GDPIPD for the calendar quarter immediately
                        preceding such Annual Adjustment Date.

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         O&M Base GDP = The GDPIDP for the first quarter 2000.

             (iii)      The Operating and Maintenance Fee payable pursuant to
         Section 3.2(a)(ii) for the first calendar quarter of each calendar
         year shall be calculated in accordance with Section 3.2(b)(i). The
         Operating and Maintenance Fee payable pursuant to Section 3.2(a)(ii)
         for each quarter of each calendar year commencing with the second
         quarter of such calendar year shall be calculated in accordance with
         the formula set forth in this Section 3.2(b)(ii) and the quarterly
         amounts to be paid to the Operator by the Company over the remainder of
         such calendar year shall be equitably adjusted by an allocation
         thereover of the amount equal to the difference between (x) the sum of
         the quarterly fee calculated pursuant to Section 3.2(b)(i) and payable
         in accordance with the first sentence of this Section 3.2(b)(iii) for
         the first quarter of such calendar year and (y) the quarterly fee that
         would have been payable for the first quarter of such calendar year if
         such quarterly fee had been calculated pursuant to Section 3.2(b)(ii).

         (c) The Operator may suspend performance of its obligations during such
time as any amount payable pursuant to Section 3.2(a)(i) is more than 60 days
past due; PROVIDED, HOWEVER, that the Operator shall not so suspend performance
of its obligations hereunder if the amount payable that is more than 60 days
past due hereunder is subject to a good faith dispute by the Company as to
whether the cost in question was in fact incurred by the Operator.

         (d) The Operator may suspend the performance of its obligations
hereunder during such time as any amount payable pursuant to Section 3.2(a)(ii)
is past due for more than 60 days; PROVIDED, HOWEVER, that the Operator shall
not so suspend performance of its obligations if the amount payable pursuant to
Section 3.2(a)(ii) is past due as a result of the application of Section 4.1 of
this Agreement and the provisions of the Collateral Agency Agreement.

                                   ARTICLE IV

                                 PAYMENT OF FEES

         SECTION 4.1    PAYMENT OF FEES.

         Notwithstanding anything to the contrary contained herein, the
Operating and Maintenance Fee payable pursuant to Section 3.2(a)(ii) shall be
payable by the Company if and to the extent that funds are available in the
Revenue Account for such payment after giving effect to the transfers and
payments (other than payment of such Operating and Maintenance Fee) specified in
paragraphs FIRST through FIFTH of Section 3.10(b) of the Collateral Agency
Agreement. In the event that the Company is at any time unable to make payment
of the Operating and Maintenance Fee due pursuant to Section 3.2(a)(ii) because
of the unavailability of funds under the Collateral Agency Agreement, such
unpaid Operating and Maintenance Fee shall accumulate and shall accrue interest
at the Prime-Based Rate (or, if lower, the maximum rate permitted by applicable
law), compounded annually (the "UNPAID FEE AMOUNT"). Until such time as the
Unpaid Fee Amount equals zero, if any amount of funds are available therefor
pursuant to Section 3.10(b) of the Collateral Agency Agreement, the Company
shall, after payment of the current quarter's Operating and Maintenance Fee on a
Bond Payment Date, pay

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to the Operator, on such Bond Payment Date (but only to the extent that funds
are available therefor pursuant to the Collateral Agency Agreement and this
Section 4.1), an amount equal to the lesser of such available funds and the
Unpaid Fee Amount.

                                  ARTICLE V

                 TERM, TERMINATION AND RELATIONSHIP OF PARTIES

         SECTION 5.1      TERM.

         The term of this Agreement shall commence as of the Effective Date and,
except as otherwise provided herein, shall terminate upon the earlier of (i) the
last day of the month in which the thirty-second anniversary of the Effective
Date occurs, (ii) the date which is sixty (60) days after receipt by Operator of
a notice from the Collateral Agent specifying that (a) a Trigger Event under the
Collateral Agency Agreement has occurred and the Collateral Agent, any Financing
Party or any agent, assignee or designee thereof has commenced the exercise of
remedies in respect of such Trigger Event and (b) the Collateral Agent has been
devoted by the Required Senior Partner to terminate this Agreement, and (iii)
the date specified by mutual written agreement of the Parties hereto.

         SECTION 5.2      TERMINATION.

         This Agreement may be terminated by either Party upon the failure of
the other Party to perform any of its material obligations hereunder; PROVIDED,
that the Party seeking to terminate this Agreement under this Section 5.2 has
given the breaching Party 120 days' prior written notice of such breach, and
such breach has not been remedied within such 120-day period. Furthermore, this
Agreement may be terminated upon written notice by either Party upon the
bankruptcy, reorganization, dissolution or liquidation of the other Party. Upon
termination of this Agreement pursuant to this Section 5.2, the Operator agrees
to provide to the Company originals or copies of all records retained by the
Operator in accordance with Section 3.1(c) pertaining to the services rendered
by the Operator hereunder up to and including the date of such termination.

                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

         SECTION 6.1      REPRESENTATIONS AND WARRANTIES OF THE OPERATOR.

         Operator represents and warrants as follows:

         (a)     It is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified to do business and is in good standing in the State of New
Jersey;

         (b)     It has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement, which action has not been
superseded or terminated, and this Agreement constitutes the legal, valid and
binding obligation of the Operator, enforceable

                                       8
<PAGE>

against the Operator in accordance with the terms hereof, except as the
enforceability hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other such laws affecting the rights of
creditors generally or by general equitable principles;

         (c)     The execution, delivery and performance of this Agreement do
not violate (i) the Operator's certificate of formation or Limited Liability
Company Agreement or any resolution of its members, (ii) any contract to which
it is a party or (iii) any law, rule, regulation, order, writ, judgment,
injunction, decree or determination binding upon the Operator or any of its
properties; and

         (d)     No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body (other than
those which have been obtained) are required for the due execution, delivery and
performance by the Operator of this Agreement.

         SECTION 6.2      REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants as follows:

         (a)     It is a limited liability company duly organized and validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified to do business and is in good standing in the State of New
Jersey;

         (b)     It has taken all necessary Company action to authorize the
execution, delivery and performance of this Agreement, which action has not been
superseded or terminated, and this Agreement constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with the terms hereof, except as the enforceability hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other such laws
affecting the rights of creditors generally or by general equitable principles;

         (c)     The execution, delivery and performance of this Agreement do
not violate (i) the Company's certificate of formation or Limited Liability
Company Agreement or any rules of any committee charged thereunder with the
governance of its affairs, (ii) any contract to which it is a party or (iii) any
law, rule, regulation, order, writ, judgment, injunction, decree or
determination binding upon the Company or any of its properties; and

         (d)     No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body (other
than those which have been obtained) are required for the due execution,
delivery and performance by the Company of this Agreement.

                                   ARTICLE VII

                                   ARBITRATION

SECTION 7.1       ARBITRATION.

         In the event of a dispute between the Parties under this Agreement,
such dispute shall be submitted to a single arbitrator pursuant to the
commercial arbitration rules of the American Arbitration Association, and the
Parties shall proceed diligently so that the arbitrator shall render

                                       9
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a decision within 90 days from the filing of a demand for arbitration. This
Agreement shall not be terminated on the basis of any disputed matter until the
arbitrator has rendered his decision. Such arbitration shall be conducted in
Washington, D.C., unless a related arbitration shall be contemplated under the
provisions of any of the Financing Documents or Project Contracts, in which
event arbitration hereunder shall be conducted where such related arbitration is
conducted and, whenever expedient, shall be consolidated with such related
arbitration.

                                   ARTICLE VIII

                            LIMITATIONS OF LIABILITY

         SECTION 8.1      NO CONSEQUENTIAL DAMAGES.

         Neither Party shall be liable to the other for any indirect, special,
incidental or consequential damages arising from or connected with its
performance hereunder or any breach of its obligations hereunder.

         SECTION 8.2      LIMITATION OF OPERATOR'S LIABILITY.

         The total aggregate liability of the Operator to the Company for all
liability, including without limitation the Operator's indemnity obligations
hereunder, arising out of or in connection with the performance of services
under this Agreement in any calendar year shall not exceed the amount of the
Operator Fees earned and paid for that calendar year.

                                   ARTICLE IX

                                  FORCE MAJEURE

         SECTION 9.1      FORCE MAJEURE.

         Notwithstanding any other provision of this Agreement to the contrary,
if the performance of the obligations of either Party under this Agreement, or
the fulfillment of any of the conditions hereof, shall be wholly or partially
prevented by any act or event beyond the reasonable control of the Party
alleging disability to perform obligations or fulfill conditions under this
Agreement, including without limitation, an act of God, nuclear emergency,
explosion, fire, epidemic, landslide, lightning, earthquake, flood or similar
cataclysmic occurrence, an act of public enemy, war, blockade, insurrection,
riot, civil disturbance, sabotage, unavailability of labor, fuel, power or raw
materials, strike, lockout or other labor disturbance, restrictions or
restraints imposed by law or by rule, regulation, or order of governmental
authorities, whether federal, state, or local, delays or interruptions in
transportation and interruption or loss of utilities ("FORCE MAJEURE EVENT"),
the Party alleging inability to perform obligations or fulfill conditions
hereunder shall be excused from whatever performance is affected by the Force
Majeure Event to the extent so affected; PROVIDED, HOWEVER, that (i) economic
hardship shall not constitute a Force Majeure Event and (ii) no obligations of
either Party which arose before the Force Majeure Event causing the suspension
of performance and no payment obligations of either Party shall be excused as a
result of the Force Majeure Event. In the event that a Force Majeure Event
occurs:

                                       10
<PAGE>

     (a)   the non-performing Party shall give the other Party prompt written
notice describing the particulars of the Force Majeure Event, including but not
limited to the nature of the occurrence and its expected duration, and shall
continue to furnish timely regular reports with respect thereto during the
period of the Force Majeure Event;

     (b)   the suspension of performance shall be of no greater scope and of
no longer duration than is required by the Force Majeure Event; and

     (c)   the non-performing Party shall use its best efforts to remedy its
inability to perform.

                                   ARTICLE X

                                 INDEMNIFICATION

         SECTION 10.1     INDEMNIFICATION.

         Each Party shall indemnify, defend and hold the other Party and its
successors, assigns and agents harmless from and against all damages, losses or
expenses of every kind or character suffered or paid as a result of any and all
claims, demands, suits, penalties, causes of action, proceedings, judgments,
administrative and judicial orders and liabilities (including reasonable counsel
fees incurred in any litigation or otherwise) assessed, incurred or sustained by
or against such other Party and its successors, assigns and agents to the extent
arising out of any negligence or willful misconduct by the indemnifying Party in
performing its obligations hereunder.

                                   ARTICLE XI

                                  MISCELLANEOUS

         SECTION 11.1     FURTHER ASSURANCES.

         If either Party reasonably determines or is reasonably advised that any
further instruments (including without limitation a consent to assignment for
the benefit of the Financing Parties or any similar documents) or actions are
necessary or desirable to carry out the terms of this Agreement, the other Party
shall execute and deliver all such instruments and perform all such actions
reasonably necessary and proper to carry out the terms of this Agreement.

         SECTION 11.2     ENTIRE AGREEMENT.

         This Agreement contains the entire agreement between the Parties with
respect to the subject matter hereof and supersedes all prior agreements,
negotiations and understandings. Neither of the Parties shall be bound by or be
deemed to have made any representations, warranties or commitments except those
contained herein.

                                       11
<PAGE>

         SECTION 11.3     COUNTERPARTS.

         This Agreement may be executed in any number of counterparts and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement.

         SECTION 11.4     GOVERNING LAW.

         This Agreement shall be construed in accordance with and governed by
the laws of the State of New York, without regard to principles of conflicts of
laws.

         SECTION 11.5     ASSIGNABILITY.

         Neither this Agreement, nor the respective rights, obligations and
duties of either Party hereunder are assignable by such Party without the prior
written consent of the non-assigning Party, and any assignment without such
written consent shall be void, except (i) that the Operator may engage agents or
subcontractors to provide the services described herein, and may enter into the
Services Agreement, (ii) the Operator may assign any and all of its rights to
payments made, due or to become due hereunder, and (iii) the Company may assign
its rights and obligations hereunder to the Financing Parties pursuant to the
Financing Documents.

         SECTION 11.6     BINDING EFFECT.

         This Agreement shall be binding upon and shall inure to the benefit of
the Parties hereto and their respective successors and permitted assigns. This
Agreement is not made for the benefit of any person or entity not a Party
hereto, and nothing in this Agreement shall be construed as giving any person or
entity, other than the Parties hereto and their respective successors and
permitted assigns, any right, remedy or claim under or in respect of this
Agreement or any provision hereof.

         SECTION 11.7     HEADINGS.

         The headings used in this Agreement are for convenience only and shall
not affect the construction of any of the terms of this Agreement.

         SECTION 11.8     NOTICES.

         All notices or other communications which are required or permitted
hereunder shall be in writing and shall be deemed sufficiently given (i) upon
delivery, if delivered personally, (ii) five days after deposit in a U.S. Postal
Office mail box, (iii) the day it is received, if it is delivered by overnight
courier or (iv) upon the effective sending of electronic transmission,
facsimile, telex or telegram, to the addresses set forth below or such other
address as the addressee may have specified in a notice duly given to sender as
provided herein:

                                       12
<PAGE>

         If to the Operator:

                  AES Sayreville, L.L.C.
                  1001 N. 19th Street
                  Arlington, VA  22209
                  Attention:        Patricia L. Rollin, Vice President
                  (Telephone):      703-358-0538
                  (Facsimile):      703-528-4510

         If to the Company:

                  AES Red Oak, L.L.C
                  1001 North 19th Street
                  Arlington, VA  22209
                  Attention:        Project Manager
                  (Telephone):      703-525-1315
                  (Facsimile):      703-528-4510

         SECTION 11.9     AMENDMENT.

         Neither Party hereto shall be bound by any termination, amendment,
supplement, waiver or modification of any term hereof unless such Party shall
have consented thereto in writing. This Agreement may not be amended, modified
or supplemented without the consent of the Financing Parties to the extent such
consent is required under the Financing Documents.

         SECTION 11.10    NO IMPLIED WAIVER.

         No delay or failure on the part of either Party in exercising any
rights hereunder, and no partial or single exercise thereof, shall constitute a
waiver of such rights or of any other rights hereunder.

         SECTION 11.11    OVERDUE OBLIGATIONS TO BEAR INTEREST.

         Except as provided in Section 4.1, all amounts due hereunder, whether
as damages, credits, revenue or reimbursements, that are not paid when due shall
bear interest at the Prime-Based Rate or, if lower, the maximum interest rate
permitted by law, on the amount outstanding from time to time, on the basis of a
365-day year and the actual number of days elapsed.

         SECTION 11.12    INDEPENDENT CONTRACTOR.

         The Operator shall at all times act as and be deemed an independent
contractor and shall not act as nor be deemed to be an agent, servant or
employee of the Company.

         SECTION 11.13    ACCESS.

         The Company and its representatives shall have the right at all times
to visit and inspect the Facility and the Site, and shall have the right, upon
reasonable notice and at reasonable times, to take visitors onto the Site and
into the Facility; PROVIDED, HOWEVER, that such visits shall be

                                       13
<PAGE>

conducted in a manner so as to minimize interference with the Operator's
performance hereunder and to be in accordance with reasonable rules and
procedures prescribed by the Operator for such visits; and PROVIDED, FURTHER,
that the Company and its representatives and invitees shall have the right to
enter the Facility and the Site without notice or obligation to minimize
interference with the Operator's performance in the event of an emergency,
including fire, vandalism or other threats to public health or safety. During
the term of this Agreement, the Company shall provide the Operator and its
agents, employees, subcontractors and consultants full and free access at all
times to the Facility to the extent required to perform the services required by
this Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       14
<PAGE>

         IN WITNESS WHEREOF, each of the Parties hereto, intending to be legally
bound, has caused this Agreement to be duly executed on its behalf on the date
first above written.

                                AES SAYREVILLE, L.L.C.

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

                                AES RED OAK, L.L.C.

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

                                                                    Exhibit 10.8

                               GENERATION FACILITY

                     TRANSMISSION INTERCONNECTION AGREEMENT

                                     BETWEEN

                      JERSEY CENTRAL POWER & LIGHT COMPANY
                                d/b/a GPU ENERGY

                                       AND

                               AES RED OAK, L.L.C.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                             PAGE
                                                                             ----
<S>                                                                          <C>
ARTICLE  1:  DEFINITIONS........................................................2

ARTICLE  2:  EFFECTIVE DATE AND TERM............................................8

ARTICLE  3:  RESPONSIBILITIES OF THE COMPANY...................................10

ARTICLE  4:  RESPONSIBILITIES OF THE POWER PRODUCER............................11

ARTICLE  5:  MODIFICATIONS TO FACILITIES, INTERCONNECTIONS.....................14

ARTICLE  6:  OPERATION.........................................................17

ARTICLE  7:  MAINTENANCE NOTIFICATION AND COORDINATION.........................18

ARTICLE  8:  REVENUE METERING..................................................20

ARTICLE  9:  LAND RIGHTS AND ACCESS............................................23

ARTICLE 10:  INSURANCE.........................................................23

ARTICLE 11:  PERFORMANCE.......................................................26

ARTICLE 12:  LIABILITY AND DEDICATION..........................................27

ARTICLE 13:  INDEMNIFICATION...................................................29

ARTICLE 14:  REPRESENTATIONS, WARRANTIES AND COVENANTS.........................32

ARTICLE 15:  EVENTS OF DEFAULT.................................................33

ARTICLE 16:  ASSIGNMENT........................................................37

ARTICLE 17:  NOTICES...........................................................38

ARTICLE 18:  AMENDMENT AND MODIFICATION........................................39

ARTICLE 19:  DISPUTES..........................................................39

ARTICLE 20:  MISCELLANEOUS.....................................................40
</TABLE>

APPENDIX A - DESCRIPTION OF FACILITY
APPENDIX B - INTERCONNECTION FACILITIES
APPENDIX C - TRANSMISSION OPERATION INTERCONNECTION REQUIREMENTS
APPENDIX D - SYSTEM PROTECTION AND CONTROL INTERCONNECTION REQUIREMENTS
APPENDIX E - INTERCONNECTION INSTALLATION AGREEMENT

<PAGE>

                               GENERATION FACILITY

                     TRANSMISSION INTERCONNECTION AGREEMENT

             THIS AGREEMENT, made and entered into this 27th day of April, 1999,
by and between Jersey Central Power & Light Company d/b/a GPU Energy
("Company"), a corporation and a public utility organized and existing under the
laws of the State of New Jersey, and AES Red Oak, L.L.C., an entity organized
and existing under the laws of the State of Delaware ("Power Producer"), both
Company and Power Producer hereinafter sometimes referred to collectively as the
"Parties", or individually as a "Party". The Parties acknowledge that GPU
Service, Inc., shall act as agent for the Company concerning the administration
of this Agreement.

                                    RECITALS

             WHEREAS, the Company is a public utility engaged in the production,
transmission, distribution and sale of electric energy; and

             WHEREAS, the Company is a member of the PJM Interconnection, L.L.C.
("PJM") operated under the PJM Agreement; and

             WHEREAS, the Company is a member of the Mid-Atlantic Area Council
("MAAC"), a reliability council under Section 202 of the Federal Power Act
established pursuant to the Mid-Atlantic Coordination Agreement, dated December
26, 1967, and as amended and restated as of August 1, 1994 by the MAAC Executive
Board, and as may be further amended from time to time thereafter; and

             WHEREAS, the Power Producer is an entity engaged or intending to be
engaged in

                                       1
<PAGE>

the production and sale of electric energy and/or capacity from an electric
power generation facility to be located in the State of New Jersey, and more
fully described in Appendix A; and

             WHEREAS, in order for the Power Producer to sell electric energy
and capacity generated from the Facility, it must be interconnected with the
Transmission System; and

             WHEREAS, the Parties are willing to enter into this agreement under
which the Facility will be interconnected with the Transmission System, subject
to terms and conditions hereinafter set forth.

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

                                    ARTICLE 1
                                   DEFINITIONS

1.1          Any capitalized or abbreviated term not elsewhere defined in this
Agreement shall have the definition set forth below:

             (a) Affiliate - With respect to a corporation, partnership or other
entity, each such other corporation, partnership or other entity that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such corporation, partnership or other entity.

             (b) Agreement - This Generation Facility Transmission
Interconnection Agreement including all appendices attached hereto, and all
amendments and supplements.

             (c) BPU - The New Jersey Board of Public Utilities or any successor
agency thereto.

                                       2
<PAGE>

             (d) Capacity - The maximum generating capability of the Facility,
measured in megawatts at a defined ambient air temperature, as set forth in
Appendix A.

              (e) Company Interconnection Facilities - All structures,
facilities, equipment, devices and apparatus owned or leased by, or under
contract to, the Company or its Affiliates, as identified in Appendix B, which
facilities are necessary, together with the Power Producer Interconnection
Facilities, to allow the interconnection of the Facility to the Transmission
System.

             (f) Emergency - A condition or situation which the PJM OI, the
Company or the Power Producer deem imminently likely to (i) endanger life or
property; (ii) adversely affect or impair the Transmission System, or imminently
will affect or impair, the Company's electrical system or the electrical or
transmission systems of others to which the Company's electrical system is
directly or indirectly connected; or (iii) adversely affect or impair the
Facility. Such a condition or situation includes, but is not limited to,
overloading or potential overloading of or excessive voltage drop on the
Company's or regional transmission and/or distribution circuits, unusual
operating conditions on either the Company's, regional or the Power Producer's
electrical system or conditions such that the output of the Power Producer's
Facility must be adjusted to avoid jeopardizing the Facility, the Company's
electrical system or the electrical systems of others to which the Company's
electrical system is directly or indirectly connected.

             (g) Facility - The real and personal property owned by the Power
Producer at the electric power generating facility including, but not limited
to, the following assets: (a) the real property (including all buildings,
structures and other improvements thereon); (b) the turbines

                                       3
<PAGE>

machinery, equipment, vehicles, furniture, and other personal property located
on the Power Producer's property, and shall include any additions, modifications
or replacements thereto, as further defined in Appendix A.

             (h) FERC - The Federal Energy Regulatory Commission or any
successor agency thereto.

             (i) Force Majeure - Shall mean an event or occurrence or
circumstance beyond the reasonable control of and without the fault or
negligence of the Party claiming Force Majeure, including, but not limited to,
acts of God, labor dispute (including strike), acts of public enemy, war, civil
disturbance, riot, fire, storm, flood, explosion, earthquake, lightning,
epidemic, sabotage, breakage or accident to machinery or equipment, electric
system disturbance, change in law or applicable regulation subsequent to the
date hereof and action or inaction by any federal, state or local legislative,
executive, administrative, military, or judicial agency or body which, in any of
the foregoing cases, by exercise of due foresight such Party could not
reasonably have been expected to avoid, and which, by the exercise of due
diligence, is unable to overcome, and which wholly or in substantial part
prevents such Party from performing its obligations under this Agreement. The
settlement of strikes and labor disturbances shall be wholly within the
discretion of the Party experiencing the event. Economic hardship of either
Party shall not constitute a Force Majeure under this Agreement.

             (j) Generator Forced Outage - Shall have the meaning given that
term in the PJM Agreement.

             (k) Generator Maintenance Outage - Shall have the meaning given
that term in the

                                       4
<PAGE>

PJM Agreement.

             (l) Generator Planned Outage - Shall have the meaning given that
term in the PJM Agreement.

             (m) Good Utility Practice - (i) Any of those practices, methods and
acts engaged in or approved by a significant portion of the electric utility
industry in North America during the relevant time period, or any of the
practices, methods and acts which, in the exercise of reasonable judgment in
light of the facts known at the time the decision was made, could have been
expected to accomplish the desired result at a reasonable cost consistent with
good business practices, reliability, safety and expedition; and (ii) any of
those practices, methods, standards and equipment commonly used, from time to
time, in electrical engineering and operations to operate electrical equipment
lawfully and with safety, dependability and efficiency and in accordance with
the National Electrical Safety Code and the National Electrical Code and
Standards of the Institute of Electrical and Electronic Engineers, and standards
established by the National Electrical Manufacturers Association, the PJM OI,
the Mid-Atlantic Area Council ("MAAC"), the American National Standards
Institute and any such other standards practiced by the industry and electrical
equipment manufacturers in North America in a manner sufficient to provide safe
and reliable service. Good Utility Practice is not intended to be limited to the
optimum practice, method, or act to the exclusion of all others, but rather to
be acceptable practices, methods or acts generally accepted and consistently
adhered to in the MAAC region.

             (n) Interconnection Facilities - The Company Interconnection
Facilities and the Power Producer Interconnection Facilities, together.

                                       5
<PAGE>

             (o) Lenders - Those entities, including their successors and
assigns and any trustee or agent acting on their behalf, who have advanced or
who will advance to the Power Producer, directly or indirectly, the economic
resources (whether on a senior or unsubordinated basis) for the development and
construction of the Facility or the Interconnection Facilities. The Power
Producer shall notify the Company of the name and addresses of the Lenders for
the purposes of this Agreement.

             (p) NERC - The North American Electric Reliability Council or any
successor thereto.

             (q) PJM Agreement - Shall mean the Amended and Restated Operating
Agreement of PJM Interconnection, L.L.C., dated as of June 2, 1997, and revised
as of December 31, 1997, January 30, 1998, and March 17, 1998, and as may be
further amended or superseded from time to time.

             (r) PJM Control Area - The control area recognized by NERC as the
PJM Control Area.

             (s) PJM Interconnection, L.L.C. - The entity formerly known as the
PJM Interconnection Association, converted into a limited liability company
pursuant to the Delaware Limited Liability Company Act, Title 6, Sections 18-101
et seq. of the Delaware Code, by virtue of the filing of both the Certificate of
Formation and Certificate of Conversion with the Recording Office, effective as
of March 31, 1997. The L.L.C. operates in accordance with the FERC requirements
as an Independent System Operator, comprised of the PJM Board, the PJM OI, and
the PJM Members Committee.

                                       6
<PAGE>

             (t) PJM OI - The Office of the Interconnection as supervised by the
Board of Managers of the PJM Interconnection, L.L.C., acting pursuant to the PJM
Agreement. The PJM OI has the responsibility for the continued operation of the
PJM Control Area and the administration of the PJM Tariff, subject to regulation
by the FERC.

             (u) PJM Tariff - The PJM Open Access Transmission Tariff filed by
the PJM Interconnection L.L.C. with FERC on July 14, 1997, in Docket
No. OA97-261-000 as amended and effective April 1, 1998, and as may be further
modified, amended or superseded from time to time, under which transmission
service is provided within the PJM Control Area.

             (v) Point of Interconnection - Each ownership point of demarcation
on the Transmission System where capacity, energy, and ancillary services each
are transferred between the Facility and the Transmission System. The Point of
Interconnection shall be located as shown on the interconnection one line
diagram attached hereto as Appendix A.

             (w) Power Producer Interconnection Facilities - All structures,
facilities, equipment, devices and apparatus owned or controlled by Power
Producer, as identified in Appendix B, and as may be amended from time to time.

             (x) Protective Apparatus - All equipment and apparatus included in
the Interconnection Facilities, including but not limited to protective relays,
circuit breakers and the like, as set forth in Appendix B, necessary to isolate
the Facility from the Company's electrical system consistent with Good Utility
Practice.

             (y) Revenue Meters - All MWh, MVARh meters, pulse isolation relays,
pulse conversion relays and transducers used by the PJM OI or the Company for
billing purposes, and

                                       7
<PAGE>

associated totalizing equipment and appurtenances (including voltage
transformers and current transformers) used to measure the transfer of energy
and the applicable ancillary services between the Parties.

             (z) Transmission System - The electric transmission facilities
owned, controlled, or operated by the Company at or above 34.5 kV delta for
purposes of providing transmission service, including services under the PJM
Tariff and the PJM Agreement.

1.2         Unless a different interpretation arises from the context: (a) the
reference to any article, section, paragraph or appendix is a reference to an
article, section, paragraph or appendix of this Agreement, (b) with respect to
the definitions set forth in Article 1, whenever applicable the singular shall
include the plural and vice-versa; and (c) the words "includes" or "including"
mean "including, but not limited to" and are not limiting. Any conflict between
an article or section of the Agreement and any provision of an appendix shall be
resolved by reference to the article or section of this Agreement.

                                    ARTICLE 2
                             EFFECTIVE DATE AND TERM

2.1         This Agreement shall become effective on the effective date
established by the FERC, and shall continue in full force and effect until a
mutually agreeable termination date not to exceed the retirement date for the
Facility, unless terminated on an earlier date by mutual agreement of the
Parties or otherwise in accordance with the terms set forth in this Agreement.

2.2         The applicable provisions of this Agreement shall continue in
effect after cancellation or termination hereof to the extent necessary to
provide for final billings, billing adjustments, and

                                       8
<PAGE>

the determination and enforcement of liability and indemnification obligations
arising from acts or events that occurred while this Agreement was in effect.

2.3         In the event that the FERC (i) fails to accept this Agreement
without suspension or (ii) finds that this Agreement is not just and reasonable
or imposes conditions that are not acceptable to either Party, the Parties will
use commercially reasonable efforts to agree upon amendments or modifications of
this Agreement that would eliminate any such condition or result in a just and
reasonable finding by the FERC. If the Parties are unable to mutually agree upon
such amendment or modification within a reasonable period of time, the Parties
agree to proceed pursuant to Article 19 in order to attempt to resolve any
impasse or dispute.

2.4         In the event that this Agreement is terminated the Power Producer
agrees that it will reimburse the Company for all unpaid costs and expenses
expended by the Company in the installation of the Company's Interconnection
Facilities, up to the date of termination, plus actual removal costs and less
actual salvage value. The Company agrees not to order any equipment or to incur
any significant expenditure on Power Producer's behalf prior to receiving a
"notice to proceed" from the Power Producer. The Power Producer shall deliver
the "notice to proceed" in accordance with Article 17 hereof.

2.5         In the event of a changing law or regulation or the issuance of an
order or other directive by a regulatory authority with jurisdiction over either
Party that affects or may reasonably be expected to affect either Party's
performance under this Agreement, the Parties will negotiate in good faith any
amendment or amendments to this Agreement necessary to adapt the terms of this
Agreement to such change, order, or directive provided that the Parties are not

                                       9
<PAGE>

obligated to agree to such amendment which may adversely affect their current
economic positions as of the effective date of this Agreement. In the event that
the Parties are unable to mutually agree to such an amendment within a
reasonable time period, the Parties agree to proceed pursuant to Article 19 in
order to attempt to resolve any impasse or dispute. Nothing in this Agreement
shall limit the rights of the parties or the FERC under Section 205 or 206 of
the Federal Power Act and FERC's Rules and Regulations thereunder.

                                    ARTICLE 3
                         RESPONSIBILITIES OF THE COMPANY

3.1          The Company shall:

             (a) Install all Company Interconnection Facilities at the Power
Producer's sole cost and expense in accordance with the terms and conditions and
the schedule set forth in Appendix E which is attached hereto and made a part
hereof. Payment of such costs and expenses shall be in accordance with the
schedule set forth in Appendix E hereof. The Company shall use reasonable
efforts to install all Company Interconnection Facilities within the estimated
costs set forth in Appendix E and shall inform the Power Producer of the amount
and reason for any increase in such estimated cost promptly after Company learns
of such cost increase.

             If the Company is materially delayed in meeting the milestone dates
set forth in Appendix E hereof for any reason, excluding an event of Force
Majeure, the Company, following its receipt of the Power Producer's demand for
adequate assurance, shall promptly take all reasonable steps necessary to
rectify the delay condition

             (b) Own, maintain, and operate Company Interconnection Facilities.
The Power

                                       10
<PAGE>

Producer shall reimburse the Company for all actual and verifiable costs and
expenses including, but not limited to, overheads and applicable taxes, directly
associated with the maintenance and operation of the Company Interconnection
Facilities.

             (c) Operate and maintain all Company Interconnection Facilities and
the Transmission System as part of the single PJM Control Area in accordance
with the provisions of the PJM Agreement and PJM Tariff, using due diligence, in
accordance with Good Utility Practice.

             (d) Provide to the Power Producer all design specifications and
equipment characteristics for the interconnection of the Facility with the
Transmission System.

             (e) Maintain in full force and effect at the Power Producer's sole
cost and expense all permits, licenses, rights of way and other authorizations
as may be required to maintain and operate the Company Interconnection
Facilities.

             (f) Upon the expiration of the Agreement and retirement of the
Facility, remove all Company Interconnection Facilities at the Power Producer's
sole cost and expense less salvage value.

3.2         Unless otherwise required by law, regulation, or Good Utility
Practice, the Company shall not be required at any time, at its expense or
otherwise, to upgrade or otherwise modify the Transmission System in order to
accommodate the interconnection of the Facility with the Transmission System.

3.3         The Company does not guarantee the non-occurrence of, or warrant
against, and the Power Producer releases the Company from, any claims or damages
associated with: (a) any interruption in the availability of Company
Interconnection Facilities or the Transmission

                                       11
<PAGE>

System; or (b) damage to the Facility resulting from electrical transients
including, without limitation, short circuits (faults), solar magnetic
disturbances, or events of Force Majeure, except to the extent caused by the
Company's gross negligence or willful misconduct.

                                    ARTICLE 4
                     RESPONSIBILITIES OF THE POWER PRODUCER

4.1          The Power Producer shall:

             (a) Own, maintain and operate the Power Producer Interconnection
Facilities and Protective Apparatus at its sole cost and expense.

             (b) Maintain in full force and effect at its sole cost and expense
all permits, licenses, rights of way and other authorizations as may be required
to maintain and operate the Power Producer Interconnection Facilities and
Protective Apparatus unless otherwise required by law or regulation.

             (c) Install, at its sole cost and expense, any and all equipment in
order to maintain the reliability of the Facility and all Interconnection
Facilities.

             (d) Subject to any right of the Power Producer, or any entity
purchasing the output of the Facility, to schedule and sell ancillary services
under the PJM Agreement or the PJM Tariff, operate the Facility in accordance
with the appropriate voltage schedules and/or reactive schedules developed as
specified in Appendix C. Subject to the foregoing, if the Power Producer fails
to operate the Facility in accordance with Appendix C, the Company will provide
written notice to the Power Producer of the Company's intent to remedy that
failure. If the Power Producer does not promptly commence appropriate action
after receiving such notice, the

                                       12
<PAGE>

Company may then take necessary action at the Power Producer's expense to remedy
such failure, including the installation of capacitor banks or other reactive
compensation equipment necessary to ensure the proper voltage or reactive supply
at the Facility. The Company shall take, to the extent feasible, reasonable
efforts to minimize the impact of such action, in accordance with Good Utility
Practice on the operation of the Facility.

             (e) Make or assure that all necessary arrangements have been made
under the applicable tariffs for transmission service (i.e., from the Point of
Interconnection to Power Producer's load serving or end use customers), losses,
and ancillary services associated with the delivery of the capacity and/or
energy produced by the Facility, which services shall not be provided under this
Agreement.

             (f) Obtain capacity and/or energy for the purpose of satisfying the
Facility station service requirements or for any other uses by the Power
Producer.

             (g) Make or assure that all necessary arrangements have been made
under the applicable tariffs for transmission service, losses, and ancillary
services associated with the use of the Transmission System for the delivery of
capacity and/or energy to the Facility for the purpose of supplying generation
station service or for any other service which is available and/or required
under the PJM Tariff or any retail wheeling tariff, including any distribution
service tariff or contract, in each case as may be amended from time to time.

             (h) Operate, install and maintain at its sole cost and expense all
equipment required to control the Facility in accordance with Section 6.1.

             (i) Maintain or cause to be maintained such records relating to the
Power Producer

                                       13
<PAGE>

Interconnection Facilities as may be required by Good Utility Practice or
applicable law.

4.2         The Power Producer acknowledges that this Agreement does not
encompass transmission service for the output of the Facility under the PJM
Tariff and that, to the extent the Company is required under the PJM Tariff or
the PJM Agreement, including any direction of the PJM OI pursuant thereto, to
upgrade, reinforce or otherwise modify its Transmission System (other than the
installation of the Company Interconnection Facilities) to provide such
transmission service on behalf of the Power Producer, the Power Producer will be
responsible for the costs of such upgrades, reinforcements or modifications in
accordance with the terms of the PJM Tariff, the PJM Agreement or any other
applicable PJM agreements.

                                    ARTICLE 5
                 MODIFICATIONS TO FACILITIES, INTERCONNECTIONS

5.1         In the event the Power Producer plans additions, modifications or
replacements to the Facility, Power Producer Interconnection Facilities or
Protective Apparatus that will increase the Capacity of the Facility, the Power
Producer shall submit to the Company any and all plans and specifications that
the Company may reasonably request related to such additions, modifications or
replacements. Such specifications and plans shall be submitted by the Power
Producer not later than eighteen (18) months prior to the respective commercial
operation date for additions, modifications, or replacements to the Facility,
except as otherwise agreed to by the Company. Any such additions, modifications,
or replacements shall comply with the criteria imposed by the PJM OI, the MAAC
Reliability Principles and Standards, Good Utility Practice, and the criteria
included in Appendix C and Appendix D.

5.2         If the Power Producer plans any additions, modifications or
replacements to the

                                       14
<PAGE>

Facility, Power Producer Interconnection Facilities or Protective Apparatus that
in the Company's view will not increase the amount of Capacity to be delivered
to the Company's electrical system, but could reasonably be expected to affect
the Transmission System, the Company Interconnection Facilities, the operation
of the Facility, the availability of Capacity and/or the delivery of electric
energy and capacity from the Facility, the Power Producer shall give the Company
reasonable notice, but not less than sixty (60) days prior written notice
thereof; PROVIDED, however, that the Power Producer shall provide the Company
with at least nine (9) months prior written notice, and shall submit to the
Company any and all plans and specifications which the Company may reasonably
request related to such additions, modifications or replacements which involves
Power Producer Interconnection Facilities or which the Power Producer
anticipates will result in an outage of the Facility for thirty (30) days or
more. All such additions, modifications, or replacements shall: (a) comply with
the criteria imposed by the PJM OI, the PJM Agreement, the MAAC Reliability
Principles and Standards, Good Utility Practice, and the criteria included in
Appendix C and Appendix D; (b) be accompanied by appropriate information and
operating instructions; and (c) be subject to review and approval of the
Company, which review shall be based on Good Utility Practice. Failure by the
Company to object to any such proposed addition, modification or replacement
within thirty (30) days and, in the case of the proviso to the first sentence of
this Section, ninety (90) days following the Company's receipt of notice thereof
shall be deemed acceptance thereof by the Company.

5.3         The Company shall inform the Power Producer of any additions,
modifications, or

                                       15
<PAGE>

replacements to the Transmission System or the Company Interconnection
Facilities that are necessary as a result of the addition, modification, or
replacement to the Facility made pursuant to Sections 5.1 or 5.2. The Power
Producer shall reimburse the Company for all costs incurred by the Company
associated with any modifications, additions, or replacements made to the
Company Interconnection Facilities or the Transmission System related to any
proposed additions, modifications, or replacements of the Facility to the extent
reasonably required by the Company including, but not limited to those necessary
to meet different voltage requirements of the Transmission System or to enhance
the Transmission System, regardless of whether the expanded Facility enters into
(or has entered into) service or is interconnected with the Transmission System.
The Company shall provide an estimate as early as practicable.

5.4         The Company's acceptance of the Power Producer's interconnection
plans and specifications for any proposed additions, modifications, or
replacement of the Power Producer's Facility whether pursuant to this Agreement
and the Company's participation in interconnected operations with the Power
Producer are not, and shall not be construed as its: (a) confirmation or
endorsement of the design of the Facility, Power Producer Interconnection
Facilities or Protective Apparatus; (b) warranty of safety, durability or
reliability of the Facility or equipment appurtenant thereto; (c) assumption of
responsibility for strength, details of design, adequacy, or capability of the
Facility, Power Producer Interconnection Facilities or Protective Apparatus; or
(d) endorsement or warranty.

5.5         The Power Producer shall modify, at its sole cost and expense (only
to the extent responsibility for such costs and expenses are not allocated to
the Company or a third party

                                       16
<PAGE>

consistent with FERC policy), the Interconnection Facilities and/or Protective
Apparatus as may be reasonably required to conform with changes to Good Utility
Practice or to conform with additions, modifications, or replacements required
by PJM Interconnection L.L.C.

5.6         The Power Producer shall compensate the Company for all reasonable
costs and fees required to enable the Company to fulfill its obligations under
this Agreement including any tax liability, any costs of acquiring land
necessary for the Interconnection Facilities, the costs and fees of all permits,
licenses, franchises or regulatory or other approvals necessary for the
construction, maintenance and operation of any Interconnection Facilities.

5.7         The Company may undertake additions, modifications, or replacements
of its Transmission System or Company Interconnection Facilities. If such
additions, modifications, or replacements might reasonably be expected to affect
the Power Producer's operation of the Facility, the Company shall provide
written notice to the Power Producer in a manner consistent with FERC Order No.
889 prior to undertaking such additions, modifications, or replacements. Any
such additions, modifications, or replacements shall comply with Good Utility
Practice. The Company shall use reasonable efforts with respect to such
addition, modification, or replacement to minimize any adverse impact on the
Facility.

                                    ARTICLE 6
                                    OPERATION

6.1         The Facility, all Interconnection Facilities and Protective
Apparatus shall be operated and maintained in accordance with Good Utility
Practice, including, without limitation, those with regard to synchronization,
voltage and reactive power control, and in compliance with all

                                       17
<PAGE>

permits, licenses, laws, rules and regulations applicable thereto. Operation and
maintenance of the Facility and all Interconnection Facilities shall at all
times conform to applicable requirements and guidelines adopted by the PJM OI
and the Company as set forth in Appendix C and Appendix D, and modified by the
PJM OI and/or the Company respectively from time to time.

6.2         The Power Producer shall be required to comply with the requests,
orders, and directives of the Company to the extent such requests, orders or
directives are (a) necessary to comply with Good Utility Practice, and (b) in
accordance with applicable tariffs and the PJM Agreement.

6.3         In the event the Power Producer believes that a request, order, or
directive of the Company exceeds the limitations in Section 6.2, it shall
nevertheless comply with the request, order, or directive of the Company pending
resolution of the dispute under Article 19. The Parties agree to cooperate in
good faith to expedite the resolution of any disputes arising under Sections 6.2
and 6.3.

6.4         If it appears to the Company at any time, in the reasonable
exercise of its judgment in accordance with Good Utility Practice, that the
operation of the Facility or any Interconnection Facility is adversely affecting
or may adversely affect the quality of service rendered by the Company
(including transmission or distribution services and services provided to end
users), or is interfering or may interfere with the safe and reliable operation
of the Transmission System or the regional transmission system, the Company may,
upon such notice specified below, disconnect the Facility from the Transmission
System and/or curtail, interrupt, or reduce energy

                                       18
<PAGE>

deliveries from the Facility until the condition has been corrected. In the
event of an Emergency, the Company may immediately take any and all steps it
reasonably believes to be necessary to mitigate or cure the Emergency condition
including, without limitation, disconnecting the Facility from the Transmission
System. The Company shall use reasonable efforts to (i) minimize, to the extent
practicable under the circumstances, any such disconnection, curtailment,
interruption, or reduction, (ii) provide the Power Producer with prior
notification of any such disconnection, curtailment, interruption, or reduction,
to the extent practicable, (iii) resume acceptance of electric energy as
promptly as practicable following elimination of the condition causing the
disconnection, curtailment, interruption, or reduction, and (iv) confer with the
Power Producer regarding the interfering conditions that gave rise to the
disconnection, curtailment, or reduction.

                                    ARTICLE 7
                    MAINTENANCE NOTIFICATION AND COORDINATION

7.1         The Power Producer shall maintain, at its own expense, the Power
Producer Interconnection Facilities and Protective Apparatus. The Company shall
maintain the Company Interconnection Facilities. The Power Producer shall
reimburse the Company for all actual and verifiable costs and expenses
including, but not limited to, overheads and applicable taxes directly
associated with the maintenance and operation of the Company Interconnection
Facilities.

7.2         In accordance with Good Utility Practice, the Company may remove
the Interconnection Facilities from service as necessary, in the reasonable
exercise of the Company's

                                       19
<PAGE>

judgment, to perform maintenance or testing or to install or replace equipment
on the Company Interconnection Facilities or the Transmission System. Unless an
Emergency exists or the risk of one in the Company's view is imminent, the
Company shall, if practical, give the Power Producer prior notice of the
removal. The Company shall use due diligence to restore the Interconnection
Facilities to service as promptly as practicable.

7.3         If the Company determines, in its sole judgment, that the Power
Producer is maintaining the Power Producer's Interconnection Facilities and
Protective Apparatus in a manner which may lead to an Emergency condition, the
Power Producer, within thirty (30) days of notification thereof from the
Company, shall take all reasonable steps to conform its maintenance practices to
the requirements of Good Utility Practice and this Agreement.

7.4         At any reasonable time upon advance notice, each Party shall permit
the representatives of the other Party access to the records for its
interconnection facilities in order to examine, inspect and test such records.
In the event of an Emergency, the Power Producer shall ensure that Company
representatives have immediate and unimpeded access to the Power Producer
Interconnection Facilities as necessary to address the Emergency in accordance
with Good Utility Practice working with the Power Producer. The Power Producer
hereby grants to the Company the right to enter upon the Power Producer's
property for such purposes.

                                    ARTICLE 8
                                REVENUE METERING

8.1         The Company shall utilize Revenue Meters to measure the electrical
energy on an hour-by-hour basis, or such shorter intervals as may be agreed
upon, at the Point of

                                       20
<PAGE>

Interconnection in order to determine the transfer of energy between the
Parties.

8.2         All Revenue Meters shall be of advanced meter design that have an
internal recorder and a communications capability that the Company can utilize
to retrieve diagnostic messages, the recorded transfer of energy between the
Parties, and any other information deemed necessary by the Company. The Power
Producer may, at its sole cost and expense, install telemetering or other
communications equipment to retrieve such information as is deemed necessary by
the Power Producer.

8.3         The Parties shall agree that, if the Revenue Meters and analog
equipment and the Point of Interconnection are not at the same location
electrically, the metering data shall be adjusted, or the Revenue Meters shall
be compensated, as the Company shall deem appropriate, to record delivery of
electricity in a manner that accounts for the total (load plus no-load)
electrical energy losses occurring between the metering point and the Point of
Interconnection, both when the Power Producer is delivering energy to the
Company and when the Company is delivering station service energy to the
Facility, or for any other use.

8.4         In the event that the Company's Revenue Meters at any time fail to
register, or should their registration be so erratic so as to be meaningless,
the hourly energy transferred between the Parties shall be determined from the
best information available, including, but not limited to, the Power Producer's
meters, operator's logs and real-time communications data of the meter results.

8.5         If at any time, any Revenue Meters and analog equipment is found to
be inaccurate by a margin greater than that allowed under the applicable
criteria, rules, and standards, the Company shall cause the Revenue Meters and
analog equipment to be made accurate or replaced

                                       21
<PAGE>

at the Power Producer's expense. Meter readings for the period of inaccuracy
shall be adjusted insofar as the extent of the inaccuracy can be reasonably
ascertained; provided, however, no adjustment shall be made for meter readings
made prior to the point in time halfway between the time of the last test that
showed the Revenue Meters and analog equipment in question to be functioning
accurately and the time the subsequent inaccuracy is corrected, except by
agreement of the Parties.

8.6         The Company shall read and report Revenue Meter data to the Power
Producer. The Power Producer shall have the right to read the Revenue Meters
upon reasonable notice to the Company.

8.7         The Parties shall each keep and maintain accurate and detailed
records relating to the Revenue Meters for a period of not less than seven (7)
years. Such records shall be made available for inspection by either Party or
any governmental agency having jurisdiction with respect thereto during normal
business hours upon reasonable notice.

8.8         The Company shall at the Power Producer's expense (i) install, own,
maintain, and repair and have the right to change the location of all Revenue
Meters, instrument transformers and appurtenances associated with the Revenue
Meters, and analog equipment (transducers and telemetry) and (ii) install, own,
maintain, and repair all additional or updated metering and associated
equipment, as mutually agreed upon by the Parties, needed to update its metering
facilities, in accordance with Good Utility Practice.

8.9         The Company shall, at the Power Producer's expense, test all
Revenue Meters and analog equipment at such time as Company deems reasonably
necessary in accordance with all

                                       22
<PAGE>

applicable regulatory requirements or standards. However, all Revenue Meters and
analog equipment shall be tested at least once every two (2) years.

8.10        Upon written request by the Power Producer, the Company shall test
designated Revenue Meters and analog equipment more frequently than once every
two (2) years. In the event a test requested by the Power Producer establishes
such Revenue Meters to be registering inaccurately by more than one (1%) percent
of full scale, the cost of said test shall be borne by the Company. In all other
instances, the cost of any such test, regardless of which Party requests it or
the results thereof, shall be paid by the Power Producer.

8.11        The Company shall give reasonable notice to the Power Producer of
the time when any Revenue Meters and analog equipment test shall take place, and
the Power Producer may have representatives present at said test. Any Revenue
Meters found to be inaccurate by more than one (1%) percent of full scale or
defective shall be adjusted, repaired or replaced, at the sole cost and expense
of the Power Producer.

8.12        The Company shall install, own, and maintain, at the Power
Producer's expense, equipment, except for associated telephone link(s) which
shall be the sole responsibility of the Power Producer, for real-time
communications, real-time reactive power, hourly MWh information, interval
revenue data and such other information as the Company or the PJM OI may
require. The Power Producer shall install, operate, maintain and repair, at its
own expense, an operating telephone link(s) to provide information deemed
necessary by the Company or the PJM OI, or as reasonably deemed necessary by the
Company, to integrate operation of the Facility with the Transmission System.

                                       23
<PAGE>

                                    ARTICLE 9
                             LAND RIGHTS AND ACCESS

9.1         The Power Producer hereby grants, or confirms its prior grant to
the Company, for nominal consideration, all necessary rights of way, easements,
and licenses as the Company may require to install, operate, maintain, replace
and remove the Company's metering equipment and other Company Interconnection
Facilities, including adequate and continuing access rights to the Power
Producer's property for any purpose reasonably related to this Agreement. The
Power Producer hereby agrees to execute such grants, deeds, licenses,
instruments and other documents as the Company may require to enable it to
record such rights of way, easements and licenses.

                                   ARTICLE 10
                                    INSURANCE

10.1        The Power Producer shall keep the Facility continuously insured
against loss or damage in amounts and for risks that property of similar
character is usually so insured by entities owning and operating like
properties.

10.2        The Power Producer, the operator of the Facility, and their
respective successors and assigns shall procure or cause to be procured and
shall maintain in effect continuously during the term of the Agreement the
following minimum insurance coverages:

<TABLE>
<CAPTION>

             TYPE OF COVERAGE                                 LIABILITY LIMITS
             ----------------                                 ----------------
             <S>                                              <C>
             Worker's Compensation                            Statutory

</TABLE>

                                       24

<PAGE>

<TABLE>

             <S>                                              <C>
             Employer's Liability                             $500,000 per occurrence/injury

             Comprehensive/General                            $1,000,000 combined single limit,
             Liability including:                             each occurrence

                                                              $2,000,000 aggregate limit
                                                              applicable for the Facility

                  Bodily Injury
                  Property Damage
                  Blanket Contractual
                  Underground Explosion and Collapse Hazard
                  Products and Completed Operations Hazard
                  Broad Form Property Damage
                  Personal Injury

             Automobile Liability

                  (Owned, Hired, Non-Owned)
                  Bodily Injury                               $1,000,000 combined single limit
                  Property Damage

             Commercial Umbrella Liability                    $9,000,000 per occurrence
             following form of
                  Commercial General Liability,
                  Automobile Liability and
                  Employers Liability
</TABLE>

10.3        In order to meet changed circumstances or changes in industry
practice in a manner consistent with the requirements of Section 10.1, the
Company may notify the Power Producer of a proposed change to the types of
coverage or the liability limits set forth in Section 10.2. The Parties agree to
negotiate in good faith to revise the provisions of Section 10.2 within ninety
(90) days of such notice or such other time period as the Parties agree upon for
such negotiations.

10.4        All insurance policies identified in Section 10.2, except Worker's
Compensation Insurance, shall name the Company as an additional insured.

                                       25
<PAGE>

10.5        The Power Producer's liability insurance (other than its Worker's
Compensation Insurance) shall include provisions or endorsements (i) stating
that such insurance is primary insurance with respect to the interest of the
Company and that any insurance maintained by the Company is excess and not
contributory insurance with the insurance required hereunder, and (ii) providing
that such policies shall not be canceled or their limits of liability reduced
except upon thirty (30) days prior written notice to the Company.

10.6        The Power Producer shall provide and shall continue to provide to
the Company during the term the Agreement (including any extensions), by
delivering to its corporate office at 2800 Pottsville Pike, P.O. Box 16001,
Reading, Pennsylvania 19640-0001, Attention: Manager - Transmission Investment
Planning, properly executed and current certificates of insurance relative to
insurance policies. Certificates of insurance shall provide the following
information:

            (i)   Name of insurance company, policy number and expiration date.

            (ii)  The coverage required and the limits on each, including the
                  amount of deductibles or self-insured retentions, which shall
                  be for the account of the Power Producer.

            (iii) A statement indicating that the Company shall receive at least
                  thirty (30) days prior written notice of cancellation or
                  reduction of liability limits with respect to said insurance
                  policies, and

            (iv)  To the extent applicable, a statement indicating that the
                  Company has been named as an additional insured.

10.7        A copy of each insurance policy, certified as a true copy by an
authorized representative of the issuing insurance company, or in lieu thereof
or in addition thereto, at the

                                       26
<PAGE>

Company's discretion, a certificate in form satisfactory to the Company
certifying to the issuance of such insurance, shall be furnished to the Company
not less than ten (10) days prior to the interconnection of the Facility and
fifteen (15) days prior to the expiration date of each such policy and/or
certificate.

10.8        The Company shall have the right to inspect the original policies
of insurance applicable to this Agreement at the Power Producer's place of
business during regular business hours.

                                   ARTICLE 11
                                   PERFORMANCE

11.1        If at any time the Power Producer fails to operate, maintain,
administer, or insure the Facility, the Power Producer Interconnection
Facilities or Protective Apparatus, the Company may, following prior written
notice and the right of the Power Producer to cure such condition within thirty
(30) days after the Power Producer's receipt of notice, immediately disconnect
the Facility from the Transmission System or otherwise refuse to accept electric
energy and capacity for delivery.

11.2        If, in the sole judgment of the Company exercised in accordance
with Good Utility Practice, operation of the Facility, the Power Producer
Interconnection Facilities or Protective Apparatus endangers the safety of the
Company's personnel or the safe operation of the Company's electrical system or
the electrical systems of others to which the Company's electrical system is
directly or indirectly interconnected, the Company may immediately disconnect
the Facility from the Transmission System or otherwise refuse to accept electric
energy and capacity

                                       27
<PAGE>

for delivery therefrom until such condition has been corrected to the Company's
satisfaction in a manner consistent with Good Utility Practice.

11.3        The Power Producer shall be solely responsible for correcting any
condition necessitating such disconnection. If the condition is corrected in
accordance herewith, the Company shall use reasonable efforts to promptly
reconnect the Facility.

11.4        The Parties shall use due diligence to perform their respective
obligations under this Agreement. However, in the event that either Party is
delayed in or prevented from performing or carrying out its obligations under
this Agreement by reason of Force Majeure as defined herein, such Party shall
not be liable to the other Party for or on account of any loss, damage, injury
or expense resulting from or arising out of such delay or prevention; provided,
however, that the Party encountering such delay or prevention shall use due
diligence to remove the cause or causes thereof.

                                   ARTICLE 12
                            LIABILITY AND DEDICATION

12.1        Nothing in this Agreement shall be construed to create any duty to,
standard of care with respect to, or any liability to any person not a Party to
this Agreement.

12.2        Neither the Company nor the Power Producer, nor their respective
officers, directors, partners, agents, employees, or Affiliates, shall be liable
to the other Party or its Affiliates, officers, directors, partners, agents,
employees, successors or assigns, for claims for incidental, special, indirect
or consequential damages of any nature connected with or resulting from
performance or non-performance of this Agreement or the inability of Power
Producer to

                                       28
<PAGE>

transmit power from the Facility to the Transmission System for delivery to its
load when the Company Interconnection Facilities are not in service, including
without limitation, claims in the nature of lost revenues, income or profits or
losses, damages or liabilities under any financing, lending, construction, or
maintenance contracts, back-up power or such other agreements or arrangements to
which the Power Producer may be party irrespective of whether such claims are
based upon warranty, negligence, strict liability, contract, operation of law or
otherwise. Further, the Power Producer releases and holds the Company harmless
for any and all damages associated with the inability to transmit power from the
Facility to the Transmission System when any of the Company Interconnection
Facilities are not in service, other than any damages that are ultimately
determined to be based upon the gross negligence or willful misconduct of the
Company, including but not limited to, Power Producer's or any third party's
lost revenues, income or profits or losses, damages or liabilities under any
financing, lending, agreements or arrangements to which the Power Producer's or
third party may be a party irrespective of whether such claims are based upon
warranty, negligence, strict liability, contract, operation of the law or
otherwise. The provisions of this section 12.2 shall survive the termination,
cancellation, suspension, completion or expiration of this Agreement.

12.3        No undertaking by either Party under any provision of this
Agreement shall constitute the dedication of that Party's electrical system,
equipment or facilities, or any portion thereof, to the other Party or to the
public, nor affect the status of the Company as a public utility corporation.

12.4        The Company does not, by acceptance of the Power Producer's
interconnection plans

                                       29
<PAGE>

and specifications or by engaging in interconnected operations with the Power
Producer, assume any responsibility or liability for damage or physical injury
to (a) Company property or electrical equipment; (b) the real or personal
property of third persons or corporations not a party to this Agreement; (c) the
Facility, real property, equipment and/or facilities and/or any appurtenances
thereto of the Power Producer; and (d) any persons who may come into contact
with or upon the Facility, real property, equipment and/or facilities(electric
or gas) and/or any appurtenances thereto.

                                   ARTICLE 13
                                 INDEMNIFICATION

13.1        The Power Producer shall indemnify, hold harmless and defend the
Company, and its Affiliates, as the case may be, and their respective officers,
directors, employees, agents, partners, subcontractors, invitees and successors,
from and against any and all claims, liabilities, costs, damages, losses, and
expenses (including, without limitation, reasonable attorney and expert fees,
and disbursements incurred by the Company in any action or proceeding between
the Company and a third party, the Power Producer, or any other party) for
damage to property, injury to or death of any persons, including the Company's
employees or any third parties (collectively, "Company's Damages"), to the
extent caused wholly or in part by any act and/or omission, negligent or
otherwise, relating to the design, construction, ownership, operation, or
maintenance of the Facility, Power Producer Interconnection Facilities and
Protective Apparatus used in connection with this Agreement and provided,
however; that Power Producer, or its respective Affiliates, and successors, and
their respective officers, agents, directors, partners or

                                       30
<PAGE>

employees shall not be liable to the Company, its Affiliates, and successors,
and their respective agents, officers, directors, partners or employees for
incidental, special indirect or consequential damages of any nature connected
with or resulting from performance or non-performance of this Agreement. Company
hereto will furnish the Power Producer with written notification after the
Company becomes aware of any event or circumstances, or the threat thereof (but
in no event later than ten (10) days prior to the time any response is required
by law), which might give rise to such indemnification. At the Company's
request, the Power Producer shall defend (with counsel reasonably acceptable to
the Company) any suit asserting a claim covered by this indemnity and shall pay
all costs and expenses (including the cost of investigation and attorney's fees
and expenses) that may be incurred in enforcing this indemnity. The Company may,
at its own expense, retain separate counsel and participate in the defense of
any such suit or action.

13.2        The indemnity in Section 13.1 shall apply to all claims against the
Company including, but not limited to, all claims made or threatened by, or in
the name of or on behalf of the Company's employees for personal injuries
(including death) which arise in the course of their employment; provided,
however that said indemnity shall not apply to any liability ultimately
determined to be based upon the negligence of the Company. The Power Producer
hereby waives any defense it may otherwise have under applicable workers'
compensation laws.

13.3        In addition to Sections 13.1 and 13.2 above, the Power Producer
shall indemnify, hold harmless and defend the Company from and against any and
all liability, loss, cost, damage and expense, associated with any and all
Federal, State and/or local tax liability, arising out of, resulting from or in
connection with Power Producer's payment (or failure to pay) to the

                                       31
<PAGE>

Company, of the costs associated with the purchase and installation of any
portion of the Company's Interconnection Facilities, Protective Apparatus and/or
any and all associated and/or related structures, equipment, facilities and
devices in performance of, pursuant to or in connection with this Agreement,
including any expense resulting from such payment being deemed to be a
Contribution In Aid of Construction ("CIAC") pursuant to U.S. Internal Revenue
Service Notices 88-129 and 90-60 (and any future applicable U.S. Internal
Revenue Service notices), which Notices are incorporated by reference herein.
The foregoing indemnification obligations of the Power Producer shall not,
however, apply with respect to any of the equipment or facilities referred to
immediately above which the Company has included in its rate base and is
collecting revenues from its customers. The Parties expressly acknowledge and
agree that Sections 13.1, 13.2 and 13.3 shall survive the termination or
expiration of this Agreement.

13.4        Power Producer shall provide the Company with an Independent
Engineering Certification (i.e., the professional engineer's seal shall be
affixed), as specified in IRS Notice 88-129, attesting that the anticipated
power flows through the Interconnection Facilities to the Power Producer for the
first ten years commencing with the taxable year in which the Interconnection
Facilities are placed in service, (or alternatively, for the first nine years
ignoring the year such facilities are placed in service) will comprise no more
than 5% of the projected total power flows over the Interconnection Facilities.
This engineering certification will be provided to the Company within forty-five
days of the execution of this Agreement. In the event this certification is not
provided to the Company, the Company retains the right to include the tax
gross-up in the final billing for the actual costs of the Interconnection
Facilities. In the event the

                                       32
<PAGE>

5% test, as specified in IRS Notice 88-129, is exceeded during any measuring
period, described in section 4(A) of Notice 88-129 (a "disqualifying event"),
Power Producer agrees to make the Company whole for any increase in the
Company's Federal and State income tax liabilities arising from this condition.
This increase in the Company's Federal and State income tax liabilities will be
determined in accordance with the requirements of IRS Notice 90-60, as amended
or supplemented.

                                   ARTICLE 14
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

14.1        The Power Producer hereby represents and warrants as follows:

            (a) The Power Producer is a limited liability company duly
organized validly existing and in good standing under the laws of the State of
Delaware and is duly registered and authorized to do business and in good
standing in the State of New Jersey;

            (b) The Power Producer has all requisite power and authority to
carry on the business to be conducted by it and to enter into and perform its
obligations under this Agreement;

            (c) The execution and delivery of this Agreement and the Power
Producer's performance of its obligations hereunder have been duly authorized by
all necessary action on the part of the Power Producer and do not and will not
conflict with or result in a breach of the Power Producer's charter documents or
by-laws or any indenture, mortgage, other agreement or instrument subject to
receipt of all necessary regulatory approval, or any statute or rule,
regulation, order, judgment or decree of any judicial or administrative body to
which the Power Producer is a party or by which the Power Producer or any of its
properties is bound or subject.

                                       33
<PAGE>

14.2        The Company hereby represents and warrants as follows:

            (a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of New Jersey.

            (b) The Company has the corporate power and authority to own its
properties, carry on its electric utility business as now being conducted, enter
into this Agreement and 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.

            (c) The execution and delivery of this Agreement by the Company and
the performance of its obligations hereunder have been duly authorized by all
necessary corporate action on the part of the Company.

            (d) This Agreement is the valid and binding obligation of the
Company, enforceable with its terms except that, in the Company's view, (i) such
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws from time to time in effect that affect creditors' rights generally or by
general principles of equity, and (ii) contracts entered into by the Company may
be subject to the power and authority of state and/or federal regulatory
agencies.

                                   ARTICLE 15
                                EVENTS OF DEFAULT

15.1        Any one of the following shall constitute an event of default under
this Agreement:

             (a) A breach of any material term or condition of this Agreement,
including but not limited to any material breach of a representation, warranty
or covenant made in this Agreement, including the Appendices. Failure by a Party
to provide any required schedule, report or notice

                                       34
<PAGE>

hereunder may constitute a material breach hereof if such failure is not cured
within sixty (60) days after notice to the defaulting Party.

            (b) The failure or refusal of a Party to permit the representatives
of the other Party access to the maintenance records, or its Interconnection
Facilities or Protective Apparatus in order to examine, inspect and test such
records.

            (c) A receiver or liquidator or trustee of either Party or of any
of its property shall be appointed by a court of competent jurisdiction, and
such receiver, liquidator or trustee shall not have been discharged within sixty
(60) days; or by decree of such a court, a Party shall be adjudicated bankrupt
or insolvent or any substantial part of its property shall have been
sequestered, and such decree shall have continued undischarged and unstayed for
a period of sixty (60) days after the entry thereof; or a petition to declare
bankruptcy or to reorganize a Party pursuant to any of the provisions of the
Federal Bankruptcy Code, as now in effect or as it may hereafter be amended, or
pursuant to any other similar state statute as now or hereafter in effect, shall
be filed against a Party and shall not be dismissed within (60) days after such
filing; or

            (d) A Party shall file a voluntary petition in bankruptcy under
any provision of any federal or state bankruptcy law or shall consent to the
filing of any bankruptcy or reorganization petition against it under any
similar law; or, without limiting the generality of the forgoing, a Party
shall file a petition or answer or consent seeking relief or assisting in
seeking relief in a bankruptcy under any provision of any federal or state
bankruptcy law or shall consent to the filing of any bankruptcy or
reorganization petition against it under any similar law; or, without
limiting the generality of the foregoing, a Party shall file a petition or
answer or consent seeking

                                       35

<PAGE>

relief or assisting in seeking relief in a proceeding under any of the
provisions of the Federal Bankruptcy Code, as now in effect or as it may
hereafter be amended, or pursuant to any other similar state statute as now
or hereafter in effect, or an answer admitting the material allegations of a
petition filed against if in such a proceeding; or a Party shall make an
assignment for the benefit of its creditors; or a Party shall admit in
writing its inability to pay its debts generally as they become due; or a
Party shall consent to the appointment of a receiver, trustee, or liquidator
of it or of all or any part of its property.

            (e) The failure of either Party to provide the other Party
reasonable written assurance of its ability to perform fully and completely any
of its material duties and responsibilities under this Agreement within sixty
(60) days of any reasonable request for such assurances by a Party hereto.

15.2        (a) Upon the occurrence of an event of default, the Party not in
default may give written notice of the default to the defaulting Party. Such
notice shall set forth, in reasonable detail, the nature of the default and,
where known and applicable, the steps necessary to cure such default. The
defaulting Party shall have sixty (60) days following receipt of such notice
either to (i) cure such default or (ii) commence in good faith all such steps as
are appropriate to cure such default in the event such default cannot, in the
reasonable judgment of such non-defaulting Party, be completely cured within
such sixty (60) day period.

            (b) If the defaulting Party fails to cure such default or take such
steps as provided under subparagraph (a) above, this Agreement may be terminated
by written notice to the Party in default hereof. This Agreement shall thereupon
terminate and the non-defaulting Party may

                                       36
<PAGE>

exercise all such rights and remedies as may be available to it to recover
damages caused by such default.

            (c) Notwithstanding the foregoing, upon the occurrence of any such
event of default, the non-defaulting Party shall be entitled (i) to commence an
action to require the defaulting Party to remedy such default and specifically
perform its duties and obligations hereunder in accordance with the terms and
conditions hereof and (ii) to exercise such other rights and remedies as it may
have at equity or at law subject however to the provisions of Article 12.

15.3        The Company shall be entitled to operate and/or purchase from the
Power Producer such DC power systems, protection and metering circuit
components, Supervisory Control and Data Acquisition ("SCADA") equipment,
transformers, secondary systems, communications equipment, building facilities,
software, documentation, structural components; and other facilities and
appurtenances that are necessary for the Company to operate and maintain the
Transmission System if: (a) the Power Producer shall commence any case under
federal bankruptcy laws or other proceeding under any similar law or any
jurisdiction for the relief of debtors, or shall petition or apply for the
appointment of a trustee or other custodian, liquidator, or receiver for the
Power Producer or for any substantial part of the Power Producer's Facilities;
(b) a decree or order for relief shall be entered in respect of the Power
Producer in an involuntary case under federal bankruptcy laws or in any other
proceeding under any similar law of any jurisdiction for the relief of debtors
or a decree or order shall be entered appointing a trustee or other custodian,
liquidator, or receiver for the Power Producer or for any substantial part of
the Power Producer's Facilities and such a decree or order is not dismissed
within sixty (60) days

                                       37
<PAGE>

after it is entered; or (c) the Power Producer shall cease its operations for
more than thirty (30) consecutive days without having an assignee, successor, or
transferee in place.

             Upon the occurrence of any of the foregoing events, the Company
shall give the Power Producer or the Power Producer's assignee, successor or
transferee written notice, pursuant to Article 17, of its intent to implement
its rights under this Section 15.3, which notice shall specify the actual or
alleged failure of the Power Producer to comply with its obligations or duties.
If the failure endangers life or property, or impairs or creates a significant
risk to the safety, reliability, stability, or integrity of the Transmission
System, the Company may implement this Section 15.3 without such prior notice as
necessary in its judgment to avert such condition.

                                   ARTICLE 16
                                   ASSIGNMENT

16.1        No Party may assign, transfer or otherwise encumber or dispose of
this Agreement or any rights, duties, interests or obligations hereunder without
the prior written consent of the other Party; PROVIDED, however, that the
Company may at any time and without the consent of the Power Producer, assign
this Agreement together with its rights, interests, duties or obligations
hereunder to any Affiliate of the Company or any successor entity; PROVIDED,
further, that in any event the assignee shall agree to be bound by all of the
terms and conditions hereof to the same extent as the Company. Notwithstanding
the foregoing, the Power Producer may assign and encumber its respective rights
under this Agreement in favor of the Lenders without the consent of the Company.
The Lenders may further assign this Agreement to other persons following the
prior consent of the Company which shall not be unreasonably withheld. PROVIDED,
further, that

                                       38
<PAGE>

in any event the assignee shall agree to be bound by all of the terms and
conditions hereof to the same extent as the Power Producer. Each Party shall
give its consent to assignments made in accordance with this Article in the form
reasonably requested by the interested Party. In the event of an assignment
without consent as set forth above, the assigning Party agrees to provide the
other Party with prompt notice of such assignment.

16.2        In the event of any sale, transfer, assignment, lease or any other
disposition of the Facility or any substantial portion thereof by the Power
Producer, or upon termination of the Agreement, or termination of any operation
at the Facility, the Power Producer hereby agrees to indemnify and hold harmless
the Company for any and all costs, expenses, liabilities and damages (including
reasonable attorneys' fees) for which the Company may be obligated in order to
comply with any applicable requirements of the federal, state, or local
regulations.

                                   ARTICLE 17
                                     NOTICES

17.1        All notices required or permitted under this Agreement shall be in
writing and shall be personally delivered or sent by certified United States
mail, postage prepaid, telex, facsimile transmission, or overnight express mail
or courier service addressed as follows:

         If to the Power Producer to: Louis J. Anatrella
                                      Vice President
                                      AES Red Oak, L.L.C.
                                      1001 North 19th Street
                                      Arlington, VA 22209

         If to the Company to:        Manager - Transmission Investment Planning

                                       39
<PAGE>

                                      GPU Energy
                                      2800 Pottsville Pike
                                      Post Office Box 16001
                                      Reading, PA 19640-0001

                              and

                                      GPU Energy
                                      Legal Department
                                      2800 Pottsville Pike
                                      Post Office Box 16001
                                      Reading, PA 19640-0001

or to such other person at such other address as a Party shall designate by like
notice to the other Party.

17.2        Unless otherwise provided herein, all notices hereunder shall be
deemed to be given when sent pursuant to Section 17.1 mailed or personally
delivered.

                                   ARTICLE 18
                           AMENDMENT AND MODIFICATION

18.1        This Agreement may not be amended or modified except by a written
instrument signed by each of the Parties hereto.

18.2        Nothing contained in this Agreement shall be construed as affecting
in any way the right of the Company to unilaterally make application to FERC for
a change in rates, terms and conditions, charges, classification of service,
rule or regulation under Section 205 of the Federal Power Act or applicable laws
and requirements.

18.3        Nothing contained in this Agreement shall be construed as affecting
in any way the ability of the Power Producer to exercise its rights under the
applicable rules and requirements of the Federal Power Act and pursuant to
FERC's rules and regulations promulgated thereunder.

                                       40
<PAGE>

                                   ARTICLE 19
                                    DISPUTES

19.1        Any claim or dispute, which either Party may have against the
other, arising out of the Agreement shall be submitted in writing to the other
Party not later than thirty (30) days after the circumstances which gave rise to
the claim or dispute have taken place. The submission of any claim or dispute
shall include a concise statement of the question or issue in dispute, together
with relevant facts and documentation to fully support the claim.

19.2        If any such claim or dispute arises, the parties shall attempt to
resolve the claim or dispute, initially through good faith negotiations or upon
the failure of such negotiations, through Alternative Dispute Resolution ("ADR")
techniques in accordance with the Model Procedure for Mediation of Business
Disputes as published by the Center for Public Resources; however, either Party
may terminate its participation in ADR during any stage of ADR and proceed under
section 19.3.

19.3        If any claim or dispute arising hereunder is not resolved pursuant
to section 19.2, either Party may, upon giving the other Party at least ten (10)
days prior written notice, initiate litigation to submit such claim or dispute
for decision by a court of competent jurisdiction of the Commonwealth of
Pennsylvania in accordance with the laws of the State of New Jersey.

19.4        Nothing in this Article 19 shall restrict the rights of any Party
to file a complaint with FERC under relevant provisions of the Federal Power
Act.

                                       41
<PAGE>

                                   ARTICLE 20
                                  MISCELLANEOUS

20.1        Except as may be otherwise provided herein, the duties, obligations
and liabilities of the Parties hereto are intended to be several and not joint
or collective. Nothing contained in this Agreement shall ever be construed to
create an association, trust, partnership, or joint venture or impose a trust or
partnership duty, obligation or liability or agency relationship on or with
regard to either Party. Each Party shall be individually and severally liable
for its own obligations under this Agreement.

20.2        Any waiver at any time by either Party of its rights with respect
to a default under this Agreement, or with respect to any other matters arising
in connection with this Agreement, shall not be deemed a waiver with respect to
any subsequent default or any other matter.

20.3        All indexes, titles, subject headings, section titles and similar
items are provided for the purpose of reference and convenience only and are not
intended to be inclusive, definitive or to affect the meaning of the contents or
scope of this Agreement.

20.4        The Company shall prohibit its employees from using their official
position for personal financial gain, or from accepting any personal advantage
from anyone under circumstances which might reasonably be interpreted as an
attempt to influence the recipients in the conduct of their official duties. The
Power Producer and its employees and representatives shall not, under
circumstances which might reasonably be interpreted as an attempt to influence
the recipients in the conduct of their duties, extend any gratuity or special
favor to employees of the Company.

20.5        This Agreement shall be governed by and construed in accordance
with the laws of the

                                       42
<PAGE>

State of New Jersey applicable to contracts made and to be performed in that
State, irrespective of the application of any conflicts of laws provisions.

20.6        This Agreement supersedes any and all oral or written agreements
and understanding heretofore made relating to the subject matter hereof.

20.7        (a) Upon the Power Producer's written request, the Company shall
maintain and not disclose to any Party, except Authorized Parties, as defined
below, Confidential Information, as defined below, which is disclosed to the
Company by the Power Producer hereunder.

            (b) For purposes hereof, "Confidential Information" means
contracts, insurance policies, documents, plans, drawings, specifications and
other information which the Power Producer maintains as confidential and which
is clearly so marked or identified when it is disclosed to the Company, except
that Confidential Information shall not include information which (i) is
available to the public, (ii) becomes available to the public other than as a
result of a breach by the Company of its obligations hereunder, (iii) was known
to the Company prior to its disclosure to the Company by the Power Producer, or
(iv) is required to be disclosed pursuant to statute, rule, regulation or order
or any court, governmental authority or regulatory body.

            (c) For purposes hereof, "Authorized Party" means any officer,
employee, representative, agent or attorney of the Company or any officer,
employee, representative, agent or attorney of any Affiliate of the Company
whose duties include the negotiation, evaluation, approval, performance or
administration of this Agreement and who needs to know the Confidential
Information in order to perform his duties.

20.8        No information relating to this Agreement may be published or
released for

                                       43
<PAGE>

publication by the Power Producer without the prior written approval of the
Company, which shall not be unreasonably withheld; PROVIDED, however, that the
foregoing shall not restrict the Power Producer from making any filing or public
disclosure with respect to this Agreement which may be required by applicable
law.

20.9        This Agreement may be executed in any number of counterparts, and
all such counterparts executed and delivered, each as an original, shall
constitute but one and the same instrument.

20.10       Should any provision of this Agreement be held invalid or
unenforceable, such provisions shall be invalid or unenforceable only to the
extent of such invalidity or unenforceability without invalidating or rendering
unenforceable any other provision hereof.

20.11       The Company shall furnish such information, certificates, opinions
of counsel, consents to assignment or pledge and other documents and assistance
as may be reasonably requested by the Lenders in connection with the financing
of the Facility. The Company agrees to negotiate in good faith concerning any
reasonable amendment or addition to this Agreement required by any Lender in
connection with the financing of the Facility. The Power Producer shall
reimburse the Company for any and all costs associated with furnishing such
information including reasonable attorneys fees.

                                       44
<PAGE>

             IN WITNESS WHEREOF, the Parties by their authorized representatives
have executed this Agreement as of the day and year first set forth above.

<TABLE>
<CAPTION>

<S>                                                          <C>

ATTEST:                                                      AES RED OAK, L.L.C.

      /s/ Charles Falter                                     By:      /s/ Louis J. Anatrella
-------------------------------                                  -------------------------------

ATTEST:                                                      JERSEY CENTRAL POWER & LIGHT
                                                             COMPANY d/b/a GPU ENERGY

    /s/ William C. Matthews                                  By:         /s/ R.S. Zechman
-------------------------------                                  -------------------------------

</TABLE>

                                       45
<PAGE>

                                   APPENDIX A
                             DESCRIPTION OF FACILITY

1.       Written Description of the Facility to include the location, type, size
         and capacity of the Facility

2.       Topographical Map to locate the facility

3.       One-Line Interconnection Diagram that includes a description of the
         Company and Power Producer Interconnection Facilities

                                       A1
<PAGE>

                          RED OAK FACILITY DESCRIPTION

Net Facility Capacity at 92F                    =        760.5 MW plus/minus 10%
Expected Capacity at ISO conditions (59F)       =        815.8 MW plus/minus 10%

The Site is located off Jernee Mill Road, in the Borough of Sayreville,
Middlesex County, NJ. The Site elevation ranges from 25 to 75 feet above sea
level. With the exception of the multi-flue stack and the HRSG drums, all
buildings and structures comprising the Facility are not more than 65 feet tall.

The Facility main power block consists of three Siemens Westinghouse Power
Corporation (SWPC) 501F combustion-turbine generators with their associated heat
recovery steam generators and ancillary plant, and a single 290 MW steam turbine
generator. The four turbine generators are arranged in the turbine building,
which is connected to the control building. The heat recovery steam generators
are located outside of the turbine house. Other plant buildings and structures
outside of the main power block include the following:

         Water Treatment facility
         Cooling towers
         Gas metering station
         Administration building
         Warehouse and maintenance shop
         Switchyard
         Pumphouse

The turbine generators will be nominally rated at 342 MVA, 0.85 power factor
lagging and can operate at approximately 0.95 power factor leading (as measured
at the generator), 18KV at 60Hz.,0.53 short circuit ratio, and 60 psi rated
hydrogen pressure.

The Facility will be capable of operation with a voltage range of plus/minus 5%
on the 230KV system.

The Facility will be supplied with four generator step-up transformers, three
rated at 200MVA and one rated at 324MVA, 10% impedance, with offline tap
changing, and two auxiliary transformers.

Interconnection with the GPU system will be via a 230KV single bus, single
breaker out door substation for each of the two transmission lines.

The Facility has no black start capability.

                                       A2
<PAGE>

                                TOPOGRAPHICAL MAP

                                   AES RED OAK

                          TOPOGRAPHICAL MAP SHOWING THE
                        LOCATION OF THE AES RED OAK SITE

                                  LOCATION MAP

                                       A3
<PAGE>

                        INTERCONNECTION ONE LINE DIAGRAM
                                   AES RED OAK

                    AES RED OAK/JCP&L INTERCONNECTION DIAGRAM
                            POINT OF INTERCONNECTION

                                       A4
<PAGE>

                                   APPENDIX B
                           INTERCONNECTION FACILITIES

The following information is included in Appendix B:

1. Detailed one-line diagram
2. List of equipment
3. Design characteristics

It is understood by the Parties that the information contained in Appendix B is
preliminary and included to show the general concepts of the Interconnection
Facilities. Additional items for interconnection and reinforcement may be
identified, the interconnection configuration may change, and specific material
items and quantities may change.

                                       B1
<PAGE>

                        INTERCONNECTION ONE LINE DIAGRAM

                                   AES RED OAK

                    AES RED OAK/JCP&L INTERCONNECTION DIAGRAM
                          SYSTEM AROUND INTERCONNECTION

                                       B2

<PAGE>

                 EQUIPMENT TO BE PROVIDED BY THE POWER PRODUCER

                                   DESCRIPTION

230 KV Switchyard (including but not limited to the following):
One 324 MVA Generator Step-up Transformer
Three 200 MVA Generator Step-up Transformers
Two Station Auxiliary Transformers
Power Circuit Breakers
Disconnect Switches
Surge Arrestors
Instrument Transformers
Control and Protective Relay Panels
Switchyard Storage Battery
Switchyard Battery Charger
Low Voltage Switchyard
Miscellaneous Switchyard Equipment
Switchyard Equipment Installation
Design and Fabrication of Substation Structures
Cast in place concrete for substation structures
Excavation and Fill
Aggregate Surfacing
Chain Link Fence
Revenue Metering System
Backup Metering System
Voice and Data Telephone circuits
SCADA system equipment
Protective Relaying as required by Appendix D to this Agreement

                                       B3
<PAGE>

                     EQUIPMENT TO BE PROVIDED BY THE COMPANY

 QUANTITY                         DESCRIPTION

         RED OAK 230 KV SUBSTATION
    2   230 kV 3000A 40kA 2-cycle Breakers w/12 CT's/Annunciator/TravelCheck
    1   Days Breaker Field Services (Pre-Installation Check-Out)
    12  Doble Test Links & Adapter Plates, 3000A (for 230-kV breakers)
    4   230 kV 3000 A GOAB Switches (for visual disconnect for breakers)
    4   230 kV Switch Stand 2 230kV CCVT, w/Carrier Acc., 1200/2000:1, 0.01 mfd
    2   230kV CCVT, w/o Carrier Acc., 1200/2000:1, 0.01 mfd
    3   230kV Line Trap, 3000A
    2   230kV CCVT/Wave Trap Rack (Steel) + shipping
    2   230kV CCVT Rack (Steel) + shipping
    2   Line Tuning Unit, Dual Frequency
    1   Lot 4" Bus Tubing (approx. 700') and 3-Phase Bus Stands (approx 24)
    2   230 kV Line Termination/Structures
    1   Lot Yard Lighting
    1   Building, 20x32, +Installation, w/Heat Pump
    1   Building general wiring and lighting
    1   Lot Telephone Protection Equipment
    1   125 Vdc Charger (12A)
    1   125Vdc Battery and Rack (60 Cells, 100Ah)
    1   AC Panel & associated equipment
    1   DC Panel & associated equipment
    2   HV Line Panels
    1   RTU
    1   Station Service Transformer & Associated Equipment
    1   Miscellaneous Purchases

         RED OAK REMOTE TERMINALS
    4   230 kV CCVT, w/Carrier Acc., 1200/2000:1, 0.01 mfd
    4   230 kV Line Trap, 3000A
    4   Line Tuning Unit, Dual Frequency
    4   1 230 kV CCVT/Wave Trap Rack (Steel) + shipping
    4   New HV Line Relay Panel
    4   Miscellaneous Purchases

                                       B4
<PAGE>

                                   APPENDIX C

                             TRANSMISSION OPERATION
                          INTERCONNECTION REQUIREMENTS

                                       C1

<PAGE>

                                  GPU ENERGY'S
                             TRANSMISSION OPERATION
                          INTERCONNECTION REQUIREMENTS
                            FOR GENERATION FACILITIES

I.       DEFINITIONS

          The definitions set forth in the Generation Facility Transmission
          Interconnection Agreement are incorporated herein by reference. In
          addition, the following definitions apply:

          PJM MANUALS - The instructions, rules, procedures and guidelines
          established by the PJM OI for the operation, planning, and accounting
          requirements of the PJM Control Area and PJM interchange energy
          market.

          SUPERVISORY CONTROL AND DATA ACQUISITION (SCADA) - A system of remote
          control and real-time communications used to monitor and control the
          Transmission System.

          TRANSMISSION OPERATOR - The Company person(s), who coordinates the
          day-to-day interconnection and operation of the Facility with the
          Transmission System.

II.      POLICY

          Every Facility which is interconnected with and synchronized to the
          Transmission System shall at all times coordinate its operation with
          the assigned Company control center and provide all necessary and
          requested information and equipment to assure that the Company can
          operate its electrical system in a safe and reliable manner.
          Continuous cooperation and communication between the Power Producer
          and the Company are essential to assure that the Transmission System
          is operated in a safe and reliable manner.

          The Power Producer shall develop the operating principles and
          procedures which shall be coordinated with the Company's requirements,
          provide the necessary training for all employees, and provide for the
          necessary communication of information between the Power Producer and
          the Company. This includes the following:

          (a)     Provide the following information necessary to ensure the safe
                  and reliable operation of the Company's electrical system: (i)
                  a copy of the Power Producer's switching procedures; (ii) a
                  completed Generator Data Form (Attachment 1) for each
                  generating unit, unit step-up transformer and auxiliary
                  transformer.

          (b)     Implement Facility practices and procedures which are
                  consistent with the Company and PJM OI transmission
                  requirements as defined in the PJM Manuals and/or herein.

          (c)     Implement operating principles and procedures which shall be
                  coordinated with

                                       C2
<PAGE>

                  the Company's and the PJM OI's requirements for normal
                  operating conditions as defined in the PJM Manuals and/or
                  herein.

          (d)     Implement operating principles and procedures which shall be
                  coordinated with the Company's and the PJM OI's requirements
                  for emergency operating conditions as defined in the PJM
                  Manuals and/or herein.

          (e)     Provide data to the Company regarding the operation and
                  maintenance of the Facility in accordance with the Operating
                  Agreement of PJM Interconnection, L.L.C.

III.     SYSTEM REQUIREMENTS

          A.      RELIABILITY

                  The Power Producer shall deliver the electric energy generated
                  by the Facility to the Company at the point(s) of
                  interconnection in the form of 3 phase, 60 Hertz alternating
                  current at the nominal system voltage at the point of
                  interconnection.

                  At no time shall the operation of the Facility, including the
                  associated generators or any of their auxiliary devices,
                  result in an electrical output in which individual harmonic
                  distortion exceeds 1% of the Company's voltage wave form or
                  the sum of all harmonics exceeds 1.5% of the Company's wave
                  form, as measured at the point of interconnection.

                  The Facility shall be operated with all of the Power
                  Producer's Protective Apparatus in service whenever the
                  Facility is connected to or operating in parallel with the
                  Company's electric system.

          B.      SWITCHING

                  The Power Producer shall be responsible for switching all
                  equipment it owns, operates or controls. A specified device(s)
                  to isolate the Facility from the Transmission System shall be
                  switched by the Power Producer whenever requested by the
                  Company, and locked and tagged by the Company to provide
                  safety clearance.

                  The Power Producer's switching procedures shall at all times
                  be followed precisely by the Power Producer and be closely
                  coordinated between the Power Producer and the Transmission
                  Operator. The Company shall provide a copy of its written
                  switching procedures to the Power Producer upon request.

                  If requested by the Power Producer, specified Company devices
                  shall be operated and tagged by the Company according to the
                  Company's switching and tagging practices and safety rules.
                  Company switching and tagging practices and safety rules shall
                  apply to (i) all situations involving the Company and (ii) any
                  Power Producer personnel involved with Company switching and
                  tagging.

                                       C3
<PAGE>

          C.      RELAYING

                  The Facility relaying systems shall be consistent with the PJM
                  OI and Company relaying practices as defined in the PJM
                  Manuals and Appendix D of the Generation Facility Transmission
                  Interconnection Agreement. Any changes to the design and/or
                  setting of the protective relay system shall be subject to the
                  prior review and acceptance by the Company.

                  The relaying system for the Facility shall be sufficient to
                  prevent or limit equipment damage for contingencies (i) within
                  the facility and (ii) external to the Facility and on the
                  Company system.

          D.      REAL-TIME COMMUNICATIONS

                  The Power Producer shall provide data via a SCADA system and
                  an associated, dedicated communications channel to the
                  Company's Energy Management System computer. Data shall
                  include, but is not limited to: MW; MVAR; MWh; voltage; 3
                  phase amps; and equipment status (i.e., open/close, on/off,
                  etc.).

                  SCADA system and metering shall be consistent with the
                  Company's practices, and compatible with the Company's
                  computer and communication systems. In addition, the Company
                  may require the ability to disconnect the Facility from the
                  Company's system via the SCADA system.

                  It is required that data shall be sent to the Company
                  automatically. In the event that the data is not automatically
                  received by the Company on a temporary basis, the Power
                  Producer shall call the Company with the operating data at
                  intervals specified by the Company. The Power Producer shall
                  correct any problems associated with the failure of equipment
                  within a reasonable time.

         E.       COMMUNICATIONS OF INFORMATION

                  The Power Producer and Transmission Operator shall promptly
                  exchange all information relating to all conditions which
                  affect (or could affect) the operations of the Facility and/or
                  the Company's electrical system and facilities.

                  The Power Producer shall provide adequate and reliable
                  telephone communication channels, manned by responsible
                  personnel, to integrate the Facility operation with the system
                  under both normal and emergency conditions.

                  The Power Producer shall communicate the outage of any
                  electrical equipment connecting the Facility to the Company's
                  system in accordance with the following requirements:

                                       C4
<PAGE>

                  a.       Each Facility will be assigned one of the Company
                           operations centers as its primary contact. This
                           assignment is based upon the voltage level of the
                           connection to the Transmission System and the
                           geographic location of the Facility.

                  b.       All planned and maintenance outages of electrical
                           equipment requiring Company personnel involvement
                           must be requested by the Power Producer, providing
                           the appropriate information in a format as defined by
                           the Company and shown on Attachment 2.

                  c.       Advance notifications of planned and maintenance
                           outages shall conform to the requirements as defined
                           in the PJM Manuals.

                  The Power Producer shall keep and maintain accurate and
                  complete records for Power Producer Interconnection Facilities
                  containing such information regarding the operation and
                  maintenance of all equipment as is appropriate and consistent
                  with industry practice and as may be necessary for the Company
                  to comply with its applicable requirements. The Company will
                  advise the Power Producer of such requirements as in effect
                  from time to time. The Power Producer shall make such records
                  available to the Company for inspection and copying from time
                  to time as the Company may reasonably request.

IV.      NORMAL OPERATION REQUIREMENTS

         A.       GENERATOR GOVERNOR CONTROL

                  For any Facility engaged in parallel operation with the
                  Company, the Facility shall:

                  1.       Operate on automatic governor control, except for the
                           periods immediately before generating equipment is
                           being removed from service and immediately after it
                           has been placed in service, and

                  2.       Minimize governor outages during periods of
                           operation.

         B.       SYNCHRONIZATION AND DISCONNECTION PROCEDURES

                  When synchronizing the Facility to or disconnecting the
                  Facility from the Company's electrical system:

                  1.       The Power Producer shall obtain the Transmission
                           Operator's prior approval (i.e., at least 30
                           minutes), EXCEPT THAT EQUIPMENT MAY BE DISCONNECTED
                           FROM THE SYSTEM WITHOUT COMPANY APPROVAL TO PREVENT
                           INJURY TO PERSONNEL OR EQUIPMENT DAMAGE. If for any
                           reason the disconnection occurs without prior Company
                           approval, the Power

                                       C5
<PAGE>

                           Producer shall immediately notify the Transmission
                           Operator as to the energy reduction and the expected
                           return time.

                  2.       In order to support the Transmission Operator's
                           responsibility to plan and operate the normal and
                           emergency operations of the transmission system, the
                           Power Producer shall keep the Transmission Operator
                           informed at all times of the Facility's availability
                           or any change(s) to its status.

         C.       VOLTAGE AND REACTIVE CONTROL PROCEDURES

                  1.       The Power Producer shall operate the Facility with
                           automatic voltage regulation equipment in service at
                           all times, except for outages of the regulator for
                           maintenance or equipment failure. Such operation will
                           normally involve a prescribed voltage limited to +/-
                           1% of schedule. The Power Producer, at the option of
                           the Company, shall operate the Facility either (i)
                           according to a predefined voltage schedule provided
                           by the Company or (ii) according to a reactive power
                           schedule as provided by the Company, consistent with
                           the Facility's generation capability and the
                           Company's electrical system. From time to time, the
                           Company may request alternate schedules consistent
                           with the Facility's generation capability and the
                           Company's electrical system.

                  2.       The Power Producer shall notify the Transmission
                           Operator prior to performing all voltage regulator
                           maintenance. The Power Producer shall notify the
                           Company of the outage with as much lead time as
                           possible. The Power Producer shall minimize the
                           duration of regulator equipment outages. The Power
                           Producer shall notify the Transmission Operator at
                           least 30 minutes prior to removing the voltage
                           regulator from service, or returning the voltage
                           regulator to service.

                  3.       The Power Producer may be requested by the Company to
                           deviate from prescribed voltage or reactive power
                           schedules if, in the Company's sole judgment,
                           conditions warrant such changes including, without
                           limitation, operating the Facility in the leading,
                           lagging, or unity power factor mode, but within the
                           capability of the machine.

                  4.       The Power Producer shall operate automatic voltage
                           regulation to a tolerance of +/- 1% of scheduled
                           voltage, except for regulator maintenance outages or
                           equipment failures, or conditions prevailing on the
                           system and/or the Power System which necessitate
                           other voltage levels.

                  5.       The Power Producer shall provide manual voltage
                           regulation to maintain the prescribed voltage
                           schedule or reactive power schedule during voltage
                           regulator equipment outages.

                                       C6
<PAGE>

                  6.       Momentary voltage fluctuations shall be permitted,
                           provided that they neither disturb service provided
                           by the Company or the Power Producer on their
                           respective systems nor hinder the Company from
                           maintaining proper voltage conditions on their
                           respective systems.

         D.       MAINTENANCE SCHEDULING

                  1.       The Power Producer shall provide the Company with at
                           least thirty (30) days prior written notice of its
                           intent to take a Generator Planned Outage or
                           Generator Maintenance Outage of the Facility,
                           including turbine, generator, and boiler overhauls or
                           inspections, testing, and nuclear refueling.

                  2.       The Power Producer shall provide the Company with at
                           least thirty (30) days prior written notice of its
                           intent to test Protective Apparatus associated with
                           Power Producer Interconnection Facilities, including
                           circuit breakers, relays and auxiliary equipment.
                           Company personnel may observe such testing.

                  3.       The Power Producer shall notify the Transmission
                           Operator of its intent to remove electrical equipment
                           from service by 10:00 a.m. five (5) working days
                           prior to, and again 30 minutes before the Generator
                           Planned Outage or Generator Maintenance Outage
                           begins. The Transmission Operator may request the
                           Power Producer to delay or reschedule the Generator
                           Planned Outage or Generator Maintenance Outage if
                           system reliability conditions warrant.

                  To the extent practical, the Company shall provide to the
                  Power Producer not less than one week advance notice of its
                  intention to perform planned maintenance on its facilities
                  that may affect the Facility's operations. The Company shall
                  notify the Power Producer when any changes occur.

         E.       POWER PRODUCER GENERATOR FORCED OUTAGES

                  The Power Producer may remove any of its equipment from
                  service without prior notification to the Transmission
                  Operator due to a Generator Forced Outage. However, if the
                  Power Producer has advance knowledge of a Generator Forced
                  Outage, the Power Producer shall notify the Transmission
                  Operator with as much lead time as practical. For reliability
                  reasons the Power Producer shall notify the Transmission
                  Operator as soon as reasonably possible of the following:

                  -        the starting time of the Generator Forced Outage
                  -        the energy reduction resulting (or expected to
                           result) from the Generator Forced Outage
                  -        the estimated time the equipment incurring the
                           Generator Forced Outage

                                       C7
<PAGE>

                           is expected to return to service
                  -        the time the Power Producer equipment is actually
                           returned to service.

         F.       FACILITY EQUIPMENT AND CONTRACT DATA

                  In order to ensure that all Company personnel responsible for
                  the design and operation of the Company's system affected by
                  the Facility are familiar with its equipment configurations,
                  capabilities and operating parameters, the Company may from
                  time to time request, and the Power Producer shall provide in
                  a timely manner to the Company, detailed information about the
                  type, nature, and operating characteristics of the Facility
                  and all related equipment.

V.       EMERGENCY OPERATION REQUIREMENTS

         THE POWER PRODUCER AND COMPANY SHALL MAINTAIN COMMUNICATIONS AND
         CONTACT DURING ALL COMPANY OR PJM EMERGENCY OPERATIONS.

         A.       SYSTEM EMERGENCY CONDITIONS

                  During an Emergency, as determined/declared by the Company or
                  the PJM OI, the Power Producer shall respond as promptly as
                  possible to all directives from the Transmission Operator with
                  respect to all matters affecting the operation of the Facility
                  including, without limitation, the following:

                  a.      Thermal overload of electrical circuits (actual or
                          contingency)
                  b.      High or low voltage conditions (actual or contingency)

                  The Transmission Operator may also direct the Power Producer
                  to (i) adjust (increase or decrease) the Facility energy
                  and/or reactive output (ii) connect or disconnect the Facility
                  from the Company's electrical system and/or (iii) deviate from
                  the prescribed voltage or reactive schedules. If safety or
                  system reliability conditions warrant, the Transmission
                  Operator may isolate the Facility from the Company's
                  electrical system without prior notice to the Power Producer
                  or upon such notice as is possible under the circumstances.
                  The Transmission Operator shall advise the Power Producer as
                  soon as possible of any forced outages of the Company's
                  electrical system which affect the Facility's operations.

                  When the Transmission Operator has determined that the
                  emergency conditions have been alleviated, he/she shall inform
                  the Power Producer and allow the Facility to return to normal
                  operations consistent with Good Utility Practice.

                  In order to safely and rapidly restore the Transmission System
                  following an outage of any or all of that system, a Facility
                  that has been isolated from the Company's electrical system
                  shall be allowed to reconnect only under the direction of the
                  Transmission Operator. In all cases, the Facility shall be
                  made

                                       C8
<PAGE>

                  ready to return to service and provide energy to the Company
                  as soon as possible.

                  Unless the Company requests a manual adjustment, the Power
                  Producer shall maintain the Facility automatic voltage
                  regulator in service during an Emergency.

                  The Power Producer shall participate in any voltage reduction
                  declared by the Company at any time, and operate the Facility
                  at the voltage level then requested by the Transmission
                  Operator.

                                       C9
<PAGE>

                                   APPENDIX C
                                  ATTACHMENT 1

                               GENERATOR DATA FORM

Station Name  ________________________                       Unit No. __________

Generator ____________________                    Rated Capacity __________  MVA

Operating Limits: Minimum KV _________                      Maximum KV _________

Alarm Limits:              Minimum KV  _________              Maximum KV _______
Alarm Action:              Minimum: ___________________________
                           Maximum: ___________________________

Max. Output (Installed Capacity) ________ MW

Max. Gross Output  ________ MW

Capability LAG Curve Breakpoint __________ MW __________ MVAR

Rated Stator Voltage _______                   Rated Stator Current _______ Amps

Generator Terminal Voltage - High Limit ______       Low Limit ______

Rated Field Current  _________ Amps D.C. @ _________ Volts D.C.

Rated Hydrogen Pressure _______ PSIG                 Power Factor _________

Field Current High Limits:              Rated ________ Amps D.C.

Field Voltage High Limits:

         Rated ________ Volts D.C.  Maximum: _______ Volts

Field Limit Alarms: Volts _______   Amps _______     Temp. _______
Alarm Action:     Volts     _______________________________________

                  Amps               _______________________________________
                  Temperature _____________________________________

Line Drop Compensation:    Type   ________________________________
                           Setting _______________________________

Generator Stator Current High Limit _________

                                       C9

<PAGE>

SYSTEM VOLTAGE: Nominal KV _______  Min. _______              Max. _______
Alarm Limits:     Minimum _____________     Maximum ________________
Alarm Action:     Minimum _______________________________________

                  Maximum _______________________________________

Other Limitations ___________________________________________________

Misc. Important Information ________________________________________

___________________________________________________________________

                     GENERATOR UNIT STEP-UP TRANSFORMER DATA

Station Name  ________________________                       Unit No. __________

Unit Step-Up Transformer __________________________

Phase      ________________        Connection _____________           __________

Class      ________________

Rated Capacity                        ________ MVA at __________ C Rise
                                      ________ MVA at __________ C Rise

Rated Winding Voltage:     (Primary) _________ KV
                           (Secondary) _________ KV

                   AVAILABLE TAPS/IMPEDANCE (XT AT RATED MVA)

<TABLE>
<CAPTION>
POSITION     PRIMARY KV      SECONDARY KV       IMPEDANCE %      MAX. AMPS

<S>          <C>             <C>                <C>             <C>
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
</TABLE>

Alarm Limits:              KV                        _______________________
                                       C10
<PAGE>

                           Amps                      _______________________
                           MVA                       _______________________
                           Temperature               _______________________

Primary Tap Setting                 ___________

Secondary Tap Setting      ___________

Voltage Limits (if applicable)            Primary    ____________
                                          Secondary ____________

Loading Limitations (if any)

________________________________________________________________________________
________________________________________________________________________________

                           AUXILIARY TRANSFORMER DATA

Station Name  __________________________                     Unit No. __________

Auxiliary Transformer ________________     Connection            _______ _______
Class  ________________

Rated Capacity                        ________ MVA at __________ C Rise
                                      ________ MVA at __________ C Rise

Rated Winding Voltage:     (Primary)    _________ KV
                                    (Secondary)      _________ KV

                                    AVAILABLE TAPS/IMPEDANCE (XT AT RATED MVA)

<TABLE>
<CAPTION>
POSITION     PRIMARY KV      SECONDARY KV       IMPEDANCE %        MAX. AMPS

<S>          <C>             <C>                <C>                <C>
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
--------     ----------      ------------       -----------      ---------
</TABLE>

                                       C11
<PAGE>

Alarm Limits:              KV           _______________________
                           Amps         _______________________
                           MVA          _______________________
                           Temperature  _______________________

Primary Tap Setting        ___________

Secondary Tap Setting      ___________

Automatic Tap Changer Range               ______________ to _____________ Volts
                           Raise Positions  _____________
                           Lower Positions  _____________

Voltage Limits (if applicable)            Primary             High ____________
                                                              Low  ____________
                                          Secondary           High ____________
                                                              Low  ____________

Load at Max. Generation    _________ MW     _________ Amps (Avg)
                           _________ MVAR   _________ Volts

Load at Min. Generation    _________ MW     _________ Amps (Avg)
                           _________ MVAR   _________ Volts

Loading Limitations (if any) ___________________________________________________
________________________________________________________________________________

                                      C12

<PAGE>

                       MISCELLANEOUS INFORMATION REQUIRED

         1.  A copy of the Generator Reactive Capability Curve

         2.  A copy of the Generator VEE Curve

         3.  A copy of the Generator Saturation Curve

         4.  A report of any special Operating Restrictions
             - such as vibration or field problems

         5.  A report of any Environmental Restrictions
             - such as SO2 emissions or river flow or temperature

         6.  A report of any known limiting facilities

                                      C13

<PAGE>

                                   APPENDIX C

                                  ATTACHMENT 2

            APPLICATION FOR PROTECTIVE TAGGING ON LINES OR EQUIPMENT

<TABLE>
<CAPTION>
<S>                                                                                                        <C>
          DATE SUBMITTED ________________ W.O. NO. ________________________ APPLICATION NO.________________

APPLICANT:

SWITCH-HOURS ______________ DATE _________ DAY ___________ FINISH-HOURS A________ DATE _________DAY _______

START-HOURS    ______________ DATE _________ DAY ___________ FINISH-HOURS A________ DATE _________DAY _____

APPARATUS/LINE REQUESTED:__________________________________________________________________________________

LOCATION:__________________________________________________________________________________________________

___________________________________________________________________________________________________________

WORK TO BE DONE:___________________________ _________________________________________ _____________________

___________________________________________________________________________________________________________

SWITCHES REQUIRED:_________________________________________________________________________________________

___________________________________________________________________________________________________________

___________________________________________________________________________________________________________

REMARKS:___________________________________________________________________________________________________

___________________________________________________________________________________________________________

___________________________________________________________________________________________________________

EMERGENCY CLEARANCE TIME ______________________________________ TRUCK OR PHONE NO. ________________________

TAGS PLACED FOR ________________________________________________ SIGNED____________________________________

CAN DO THE REQUIRED SWITCHING?  YES                      NO          COUNTER SIGNED________________________

OUT OF SERVICE OVERNIGHT?               YES              NO

SYSTEM OPERATOR:

SWITCHES TO BE TAGGED:_____________________________________________________________________________________

___________________________________________________________________________________________________________

___________________________________________________________________________________________________________

SYSTEM OPERATOR APPROVAL (1) __________________________________ (2) _______________________________________

DATE ______________ CLEARANCE @ ______________ BY ______________ CLEAR @ ______________ BY ________________

DATE ______________ CLEARANCE @ ______________ BY ______________ CLEAR @ ______________ BY ________________

DATE ______________ CLEARANCE @ ______________ BY ______________ CLEAR @ ______________ BY ________________

DATE ______________ CLEARANCE @ ______________ BY ______________ CLEAR @ ______________ BY ________________

DATE ______________ CLEARANCE @ ______________ BY ______________ CLEAR @ ______________ BY ________________

                                    APPLICATION COMPLETED @   _________________ DATE _______________

DATE ______________ TIME _____________ PARTY NOTIFIED ________________ BY _______________ REMARKS _________

DATE ______________ TIME _____________ PARTY NOTIFIED ________________ BY _______________ REMARKS _________

DATE ______________ TIME _____________ PARTY NOTIFIED ________________ BY _______________ REMARKS _________

DATE ______________ TIME _____________ PARTY NOTIFIED ________________ BY _______________ REMARKS _________
</TABLE>

                                      C14

<PAGE>

                                   APPENDIX D

                          SYSTEM PROTECTION AND CONTROL
                          INTERCONNECTION REQUIREMENTS

                                       D1

<PAGE>

                                  GPU ENERGY'S

                          SYSTEM PROTECTION AND CONTROL

                          INTERCONNECTION REQUIREMENTS

                           Revised: November 17, 1997

         A.    DEFINITIONS

               GPU Energy - The trade name used individually and collectively by
               the three operating electric utilities in the GPU System (i.e.,
               Jersey Central Power and Light Company, Metropolitan Edison
               Company, and Pennsylvania Electric Company).

               GPU System - The transmission and distribution facilities owned
               by GPU Energy.

               Generation Facility - A facility for generating electricity which
               is connected to the GPU system.

               Generation - The electrical energy being produced by: rotating
               generators driven by steam turbines, internal combustion engines,
               hydraulic turbines, windmills, etc; fuel cells, photovoltaic or
               battery arrays with a DC or AC inverter; or any other electric
               generating device.

               Power Producer - The owner or operator of the Generation
               Facility.

         B.    OBJECTIVES

               This document was prepared to assist GPU Energy engineers and
               Power Producers when planning protection and control requirements
               for interconnection between GPU Energy and the Generation
               Facility.

               To ensure all proposed installations are handled uniformly and to
               minimize the possibility of misinterpreting GPU Energy`s
               requirements, this document outlines the MINIMUM PROTECTION
               REQUIREMENTS for the safe and effective operation of this
               interconnection, and provides technical and administrative
               guidelines.

         C.    GENERAL POLICY

               The minimum protection requirements stated in this document are
               intended to achieve the following goals:

                     -     Insure the safety of the general public and GPU
                           Energy personnel.

                     -     Minimize the possible damage to the property of the
                           general public, GPU

                                       D2
<PAGE>

                           Energy , GPU Energy customers, and neighboring
                           utility systems.

                     -     Minimize adverse conditions on the GPU System.

                     -     Permit the Power Producer to operate its generating
                           equipment in parallel with the GPU System in a safe
                           and reliable manner.

               In order to achieve these goals, certain protective devices
               (relays, circuit breakers, etc.) must be installed to promptly
               disconnect the Generating Facilities from the GPU System whenever
               a fault or abnormality occurs. The determination of what type of
               protective devices are required depends primarily on three (3)
               major factors:

                     1)    The type and size of the Generation Facility.

                     2)    The location of the Generation Facility on the GPU
                           System.

                     3)    The manner in which the installation will operate.

               In addition to the protective devices, certain modifications
               and/or additions may be required to be made to the GPU System due
               to the addition and/or modification of the Generation Facility.
               EACH REQUEST WILL BE HANDLED INDIVIDUALLY, and the final
               determination of the protective devices, modifications, and/or
               additions required will be made by GPU Energy. Any modifications
               to the GPU Energy distribution or transmission systems
               necessitated by these changes to the Generation Facility will be
               specified, purchased, and installed by GPU Energy at the expense
               of the Power Producer.

               GPU Energy will work with the Power Producer to achieve an
               installation which meets the requirements of both the Power
               Producer and GPU Energy.

               GPU Energy cannot assume any responsibility for protection of the
               Generation Facility's generating equipment, or any portion of the
               Generation Facility's equipment. The Power Producer is solely
               responsible for protecting its equipment in such a manner that
               faults, imbalances or other disturbances on the GPU System do not
               cause damage to the Generation Facility's equipment.

               It is the responsibility of the Power Producer to comply with all
               applicable Federal, State, and Local Regulatory Agencies and all
               electrical and safety codes. Further, the Power Producer may be
               required, in GPU Energy's sole and exclusive judgement, to
               retrofit its interconnection protection systems due to
               obsolescence, operational problems, enhancements in
               microprocessor/solid state technology leading to improved
               sensitivity, modifications to the GPU system or the Generation
               Facility, and in accordance with the most recently published
               industry standards and practices.

               Any interconnection of a Generation Facility to the GPU System
               must not impair the quality and quantity of transmission or
               distribution service available to its customers, create
               reliability problems, or interfere with the operation and
               economic dispatch of power sources in which GPU Energy has
               entitlement or with GPU Energy's ability to carry out its
               obligations under pre-existing agreements.

               A Generation Facility will not be permitted to be connected to
               the GPU Energy low voltage ( LESS THAN 1 kV) looped network
               system.

               A GPU Energy controlled disconnecting device is required on the
               GPU Energy side of all Generation Facility interties.

               A Generation Facility's disconnecting device used to isolate the
               facility's generation from the GPU System shall be blocked from
               closing in on a de-energized utility circuit.

                                       D3
<PAGE>

               The Power Producer is responsible for properly synchronizing its
               generation with the GPU System.

         D.    REVIEW PROCESS

               In order to process all Power Producer requests in an efficient
               and consistent manner, the following Review Process for
               Protection Requirements must be followed.

               1.    PRELIMINARY PROTECTION REQUIREMENTS REVIEW

                     The GPU Energy System Relay and Control Engineering
                     Department will have primary responsibility for the review
                     and comment of all required protection design and
                     associated settings.

                     The following information shall be supplied to GPU Energy :

                     a)    Detailed One-Line Diagram of entire Generation
                           Facility system.

                     b)    A potential schematic of Generation Facility.

                     c)    A current schematic of Generation Facility.

                     d)    A control schematic of Generation Facility.

                     e)    A connection diagram indicating all external
                           connections to individual components of the
                           protective scheme.

                     f)    A three-line diagram of Generation Facility.

                     g)    Instruction manuals for all protective equipment.
                           Component specifications and internal wiring diagrams
                           shall be included if not provided in manuals.

                     h)    All protective equipment ratings.

                     i)    Generator data, complete Attachment 2.

                     j)    Equipment specifications and details of transformers,
                           circuit breakers, current transformers, voltage
                           transformers, and any other major equipment or
                           special items.

                     k)    Specific setting information on all the Generation
                           Facility's protective relays associated with the
                           generator protection and generator step-up
                           transformer protection or auxiliary transformer
                           protection.

               One set of all the above information is required. GPU Energy may
               in its discretion require that meeting(s) be held between GPU
               System Relay and Control Engineering personnel and the Power
               Producer's Consulting Engineer, Contractor, etc. during this
               process.

               Upon completion of the Preliminary Protection Requirements Review
               process, the Power Producer's representative will be notified of
               any modifications and/or additions, required to the GPU System or
               to the Generation Facility. The Power Producer's representative
               shall also be notified by GPU Energy that the Preliminary
               Protection Requirements Review process is to be accomplished in a
               timely manner and that it must represent an as accurate as
               possible determination of protection requirements, however the
               Power Producer's representative shall be notified that the
               information submitted will be subject to change modification
               and/or addition by GPU Energy, in its sole and exclusive
               discretion.

               2.    FINAL PROTECTION REQUIREMENTS REVIEW

                     The Final Protection Requirements Review process will
                     proceed in the same manner as the Preliminary Protection
                     Requirements Review process outlined in Section D-1 above.

                                       D4
<PAGE>

                     The information identified in Section D-1, including any
                     modifications and/or additions made by GPU Energy during
                     the Preliminary Protection Requirements Review process,
                     will be required in triplicate. The Instruction manuals for
                     all protective equipment required pursuant to Section
                     D.1.(g) must contain at least one vendor original copy. All
                     information supplied for this review process shall be
                     Final\As-Built submittal information.

                     Upon GPU Energy's completion of its initial review of the
                     Power Producer's final submittal, the Power Producer's
                     representative will be notified of any final modifications
                     and/or additions required to the GPU System or to the
                     Generation Facility. Upon the Generation Facility's
                     satisfactory completion, as determined by GPU Energy in its
                     sole and exclusive judgement, of any required final
                     modifications and/or additions, GPU Energy will notify the
                     Power Producer's representative that the Final Protection
                     Requirements Review process has been completed.

         E.    DESIGN CONSIDERATION

               1.    AUTOMATIC RECLOSING

                     The need for automatic reclosing modifications is directed
                     towards protection of the GPU System and the equipment of
                     GPU Energy customers from potential damage. It is the Power
                     Producer's responsibility to evaluate the potential effect
                     of GPU Energy's reclosing practices on its generator and to
                     provide suitable protection.

                     GPU Energy normally provides automatic multiple shot
                     reclosing with no intentional time delay on the first shot
                     on all distribution line circuit breakers. Additionally,
                     automatic sectionalizing for faults is provided on the
                     distribution system with electronic and hydraulic reclosers
                     that reclose in approximately 2 seconds following a trip
                     operation. To protect both GPU Energy and GPU Energy
                     customers' equipment from possible damage due to
                     out-of-phase reclosing, the substation distribution line
                     circuit breaker and the line reclosers may have to be
                     modified, at the expense of the Power Producer, with
                     voltage check relays unless the size and characteristics of
                     the generator indicate that immediate reclosing would not
                     be hazardous to the GPU System. These relays will block
                     reclosing until the parallel generation on a line or line
                     section is de-energized.

                     Lines operated at 34.5 kV Delta and above also utilize
                     multi-shot automatic reclosing with the first shot delayed
                     approximately 20 cycles. Reclosing logic for these lines
                     must be modified, at the expense of the Power Producer, to
                     include synchronism checking.

               2.    PROTECTION REQUIREMENTS

                     Typical protection is illustrated in Appendix A Figures 1
                     and 2 inclusive.

                     The design of the Isolation and Fault Protection shall be
                     based upon a single failure philosophy, i.e., the failure
                     of any single component shall not render the protection
                     inoperative.

                     Isolation and fault protective relays shall be purchased,
                     installed and owned by the Power Producer. The required
                     fault and isolation protection shall be utility grade and
                     conform to the most recent ANSI Standard C37.90. Only solid
                     state/microprocessor based relay models are acceptable.

                                       D5
<PAGE>

                     ISOLATION PROTECTION

                     All relay settings associated with the Isolation Protection
                     shall be specified by GPU Energy .

                     GPU Energy shall have exclusive control and access to the
                     Isolation Protection.

                     a)    UNDERVOLTAGE (27) WITH TIME DELAY (62). Relay to be
                           set at approximately 90% of nominal voltage (108
                           secondary volts on a 120 volt base). Time delay to be
                           set at approximately 2.0 seconds in order to provide
                           coordination with motor starting and system faults.

                     b)    OVERVOLTAGE (59) WITH TIME DELAY (62). Relay to be
                           set at approximately 110% of nominal voltage (132
                           secondary volts on a 120 volt base). Time delay to be
                           set at approximately 2.0 seconds to over-ride relay
                           response to transients and external fault clearing
                           which may cause nuisance operations.

                     c)    OVERFREQUENCY (81O). Relay to be set at 60.5 Hertz
                           with no intentional time delay in its operation.

                     d)    UNDERFREQUENCY (81U) WITH TIME DELAY (62).  Relay to
                           be set at 57.5 Hertz with a 5.0 second time delay.
                           This setting is necessary in order to coordinate with
                           GPU Energy 's system loadshedding underfrequency
                           relaying. GPU Energy , as a member of the
                           Pennsylvania- New Jersey-Maryland Interconnection
                           (PJM) agreement, has agreed to trip generators
                           connected to its system at a frequency of 57.5 Hertz
                           after a delay of 5.0 seconds. Therefore, the Power
                           Producer must also comply with this agreement. The
                           Power Producer is responsible to insure that setting
                           is compatible with all equipment purchased, installed
                           and operated at the Generation Facility.

                     FAULT PROTECTION

                     Generation Facility's fault protection shall coordinate
                     with GPU System protective devices for faults. All fault
                     protection settings are to be specified by the Power
                     Producer and approved by GPU Energy for COORDINATION
                     PURPOSES ONLY.

                     e)    OUT-OF-STEP RELAYING (21 ZOS). Relays maybe required
                           to isolate the generator from the GPU System during
                           unstable conditions. The need for out-of-step
                           relaying will be based on the results of stability
                           studies. The Power Producer will be responsible for
                           providing the appropriate relay and settings.

                     f)    SYNCHRONISM CHECK (25). A synchronism check relay
                           will be required on all breakers that may be used to
                           synchronize the generator to the system. The
                           synchronism check relay shall be capable of being set
                           for an angular difference of 10-60 degrees and have
                           an internal timer function allowing a time delay
                           setting between 0.5-5 seconds. The relay chosen must
                           also have an optional hot-bus dead-line; dead-bus
                           hot-line accessory.

                     g)    NON-DIRECTIONAL PHASE OVERCURRENT (50/51),
                           NON-DIRECTIONAL GROUND OVERCURRENT (50/51G), AND
                           NON-DIRECTIONAL NEUTRAL OVERCURRENT (51N) RELAYS.
                           Where high-side of transformer (GPU System side) is
                           connected to the GPU System via a device other than
                           a fuse, the above mentioned protective relays are
                           required.

                                       D6
<PAGE>

                           Current transformers for the 50/51 and 50/51G relays
                           shall be located on the high-side of the transformers
                           protective device (breaker, circuit switcher, etc.)
                           If high-side grounding of the transformer is
                           provided, the 51N relay shall be connected to a
                           current transformer installed in the neutral
                           connection of the transformer.

                     h)    VOLTAGE CONTROLLED TIME OVERCURRENT RELAYS (51V). In
                           applications where the Generation Facility is
                           interconnected to GPU Energy's distribution system
                           (34.5 kV Wye and below), voltage - controlled time
                           overcurrent relays must be provided. These relays
                           shall be connected to current transformers located on
                           the generator or its associated breaker. These relays
                           shall receive potential from the generator voltage
                           transformers.

                     i)    SYSTEM BACKUP IMPEDANCE (21) RELAY(S). In
                           applications where the Generation Facility is
                           interconnected to GPU Energy's transmission system
                           (34.5 kV Delta and above), an impedance relay must be
                           provided as a backup function to clear faults on the
                           GPU Energy System. This relay(s) shall be connected
                           to current transformers located on the generator or
                           its associated breaker. These relays shall receive
                           potential from the generator voltage transformers. An
                           external timer (0.1 - 5.0 sec) must be provided if
                           not provided internal to the impedance relay design.
                           Time delay will be typically set between 1.0 and 2.0
                           seconds.

         F.    CONTROL SYSTEMS

               The Power Producer has the option to use either an AC or DC
               control system, as described below.

               1.    AC SYSTEM

                     The AC control system supply must use 60 Hz power derived
                     from the GPU Energy line. The system must be designed to be
                     fail-safe and the failure of any SINGLE component must
                     result in a trip of the generator breaker.

                     NOTE: In AC powered schemes, the generator breaker will
                     probably be a contactor. In such cases, a latching
                     contactor is not acceptable. The AC System shall use
                     continuously energized auxiliary relays with contacts
                     arranged to trip the generator circuit breaker whenever the
                     relays drop out. If a molded case circuit breaker (or
                     equal) is used, it MUST be equipped with an undervoltage
                     trip option.

                     All installations must isolate (trip) the generator in such
                     a manner that:

                           a manual operation

                           or

                           a time-delayed automatic synchro-check or voltage
                           check supervised operation

                     is required to close the generator or point-of-contact
                     breaker (contactor) after the GPU Energy source has
                     returned to normal.

                                       D7

<PAGE>

                     Under no circumstances is the generator contactor (breaker)
                     to close immediately upon restoration of the GPU Energy
                     source.

                     A white lamp should be provided to monitor the AC source
                     and shall have a nameplate.

               2.    DC SYSTEM

                     This system must use a battery of 48 or 125 VDC to supply
                     tripping energy to the generator circuit breaker.

                     All such installations must isolate (trip) the generator in
                     such a manner that:

                            a manual operation

                            or

                            a time-delayed automatic synchro-check or voltage
                            check supervised operation

                     is required to close the generator or point-of-contact
                     breaker (contactor) after the GPU Energy source has
                     returned to normal.

                     Under no circumstances is the generator contactor (breaker)
                     to close immediately upon restoration of the GPU Energy
                     source.

                     An amber or yellow lamp shall provided to monitor the DC
                     source and shall have a nameplate.

         G.    TARGETS

               All protective relays shall be equipped with targets that
               indicate operation. These targets are to be arranged in the
               control circuit to operate only when the associated relays trip
               the generator or point-of-contact circuit breaker.

         H.    REMOTE TERMINAL UNIT (RTU)

               For all Generation Facility installations, a Remote Terminal Unit
               (RTU) will be purchased and installed by GPU Energy at the
               expense of the Power Producer. This RTU will utilize the CDC II
               protocol and provide the necessary point counts required by the
               Energy Management System (EMS) of GPU Energy to operate and
               monitor the generation and interconnection facilities at the
               Generation Facility site. Point count will include, but not be
               limited to, analog, MWH, control, and status.

               The Power Producer will provide an indoor weather controlled
               location to mount an RTU and supply a four (4) wire data
               telephone circuit in order for the RTU to communicate with the
               GPU Energy EMS. Furthermore, a telephone and telephone circuit
               must be provided in the location of the RTU in order that GPU
               Energy personnel may communicate with the distribution or
               transmission operator for installation and maintenance purposes.

                                       D8

<PAGE>

               If necessary, provisions shall be made at the bottom of each
               enclosure to allow all cables to be wired to the RTU. The Power
               Producer must also supply the power necessary for the RTU. The
               supply power can be, but not limited to, 125 VDC, 120 VAC, and 48
               VDC.

         I.    GROUNDING

               Neutral and ground are not to be confused. ALL current and
               potential NEUTRALS are to be isolated from all other circuits.
               Each neutral is to be grounded at ONE point only. The preferred
               grounding location will be at the protective relay cabinet, on
               the internal side of the States links.

         J.    WIRING

               All wiring must agree exactly with schematics and wiring
               drawings.

               All wires must be anchored to the cabinet or bundled when running
               between devices. Bundling is permitted but all wiring must be
               traceable. Wiring must be installed so that it can be visually
               traced and checked. Use of conduit, or equal, wire trough is
               generally acceptable but must be verified with GPU Energy.

               Wiring shall be installed so as to avoid damage to the cable and
               its insulation. Movement of the hinged panel shall not damage the
               cable or its insulation or cause stress to the termination points
               on the panel or on the door.

               Wiring and device location shall not prevent the removal of any
               equipment, block access to equipment for inspection and
               maintenance, nor block spare space in the cabinet.

               All equipment shall be mounted and wired in such a manner that no
               energized terminals or connections are exposed or accessible to
               personnel with the hinged relay panel in a closed position.

               Any protective relay not equipped with internal isolation device
               must be connected through an external test device (i.e., ABB FT-1
               or sliding link terminal blocks as determined and approved by GPU
               Energy .)

               All incoming and outgoing cables/conductors will terminate on
               sliding link terminal blocks located in the protective relay
               cabinet.

               Terminal blocks shall be the States Company Type NT or
               equivalent.

               The incoming side shall have one (1) nut, for mounting incoming
               cables.

               The internal panel side shall have double nuts for mounting of
               internal wires and marker tags. Marker tags should carry wire or
               cable conductor identification.

               Terminal blocks shall be mounted such that the connections and
               lines are accessible and not blocked by projecting equipment.

                                       D9
<PAGE>

               Terminal blocks shall be mounted a minimum of 6" from side walls
               and adjacent equipment and a minimum of 4" above the bottom of
               the housing.

               Terminal blocks shall be mounted such that the sliding link:

                     Falls closed when loosened, if mounted in horizontal rows;

                     Moves toward the front of the cabinet when opened, if
                     mounted in vertical rows on side panels;

                     Moves away from the panel centerline when opened, if
                     mounted on the rear panel.

               There shall be a minimum of 10% or 2, whichever is greater, spare
               terminals included in the cabinet for modifications.

               Pressure type connections with insulated sleeves shall be used.

               Ring tongue lugs which completely encircle the screw or the stud
               shall be used.

               The crimping tool must be one approved by the Manufacturer for
               use on the connector.

               No soldered terminals or connections shall be used.

         K.    DRAWINGS CONTENT

               1.    ONE-LINE DIAGRAM

                     This drawing shows the functional arrangement, using single
                     line and standard symbol notations (per ANSI 432.2-1970,
                     41.1-1972) for the following equipment and accompanying
                     information:

                     a)    Equipment Names and/or Numerical Designations for all
                           circuit breakers, contactors, switches, transformers,
                           generators, transmission lines, etc., associated with
                           the generation as required by GPU Energy to
                           facilitate switching.

                     b)    Power Transformers - Name or designation, nominal
                           KVA, nominal primary, secondary, tertiary voltages,
                           vector diagram, impedance and tap settings.

                     c)    Station Service/Operating Transformers - Designate
                           phase(s) connected to, and estimated KVA load.

                                      D10

<PAGE>

                     d)    Instrument Transformers - Voltage and current, used
                           to supply the Protective Relay cabinet and phase
                           connections.

                     e)    Lightning Arresters/Spill Gaps/Surge Capacitors -
                           Ratings.

                     f)    Capacitor Banks - kvar rating.

                     g)    Switches - Indicate status normally open with a
                           (N.O.) and type of operation manual or motor.

                     h)    Safety Switch - Continuous ampere and interrupting
                           ratings.

                     i)    Circuit Breakers and/or Contactors - Interrupting
                           rating, continuous rating, operating times.

                     j)    Generator(s) - Include type, connection, KVA,
                           voltage, current, rpm, PF, etc.

                     k)    Point of interconnection to the GPU System and phase
                           identification.

                     l)    Fuses - Size, type location.

                     m)    Grounding.

                     n)    Relay Nomenclature - A "1" outside a relay function
                           shall indicate a single phase relay and a "3" shall
                           indicate a three phase relay or three individual
                           relays.

               2.    CONTROL SCHEMATIC

                     Control schematics are to be functionally complete
                     schematics. They shall be as simple and uncluttered as
                     possible, and shall contain the following information:

                     a)    Terminal designation of all devices - relay coils and
                           contacts, switches, transducers, etc. If a device is
                           not supplied with terminal numbers, the cabinet
                           supplier shall number the device terminals clearly
                           and use those numbers on all drawings.

                     b)    Relay functional designation - per latest ANSI
                           Standard. The same functional designation shall be
                           used on all drawings showing the relay.

                     c)    Complete relay type, manufacturer, style number, and
                           relay range.

                     d)    Numbers or wire designations for all cable
                           connections.

                                      D11

<PAGE>

                     e)    Switch contacts shall be referenced to the switch
                           development if development is shown on a separate
                           drawing.

                     f)    Switch developments and escutcheons shall be shown on
                           the drawing where the majority of contacts are used.
                           Where contacts of a switch are used on a separate
                           drawing, that drawing shall be referenced adjacent to
                           the contacts in the switch development. Any contacts
                           not used shall be referenced as spare. All switch
                           developments shall include the manufacturer name,
                           complete style number and notations indicating spring
                           return to normal operation, when appropriate.

                     g)    All switch contacts are to be shown open with each
                           labeled to indicate the positions in which the
                           contact will be closed.

                     h)    Explanatory notes defining switch coordination and
                           adjustment where misadjustment could result in
                           equipment failure or safety hazard.

                     i)    Auxiliary relay contacts shall be referenced to the
                           coil location drawing if coil is shown on a separate
                           drawing. All contacts of auxiliary relays must be
                           shown and the appropriate drawing referenced adjacent
                           to the respective contacts.

                     j)    Device auxiliary switches (circuit breakers,
                           contactor) must be referenced to the drawing where
                           they are used.

                     k)    Any interlocks electromechanical, key, etc.,
                           associated with the generation.

                     l)    Ranges of all timers, and setting if dictated by
                           control logic.

                     m)    All target ratings (on dual ratings underline the
                           appropriate tap setting).

                     n)    Complete internal for all protective relays.
                           Solid-state relays may be shown as a "black box" but
                           manufacturers instruction book number shall be
                           referenced, and terminal connections shown.

                     o)    Isolation points (States links or FT-1 blocks)
                           including terminal identification.

                     p)    All circuit elements and components, with device
                           designation, rating and setting where applicable.
                           Coil voltage is shown only if different from nominal
                           control voltage.

                     q)    Size, type, rating and designation of all fuses.

               3.    CURRENT SCHEMATIC

                     NOTE: This drawing is a primary three line and shall
                     contain the following information:

                                      D12

<PAGE>

                     a)    Relay functional designation per latest ANSI
                           Standard. The same functional designation shall be
                           used on all drawings showing the relay.

                     b)    Terminal designations of all devices - relay coils
                           and contacts, switches, transducers, etc.

                     c)    Numbers or wire designations for all cable
                           connections.

                     d)    Phases shall be designated as A, B, C, N and rotation
                           (sequence) indicated as ABC or CBA.

                     e)    Switch developments and escutcheons shall be shown on
                           the drawing where the majority of contacts are used.
                           Where contacts of a switch are used on a separate
                           drawing, that drawing shall be referenced adjacent to
                           the contacts in the switch development. Any contacts
                           not used shall be referenced as spare. All switch
                           developments shall include the manufacturer name,
                           complete style number and notations indicating spring
                           return to normal operation, where appropriate.

                     f)    Auxiliary relay contacts shall be referenced to the
                           coil location drawing if coil is shown on a separate
                           drawing. Switch contacts shall be referenced to the
                           switch development drawing if development is shown on
                           a separate drawing.

                     g)    Current transformers (CT) - polarity marks, rating,
                           tap, ratio and connection.

                     h)    Auxiliary CT ratios, connection, winding current
                           rating and arrows to indicate assumed current flow.

                     I)    Grounding of cables, CT's, etc.

                     j)    Isolating points (States links, test switches, etc.).

                     k)    Complete relay type, manufacturer, style number and
                           relay range.

                     l)    All circuit elements and components, with device
                           designation, size, rating and setting where
                           applicable.

               4.    POTENTIAL SCHEMATIC

                     This drawing is a primary three line SCHEMATIC with only
                     switching devices shown and shall contain the following
                     information:

                     a)    Terminal designations of all devices - relay coils
                           and contacts, switches, transducers, etc.

                     b)    Relay functional designation - per latest ANSI
                           Standard. The same functional

                                      D13

<PAGE>

                           designation shall be used on all drawings showing
                           the relay.

                     c)    Complete relay type, manufacturer, style number and
                           relay range.

                     d)    Numbers or wires designations for all cable
                           connections.

                     e)    Phases shall be designated as A, B, C, N and rotation
                           (sequence) indicated as ABC or CBA.

                     f)    Auxiliary relay contacts shall be referenced to the
                           coil location drawing if coil is shown on a separate
                           drawing. All contacts of auxiliary relays shall be
                           shown with each referenced to the appropriate
                           drawing.

                     g)    Switch developments and escutcheons shall be shown on
                           the drawing where the majority of contacts are used.
                           Where contacts of a switch are used on a separate
                           drawing, that drawing must be referenced adjacent to
                           the contacts in the switch development. Any contacts
                           not used shall be referenced as spare. All switch
                           developments shall include the manufacturer name,
                           complete style number and notations indicating spring
                           return to normal operation, when appropriate.

                     h)    Switch contacts shall be referenced to the switch
                           development drawing if development is shown on a
                           separate drawing.

                     I)    All switch contacts are to be shown in the open
                           position, and labeled to indicate closed position(s).

                     j)    Explanatory notes defining switch coordination and
                           adjustment where misadjustment could result in
                           equipment failure.

                     k)    Ranges of all timers, and setting if dictated by
                           control logic.

                     l)    Isolating points (States links, test switches, etc.).

                     m)    Grounding of cables, VTs, etc.

                     n)    Potential transformers (PTs, VTs), nameplate ratio,
                           polarity marks, rating, primary and secondary
                           connections.

                     o)    All circuit elements and components, with device
                           designation, rating and setting where applicable.
                           Coil voltage is shown for all auxiliary relays.

                     p)    Size, type, designations of all fuses.

               5.    PANEL WIRING DRAWING

                                      D14

<PAGE>

                     NOTE: Wiring diagrams shall follow the physical equipment
                           layout. The following equipment must be identified on
                           this drawing.

                     a)    Front view sketch with functional designation and
                           device type for all components and nameplates.

                     b)    External cables, wire designations (number,
                           destination and drawing number). Each wire
                           designation shall be unique.

                     c)    Terminal block location and number.

                     d)    Equipment identification - functional designation and
                           device wiring designation (ratings shall appear by
                           components only when required for specific
                           identification and clarity).

                     e)    Reference to relay internals, schematic, and
                           Instruction Book(s).

                     f)    Current transformer tap ratio tables where
                           applicable.

                     g)    Ground bus and connections.

                     h)    Current circuits must be identified with asterisks.

                     i)    Reference to switch developments.

                     j)    Complete panel wiring details for all equipment
                           included on panel.

                     k)    When external devices are connected to the protective
                           relaying cabinet, wiring drawings must be supplied
                           for those devices.

               6.    THREE-LINE DIAGRAM

                     This drawing must include all the equipment shown on the
                     one line diagram and all information necessary for correct
                     phasing.

                     a)    Phases shall be designated as A, B, C, N and rotation
                           (sequence) indicated as ABC or CBA.

                     b)    Both GPU Energy and Generation Facility phase
                           designations, rotation (sequence), as well as
                           necessary interconnections shall be designated.

                     c)    Terminal numbers shall be identified for all primary
                           equipment (i.e., breakers, transformers, generators,
                           etc.) shown on the one-line diagram.

                                      D15

<PAGE>

                     d)    Bushing designations shall be identified for all
                           circuit breakers and transformers.

         L.    PROTECTIVE RELAY TEST REQUIREMENTS

               1.    Commissioning as well as periodic and functional testing of
                     required fault protection (21 ZOS, 25, 50/51, 50/51G, 51N,
                     51V, 21, 62, 27, 59, 81, etc.) shall be performed and
                     documented by the Power Producer at intervals specified by
                     GPU Energy and to specifications established by the
                     manufacturer.

                     All required testing of the fault protection shall be
                     performed and certified by a qualified testing organization
                     acceptable to GPU Energy. See Attachment 3.

                     A maintenance and test log will be developed and maintained
                     by the Power Producer. This log will detail all maintenance
                     information recommended by the manufacturers and then
                     instruction manuals. This log will contain specific
                     information pertinent to the equipment maintained, e.g.
                     location, manufacturer, year, type, serial number, date and
                     type of test (functional trip test calibration test
                     results, etc.) and any corrective action taken due to
                     test/maintenance findings. This log shall be available for
                     inspection by GPU Energy at any reasonable time. Each year,
                     a letter indicating that all required testing and
                     maintenance has been completed with acceptable results
                     shall be submitted to GPU Energy. GPU Energy has the right
                     upon request to inspect all required protective equipment
                     associated with the Generation Facility's
                     interconnection(s).

               2.    GPU Energy shall reserve the right to specify settings of
                     all isolation devices which are part of the Generation
                     Facility's system.

               3.    GPU Energy shall require initial inspection and testing as
                     well as subsequent inspection and testing of the Generating
                     Facility's isolation and fault protection systems (27-62,
                     59-62, 81o, 81u-62, etc.) at the Generation Facility's
                     expense on an annual basis. All required testing shall be
                     performed and certified by a qualified testing organization
                     acceptable to GPU Energy (Attachment 3). GPU Energy
                     reserves the right to observe any tests performed.
                     Maintenance of these systems must be performed and
                     documented by the Power Producer at specified intervals to
                     the satisfaction of GPU Energy. GPU Energy shall reserve
                     the right to disconnect the Generation Facility and/or the
                     cogeneration equipment from the GPU system for failure to
                     comply with these inspections, testing and maintenance
                     requirements.

         M.    FINAL INTERCONNECTION APPROVAL

               Final interconnection approval will be given upon:

               1.    Positive engineering review of the Generation Facility's
                     Electrical Plans (See Section C2).

               2.    Receipt of all information required in Section C1 in
                     triplicate.

               3.    Written certification from an approved relay testing
                     organization (Attachment 3) that all fault protection
                     relays have been successfully acceptance tested,
                     commissioned, set, and functionally trip tested.

                                      D16

<PAGE>

               4.    Settings, acceptance testing, commissioning and functional
                     trip testing of all Isolation Protection Relays shall have
                     been successfully completed by the relay testing
                     organization and approved by GPU Energy.

                                      D17

<PAGE>

                                  Attachment 1

                             PROTECTION REQUIREMENTS

         FIGURE

            1   Generation Connected to System Voltages 34.5 kV Wye and Below

            2   Generation Connected to System Voltages 34.5 kV Delta and Above
                with Wye-Wye and Delta-Wye Transformer Connections

            3   Generation Connected to System Voltages 34.5 kv Delta and Above
                with Wye-Delta and Delta-Delta Transformer Connections

                                      D18

<PAGE>

                                    FIGURE 1

                                   Diagram of

                     Generation Connected to System Voltages

                              34.5 kV Wye and Below

                                      D19

<PAGE>

                                    FIGURE 2

                                   Diagram of

                     Generation Connected to System Voltages

                             34.5 kV Delta and Above

                                       D20

<PAGE>

                                    FIGURE 3

                                   Diagram of

                     Generation Connected to System Voltages

                             34.5 kV Delta and Above

                                      D21

<PAGE>

                                                                    Attachment 2

                                 GENERATOR DATA

                           FOR STABILITY CALCULATIONS

         Machine MVA base for each machine:      __________

                                                 __________

                                                 __________

         Step-up transformer percent impedance and MVA base

            _________ % R + J      _________ % X       _________ MVA

            _________ % R + J      _________ % X       _________ MVA

<TABLE>
<CAPTION>

         Value*           Description (for each machine)
         -----------      -------------------------------------------------------------------------------------
         <S>              <C>
                          T'do (sec. 0)
         ----------
                          T'do (sec. 0)
         ----------
                          T'do (sec. 0)
         ----------
                          T'do (sec. 0)
         ----------

                          Inertia H         Total Shaft Inertia (Turbine, exciter, generator)
         ----------

                          Speed Damping D   If unavailable, program defaults to 0.0
         ----------

                          Xd
         ----------                                 -----------------------------------------
                                                                  EXCITATION SYSTEM
                          Xq
                                                     Brand Name
         ----------                                            --------------------

                                                     Type
                                                          -------------------------
                          X'd
         ----------                                 -----------------------------------------

                          X'q
         ----------

                          X"d = X"q

         ----------

                          X1       If unavailable, program defaults to 0.05Xd

         ----------

                          S(1.0)   Saturation values 1.0 p.u. voltage; if unavailable, program defaults to 0.11
         ----------

                          S(1.2)  Saturation values 1.2 p.u. voltage; if unavailable, program defaults to 0.48
         ----------

</TABLE>

         *  Xd, Xq, X'd, X'q, X"d, X"q, X1, H, and D are in p.u. machine base.

            X"q must be equal to X"d.

                                      D22

<PAGE>

                                                                    Attachment 3

                      ACCEPTED RELAY TESTING ORGANIZATIONS

                                   GPU ENERGY

         ABB Power T&D Company
         One Bala Plaza
         Bala Cynwyd, Pennsylvania  10994

         Doble Engineering Company
         85 Walnut Street
         Watertown, Massachusetts  02172

         General Electric Company
         205 Great Valley Parkway
         Malvern, Pennsylvania  19355

         GPU Energy Company
         2800 Pottsville Pike
         Post Office Box 16001
         Reading, PA 19640-0001

         MET Electrical Testing Company, Inc.
         916 W. Patapsco Avenue
         Baltimore, Maryland  21230

         Multi-Amp Corporation
         4271 Bronze Way
         Dallas, Texas  75237

         Addresses identified above are GPU Energy's regional contacts for relay
         testing services. Other regional contacts may be more appropriate for
         THE consulting engineer.

                                      D23

<PAGE>

                                   REFERENCES

         1.   Guide for Interconnection Requirements and Parallel Operation of
              Customer-Owned Generation Georgia Power Company - Electric
              Operations Bulletin No. 51

         2.   Protection Requirements for Parallel Operation of Non-Utility
              Generation, Pennsylvania Power & Light Company - Revision #5 dated
              June 20, 1988

                                      D24

<PAGE>

                                   APPENDIX E

                     INTERCONNECTION INSTALLATION AGREEMENT

                                     BETWEEN

                      JERSEY CENTRAL POWER & LIGHT COMPANY

                                d/b/a GPU ENERGY

                                       AND

                               AES RED OAK, L.L.C.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

ARTICLE                TITLE OF ARTICLE                   PAGE NO.
-------                ----------------                   --------
<S>                     <C>                                 <C>
   I                    Scope of Work                       E2

   II                   Schedule of Work                    E2

   III                  Payment                             E3

   IV                   Bonus/Liquidated Damages            E4

   V                    General Provisions                  E5

   VI                   Notices                             E5

   VII                  Authorization for Changes and
                         Approvals                          E6

   VIII                 Entire Agreement                    E6

</TABLE>

Attachment I            Scope of Work
Attachment II           Schedule of Work
Attachment III          General Provisions

<PAGE>

                     INTERCONNECTION INSTALLATION AGREEMENT

         THIS AGREEMENT ("Installation Agreement"), entered into this 27th day
of April, 1999, between Jersey Central Power & Light Company d/b/a GPU Energy,
(hereinafter referred to as the "Company") and AES Red Oak, L.L.C., (hereinafter
referred to as "Power Producer"), collectively "Parties". The Parties
acknowledge that GPU Service, Inc., shall act as agent for the Company
concerning the administration of this Installation Agreement.

                                    RECITALS

         WHEREAS, Power Producer desires to build the Red Oak power plant and
interconnect with the Transmission System; and

         WHEREAS, the Company is willing to design, furnish, install and own
certain facilities required to interconnect Power Producer's Facility with the
Transmission System, as more fully defined and described in the Generation
Facility Transmission Interconnection Agreement between the Parties ("Company
Interconnection Facilities").

         WHEREAS, Power Producer has placed a high priority on the Schedule of
Work and desires that the Company accept Bonus/Liquidated Damages provisions
relating to this Installation Agreement.

         WHEREAS, the Company is willing to accept Bonus/Liquidated Damages
provisions relating to this Installation Agreement.

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

<PAGE>

ARTICLE I - SCOPE OF WORK

         The Company shall, in accordance with the provisions set forth herein,
provide all labor, supervision, materials and equipment necessary to perform the
interconnection installation as more fully described in Attachment I, attached
hereto and made a part hereof, entitled "Scope of Work".

ARTICLE II - SCHEDULE OF WORK

         The Company shall use reasonable efforts to perform the Scope of Work
on a timely basis, completing the installation within 18 months of the date
Power Producer issues a notice to proceed, all in accordance with the milestone
schedule set forth in Attachment II, which is attached hereto and made a part
hereof, entitled "Schedule of Work". The Company and Power Producer shall
conduct monthly informational meetings to update the status of the project,
scheduled events in the upcoming months, all monies previously committed by
Company on behalf of the Power Producer's Project, and all monies to be
committed in the upcoming months. The Company will provide and update a list of
all interconnection equipment (as identified in Appendix B) already ordered, all
equipment received, the actual delivery date or estimated delivery date if still
outstanding, and the return/restocking fee prior to delivery. Notwithstanding
the foregoing, if the Power Producer does not issue a notice to proceed prior to
December 31, 1999, the Company shall be entitled to revise the milestone
schedule set forth in Attachment II by extending the date for completing the
installation by up to four (4) months, and adjusting the milestones accordingly,
as may be necessary to permit the completion of the installation consistent with
the maintenance and outage schedule approved by PJM for the Transmission System.
The Company agrees that if extension of the schedule or adjustment of the
milestones is necessary, as stated above, the Company will use all reasonable

                                       E2

<PAGE>

methods to mitigate the length of the extension. Furthermore, the Company will
not extend the schedules or adjust the milestones to achieve the bonus described
in Article IV of this Installation Agreement.

ARTICLE III - PAYMENT

         Power Producer shall pay the Company for the actual costs of all
services performed by the Company, as specified in Attachment I - Scope of Work.
Costs shall include, but not be limited to, all labor charges, expenses,
materials and equipment charges, subcontractor costs, overheads and all
applicable permits, fees and sales, use or any other taxes.

         Power Producer shall provide an advanced payment of $100,000 at the
time this Installation Agreement is executed, a second payment of $200,000 at
the time of the issuance of the notice to proceed, and a third payment of $1.7
million within 60 days of the notice to proceed. The Company agrees that it will
not exceed $200,000 in expenditures during said 60 day period. The total amount
shall be used by the Company during the execution of the work first to offset
AFUDC charges, then to offset the final invoiced costs.

         The Company shall submit monthly invoices for work performed. Each
invoice shall include supporting documentation and shall state the dates of
performance covered by the invoice. Invoices in the final stages of the project
will be adjusted to credit for the application of advance payment.

         Terms of payment shall be net 30 days from the date of invoice
issuance. Interest shall be assessed on payments received after their due date
at the interest rate applied to prime commercial loans then in effect at the
main office of Citibank N.A., located in New York, N.Y. or its successor,
calculated from the due date to the date of payment.

         Power Producer may, at any time, assign its payment obligations in this
Installation

                                       E3

<PAGE>

Agreement to the purchaser of the output of the Red Oak facility. Power Producer
shall provide the Company with such notice of such assignment, identifying the
assignee. Following receipt of such notice, the Company shall direct its
invoices under this Installation Agreement to the assignee with a copy to Power
Producer. No such assignment, however, shall release or in any way discharge
Power Producer from the performance of its obligations (including any or all
payment obligations) under this Installation Agreement.

ARTICLE IV - BONUS/LIQUIDATED DAMAGES

         If the actual completion date for the installation varies from the date
shown in the Schedule of Work Attachment II, the following provisions shall
apply:

         1. If the actual completion date is later than the scheduled completion
date (i.e., 540 days from the notice to proceed), the Company will pay Power
Producer Liquidated Damages in the amount of $5,000 per day for each day by
which the installation of the work is not complete for up to and including 45
days.

         2. If the actual completion date is earlier than the scheduled
completion date (i.e., 540 days from the notice to proceed), Power Producer will
pay the Company a Bonus for early completion in the amount of $5,000 per day for
each day by which the installation of the work is completed early, for up to and
including 30 days. It is understood by the Parties that the Company will utilize
overtime from time to time during the installation of the Interconnection
Facilities for the purpose of properly scheduling the work. Examples of this are
the use of overtime when working in active substations as required to minimize
the duration of substation outages or to complete work activities which are
better completed in one day rather than extending the work into a second day. It
is also understood by the parties that overtime is not intended to be used
purely for

                                       E4

<PAGE>

the benefit of accelerating schedule to achieve the Bonus. If overtime is used
for this purpose, the premium portion of overtime cost will be deducted from the
Bonus amount.

         If it becomes apparent at any time that the Company will not complete
the installation of the work within 45 days after the scheduled completion date
(i.e., 540 days from the notice to proceed), and the Company cannot within 30
days (of the delay becoming known) propose a recovery plan reasonably acceptable
to Power Producer, then Power Producer shall have step in rights to complete the
work in accordance with Company's specifications and pursuant to Good Utility
Practice, provided that Power Producer can demonstrate that they could complete
more quickly than the Company.

ARTICLE V - GENERAL PROVISIONS

         The terms and conditions contained in Attachment III, attached hereto
and made part hereof, entitled "General Provisions", dated March 18, 1999 shall
apply to all services performed under this Installation Agreement. The terms not
otherwise defined in the Installation Agreement shall have the meanings set
forth in the Generation Facility Transmission and Interconnection Agreement
between the Parties.

ARTICLE VI - NOTICES

         Any notice required under this Installation Agreement shall be deemed
to have been given at the time it is received in writing by the party being
notified. The designees authorized to give and receive such notices are as
follows:

       1. The Company designees authorized to give and receive such notices are
as follows:

                   Bradley J. Breidinger
                   Manager - Transmission Investment Planning
                   2800 Pottsville Pike
                   Reading, PA 19605
                   Or Post Office Box 16001
                   Reading, PA 19604-0001

                                       E5

<PAGE>

       2. The Power Producer designees authorized to give and receive such
notices are as follows:

                  Louis J. Anatrella
                  Vice President
                  AES Red Oak, L.L.C.
                  1001 North 19th Street
                  Arlington, VA  22209

ARTICLE VII - AUTHORIZATION FOR CHANGES AND APPROVALS

         A. This Installation Agreement may not be amended or modified except by
a written instrument signed by each of the Parties hereto.

         B. The Company designated representatives listed below are the only
persons authorized to bind the Company under this Installation Agreement,
including any written direction or amendment hereto:

                  Robert S. Zechman
                  VP - Engineering & Operations

ARTICLE VIII - ENTIRE AGREEMENT

         This Installation Agreement, together with that certain Generation
Facility Transmission Interconnection Agreement between the Parties of even date
herewith, constitute the entire agreement between the Company and the Power
Producer with respect to the performance by the Parties of the interconnection
installation described herein. They supersede all prior or contemporaneous
communications, representations, or agreements, representations, statements, or
agreements other than those herein expressed, whether oral or written, with
respect to the subject matter hereof and has been induced by no representations,
statements, or agreements other than those herein expressed.

                                       E6

<PAGE>

         IN WITNESS WHEREOF, the Parties hereto have executed this Agreement by
the undersigned thereunto duly authorized as of the date first written above.

ATTEST:                                     AES RED OAK, L.L.C.

BY: /s/ Charles Falter                      BY: /s/ Louis J. Anatrella
   ----------------------------------          -------------------------------

TITLE:                                      TITLE: VP
      -------------------------------             ----------------------------

DATE:                                       DATE: 4-27-99
     --------------------------------            -----------------------------

                                            JERSEY CENTRAL POWER & LIGHT
                                            COMPANY d/b/a GPU ENERGY

ATTEST:

BY: /s/ William C. Matthews                 By:  /s/ R. S. Zechman
   ----------------------------------           ------------------------------

TITLE:                                      TITLE: Vice-President
      -------------------------------             ----------------------------

DATE:                                       DATE: April 27, 1999
     --------------------------------            -----------------------------

Executed in duplicate.

                                       E7

<PAGE>

                                                                    Attachment I
                                                                          Page 1

                     INTERCONNECTION INSTALLATION AGREEMENT

                                  SCOPE OF WORK

Services to be performed by the Company:

The Company will provide all labor, supervision, materials, equipment and tools
needed to design, furnish and install the Company Interconnection Facilities for
the Red Oak project. It is understood by the Parties, additional items for
interconnection and reinforcement may be identified, the interconnection
configuration may change, and the actual costs will differ from the estimated
costs shown below. In addition, it is understood by the Parties that the Power
Producer will pay for all actual costs incurred by the Company under this
installation Agreement.

                            AES RED OAK - RADIAL TAP

<TABLE>
<CAPTION>

ITEM                  DESCRIPTION                             ESTIMATED COST
----                  -----------                             --------------
<S>                   <C>                                      <C>
  1                   Transmission Tap                         $  325,000

  2                   Terminals 4 @ $422,000                   $1,688,000

  3                   New 230 kV Switching Station             $2,569,000

  4                   Wave Trap at Freneau                     $   38,000

  5                   Fiber Optic Line (4 miles)               $  200,000

                      SUB TOTAL                                $4,820,000

                      Return (8.64%)                           $  416,448

                      TOTAL                                    $5,236,448

</TABLE>

Note: In developing this estimate no subsoil samples have been taken and
      evaluated. If the subsoil proves unstable, steel pole foundation costs may
      rise and increase the total cost.

<PAGE>

                                                                   Attachment II
                                                                          Page 1

                     INTERCONNECTION INSTALLATION AGREEMENT

                                SCHEDULE OF WORK

                             GPU ENERGY COMMITMENTS:

                            INSTALLATION - MILESTONES

<TABLE>
<CAPTION>

      SUBSTATION                              NOTICE TO PROCEED DATE PLUS
      ----------                              ---------------------------
<S>                                                  <C>
Requisition Circuit Breakers                           47 DAYS
Complete Design & Engineering                         309 DAYS
Finish Foundations                                    324 DAYS
Receive Materials                                     331 DAYS

  TAP INTERCONNECTION
  -------------------

Complete Design & Engineering                         272 DAYS
Finish Foundations                                    345 DAYS
Receive Materials                                     391 DAYS
Complete Structures & Electrical Construction         451 DAYS

Provide those Company Interconnection Facilities      540 DAYS (18 MONTHS)*
necessary to permit the Power Producer to energize
the switchyard and commence commissioning of the
Facility.

</TABLE>

*Completion of installation.

NOTES:     1)   If the notice to proceed occurs after December 31, 1999, the
                Company shall be entitled to extend the date for completing the
                Scope of Work by up to four (4) months and adjust the milestones
                accordingly.

           2)   The Power Producer must provide the area for the GPU Substation
                in a final sub-grade condition ready for the start of
                construction within seven (7) months of the issue of the notice
                to proceed, plus provide an easement and continuous access to
                that area and the area over which the transmission line travels
                to the edge of the existing GPU right-of-way. Any delay on
                behalf of the Power Producer will delay the Company in meeting
                their commitment dates on a day-for-day basis.

<PAGE>

                                                            Attachment III
                                                            Dated March 18, 1999
                                                            Page 1

                     INTERCONNECTION INSTALLATION AGREEMENT

                               GENERAL PROVISIONS

INSURANCE

       The Company shall, at its sole expense, obtain and maintain in effect at
       all times on and after the date hereof the insurance described below,
       with insurers reasonably acceptable to Power Producer, and shall provide
       Power Producer with evidence of such insurance upon request. All
       insurance policies identified herein, except Worker's Compensation
       Insurance, shall name the Power Producer as an additional insured:

       (a) workers' compensation insurance in forms and within statutory limits
       and employer's liability with limits of not less than $1,000,000;

       (b) comprehensive general liability insurance (excluding automobile
       liability) covering personal injury and property damage to third parties
       and having a limit of not less than $1,000,000 per occurrence and
       $1,000,000 in the aggregate; and

       (c) automobile liability insurance covering owned and leased vehicles
       used in the performance of services pursuant to this Installation
       Agreement, covering personal injury and property damage to third parties,
       with a limit of not less than $1,000,000 per occurrence.

LIMITATION OF LIABILITY

A.     Notwithstanding any other provisions of this Installation Agreement, in
       no event shall the Company nor its respective officers, directors,
       partners, agents, employees or Affiliates, be liable to the Power
       Producer or its Affiliates, officers, directors, partners, agents,
       employees, successors or assigns, for claims for incidental, special,
       indirect or consequential damages of any nature connected with or
       resulting from performance or non-performance of this Installation
       Agreement, including without limitation, claims in the nature of lost
       revenues, income or profits or losses, damages or liabilities under any
       financing, lending, construction, or maintenance contracts, agreements or
       arrangements to which the Power Producer may be party irrespective of
       whether such claims are based on warranty, negligence, strict liability,
       contract, or operational loss or otherwise. Provisions of this Section A
       shall survive the termination, cancellation, suspension or completion or
       expiration of this Installation Agreement.

B.     The total liability of the Company under this Installation Agreement for
       all claims of any kind, whether based on contract, indemnity, warranty,
       tort (including negligence), strict liability, duty to warn, or
       otherwise, for all damages or losses relating to or resulting from the
       performance of services by the Company pursuant to this Installation
       Agreement, or the performance of or failure to perform the services
       described more fully under

<PAGE>

                                                            Attachment III
                                                            Dated March 18, 1999
                                                            Page 2

       the Scope of Work within this Installation Agreement is limited to the
       amount of money paid to the date of the claim. For purposes of this
       Installation Agreement the Company includes Metropolitan Edison
       Company, its parent and affiliates and officers, directors, employees,
       representatives, associates, agents, successors and assigns of all such
       companies. Also, the remedies expressed in this Installation Agreement
       are the only remedies for any claims made in connection with this
       Installation Agreement.

C.     The provisions of this paragraph and any other provisions of this
       Installation Agreement providing for limitation of or protection against
       liability shall apply to the full extent permitted by law.

D.     The provisions of this paragraph and any other provisions of this
       Installation Agreement providing for limitation of or protection against
       liabilities between the Parties hereto shall survive termination of this
       agreement or completion of the work as described herein.

GRATUITIES

      The Company prohibits their employees from using their official position
      for personal financial gain, or from accepting any personal advantage from
      anyone under circumstances which might reasonably be interpreted as an
      attempt to influence the recipients in the conduct of their official
      duties. Power Producer or its employees shall not, under circumstances
      which might reasonably be interpreted as an attempt to influence the
      recipients in the conduct of their duties, extend any gratuity or special
      favor to employees of the Company.

CLAIMS/DISPUTES/GOVERNING LAWS

A.    Any claim or dispute which either party may have against the other party,
      arising out of this Installation Agreement or the Scope of Work, shall be
      presented by the claimant in writing to the other party no later than
      Thirty (30) Days after circumstances which give rise to the claim or
      dispute have taken place. The claim or dispute shall contain a concise
      statement of the question or dispute, together with relevant facts and
      data to fully support the claims.

B.    In the event of any such claim or dispute, the Parties shall use their
      best effort to resolve the claim or dispute, initially, through good faith
      negotiations or upon the failure of such negotiations, through Alternative
      Dispute Resolution (ADR) techniques in accordance with the Model Procedure
      for Mediation of Business Disputes as published by the Center for Public
      Resources; provided however, that nothing therein contained shall prohibit
      either party from terminating its participation in ADR during any stage of
      ADR or if either party believes that the dispute is not suitable for ADR
      techniques or if such techniques do not produce results satisfactory to
      the Parties from proceeding in accordance with Paragraph C hereof.

C.    If any claim or dispute arising hereunder is not resolved in accordance
      with Paragraph B above, either party may, upon giving the other party at
      least ten (10) days prior written notice, initiate litigation to submit
      such

<PAGE>

       claims or disputes for decision by a court of competent jurisdiction of
       the Commonwealth of Pennsylvania in accordance with and governed by the
       laws of Pennsylvania.

<PAGE>

                                                            Attachment III
                                                            Dated March 18, 1999
                                                            Page 3

ACCESS

      The Power Producer will allow access to any premises under the Power
      Producer's immediate control and obtain appropriate permission to allow
      the Company's employees or subcontractor's access to premises not under
      the Power Producer's control that the Company finds necessary to access in
      order to perform the services more fully described herein.

WORKMANSHIP

A.    The Company represents to the Power Producer that it will perform the
      services as described in this agreement, in a good and workmanlike manner
      and in accordance with all applicable laws, rules, regulations, orders and
      policies.

B.    POWER PRODUCER ACKNOWLEDGES THAT THERE ARE NO IMPLIED WARRANTIES FROM THE
      COMPANY AND/OR WAIVES ANY WARRANTIES THAT MAY ARISE BY OPERATION OF LAW,
      CUSTOM, USAGE, INCLUDING AMONG OTHER THINGS, THE IMPLIED WARRANTIES OF
      MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

C.    Damages resulting from any and all causes whatsoever, including but not
      limited to, breach of contract, breach of warranty, negligence, or strict
      product liability, will be exclusively limited to this paragraph and the
      Limitation of Liability paragraph contained herein.

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