Document:

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                                                                    EXHIBIT 10.2

                          TRANSITION SERVICES AGREEMENT

                                     between

                          RELIANT ENERGY, INCORPORATED

                                       and

                             RELIANT RESOURCES, INC.

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                          TRANSITION SERVICES AGREEMENT

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           ----
<S>                                                                                        <C>
ARTICLE I DEFINITIONS.......................................................................3
        1.1       Additional Services.......................................................3
        1.2       Corporate Center Services.................................................3
        1.3       Distribution Date.........................................................3
        1.4       Impracticable.............................................................3
        1.5       Information Technology Services...........................................3
        1.6       Initial Services..........................................................3
        1.7       IPO and IPO Closing Date..................................................4
        1.8       Liability.................................................................4
        1.9       Providing Company.........................................................4
        1.10      Receiving Company.........................................................4
        1.11      REI Group.................................................................4
        1.12      Representative............................................................4
        1.13      Resources Group...........................................................4
        1.14      Service...................................................................4
        1.15      Service Level Agreements..................................................4
        1.16      Shared Services...........................................................4
        1.17      Subsidiary................................................................4
        1.18      System....................................................................4

ARTICLE II SERVICES.........................................................................4
        2.1       Services..................................................................4
                  (a)    Initial Services...................................................4
                  (b)    Final Exhibits.....................................................5
                  (c)    Additional Services................................................5
                  (d)    Services Performed by Others.......................................6
                  (e)    Service Level Agreements; Effect...................................6
                  (f)    Scaled Up or Modified Services.....................................6
        2.2       Subsidiaries..............................................................6
        2.3       Charges and Payment.......................................................7
                  (a)    General Principles Relating to Charges for Services................7
                  (b)    Economic Reopener..................................................9
                  (c)    Annual Adjustments.................................................9
                  (d)    Scaled up or Modified Services.....................................9
                  (e)    Charges for Additional Services...................................10
                  (f)    Payment Terms.....................................................10
                  (g)    Performance under Ancillary Agreements............................10
                  (h)    Error Correction; True-ups; Accounting............................10
        2.4       General Obligations; Standard of Care....................................10
                  (a)    Performance Metrics: Providing Company............................10
                  (b)    Performance Metrics: Receiving Company............................11
</TABLE>

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<TABLE>
<S>                                                                                        <C>
                  (c)    Transitional Nature of Services; Changes..........................11
                  (d)    Responsibility for Errors; Delays.................................11
                  (e)    Good Faith Cooperation; Consents..................................11
                  (f)    Alternatives......................................................12
        2.5       Certain Limitations......................................................12
                  (a)    Service Boundaries and Scope......................................12
                  (b)    Impracticability..................................................12
                  (c)    Additional Resources..............................................12
                  (d)    No Sale, Transfer, Assignment.....................................12
        2.6       Confidentiality..........................................................12
                  (a)    Information Subject to Other Obligations..........................12
                  (b)    All Information Confidential......................................13
                  (c)    Internal Use; Title, Copies, Return...............................13
        2.7       Term; Early Termination..................................................13
                  (a)    Term..............................................................13
                  (b)    Termination by Resources of Specific Service Categories...........13
                  (c)    Termination of Less than all Services.............................14
                  (d)    User IDs, Passwords...............................................14
        2.8       Disclaimer of Warranties, Limitation of Liability and Indemnification....14
                  (a)    Disclaimer of Warranties..........................................14
                  (b)    Limitation of Liability; Indemnification of Receiving Company.....14
                  (c)    Limitation of Liability; Indemnification of Providing Company.....15
                  (d)    Subrogation of Rights vis-a-vis Third Party Contractors...........15
        2.9       Representatives..........................................................15

ARTICLE III MISCELLANEOUS..................................................................16
        3.1       Taxes....................................................................16
        3.2       Laws and Governmental Regulations........................................16
        3.3       Relationship of Parties..................................................16
        3.4       References...............................................................16
        3.5       Modification and Amendment...............................................17
        3.6       Inconsistency............................................................17
        3.7       Resolution of Disputes...................................................17
        3.8       Notices..................................................................17
        3.9       Governing Law............................................................17
        3.10      Severability.............................................................17
        3.11      Counterparts.............................................................17
        3.12      Rights of the Parties....................................................17
        3.13      Reservation of Rights....................................................18
        3.14      Entire Agreement.........................................................18

</TABLE>

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                          TRANSITION SERVICES AGREEMENT

               THIS TRANSITION SERVICES AGREEMENT, dated as of December 31, 2000
(the "Effective Date"), is between Reliant Energy, Incorporated, a Texas
corporation ("REI"), and Reliant Resources, Inc., a Delaware corporation
("Resources"). Capitalized terms used herein and not otherwise defined shall
have the respective meanings assigned to them in Article I hereof or as assigned
to them in the Master Separation Agreement (as defined below).

               WHEREAS, the Board of Directors of REI has determined that it is
in the best interests of REI and its shareholders to separate REI's existing
businesses into two independent business groups;

               WHEREAS, in order to effectuate the foregoing, REI and Resources
have entered into a Master Separation Agreement, dated as of the date hereof
(the "Separation Agreement"), which provides, among other things, subject to the
terms and conditions thereof, for the Separation and the IPO, and the execution
and delivery of certain other agreements in order to facilitate and provide for
the foregoing; and

               WHEREAS, in order to ensure an orderly transition under the
Separation Agreement it will be necessary for REI to provide to Resources the
Services described herein for a transitional period.

               NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties, intending to be legally
bound, agree as follows:

                                   ARTICLE I
                                   DEFINITIONS

               For the purpose of this Agreement the following terms shall have
the following meanings:

               1.1 ADDITIONAL SERVICES. "Additional Services" shall have the
meaning set forth in subsection 2.1(c).

               1.2 CORPORATE CENTER SERVICES. "Corporate Center Services" shall
mean the Services described in Exhibit 2.1(a)(i).

               1.3 DISTRIBUTION DATE. "Distribution Date" has the meaning
assigned to that term in the Separation Agreement.

               1.4 IMPRACTICABLE. "Impracticable" (and words of similar import)
shall have the meaning set forth in Section 2.5(b).

               1.5 INFORMATION TECHNOLOGY SERVICES. "Information Technology
Services" shall mean the Services described in the Service Level Agreements
identified in Exhibit 2.1(a)(ii).

               1.6 INITIAL SERVICES. "Initial Services" shall have the meaning
set forth in Section 2.1(a).

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               1.7 IPO AND IPO CLOSING DATE. "IPO" and "IPO Closing Date" has
the meaning assigned to that term in the Separation Agreement.

               1.8 LIABILITY. "Liability" has the meaning assigned to that term
in the Separation Agreement.

               1.9 PROVIDING COMPANY. "Providing Company" shall mean, with
respect to any particular Service, REI, or if a REI Subsidiary is identified on
the applicable Exhibit as the party to provide such Service, such REI
Subsidiary.

               1.10 RECEIVING COMPANY. "Receiving Company" shall mean, with
respect to any particular Service, Resources or such Resources Subsidiary or
Resources Subsidiaries as may be identified on the applicable Exhibit as the
party to receive such Service or as Resources may hereafter designate to receive
such Service.

               1.11 REI GROUP. "REI Group" shall mean REI and its Subsidiaries
excluding Resources and other members of the Resources Group.

               1.12 REPRESENTATIVE. "Representative" of any party shall mean a
managerial level employee appointed by such party to have the responsibilities
and authority set forth in Section 2.9.

               1.13 RESOURCES GROUP. "Resources Group" shall mean Resources and
its Subsidiaries.

               1.14 SERVICE. "Service" shall have the meaning set forth in
Section 2.1(c).

               1.15 SERVICE LEVEL AGREEMENTS. "Service Level Agreements" shall
have the meaning set forth in Section 2.1(e).

               1.16 SHARED SERVICES. "Shared Services" shall mean the Services
described in Exhibit 2.1(a)(iii) and the Service Level Agreements for such
Services.

               1.17 SUBSIDIARY. "Subsidiary" shall mean, with respect to REI or
Resources, a corporation, partnership, limited liability company or other entity
more than 50% of the voting common stock or other interests entitled to vote
generally for the election of directors (or comparable governing body) is owned,
directly or indirectly, by REI or Resources, respectively.

               1.18 SYSTEM. "System" shall mean the software, hardware, data
store or maintenance and support components or portions of such components of a
set of information technology assets identified in an Exhibit hereto.

                                   ARTICLE II
                                    SERVICES

               2.1 SERVICES.

               (a) INITIAL SERVICES. Except as otherwise provided herein, during
the applicable term determined pursuant to Section 2.7 hereof the following
"Initial Services"

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shall be provided by REI or other Providing Company with respect to a Service to
Resources or other Receiving Company with respect to a Service:

               (i) CORPORATE CENTER SERVICES described in Exhibit 2.1(a)(i);

               (ii) INFORMATION TECHNOLOGY SERVICES described in the Service
        Level Agreements for the Services identified in Exhibit 2.1(a)(ii); and

               (iii) SHARED SERVICES described in Exhibit 2.1(a)(iii) and the
        Service Level Agreements for the Services identified therein.

               (b) FINAL EXHIBITS. The parties have made good faith efforts as
of the date hereof to identify each Initial Service and complete the content of
each Exhibit or Service Level Agreement pertaining to the Initial Services. To
the extent an Exhibit or Service Level Agreement has not been prepared for an
Initial Service or an Exhibit or Service Level Agreement is otherwise incomplete
as of the date hereof, the parties shall use good faith efforts to prepare or
complete Exhibits or Service Level Agreement by the IPO Closing Date. Any
Services reflected on any such additional or amended Exhibit or Service Level
Agreement shall be deemed an "Initial Service" as if set forth on such Exhibit
as of the date hereof.

               (c) ADDITIONAL SERVICES.

               (i) From time to time after the IPO Closing Date, the parties may
        identify additional services that one party will provide to the other
        party in accordance with the terms of this Agreement (the "Additional
        Services" and, together with the Initial Services, the "Services"). The
        parties shall create an Exhibit for each Additional Service setting
        forth a description of the Service, the time period during which the
        Service will be provided, the charge for the Service and any other terms
        applicable thereto and obtain the approval of each party's
        Representative. Except as set forth in Section 2.1(c)(ii), the parties
        may, but shall not be required to, agree on Additional Services during
        the term of this Agreement.

               (ii) Except as set forth in the next sentence, the Providing
        Company shall be obligated to perform, at charges established pursuant
        to Section 2.3, any Additional Service that: (A) was provided by the
        Providing Company immediately prior to the IPO Closing Date and that
        Receiving Company reasonably believes was inadvertently or
        unintentionally omitted from the list of Initial Services or (B) is
        essential to effectuate an orderly transition under the Separation
        Agreement unless such performance would significantly disrupt Providing
        Company's operations or materially increase the scope of its
        responsibility under this Agreement. If Providing Company reasonably
        believes the performance of Additional Services required under the
        foregoing clauses (A) or (B) would significantly disrupt its operations
        or materially increase the scope of its responsibility under this
        Agreement, the Providing Company and Receiving Company shall negotiate
        in good faith to establish terms under which Providing Company can
        provide such Additional Services, but the Providing Company shall not be
        obligated to provide such Additional Services if, following good faith
        negotiation, it is unable to reach agreement on such terms.

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               (d) SERVICES PERFORMED BY OTHERS. At its option, a Providing
Company may cause any Service it is required to provide hereunder to be provided
by another member of the REI Group or by any other Person that is providing, or
may from time to time provide, the same or similar services for the Providing
Company. The Providing Company shall remain responsible, in accordance with the
terms of this Agreement, for performance of any Service it causes to be so
provided.

               (e) SERVICE LEVEL AGREEMENTS; EFFECT. The Service Level
Agreements identified in Exhibits 2.1(a)(ii) and 2.1(a)(iii) are agreements in
effect prior to the date of this Agreement for the provision of certain services
by REI to Resources or the businesses that have been or are being transferred to
Resources. They are referred to in this Agreement for purposes of

               (i) identifying Information Technology Services and Shared
        Services;

               (ii) establishing specific bases for charging for Information
        Technology Services and Shared Services; and

               (iii) defining performance metrics or standards and other
        procedures and requirements with respect to such Information Technology
        Services and Shared Services.

               To the extent so referred to, the applicable provisions of the
Service Level Agreements are incorporated herein by reference. Except to the
extent provisions thereof are so incorporated by reference herein, from and
after the date of this Agreement the Service Level Agreements shall cease to
have effect and shall be superseded by this Agreement.

               (f) SCALED UP OR MODIFIED SERVICES. If Resources requests the
level at which any Service is to be provided to be scaled up to a level in
excess of the level in effect on the IPO Closing Date (or, in the case of
Corporate Center Services, such levels as may reasonably be expected to result
taking into account the status of Resources as a separate public company), or a
modification to any Service, Resources shall give REI such advance notice as it
may reasonably require sufficient to enable REI to make any necessary
preparations to perform such Services on the scaled-up or modified basis, and to
develop changes in the cost-based rates for those services as described in
Section 2.3(d). For purposes of this Section, the level of a Service shall be
considered to be "scaled up" if providing the service at the proposed level
involves an increase in personnel, equipment or other resources that is not de
minimis and is not reasonably embraced by the agreed definition and scope of
that Service prior to the proposed increase.

               2.2 SUBSIDIARIES. REI may cause any Service required to be
provided hereunder by another member of the REI Group, but unless otherwise
specified herein or on an Exhibit hereto or a Service Level Agreement referred
to in an Exhibit, REI shall be responsible for the performance of that Service
by the other member of the REI Group. Resources may direct that any Service
required to be provided hereunder be provided for the benefit of another member
of the Resources Group, but unless specified herein or on an Exhibit hereto or a
Service Level Agreement referred to in an Exhibit, Resources shall be
responsible for the payment of charges and other performance required of the
Receiving Company with respect to such Service.

<PAGE>   8

               To the extent REI personnel who traditionally have provided
services contemplated by this Agreement are transferred to a similar position
with Resources or a member of the Resources Group, such personnel shall continue
to provide services to Resources and, until the Distribution Date, will provide
such services to REI to the extent REI requests. To the extent such transferred
personnel provide services to Resources, REI shall be relieved of its
obligations to provide such services to Resources under this Agreement.

               If REI personnel necessary to provide services under this
Agreement are transferred to Resources before the Distribution Date and REI is
thereby rendered unable to continue to provide such services as contemplated by
this Agreement, REI shall be excused from its obligations to provide such
services, except to the extent either (i) such services can reasonably be
provided from personnel remaining with REI without an increase in costs to REI
that are not subject to reimbursement under this Agreement or (ii) such services
are treated as Additional Services.

               Services that Resources provides to REI prior to Distribution
Date shall be treated as though Resources is the Providing Company and REI is
the Receiving Company under this Agreement and REI shall compensate Resources
for such services in the same manner as Resources compensates REI for similar
services, and the risk allocation to Resources for such services shall be the
same as the risk allocation to REI for the services.

               2.3 CHARGES AND PAYMENT.

               (a) GENERAL PRINCIPLES RELATING TO CHARGES FOR SERVICES. Subject
to the specific terms of this Agreement, the Services will be charged and paid
for on the same general basis as has been heretofore in effect, with the intent
that such charges shall approximate the fully allocated direct and indirect
costs of providing the services, including reimbursement of out-of-pocket third
party costs and expenses, but without any element of profit except to the extent
routinely included as a component of traditional utility cost of capital. It is
the further intent of the parties that (subject as aforesaid) the fully
allocated direct and indirect costs incurred by REI and its Subsidiaries in
providing Services under this Agreement and similar services to other entities
within the REI Group will be charged for on a basis that allocates such costs
charged on a fair nondiscriminatory basis. The parties shall use good faith
efforts to discuss any situation in which the actual charge for a Service is
reasonably expected to exceed the estimated charge, if any, set forth on an
Exhibit for a particular Service (or a Service Level Agreement referred to
therein), provided, however, that charges incurred in excess of any such
estimate shall not justify stopping the provision of, or payment for, Services
under this Agreement.

               (i) Special Provisions for Corporate Center Services. In the case
        of Corporate Center Services, the costs of Services included in Exhibit
        2.1(a)(i) will be direct billed on the basis of the fully allocated
        direct and indirect costs of providing those Services determined under
        the principles set forth in Section 2.3(a) where practicable. The costs
        of all other Corporate Center Services will be gathered in a common cost
        pool with similar services provided to other members of the REI Group
        and allocated to Resources and to other members of the REI Group
        pursuant to the existing methodology derived from the 1999 corporate
        cost allocation study conducted for REI by DMG Maximus. As is the case
        under the

<PAGE>   9

        current methodology, when there is a significant increase or decrease in
        one or more components of the cost of providing a Service, or when a
        category of Services is terminated as provided in Section 2.7, an
        adjustment to the allocation will be made by REI to reflect such
        changes. Out-of-pocket costs and expenses will also be included in the
        charges as provided in this Section 2.3(a).

               (ii) Special Provisions for Information Technology Services. In
        the case of Information Technology Services, Services will be charged
        for initially based on the rates and usage formulas set forth in the
        applicable Service Level Agreements referenced in Exhibit 2.1(a)(ii),
        and shall be adjusted from time to time thereafter. The rates and
        formulas in effect at the IPO Closing Date will continue in effect until
        December 31, 2001, unless adjustments prior to that date are required as
        specified in Section 2.3(b). Out-of-pocket costs and expenses will also
        be included in the charges as provided in this Section 2.3(a).
        Subsequent to December 31, 2001, components of rates attributable to
        equipment usage will be adjusted to reflect compensation for
        depreciation and return on capital investment.

               In the case of any Services associated with facilitating the
        transition to an independent information technology infrastructure for
        Resources (as distinguished from the continuation of services of the
        nature heretofore provided) the scope and pricing of which has not been
        defined as of the IPO Closing Date, the rates therefor will be
        determined by REI on the basis of the same cost-based methodology
        underlying the pricing of other Services provided under this Agreement.
        REI and Resources will use their respective commercially reasonable
        efforts to minimize incremental costs of effecting a transition to an
        independent information technology infrastructure for Resources.

               It is understood that, except as otherwise provided herein or
        agreed in writing, the cost of buying new hardware or obtaining new
        software licenses specifically for the benefit of Resources shall be the
        responsibility of Resources.

               It is understood that REI's commitment to deliver the level of
        service specified in the applicable Service Level Agreements is
        contingent upon adherence by Resources to REI's process and technology
        standards as currently in effect and as subsequently modified and
        communicated to Resources.

               It is understood that REI is responsible for protecting the
        performance levels and security of existing systems and IT
        infrastructure. Accordingly, Resources agrees to review all
        modifications to any existing system currently running on REI's
        infrastructure and to obtain REI's approval, which shall not be
        unreasonably withheld, for such modifications. Similarly, Resources will
        review all new systems to be run on REI's infrastructure, or which
        connect with it, and will obtain REI's approval, which shall not be
        unreasonably withheld or delayed, before such systems are put in
        development or production.

               It is understood that the rates provided for herein are based on
        a continuation of REI's centralized information technology
        infrastructure and organization. If Resources requests changes to any
        Services provided that require the segmentation of REI's information
        technology infrastructure into multiple or independent units, REI shall
        have the right to elect whether or not to provide

<PAGE>   10

        Services on such changed basis, including the right to establish the
        economic terms on which it is willing to provide such Services.

               (iii) Special Provisions for Shared Services. In the case of
        Shared Services, the Services will be charged for initially based on the
        rates and usage formulas set forth in the applicable Service Level
        Agreements referenced in Exhibit 2.1(a)(iii), and shall be adjusted from
        time to time thereafter, as provided herein. The rates and formulas in
        effect at the IPO Closing Date will continue in effect until December
        31, 2001, unless adjustments prior to that date are required as
        specified in Section 2.3(b). Out-of-pocket costs and expenses will also
        be included in the charges as provided in this Section 2.3(a).

               (b) ECONOMIC REOPENER. If, in the case of any Services, events or
circumstances arise which, in the opinion of the Providing Company, render the
costs of providing such Services as determined under the principles set forth in
Section 2.3(a) materially different from those being charged under a specific
rate or formula then in effect, the specific rate or formulas shall be equitably
adjusted to take into account such events or changed circumstances and bring
them into line with the general principles set forth in Section 2.3(a). Rates
for a Service will also be adjusted on a pro rata basis whenever the cost of
providing the Service increases by reason of the necessity to renegotiate a
software license or obtain a new license as a result of the change in the
relationship between the Providing Company and the entity to whom the Service is
provided.

               (c) ANNUAL ADJUSTMENTS. Specific rates and formulas for Services
provided hereunder shall be subject to adjustment as of January 1 in each year
commencing January 1, 2002 to bring the rates and formulas into conformity with
the general principles referred to in Section 2.3(a), based on estimated fixed
and variable costs and budgeted usage levels for the year commencing on such
January 1.

               (d) SCALED UP OR MODIFIED SERVICES. If Resources requests the
scaling up or modifications of services under Section 2.1(f), REI shall
determine appropriate changes in the charges for such scaled up or modified
services in accordance with the general principles set forth in Section 2.3(a)
and shall give notice thereof to Resources. REI shall not be required to incur
costs or obligations or otherwise commit time and resources to preparation for
providing such Services on the scaled up or modified basis (except to the extent
necessary to make such determination of appropriate changes in the charges to be
made) unless and until Resources gives REI notice that it will accept the
charges for such services determined by REI in accordance with this Section
2.3(d). If the scaling up of Services requires the hiring of additional
employees by REI or its Subsidiaries or the procurement of additional equipment
or services (other than equipment or services the full cost of which is paid or
reimbursed by Resources on a current basis), REI may include in the charges for
the scaled up services provisions for recovery (either as part of the periodic
rate or as payments due upon termination of the Services) of (a) employee
severance expenses and (b) the cost of equipment and systems which REI cannot
otherwise recover following termination of the Services, in each case to the
extent attributable to the scaled-up service levels. In case any scaling up or
modification of services requires the incurrence of costs to implement such
modification or scaling up (for example, an SAP change or payroll
configuration), REI may charge

<PAGE>   11

Resources for such costs on an "up front" basis, in addition to any adjustments
in periodic rates occasioned by such scaling up or modification.

               (e) CHARGES FOR ADDITIONAL SERVICES. Receiving Company shall pay
Providing Company the charges, if any, set forth on each Exhibit hereafter
created for each of the Additional Services listed therein. Charges, if any, for
other Additional Services, including those required by Section 2.1(c)(ii), shall
be determined according to methods in use prior to the IPO Closing Date or such
other method as may be mutually agreed that ensures that Providing Company
recovers costs and expenses, but without any profit except to the extent
routinely included as a component of traditional utility cost of capital, in
accordance with subsection 2.3(a). Notwithstanding the foregoing, however, the
agreement of a party to provide or receive any Additional Service that is not
required pursuant to Section 2.1(c)(ii) at any given rate or charge shall be at
the sole discretion of such party.

               (f) PAYMENT TERMS. Charges and collections for Services rendered
pursuant to this Agreement shall continue to be made using the SAP functionality
in use as of the date of this Agreement unless and until either party elects to
discontinue such procedures, in which case Providing Company shall thereafter
bill Receiving Company monthly for all charges pursuant to this Agreement and
Receiving Company shall pay Providing Company for all Services within thirty
days after receipt of an invoice therefor. Charges shall be supported by
reasonable documentation (which may be maintained in electronic form),
consistent with past practices. Late payments shall bear interest at the lesser
of the prime rate announced by Chase Bank Houston, N.A. and in effect from time
to time plus two percent (2%) per annum or the maximum non-usurious rate of
interest permitted by applicable law.

               (g) PERFORMANCE UNDER ANCILLARY AGREEMENTS. Notwithstanding
anything to the contrary contained herein, Receiving Company shall not be
charged under this Agreement for any Services that are specifically required to
be performed under the Separation Agreement or any other Ancillary Agreement and
any such other Services shall be performed and charged for in accordance with
the terms of the Separation Agreement or such other Ancillary Agreement.

               (h) ERROR CORRECTION; TRUE-UPS; ACCOUNTING. Providing Company
shall make adjustments to charges as required to reflect the discovery of errors
or omissions in charges. Providing Company and Receiving Company shall conduct
an annual true up process to adjust charges based on a reconciliation of
differences in budgeted usage and costs with actual experience. It is the intent
of the parties that such true-up process will be conducted using substantially
the same process, procedures and methods of review as have been heretofore in
effect. Services under this Agreement and charges therefor shall be subject to
the provisions of Section 10.5 of the Separation Agreement (Audit Rights).

               2.4 GENERAL OBLIGATIONS; STANDARD OF CARE.

               (a) PERFORMANCE METRICS: PROVIDING COMPANY. Subject to Sections
2.3 and 2.5(c), the Providing Company shall maintain sufficient resources to
perform its obligations hereunder and shall perform such obligations in a
commercially reasonable manner. Specific performance metrics for the Providing
Company may be set forth in Exhibits or Service Level Agreements referred to
therein. Where none is set

<PAGE>   12

forth, the Providing Company shall provide Services in accordance with the
policies, procedures and practices in effect before the date of this Agreement
and shall exercise the same care and skill as it exercises in performing similar
services for itself.

               (b) PERFORMANCE METRICS: RECEIVING COMPANY. Specific performance
metrics for the Receiving Company may be set forth in Exhibits or Service Level
Agreements referred to therein. Where none is set forth, the Receiving Company
shall, in connection with receiving Services, follow the policies, procedures
and practices in effect before the date of this Agreement including providing
information and documentation sufficient for Providing Company to perform the
Services as they were performed before the date of this Agreement and making
available, as reasonably requested by the Providing Company, sufficient
resources and timely decisions, approvals and acceptances in order that
Providing Company may accomplish its obligations hereunder in a timely manner.

               (c) TRANSITIONAL NATURE OF SERVICES; CHANGES. The parties
acknowledge the transitional nature of the Services and that Providing Company
may make changes from time to time in the manner of performing the Services if
Providing Company is making similar changes in performing similar services for
members of its own Group and if Providing Company furnishes to Receiving Company
substantially the same notice Providing Company shall provide members of its own
Group respecting such changes.

               (d) RESPONSIBILITY FOR ERRORS; DELAYS. Providing Company's sole
responsibility to Receiving Company:

               (i) for errors or omissions in Services, shall be to furnish
        correct information and/or adjustment in the Services, at no additional
        cost or expense to Receiving Company; provided, Receiving Company must
        promptly advise Providing Company of any such error or omission of which
        it becomes aware after having used reasonable efforts to detect any such
        errors or omissions in accordance with the standard of care set forth in
        subsection 2.4(b); and provided, further, that the responsibility to
        furnish correct information or an adjustment of services at no
        additional cost or expense to the Receiving Company shall not be
        construed to require Providing Company to make any payment or incur any
        Liability for which it is not responsible, or with respect to which it
        is provided indemnity, under Section 2.8; and

               (ii) for failure to deliver any Service because of
        Impracticability, shall be to use commercially reasonable efforts,
        subject to subsection 2.5(b), to make the Services available and/or to
        resume performing the Services as promptly as reasonably practicable.

               (e) GOOD FAITH COOPERATION; CONSENTS. The parties will use good
faith efforts to cooperate with each other in all matters relating to the
provision and receipt of Services. Such cooperation shall include exchanging
information, providing electronic access to systems used in connection with
Services to the extent the systems in use are designed and configured to permit
such access, performing true-ups and adjustments and obtaining all consents,
licenses, sublicenses or approvals necessary to permit each party to perform its
obligations hereunder. The costs of obtaining such consents, licenses,
sublicenses or approvals shall be allocated in accordance with Section

<PAGE>   13

2.3. The parties will maintain documentation supporting the information
contained in the Exhibits and cooperate with each other in making such
information available as needed in the event of a tax audit, whether in the
United States or any other country.

               (f) ALTERNATIVES. If Providing Company reasonably believes it is
unable to provide any Service because of a failure to obtain necessary consents,
licenses, sublicenses or approvals pursuant to subsection 2.4(e) or because of
Impracticability, the parties shall cooperate to determine the best alternative
approach. Until such alternative approach is found or the problem otherwise
resolved to the satisfaction of the parties, the Providing Party shall use
commercially reasonable efforts, subject to Section 2.5(b) and Section 2.5(c),
to continue providing the Service or, in the case of Systems, to support the
function to which the System relates or permit Receiving Party to have access to
the System so Receiving Party can support the function itself.

               2.5 CERTAIN LIMITATIONS.

               (a) SERVICE BOUNDARIES AND SCOPE. Except as provided in an
Exhibit for a specific Service or a Service Level Agreement referred to therein:
(i) Providing Company shall be required to provide the Services only at the
locations such Services are being provided by Providing Company for the members
of the Resources Group immediately prior to the IPO Closing Date; and (ii) the
Services will be available only for purposes of conducting the business of
Resources and its Subsidiaries substantially in the manner it was conducted
prior to the IPO Closing Date.

               (b) IMPRACTICABILITY. Providing Company shall not be required to
provide any Service to the extent the performance of such Service becomes
"Impracticable" as a result of a cause or causes outside the reasonable control
of Providing Company including unfeasible technological requirements, or to the
extent the performance of such Services (i) would require Providing Company to
violate any applicable laws, rules or regulations or (ii) would result in the
breach of any software license or other applicable contract in effect on the
date of this Agreement.

               (c) ADDITIONAL RESOURCES. Except as provided in an Exhibit for a
specific Service, in providing the Services, Providing Company shall not be
obligated to: (i) maintain the employment of any specific employee; (ii)
purchase, lease or license any additional equipment or software; or (iii) pay
any costs related to the transfer or conversion of Receiving Company's data to
Receiving Company or any alternate supplier of Services.

               (d) NO SALE, TRANSFER, ASSIGNMENT. No Receiving Company may sell,
transfer, assign or otherwise use the Services provided hereunder, in whole or
in part, for the benefit of any Person other than a member of the Resources
Group.

               2.6 CONFIDENTIALITY.

               (a) INFORMATION SUBJECT TO OTHER OBLIGATIONS. Providing Company
and Receiving Company agree that all Information regarding the Services,
including, but not limited to, price, costs, methods of operation, and software,
and all Information provided by any Receiving Company in connection with the
Services, shall be maintained in confidence and shall be subject to Section 10.3
of the Separation Agreement.

<PAGE>   14

               (b) ALL INFORMATION CONFIDENTIAL. Providing Company's Systems
used to perform the Services provided hereunder are confidential and proprietary
to Providing Company or third parties. Receiving Company shall treat these
Systems and all related procedures and documentation as confidential and
proprietary to Providing Company or its third party vendors.

               (c) INTERNAL USE; TITLE, COPIES, RETURN. Subject to the
applicable provisions of the Intellectual Property Agreement governing
ownership, use and licensing of Intellectual Property, Receiving Company agrees
that:

               (i) all Systems, procedures and related materials provided to
        Receiving Company are for Receiving Company's internal use only and only
        as related to the Services or any of the underlying Systems used to
        provide the Services;

               (ii) title to all Systems used in performing the Services
        provided hereunder shall remain in Providing Company or its third party
        vendors;

               (iii) Receiving Company shall not copy, modify, reverse engineer,
        decompile or in any way alter Systems without Providing Company's
        express written consent; and

               (iv) Upon the termination of any of the Services, Receiving
        Company shall return to Providing Company, as soon as practicable, any
        equipment or other property of Providing Company relating to the
        Services which is owned or leased by it and is or was in Receiving
        Company's possession or control.

               2.7 TERM; EARLY TERMINATION.

               (a) TERM. The term of this Agreement shall commence on the date
hereof and shall remain in effect through December 31, 2004 or until such
earlier time as all Services are terminated as provided in this Section. This
Agreement may be extended by the parties in writing either in whole or with
respect to one or more of the Services, provided, however, that such extension
shall only apply to the Service for which the Agreement was extended. Except as
otherwise provided on an Exhibit for a particular Service, the obligation to
provide Corporate Center Services shall terminate on the Distribution Date. The
parties may agree on an earlier expiration date respecting a specific Service by
specifying such date on the Exhibit for that Service. Services shall be provided
up to and including the date set forth in the applicable Exhibit, subject to
earlier termination as provided herein.

               (b) TERMINATION BY RESOURCES OF SPECIFIC SERVICE CATEGORIES.
Resources may terminate this Agreement either with respect to all, or with
respect to any one or more, of the Services provided hereunder at any time and
from time to time, for any reason or no reason, by giving written notice to the
Providing Party as follows:

               (i) for Corporate Center Services, except to the extent otherwise
        provided in Exhibit 2.1(a)(i), a terminated category of Services must
        include all Services included in one of the nine major service
        categories specified in Exhibit 2.1(a)(i), and notice of termination
        thereof must be given at least 30 days in advance of the effective date
        of the termination.

<PAGE>   15

               (ii) for Information Technology Services, except to the extent
        otherwise provided in a Service Level Agreement referred to in Exhibit
        2.1(a)(ii), a terminated category of Services must include one of the
        thirteen major service categories specified in Exhibit 2.1(a)(ii), in
        its entirety, and a notice of termination must be given at least 90 days
        in advance of the effective date of the termination except for SAP
        services and systems. SAP-related applications and services shall be
        subject to termination in accordance with a SAP separation plan to be
        mutually developed by Resources and REI as hereinafter provided.
        Resources will propose a SAP separation plan to REI no later than March
        1, 2001. This plan will specify notice periods, processes and other
        terms for terminating SAP applications and services. REI will review and
        propose modifications to this plan within 30 days of receipt. Both
        Resources and REI will act reasonably and in good faith with the
        objective of having a mutually agreed upon SAP separation plan in effect
        by April 15, 2001. Such plan may be modified from time to time by mutual
        agreement. In the event that a mutually agreed upon SAP separation plan
        is not in effect at any time at which Resources requests termination of
        SAP applications and services, both parties will use commercially
        reasonable efforts to terminate such services as quickly as possible
        without the incurrence of unnecessary costs or jeopardizing REI's
        infrastructure or other applications.

               (iii) for Shared Services, except to the extent otherwise
        provided in a Service Level Agreement referred to in Exhibit
        2.1(a)(iii), a terminated category of Services must include a complete
        service function specified in Exhibit 2.7(b)(iii) and advance notice of
        termination for that function must be given no later than the date
        specified in Exhibit 2.7(b)(iii).

               (c) TERMINATION OF LESS THAN ALL SERVICES. In the event of any
termination with respect to one or more, but less than all, Services, this
Agreement shall continue in full force and effect with respect to any Services
not terminated hereby.

               (d) USER IDs, PASSWORDS. The parties shall use good faith efforts
at the termination or expiration of this Agreement or any specific Exhibit
hereto, to ensure that all user IDs and passwords are canceled and, subject to
Section 2.6(c), that any data pertaining solely to the other parties are deleted
or removed from Systems.

               2.8 DISCLAIMER OF WARRANTIES, LIMITATION OF LIABILITY AND
INDEMNIFICATION.

               (a) DISCLAIMER OF WARRANTIES. REI AND ITS SUBSIDIARIES DISCLAIM
ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT
TO THE SERVICES. REI AND ITS SUBSIDIARIES MAKES NO REPRESENTATIONS OR WARRANTIES
AS TO THE QUALITY, SUITABILITY OR ADEQUACY OF THE SERVICES FOR ANY PURPOSE OR
USE.

               (b) LIMITATION OF LIABILITY; INDEMNIFICATION OF RECEIVING
COMPANY. REI and its Subsidiaries shall have no Liability to any Receiving
Company with respect to its furnishing any of the Services hereunder except for
Liabilities arising out of or resulting from the gross negligence or willful
misconduct occurring after the IPO Closing Date of the Providing Company or any
member of the REI Group. REI will

<PAGE>   16

indemnify, defend and hold harmless each Receiving Company in respect of all
Liabilities arising out of or resulting from such gross negligence or willful
misconduct. Such indemnification obligation shall be a Liability of REI for
purposes of the Separation Agreement and the provisions of Article III of the
Separation Agreement with respect to indemnification shall govern with respect
thereto. IN NO EVENT SHALL REI OR ANY MEMBER OF THE REI GROUP HAVE ANY LIABILITY
UNDER THIS AGREEMENT OR OTHERWISE ARISING OUT OF OR RESULTING FROM THE
PERFORMANCE OF, OR THE FAILURE TO PERFORM, SERVICES FOR LOSS OF ANTICIPATED
PROFITS BY REASON OF ANY BUSINESS INTERRUPTION, FACILITY SHUTDOWN OR
NON-OPERATION, LOSS OF DATA OR OTHERWISE OR FOR ANY INCIDENTAL, INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES, WHETHER OR NOT CAUSED BY OR RESULTING FROM
NEGLIGENCE, INCLUDING GROSS NEGLIGENCE, OR BREACH OF OBLIGATIONS HEREUNDER AND
WHETHER OR NOT REI OR ANY MEMBER OF THE REI GROUP WAS INFORMED OF THE
POSSIBILITY OF THE EXISTENCE OF SUCH DAMAGES.

               (c) LIMITATION OF LIABILITY; INDEMNIFICATION OF PROVIDING
COMPANY. Resources shall indemnify and hold harmless REI and any other
applicable Providing Company in respect of all Liabilities arising out of or
resulting from Providing Company's furnishing or failing to furnish the Services
provided for in this Agreement, other than Liabilities arising out of or
resulting from the gross negligence or willful misconduct of the Providing
Company or any other member of the REI Group. The provisions of this indemnity
shall apply only to losses which relate directly to the provision of Services.
Such indemnification obligation shall be a Liability of Resources for purposes
of the Separation Agreement and the provisions of Article III of the Separation
Agreement with respect to indemnification shall govern with respect thereto. IN
NO EVENT SHALL RESOURCES OR ANY MEMBER OF THE RESOURCES GROUP HAVE ANY LIABILITY
UNDER THIS AGREEMENT OR OTHERWISE ARISING OUT OF OR RESULTING FROM THE
PERFORMANCE OF, OR THE FAILURE TO PERFORM, SERVICES FOR LOSS OF ANTICIPATED
PROFITS BY REASON OF ANY BUSINESS INTERRUPTION, FACILITY SHUTDOWN OR
NON-OPERATION, LOSS OF DATA OR OTHERWISE OR FOR ANY INCIDENTAL, INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES, WHETHER OR NOT CAUSED BY OR RESULTING FROM
NEGLIGENCE, INCLUDING GROSS NEGLIGENCE, OR BREACH OF OBLIGATIONS HEREUNDER AND
WHETHER OR NOT RESOURCES OR ANY MEMBER OF THE RESOURCES GROUP WAS INFORMED OF
THE POSSIBILITY OF THE EXISTENCE OF SUCH DAMAGES.

               (d) SUBROGATION OF RIGHTS VIS-A-VIS THIRD PARTY CONTRACTORS. In
the event any Liability arises from the performance of Services hereunder by a
third party contractor, the Receiving Company shall be subrogated to such
rights, if any, as the Providing Company may have against such third party
contractor with respect to the Services provided by such third party contractor
to or on behalf of the Receiving Company. Subrogation under this Section 2.8(d)
shall not affect the obligation of Providing Company to perform Services under
this Agreement.

               2.9 REPRESENTATIVES. The parties shall each appoint one or more
Representatives to facilitate communications and performance under this
Agreement. The maximum number of Representatives for each party shall be three,
one for each of the three principal categories specified in Section 2.1(a). Each
party may treat an act of a Representative of another party as being authorized
by such other party without inquiring behind such act or ascertaining whether
such Representative had authority to so act. The initial Representatives are
named on Exhibit 2.9. Each party shall have the right at any time and from time
to time to replace any of its Representatives by giving notice in

<PAGE>   17

writing to the other party setting forth the name of (i) each Representative to
be replaced and (ii) the replacement, and certifying that the replacement
Representative is authorized to act for the party giving the notice in all
matters relating to this Agreement (or matters relating to one or more
categories specified in Section 2.1(a)). Each Representative is hereby
authorized by the party he or she represents to approve the establishment of new
or modifications to existing Exhibits for Initial Services before or after the
IPO Closing Date and the addition of new Exhibits for Additional Services after
the IPO Closing Date.

                                  ARTICLE III
                                  MISCELLANEOUS

               3.1 TAXES. (a) General. Resources and its Subsidiaries shall bear
all taxes, duties and other similar charges (and any related interest and
penalties), imposed as a result of their receipt of Services under this
Agreement, including any tax which a Receiving Company is required to withhold
or deduct from payments to a Providing Company, except any net income tax
imposed upon Providing Company by the country of its incorporation or any
governmental entity within its country of incorporation.

               (b) Sales Tax Liability and Payment. Notwithstanding Section
3.1(a), each Receiving Company is liable for and will indemnify and hold
harmless any Providing Company from all sales, use and similar taxes (plus any
penalties, fines or interest thereon) (collectively, "Sales Taxes") assessed,
levied or imposed by any governmental or taxing authority on the providing of
Services by the Providing Company to the Receiving Company. The Providing
Company shall collect from the Receiving Company any Sales Tax that is due on
the Service it provides to such Receiving Company and shall pay such Sales Tax
so collected to the appropriate governmental or taxing authority.

               3.2 LAWS AND GOVERNMENTAL REGULATIONS. Receiving Company shall be
responsible for (i) compliance with all laws and governmental regulations
affecting its business and (ii) any use Receiving Company may make of the
Services to assist it in complying with such laws and governmental regulations.
The provision of Services shall comply, to the extent applicable, with REI's
Internal Code of Conduct. Providing Company shall comply with all laws and
governmental regulations applicable to the provision of Services.

               3.3 RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be
deemed or construed by the parties or any third party as creating the
relationship of principal and agent, partnership or joint venture between the
parties, it being understood and agreed that no provision contained herein, and
no act of the parties, shall be deemed to create any relationship between the
parties other than the relationship of independent contractor nor be deemed to
vest any rights, interest or claims in any third parties.

               3.4 REFERENCES. All reference to Sections, Articles, Exhibits or
Schedules contained herein mean Sections, Articles, Exhibits or Schedules of or
to this Agreement, as the case may be, unless otherwise stated. When a reference
is made in this Agreement to a "party" or "parties", such reference shall be to
a party or parties to this Agreement unless otherwise indicated. Whenever the
words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The use of the
singular herein shall be deemed to be or include the

<PAGE>   18

plural (and vice versa) whenever appropriate. The use of the words "hereof",
"herein", "hereunder", and words of similar import shall refer to this entire
Agreement, and not to any particular article, section, subsection, clause,
paragraph or other subdivision of this Agreement, unless the context clearly
indicates otherwise. The word "or" shall not be exclusive; "may not" is
prohibitive and not permissive.

               3.5 MODIFICATION AND AMENDMENT. Except for modifications to
Exhibits, which may be made by Representatives pursuant to Section 2.9 hereof,
this Agreement may not be modified or amended, or any provision waived, except
in the manner set forth in the Separation Agreement.

               3.6 INCONSISTENCY. In the event of any inconsistency between the
terms of this Agreement and any of the Exhibits hereto, the terms of this
Agreement, other than charges, shall control.

               3.7 RESOLUTION OF DISPUTES. If a dispute, claim or controversy
results from or arises out of or in connection with this Agreement or the
performance of, or failure to perform, the Services, the parties agree to use
the procedures set forth in Article IX of the Separation Agreement, in lieu of
other available remedies, to resolve the same.

               3.8 NOTICES. Unless expressly provided herein, all notices,
claims, certificates, requests, demands and other communications hereunder shall
be in writing and shall be deemed to be duly given (i) when personally delivered
or (ii) if mailed registered or certified mail, postage prepaid, return receipt
requested, on the date the return receipt is executed or the letter refused by
the addressee or its agent or (iii) if sent by overnight courier which delivers
only upon the signed receipt of the addressee, on the date the receipt
acknowledgment is executed or refused by the addressee or its agent or (iv) if
sent by facsimile or other generally accepted means of electronic transmission,
on the date confirmation of transmission is received (provided that a copy of
any notice delivered pursuant to this clause (iv) shall also be sent pursuant to
clause (ii) or (iii)), addressed to the attention of the addressee's General
Counsel at the address of its principal executive office or to such other
address or facsimile number for a party as it shall have specified by like
notice.

               3.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.

               3.10 SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law. If any portion of this Agreement is declared invalid for
any reason, such declaration shall have no effect upon the remaining portions of
this Agreement, which shall continue in full force and effect as if this
Agreement had been executed with the invalid portions thereof deleted.

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

               3.12 RIGHTS OF THE PARTIES. Nothing expressed or implied in this
Agreement is intended or will be construed to confer upon or give any person or
entity, other than the parties and to the extent provided herein their
respective Subsidiaries, any

<PAGE>   19

rights or remedies under or by reason of this Agreement or any transaction
contemplated thereby.

               3.13 RESERVATION OF RIGHTS. The waiver by either party of any of
its rights or remedies afforded hereunder or at law is without prejudice and
shall not operate to waive any other rights or remedies which that party shall
have available to it, nor shall such waiver operate to waive the party's rights
to any remedies due to a future breach, whether of a similar or different
nature. The failure or delay of a party in exercising any rights granted to it
hereunder shall not constitute a waiver of any such right and that party may
exercise that right at any time. Any single or partial exercise of any
particular right by a party shall exhaust the same or constitute a waiver of any
other right.

               3.14 ENTIRE AGREEMENT. All understandings, representations,
warranties and agreements, if any, heretofore existing between the parties
regarding the subject matter hereof are merged into this Agreement, which fully
and completely express the agreement of the parties with respect to the subject
matter hereof.

        IN WITNESS WHEREOF, the parties have executed this Transition Services
Agreement as of the date first above written.

                                        RELIANT ENERGY, INCORPORATED

                                        By:
                                              ----------------------------------

                                        Name:
                                              ----------------------------------

                                        Title:
                                              ----------------------------------

                                        RELIANT RESOURCES, INC.

                                        By:
                                              ----------------------------------

                                        Name:
                                              ----------------------------------

                                        Title:
                                              ----------------------------------<PAGE>   1
                                                                    EXHIBIT 10.3

                                    TECHNICAL

                               SERVICES AGREEMENT

                                     between

                          RELIANT ENERGY, INCORPORATED

                                       and

                             RELIANT RESOURCES, INC.

<PAGE>   2

                          TECHNICAL SERVICES AGREEMENT

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                          Page
                                                                                          ----
<S>                                                                                        <C>
ARTICLE I DEFINITIONS.......................................................................1
        1.1       Additional Services.......................................................1
        1.2       Effective Date............................................................1
        1.3       Computer Systems Services.................................................1
        1.4       Environmental and Safety Services.........................................1
        1.5       Genco Assets..............................................................1
        1.6       Genco LP..................................................................1
        1.7       Genco Option Agreement....................................................2
        1.8       Impracticable.............................................................2
        1.9       Information Technology Services...........................................2
        1.10      Liability.................................................................2
        1.11      Option Closing Date.......................................................2
        1.12      Option Expiration Date....................................................2
        1.13      Providing Company.........................................................2
        1.14      Receiving Company.........................................................2
        1.15      REI Group.................................................................2
        1.16      Representative............................................................2
        1.17      Resources Group...........................................................2
        1.18      Service...................................................................2
        1.19      Subsidiary................................................................2
        1.20      Technical Services........................................................2

ARTICLE II SERVICES.........................................................................3
        2.1       Services..................................................................3
                  (a)    Initial Services...................................................3
                  (b)    Additional Services................................................3
                  (c)    Exhibits...........................................................3
                  (d)    Services Performed by Others.......................................3
        2.2       Charges and Payment.......................................................4
                  (a)    Charges for Services...............................................4
                  (b)    Special Provisions Applicable to Computer Systems Services.........4
                  (c)    Budgeting..........................................................4
                  (d)    Charges for Additional Services....................................4
                  (e)    Payment Terms......................................................5
                  (f)    Performance under Ancillary Agreements.............................5
                  (g)    Error Correction; True-Ups; Accounting.............................5
        2.3       General Obligations; Standard of Care.....................................5
                  (a)    Performance Metrics:  Providing Company............................5
                  (b)    Performance Metrics:  Receiving Company............................5
                  (c)    Transitional Nature of Services; Changes...........................6
                  (d)    Responsibility for Errors; Delays..................................6
</TABLE>

                                      -i-

<PAGE>   3

<TABLE>
<S>                                                                                        <C>
                  (e)    Good Faith Cooperation; Consents...................................6
        2.4       Certain Limitations.......................................................7
                  (a)    Service Boundaries and Scope.......................................7
                  (b)    Impracticability...................................................7
                  (c)    Sale, Transfer, Assignment.........................................7
        2.5       Confidentiality...........................................................7
                  (a)    Information Subject to Other Obligations...........................7
                  (b)    All Information Confidential.......................................7
                  (c)    Internal Use; Title, Copies, Return................................7
        2.6       Term; Early Termination...................................................8
                  (a)    Term...............................................................8
                  (b)    Termination by Receiving Company of Specific Service Categories....8
                  (c)    Termination of Less than All Services..............................9
        2.7       Disclaimer of Warranties, Limitation of Liability and Indemnification.....9
                  (a)    Disclaimer of Warranties...........................................9
                  (b)    Limitation of Liability; Indemnification of Receiving Company......9
                  (c)    Limitation of Liability; Indemnification of Providing Company......9
                  (d)    Subrogation of Rights vis-a-vis Third Party Contractors...........10
        2.8       Representatives..........................................................10

ARTICLE III MISCELLANEOUS..................................................................10
        3.1       Taxes....................................................................10
        3.2       Laws and Governmental Regulations........................................10
        3.3       Relationship of Parties..................................................11
        3.4       References...............................................................11
        3.5       Modification and Amendment...............................................11
        3.6       Inconsistency............................................................11
        3.7       Resolution of Disputes...................................................11
        3.8       Successors and Assignment................................................11
        3.9       Notices..................................................................11
        3.10      Governing Law............................................................12
        3.11      Severability.............................................................12
        3.12      Counterparts.............................................................12
        3.13      Rights of the Parties....................................................12
        3.14      Reservation of Rights....................................................12
        3.15      Entire Agreement.........................................................12
</TABLE>

                                      -ii-

<PAGE>   4
                          TECHNICAL SERVICES AGREEMENT

               THIS TECHNICAL SERVICES AGREEMENT, dated as of December 31, 2000
(the "Effective Date"), is between Reliant Energy, Incorporated, a Texas
corporation ("REI") acting through its Reliant Energy HL&P Division and Reliant
Resources, Inc., a Delaware corporation ("Resources"). Capitalized terms used
herein and not otherwise defined shall have the respective meanings assigned to
them in Article I hereof or as assigned to them in the Separation Agreement (as
defined below).

               WHEREAS, the Board of Directors of REI has determined that it is
in the best interests of REI and its shareholders to separate REI's existing
businesses into two independent business groups;

               WHEREAS, in order to effectuate the foregoing, REI and Resources
have entered into a Master Separation Agreement, dated as of December 31, 2000
(the "Separation Agreement"); and

               WHEREAS, the Separation Agreement provides, among other things,
for REI and Resources to enter into this Agreement in order to set forth the
terms on which Resources will provide to REI the Services described herein.

               NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties, intending to be legally
bound, agree as follows:

                                   ARTICLE I
                                   DEFINITIONS

               For the purpose of this Agreement the following terms shall have
the following meanings:

               1.1 ADDITIONAL SERVICES. "Additional Services" has the meaning
set forth in Section 2.1(b).

               1.2 EFFECTIVE DATE. "Effective Date" means the date of this
Agreement.

               1.3 COMPUTER SYSTEMS SERVICES. "Computer Systems Services" has
the meaning assigned to that term in Section 2.1(a)(iii).

               1.4 ENVIRONMENTAL AND SAFETY SERVICES. "Environmental and Safety
Services" has the meaning assigned to that term in Section 2.1(a)(ii).

               1.5 GENCO ASSETS. "Genco Assets" has the meaning assigned to that
term in Section 1.14 of the Separation Agreement.

               1.6 GENCO LP. "Genco LP" has the meaning assigned to that term in
the Genco Option Agreement.

                                       1
<PAGE>   5

               1.7 GENCO OPTION AGREEMENT. "Genco Option Agreement" means the
Texas Genco Option Agreement dated as of December 31, 2000 between REI and
Resources.

               1.8 IMPRACTICABLE. "Impracticable" (and words of similar import)
has the meaning set forth in Section 2.4(b).

               1.9 INFORMATION TECHNOLOGY SERVICES. "Information Technology
Services" has the meaning assigned to that term in Section 2.1(a)(iv).

               1.10 LIABILITY. "Liability" has the meaning assigned to that term
in the Separation Agreement.

               1.11 OPTION CLOSING DATE. "Option Closing Date" has the meaning
assigned to that term in the Genco Option Agreement.

               1.12 OPTION EXPIRATION DATE. "Option Expiration Date" has the
meaning assigned to that term in the Genco Option Agreement.

               1.13 PROVIDING COMPANY. "Providing Company" means Resources.

               1.14 RECEIVING COMPANY. "Receiving Company" means REI or a
permitted assignee under Section 2.4(c), including Genco.

               1.15 REI GROUP. "REI Group" means REI and its Subsidiaries
excluding Resources and other members of the Resources Group.

               1.16 REPRESENTATIVE. "Representative" of any party means a
managerial level employee appointed by such party to have the responsibilities
and authority set forth in Section 2.8.

               1.17 RESOURCES GROUP. "Resources Group" means Resources and its
Subsidiaries.

               1.18 SERVICE. "Service" has the meaning set forth in subsection
2.1(b).

               1.19 SUBSIDIARY. "Subsidiary" means, with respect to REI or
Resources, a corporation, partnership, limited liability company or other entity
more than 50% of the voting common stock or other interests entitled to vote
generally for the election of directors (or comparable governing body) is owned,
directly or indirectly, by REI or Resources, respectively.

               1.20 TECHNICAL SERVICES. "Technical Services" has the meaning
assigned to that term in Section 2.1(a)(i).

                                       2
<PAGE>   6

                                   ARTICLE II
                                    SERVICES

               2.1 SERVICES.

               (a) INITIAL SERVICES. Except as otherwise provided herein, during
the applicable term determined pursuant to Section 2.6 hereof the following
"Initial Services" shall be provided by Resources to Receiving Company:

               (i) TECHNICAL SERVICES consist of engineering and technical
        support services required to support operation and maintenance of the
        Genco Assets, including betterment and reliability analysis,
        surveillance, testing, calibrations, diagnostic analysis and water
        technology services, as and more particularly described in Exhibit
        2.1(a)(i);

               (ii) ENVIRONMENTAL AND SAFETY SERVICES consist of environmental,
        safety and industrial health services in support of the operation and
        maintenance of the Genco Assets, as more particularly described in
        Exhibit 2.1(a)(ii);

               (iii) COMPUTER SYSTEMS SERVICES consist of the provision of
        computer systems (software and hardware) used for economic dispatch, QSE
        scheduling, QSE settlement, ISO settlement and communication, and
        related functions associated with the operation and maintenance of the
        Genco Assets, including technical, programming, consulting support, and
        hardware maintenance services (but excluding the provisions of any
        plant-specific hardware, which will be purchased by the Receiving
        Company), all as more particularly described in Exhibit 2.1(a)(iii); and

               (iv) INFORMATION TECHNOLOGY SERVICES consist of the provision of
        information technology services associated with the operation and
        maintenance of the Genco Assets, all as more particularly described in
        Exhibit 2.1(a)(iv).

               (b) ADDITIONAL SERVICES. From time to time after the Effective
Date, the parties may, by mutual agreement, identify additional services that
one party will provide to the other party in accordance with the terms of this
Agreement (the "Additional Services" and, together with the Initial Services,
the "Services"). In such case, the parties shall create an Exhibit for each
Additional Service setting forth a description of the Service, the time period
during which the Service will be provided, the charge for the Service and any
other terms applicable thereto.

               (c) EXHIBITS. To the extent not affixed at the date of this
Agreement, Exhibits 2.1(a)(i) through (iv) shall be established by agreement of
the parties and, upon such agreement, shall be affixed and made a part hereof.

               (d) SERVICES PERFORMED BY OTHERS. At its option, Resources may
cause any Service it is required to provide hereunder to be provided by another
member of the Resources Group or by any other Person that is providing, or may
from time to time provide, the same or similar services for members of the
Resources Group. Resources shall remain responsible, in accordance with the
terms of this Agreement, for performance of any Service it causes to be so
provided by others.

                                       3
<PAGE>   7

               2.2 CHARGES AND PAYMENT.

               (a) CHARGES FOR SERVICES. Subject to Section 2.2(b), Resources
will charge for the Services, and the Receiving Company will pay for them on the
following basis:

               (i) Resources will charge the Receiving Company for its direct
        operating costs incurred in providing the Services, including, but not
        limited to, allocable salary and wages, incentives, paid absences,
        payroll taxes, payroll additives (insurance premiums, social security,
        health care and retirement benefits and the like) and similar expenses,
        and reimbursement of out-of-pocket third party costs and expenses; and

               (ii) Resources will also charge the Receiving Company for its
        indirect costs of providing the services, including, but not limited to,
        allocable charges for management, payroll, procurement, legal, risk
        management, accounting, tax, audit, human Resources and the like, and
        similar expenses.

It is the intent of the parties that the charges for the Services will be based
on Resource's fully allocated direct and indirect costs of providing the
Services, but without any element of profit, and that the Services under this
Agreement and similar services provided by Resources to entities within the
Resources Group will be charged for on a basis that allocates the costs charged
out on a fair and nondiscriminatory basis.

               (b) SPECIAL PROVISIONS APPLICABLE TO COMPUTER SYSTEMS SERVICES.
Costs incurred by Resources in providing Computer Systems Services that
constitute capital investment shall be charged to the Receiving Company in the
form of a base service rate on an installed megawatt basis, using the same
methodology by which capital costs are allocated by Resources to Resources'
generation operations in regions outside the territory served by the business
conducted with the Genco Assets. Capital additions that benefit both the
operations conducted with the Genco Assets and Resources' generation operations
in other regions will be allocated on an installed megawatt basis. Capital
additions that benefit only the operation of the Genco Assets or only Resources'
other generation operations will be charged directly to the entity that benefits
from those additions, and use by others shall be prohibited.

               (c) BUDGETING. In advance of each calendar year, Resources shall
prepare and deliver to the Receiving Party a proposed budget for Services to be
performed during that year, taking into account such information as may be
provided by Receiving Company for the specification of the scope of the Services
to be performed during that year and any changes in the scope of work from that
theretofore provided, and including budgetary parameters for the use of third
party service providers Resources will also prepare on a monthly basis forward
budgetary forecasts for the Services, including an analysis of variances from
previously budgeted amounts.

               (d) CHARGES FOR ADDITIONAL SERVICES. Receiving Company shall pay
Resources the charges, if any, set forth on each Exhibit hereafter created for
each of the Additional Services listed therein. Notwithstanding the foregoing
the agreement of a party to provide or receive any Additional Service at any
given rate or charge shall be at the sole discretion of such party.

                                       4
<PAGE>   8

               (e) PAYMENT TERMS. Resources shall bill Receiving Company monthly
for all charges pursuant to this Agreement and Receiving Company shall pay
Resources for all Services within thirty days after receipt of an invoice
therefor. Charges shall be supported by reasonable documentation (which may be
maintained in electronic form) consistent with past practices. Late payments
shall bear interest at the lesser of the prime rate as announced and in effect
from time to time at Chase Bank Houston, Houston, Texas plus two percent (2%)
per annum or the maximum non-usurious rate of interest permitted by applicable
law.

               (f) PERFORMANCE UNDER ANCILLARY AGREEMENTS. Notwithstanding
anything to the contrary contained herein, Receiving Company shall not be
charged under this Agreement for any Services that are specifically required to
be performed under the Separation Agreement or any other Ancillary Agreement and
any such other Services shall be performed and charged for in accordance with
the terms of the Separation Agreement or such other Ancillary Agreement.

               (g) ERROR CORRECTION; TRUE-UPS; ACCOUNTING. Resources shall make
adjustments to charges as required to reflect the discovery of errors or
omissions in charges. Resources and Receiving Company shall conduct a true-up
process at least annually and more frequently if necessary to adjust charges
based on a reconciliation of amounts charged and costs incurred. It is the
intent of the parties that such true-up process will be conducted using
substantially the same process, procedures and methods of review as have been
heretofore in effect. Resources will maintain such books and records as are
necessary to support the charges for Services, in sufficient detail as may be
necessary to enable REI to satisfy applicable regulatory requirements. Services
under this Agreement and charges therefor shall be subject to the provisions of
Section 10.5 of the Separation Agreement (Audit Rights).

               2.3 GENERAL OBLIGATIONS; STANDARD OF CARE.

               (a) PERFORMANCE METRICS: PROVIDING COMPANY. The Providing Company
shall maintain sufficient resources to perform its obligations hereunder and
shall perform such obligations in a commercially reasonable manner. Specific
performance metrics for the Providing Company may be set forth in Exhibits
referred to herein. Where none is set forth, the Providing Company shall provide
Services in accordance with the policies, procedures and practices in effect for
the provision of similar services in support of the operation and maintenance of
the Genco Assets before the date of this Agreement and shall exercise the same
care and skill as it exercises in performing similar services hereafter for
generation operations conducted by members of the Resources Group and shall not,
in situations in which common personnel, equipment or facilities are used in
performing Services hereunder and such similar Services for members of the
Resources Group, favor either a Receiving Company or a member of the Resources
Group.

               (b) PERFORMANCE METRICS: RECEIVING COMPANY. Specific performance
metrics for the Receiving Company may be set forth in Exhibits referred to
herein. Where none is set forth, the Receiving Company shall, in connection with
receiving Services, follow the policies, procedures and practices in effect
before the date of this Agreement including providing information and
documentation sufficient for the Providing Company to perform the Services as
they were performed before the date of this Agreement and making available, as
reasonably requested by the Providing Company, sufficient Resources and timely
decisions, approvals and

                                       5
<PAGE>   9

acceptances in order that Providing Company may accomplish its obligations
hereunder in a timely manner. In connection with the provision of Information
Technology Services, Receiving Company will use hardware and software
configurations conforming to Resource's standards when reasonably practicable.
If Receiving Company elects to use different standards, Resources will use
commercially reasonable efforts to provide services consistent with such
standards, but shall have no responsibility for the functionality of the
nonconforming configurations, and Receiving Company shall be responsible for all
costs incurred by Resources in adapting to the different standards.

               (c) TRANSITIONAL NATURE OF SERVICES; CHANGES. The parties
acknowledge the transitional nature of the Services and that Providing Company
may make changes from time to time in the manner of performing the Services if
Providing Company is making similar changes in performing similar services for
members of the Resources Group and if Providing Company furnishes to Receiving
Company substantially the same notice Providing Company shall provide members of
the Resources Group respecting such changes.

               (d) RESPONSIBILITY FOR ERRORS; DELAYS. Providing Company's sole
responsibility to Receiving Company:

               (i) for errors or omissions in Services, shall be to furnish
        correct information and/or adjustment in the Services, at no additional
        cost or expense to Receiving Company; provided, Receiving Company must
        promptly advise Providing Company of any such error or omission of which
        it becomes aware after having used commercially reasonable efforts to
        detect any such errors or omissions in accordance with the standard of
        care set forth in Section 2.3(b); and provided, further, that the
        responsibility to furnish correct information or an adjustment of
        services at no additional cost or expense to the Receiving Company shall
        not be construed to require Providing Company to make any payment or
        incur any Liability for which it is not responsible, or with respect to
        which it is provided indemnity, under Section 2.7; and

               (ii) for failure to deliver any Service because of
        Impracticability, shall be to use commercially reasonable efforts,
        subject to subsection 2.4(b), to make the Services available and/or to
        resume performing the Services as promptly as reasonably practicable.

               (e) GOOD FAITH COOPERATION; CONSENTS. The parties will use good
faith efforts to cooperate with each other in all matters relating to the
provision and receipt of Services. Such cooperation shall include exchanging
information, providing electronic access to systems used in connection with
Services to the extent the systems in use are designed and configured to permit
such access, performing true-ups and adjustments and obtaining all consents,
licenses, sublicenses or approvals necessary to permit each party to perform its
obligations hereunder. The parties will cooperate with each other in making such
information available as needed in the event of a tax audit or Regulatory
Proceeding, whether in the United States or any other country.

                                       6
<PAGE>   10

               2.4 CERTAIN LIMITATIONS.

               (a) SERVICE BOUNDARIES AND SCOPE. Except as provided in an
Exhibit for a Service, the Services will be available only for purposes of
conducting the generation business of REI and its Subsidiaries substantially in
the manner as the generation business of the Reliant Energy HL&P Division of REI
was conducted prior to the Effective Date.

               (b) IMPRACTICABILITY. Providing Company shall not be required to
provide any Service to the extent the performance of such Service becomes
"Impracticable" as a result of a cause or causes outside the reasonable control
of Providing Company including unfeasible technological requirements, or to the
extent the performance of such Services would require Providing Company to
violate any applicable laws, rules or regulations or would result in the breach
of any software license or other applicable contract.

               (c) SALE, TRANSFER, ASSIGNMENT. No Receiving Company may sell,
transfer, assign or otherwise use the Services provided hereunder, in whole or
in part, for the benefit of any Person other than a member of the REI Group.
Without limitation, it is understood and agreed that REI may assign its rights
under this Agreement to Genco LP.

               2.5 CONFIDENTIALITY.

               (a) INFORMATION SUBJECT TO OTHER OBLIGATIONS. Providing Company
and Receiving Company agree that all Information regarding the Services,
including, but not limited to, price, costs, methods of operation and software,
shall be maintained in confidence and shall be subject to Section 10.3 of the
Separation Agreement.

               (b) ALL INFORMATION CONFIDENTIAL. Providing Company's systems
used to perform the Services provided hereunder are confidential and proprietary
to Providing Company or third parties. Receiving Company shall treat these
systems and all related procedures and documentation as confidential and
proprietary to Providing Company or its third party vendors.

               (c) INTERNAL USE; TITLE, COPIES, RETURN. Subject to the
applicable provisions of the Intellectual Property Agreement governing the
ownership, use, and licensing of Intellectual Property, Receiving Company agrees
that:

               (i) all systems, procedures and related materials provided to
        Receiving Company are for Receiving Company's internal use only and only
        as related to the Services or any of the underlying systems used to
        provide the Services;

               (ii) title to all systems used in performing the Services
        provided hereunder shall remain in Providing Company or its third party
        vendors; and

               (iii) upon the termination of any of the Services, Receiving
        Company shall return to Providing Company, as soon as practicable, any
        equipment or other property of Providing Company relating to the
        Services which is owned or leased by it and is or was in Receiving
        Company's possession or control.

                                       7
<PAGE>   11

               2.6 TERM; EARLY TERMINATION.

               (a) TERM. The term of this Agreement shall commence on the date
hereof and shall remain in effect through the earlier of (i) the Option Closing
Date, (ii) the sale or disposition by REI, directly or indirectly, of Genco LP
or of all or substantially all of the Genco Assets, and (iii) May 31, 2005 or
until such earlier time as all Services are terminated as provided in this
Section. Notwithstanding the foregoing, if the Genco Option is not exercised
prior to the Option Expiration Date, Receiving Company may extend the term of
this Agreement until December 31, 2005 (or such earlier time as Genco LP or all
or substantially all of the Genco Assets are disposed of as provided in clause
(ii) of the preceding sentence). This Agreement may be extended by the parties
in writing either in whole or with respect to one or more of the Services,
provided, however, that such extension shall only apply to the Service for which
the Agreement was extended. Services shall be subject to earlier termination as
provided herein. In the event that any Genco Asset is sold or otherwise disposed
of other than through exercise of the Genco Option, Services shall no longer be
provided with respect to the Genco Asset that is sold or otherwise disposed of
and the charges for services shall be adjusted to take the same into account.

               (b) TERMINATION BY RECEIVING COMPANY OF SPECIFIC SERVICE
CATEGORIES. A Receiving Company may terminate this Agreement either with respect
to all, or with respect to any one or more, of the Services provided hereunder
at any time and from time to time, for any reason or no reason, by giving
written notice to the Providing Company as follows:

               (i) for Technical Services, except to the extent otherwise
        provided in Exhibit 2.1(a)(i), a terminated category of Services must
        include all Services included in one of the major service categories
        specified in Exhibit 2.1(a)(i), and notice of termination thereof must
        be given at least 90 days in advance of the effective date of the
        termination.

               (ii) for Environmental and Safety Services, except to the extent
        otherwise provided in Exhibit 2.1(a)(ii), a terminated category of
        Services must include all of the Services included in one of the major
        service categories specified in Exhibit 2.1(a)(ii), and notice of
        termination thereof must be given at least 90 days in advance of the
        effective date of the termination.

               (iii) for Computer Systems Services, except to the extent
        otherwise provided in Exhibit 2.1(a)(iii), a terminated category of
        Services must include all of the Services included in one of the major
        service categories specified in Exhibit 2.1(a)(iii), and notice of
        termination thereof must be given at least 90 days in advance of the
        effective date of the termination.

               (iv) for Information Technology Services, except to the extent
        otherwise provided on Exhibit 2.1(a)(iv), a terminated category of
        Services must include all of the Services included in one of the major
        service categories specified in Exhibit 2.1(a)(iv), and notice of
        termination thereof must be given at least 90 days in advance of the
        effective date of the termination.

                                       8
<PAGE>   12

               (c) TERMINATION OF LESS THAN ALL SERVICES. In the event of any
termination with respect to one or more, but less than all, Services, this
Agreement shall continue in full force and effect with respect to any Services
not terminated hereby.

               2.7 DISCLAIMER OF WARRANTIES, LIMITATION OF LIABILITY AND
INDEMNIFICATION.

               (a) DISCLAIMER OF WARRANTIES. RESOURCES DISCLAIMS ALL WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE
SERVICES. RESOURCES MAKES NO REPRESENTATIONS OR WARRANTIES AS TO THE QUALITY,
SUITABILITY OR ADEQUACY OF THE SERVICES FOR ANY PURPOSE OR USE.

               (b) LIMITATION OF LIABILITY; INDEMNIFICATION OF RECEIVING
COMPANY. Resources and its Subsidiaries shall have no Liability to any Receiving
Company with respect to its furnishing any of the Services hereunder except for
Liabilities arising out of or resulting from the gross negligence or willful
misconduct occurring after the Effective Date of Resources or any member of the
Resources Group. Resources will indemnify, defend and hold harmless each
Receiving Company in respect of all Liabilities arising out of or resulting from
such gross negligence or willful misconduct. Such indemnification obligation
shall be a Liability of Resources for purposes of the Separation Agreement and
the provisions of Article III of the Separation Agreement with respect to
indemnification shall govern with respect thereto. IN NO EVENT SHALL RESOURCES
OR ANY MEMBER OF THE RESOURCES GROUP HAVE ANY LIABILITY UNDER THIS AGREEMENT OR
OTHERWISE ARISING OUT OF OR RESULTING FROM THE PERFORMANCE OF, OR THE FAILURE TO
PERFORM, SERVICES FOR LOSS OF ANTICIPATED PROFITS BY REASON OF ANY BUSINESS
INTERRUPTION, FACILITY SHUTDOWN OR NON-OPERATION, LOSS OF DATA OR OTHERWISE OR
FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, WHETHER OR NOT
CAUSED BY OR RESULTING FROM NEGLIGENCE, INCLUDING GROSS NEGLIGENCE, AND WHETHER
OR NOT RESOURCES OR ANY MEMBER OF THE RESOURCES GROUP WAS INFORMED OF THE
POSSIBILITY OF THE EXISTENCE OF SUCH DAMAGES. IN NO EVENT SHALL RESOURCES OR ANY
MEMBER OF THE RESOURCES GROUP HAVE ANY LIABILITY HEREUNDER OR OTHERWISE ARISING
OUT OF OR RESULTING FROM THE PERFORMANCE OF, OR FAILURE TO PERFORM, SERVICES IN
AN AGGREGATE AMOUNT EXCEEDING THE TOTAL CHARGES PAID OR PAYABLE TO RESOURCES
HEREUNDER.

               (c) LIMITATION OF LIABILITY; INDEMNIFICATION OF PROVIDING
COMPANY. REI and each other Receiving Company shall indemnify and hold harmless
Resources in respect of all Liabilities arising out of or resulting from
Resource's furnishing or failing to furnish the Services to such Receiving
Company provided for in this Agreement, other than Liabilities arising out of or
resulting from the gross negligence or willful misconduct of Resources or any
other member of the Resources Group. The provisions of this indemnity shall
apply only to losses which relate directly to the provision of Services. Such
indemnification obligation shall be a Liability of REI for purposes of the
Separation Agreement and the provisions of Article III of the Separation
Agreement with respect to indemnification shall govern with respect thereto. IN
NO EVENT SHALL REI OR ANY MEMBER OF THE REI GROUP HAVE ANY LIABILITY UNDER THIS
AGREEMENT OR OTHERWISE ARISING OUT OF OR RESULTING FROM ITS RECEIPT OF SERVICES
HEREUNDER FOR LOSS OF ANTICIPATED PROFITS OR FOR ANY INCIDENTAL, INDIRECT,
SPECIAL OR CONSEQUENTIAL

                                       9
<PAGE>   13

DAMAGES, WHETHER OR NOT CAUSED BY OR RESULTING FROM NEGLIGENCE, INCLUDING GROSS
NEGLIGENCE, AND WHETHER OR NOT REI OR ANY MEMBER OF THE REI GROUP WAS INFORMED
OF THE POSSIBILITY OF THE EXISTENCE OF SUCH DAMAGES.

               (d) SUBROGATION OF RIGHTS VIS-A-VIS THIRD PARTY CONTRACTORS. In
the event any Liability arises from the performance of Services hereunder by a
third party contractor, the Receiving Company shall be subrogated to such
rights, if any, as the Providing Company may have against such third party
contractor with respect to the Services provided by such third party contractor
to or on behalf of the Receiving Company. Subrogation under this Section 2.7(c)
shall not affect the obligation of Providing Company to perform Services under
this Agreement.

               2.8 REPRESENTATIVES. Each party shall by notice to the other
appoint one or more Representatives to facilitate communications and performance
under this Agreement. The maximum number of Representatives for each party shall
be four, one for Technical Services, one for Environmental and Safety Services,
one for Computer Systems Services and one for Information Technology Services.
Each party may treat an act of a Representative of another party as being
authorized by such other party without inquiring behind such act or ascertaining
whether such Representative had authority to so act. Each party shall have the
right at any time and from time to time to replace any of its Representatives by
giving notice in writing to the other party setting forth the name of (i) each
Representative to be replaced and (ii) the replacement, and certifying that the
replacement Representative is authorized to act for the party giving the notice
in all matters relating to this Agreement (or matters relating to one category
of Services as aforesaid).

                                  ARTICLE III
                                  MISCELLANEOUS

               3.1 TAXES. (a) GENERAL. The Receiving Company shall bear all
taxes, duties and other similar charges (and any related interest and
penalties), imposed as a result of its receipt of Services under this Agreement,
including any tax which Receiving Company is required to withhold or deduct from
payments to Providing Company, except any net income tax imposed upon Providing
Company by the country of its incorporation or any governmental entity within
its country of incorporation.

               (b) SALES TAX LIABILITY AND PAYMENT. Notwithstanding Section
3.1(a), each Receiving Company is liable for and will indemnify and hold
harmless any Providing Company from all sales, use and similar taxes (plus any
penalties, fines or interest thereon) (collectively, "Sales Taxes") assessed,
levied or imposed by any governmental or taxing authority on the providing of
Services by the Providing Company to the Receiving Company. The Providing
Company shall collect from the Receiving Company any Sales Tax that is due on
the Service it provides to such Receiving Company and shall pay such Sales Tax
so collected to the appropriate governmental or taxing authority.

               3.2 LAWS AND GOVERNMENTAL REGULATIONS. Receiving Company shall be
responsible for (i) compliance with all laws and governmental regulations
affecting its business and (ii) any use Receiving Company may make of the
Services to assist it in complying with such laws and governmental regulations.
The provision of Services shall comply, to the extent

                                       10
<PAGE>   14

applicable, with REI's Internal Code of Conduct. Providing Company shall comply
with all laws and governmental regulations applicable to the provision of
Services.

               3.3 RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be
deemed or construed by the parties or any third party as creating the
relationship of principal and agent, partnership or joint venture between the
parties, it being understood and agreed that no provision contained herein, and
no act of the parties, shall be deemed to create any relationship between the
parties other than the relationship of independent contractor nor be deemed to
vest any rights, interest or claims in any third parties.

               3.4 REFERENCES. All reference to Sections, Articles, Exhibits or
Schedules contained herein mean Sections, Articles, Exhibits or Schedules of or
to this Agreement, as the case may be, unless otherwise stated. When a reference
is made in this Agreement to a "party" or "parties", such reference shall be to
a party or parties to this Agreement unless otherwise indicated. Whenever the
words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The use of the
singular herein shall be deemed to be or include the plural (and vice versa)
whenever appropriate. The use of the words "hereof", "herein", "hereunder", and
words of similar import shall refer to this entire Agreement, and not to any
particular article, section, subsection, clause, paragraph or other subdivision
of this Agreement, unless the context clearly indicates otherwise. The word "or"
shall not be exclusive; "may not" is prohibitive and not permissive.

               3.5 MODIFICATION AND AMENDMENT. This Agreement may not be
modified or amended, or any provision waived, except in the manner set forth in
the Separation Agreement.

               3.6 INCONSISTENCY. In the event of any Inconsistency between the
terms of this Agreement and any of the Exhibits hereto, the terms of this
Agreement, other than charges, shall control.

               3.7 RESOLUTION OF DISPUTES. If a dispute, claim or controversy
results from or arises out of or in connection with this Agreement or the
performance of, or failure to perform, the Services, the parties agree to use
the procedures set forth in Article IX of the Separation Agreement, in lieu of
other available remedies, to resolve the same.

               3.8 SUCCESSORS AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. No party shall assign this Agreement or any rights herein
without the prior written consent of the other party, which may be withheld for
any or no reason.

               3.9 NOTICES. Unless expressly provided herein, all notices,
claims, certificates, requests, demands and other communications hereunder shall
be in writing and shall be deemed to be duly given (i) when personally delivered
or (ii) if mailed registered or certified mail, postage prepaid, return receipt
requested, on the date the return receipt is executed or the letter refused by
the addressee or its agent or (iii) if sent by overnight courier which delivers
only upon the signed receipt of the addressee, on the date the receipt
acknowledgment is executed or refused by the addressee or its agent or (iv) if
sent by facsimile or other generally accepted means of electronic transmission,
on the date confirmation of transmission is received (provided

                                       11
<PAGE>   15

that a copy of any notice delivered pursuant to this clause (iv) shall also be
sent pursuant to clause (ii) or (iii)), addressed to the attention of the
addressee's General Counsel at the address of its principal executive office or
to such other address or facsimile number for a party as it shall have specified
by like notice.

               3.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.

               3.11 SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law. If any portion of this Agreement is declared invalid for
any reason, such declaration shall have no effect upon the remaining portions of
this Agreement, which shall continue in full force and effect as if this
Agreement had been executed with the invalid portions thereof deleted.

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

               3.13 RIGHTS OF THE PARTIES. Nothing expressed or implied in this
Agreement is intended or will be construed to confer upon or give any person or
entity, other than the parties and to the extent provided herein their
respective Subsidiaries, any rights or remedies under or by reason of this
Agreement or any transaction contemplated thereby.

               3.14 RESERVATION OF RIGHTS. The waiver by either party of any of
its rights or remedies afforded hereunder or at law is without prejudice and
shall not operate to waive any other rights or remedies which that party shall
have available to it, nor shall such waiver operate to waive the party's rights
to any remedies due to a future breach, whether of a similar or different
nature. The failure or delay of a party in exercising any rights granted to it
hereunder shall not constitute a waiver of any such right and that party may
exercise that right at any time. Any single or partial exercise of any
particular right by a party shall exhaust the same or constitute a waiver of any
other right.

               3.15 ENTIRE AGREEMENT. All understandings, representations,
warranties and agreements, if any, heretofore existing between the parties
regarding the subject matter hereof are merged into this Agreement, which fully
and completely express the agreement of the parties with respect to the subject
matter hereof.

                                       12
<PAGE>   16

               IN WITNESS WHEREOF, the parties have executed this Technical
Services Agreement as of the date first above written.

                                        RELIANT ENERGY, INCORPORATED

                                        By:
                                              ----------------------------------

                                        Name:
                                              ----------------------------------

                                        Title:
                                              ----------------------------------

                                        RELIANT RESOURCES, INC.

                                        By:
                                              ----------------------------------

                                        Name:
                                              ----------------------------------

                                        Title:
                                              ----------------------------------

                                       13

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