Document:

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                                                                   Exhibit 4.2.2

            FIRST AMENDMENT TO CREDIT AGREEMENT AND PLEDGE AGREEMENT

            FIRST AMENDMENT TO CREDIT AGREEMENT AND PLEDGE AGREEMENT (this
"First Amendment"), dated as of September 3, 2004, among, TEXAS GENCO HOLDINGS,
INC., a Texas corporation (the "Parent"), TEXAS GENCO GP, LLC, a Texas limited
liability company ("Genco GP"), TEXAS GENCO LP, LLC, a Delaware limited
liability company ("Genco LP"), TEXAS GENCO SERVICES, LP, a Texas limited
partnership ("Genco Services"), TEXAS GENCO, LP, a Texas limited partnership
(the "Borrower"), the undersigned lenders party to the Credit Agreement referred
to below (the "Continuing Lenders") and DEUTSCHE BANK AG NEW YORK BRANCH, as
Administrative Agent and Collateral Agent (the "Administrative Agent"). All
capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Credit Agreement referred to
below immediately prior to the First Amendment Effective Date referred to below.

                              W I T N E S S E T H:

            WHEREAS, the Parent, Genco GP, Genco LP, Genco Services, the
Borrower, various lenders (the "Lenders"), the Documentation Agent and the
Administrative Agent are parties to a Credit Agreement, dated as of December 23,
2003 (the "Credit Agreement")

            WHEREAS, the Borrower and the Collateral Agent are parties to a
Pledge Agreement, dated as of December 23, 2003 (the "Pledge Agreement");

            WHEREAS, the parties hereto wish to effect the agreements and
amendments herein provided; and

            WHEREAS, subject to the terms and conditions of this First
Amendment, the parties hereto agree as follows:

I. Amendments to the Credit Agreement as at the First Amendment Effective Date

            1. The first paragraph of the Credit Agreement is hereby amended by
deleting said paragraph in its entirety and inserting the following paragraph in
lieu thereof:

            "CREDIT AGREEMENT, dated as of December 23, 2003, among TEXAS GENCO
      HOLDINGS, INC., a Texas corporation (the "Parent"), TEXAS GENCO GP, LLC, a
      Texas limited liability company ("Genco GP"), TEXAS GENCO LP, LLC, a
      Delaware limited liability company ("Genco LP"), TEXAS GENCO SERVICES, LP,
      a Texas limited partnership ("Genco Services") TEXAS GENCO, LP, a Texas
      limited partnership (the "Borrower"), the Lenders from time to time party
      hereto, DEUTSCHE BANK AG NEW YORK BRANCH, as Administrative Agent and
      Collateral Agent, CITIBANK, N.A., as Syndication Agent and COMPASS BANK,
      as Documentation Agent. Unless otherwise defined herein, all capitalized
      terms used herein and defined in Section 11 are used herein as so
      defined."

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            2. Section 2.01(c) of the Credit Agreement is hereby amended by
inserting the following proviso at the end of clause (ii) of said Section:

            "; provided, that subject to Section 4.02(d), each South Texas
      Letter of Credit may have an expiry date occurring no later than the date
      occurring 360 days after the Maturity Date"

            3. Section 2.01(c) of the Credit Agreement is hereby further amended
by inserting the new sentence at the end of said Section:

            "(d) Notwithstanding anything to the contrary contained in this
      Agreement, any Security Document or any other Credit Document (i) subject
      to the provisions of Section 13.20, each of the covenants, agreements and
      Obligations of the Credit Parties contained in each Credit Document and
      (ii) the participations of each Lender in each Letter of Credit purchased
      by such Lender pursuant to Section 2.04, shall, in each case, remain in
      full force and effect until the expiration or termination of such Letter
      of Credit in accordance with its terms."

            4. Section 4.02 of the Credit Agreement is hereby amended by
inserting the following new clause (d) at the end of said Section:

            "(d) If any Letter of Credit is outstanding on the Maturity Date
      which has an expiry date later than the Maturity Date (or which, pursuant
      to its terms, may be extended to a date later than the Maturity Date) (all
      such Letters of Credit outstanding on the Maturity Date, the "Continuing
      Letters of Credit" and each, a "Continuing Letter of Credit"), the
      Borrower shall, on or prior the Maturity Date, (i) pay to each Issuing
      Lender which has issued any Continuing Letter of Credit an amount of cash
      equal to 105% of the aggregate Stated Amount of all Continuing Letters of
      Credit issued by such Issuing Lender to be held as security for all
      Obligations of the Borrower to such Issuing Lender in respect of such
      Continuing Letters of Credit in a cash collateral account to be
      established by, and under the sole dominion and control of, the respective
      Issuing Lender in accordance with the applicable Cash Collateral
      Agreement, (ii) enter into a Cash Collateral Agreement with each such
      Issuing Lender and take all other actions as may be reasonably requested
      by such Issuing Lender in connection with the foregoing and (iii) deliver
      to each such Issuing Lender an opinion from Baker Botts LLP covering (x)
      the creation and perfection of the security interests granted under the
      respective Cash Collateral Agreement and (y) and such other matters
      incidental to the transactions contemplated hereby as such Issuing Lender
      may reasonably request."

            5. Section 7.12(b) of the Credit Agreement is hereby amended by
deleting the last sentence thereof and inserting the following sentence in lieu
thereof:

            "At the time of the granting of any security interests pursuant to
      the Indenture the Borrower and/or such entity surviving the merger

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      contemplated by the Genco LP Division, as the case may be, has good and
      marketable title to all Indenture Collateral referred to therein free and
      clear of all Liens (other than Permitted Liens)."

            6. Section 8.12 of the Credit Agreement is hereby amended by
deleting said Section in its entirety and inserting the following new Section
8.12 in lieu thereof:

      "Section 8.12 Future Guarantors. Each of the Credit Parties shall and
      shall cause each of its Subsidiaries to promptly upon any Person becoming
      a direct or indirect Subsidiary of the Parent to become a guarantor under
      the Guaranty by executing an accession agreement in respect of this
      Agreement in form and substance reasonably satisfactory to the
      Administrative Agent, provided that (x) no such Subsidiary that is not a
      Domestic Subsidiary shall be required to become a guarantor under the
      Guaranty, unless such Subsidiary shall at such time guarantee any
      Indebtedness of the Parent or any Domestic Subsidiary and (y) STP Nuclear
      Operating Company shall not be required to become a guarantor under the
      Guaranty."

            7. Section 9 of the Credit Agreement is hereby amended by inserting
the following new Section 9.10:

      "Section 9.10 Modifications to the Transaction Agreement. The Credit
      Parties shall not, and shall not permit, any modification or amendment to
      the Transaction Agreement which could reasonably be expected to (x) have a
      material adverse effect on the ability of any Credit Party to perform its
      payment obligations (including, without limitation, any obligations to
      post cash collateral pursuant to Section 4.02(d)) under this Agreement or
      any other Credit Document to which it is a party or (y) impair the rights
      of the Collateral Agent or the Lenders in the Collateral or the perfection
      or priority of the security interests granted or purported to be granted
      therein pursuant to the Security Documents."

            8. Section 10.03 of the Credit Agreement is hereby amended by
inserting the reference "Section 4.02(d)" immediately after the text "covenant
or agreement contained in" appearing in said Section.

            9. Section 11 of the Credit Agreement is hereby amended by deleting
the definitions of "Agents", "Applicable Commitment Commission Percentage" and
"Applicable Margin", "Bond", "Issuing Lender", "Lead Arranger", "Maturity Date"
and "Security Documents" in their entirety and inserting the following new
definitions of in lieu thereof:

            "Agents" shall mean and include (i) the Administrative Agent, (ii)
      the Collateral Agent, (iii) for the purposes of Section 12 only, the
      Documentation Agent and the Syndication Agent and (iv) for purposes of
      Sections 12, 13.01, 13.12 and 13.15 only, the Joint Lead Arrangers.

            "Applicable Commitment Commission Percentage" and "Applicable
      Margin" shall mean (x) with respect to Commitment Commission, a percentage

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      per annum equal to 0.25% and (y) with respect to Loans maintained as (i)
      Eurodollar Loans, (a) at all times prior to the date upon which the
      requirements of Section 4.02(d) have been satisfied to the reasonable
      satisfaction of the Lenders, a percentage per annum equal to 1.00% and (b)
      at all times after the date upon which the requirements of Section 4.02(d)
      have been satisfied to the reasonable satisfaction of the Lenders, a
      percentage per annum equal to 0.50% and (ii) Base Rate Loans, a percentage
      per annum equal to 0.0%.

            "Bond" shall mean the bond in the original principal amount of the
      Total Commitment as in effect on the First Amendment Effective Date issued
      under the Indenture and pledged pursuant to the Pledge Agreement.

            "Issuing Lender" shall mean (x) solely in respect of the South Texas
      Letters of Credit, each of (i) DBAG for up to an aggregate Stated Amount
      with respect to all South Texas Letters of Credit issued by DBAG equal to
      50% of all South Texas Letters of Credit and (ii) Citibank for up to an
      aggregate Stated Amount with respect to all South Texas Letters of Credit
      issued by Citibank equal to 50% of all South Texas Letters of Credit, (y)
      in respect of all Letters of Credit (other than the South Texas Letters of
      Credit), Compass for up to an aggregate Stated Amount equal to the
      difference of Total Commitment and the aggregate Stated Amount of all
      South Texas Letters of Credit and (z) any other Lender which at the
      request of the Borrower and with the consent of the Administrative Agent
      (which shall not be unreasonably withheld or delayed) agrees, in such
      Lender's sole discretion, to become an Issuing Lender for the purpose of
      issuing Letters of Credit pursuant to Section 2 (which, in each case, for
      purposes of this definition shall also include any respective banking
      affiliate of DBAG, Citibank, Compass and such other Lender). It being
      understood and agreed that on the First Amendment Effective Date the sole
      Issuing Lenders are DBAG, Citibank and Compass (and their respective
      banking affiliates).

            "Joint Lead Arrangers" shall mean Deutsche Bank Securities Inc. and
      Citigroup Global Markets Inc., in their capacity as Joint Lead Arrangers.

            "Maturity Date" shall mean the earlier of (x) date occurring 180
      days after the First Amendment Effective Date and (y) the Non-STP
      Acquisition Date.

            "Security Documents" shall mean (subject to Section 13.20), the
      Indenture and any supplemental indenture issued to the Administrative
      Agent in connection with the Bond, the Bond, Pledge Agreement, each Cash
      Collateral Agreement, and each other collateral document or instrument
      entered into pursuant to Section 5.05 or 8.11, if any, in each case as and
      when delivered in accordance with this Agreement as same may be amended,
      modified or supplemented from time to time in accordance with the terms
      thereof and/or hereof.

            10. Section 11 of the Credit Agreement is hereby further amended by
      adding the following definitions in such Section in their appropriate
      alphabetical order:

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            "Citibank" shall mean Citibank, N.A., in its individual capacity.

            "Cash Collateral Agreement" shall mean a cash collateral agreement
      substantially in the form of Exhibit J.

            "Compass" shall mean Compass Bank, in its individual capacity.

            "Continuing Letter of Credit" shall have the meaning provided in
      Section 4.02(d).

            "First Amendment Effective Date" shall mean the date upon which the
      First Amendment to this Agreement, dated September 3, 2004 becomes
      effective in accordance with its terms.

            "Genco LP Division" shall have the meaning provided in the
      Transaction Agreement.

            "Genco LP Division Date" shall mean the earlier of (x) date upon
      which the Genco LP Division is consummated in accordance with the
      Transaction Agreement and (y) the date upon which Non-STP Assets are no
      longer owned by the Borrower.

            "Highest Lawful Rate" shall mean, with respect to each Lender, the
      Administrative Agent and the Documentation Agent, the maximum nonusurious
      interest rate, if any, that at any time or from time to time may be
      contracted for, taken, reserved, charged or received with respect to any
      Loan or on other amounts, if any, due to such Person pursuant to this
      Agreement or any other Credit Document under applicable law. "Applicable
      law" as used in this definition means, with respect to each Lender, the
      Administrative Agent and the Documentation Agent, that law in effect from
      time to time that permits the charging and collection by such Person of
      the highest permissible lawful, nonusurious rate of interest on the
      transactions herein contemplated under the laws of Texas.

            "Non-STP Acquisition" shall have the meaning provided in the
      Transaction Agreement.

            "Non-STP Acquisition Date" shall mean the earlier of (x) the date
      upon which the Non-STP Acquisition is consummated in accordance with the
      terms of the Transaction Agreement and (y) the date upon which Non-STP
      Assets are no longer owned by any Credit Party.

            "Non-STP Assets" shall have the meaning provided in the Transaction
      Agreement.

            "Overnight Bridge Loan" shall have the meaning provided in the
      Transaction Agreement.

            "Public Company Merger" shall have the meaning provided in the
      Transaction Agreement.

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            "Repurchase" shall have the meaning provided in Section 13.18.

            "South Texas Letter of Credit" shall mean each Letter of Credit
      issued by (x) DBAG (in its capacity as an Issuing Lender) and (y) Citibank
      (in its capacity as an Issuing Lender), in each case, in connection with
      the Borrower's acquisition of an increased ownership interest in the South
      Texas Project; provided that (i) the aggregate Stated Amount of all South
      Texas Letters of Credit shall not exceed $189,500,000 and (ii) neither
      DBAG nor Citibank shall be required to issue a South Texas Letter of
      Credit in a Stated Amount exceeding 50% of the aggregate Stated Amount of
      all such South Texas Letters of Credit as provided in clause (i) of this
      proviso. For the avoidance of doubt, it is understood that nothing
      contained in this definition shall be deemed to increase the Commitments
      of DBAG or Citibank or limit or modify the provisions contained in Section
      2.01(c) or the definition of Issuing Lender.

            "South Texas Project" shall mean the South Texas Project Nuclear
      Electric Generating Station.

            "Syndication Agent" shall mean Citibank in its capacity as
      Syndication Agent.

            "Transaction Agreement" shall mean that certain Transaction
      Agreement, dated as of July 21, 2004, among CenterPoint Energy, Utility
      Holding, LLC, NN Houston Sub, Inc., the Parent, HPC Merger Sub, Inc. and
      GC Power Acquisition LLC and shall include all exhibits thereto, in each
      case, as previously delivered to the Lenders and as may be amended from
      time to time in accordance with the terms thereof and with the terms of
      this Agreement.

            11. The definition of the term "Permitted Liens" appearing in
Section 11 of the Credit Agreement is hereby amended by deleting the amount
"$250,000,000" appearing therein and inserting the amount "$425,000,000" in lieu
thereof.

            12. Section 12.01 of the Credit Agreement is hereby amended by
deleting the first sentence thereof and inserting the following text in lieu
thereof.

            "The Lenders hereby designate (i) DBAG as Administrative Agent and
      Collateral Agent to act as specified herein and in the other Credit
      Documents, (ii) Compass Bank as Documentation Agent, (ii) Citibank, N.A.,
      as Syndication Agent and (iii) Deutsche Bank Securities, Inc. and
      Citigroup Global Markets Inc. as Joint Lead Arrangers, in each case to act
      as specified herein and in the other Credit Documents."

            13. Section 12.10 of the Credit Agreement is hereby amended by
deleting said Section in its entirety and inserting the following new Section
12.10 in lieu thereof:

            12.10 Documentation Agent; Syndication Agent. Notwithstanding
      anything to the contrary contained herein, nothing in this Agreement shall
      impose on either the Documentation Agent, in such capacity or the
      Syndication Agent, in such capacity, any duties or obligations.

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            14. Section 13.02 of the Credit Agreement is hereby amended by
inserting the text "or its Affiliates" immediately after the text "any time held
or owing by such Lender" appearing in said Section.

            15. Section 13 of the Credit Agreement is hereby amended by adding
the following new Sections 13.17, 13.18, 13.19, 13.20 and 13.21 at the end of
said Section:

            "Section 13.17 Genco LP Division. Notwithstanding anything to the
      contrary contained in the Credit Agreement or any other Credit Document,
      the Continuing Lenders hereby agree that the Genco LP Division shall be
      permitted in accordance with the terms and conditions contained in the
      Transaction Agreement; provided that on or prior to the Genco LP Division
      Date, the following conditions shall have been satisfied, in each case, to
      the reasonable satisfaction of the Lenders:

            (a) (i) Texas Genco, LP shall survive the merger contemplated by the
      Genco LP Division, (ii) at no time shall the Credit Agreement or any other
      Credit Document cease to be in full force and effect as to Texas Genco,
      LP, (iii) the Credit Agreement and each other Credit Document shall remain
      in full force and effect as to the Borrower (after giving effect to such
      merger);

            (b) each surviving entity of the merger contemplated by the Genco LP
      Division (other than the Borrower) shall (i) pursuant to documentation in
      form and substance reasonably satisfactory to the Lenders, become a party
      to the Credit Agreement as a Guarantor thereunder and expressly agree to
      assume all obligations and liabilities of a Guarantor thereunder
      (including, without limitation, the Guaranteed Obligations) and under each
      of the other Credit Documents and (ii) take all actions and deliver all
      documents, agreements and opinions reasonably requested by the Lenders in
      connection with the assumption of such obligations and liabilities
      including, without limitation, those actions and documents described in
      Section 5 of the Credit Agreement, as if such Person were a Guarantor on
      the Effective Date;

            (c) the requirements and conditions contained in the Indenture in
      connection with the Genco LP Division and the merger contemplated thereby
      (including, without limitation, Articles Twelve and Thirteen thereof)
      shall have been satisfied in all material respects in accordance therewith
      and no such requirement or condition shall have been waived without the
      express written consent of the Lenders;

            (d) the Administrative Agent shall have received evidence of the
      completion of all other recordings and filings of, or with respect to, the
      Indenture as may be necessary or, in the reasonable opinion of the
      Administrative Agent, desirable to effectively to create a valid and
      enforceable first priority mortgage Lien (subject to Permitted Liens) and
      otherwise perfect the security interests purported to be created by the
      Indenture (after giving effect to the Genco LP Division); and

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            (e) the Administrative Agent and the Lenders shall have received a
      copy of the opinions of Baker Botts LLP and the Deputy General Counsel of
      CenterPoint Energy issued to the Trustee in connection with any actions
      contemplated by the Genco LP Division and a reliance letter addressed to
      the Administrative Agent and each of the Lenders in respect of each such
      opinion.

            Section 13.18 Public Company Merger. Notwithstanding anything to the
      contrary contained in the Credit Agreement or any other Credit Document,
      the Continuing Lenders hereby agree that the Public Company Merger and the
      payments made in connection with the repurchase (the "Repurchase") of any
      outstanding Common Stock of the Parent shall be permitted in accordance
      with the terms and conditions contained in the Transaction Agreement;
      provided that (i) the Parent shall survive the Public Company Merger (and
      there shall be no other surviving entity of such merger), (ii) at no time
      shall the obligations of the Parent under the Guaranty cease to be in full
      force and effect, (iii) the Guaranty and each other Credit Document shall
      remain in full force and effect as to the Parent (after giving effect to
      such merger), (iv) the Overnight Bridge Loans constitute the unsecured
      Indebtedness of the Parent guaranteed by the Parent's Domestic
      Subsidiaries (which guaranty shall not be secured), (v) all payments in
      respect of the Repurchase shall be made solely from the proceeds of the
      Overnight Bridge Loan, the proceeds of the Non-STP Acquisition and/or the
      cash on hand of the Parent and its Subsidiaries and (vi) the Overnight
      Bridge Loans shall only be repaid with a portion of the proceeds of the
      Non-STP Acquisition in accordance with Section 2.3(c) of the Transaction
      Agreement.

            Section 13.19 Non-STP Acquisition. Notwithstanding anything to the
      contrary contained in the Credit Agreement or any other Credit Document
      and subject to the definition of Maturity Date, the Lenders hereby agree
      that the Non-STP Acquisition shall be permitted in accordance with the
      terms and conditions contained in the Transaction Agreement, provided that
      concurrently with or prior to the Non-STP Acquisition Date, (i) all of the
      requirements of Section 4.02(d) have been satisfied to the reasonable
      satisfaction of the Lenders and (ii) the Total Commitment shall have been
      terminated, no Revolving Note, Loan, Unpaid Drawing or any Letter of
      Credit which has not been cash collateralized to the reasonable
      satisfaction of the Lenders in accordance with Section 4.02(d) is
      outstanding and all other Obligations (other than indemnities described in
      Section 13.13, and any other indemnities set forth in any other Credit
      Document which survive the termination of the Total Commitment, in each
      case which are not then due and payable) shall have been paid in full in
      cash.

            Section 13.20 Termination of the Guaranty, the Pledge Agreement and
      Certain Covenants and Events of Default Upon Cash Collateralization. The
      Lenders hereby agree that, notwithstanding anything to the contrary
      contained in this Agreement or any other Credit Document and without
      limiting any other provision of this Agreement, upon the satisfaction of
      the requirements contained in Section 4.02(d) to the reasonable
      satisfaction of the Lenders:

            (a) except for the covenants contained in Section 8.01(a), (b), (d)
      and (k), Section 8.02, 8.04 and 8.11 and Section 9.07, all other covenants
      contained in Section 8

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      and Section 9 and the covenants contained in Section 4.02(a) shall be of
      no further force and effect and no breach of such covenants shall
      constitute a Default or Event of Default under this Agreement or any other
      Credit Document;

            (b) the occurrence of any of the events described in Sections 10.04,
      10.06, 10.07, 10.08, 10.09 and 10.11 shall, in each case, no longer
      constitute Events of Default under the Credit Agreement or any other
      Credit Document;

            (c) the Guaranty shall terminate and be of no further force and
      effect; and

            (d) the Pledge Agreement shall terminate in accordance with its
      terms.

            13.21. Limitation on Interest. Notwithstanding anything to the
      contrary contained in this Agreement or any other Credit Document, all
      agreements between the Borrower, the Administrative Agent or any Lender,
      whether now existing or hereafter arising and whether written or oral, are
      hereby expressly limited so that in no contingency or event whatsoever,
      whether by reason of demand being made in respect of an amount due under
      any Credit Document or otherwise, shall the amount paid, or agreed to be
      paid, to the Administrative Agent or any Lender for the use, forbearance,
      or detention of the money to be loaned under this Agreement, any Revolving
      Notes or any other Credit Document or otherwise or for the payment or
      performance of any covenant or obligation contained herein or in any other
      Credit Document exceed the Highest Lawful Rate. If, as a result of any
      circumstances whatsoever, fulfillment of any provision hereof or of any of
      such documents, at the time performance of such provision shall be due,
      shall involve transcending the limit of validity prescribed by Applicable
      Law, then, ipso facto, the obligation to be fulfilled shall be reduced to
      the limit of such validity, and if, from any such circumstance, the
      Administrative Agent or any Lender shall ever receive interest under
      Applicable Law that would exceed the Highest Lawful Rate, such amount that
      would exceed the Highest Lawful Rate shall be applied to the reduction of
      the principal amount owing on account of such Lender's Loans or the
      amounts owing on other obligations of the Borrower to the Administrative
      Agent or any Lender under any Credit Document and not to the payment of
      interest, or if such excessive interest exceeds the unpaid principal
      balance of such Lender's Loans and the amounts owing on other obligations
      of the Borrower to the Administrative Agent or any Lender under any Credit
      Document, as the case may be, such excess shall be refunded to the
      Borrower to the extent required under Applicable Law. All sums paid or
      agreed to be paid to the Administrative Agent or any Lender for the use,
      forbearance or detention of the indebtedness of the Borrower to the
      Administrative Agent or any Lender shall, to the fullest extent permitted
      by Applicable Law, be amortized, prorated, allocated and spread throughout
      the full term of such indebtedness until payment in full of the principal
      (including the period of any renewal or extension thereof) so that the
      interest on account of such indebtedness shall not exceed the Highest
      Lawful Rate. Notwithstanding anything to the contrary contained in any
      Credit Document, it is understood and agreed that if at any time the rate
      of interest that accrues on the outstanding principal balance of any Loan
      shall exceed the Highest Lawful Rate, the rate of interest that accrues on
      the outstanding principal balance of any Loan shall be limited to the
      Highest Lawful Rate, but any subsequent reductions in the rate of interest
      that accrues on the outstanding principal balance of any Loan shall not
      reduce the rate of interest that accrues on the outstanding principal

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      balance of any Loan below the Highest Lawful Rate until the total amount
      of interest accrued on the outstanding principal balance of any Loan
      equals the amount of interest that would have accrued if such interest
      rate had at all times been in effect."

            16. Schedule I to the Credit Agreement is hereby amended by deleting
Schedule I to the Credit Agreement in its entirety and replacing it with
Schedule I attached hereto.

            17. Schedule II to the Credit Agreement is hereby amended by
deleting Schedule II to the Credit Agreement in its entirety and replacing it
with Schedule II attached hereto.

            18. The Credit Agreement is hereby further amended by inserting new
Exhibit J in the form of Exhibit J attached hereto.

            19. The cover page to the Credit Agreement is hereby amended by (i)
deleting the text ", AS LEAD ARRANGER AND BOOK RUNNER" immediately following the
text "DEUTSCHE BANK SECURITIES INC.", and inserting the text "and CITIGROUP
GLOBAL MARKETS INC., AS JOINT LEAD ARRANGERS AND BOOK RUNNERS" in lieu thereof,
(ii) inserting the text "CITIBANK, N.A., as Syndication Agent" immediately below
the text "as Administrative Agent and Collateral Agent" and (iii) deleting the
amount "$75,000,000" appearing therein and replacing it with the amount
"$250,000,000".

II. Amendments to the Pledge Agreement as at the First Amendment Effective Date

            1. Clause (b) of Section 1 to the Pledge Agreement is hereby amended
by deleting the definition of "Pledged Bonds" in its entirety and inserting the
following definition in lieu thereof:

            ""Pledged Bonds": shall mean the First Mortgage Indenture Bonds
      Series C, initially authenticated and delivered in the aggregate principal
      amount of two hundred fifty million dollars ($250,000,000), established in
      the Third Supplemental Indenture, dated as of September 3, 2004, between
      the Company and the Trustee."

            2. Section 21 of the Pledge Agreement is hereby amended by inserting
the following new text immediately after the text "Letter of Credit" appearing
in said Section:

            "which has not been cash collateralized to the reasonable
      satisfaction of the Lenders in accordance with Section 4.02(d) of the
      Credit Agreement"

III. Agreements

            1. The parties hereto agree that upon the effectiveness of this
First Amendment, each Person set forth on Schedule III hereto (each a
"Non-Continuing Lender" and collectively, the "Non-Continuing Lenders") shall no
longer constitute a "Lender" under the

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Credit Agreement, except with respect to indemnification provisions applicable
to such Non-Continuing Lender under any Credit Document.

            2. Concurrently with the effectiveness of this First Amendment, the
Borrower agrees that in connection with the amendment made in Section 15 of
Article I hereof and the agreements made in Section 1 of this Article III and
notwithstanding anything to the contrary contained in the Credit Agreement, the
Borrower shall take all actions as may be reasonably necessary to ensure that
all Lenders (after giving effect to this First Amendment) participate in each
Borrowing of Loans outstanding on the First Amendment Effective Date on a pro
rata basis including, without limitation, by making such voluntary repayments of
outstanding Loans and the incurring such new Loans as necessary to ensure the
foregoing (even though as a result thereof Lenders may incur costs of the type
described in Section 1.11 which costs shall be for the account of, and paid by,
the Lender on the First Amendment Effective Date).

            3. Each of the Parent, Genco GP, Genco LP and Genco Services hereby
represents and warrants that, subject to Section 13.20 of the Credit Agreement
(after giving effect to this First Amendment), (i) it has full power and
authority, and has taken all action necessary, to execute and deliver this First
Amendment and to continue the guarantees made by it under the Guaranty (after
giving effect to this First Amendment), (ii) it is and shall continue to be on
and after the First Amendment Effective Date, bound by the provisions of the
Guaranty and each other Credit Document to which it is a party (except to the
extent that the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting creditors' rights
generally and by equity principles), (iii) on and after the First Amendment
Effective Date, it continues to be a Guarantor for all purposes under the
Guaranty and each other Credit Document, (iv) on and after the First Amendment
Effective Date, it will continue to obtain benefits from the incurrence of Loans
to, and the issuance of Letters of Credit for the account of, the Borrower, (v)
on and after the First Amendment Effective Date and after giving effect to
clause (vi) below, the guarantees made by it under the Guaranty remain in full
force and effect and (vi) on and after the First Amendment Effective Date all
references in the Guaranty and each other Credit Document to the "Credit
Agreement" shall be deemed and are references to the Credit Agreement as amended
hereby.

            4. The Borrower hereby represents, warrants and agrees that (i) it
has full power and authority, and has taken all action necessary, to execute and
deliver this First Amendment and to continue the pledge and grant of security
interests made by it under the Pledge Agreement and each other Security Document
(after giving effect to this First Amendment), (ii) subject to Section 13.20 of
the Credit Agreement (after giving effect to this First Amendment), it is and
shall continue to be on and after the First Amendment Effective Date, bound by
the provisions of the Pledge Agreement and each other Credit Document to which
it is a party, (iii) on and after the First Amendment Effective Date and after
giving effect to clause (iv) below, the Pledge Agreement remains in full force
and effect and (iv) on and after the First Amendment Effective Date all
references in each Security Document to the "Credit Agreement" shall be deemed
and are references to the Credit Agreement as amended hereby.

                                      -11-
<PAGE>

IV. Miscellaneous

            1. In order to induce the undersigned Lenders to enter into this
First Amendment, the Borrower hereby represents and warrants that (x) no Default
or Event of Default exists on the First Amendment Effective Date both before and
after giving effect to this First Amendment, and (y) all of the representations
and warranties contained in the Credit Agreement are true and correct in all
material respects on the First Amendment Effective Date, both before and after
giving effect to this First Amendment, with the same effect as though such
representations and warranties had been made on and as of the First Amendment
Effective Date (unless such representations expressly relate to an earlier date,
in which case they shall be true and correct in all material respects on and as
of such earlier date).

            2. This First Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.

            3. This First Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts when executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument. A complete set
of counterparts shall be lodged with the Borrower and the Administrative Agent.

            4. THIS FIRST AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.

            5. This First Amendment shall become effective on the date (the
"First Amendment Effective Date") when:

            (A) the Borrower and each Continuing Lender shall have signed a
counterpart hereof (whether the same or different counterparts) and shall have
delivered (including by way of telecopier) the same to the Administrative Agent;

            (B) there shall have been delivered to the Administrative Agent for
the account of each Lender that has requested same, the appropriate Revolving
Note executed by the Borrower, in each case in the amount, maturity and as
otherwise provided in the Credit Agreement (after giving effect to this First
Amendment);

            (C) the Commitments of each Non-Continuing Lender shall have been
terminated and the Obligations due and payable to the Non-Continuing Lenders on
the First Amendment Effective Date shall have been paid in full;

            (D) on the First Amendment Effective Date, all reasonable costs,
fees and expenses (including, without limitation, the reasonable legal fees and
expenses of White & Case LLP) payable to the Lead Arrangers, the Agents and the
Lenders shall have been paid in full;

                                      -12-
<PAGE>

            (E) the Administrative Agent shall have received executed copies of,
(i) the Third Supplemental Indenture, dated September 3, 2004, between the
Borrower and the Trustee in the form of Exhibit A hereto (the "Third
Supplemental Indenture"), (ii) the Officer's Certificate of Genco GP, dated
September 3, 2004, in form of Exhibit B hereto, (iii) the Company Order, dated
September 3, 2004, from the Borrower to the Trustee, in the form of Exhibit C
hereto, (iv) the opinion of Baker Botts LLP issued to the Trustee in connection
with any of the transactions contemplated by this First Amendment and a reliance
letter addressed to the Administrative Agent and each of the Lenders in respect
of such opinion and (v) any all other documents required under the Indenture;

            (F) the Borrower shall have delivered to the Collateral Agent, the
First Mortgage Bond Series C, in the aggregate principal amount of two hundred
fifty million dollars;

            (G) the Administrative Agent shall have received legal opinions
addressed to each Agent and the Lenders from (i) New York counsel opinion of
Baker Botts LLP, (ii) the Deputy General Counsel of CenterPoint Energy and (iii)
local counsel opinion of Baker Botts LLP, and, in each case covering matters,
reasonably acceptable to the Administrative Agent including, without limitation,
(x) a no-conflicts opinion as to (1) the material Indebtedness for Borrowed
Money of any Credit Party which will remain outstanding of the First Amendment
Effective Date (if any) and (2) any material contracts of Parent or its
subsidiaries, (y) title, perfection and priority of the security interests
securing the Bond and (z) and such other matters incidental to the transactions
contemplated hereby as the Administrative Agent may reasonably request;

            (H) the Administrative Agent shall have received a certificate,
dated the First Amendment Effective Date, and signed on behalf of the Borrower
by a Responsible Officer, stating that all conditions in this Section 5 (other
than clause (H)) of this First Amendment have been satisfied on such date;

            (I) the Administrative Agent shall have received evidence of the
completion of all other recordings and filings of, or with respect to, the
Indenture as may be necessary or, in the reasonable opinion of the
Administrative Agent, desirable to effectively to create a valid and enforceable
first priority mortgage Lien (subject to Permitted Liens) and otherwise perfect
the security interests purported to be created by the Indenture;

            (J) since December 31, 2003, nothing shall have occurred (and
neither the Administrative Agent nor any Lender shall have become aware of any
facts or conditions not previously known) which the Administrative Agent or the
Required Lenders shall determine could reasonably be expected to have a Material
Adverse Effect;

            (K) on or prior to the First Amendment Effective Date, all necessary
governmental (domestic and foreign) and third party approvals and/or consents in
connection with the transactions contemplated by the Credit Documents (after
giving effect to this First Amendment) shall have been obtained and remain in
effect, and all applicable waiting periods shall have expired without any action
being taken by any

                                      -13-
<PAGE>

competent authority which in the reasonable judgment of the Administrative Agent
or the Required Lenders restrains, prevents or imposes materially adverse
conditions upon the consummation of the transactions contemplated by the Credit
Documents. Additionally, there shall not exist any judgment, order, injunction
or other restraint issued or filed or a hearing seeking injunctive relief or
other restraint pending or notified prohibiting or imposing materially adverse
conditions upon the making of any Loan, issuance of any Letter of Credit or the
consummation of the transactions contemplated by the Credit Documents;

            (L) on the First Amendment Effective Date, no litigation by any
entity (private or governmental) shall be pending or threatened with respect to
this Agreement, any other Credit Document or any other documentation executed in
connection herewith and therewith or the transactions contemplated hereby and
thereby, or which the Administrative Agent or the Required Lenders shall
determine has had, or could reasonably be expected to have, a Material Adverse
Effect; and

            (M) the Administrative Agent shall have received evidence that all
other actions necessary or, in the reasonable opinion of the Administrative
Agent, desirable to perfect and protect the security interests purported to be
created by the Indenture (after giving effect to this First Amendment) have been
taken.

            6. From and after the First Amendment Effective Date all references
in the Credit Agreement and the other Credit Documents to the Credit Agreement
shall be deemed to be references to the Credit Agreement as modified hereby.
Except as modified hereunder, the terms, provisions and conditions of the Credit
Agreement and the other Credit Documents shall continue in full force and
effect.

                                    * * * * *

                                      -14-
<PAGE>

            IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this First Amendment to be duly executed and delivered as of the
date first above written.

                                        TEXAS GENCO, LP

                                        By:  TEXAS GENCO GP, LLC,
                                             its General Partner

                                        By: /s/ Marc Kilbride
                                            -------------------------------
                                            Name:  Marc Kilbride
                                            Title: V. P. and Treasurer

                                        TEXAS GENCO HOLDINGS, INC.

                                        By: /s/ Marc Kilbride
                                            -------------------------------
                                            Name:  Marc Kilbride
                                            Title: V. P. and Treasurer

                                        TEXAS GENCO GP, LLC

                                        By: /s/ Marc Kilbride
                                            -------------------------------
                                            Name:  Marc Kilbride
                                            Title: V. P. and Treasurer

                                        TEXAS GENCO LP, LLC

                                        By: /s/ Patricia G. Genzel
                                            -------------------------------
                                            Name:  Patricia F. Genzel
                                            Title: Manager and President

<PAGE>

                                        TEXAS GENCO SERVICES , LP

                                        By:  TEXAS GENCO GP, LLC,
                                             its General Partner

                                        By: /s/ Marc Kilbride
                                            -------------------------------
                                            Name:  Marc Kilbride
                                            Title: V. P. and Treasurer

<PAGE>

                                      DEUTSCHE BANK AG NEW YORK
                                      BRANCH, individually and as
                                      Administrative Agent and Collateral Agent

                                      By: /s/ RICHARD HENSHALL
                                         -------------------------------
                                         Name: Richard Henshall
                                         Title: Director

                                      By: /s/ OLIVER RIEDINGER
                                         -------------------------------
                                         Name: Oliver Riedinger
                                         Title: Vice President

<PAGE>

                                      CITIBANK, N.A.

                                      By: /s/ SANDIP SEN
                                         -------------------------------
                                         Name: Sandip Sen
                                         Title: Managing Director

<PAGE>

                                      COMPASS BANK

                                      By: /s/ COLLIS SANDERS
                                         -------------------------------
                                         Name: Collis Sanders
                                         Title: Executive Vice President

<PAGE>

                                                                      SCHEDULE I
                                   COMMITMENTS

<TABLE>
<CAPTION>
                Lender                                         Commitment
---------------------------------                             ------------
<S>                                                           <C>
Deutsche Bank AG New York Branch                              $110,000,000
Citibank N.A.                                                 $110,000,000
Compass Bank                                                  $ 30,000,000

            Total:                                            $250,000,000
                                                              ============
</TABLE>

<PAGE>
                                                                     SCHEDULE II

                                LENDER ADDRESSES

DEUTSCHE BANK AG NEW YORK BRANCH
60 Wall Street
New York, NY 10005-2858
Telephone: (212) 250-3968
Facsimile: (212) 797-4346
Attention: Richard Henshall

CITIBANK, N.A.
2 Penns Way, Suite 110
New Castle, DE 19720
Telephone: (302) 894-6084
Facsimile: (212) 994-0847
Attention: Karen Riley

COMPASS BANK

24 Greenway Plaza, Suite 1400
Houston, TX 77046
Telephone: (713) 968-8234
Facsimile: (713) 968-8211
Attention: Collis Sanders

<PAGE>

                                                                    SCHEDULE III

                             NON-CONTINUING LENDERS

Bank of America, N.A.

Credit Suisse First Boston

JPMorgan Chase Bank

Wachovia Bank, National Association<PAGE>
                                                                    Exhibit 10.1

*** indicates material has been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission. A complete copy of
this agreement has been filed with the Securities and Exchange Commission.

                    MASTER POWER PURCHASE AND SALES AGREEMENT

<PAGE>

                    MASTER POWER PURCHASE AND SALES AGREEMENT

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

<S>                                                                                                              <C>
COVER SHEET.......................................................................................................1

GENERAL TERMS AND CONDITIONS.....................................................................................25

ARTICLE ONE: GENERAL DEFINITIONS.................................................................................25

ARTICLE TWO: TRANSACTION TERMS AND CONDITIONS....................................................................30
       2.1        Transactions...................................................................................30
       2.2        Governing Terms................................................................................30
       2.3        Confirmation...................................................................................30
       2.4        Additional Confirmation Terms..................................................................31
       2.5        Recording......................................................................................31

ARTICLE THREE: OBLIGATIONS AND DELIVERIES........................................................................31
       3.1        Seller's and Buyer's Obligations...............................................................31
       3.2        Transmission and Scheduling....................................................................32
       3.3        Force Majeure..................................................................................32

ARTICLE FOUR: REMEDIES FOR FAILURE TO DELIVER/RECEIVE............................................................32
       4.1        Seller Failure.................................................................................32
       4.2        Buyer Failure..................................................................................32

ARTICLE FIVE: EVENTS OF DEFAULT; REMEDIES........................................................................33
       5.1        Events of Default..............................................................................33
       5.2        Declaration of an Early Termination Date and Calculation of Settlement
                  Amounts........................................................................................34
       5.3        Net Out of Settlement Amounts..................................................................34
       5.4        Notice of Payment of Termination Payment.......................................................35
       5.5        Disputes With Respect to Termination Payment...................................................35
       5.6        Closeout Setoffs...............................................................................35
       5.7        Suspension of Performance......................................................................36

ARTICLE SIX: PAYMENT AND NETTING.................................................................................36
       6.1        Billing Period.................................................................................36
       6.2        Timeliness of Payment..........................................................................36
       6.3        Disputes and Adjustments of Invoices...........................................................36
       6.4        Netting of Payments............................................................................37
       6.5        Payment Obligation Absent Netting..............................................................37
       6.6        Security.......................................................................................37
       6.7        Paying for Options.............................................................................37
       6.8        Transaction Netting............................................................................37
</TABLE>

                                       i
<PAGE>

<TABLE>
<CAPTION>

<S>                                                                                                             <C>
ARTICLE SEVEN: LIMITATIONS.......................................................................................38
       7.1        Limitation of Remedies, Liability and Damage...................................................38

ARTICLE EIGHT: CREDIT AND COLLATERAL REQUIREMENTS................................................................39
       8.1        Party A Credit Protection......................................................................39
       8.2        Party B Credit Protection......................................................................40
       8.3        Grant of Security Interest/Remedies............................................................42

ARTICLE NINE: GOVERNMENTAL CHARGES...............................................................................43
       9.1        Cooperation....................................................................................43
       9.2        Governmental Charge............................................................................43

ARTICLE TEN: MISCELLANEOUS.......................................................................................43
       10.1       Term of Master Agreement.......................................................................43
       10.2       Representations and Warranties.................................................................43
       10.3       Title and Risk of Loss.........................................................................45
       10.4       Indemnity......................................................................................45
       10.5       Assignment.....................................................................................45
       10.6       Governing Law..................................................................................46
       10.7       Notices........................................................................................46
       10.8       General........................................................................................46
       10.9       Audit..........................................................................................47
       10.10      Forward Contract...............................................................................47
       10.11      Confidentiality................................................................................47

CONFIRMATION LETTER..............................................................................................48
</TABLE>

                                       ii
<PAGE>

                                      ***

                    MASTER POWER PURCHASE AND SALE AGREEMENT

                                 COVER SHEET ***

This Master Power Purchase and Sale Agreement ("Master Agreement") is made as of
the following date: JULY 21, 2004 ("Effective Date"). This Master Agreement,
together with the exhibits, schedules and any written supplements hereto, the
Party A Tariff, if any, the Party B Tariff, if any, any designated collateral,
credit support or margin agreement or similar arrangement between the Parties
and all Transactions (including any confirmations accepted in accordance with
Section 2.3 hereto) shall be referred to as this "Agreement." The Parties to
this Agreement are the following:

<TABLE>

<S>                                                            <C>
Party A:  J. ARON & COMPANY                                     Party B:  TEXAS GENCO, LP
All Notices:  J. ARON & COMPANY                                 All Notices:  TEXAS GENCO, LP
Street:  85 Broad Street                                        Street:  1111 Louisiana Street, 10th Floor
                                                                             P.O. Box 2846, 20th Floor
City/State:  New York, N.Y.  Zip:  10004                        City/State:  Houston, TX  Zip:  77002 (77252-2846)

Attn:  Commodity Operations                                     Attn:  Contract Administration--20th Floor
Phone:  (212) 902-8986                                          Phone:  (713) 207-3374
Facsimile:  (212) 344-3457                                      Facsimile:  (713) 207-9233
Duns:  00-698-0312                                              Duns:  12-080-7255
Federal Tax ID Number:  133092284                               Federal Tax ID Number:  30-0083668
INVOICES:  J. ARON & COMPANY                                    INVOICES:
    Attn:  Contract Execution Dept.                                 Attn:  Energy Accounting--10th Floor
    Phone:  (212) 357-5110                                          Phone:  (713) 207-5066
    Facsimile:  (212) 428-1991                                      Facsimile:  (713) 207-9016
SCHEDULING:  J. ARON & COMPANY                                  SCHEDULING:
    Attn:  Power Scheduling                                         Attn:  Energy Trading--10th Floor
    Phone:  (212) 902-1454                                          Phone:  (713) 207-2543 or (713) 207-1538
    Facsimile:  (917) 454-2595                                      Facsimile:  (713) 207-2108
PAYMENTS:  J. ARON & COMPANY                                    PAYMENTS:
    Attn:  Contract Execution Dept.                                 Attn:  Energy Accounting
    Phone:  (212) 357-5110                                          Phone:  (713) 207-5066
    Facsimile:  (212) 428-9571                                      Facsimile:  (713) 207-9016
WIRE TRANSFER:  J. ARON & COMPANY                               WIRE TRANSFER:
    BNK:  CITIBANK, NA                                              BNK:  Chase Bank of Texas, Houston, TX
               399 Park Avenue                                      ABA:  113 000 609
               New York, N.Y.                                       ACCT:  0010-341-2327
               A/C J. ARON & CO.
                      NEW YORK
              ABA:  021000089
              ACCT:  09292521
</TABLE>

                                      -1-

<PAGE>

                                      ***

<TABLE>

<S>                                                          <C>

CREDIT AND COLLECTIONS:  J. ARON & COMPANY                      CREDIT AND COLLECTIONS:
    Attn:  Credit Risk Management - Power                           Attn:  Credit Department
    Phone:  (212) 855-0990                                          Phone:  (713) 207-3980
    Facsimile:  (212) 493-0821                                      Facsimile:  (713) 207-9233
With additional Notices of an Event of Default or               With additional Notices of an Event of Default or
Potential Event of Default to:                                  Potential Event of Default to:
   Attn:  Credit Department                                         Attn: President
   Phone:  (212) 902-1800                                                 Texas Genco GP, LLC
   Facsimile:                                                       Phone:  (713) 207-6611
                                                                    Facsimile:  (713) 207-9632
   and to:
                                                                and to:
         J. Aron & Company
         One New York Plaza                                         Rufus S. Scott
         New York, NY 10004                                         c/o CenterPoint Energy, Inc.
         Attn:  Steven M. Bunkin, Esq.                              Vice President and Deputy General Counsel
         Phone:  (212) 902-0952                                     P.O. Box 61867
         Facsimile: (212) 428-3675                                  Houston, TX 77208-1867
                                                                    Phone:  (713) 207-7451
                                                                    Facsimile:  (713) 207-0490

                                                                and to:

                                                                    GC Power Acquisition LLC
                                                                    c/o W. Thaddeus Miller, Esq.
                                                                    61 Edge of the Woods Road
                                                                    Southampton, NY 11968
                                                                    Phone:  (631) 287-2603
                                                                    Facsimile:  (877) 892-1953

                                                                and to:

                                                                    Michael S. Shenberg, Esq.
                                                                    Stroock & Stroock & Lavan LLP
                                                                    180 Maiden Lane
                                                                    New York, NY 10038
                                                                    Phone:  (212) 806-5831
                                                                    Facsimile:  (212) 806-6006
</TABLE>

The Parties hereby agree that the General Terms and Conditions are incorporated
herein, and to the following provisions as provided for in the General Terms and
Conditions:

Party A Tariff: None

Party B Tariff: None                     Dated:                   Docket Number:

--------------------------------------------------------------------------------
ARTICLE TWO

Transaction Terms and Conditions         [ ]  Optional provision in Section 2.4.
                                              If not checked, inapplicable.

--------------------------------------------------------------------------------
ARTICLE FOUR

Remedies for Failure                     [ ]  Accelerated Payment of Damages.
to Deliver or Receive                         If not checked, inapplicable.

                                      -2-
<PAGE>
                                      ***

<TABLE>

------------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>
ARTICLE FIVE                               [ ] Cross Default for Party A:
Events of Default; Remedies                [ ] Party A:  Applicable            Cross Default Amount:
                                           [ ] Other Entity:                   Cross Default Amount:

                                           [ ] Cross Default for Party B:
                                           [ ] Party B:                        Cross Default Amount:
                                           [ ] Other Entity:                   Cross Default Amount:

                                           5.6  Closeout Setoff
                                                [ ] Option A (Applicable if no other selection is made.)
                                                [ ] Option B -- Affiliates shall have the meaning set forth in the
                                                    Agreement unless otherwise specified as follows:
                                                [ ] Option C (No Setoff)

------------------------------------------------------------------------------------------------------------------------------------
ARTICLE EIGHT                              8.1  Party A Credit Protection:
Credit and Collateral Requirements              (a)  Financial Information:
                                                       [ ]  Option A
                                                       [ ]  Option B   Specify:

                                                       [ ]  Option C   Specify:

                                                (b)  Credit Assurances:
                                                       [ ]  Not Applicable
                                                       [ ]  Applicable
                                                (c)  Collateral Threshold:
                                                       [ ]  Not Applicable
                                                       [ ]  Applicable

                                           Party B Collateral Threshold:

                                                (d) Downgrade Event:

                                                       [ ]   Not Applicable
                                                       [ ]   Applicable

                                                (e)  Guarantor for Party B:

                                                     Guarantee Amount:    N/A

</TABLE>

                                      -3-
<PAGE>

                                      ***

                                           8.2 Party B Credit Protection
                                                (a)  Financial Information:
                                                       [ ]  Option A
                                                       [ ]  Option B   Specify:
                                                       |_|  Option C   Specify:
                                                (b)  Credit Assurances:
                                                       [ ]  Not Applicable
                                                       [ ]  Applicable
                                                (c)  Collateral Threshold:
                                                       [ ]  Not Applicable
                                                       [ ]  Applicable

                                                (d)  Downgrade Event:
                                                       [ ]   Not Applicable
                                                       [ ]   Applicable
                                                (e)  Guarantor for Party A:
                                                    Guarantee Amount:

<TABLE>

------------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>
ARTICLE TEN
Confidentiality                            [ ]   Confidentiality Applicable      If not checked, inapplicable.
Schedule M                                 [_]   Party A is a Governmental Entity or Public Power System
                                           [_]   Party B is a Governmental Entity or Public Power System
                                           [_]   Add Section 3.6.  If not checked, inapplicable
                                           [_]   Add Section 8.6.  If not checked, inapplicable

Other Changes:  Applicable                 Specify, if any:
</TABLE>

PART 1.  GENERAL TERMS AND CONDITIONS

(1)      ARTICLE ONE shall be amended as follows:

           (i)    The following definitions shall be revised or inserted in
                  alphabetical order:

                  "Acquiring Person" has the meaning specified in Section 10.5.

                  "Affiliated Transferee" means a wholly-owned direct or
           indirect subsidiary of Party B that receives by way of sale,
           transfer, lease conveyance or other disposition (A) all or
           substantially all of the assets of Party B, (B) a substantial portion
           of the coal or natural gas power generating assets of Party B, or (C)
           a Delivery Point Facility.

                  "Change in Control" means, with respect to Party B, the
           occurrence of any of the following: (i) the adoption of a plan
           relating to the liquidation or dissolution of Party B or the general
           partner of Party B; (ii) Texas Genco Holdings, Inc. ceasing to own,
           directly or

                                      -4-
<PAGE>

           indirectly, all of the general partner interests and limited partner
           interests of Party B, (iii) any person other than a direct or
           indirect wholly-owned subsidiary of Texas Genco Holdings, Inc.
           becoming a general partner of Party B, (iv) CenterPoint Energy, Inc.
           ceasing to own, directly or indirectly, at least 67% of the voting
           equity of Texas Genco Holdings, Inc., (v) the sale, transfer, lease,
           conveyance or other disposition to any person (other than an
           Affiliated Transferee) of (A) all or substantially all of the assets
           of Party B, (B) a substantial portion of Party B's coal and natural
           gas power generating assets, taken as a whole, or (C) a Delivery
           Point Facility; or (vi) Party B ceasing to own, directly or
           indirectly, all of the voting equity of any Affiliated Transferee,
           provided that, for avoidance of doubt, the Genco LP Division will not
           be deemed a Change in Control, but the Non-STP Acquisition (as
           defined in the Transaction Agreement) will be deemed a Change in
           Control.

                  "Delivery Point Facility" means any facility at which a
           Delivery Point under any Transaction is located.

                  "ERCOT" means the Electric Reliability Council of Texas, Inc.

                  "ERCOT Protocols" means the document adopted, published and
           amended from time to time by ERCOT, and approved by the PUC, to
           govern electric transmission in ERCOT, including any attachments,
           exhibits or publications referenced in the document, that contains
           the scheduling, operating, planning, reliability, and settlement
           policies, rules, guidelines, procedures, standards, and criteria of
           ERCOT.

                  "Fixed LOC" has the meaning ascribed thereto in Section
           8.1(c)(III).

                  "Genco LP Division" has the meaning ascribed thereto in the
           Transaction Agreement.

                  "Hedge Agreement" means any agreement (including each
           confirmation entered into under a master agreement) providing for
           options, swaps, floors, caps, collars, forward sales or forward
           purchases involving Energy, generation capacity or natural gas,
           prices for such commodities or price indices for such commodities or
           other derivative agreement or similar agreement in any case relating
           the purchase or sale of Energy, generation capacity or natural gas.

                  "Increase Date" has the meaning specified in the ***.

                  ***

                  ***

                  ***

                  "Party" means each of Party A and Party B and "Parties" means
           Party A and Party B collectively.

                  "Person" or "person" means any individual, partnership, firm,
           corporation, association, joint venture, limited liability company,
           joint-stock company, trust or other entity or organization.

                  ***

                  ***

                  ***
                                      -5-

<PAGE>

                  "Release Date" has the meaning ascribed thereto in the ***

                  "PUCT" means the Public Utility Commission of Texas.

                  ***

                  "Specified Transaction" means any transaction (other than a
           Transaction) now existing or hereafter entered into between one Party
           to this Agreement and the other Party to this Agreement that is a
           spot, forward, option or swap transaction in or with respect to one
           or more currencies, commodities, securities, rates, indices or other
           measures of financial or economic risk or any other similar
           transaction (or any combination thereof).

                  "Transaction Agreement" means that certain Transaction
           Agreement of even date herewith by and among CenterPoint Energy,
           Inc., Utility Holding, LLC, Step One Merger Sub, Inc., Texas Genco
           Holdings, Inc., Houston Power Company LLC and HPC Merger Sub, Inc.

                  "Transition Date" means the date that is two hundred and
           seventy (270) days following the Effective Date, or, if earlier, the
           Increase Date.

                  "Trigger Date" means the first date following the Release Date
           that there is no outstanding Second Lien Indebtedness other than of
           Party A hereunder.

           (ii)   Section 1.11 is amended by adding the following to the
                  end thereof: "and in entering into new arrangements which
                  replace a Terminated Transaction."

           (iii)  Section 1.50 is amended to delete the reference to section
                  "2.4" and replacing it with "2.5".

           (iv)   Section 1.51 is amended by (a) adding the phrase "for
                  delivery" immediately before the phrase "at the Delivery
                  Point" in the second line thereof and (b) deleting the phrase
                  "at Buyer's option" from the fifth line thereof and replacing
                  it with the following: "absent a purchase".

           (v)    Section 1.53 is amended by (a) deleting the phrase "at the
                  Delivery Point" from the second line thereof and (b) deleting
                  the phrase "at Seller's option" from the fifth line thereof
                  and replacing it with the following: "absent a sale."

(2)        ARTICLE TWO shall be amended as follows:

           (i)    In Section 2.3, insert "or any other means of electronic
                  messaging for which a written record can be retrieved" after
                  "facsimile" in the first sentence.

(3)        ARTICLE FIVE shall be amended as follows:

           (i)    In Section 5.1(e), add ", the *** or the ***" before "hereof".

           (ii)   Section 5.1(g) is amended as follows:  in clause (i), delete
                  ", or becoming capable at such time of being declared,".

           (iii)  Section 5.1 shall be amended to add a new Section 5.1(i) and
                  Section 5.1(j) as follows:

                        "(i)  with respect to Party B only, (A) Party's B
                              failure to perform any covenant under Paragraph 5
                              or Paragraph 8(b) of the *** or Paragraph 5 of the
                              *** and Party B has not cured such failure within
                              thirty (30) calendar days after receiving notice
                              from Party A and such failure

                                      -6-

<PAGE>

                              either (x) has a Material Adverse Effect (as
                              defined in the *** or (y) violates a ***, (B)
                              prior to the Release Date, the acceleration of any
                              *** under the *** (as defined in the ***) or any
                              other of Party B's *** or more (excluding *** held
                              by Party A), or (C) after the Release Date, the
                              acceleration of any of the *** of Party B held by
                              any Other *** Holder (as defined in the ***) or,
                              after the Trigger Date, of any other *** of Party
                              B of *** or more. For purposes hereof,
                              "acceleration" means the occurrence and
                              continuation of a default, event of default or
                              other similar condition or event relating to such
                              ***, as applicable, which results in such ***
                              becoming immediately due and payable, or the
                              failure to pay any such *** at maturity.

                        (j)   either Party (i) defaults under a Specified
                              Transaction and, after giving effect to any
                              applicable notice requirement or grace period,
                              such default results in a liquidation of, an
                              acceleration of obligations under, or an early
                              termination of, that Specified Transaction, (ii)
                              defaults, after giving effect to any applicable
                              notice requirement or grace period, in making any
                              payment or delivery due on the last payment date
                              or delivery date of a Specified Transaction; or
                              (iii) disaffirms, disclaims or repudiates any
                              Specified Transaction."

           (iv)   Section 5.2 is amended to delete the following phrase from the
                  last two lines thereof: "under applicable law on the Early
                  Termination Date, as soon thereafter as is reasonably
                  practicable)" and to add the following to the end of Section
                  5.2:

                        "under applicable law on the Early Termination Date,
                        then each such Transaction (individually, an "Excluded
                        Transaction" and collectively, the "Excluded
                        Transactions") shall be terminated as soon thereafter as
                        reasonably practicable, and upon termination shall be
                        deemed to be a Terminated Transaction and the
                        Termination Payment payable in connection with all such
                        Transactions shall be calculated in accordance with
                        Section 5.3 below). The Non-Defaulting Party (or its
                        agent) may determine its Gains and Losses by reference
                        to information either available to it internally or
                        supplied by one or more third parties including, without
                        limitation, quotations (either firm or indicative) of
                        relevant rates, prices, yields, yield curves,
                        volatilities, spreads or other relevant market data in
                        the relevant markets. Third parties supplying such
                        information may include, without limitation, dealers in
                        the relevant markets, end-users of the relevant product,
                        information vendors and other sources of market
                        information."

           (v)    In Section 5.3(a), insert the word "liquid" immediately after
                  the phrase "any cash or other form of" in the third line
                  thereof.

           (vi)   In Section 5.3(b), insert "plus, at the option of the
                  Non-Defaulting Party, any cash or other form of liquid
                  security then available to the Defaulting Party or its agent
                  pursuant to Article Eight," after the phrase "Non-Defaulting
                  Party," in the sixth line thereof.

           (vii)  The following is added to the end of Section 5.4:

                        Notwithstanding any provision to the contrary contained
                        in this Agreement, the Non-Defaulting Party shall not be
                        required to pay to the Defaulting Party any amount under
                        Article 5 until the Non-Defaulting Party receives
                        confirmation satisfactory to it in its reasonable
                        discretion (which may include an opinion of its counsel)
                        that all other obligations of any kind whatsoever of the
                        Defaulting Party to make any payments to the
                        Non-Defaulting Party under this Agreement or otherwise
                        have been fully and finally performed.

                                      -7-

<PAGE>

           (viii) Option A of Section 5.6 shall be deleted in its entirety and
                  replaced with the following provision:

                           "Option A: After calculation of a Termination Payment
                           in accordance with Section 5.3, if the Defaulting
                           Party would be owed the Termination Payment, the
                           Non-Defaulting Party shall be entitled, at its option
                           and in its discretion, to (i) set off against such
                           Termination Payment any amounts payable (whether or
                           not then due) by the Defaulting Party to the
                           Non-Defaulting Party under any other agreements,
                           instruments or undertakings between the Defaulting
                           Party and the Non-Defaulting Party and/or (ii) to the
                           extent the Transactions are not yet liquidated in
                           accordance with Section 5.2, withhold payment of the
                           Termination Payment to the Defaulting Party. The
                           remedy provided for in this Section shall be without
                           prejudice and in addition to any right of setoff,
                           combination of accounts, lien or other right to which
                           any Party is at any time otherwise entitled (whether
                           by operation of law, contract or otherwise).

                           If any obligation is unascertained, the
                           Non-Defaulting Party may in good faith estimate that
                           obligation and set-off in respect of the estimate,
                           subject to the Non-Defaulting Party accounting to the
                           other when the obligation is ascertained."

           (ix)   Section 5.7 is amended as follows:

                  (a)      after "(i)" insert the following words: "to withhold
                           any payment due to the Defaulting Party under this
                           Agreement and/or"; and

                  (b)      insert the words "withholding or" after "any such".

           (x)    The following shall be added as a new Section 5.8:

                           "Section 5.8   Certain Regulatory Matters.

                                    (a) In the event Buyer is regulated by a
                           federal, state or local regulatory body, and such
                           body shall disallow all or any portion of any costs
                           incurred or yet to be incurred by Buyer under any
                           provision of this Agreement or in respect of any
                           Transaction, such action shall not operate to excuse
                           Buyer from performance of any obligation hereunder
                           nor shall such action give rise to any right of Buyer
                           to any refund or retroactive adjustment of the price
                           of any Transaction.

                                    (b) If, after giving effect to any
                           applicable provision or remedy specified in, or
                           pursuant to, this Agreement, due to an event or
                           circumstance (other than any action taken or omission
                           by a Party) occurring after a Transaction is entered
                           into, it becomes unlawful under any applicable law
                           for a Party (an "Affected Party") to perform any
                           material obligation to make a payment or delivery in
                           respect of such Transaction (an "Affected
                           Transaction"), to receive a payment or take delivery
                           in respect of such Transaction or to comply with any
                           other material provision of this Agreement relating
                           to such Transaction (in each case, other than as a
                           result of a breach by such Party of Section 5.8(c)),
                           then either Party may, by notice to the other Party,
                           terminate and liquidate all Affected Transactions in
                           the manner contemplated by Section 5.2, which notice
                           shall specify the basis for declaring such Early
                           Termination Date and identify which Transactions are
                           Affected Transactions. If the Affected Transactions
                           constitute all Transactions then in effect under this
                           Agreement, both Parties shall calculate their
                           respective Gains, Losses or Costs in respect of
                           Terminated Transactions as provided in Sections 5.2,
                           5.3 and 5.4, and endeavor in good faith to agree upon
                           the Termination Payment payable by either Party. If

                                      -8-

<PAGE>

                           the Affected Transactions constitute some but less
                           than all of the Transactions then in effect under
                           this Agreement, only the Party that is not the
                           Affected Party shall calculate its Gains, Losses and
                           Costs in respect of all Affected Transactions and
                           notify the Affected Party of the Termination Payment,
                           as provided in Section 5.2, 5.3 and 5.4. Only the
                           Affected Transactions shall be terminated on the
                           Early Termination Date under the circumstances
                           described in preceding sentence and all other
                           Transactions shall remain unaffected as if no Early
                           Termination Date had been declared.

                                    (c) Each Party agrees that it will use all
                           reasonable efforts to maintain in full force and
                           effect all consents, approvals, permits or other
                           authorizations of any governmental or other authority
                           (including ERCOT) that are required to be obtained by
                           it with respect to this Agreement and will use all
                           reasonable efforts to obtain any that may become
                           necessary in the future."

(4)        ARTICLE SEVEN shall be amended as follows:

           (i)    Section 7.1 is amended by: (a) deleting "EXCEPT AS SET FORTH
                  HEREIN" from the first sentence thereof, (b) deleting "UNLESS
                  EXPRESSLY HEREIN PROVIDED" from the fifth sentence thereof and
                  substituting in lieu thereof, "NOTWITHSTANDING ANYTHING IN
                  THIS AGREEMENT TO THE CONTRARY" and (c) adding "SET FORTH IN
                  THIS AGREEMENT" after the phrase "INDEMNITY PROVISION" in the
                  fifth sentence thereof.

(5)        ***

(6)        The following Sections will be added as a new Section 9.3, 9.4 and
           9.5, respectively:

                          "9.3   ***

                           9.4   ***

                           9.5   ***

(7)        ARTICLE TEN shall be amended as follows:

           (i)    Section 10.2(viii) is amended by adding at the end thereof:
                  "; and acknowledges that the other Party is not acting as a
                  fiduciary for or advisor to it in respect of any Transaction."

           (ii)   Section 10.5 is amended as follows:

                                      -9-

<PAGE>

                  (a)   in the second and third lines thereof, delete the words
                        "may be withheld in the exercise of its sole discretion"
                        and replace them with the following: "will not be
                        arbitrarily withheld or delayed";

                  (b)   in the fourth line thereof, delete "(and without
                        relieving itself from liability hereunder)";

                  (c)   in Clause (iii) delete "whose creditworthiness is
                        equal or higher than that" and insert "or pursuant to
                        any consolidation or amalgamation with, or merger with
                        or into another entity or the reorganization,
                        incorporation, reincorporation or reconstitution into or
                        as another entity" after "such Party";

                  (d)   insert the following at the end of Section 10.5:

                                    "No transfer or assignment by either Party
                                    shall affect the non-transferring Party's
                                    rights and obligations or the transferring
                                    Party's obligations hereunder, including the
                                    obligation to provide and maintain
                                    Performance Assurance (including any liens)
                                    or a guaranty required to be provided under
                                    this Agreement. Notwithstanding the
                                    foregoing, Party B shall have the right to
                                    assign, with full novation and release, this
                                    Agreement without Party A's consent to any
                                    of (i) an Affiliate (provided such Affiliate
                                    assumes all of Party B's obligations under
                                    the Indenture), or (ii) an Acquiring Person
                                    or any other Person that receives
                                    substantially all of Party B's coal and gas
                                    generation assets (with such novation and
                                    release becoming effective upon the
                                    transferee providing all Party B Performance
                                    Assurance required to be provided pursuant
                                    to Section 8.1(c)). The right afforded by
                                    clause (ii) of the foregoing sentence may be
                                    exercised only once during the term of this
                                    Agreement. Party A will execute all
                                    documentation reasonably requested by Party
                                    B, such Acquiring Person or such other
                                    transferee that receives substantially all
                                    of Party B's coal and gas generation assets
                                    in accordance herewith to reflect such
                                    novation and release. An `Acquiring Person'
                                    is any Person (or any Affiliate thereof)
                                    that is owned, directly or indirectly, by
                                    one or more of Blackstone Capital Partners
                                    IV, L.P., Hellman & Friedman Capital
                                    Partners IV, L.P., KKR Millennium Fund,
                                    L.P., and TPG Partners IV, L.P."

           (iii)  In Section 10.6:

                  (a)   designate the existing text of the Section as Clause
                        (a) and delete the words "AND THE RIGHTS AND DUTIES OF
                        THE PARTIES HEREUNDER" and replace them with ", EACH
                        TRANSACTION ENTERED INTO HEREUNDER, AND ALL MATTERS
                        ARISING IN CONNECTION WITH THIS AGREEMENT", and

                  (b)   insert the following new Clauses (b) and (c):

                                    "(b) With respect to any suit, action or
                                         proceedings relating to this Agreement
                                         ("Proceedings"), each Party
                                         irrevocably:

                                         (i)   submits to the non-exclusive
                                               jurisdiction of the courts of the
                                               State of New York and the United
                                               States District Court located in
                                               the Borough of Manhattan in New
                                               York City; and

                                      -10-

<PAGE>

                                         (ii)  waives any objection which it
                                               may have at any time to the
                                               laying of venue of any
                                               Proceedings brought in any such
                                               court, waives any claim that such
                                               Proceedings have been brought in
                                               an inconvenient forum and further
                                               waives the right to object, with
                                               respect to such Proceedings, that
                                               such court does not have any
                                               jurisdiction over such party.

                                         Nothing in this Agreement precludes
                                         either Party from bringing Proceedings
                                         in any other jurisdiction in order to
                                         enforce any judgment obtained in any
                                         Proceedings referred to in the
                                         preceding sentence, nor will the
                                         bringing of such enforcement
                                         Proceedings in any one or more
                                         jurisdictions preclude the bringing of
                                         enforcement Proceedings in any other
                                         jurisdiction.

                                    (c)  Each Party hereby irrevocably waives
                                         any and all right to trial by jury in
                                         any Proceeding.";

           (iv)   The third and fourth sentences of Section 10.7 are replaced
                  with the following:

                           "Notices shall be effective upon receipt by the Party
                           to which it was addressed, which in the case of a
                           facsimile shall be deemed to occur by the close of
                           business on the Business Day on which the same is
                           transmitted (or if not transmitted on a Business Day,
                           then the next Business Day) or such earlier time as
                           is confirmed by the receiving Party."

           (v)    Section 10.11 shall be deleted in its entirety and replaced
                  with the following:

                                    "10.11 Confidentiality. If the Parties have
                           elected on the Cover Sheet to make this Section 10.11
                           applicable to this Agreement, neither Party shall
                           disclose the terms or conditions of a Transaction
                           under this Agreement, during the term of such
                           Transaction, to a third party (other than the Party's
                           and the Party's Affiliates' employees, rating
                           agencies, lenders, potential investors or buyers,
                           counsel, accountants or advisors who have agreed to
                           keep such terms confidential) except (i) in order to
                           comply with any applicable law (including the rules
                           and regulations of the Securities and Exchange
                           Commission), regulation, or any exchange, control
                           area or independent system operator rule or in
                           connection with any court, regulatory or
                           self-regulatory proceeding or request, (ii) to the
                           extent such information is delivered to such third
                           party for the sole purpose of calculating a published
                           index or other published price source, (iii) to an
                           Acquiring Person, such Acquiring Person's Affiliates,
                           and their respective employees, lenders, counsel,
                           accountants or advisors who have agreed, in each
                           case, to keep such terms confidential, and (iv) as
                           may be required to be disclosed to the PUC or in any
                           proceedings of such commission or of any other
                           governmental or regulatory agency having jurisdiction
                           over any Party or such Party's Affiliates. Each Party
                           shall notify the other Party of any proceeding of
                           which it is aware which may result in disclosure of
                           the terms of any transaction (other than as permitted
                           hereunder) and use reasonable efforts to prevent or
                           limit the disclosure, provided, however, that such
                           reasonable efforts do not cause a Party to be in
                           violation of any law, regulation, subpoena, order or
                           request. The Parties shall be entitled to all
                           remedies available at law or in equity to enforce, or
                           seek relief in connection with, this confidentiality
                           obligation."

           (vi)   The following Sections will be added as a new Section 10.12,
                  10.13, 10.14, 10.15, 10.16 and 10.17 respectively:

                                      -11-

<PAGE>

                                    "10.12 Scope of Agreement. Notwithstanding
                           anything contained in this Agreement to the contrary,
                           any transaction for the purchase and sale of electric
                           capacity, energy or other products related thereto
                           which has been or will be entered into between Party
                           A and Party B shall constitute a "Transaction" which
                           is subject to, governed by, and construed in
                           accordance with the terms of this Agreement.

                                    10.13  Binding Rates and Terms.

                                    (a) Each Party irrevocably waives its
                           rights, including its rights under Sections 205-206
                           of the Federal Power Act, unilaterally to seek or
                           support a change in the rate(s), charges,
                           classifications, terms or conditions of this
                           Agreement or any other agreements entered into in
                           connection with this Agreement or any Transaction
                           thereunder, including any credit, security, margin,
                           guaranty or similar agreement (collectively with this
                           Agreement, the "Covered Agreements"). By this
                           provision, each Party expressly waives its right to
                           seek or support: (i) an order from FERC finding that
                           the market-based rate(s), charges, classifications,
                           terms or conditions agreed to by the Parties in the
                           Covered Agreements are unjust and unreasonable; or
                           (ii) any refund with respect thereto. Each Party
                           agrees not to make or support such a filing or
                           request, and that these covenants and waivers shall
                           be binding notwithstanding any regulatory or market
                           changes that may occur hereafter.

                                    (b)  Absent the agreement of all parties to
                           the proposed change, the standard of review for
                           changes to any section of any Covered Agreement
                           proposed by a Party (to the extent that any waiver in
                           Section 10.13(a) above is unenforceable or
                           ineffective as to such Party), a non-Party or FERC
                           acting sua sponte, shall be the "public interest"
                           standard of review set forth in United Gas Pipe Line
                           Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956)
                           and Federal Power Commission v. Sierra Pacific Power
                           Co., 350 U.S. 348 (1956) (the "Mobile-Sierra"
                           doctrine).

                                    (c) The Parties agree that, if and to the
                           extent that FERC adopts a final Mobile-Sierra policy
                           statement in Docket No. PL02-7-000 ("Policy
                           Statement") or issues a final rule ("Final Rule")
                           that requires that, in order to exclude application
                           of the just and reasonable standard under the
                           Mobile-Sierra doctrine, the Parties must agree to
                           language which varies from that set forth in Section
                           10.13(a) or (b) above, then, without further action
                           of either Party (unless the Parties mutually agree
                           otherwise), such Section(s) shall be deemed amended
                           to incorporate the specific language in the Policy
                           Statement or the Final Rule (as applicable) that
                           requires the public interest standard of review.

                                    (d) The foregoing is not intended to subject
                           this Agreement or either Party to the jurisdiction of
                           FERC.

                                    10.14   ***

                                      -12-

<PAGE>

                                    10.15 ERCOT Protocols. The Parties shall
                           comply with the ERCOT Protocols and shall reasonably
                           cooperate with each other in their efforts to comply
                           with the ERCOT Protocols; provided, however, this
                           Section 10.15 is not intended to impose liability on
                           either Party for the failure to do so.

                                    10.16 Modifications to Indenture. If at any
                           time prior to the Release Date, Party B seeks to
                           modify the terms of the Indenture pursuant to Section
                           1302 of the Indenture, Party B shall use commercially
                           reasonable efforts to obtain the necessary consents
                           to modify the Indenture to provide that any
                           bondholder may elect, in its sole discretion, not to
                           have the benefit of or any interest in or enforcement
                           rights with respect to collateral which consists of a
                           nuclear facility."

                                    10.17 Genco LP Division. (a) Upon the
                           transfer of the Agreement by operation of law
                           pursuant to the Genco LP Division to Genco II LP (as
                           defined in the Transaction Agreement), the successor
                           to substantially all of the coal and gas assets of
                           Party B ("Successor"), under the Transaction
                           Agreement, (a) the Successor shall, subject to
                           clauses (b) and (c) below, be fully novated into
                           Party B's rights and obligations under this Agreement
                           and (b) Texas Genco, LP shall be automatically and
                           fully released herefrom (to the extent it would
                           otherwise be bound) upon consummation of such
                           transaction. The Parties also agree that the Genco LP
                           Division shall not constitute an Event of Default
                           hereunder.

                                    (b) On the effectiveness of any novation
                           under this Section 10.17 or Section 10.5 (the
                           "Novation Date") and with respect to the agreement to
                           be novated (as in effect prior to the Novation Date,
                           the "Old Agreement"), Party A and Party B (as the
                           party transferring the agreement by novation,
                           "Transferor Party B"), are each released and
                           discharged from further obligations to each other
                           with respect to the Old Agreement and their
                           respective rights against each other thereunder are
                           cancelled.

                                    (c) From and after the Novation Date and
                           with respect to the novated agreement (as in effect
                           from and after the Novation Date, the "New
                           Agreement"), Party A and Party B (as the party
                           receiving the agreement by novation, "Transferee
                           Party B"), shall each undertake liabilities and
                           obligations towards the other and acquire rights
                           against the other identical in their terms to the Old
                           Agreement (and, for the avoidance of doubt, as if
                           Transferee Party B were Transferor Party B and with
                           Party A remaining as Party A).

                                      -13-

<PAGE>

(8)        ADDITIONAL PROVISIONS. The following provisions shall be added to
           Schedule P: Products and Related  Definitions:

           (i)    Other Products and Service Levels.  If the Parties agree to a
                  service level defined by a different agreement (i.e., the WSPP
                  agreement, the ERCOT agreement, etc.) for a particular
                  Transaction, then, unless the Parties expressly state and
                  agree that all the terms and conditions of such other
                  agreement will apply, such reference to a service
                  level/product defined by such other agreement means that the
                  service level for that Transaction is subject to the
                  applicable regional reliability requirements and guidelines as
                  well as the excuses for performance, Force Majeure,
                  Uncontrollable Forces, or other such excuses applicable to
                  performance under such other agreement, to the extent
                  inconsistent with the terms of this Agreement, but all other
                  terms and conditions of this Agreement remain applicable
                  including, without limitation, Section 2.2.

           (ii)   Index Transactions. The terms and provisions of this Section
                  shall be applicable only to transactions which stipulate
                  prices that must be determined by reference to a published
                  index or other publicly available price reference:

                  (a)   Market Disruption.  If a Market Disruption Event has
                        occurred and is continuing during the Determination
                        Period, the Floating Price for the affected Trading Day
                        shall be determined pursuant to the index specified in
                        the Transaction for the first Trading Day thereafter on
                        which no Market Disruption Event exists; provided,
                        however, if the Floating Price is not so determined
                        within three (3) Business Days after the first Trading
                        Day on which the Market Disruption Event occurred or
                        existed, then the Parties shall negotiate in good faith
                        to agree on a Floating Price (or a method for
                        determining a Floating Price), and if the Parties have
                        not so agreed on or before the twelfth (12th) Business
                        Day following the first Trading Day on which the Market
                        Disruption Event occurred or existed, then the Floating
                        Price shall be determined with each party obtaining in
                        good faith a quote from a leading dealer in the relevant
                        market and averaging the two quotes.

                        "Determination Period" means each calendar month during
                        the term of the relevant Transaction, provided that if
                        the term of the Transaction is less than one calendar
                        month the Determination Period shall be the term of the
                        Transaction.

                        "Floating Price" means the price specified in the
                        Transaction as being based upon a specified index or
                        other publicly available price reference ("index").

                        "Market Disruption Event" means, with respect to an
                        index, any of the following events: (a) the failure of
                        the index to announce or publish information necessary
                        for determining the Floating Price; (b) the failure of
                        trading to commence or the permanent discontinuation or
                        material suspension of trading in the relevant options
                        contract or commodity on the exchange or market acting
                        as the index; (c) the temporary (for a period in excess
                        of three (3) business days) or permanent discontinuance
                        or unavailability of the index; (d) the temporary (for a
                        period in excess of three (3) business days) or
                        permanent closing of any exchange acting as the index;
                        or (e) a material change in the formula for or the
                        method of determining the Floating Price.

                        "Trading Day" means a day in respect of which the
                        relevant price source published the relevant price.

                  (b)   Corrections to Published Prices.  For purposes of
                        determining the relevant prices for any day, if the
                        price published or announced on a given day and used or
                        to be used to determine a relevant price is subsequently
                        corrected and the correction is

                                      -14-

<PAGE>

                        published or announced by the person responsible for
                        that publication or announcement, either Party may
                        notify the other Party of (i) that correction and (ii)
                        the amount (if any) that is payable as a result of that
                        correction. If a Party gives notice that an amount is so
                        payable, the Party that originally either received or
                        retained such amount will, not later than three (3)
                        Business Days after the effectiveness of that notice,
                        pay, subject to any applicable conditions precedent, to
                        the other Party that amount, together with interest at
                        the Interest Rate for the period from and including the
                        day on which payment originally was (or was not) made to
                        but excluding the day of payment of the refund or
                        payment resulting from that correction.

                  (c)   Calculation of Floating Price. For the purposes of
                        the calculation of a Floating Price, all numbers shall
                        be rounded to three (3) decimal places. If the four the
                        (4th) decimal number is five (5) or greater, then the
                        third (3rd) decimal number shall be increased by one
                        (1), and if the four the (4th) decimal number is less
                        than five (5), then the third (3rd) decimal number shall
                        remain unchanged.

                            [SIGNATURE PAGE FOLLOWS]

<PAGE>

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
as of the date first above written.

          J. ARON & COMPANY                         TEXAS GENCO, LP

                                          By: TEXAS GENCO GP, LLC, its general
                                          partner

By: /s/ Peter O'Hagen                     By: /s/ David G. Tees
    ------------------------------            ---------------------------------
Name:  Peter O'Hagen                      Name:  David G. Tees
Title: Managing Director                  Title: President
Date:  July 21, 2004                      Date:  July 21, 2004

                                      -16-

<PAGE>

                                           Schedule A-1 to Master Power Purchase
                                                  and Sale Agreement Cover Sheet

                    PUC-MANDATED BASELOAD CAPACITY AUCTIONS*

<TABLE>
<CAPTION>
ESTIMATED VOLUMES (M/W) TO BE OFFERED IN PUC BASELOAD CAPACITY AUCTIONS

                                   SEP-04    OCT-04   NOV-04    DEC-04   JAN-05   FEB-05    MAR-05    APR-05    MAY-05
<S>                                <C>       <C>      <C>       <C>      <C>      <C>       <C>       <C>       <C>
7/12/2004 AUCTION
  Houston Zone -- Parish              125       125      100       125        -        -         -         -         -
  North Zone -- Limestone              75        75       75        75        -        -         -         -         -
  South Zone -- STP                    50        50       50        50        -        -         -         -         -
                                   -----------------------------------------------------------------------------------
                           TOTAL      250       250      225       250        -        -         -         -         -

9/10/2004 AUCTION
  Houston Zone -- Parish                -         -        -         -      200      275       275       275       275
  North Zone -- Limestone               -         -        -         -      175      175       175       100       175
  South Zone -- STP                     -         -        -         -      125      125        75       125       125
                                   -----------------------------------------------------------------------------------
                           TOTAL        -         -        -         -      500      575       525       500       575
11/10/2004 AUCTION
  Houston Zone -- Parish                -         -        -         -      100      125       125       125         -
  North Zone -- Limestone               -         -        -         -       75       75        75        50         -
  South Zone -- STP                     -         -        -         -       50       50        25        50         -
                                   -----------------------------------------------------------------------------------
                           TOTAL        -         -        -         -      225      250       225       225         -

<CAPTION>

ESTIMATED VOLUMES (M/W) TO BE OFFERED IN PUC BASELOAD CAPACITY AUCTIONS

                                   JUN-05   JUL-05    AUG-05   SEP-05   OCT-05    NOV-05   DEC-05
<S>                                <C>      <C>       <C>      <C>      <C>       <C>      <C>
7/12/2004 AUCTION
  Houston Zone -- Parish                -        -         -        -        -         -        -
  North Zone -- Limestone               -        -         -        -        -         -        -
  South Zone -- STP                     -        -         -        -        -         -        -
                                   --------------------------------------------------------------
                           TOTAL        -        -         -        -        -         -        -

9/10/2004 AUCTION
  Houston Zone -- Parish              275      275       275      275      275       200      275
  North Zone -- Limestone             175      175       175      175      175       175      175
  South Zone -- STP                   125      125       125      125       75       125      125
                                   --------------------------------------------------------------
                           TOTAL      575      575       575      575      525       500      575
11/10/2004 AUCTION
  Houston Zone -- Parish                -        -         -        -        -         -        -
  North Zone -- Limestone               -        -         -        -        -         -        -
  South Zone -- STP                     -        -         -        -        -         -        -
                                   --------------------------------------------------------------
                           TOTAL        -        -         -        -        -         -        -

</TABLE>

* Actual dates and volumes shall be substantially similar to those set forth
above, subject to PUC requirements and facility availability, but not to exceed
the minimum amount under PUC requirements.

                                      -20-

<PAGE>

                                           Schedule A-2 to Master Power Purchase
                                                  and Sale Agreement Cover Sheet

                      PUC-MANDATED GAS CAPACITY AUCTIONS*

<TABLE>
<CAPTION>
ESTIMATED VOLUMES (M/W) TO BE OFFERED IN PUC BASELOAD CAPACITY AUCTIONS

                       SEP-04    OCT-04   NOV-04    DEC-04   JAN-05   FEB-05    MAR-05    APR-05    MAY-05
<S>                    <C>       <C>      <C>       <C>      <C>      <C>       <C>       <C>       <C>
7/12/2004 AUCTION
  Intermediate            125       125      125       125        -        -         -         -         -
  Cyclic                  200       200      200       200        -        -         -         -         -
  Peaking                  50        50       50        50        -        -         -         -         -
                       -----------------------------------------------------------------------------------
               TOTAL      375       375      375       375        -        -         -         -         -

9/10/2004 AUCTION
  Intermediate              -         -        -         -      300      300       300       300       300
  Cyclic                    -         -        -         -      450      450       450       450       450
  Peaking                   -         -        -         -      125      125       125       125       125
                       -----------------------------------------------------------------------------------
               TOTAL        -         -        -         -      875      875       875       875       875
11/10/2004 AUCTION
  Intermediate              -         -        -         -      125      125       125       125         -
  Cyclic                    -         -        -         -      200      200       200       200         -
  Peaking                   -         -        -         -       50       50        50        50         -
                       -----------------------------------------------------------------------------------
               TOTAL        -         -        -         -      375      375       375       375         -

<CAPTION>

                         JUN-05   JUL-05    AUG-05   SEP-05   OCT-05    NOV-05   DEC-05
<S>                      <C>      <C>       <C>      <C>      <C>       <C>      <C>
7/12/2004 AUCTION
  Intermediate                -        -         -        -        -         -        -
  Cyclic                      -        -         -        -        -         -        -
  Peaking                     -        -         -        -        -         -        -
                         --------------------------------------------------------------
               TOTAL          -        -         -        -        -         -        -

9/10/2004 AUCTION
  Intermediate              300      300       300      300      300       300      300
  Cyclic                    450      450       450      450      450       450      450
  Peaking                   125      125       125      125      125       125      125
                         --------------------------------------------------------------
               TOTAL        875      875       875      875      875       875      875
11/10/2004 AUCTION
  Intermediate                -        -         -        -        -         -        -
  Cyclic                      -        -         -        -        -         -        -
  Peaking                     -        -         -        -        -         -        -
                         --------------------------------------------------------------
               TOTAL          -        -         -        -        -         -        -

</TABLE>

* Actual dates and volumes shall be substantially similar to those set forth
above, subject to PUC requirements and facility availability, but not to exceed
the minimum amount under PUC requirements.

                                      -21-

<PAGE>

                                           Schedule A-3 to Master Power Purchase
                                                  and Sale Agreement Cover Sheet

            VOLUMES (MW) TO BE OFFERED IN BASELOAD CAPACITY AUCTIONS

<TABLE>
<CAPTION>

AUCTION TO OCCUR NOT BEFORE AUGUST 1, 2004
PRODUCT                                            SEP-04
<S>                                                <C>
Baseload Firm:  ERCOT Houston Zone                     25

Baseload Firm:  ERCOT North Zone                       25

Baseload Non-Firm                                     550

Baseload South:  5 MW Blocks                           10
</TABLE>

<TABLE>
<CAPTION>

AUCTION TO OCCUR NOT BEFORE AUGUST 9, 2004
PRODUCT                                            OCT-04      NOV-04     DEC-04
<S>                                                <C>         <C>        <C>
Baseload Firm:  ERCOT Houston Zone                     25          25        250

Baseload Firm:  ERCOT North Zone                       25          25        300

Cyclic Gas Capacity                                    75           -          -

Baseload Non-Firm                                     350         325        375

Baseload South:  5 MW Blocks                           10          10         10
</TABLE>

                                      -22-

<PAGE>

                                             Schedule B to Master Power Purchase
                                                  and Sale Agreement Cover Sheet

                            FORM OF LETTER OF CREDIT

WE HEREBY ESTABLISH OUR IRREVOCABLE STAND-BY LETTER OF CREDIT NO.
                                                                 --------------

IN FAVOR OF:
[BENEFICIARY]
[ADDRESS]
[ADDRESS]
Attn  :  [               ]
          ---------------
Telex :  [               ]
          ---------------

BY ORDER AND FOR THE ACCOUNT OF:
(insert full style and address)

FOR AN AMOUNT OF:
US DOLLARS
           -------------------------
(UNITED STATES DOLLARS                                   )
                       ----------------------------------

AVAILABLE FOR PAYMENT AT SIGHT UPON PRESENTATION AT OUR COUNTERS IN (insert city
and country where documents are to be presented) OF THE FOLLOWING DOCUMENT:

STATEMENT SIGNED BY A PURPORTEDLY AUTHORIZED REPRESENTATIVE OF [BENEFICIARY]
CERTIFYING THAT (insert your company name) HAS NOT PERFORMED IN ACCORDANCE WITH
THE TERMS OF THE MASTER POWER PURCHASE & SALE AGREEMENT, DATED AS OF JULY    ,
                                                                          ---
2004, BETWEEN [BENEFICIARY] AND (insert your company name), AND THE AMOUNT BEING
DRAWN OF USD              DOES NOT EXCEED THAT AMOUNT WHICH [BENEFICIARY] IS
            -------------
ENTITLED TO DRAW PURSUANT TO THE TERMS AND CONDITIONS OF SUCH AGREEMENT.
SPECIAL CONDITIONS:

1.  PARTIAL AND MULTIPLE DRAWINGS ARE PERMITTED.

2.  ALL CHARGES RELATED TO THIS LETTER OF CREDIT ARE FOR THE ACCOUNT PARTY'S
ACCOUNT.

3. DOCUMENTS MUST BE PRESENTED NOT LATER THAN (insert expiry date) OR IN THE
EVENT OF FORCE MAJEURE INTERRUPTING OUR BUSINESS, WITHIN THIRTY (30) DAYS AFTER
RESUMPTION OF OUR BUSINESS, WHICHEVER IS LATER.

                                      -23-

<PAGE>

UPON RECEIPT OF DOCUMENTS ISSUED IN COMPLIANCE WITH THE TERMS OF THIS CREDIT, WE
HEREBY IRREVOCABLY UNDERTAKE TO COVER YOU AS PER YOUR INSTRUCTIONS WITH VALUE
ONE BANK WORKING DAY.

THIS STANDBY CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR
DOCUMENTARY CREDITS 1993 REVISION), I.C.C. PUBLICATION 500.

                                      -24-

<PAGE>
                          GENERAL TERMS AND CONDITIONS

                        ARTICLE ONE: GENERAL DEFINITIONS

         1.1 "Affiliate" means, with respect to any person, any other person
(other than an individual) that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such person. For this purpose, "control" means the direct or indirect ownership
of fifty percent (50%) or more of the outstanding capital stock or other equity
interests having ordinary voting power.

         1.2 "Agreement" has the meaning set forth in the Cover Sheet.

         1.3 "Bankrupt" means with respect to any entity, such entity (i) files
a petition or otherwise commences, authorizes or acquiesces in the commencement
of a proceeding or cause of action under any bankruptcy, insolvency,
reorganization or similar law, or has any such petition filed or commenced
against it, (ii) makes an assignment or any general arrangement for the benefit
of creditors, (iii) otherwise becomes bankrupt or insolvent (however evidenced),
(iv) has a liquidator, administrator, receiver, trustee, conservator or similar
official appointed with respect to it or any substantial portion of its property
or assets, or (v) is generally unable to pay its debts as they fall due.

         1.4 "Business Day" means any day except a Saturday, Sunday, or a
Federal Reserve Bank holiday. A Business Day shall open at 8:00 a.m. and close
at 5:00 p.m. local time for the relevant Party's principal place of business.
The relevant Party, in each instance unless otherwise specified, shall be the
Party from whom the notice, payment or delivery is being sent and by whom the
notice or payment or delivery is to be received.

         1.5 "Buyer" means the Party to a Transaction that is obligated to
purchase and receive, or cause to be received, the Product, as specified in the
Transaction.

         1.6 "Call Option" means an Option entitling, but not obligating, the
Option Buyer to purchase and receive the Product from the Option Seller at a
price equal to the Strike Price for the Delivery Period for which the Option may
be exercised, all as specified in the Transaction. Upon proper exercise of the
Option by the Option Buyer, the Option Seller will be obligated to sell and
deliver the Product for the Delivery Period for which the Option has been
exercised.

         1.7 "Claiming Party" has the meaning set forth in Section 3.3.

         1.8 "Claims" means all third party claims or actions, threatened or
filed and, whether groundless, false, fraudulent or otherwise, that directly or
indirectly relate to the subject matter of an indemnity, and the resulting
losses, damages, expenses, attorneys' fees and court costs, whether incurred by
settlement or otherwise, and whether such claims or actions are threatened or
filed prior to or after the termination of this Agreement.

         1.9 "Confirmation" has the meaning set forth in Section 2.3.

         1.10 "Contract Price" means the price in $U.S. (unless otherwise
provided for) to be paid by Buyer to Seller for the purchase of the Product, as
specified in the Transaction.

                                      -25-
<PAGE>

         1.11 "Costs" means, with respect to the Non-Defaulting Party, brokerage
fees, commissions and other similar third party transaction costs and expenses
reasonably incurred by such Party either in terminating any arrangement pursuant
to which it has hedged its obligations or entering into new arrangements which
replace a Terminated Transaction; and all reasonable attorneys' fees and
expenses incurred by the Non-Defaulting Party in connection with the termination
of a Transaction.

         1.12 "Credit Rating" means, with respect to any entity, the rating then
assigned to such entity's unsecured, senior long term debt obligations (not
supported by third party credit enhancements) or if such entity does not have a
rating for its senior unsecured long term debt, then the rating then assigned to
such entity as an issues rating by S&P, Moody's or any other rating agency
agreed by the Parties as set forth in the Cover Sheet.

         1.13 "Cross Default Amount" means the cross default amount, if any, set
forth in the Cover Sheet for a Party.

         1.14 "Defaulting Party" has the meaning set forth in Section 5.1.

         1.15 "Delivery Period" means the period of delivery for a Transaction,
as specified in the Transaction.

         1.16 "Delivery Point" means the point at which the Product will be
delivered and received, as specified in the Transaction.

         1.17 "Downgrade Event" has the meaning set forth on the Cover Sheet.

         1.18 "Early Termination Date" has the meaning set forth in Section 5.2.

         1.19 "Effective Date" has the meaning set forth on the Cover Sheet.

         1.20 "Equitable Defenses" means any bankruptcy, insolvency,
reorganization and other laws affecting creditors' rights generally, and with
regard to equitable remedies, the discretion of the court before which
proceedings to obtain same may be pending.

         1.21 "Event of Default" has the meaning set forth in Section 5.1.

         1.22 "FERC" means the Federal Energy Regulatory Commission or any
successor government agency.

         1.23 "Force Majeure" means an event or circumstance which prevents one
Party from performing its obligations under one or more Transactions, which
event or circumstance was not anticipated as of the date the Transaction was
agreed to, which is not within the reasonable control of, or the result of the
negligence of, the Claiming Party, and which, by the exercise of due diligence,
the Claiming Party is unable to overcome or avoid or cause to be avoided. Force
Majeure shall not be based on (i) the loss of Buyer's markets; (ii) Buyer's
inability economically to use or resell the Product purchased hereunder; (iii)
the loss or failure of Seller's supply; or (IV) Seller's ability to sell the
Product at a price greater than the Contract Price. Neither Party may raise a
claim of Force Majeure based in whole or in part on curtailment by a
Transmission

                                      -26-
<PAGE>

Provider unless (i) such Party has contracted for firm transmission with a
Transmission Provider for the Product to be delivered to or received at the
Delivery Point and (ii) such curtailment is due to "force majeure" or
"uncontrollable force" or a similar term as defined under the Transmission
Provider's tariff, provided, however, that existence of the foregoing factors
shall not be sufficient to conclusively or presumptively prove the existence of
a Force Majeure absent a showing of other facts and circumstances which in the
aggregate with such factors establish that a Force Majeure as defined in the
first sentence hereof has occurred. The applicability of Force Majeure to the
Transaction is governed by the terms of the Products and Related Definitions
contained in Schedule P.

         1.24 "Gains" means, with respect to any Party, an amount equal to the
present value of the economic benefit to it, if any (exclusive of Costs),
resulting from the termination of a Terminated Transaction, determined in a
commercially reasonable manner.

         1.25 "Guarantor" means, with respect to a Party, the guarantor, if any,
specified for such Party on the Cover Sheet.

         1.26 "Interest Rate" means, for any date, the lesser of (a) the per
annum rate of interest equal to the prime lending rate as may from time to time
be published in The Wall Street Journal under "Money Rates" on such day (or if
not published on such day on the most recent preceding day on which published),
plus two percent (2%) and (b) the maximum rate permitted by applicable law.

         1.27 "Letter(s) of Credit" means one or more irrevocable, transferable
standby letters of credit issued by a U.S. commercial bank or a foreign bank
with a U.S. branch with such bank having a credit rating of at least AA from S&P
or A3 from Moody's, in a form acceptable to the Party in whose favor the letter
of credit is issued. Costs of a Letter of Credit shall be borne by the applicant
for such Letter of Credit.

         1.28 "Losses" means, with respect to any Party, an amount equal to the
present value of the economic loss to it, if any (exclusive of Costs), resulting
from termination of a Terminated Transaction, determined in a commercially
reasonable manner.

         1.29 "Master Agreement" has the meaning set forth on the Cover Sheet.

         1.30 "Moody's" means Moody's Investor Services, Inc. or its successor.

         1.31 "NERC Business Day" means any day except a Saturday, Sunday or a
holiday as defined by the North American Electric Reliability Council or any
successor organization thereto. A NERC Business Day shall open at 8:00 a.m. and
close at 5:00 p.m. local time for the relevant Party's principal place of
business. The relevant Party, in each instance unless otherwise specified, shall
be the Party from whom the notice, payment or delivery is being sent and by whom
the notice or payment or delivery is to be received.

         1.32 "Non-Defaulting Party" has the meaning set forth in Section 5.2.

         1.33 "Offsetting Transactions" mean any two or more outstanding
Transactions, having the same or overlapping Delivery Period(s), Delivery Point
and payment date, where

                                      -27-
<PAGE>

under one or more of such Transactions, one Party is the Seller, and under the
other such Transaction(s), the same Party is the Buyer.

         1.34 "Option" means the right but not the obligation to purchase or
sell a Product as specified in a Transaction.

         1.35 "Option Buyer" means the Party specified in a Transaction as the
purchaser of an option, as defined in Schedule P.

         1.36 "Option Seller" means the Party specified in a Transaction as the
seller of an option , as defined in Schedule P.

         1.37 "Party A Collateral Threshold" means the collateral threshold, if
any, set forth in the Cover Sheet for Party A.

         1.38 "Party B Collateral Threshold" means the collateral threshold, if
any, set forth in the Cover Sheet for Party B.

         1.39 "Party A Independent Amount" means the amount , if any, set forth
in the Cover Sheet for Party A.

         1.40 "Party B Independent Amount" means the amount, if any, set forth
in the Cover Sheet for Party B.

         1.41 "Party A Rounding Amount" means the amount, if any, set forth in
the Cover Sheet for Party A.

         1.42 "Party B Rounding Amount" means the amount, if any, set forth in
the Cover Sheet for Party B.

         1.43 "Party A Tariff" means the tariff, if any, specified in the Cover
Sheet for Party A.

         1.44 "Party B Tariff' means the tariff, if any, specified in the Cover
Sheet for Party B.

         1.45 "Performance Assurance" means collateral in the form of either
cash, Letter(s) of Credit, or other security acceptable to the Requesting Party.

         1.46 "Potential Event of Default" means an event which, with notice or
passage of time or both, would constitute an Event of Default.

         1.47 "Product" means electric capacity, energy or other product(s)
related thereto as specified in a Transaction by reference to a Product listed
in Schedule P hereto or as otherwise specified by the Parties in the
Transaction.

         1.48 "Put Option" means an Option entitling, but not obligating, the
Option Buyer to sell and deliver the Product to the Option Seller at a price
equal to the Strike Price for the Delivery Period for which the option may be
exercised, all as specified in a Transaction. Upon

                                      -28-
<PAGE>

proper exercise of the Option by the Option Buyer, the Option Seller will be
obligated to purchase and receive the Product.

         1.49 "Quantity" means that quantity of the Product that Seller agrees
to make available or sell and deliver, or cause to be delivered, to Buyer, and
that Buyer agrees to purchase and receive, or cause to be received, from Seller
as specified in the Transaction.

         1.50 "Recording" has the meaning set forth in Section 2.4.

         1.51 "Replacement Price" means the price at which Buyer, acting in a
commercially reasonable manner, purchases at the Delivery Point a replacement
for any Product specified in a Transaction but not delivered by Seller, plus (i)
costs reasonably incurred by Buyer in purchasing such substitute Product and
(ii) additional transmission charges, if any, reasonably incurred by Buyer to
the Delivery Point, or at Buyer's option, the market price at the Delivery Point
for such Product not delivered as determined by Buyer in a commercially
reasonable manner; provided, however, in no event shall such price include any
penalties, ratcheted demand or similar charges, nor shall Buyer be required to
utilize or change its utilization of its owned or controlled assets or market
positions to minimize Seller's liability. For the purposes of this definition,
Buyer shall be considered to have purchased replacement Product to the extent
Buyer shall have entered into one or more arrangements in a commercially
reasonable manner whereby Buyer repurchases its obligation to sell and deliver
the Product to another party at the Delivery Point.

         1.52 "S&P" means the Standard & Poor's Rating Group (a division of
McGraw Hill, Inc.) or its successor.

         1.53 "Sales Price" means the price at which Seller, acting in a
commercially reasonable manner, resells at the Delivery Point any Product not
received by Buyer, deducting from such proceeds any (1) costs reasonably
incurred by Seller in reselling such Product and (ii) additional transmission
charges, if any, reasonably incurred by Seller in delivering such Product to the
third party purchasers, or at Seller's option, the market price at the Delivery
Point for such Product not received as determined by Seller in a commercially
reasonable manner; provided, however, in no event shall such price include any
penalties, ratcheted demand or similar charges, nor shall Seller be required to
utilize or change its utilization of its owned or controlled assets, including
contractual assets, or market positions to minimize Buyer's liability. For
purposes of this definition, Seller shall be considered to have resold such
Product to the extent Seller shall have entered into one or more arrangements in
a commercially reasonable manner whereby Seller repurchases its obligation to
purchase and receive the Product from another party at the Delivery Point.

         1.54 "Schedule" or "Scheduling" means the actions of Seller, Buyer
and/or their designated representatives, including each Party's Transmission
Providers, if applicable, of notifying, requesting and confirming to each other
the quantity and type of Product to be delivered on any given day or days during
the Delivery Period at a specified Delivery Point.

         1.55 "Seller" means the Party to a Transaction that is obligated to
sell and deliver, or cause to be delivered, the Product, as specified in the
Transaction.

                                      -29-
<PAGE>

         1.56 "Settlement Amount" means, with respect to a Transaction and the
Non-Defaulting Party, the Losses or Gains, and Costs, expressed in U.S. Dollars,
which such party incurs as a result of the liquidation of a Terminated
Transaction pursuant to Section 5.2.

         1.57 "Strike Price" means the price to be paid for the purchase of the
Product pursuant to an Option.

         1.58 "Terminated Transaction" has the meaning set forth in Section 5.2.

         1.59 "Termination Payment" has the meaning set forth in Section 5.3.

         1.60 "Transaction" means a particular transaction agreed to by the
Parties relating to the sale and purchase of a Product pursuant to this Master
Agreement.

         1.61 "Transmission Provider" means any entity or entities transmitting
or transporting the Product on behalf of Seller or Buyer to or from the Delivery
Point in a particular Transaction.

                  ARTICLE TWO: TRANSACTION TERMS AND CONDITIONS

         2.1 Transactions. A Transaction shall be entered into upon agreement of
the Parties orally or, if expressly required by either Party with respect to a
particular Transaction, in writing, including an electronic means of
communication. Each Party agrees not to contest, or assert any defense to, the
validity or enforceability of the Transaction entered into in accordance with
this Master Agreement (i) based on any law requiring agreements to be in writing
or to be signed by the parties, or (ii) based on any lack of authority of the
Party or any lack of authority of any employee of the Party to enter into a
Transaction.

         2.2 Governing Terms. Unless otherwise specifically agreed, each
Transaction between the Parties shall be governed by this Master Agreement. This
Master Agreement (including all exhibits, schedules and any written supplements
hereto), the Party A Tariff, if any, and the Party B Tariff, if any, any
designated collateral, credit support or margin agreement or similar arrangement
between the Parties and all Transactions (including any Confirmations accepted
in accordance with Section 2.3) shall form a single integrated agreement between
the Parties. Any inconsistency between any terms of this Master Agreement and
any terms of the Transaction shall be resolved in favor of the terms of such
Transaction.

         2.3 Confirmation. Seller may confirm a Transaction by forwarding to
Buyer by facsimile within three (3) Business Days after the Transaction is
entered into a confirmation ("Confirmation') substantially in the form of
Exhibit A. If Buyer objects to any term(s) of such Confirmation, Buyer shall
notify Seller in writing of such objections within two (2) Business Days of
Buyer's receipt thereof, failing which Buyer shall be deemed to have accepted
the terms as sent. If Seller fails to send a Confirmation within three (3)
Business Days after the Transaction is entered into, a Confirmation
substantially in the form of Exhibit A, may be forwarded by Buyer to Seller. If
Seller objects to any term(s) of such Confirmation, Seller shall notify Buyer of
such objections within two (2) Business Days of Seller's receipt thereof,
failing which Seller shall be deemed to have accepted the terms as sent. If
Seller and Buyer each send a Confirmation and neither Party objects to the other
Party's Confirmation within two (2) Business Days of receipt, Seller's
Confirmation shall be deemed to be accepted and shall be the

                                      -30-
<PAGE>

controlling Confirmation, unless (i) Seller's Confirmation was sent more than
three (3) Business Days after the Transaction was entered into and (ii) Buyer's
Confirmation was sent prior to Seller's Confirmation, in which case Buyer's
Confirmation shall be deemed to be accepted and shall be the controlling
Confirmation. Failure by either Party to send or either Party to return an
executed Confirmation or any objection by either Party shall not invalidate the
Transaction agreed to by the Parties.

         2.4 Additional Confirmation Terms. If the Parties have elected on the
Cover Sheet to make this Section 2.4 applicable to this Master Agreement, when a
Confirmation contains provisions, other than those provisions relating to the
commercial terms of the Transaction (e.g., price or special transmission
conditions), which modify or supplement the general terms and conditions of this
Master Agreement (e.g., arbitration provisions or additional representations and
warranties), such provisions shall not be deemed to be accepted pursuant to
Section 2.3 unless agreed to either orally or in writing by the Parties;
provided that the foregoing shall not invalidate any Transaction agreed to by
the Parties.

         2.5 Recording. Unless a Party expressly objects to a Recording (defined
below) at the beginning of a telephone conversation, each Party consents to the
creation of a tape or electronic recording ("Recording") of all telephone
conversations between the Parties to this Master Agreement, and that any such
Recordings will be retained in confidence, secured from improper access, and may
be submitted in evidence in any proceeding or action relating to this Agreement.
Each Party waives any further notice of such monitoring or recording, and agrees
to notify its officers and employees of such monitoring or recording and to
obtain any necessary consent of such officers and employees. The Recording, and
the terms and conditions described therein, if admissible, shall be the
controlling evidence for the Parties' agreement with respect to a particular
Transaction in the event a Confirmation is not fully executed (or deemed
accepted) by both Parties. Upon full execution (or deemed acceptance) of a
Confirmation, such Confirmation shall control in the event of any conflict with
the terms of a Recording, or in the event of any conflict with the terms of this
Master Agreement.

                    ARTICLE THREE: OBLIGATIONS AND DELIVERIES

         3. 1 Seller's and Buyer's Obligations. With respect to each
Transaction, Seller shall sell and deliver, or cause to be delivered, and Buyer
shall purchase and receive, or cause to be received, the Quantity of the Product
at the Delivery Point, and Buyer shall pay Seller the Contract Price; provided,
however, with respect to Options, the obligations set forth in the preceding
sentence shall only anise if the Option Buyer exercises its Option in accordance
with its terms. Seller shall be responsible for any costs or charges imposed on
or associated with the Product or its delivery of the Product up to the Delivery
Point. Buyer shall be responsible for any costs or charges imposed on or
associated with the Product or its receipt at and from the Delivery Point.

         3.2 Transmission and Scheduling. Seller shall arrange and be
responsible for transmission service to the Delivery Point and shall Schedule or
arrange for Scheduling services with its Transmission Providers, as specified by
the Parties in the Transaction, or in the absence thereof, in accordance with
the practice of the Transmission Providers, to deliver the Product to the
Delivery Point. Buyer shall arrange and be responsible for transmission service
at and from

                                      -31-
<PAGE>

the Delivery Point and shall Schedule or arrange for Scheduling services with
its Transmission Providers to receive the Product at the Delivery Point.

         3.3 Force Majeure. To the extent either Party is prevented by Force
Majeure from carrying out, in whole or part, its obligations under the
Transaction and such Party (the "Claiming Party") gives notice and details of
the Force Majeure to the other Party as soon as practicable, then, unless the
terms of the Product specify otherwise, the Claiming Party shall be excused from
the performance of its obligations with respect to such Transaction (other than
the obligation to make payments then due or becoming due with respect to
performance prior to the Force Majeure). The Claiming Party shall remedy the
Force Majeure with all reasonable dispatch. The non Claiming Party shall not be
required to perform or resume performance of its obligations to the Claiming
Party corresponding to the obligations of the Claiming Party excused by Force
Majeure.

              ARTICLE FOUR: REMEDIES FOR FAILURE TO DELIVER/RECEIVE

         4.1 Seller Failure. If Seller falls to schedule and/or deliver all or
part of the Product pursuant to a Transaction, and such failure is not excused
under the terms of the Product or by Buyer's failure to perform, then Seller
shall pay Buyer, on the date payment would otherwise be due in respect of the
month in which the failure occurred or, if "Accelerated Payment of Damages" is
specified on the Cover Sheet, within five (5) Business Days of invoice receipt,
an amount for such deficiency equal to the positive difference, if any, obtained
by subtracting the Contract Price from the Replacement Price. The invoice for
such amount shall include a written statement explaining in reasonable detail
the calculation of such amount.

         4.2 Buyer Failure. If Buyer fails to schedule and/or receive all or
part of the Product pursuant to a Transaction and such failure is not excused
under the terms of the Product or by Seller's failure to perform, then Buyer
shall pay Seller, on the date payment would otherwise be due in respect of the
month in which the failure occurred or, if "Accelerated Payment of Damages" is
specified on the Cover Sheet, within five (5) Business Days of invoice receipt,
an amount for such deficiency equal to the positive difference, if any, obtained
by subtracting the Sales Price from the Contract Price. The invoice for such
amount shall include a written statement explaining in reasonable detail the
calculation of such amount.

                    ARTICLE FIVE: EVENTS OF DEFAULT; REMEDIES

         5.1 Events of Default. An "Event of Default" shall mean, with respect
to a Party (a "Defaulting Party"), the occurrence of any of the following:

                  (a)      the failure to make, when due, any payment required
                           pursuant to this Agreement if such failure is not
                           remedied within three (3) Business Days after written
                           notice;

                  (b)      any representation or warranty made by such Party
                           herein is false or misleading in any material respect
                           when made or when deemed made or repeated;

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<PAGE>

                  (c)      the failure to perform any material covenant or
                           obligation set forth in this Agreement (except to the
                           extent constituting a separate Event of Default, and
                           except for such Party's obligations to deliver or
                           receive the Product, the exclusive remedy for which
                           is provided in Article Four) if such failure is not
                           remedied within three (3) Business Days after written
                           notice;

                  (d)      such Party becomes Bankrupt;

                  (e)      the failure of such Party to satisfy the
                           creditworthiness/collateral requirements agreed to
                           pursuant to Article Eight hereof;

                  (f)      such Party consolidates or amalgamates with, or
                           merges with or into, or transfers all or
                           substantially all of its assets to, another entity
                           and, at the time of such consolidation, amalgamation,
                           merger or transfer, the resulting, surviving or
                           transferee entity fails to assume all the obligations
                           of such Party under this Agreement to which it or its
                           predecessor was a party by operation of law or
                           pursuant to an agreement reasonably satisfactory to
                           the other Party;

                  (g)      if the applicable cross default section in the Cover
                           Sheet is indicated for such Party, the occurrence and
                           continuation of (i) a default, event of default or
                           other similar condition or event in respect of such
                           Party or any other party specified in the Cover Sheet
                           for such Party under one or more agreements or
                           instruments, individually or collectively, relating
                           to indebtedness for borrowed money in an aggregate
                           amount of not less than the applicable Cross Default
                           Amount (as specified in the Cover Sheet), which
                           results in such indebtedness becoming, or becoming
                           capable at such time of being declared, immediately
                           due and payable or (ii) a default by such Party or
                           any other party specified in the Cover Sheet for such
                           Party in making on the due date therefor one or more
                           payments, individually or collectively, in an
                           aggregate amount of not less than the applicable
                           Cross Default Amount (as specified in the Cover
                           Sheet);

                  (h)      with respect to such Party's Guarantor if any:

                           (i)      if any representation or warranty made by a
                                    Guarantor in connection with this Agreement
                                    is false or misleading in any material
                                    respect when made or when deemed made or
                                    repeated;

                           (ii)     the failure of a Guarantor to make any
                                    payment required or to perform any other
                                    material covenant or obligation in any
                                    guaranty made in connection with this
                                    Agreement and such failure shall not be
                                    remedied within three (3) Business Days
                                    after written notice;

                           (iii)    a Guarantor becomes Bankrupt;

                           (iv)     the failure of a Guarantor's guaranty to be
                                    in full force and effect for purposes of
                                    this Agreement (other than in accordance
                                    with its

                                      -33-
<PAGE>

                                    terms) prior to the satisfaction of all
                                    obligations of such Party under each
                                    Transaction to which such guaranty shall
                                    relate without the written consent of the
                                    other Party; or

                           (v)      a Guarantor shall repudiate, disaffirm,
                                    disclaim, or reject, in whole or in part, or
                                    challenge the validity of any guaranty.

         5.2 Declaration of an Early Termination Date and Calculation of
Settlement Amounts. If an Event of Default with respect to a Defaulting Party
shall have occurred and be continuing, the other Party (the "Non-Defaulting
Party") shall have the right (i) to designate a day, no earlier than the day
such notice is effective and no later than 20 days after such notice is
effective, as an early termination date ("Early Termination Date") to accelerate
all amounts owing between the Parties and to liquidate and terminate all, but
not less than all, Transactions (each referred to as a "Terminated Transaction")
between the Parties, (ii) withhold any payments due to the Defaulting Party
under this Agreement and (iii) suspend performance. The Non-Defaulting Party
shall calculate, in a commercially reasonable manner, a Settlement Amount for
each such Terminated Transaction as of the Early Termination Date (or, to the
extent that in the reasonable opinion of the Non-Defaulting Party certain of
such Terminated Transactions are commercially impracticable to liquidate and
terminate or may not be liquidated and terminated under applicable law on the
Early Termination Date, as soon thereafter as is reasonably practicable).

         5.3 Net Out of Settlement Amounts. The Non-Defaulting Party shall
aggregate all Settlement Amounts into a single amount by: netting out (a) all
Settlement Amounts that are due to the Defaulting Party, plus, at the option of
the Non-Defaulting Party, any cash or other form of security then available to
the Non-Defaulting Party pursuant to Article Eight, plus any or all other
amounts due to the Defaulting Party under this Agreement against (b) all
Settlement Amounts that are due to the Non-Defaulting Party, plus any or all
other amounts due to the Non-Defaulting Party under this Agreement, so that all
such amounts shall be netted out to a single liquidated amount (the "Termination
Payment) payable by one Party to the other. The Termination Payment shall be due
to or due from the Non-Defaulting Party as appropriate.

         5.4 Notice of Payment of Termination Payment. As soon as practicable
after a liquidation, notice shall be given by the Non-Defaulting Party to the
Defaulting Party of the amount of the Termination Payment and whether the
Termination Payment is due to or due from the Non-Defaulting Party. The notice
shall include a written statement explaining in reasonable detail the
calculation of such amount. The Termination Payment shall be made by the Party
that owes it within two (2) Business Days after such notice is effective.

         5.5 Disputes With Respect to Termination Payment. If the Defaulting
Party disputes the Non-Defaulting Party's calculation of the Termination
Payment, in whole or in part, the Defaulting Party shall, within two (2)
Business Days of receipt of Non-Defaulting Party's calculation of the
Termination Payment, provide to the Non-Defaulting Party a detailed written
explanation of the basis for such dispute; provided, however, that if the
Termination Payment is due from the Defaulting Party, the Defaulting Party shall
first transfer Performance Assurance to the Non-Defaulting Party in an amount
equal to the Termination Payment.

                                      -34-

<PAGE>

         5.6 Closeout Setoffs.

         Option A: After calculation of a Termination Payment in accordance with
Section 5.3, if the Defaulting Party would be owed the Termination Payment, the
Non-Defaulting Party shall be entitled, at its option and in its discretion, to
(1) set off against such Termination Payment any amounts due and owing by the
Defaulting Party to the Non-Defaulting Party under any other agreements,
instruments or undertakings between the Defaulting Party and the Non-Defaulting
Party and/or (ii) to the extent the Transactions are not yet liquidated in
accordance with Section 5.2, withhold payment of the Termination Payment to the
Defaulting Party. The remedy provided for in this Section shall be without
prejudice and in addition to any right of setoff, combination of accounts, lien
or other night to which any Party is at any time otherwise entitled (whether by
operation of law, contract or otherwise).

         Option B: After calculation of a Termination Payment in accordance with
Section 5.3, if the Defaulting Party would be owed the Termination Payment, the
Non-Defaulting Party shall be entitled, at its option and in its discretion, to
(1) set off against such Termination Payment any amounts due and owing by the
Defaulting Party or any of its Affiliates to the Non-Defaulting Party or any of
its Affiliates under any other agreements, instruments or undertakings between
the Defaulting Party or any of its Affiliates and the Non-Defaulting Party or
any of its Affiliates and/or (ii) to the extent the Transactions are not yet
liquidated in accordance with Section 5.2, withhold payment of the Termination
Payment to the Defaulting Party. The remedy provided for in this Section shall
be without prejudice and in addition to any right of setoff, combination of
accounts, lien or other right to which any Party is at any time otherwise
entitled (whether by operation of law, contract or otherwise).

         Option C: Neither Option A nor B shall apply.

         5.7 Suspension of Performance. Notwithstanding any other provision of
this Master Agreement, if (a) an Event of Default or (b) a Potential Event of
Default shall have occurred and be continuing, the Non-Defaulting Party, upon
written notice to the Defaulting Party, shall have the right (1) to suspend
performance under any or all Transactions; provided, however, in no event shall
any such suspension continue for longer than ten (10) NERC Business Days with
respect to any single Transaction unless an early Termination Date shall have
been declared and notice thereof pursuant to Section 5.2 given, and (10 to the
extent an Event of Default shall have occurred and be continuing to exercise any
remedy available at law or in equity.

                        ARTICLE SIX: PAYMENT AND NETTING

         6.1 Billing Period. Unless otherwise specifically agreed upon by the
Parties in a Transaction, the calendar month shall be the standard period for
all payments under this Agreement (other than Termination Payments and, if
"Accelerated Payment of Damages" is specified by the Parties in the Cover Sheet,
payments pursuant to Section 4.1 or 4.2 and Option premium payments pursuant to
Section 6.7). As soon as practicable after the end of each month, each Party
will render to the other Party an invoice for the payment obligations, if any,
incurred hereunder during the preceding month.

                                      -35-
<PAGE>

         6.2 Timeliness of Payment. Unless otherwise agreed by the Parties in a
Transaction, all invoices under this Master Agreement shall be due and payable
in accordance with each Party's invoice instructions on or before the later of
the twentieth (20th) day of each month, or tenth (10th) day after receipt of the
invoice or, if such day is not a Business Day, then on the next Business Day.
Each Party will make payments by electronic funds transfer, or by other mutually
agreeable method(s), to the account designated by the other Party. Any amounts
not paid by the due date will be deemed delinquent and will accrue interest at
the Interest Rate, such interest to be calculated from and including the due
date to but excluding the date the delinquent amount is paid in full.

         6.3 Disputes and Adjustments of Invoices. A Party may, in good faith,
dispute the correctness of any invoice or any adjustment to an invoice, rendered
under this Agreement or adjust any invoice for any arithmetic or computational
error within twelve (12) months of the date the invoice, or adjustment to an
invoice, was rendered. In the event an invoice or portion thereof, or any other
claim or adjustment arising hereunder, is disputed, payment of the undisputed
portion of the invoice shall be required to be made when due, with notice of the
objection given to the other Party. Any invoice dispute or invoice adjustment
shall be in writing and shall state the basis for the dispute or adjustment.
Payment of the disputed amount shall not be required until the dispute is
resolved. Upon resolution of the dispute, any required payment shall be made
within two (2) Business Days of such resolution along with interest accrued at
the Interest Rate from and including the due date to but excluding the date
paid. Inadvertent overpayments shall be returned upon request or deducted by the
Party receiving such overpayment from subsequent payments, with interest accrued
at the Interest Rate from and including the date of such overpayment to but
excluding the date repaid or deducted by the Party receiving such overpayment.
Any dispute with respect to an invoice is waived unless the other Party is
notified in accordance with this Section 6.3 within twelve (12) months after the
invoice is rendered or any specific adjustment to the invoice is made. If an
invoice is not rendered within twelve (12) months after the close of the month
during which performance of a Transaction occurred, the night to payment for
such performance is waived.

         6.4 Netting of Payments. The Parties hereby agree that they shall
discharge mutual debts and payment obligations due and owing to each other on
the same date pursuant to all Transactions through netting, `in which case all
amounts owed by each Party to the other Party for the purchase and sale of
Products during the monthly billing period under this Master Agreement,
including any related damages calculated pursuant to Article Four (unless one of
the Parties elects to accelerate payment of such amounts as permitted by Article
Four), interest, and payments or credits, shall be netted so that only the
excess amount remaining due shall be paid by the Party who owes it.

         6.5 Payment Obligation Absent Netting. If no mutual debts or payment
obligations exist and only one Party owes a debt or obligation to the other
during the monthly billing period, including, but not limited to, any related
damage amounts calculated pursuant to Article Four interest, and payments or
credits, that Party shall pay such sum in full when due.

         6.6 Security. Unless the Party benefiting from Performance Assurance or
a guaranty notifies the other Party in writing, and except in connection with a
liquidation and termination in accordance with Article Five, all amounts netted
pursuant to this Article Six shall not take into

                                      -36-
<PAGE>

account or include any Performance Assurance or guaranty which may be in effect
to secure a Party's performance under this Agreement.

         6.7 Paying for Options. The premium amount for the purchase of an
Option shall be paid within two (2) Business Days of receipt of an invoice from
the Option Seller. Upon exercise of an Option, payment for the Product
underlying such Option shall be due in accordance with Section 6.1.

         6.8 Transaction Netting. If the Parties enter into one or more
Transactions, which in conjunction with one or more other outstanding
Transactions, constitute Offsetting Transactions, then all such Offsetting
Transactions may by agreement of the Parties, be netted into a single
Transaction under which:

                  (a)      the Party obligated to deliver the greater amount of
                           Energy will deliver the difference between the total
                           amount it is obligated to deliver and the total
                           amount to be delivered to it under the Offsetting
                           Transactions, and

                  (b)      the Party owing the greater aggregate payment will
                           pay the net difference owed between the Parties.

Each single Transaction resulting under this Section shall be deemed part of the
single, indivisible contractual arrangement between the parties, and once such
resulting Transaction occurs, outstanding obligations under the Offsetting
Transactions which are satisfied by such offset shall terminate.

                           ARTICLE SEVEN: LIMITATIONS

         7.1 Limitation of Remedies, Liability and Damage. EXCEPT AS SET FORTH
HEREIN, THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM
THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT
SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY PROVISION FOR WHICH AN
EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE
OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR'S LIABILITY SHALL
BE LIMITED AS SET FORTH IN SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT
LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY
PROVIDED HEREIN OR IN A TRANSACTION, THE OBLIGOR'S LIABILITY SHALL BE LIMITED TO
DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY AND ALL OTHER ` OR DAMAGES AT LAW OR IN EQUITY ARE
WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS
OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER
ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE
LIMITATIONS HEREIN IMPOSED ON REMEDIES

                                      -37-
<PAGE>

AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED
THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE,
JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO
BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE
DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY
IS INCONVENIENT AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE
APPROXIMATION OF THE HARM OR LOSS.

                ARTICLE EIGHT: CREDIT AND COLLATERAL REQUIREMENTS

         8.1 Party A Credit Protection. The applicable credit and collateral
requirements shall be as specified on the Cover Sheet. If no option in Section
8. 1 (a) is specified on the Cover Sheet, Section 8.1(a) Option C shall apply
exclusively. If none of Sections 8.1(b), 8.1(c) or 8.1(d) are specified on the
Cover Sheet, Section 8. 1 (b) shall apply exclusively.

                  (a) Financial Information. Option A: If requested by Party A,
Party B shall deliver (1) within 120 days following the end of each fiscal year,
a copy of Party B's annual report containing audited consolidated financial
statements for such fiscal year and (ii) within 60 days after the end of each of
its first three fiscal quarters of each fiscal year, a copy of Party B's
quarterly report containing unaudited consolidated financial statements for such
fiscal quarter. In all cases the statements shall be for the most recent
accounting period and prepared in accordance with generally accepted accounting
principles; provided, however, that should any such statements not be available
on a timely basis due to a delay in preparation or certification, such delay
shall not be an Event of Default so long as Party B diligently pursues the
preparation, certification and delivery of the statements.

         Option B: If requested by Party A, Party B shall deliver (i) within 120
days following the end of each fiscal year, a copy of the annual report
containing audited consolidated financial statements for such fiscal year for
the party(s) specified on the Cover Sheet and (ii) within 60 days after the end
of each of its first three fiscal quarters of each fiscal year, a copy of
quarterly report containing unaudited consolidated financial statements for such
fiscal quarter for the party(s) specified on the Cover Sheet. In all cases the
statements shall be for the most recent accounting period and shall be prepared
in accordance with generally accepted accounting principles; provided, however,
that should any such statements not be available on a timely basis due to a
delay in preparation or certification, such delay shall not be an Event of
Default so long as the relevant entity diligently pursues the preparation,
certification and delivery of the statements.

         Option C: Party A may request from Party B the information specified in
the Cover Sheet.

                  (b) Credit Assurances. If Party A has reasonable grounds to
believe that Party B's creditworthiness or performance under this Agreement has
become unsatisfactory, Party A will provide Party B with written notice
requesting Performance Assurance in an amount determined by Party A in a
commercially reasonable manner. Upon receipt of such notice Party

                                      -38-
<PAGE>

B shall have three (3) Business Days to remedy the situation by providing such
Performance Assurance to Party A. In the event that Party B fails to provide
such Performance Assurance, or a guaranty or other credit assurance acceptable
to Party A within three (3) Business Days of receipt of notice, then an Event of
Default under Article Five will be deemed to have occurred and Party A will be
entitled to the remedies set forth in Article Five of this Master Agreement.

                  (c) Collateral Threshold. If at any time and from time to time
during the term of this Agreement (and notwithstanding whether an Event of
Default has occurred), the Termination Payment that would be owed to Party A
plus Party B's Independent Amount, if any, exceeds the Party B Collateral
Threshold, then Party A, on any Business Day, may request that Party B provide
Performance Assurance in an amount equal to the amount by which the Termination
Payment plus Party B's Independent Amount, if any, exceeds the Party B
Collateral Threshold (rounding upwards for any fractional amount to the next
Party B Rounding Amount) ("Party B Performance Assurance"), less any Party B
Performance Assurance already posted with Party A. Such Party B Performance
Assurance shall be delivered to Party A within three (3) Business Days of the
date of such request. On any Business Day (but no more frequently than weekly
with respect to Letters of Credit and daily with respect to cash), Party B, at
its sole cost, may request that such Party B Performance Assurance be reduced
correspondingly to the amount of such excess Termination Payment plus Party B's
Independent Amount, if any, (rounding upwards for any fractional amount to the
next Party B Rounding Amount). In the event that Party B fails to provide Party
B Performance Assurance pursuant to the terms of this Article Eight within three
(3) Business Days. then an Event of Default under Article Five shall be deemed
to have occurred and Party A will be entitled to the remedies set forth in
Article Five of this Master Agreement.

         For purposes of this Section 8.1(c), the calculation of the Termination
Payment shall be calculated pursuant to Section 5.3 by Party A as if all
outstanding Transactions had been liquidated, and in addition thereto, shall
include all amounts owed but not yet paid by Party B to Party A, whether or not
such amounts are due, for performance already provided pursuant to any and all
Transactions.

                  (d) Downgrade Event. If at any time there shall occur a
Downgrade Event in respect of Party B, then Party A may require Party B to
provide Performance Assurance in an amount determined by Party A in a
commercially reasonable manner. In the event Party B shall fall to provide such
Performance Assurance or a guaranty or other credit assurance acceptable to
Party A within three (3) Business Days of receipt of notice, then an Event of
Default shall be deemed to have occurred and Party A will be entitled to the
remedies set forth `in Article Five of this Master Agreement.

                  (e) If specified on the Cover Sheet, Party B shall deliver to
Party A, prior to or concurrently with the execution and delivery of this Master
Agreement a guarantee in an amount not less than the Guarantee Amount specified
on the Cover Sheet and in a form reasonably acceptable to Party A.

         8.2 Party B Credit Protection. The applicable credit and collateral
requirements shall be as specified on the Cover Sheet. If no option in Section
8.2(a) is specified on the Cover Sheet,

                                      -39-
<PAGE>

Section 8.2(a) Option C shall apply exclusively. If none of Sections 8.2(b),
8.2(c) or 8.2(d) are specified on the Cover Sheet, Section 8.2(b) shall apply
exclusively.

                  (a) Financial Information. Option A: If requested by Party B,
Party A shall deliver (i) within 120 days following the end of each fiscal year,
a copy of Party A's annual report containing audited consolidated financial
statements for such fiscal year and (ii) within 60 days after the end of each of
its first three fiscal quarters of each fiscal year, a copy of such Party's
quarterly report containing unaudited consolidated financial statements for such
fiscal quarter. In all cases the statements shall be for the most recent
accounting period and prepared in accordance with generally accepted accounting
principles; provided, however, that should any such statements not be available
on a timely basis due to a delay in preparation or certification, such delay
shall not be an Event of Default so long as such Party diligently pursues the
preparation, certification and delivery of the statements.

         Option B: If requested by Party B, Party A shall deliver (1) within 120
days following the end of each fiscal year, a copy of the annual report
containing audited consolidated financial statements for such fiscal year for
the party(s) specified on the Cover Sheet and (ii) within 60 days after the end
of each of its first three fiscal quarters of each fiscal year, a copy of
quarterly report containing unaudited consolidated financial statements for such
fiscal quarter for the party(s) specified on the Cover Sheet. In all cases the
statements shall be for the most recent accounting period and shall be prepared
in accordance with generally accepted accounting principles; provided, however,
that should any such statements not be available on a timely basis due to a
delay in preparation or certification, such delay shall not be an Event of
Default so long as the relevant entity diligently pursues the preparation,
certification and delivery of the statements.

         Option C: Party B may request from Party A the information specified in
the Cover Sheet.

                  (b) Credit Assurances. If Party B has reasonable grounds to
believe that Party A's creditworthiness or performance under this Agreement has
become unsatisfactory, Party B will provide Party A with written notice
requesting Performance Assurance in an amount determined by Party B in a
commercially reasonable manner. Upon receipt of such notice Party A shall have
three (3) Business Days to remedy the situation by providing such Performance
Assurance to Party B. In the event that Party A fails to provide such
Performance Assurance, or a guaranty or other credit assurance acceptable to
Party B within three (3) Business Days of receipt of notice, then an Event of
Default under Article Five will be deemed to have occurred and Party B will be
entitled to the remedies set forth in Article Five of this Master Agreement.

                  (c) Collateral Threshold. If at any time and from time to time
during the term of this Agreement (and notwithstanding whether an Event of
Default has occurred), the Termination Payment that would be owed to Party B
plus Party A's Independent Amount, if any, exceeds the Party A Collateral
Threshold, then Party B, on any Business Day, may request that Party A provide
Performance Assurance in an amount equal to the amount by which the Termination
Payment plus Party A's Independent Amount, if any, exceeds the Party A
Collateral Threshold (rounding upwards for any fractional amount to the next
Party A Rounding Amount) ("Party A Performance Assurance"), less any Party A
Performance Assurance already posted

                                      -40-
<PAGE>

with Party B. Such Party A Performance Assurance shall be delivered to Party B
within three (3) Business Days of the date of such request. On any Business Day
(but no more frequently than weekly with respect to Letters of Credit and daily
with respect to cash), Party A, at its sole cost, may request that such Party A
Performance Assurance be reduced correspondingly to the amount of such excess
Termination Payment plus Party A's Independent Amount, if any, (rounding upwards
for any fractional amount to the next Party A Rounding Amount). In the event
that Party A fails to provide Party A Performance Assurance pursuant to the
terms of this Article Eight within three (3) Business Days, then an Event of
Default under Article Five shall be deemed to have occur red and Party B will be
entitled to the remedies set forth in Article Five of this Master Agreement.

         For purposes of this Section 8.2(c), the calculation of the Termination
Payment shall be calculated pursuant to Section 5.3 by Party B as if all
outstanding Transactions had been liquidated, and in addition thereto, shall
include all amounts owed but not yet paid by Party A to Party B, whether or not
such amounts are due, for performance already provided pursuant to any and all
Transactions.

                  (d) Downgrade Event. If at any time there shall occur a
Downgrade Event in respect of Party A, then Party B may require Party A to
provide Performance Assurance in an amount determined by Party B in a
commercially reasonable manner. In the event Party A shall fail to provide such
Performance Assurance or a guaranty or other credit assurance acceptable to
Party B within three (3) Business Days of receipt of notice, then an Event of
Default shall be deemed to have occurred and Party B will be entitled to the
remedies set forth in Article Five of this Master Agreement.

                  (e) If specified on the Cover Sheet, Party A shall deliver to
Party B, prior to or concurrently with the execution and delivery of this Master
Agreement a guarantee in an amount not less than the Guarantee Amount specified
on the Cover Sheet and in a form reasonably acceptable to Party B.

         8.3 Grant of Security Interest/Remedies. To secure its obligations
under this Agreement and to the extent either or both Parties deliver
Performance Assurance hereunder, each Party (a "Pledgor") hereby grants to the
other Party (the "Secured Party") a present and continuing security interest in,
and lien on (and right of setoff against), and assignment of, all cash
collateral and cash equivalent collateral and any and all proceeds resulting
therefrom or the liquidation thereof, whether now or hereafter held by, on
behalf of, or for the benefit of, such Secured Party, and each Party agrees to
take such action as the other Party reasonably requires in order to perfect the
Secured Party's first priority security interest in, and lien on (and right of
setoff against), such collateral and any and all proceeds resulting therefrom or
from the liquidation thereof Upon or any time after the occurrence or deemed
occurrence and during the continuation of an Event of Default or an Early
Termination Date, the Non-Defaulting Party may do any one or more of the
following: (1) exercise any of the rights and remedies of a Secured Party with
respect to all Performance Assurance, including any such rights and remedies
under law then in effect; (ii) exercise its rights of setoff against any and all
property of the Defaulting Party in the possession of the Non-Defaulting Party
or its agent; (iii) draw on any outstanding Letter of Credit issued for its
benefit; and (iv) liquidate all Performance Assurance then held by or for the
benefit of the Secured Party free from any claim or right of any nature
whatsoever of

                                      -41-
<PAGE>

the Defaulting Party, including any equity or right of purchase or redemption by
the Defaulting Party. The Secured Party shall apply the proceeds of the
collateral realized upon the exercise of any such rights or remedies to reduce
the Pledgor's obligations under the Agreement (the Pledgor remaining liable for
any amounts owing to the Secured Party after such application), subject to the
Secured Party's obligation to return any surplus proceeds remaining after such
obligations are satisfied in full.

                       ARTICLE NINE: GOVERNMENTAL CHARGES

         9.1 Cooperation. Each Party shall use reasonable efforts to implement
the provisions of and to administer this Master Agreement in accordance with the
intent of the parties to minimize all taxes, so long as neither Party is
materially adversely affected by such efforts.

         9.2 Governmental Charge. Seller shall pay or cause to be paid all taxes
imposed by any government authority ("Governmental Charges") on or with respect
to the Product or a Transaction arising prior to the Delivery Point. Buyer shall
pay or cause to be paid all Governmental Charges on or with respect to the
Product or a Transaction at and from the Delivery Point (other than ad valorem,
franchise or income taxes which are related to the sale of the Product and are,
therefore, the responsibility of the Seller). In the event Seller is required by
law or regulation to remit or pay Governmental Charges which are Buyer's
responsibility hereunder, Buyer shall promptly reimburse Seller for such
Governmental Charges. If Buyer is required by law or regulation to remit or pay
Governmental Charges which are Seller's responsibility hereunder, Buyer may
deduct the amount of any such Governmental Charges from the sums due to Seller
under Article 6 of this Agreement. Nothing shall obligate or cause a Party to
pay or be liable to pay any Governmental Charges for which it is exempt under
the law.

                           ARTICLE TEN: MISCELLANEOUS

         10.1 Term of Master Agreement. The term of this Master Agreement shall
commence on the Effective Date and shall remain in effect until terminated by
either Party upon (thirty) 30 days' prior written notice; provided, however,
that such termination shall not affect or excuse the performance of either Party
under any provision of this Master Agreement that by its terms survives any such
termination and, provided further, that this Master Agreement and any other
documents executed and delivered hereunder shall remain in effect with respect
to the Transaction(s) entered into prior to the effective date of such
termination until both Parties have fulfilled all of their obligations with
respect to such Transaction(s), or such Transaction(s) that have been terminated
under Section 5.2 of this Agreement.

         10.2 Representations and Warranties. On the Effective Date and the date
of entering into each Transaction, each Party represents and warrants to the
other Party that:

                           (i)      it is duly organized, validly existing and
                                    in good standing under the laws of the
                                    jurisdiction of its formation;

                           (ii)     it has all regulatory authorizations
                                    necessary for it to legally perform its
                                    obligations under this Master Agreement and
                                    each Transaction (including any Confirmation
                                    accepted in accordance with Section 2.3);

                                      -42-
<PAGE>

                           (iii)    the execution, delivery and performance of
                                    this Master Agreement and each Transaction
                                    (including any Confirmation accepted in
                                    accordance with Section 2.3) are within its
                                    powers, have been duly authorized by all
                                    necessary action and do not violate any of
                                    the terms and conditions in its governing
                                    documents, any contracts to which it is a
                                    party or any law, rule, regulation, order or
                                    the like applicable to it;

                           (iv)     this Master Agreement, each Transaction
                                    (including any Confirmation accepted in
                                    accordance with Section 2.3), and each other
                                    document executed and delivered in
                                    accordance with this Master Agreement
                                    constitutes its legally valid and binding
                                    obligation enforceable against it in
                                    accordance with its terms; subject to any
                                    Equitable Defenses.

                           (v)      it is not Bankrupt and there are no
                                    proceedings pending or being contemplated by
                                    it or, to its knowledge, threatened against
                                    it which would result in it being or
                                    becoming Bankrupt;

                           (vi)     there is not pending or, to its knowledge,
                                    threatened against it or any of its
                                    Affiliates any legal proceedings that could
                                    materially adversely affect its ability to
                                    perform its obligations under this Master
                                    Agreement and each Transaction (including
                                    any Confirmation accepted in accordance with
                                    Section 2.3);

                           (vii)    no Event of Default or Potential Event of
                                    Default with respect to it has occurred and
                                    is continuing and no such event or
                                    circumstance would occur as a result of its
                                    entering into or performing its obligations
                                    under this Master Agreement and each
                                    Transaction (including any Confirmation
                                    accepted in accordance with Section 2.3);

                           (viii)   it is acting for its own account, has made
                                    its own independent decision to enter into
                                    this Master Agreement and each Transaction
                                    (including any Confirmation accepted in
                                    accordance with Section 2.3) and as to
                                    whether this Master Agreement and each such
                                    Transaction (including any Confirmation
                                    accepted in accordance with Section 2.3) is
                                    appropriate or proper for it based upon its
                                    own judgment, is not relying upon the advice
                                    or recommendations of the other Party in so
                                    doing, and is capable of assessing the
                                    merits of and understanding, and understands
                                    and accepts, the terms, conditions and risks
                                    of this Master Agreement and each
                                    Transaction (including any Confirmation
                                    accepted in accordance with Section 2.3);

                           (ix)     it is a "forward contract merchant" within
                                    the meaning of the United States Bankruptcy
                                    Code;

                                      -43-
<PAGE>

                           (x)      it has entered into this Master Agreement
                                    and each Transaction (including any
                                    Confirmation accepted in accordance with
                                    Section 2.3) in connection with the conduct
                                    of its business and it has the capacity or
                                    ability to make or take delivery of all
                                    Products referred to in the Transaction to
                                    which it is a Party;

                           (xi)     with respect to each Transaction (including
                                    any Confirmation accepted in accordance with
                                    Section 2.3) involving the purchase or sale
                                    of a Product or an Option, it is a producer,
                                    processor, commercial user or merchant
                                    handling the Product, and it is entering
                                    into such Transaction for purposes related
                                    to its business as such; and

                           (xii)    the material economic terms of each
                                    Transaction are subject to individual
                                    negotiation by the Parties.

         10.3 Title and Risk of Loss. Title to and risk of loss related to the
Product shall transfer from Seller to Buyer at the Delivery Point. Seller
warrants that it will deliver to Buyer the Quantity of the Product free and
clear of all liens, security interests, claims and encumbrances or any interest
therein or thereto by any person arising prior to the Delivery Point.

         10.4 Indemnity. Each Party shall indemnify, defend and hold harmless
the other Party from and against any Claims arising from or out of any event,
circumstance, act or incident first occurring or existing during the period when
control and title to Product is vested in such Party as provided in Section
10.3. Each Party shall indemnify, defend and hold harmless the other Party
against any Governmental Charges for which such Party is responsible under
Article Nine.

         10.5 Assignment. Neither Party shall assign this Agreement or its
rights hereunder without the prior written consent of the other Party, which
consent may be withheld in the exercise of its sole discretion; provided,
however, either Party may, without the consent of the other Party (and without
relieving itself from liability hereunder), (i) transfer, sell, pledge, encumber
or assign this Agreement or the accounts, revenues or proceeds hereof in
connection with any financing or other financial arrangements, (ii) transfer or
assign this Agreement to an affiliate of such Party which affiliate's
creditworthiness is equal to or higher than that of such Party, or (iii)
transfer or assign this Agreement to any person or entity succeeding to all or
substantially all of the assets whose creditworthiness is equal to or higher
than that of such Party; provided, however, that in each such case, any such
assignee shall agree in writing to be bound by the terms and conditions hereof
and so long as the transferring Party delivers such tax and enforceability
assurance as the non-transferring Party may reasonably request.

         10.6 Governing Law. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND PERFORMED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. EACH PARTY WAIVES ITS RESPECTIVE RIGHT TO ANY JURY TRIAL
WITH RESPECT TO ANY LITIGATION ARISING UNDER OR IN CONNECTION WITH THIS
AGREEMENT.

                                      -44-
<PAGE>

         10.7 Notices. All notices, requests, statements or payments shall be
made as specified in the Cover Sheet. Notices (other than scheduling requests)
shall, unless otherwise specified herein, be in writing and may be delivered by
hand delivery, United States mail, overnight courier service or facsimile.
Notice by facsimile or hand delivery shall be effective at the close of business
on the day actually received, if received during business hours on a Business
Day, and otherwise shall be effective at the close of business on tile next
Business Day. Notice by overnight United States mail or courier shall be
effective on the next Business Day after it was sent. A Party may change its
addresses by providing notice of same in accordance herewith.

         10.8 General. This Master Agreement (including the exhibits, schedules
and any written supplements hereto), the Party A Tariff, if any, the Party B
Tariff, if any, any designated collateral, credit support or margin agreement or
similar arrangement between the Parties and all Transactions (including any
Confirmation accepted in accordance with Section 2.3) constitute the entire
agreement between the Parties relating to the subject matter. Notwithstanding
the foregoing, any collateral, credit support or margin agreement or similar
arrangement between the Parties shall, upon designation by the Parties, be
deemed part of this Agreement and shall be incorporated herein by reference.
This Agreement shall be considered for all purposes as prepared through the
joint efforts of the parties and shall not be construed against one party or the
other as a result of the preparation, substitution, submission or other event of
negotiation, drafting or execution hereof. Except to the extent herein provided
for, no amendment or modification to this Master Agreement shall be enforceable
unless reduced to writing and executed by both Parties. Each Party agrees if it
seeks to amend any applicable wholesale power sales tariff during the term of
this Agreement, such amendment will not in any way affect outstanding
Transactions under this Agreement without the prior written consent of the other
Party. Each Party further agrees that it will not assert, or defend itself, on
the basis that any applicable tariff is inconsistent with this Agreement. This
Agreement shall not impart any rights enforceable by any third party (other than
a permitted successor or assignee bound to this Agreement). Waiver by a Party of
any default by the other Party shall not be construed as a waiver of any other
default. Any provision declared or rendered unlawful by any applicable court of
law or regulatory agency or deemed unlawful because of a statutory change
(individually or collectively, such events referred to as "Regulatory Event")
will not otherwise affect the remaining lawful obligations that anise under this
Agreement; and provided, further, that if a Regulatory Event occurs, the Parties
shall use their best efforts to reform this Agreement in order to give effect to
the original intention of the Parties. The term "including" when used in this
Agreement shall be by way of example only and shall not be considered in any way
to be in limitation. The headings used herein are for convenience and reference
purposes only. All indemnity and audit rights shall survive the termination of
this Agreement for twelve (12) months. This Agreement shall be binding on each
Party's successors and permitted assigns.

         10.9 Audit. Each Party has the right, at its sole expense and during
normal working hours, to examine the records of the other Party to the extent
reasonably necessary to verify the accuracy of any statement, charge or
computation made pursuant to this Master Agreement. If requested, a Party shall
provide to the other Party statements evidencing the Quantity delivered at the
Delivery Point. If any such examination reveals any inaccuracy in any statement,
the necessary adjustments in such statement and the payments thereof will be
made promptly and shall bear interest calculated at the Interest Rate from the
date the overpayment or underpayment was made until paid, provided, however,
that no adjustment for any statement or payment will be

                                      -45-
<PAGE>

made unless objection to the accuracy thereof was made prior to the lapse of
twelve (12) months from the rendition thereof, and thereafter any objection
shall be deemed waived.

         10.10 Forward Contract. The Parties acknowledge and agree that all
Transactions constitute "forward contracts" within the meaning of the United
States Bankruptcy Code.

         10.11 Confidentiality. If the Parties have elected on the Cover Sheet
to make this Section 10.11 applicable to this Master Agreement, neither Party
shall disclose the terms or conditions of a Transaction under this Master
Agreement to a third party (other than the Party's employees, lenders, counsel,
accountants or advisors who have a need to know such information and have agreed
to keep such terms confidential) except in order to comply with any applicable
law, regulation, or any exchange, control area or `independent system operator
rule or in connection with any court or regulatory proceeding; provided,
however, each Party shall, to the extent practicable, use reasonable efforts to
prevent or limit the disclosure. The Parties shall be entitled to all remedies
available at law or in equity to enforce, or seek relief in connection with,
this confidentiality obligation.

                                      -46-

<PAGE>

                               CONFIRMATION LETTER

From:                 J. Aron & Company
                      85 Broad Street
                      New York, NY  10004

To:                   Texas Genco, LP
                      1111 Louisiana Street, 10th Floor
                      P.O. Box 2846, 20th Floor
                      Houston, TX 77002 (77252-2846)

Attention:            David G. Tees

The purpose of this letter agreement (this "Confirmation") is to confirm the
terms and conditions of the following transaction (the "Transaction") entered
into on the Trade Date specified below between J. Aron & Company ("Buyer") and
Texas Genco, LP ("Seller").

This confirmation letter is being provided pursuant to and in accordance with
the Master Power Purchase and Sale Agreement dated as of July21, 2004 (the
"Master Agreement") between Buyer and Seller and constitutes part of and is
subject to the terms and provisions of such Master Agreement. Terms used but not
defined herein shall have the meanings ascribed to them in the Master Agreement.

The commercial terms of this Transaction are as follows:

Trade Date:                                July 21, 2004

Contract Reference:                        To be advised by Buyer

Buyer:                                     J. Aron & Company

Seller:                                    Texas Genco, LP

Scheduling:                                Buyer must Schedule the Product at
                                           the contracted quantity with ERCOT by
                                           11:00 Central prevailing time each
                                           day.

Product:                                   Firm (LD) Energy

Delivery                                   Period: From hour ending 0100 on
                                           January 1, 2005 to hour ending 2400
                                           on December 31, 2008, including North
                                           American Electricity Reliability
                                           Council ("NERC") holidays

                                      -47-

<PAGE>

Monthly Quantities:                        See Schedule 1 to this Confirmation.

Contract Prices:                           See Schedule 1 to this Confirmation.

Delivery Points:                           Subject to the section entitled
                                           "Alternate Delivery Points" below,
                                           (i) while ERCOT operates on a zonal
                                           congestion basis, the "Primary
                                           Delivery Point" for each ERCOT zone
                                           specified in Schedule 1 shall be any
                                           delivery point in such ERCOT zone,
                                           and (ii) if and when ERCOT switches
                                           to a nodal congestion methodology,
                                           the "Primary Delivery Point" for each
                                           of the Parish facility, the South
                                           Texas Project facility and the
                                           Limestone facility, as specified in
                                           Schedule 1, shall be the node that
                                           consists of the 345 kV
                                           interconnection at the busbar for
                                           such facility.

Alternate Delivery Points:                 Seller may specify an alternate
                                           delivery point (an "Alternate
                                           Delivery Point") in accordance with
                                           the following for any Product
                                           delivered under this Transaction:

                                           (1) If and when ERCOT switches to a
                                           nodal congestion methodology, upon
                                           notice by Seller to Buyer delivered
                                           no later than 08:30 Central
                                           prevailing time of the Day prior to
                                           the Day on which a Product is to be
                                           delivered, Seller may specify any
                                           other delivery point in the ERCOT
                                           zone (or equivalent designation) in
                                           which the Primary Delivery Point for
                                           such Product is located as the
                                           Delivery Point for such Product. In
                                           the event Seller elects an Alternate
                                           Delivery Point pursuant to this
                                           clause (1), (a) Seller shall pay
                                           Buyer the amount by which the market
                                           price at the Primary Delivery Point
                                           exceeded the market price at the
                                           Alternate Delivery Point, and (b)
                                           Buyer shall pay to Seller the amount
                                           by which the market price at the
                                           Alternate Delivery Point exceeded the
                                           market price at the Primary Delivery
                                           Point, in each case with respect to
                                           the Product delivered at such
                                           Alternate Delivery Point.

                                           (2) In the event of an Unplanned
                                           (Forced) Outage or an Unplanned
                                           (Forced) Derating at either the
                                           Limestone facility or the South Texas
                                           Project facility (each, an "Affected
                                           Facility"), Seller may, upon notice
                                           by Seller to Buyer delivered no later
                                           than 08:30 Central prevailing time of
                                           the Day prior to the Day on which a
                                           Product is to be delivered, elect a
                                           Parish Zone Delivery Point as the

                                      -48-

<PAGE>

                                           delivery point for the Product that
                                           would otherwise have been delivered
                                           at the Primary Delivery Point
                                           associated with such Affected
                                           Facility. Seller shall not reduce
                                           Buyer's receipts at the Primary
                                           Delivery Point at either Affected
                                           Facility more than pro rata with
                                           other parties buying power at such
                                           facilities for which Seller has the
                                           right to designate an alternate
                                           delivery point.

                                           For purposes of the foregoing, (i) a
                                           "Parish Zone Delivery Point" is any
                                           delivery point in the ERCOT zone (or
                                           equivalent designation) in which the
                                           Primary Delivery Point for the Parish
                                           facility is located and (ii)
                                           "Unplanned (Forced) Outage" and
                                           "Unplanned (Forced) Derating" each
                                           have the meanings specified in the
                                           NERC Generating Unit Availability
                                           Data System (GADS) event reporting
                                           guidelines.

                                           The provisions related to Alternate
                                           Delivery Points shall not affect
                                           Seller's obligation to deliver Firm
                                           (LD) Energy.

Force Majeure                              Revise the third sentence of Section
                                           1.23 of the Master Agreement to read
                                           as follows:

                                                    Neither Party may raise a
                                                    claim of Force Majeure based
                                                    in whole or in part on
                                                    curtailment by a
                                                    Transmission Provider unless
                                                    (i) such Party has either
                                                    (A) contracted for firm
                                                    transmission with a
                                                    Transmission Provider for
                                                    the Product to be delivered
                                                    to or received at the
                                                    Delivery Point or (B)
                                                    scheduled such Product into
                                                    (in the case of Seller) or
                                                    out of (in the case of
                                                    Buyer) a Delivery Point and
                                                    (ii) such curtailment is due
                                                    to "force majeure" or
                                                    "uncontrollable force" or a
                                                    similar term as defined
                                                    under the ERCOT Protocols.
                                                    For the avoidance of doubt,
                                                    Seller is not a Transmission
                                                    Provider for purposes of
                                                    this provision.

Buyer Operations Contacts:                 Fintan Whitty - Operations Manager:
                                           (212) 902-7311
                                           Kathy Benini - Scheduling Manager
                                           (212) 902-1454

                            [SIGNATURE PAGE FOLLOWS]

                                      -49-
<PAGE>

Please confirm that the terms stated herein accurately reflect the agreement
reached between Texas Genco, LP and J. Aron & Company by executing where
indicated below.

Signed on behalf of J. Aron & Company

By:   /s/ Peter O'Hagan
    -----------------------------------------
Peter O'Hagan
Managing Director
J. Aron & Company

Signed on behalf of Texas Genco, LP
By Texas Genco GP, LLC, its general partner

By:   /s/ David G. Tees
    -----------------------------------
Name:   David G. Tees
Title:  President

                                      -50-
<PAGE>

                                               Schedule 1 to Confirmation Letter

              CONTRACT PRICES, MONTHLY VOLUMES AND DELIVERY POINTS

                                      ***

                                      -51-
<PAGE>

                                      ***

Pursuant to the Confidential Treatment Request filed with the Securities and
Exchange Commission, we have omitted 14 pages from this exhibit from this point
forward.

                                       A-1

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