Document:

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                                                                    EXHIBIT 10.3

                         TRANSITION SERVICES AGREEMENT

                                     between

                            CENTERPOINT ENERGY, INC.

                                       and

                           TEXAS GENCO HOLDINGS, INC.

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                          TRANSITION SERVICES AGREEMENT

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

ARTICLE I DEFINITIONS ....................................................     1
        1.1      Additional Services .....................................     1
        1.2      Ancillary Agreement......................................     1
        1.3      CenterPoint Group .......................................     1
        1.4      Corporate Center Services ...............................     1
        1.5      Genco Distribution. .....................................     1
        1.6      Genco Distribution Date .................................     1
        1.7      Genco Separation Agreement...............................     1
        1.8      Genco Group .............................................     2
        1.9      Group....................................................     2
        1.10     Impracticable ...........................................     2
        1.11     Information Technology Services .........................     2
        1.12     Initial Services ........................................     2
        1.13     Liability ...............................................     2
        1.14     Providing Company .......................................     2
        1.15     Receiving Company .......................................     2
        1.16     Representative ..........................................     2
        1.17     Service .................................................     2
        1.18     Shared Services .........................................     2
        1.19     Subsidiary ..............................................     2
        1.20     System ..................................................     2

ARTICLE II SERVICES ......................................................     3
        2.1      Services ................................................     3
        2.2      Subsidiaries; Services Performed by Others ..............     4
        2.3      Charges and Payment .....................................     5
        2.4      General Obligations; Standard of Care ...................     8
        2.5      Certain Limitations .....................................    10
        2.6      Confidentiality .........................................    10
        2.7      Term; Early Termination .................................    11
        2.8      Disclaimer of Warranties, Limitation of Liability
                 and Indemnification .....................................    12
        2.9      Representatives .........................................    13
        2.10     Employee Matters. .......................................    13

ARTICLE III MISCELLANEOUS ................................................    13
        3.1      Taxes ...................................................    13
        3.2      Laws and Governmental Regulations .......................    14
        3.3      Relationship of Parties .................................    14
        3.4      References ..............................................    14
        3.5      Modification and Amendment ..............................    14

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        3.6      Inconsistency ...........................................    14
        3.7      Resolution of Disputes ..................................    15
        3.8      Successors and Assignment ...............................    15
        3.9      Notices .................................................    15
        3.10     Governing Law ...........................................    15
        3.11     Severability ............................................    15
        3.12     Counterparts ............................................    15
        3.13     Rights of the Parties ...................................    15
        3.14     Reservation of Rights ...................................    15
        3.15     Entire Agreement ........................................    16

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                          TRANSITION SERVICES AGREEMENT

     THIS TRANSITION SERVICES AGREEMENT, dated as of ____, 2002 (the "Effective
Date"), is between CenterPoint Energy, Inc., a Texas corporation
("CenterPoint"), and Texas Genco Holdings, Inc., a Texas corporation ("Genco").
Capitalized terms used herein and not otherwise defined shall have the
respective meanings assigned to them in Article I hereof or assigned to them in
the Genco Separation Agreement (as defined below).

     WHEREAS, Genco is an indirect, wholly owned Subsidiary of CenterPoint; and

     WHEREAS, the parties have entered into a Separation Agreement of even date
herewith (the "Genco Separation Agreement") pursuant to which, among other
things, up to 20% of the shares of Genco common stock owned by CenterPoint will
be distributed to the shareholders of CenterPoint (the "Genco Distribution");
and

     WHEREAS, the parties agree that it will be necessary and desirable for
CenterPoint to provide to Genco the "Services" described herein for a
transitional period following the Genco Distribution.

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

                                   ARTICLE I
                                   DEFINITIONS

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

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

     1.2 Ancillary Agreement. "Ancillary Agreement" has the meaning assigned to
that term in the Genco Separation Agreement.

     1.3 CenterPoint Group. "CenterPoint Group" shall mean CenterPoint and its
Subsidiaries excluding Genco and other members of the Genco Group.

     1.4 Corporate Center Services. "Corporate Center Services" shall mean the
Services described in Exhibit 2.1(a)(i).

     1.5 Genco Distribution. "Genco Distribution" has the meaning set forth in
the recitals hereto.

     1.6 Genco Distribution Date. "Genco Distribution Date" has the meaning
assigned to that term in the Genco Separation Agreement.

     1.7 Genco Separation Agreement. "Genco Separation Agreement" has the
meaning set forth in the recitals hereto.

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     1.8  Genco Group. "Genco Group" shall mean Genco and its Subsidiaries.

     1.9  Group. "Group" shall mean either of the CenterPoint Group or the Genco
Group, as the context requires.

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

     1.11 Information Technology Services. "Information Technology Services"
shall mean the Services described in Exhibit 2.1(a)(ii).

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

     1.13 Liability. "Liability" has the meaning assigned to that term in the
Genco Separation Agreement.

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

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

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

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

     1.18 Shared Services. "Shared Services" shall mean the Services described
in Exhibit 2.1(a)(iii).

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

     1.20 System. "System" shall mean the software, hardware, data store or
maintenance and support components or portions of such components of a set of
information technology assets identified in Exhibit 2.1(a)(ii) hereto.

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                                   ARTICLE II
                                    SERVICES

     2.1 Services.

     (a) Initial Services. Except as otherwise provided herein, during the
applicable term determined pursuant to Section 2.7 hereof, the following
"Initial Services" shall be provided by CenterPoint or other Providing Company
with respect to a Service to Genco or other Receiving Company with respect to a
Service:

     (i)   Corporate Center Services;

     (ii)  Information Technology Services; and

     (iii) Shared Services.

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

     (c) Additional Services.

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

          (ii) Except as set forth in the next sentence, the Providing Company
     shall be obligated to perform, at charges established pursuant to Section
     2.3, any Additional Service that: (A) was provided by the Providing Company
     immediately prior to the Genco Distribution Date and that the Receiving
     Company reasonably believes was inadvertently or unintentionally omitted
     from the list of Initial Services or (B) is essential to effectuate an
     orderly transition of Genco to an independently managed, public company
     following the Genco Distribution, unless in either case such performance
     would significantly disrupt the Providing Company's operations or
     materially increase the scope of its responsibility under this Agreement.
     If the Providing Company reasonably believes the performance of Additional
     Services required under the foregoing clauses (A) or (B) would
     significantly disrupt its operations or materially increase the scope of
     its responsibility under this Agreement, the Providing Company and the
     Receiving

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     Company shall negotiate in good faith to establish terms under which the
     Providing Company can provide such Additional Services, but the Providing
     Company shall not be obligated to provide such Additional Services if,
     following good faith negotiation, the Providing Company and the Receiving
     Company are unable to reach agreement on such terms.

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

     2.2 Subsidiaries; Services Performed by Others. At its option, a Providing
Company may cause any Service it is required to provide hereunder to be provided
by any other Person that is providing, or may from time to time provide, the
same or similar services for the Providing Company. Unless otherwise specified
herein or on an Exhibit hereto, the Providing Company shall remain responsible,
in accordance with the terms of this Agreement, for performance of any Service
it causes to be so provided. A Receiving Company may direct that any Service
required to be provided hereunder be provided for the benefit of another member
of the Group of which the Receiving Company is a member, but unless specified
herein or on an Exhibit hereto, the Receiving Company shall be responsible for
the payment of charges and other performance required of the Receiving Company
with respect to such Service.

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

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

     Services that Genco provides to CenterPoint prior to the Genco Distribution
Date shall be treated as though Genco is the Providing Company and CenterPoint
is the Receiving

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Company under this Agreement. CenterPoint shall compensate Genco for such
services in the same manner as Genco compensates CenterPoint for similar
services, and the risk allocation to Genco for such services shall be the same
as the risk allocation to CenterPoint for the services.

     2.3 Charges and Payment.

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

          (i)  Special Provisions for Corporate Center Services. In the case of
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     Corporate Center Services, the costs of Services included in Exhibit
     2.1(a)(i) will be direct billed on the basis of the fully allocated direct
     and indirect costs of providing those Services determined under the
     principles set forth in Section 2.3(a) where practicable. The costs of all
     other Corporate Center Services will be gathered in a common cost pool with
     similar services provided to other members of the CenterPoint Group and
     allocated to Genco and to other members of the CenterPoint Group pursuant
     to the existing methodology derived from the 1999 corporate cost allocation
     study conducted for Reliant Energy, Incorporated by DMG Maximus. As is the
     case under the current methodology, when there is a significant increase or
     decrease in one or more components of the cost of providing a Service, or
     when a category of Services is terminated as provided in Section 2.7, an
     adjustment to the allocation will be made by CenterPoint to reflect such
     changes. Out-of-pocket costs and expenses will also be included in the
     charges as provided in this Section 2.3(a).

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

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

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

          It is understood that CenterPoint's commitment to deliver the level of
     service specified herein (including any Exhibits hereto) is contingent upon
     adherence by Genco to CenterPoint's process and technology standards as
     currently in effect and as subsequently modified and communicated to Genco.

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

          It is understood that the rates provided for herein are based on a
     continuation of CenterPoint's centralized information technology
     infrastructure and organization. If Genco requests changes to any Services
     provided that require the segmentation of CenterPoint's information
     technology infrastructure into multiple or independent units, CenterPoint
     shall have the right to elect whether or not to provide Services on such
     changed basis, including the right to establish the economic terms on which
     it is willing to provide such Services.

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

     (b) Economic Reopener. If, in the case of any Services, events or
circumstances arise which, in the opinion of the Providing Company, render the
costs of providing such Services as determined under the principles set forth in
Section 2.3(a) materially different from those being charged under a specific

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rate or formula then in effect, the specific rate or formulas shall be equitably
adjusted to take into account such events or changed circumstances and bring
them into line with the general principles set forth in Section 2.3(a). Rates
for a Service will also be adjusted on a pro rata basis whenever the cost of
providing the Service increases by reason of the necessity to renegotiate a
software license or obtain a new license as a result of the change in the
relationship between the Providing Company and the entity to whom the Service is
provided.

     (c) Annual Adjustments. Specific rates and formulas for Services provided
hereunder shall be subject to adjustment as of January 1 in each year commencing
January 1, 2003 to bring the rates and formulas into conformity with the general
principles referred to in Section 2.3(a), based on estimated fixed and variable
costs and budgeted usage levels for the year commencing on such January 1.

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

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

     (f) Payment Terms. Charges and collections for Services rendered pursuant
to this Agreement shall continue to be made using the SAP functionality in use
as of the date of

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this Agreement unless and until either party elects to discontinue such
procedures, in which case the Providing Company shall thereafter bill the
Receiving Company monthly for all charges pursuant to this Agreement and the
Receiving Company shall pay the Providing Company for all Services within 30
days after receipt of an invoice therefor. Charges shall be supported by
reasonable documentation (which may be maintained in electronic form),
consistent with past practices. Late payments shall bear interest at the lesser
of the prime rate announced by Chase Bank and in effect from time to time plus
2% per annum or the maximum non-usurious rate of interest permitted by
applicable law.

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

     (h) Error Correction; True-ups; Accounting. The Providing Company shall
make adjustments to charges as required to reflect the discovery of errors or
omissions in charges. The Providing Company and the Receiving Company shall
conduct an annual true-up process to adjust charges based on a reconciliation of
differences in budgeted usage and costs with actual experience. It is the intent
of the parties that such true-up process will be conducted using substantially
the same process, procedures and methods of review as have been heretofore in
effect. Services under this Agreement and charges therefor shall be subject to
the audit rights set forth in Section 7.4 of the Genco Separation Agreement.

     2.4 General Obligations; Standard of Care.

     (a) Performance Metrics: Providing Company. Subject to Sections 2.3 and
2.5(c), the Providing Company shall maintain sufficient resources to perform its
obligations hereunder and shall perform such obligations in a commercially
reasonable manner. Specific performance metrics for the Providing Company may be
set forth in Exhibits. Where none is set forth, the Providing Company shall
provide Services in accordance with the policies, procedures and practices in
effect before the date of this Agreement and shall exercise the same care and
skill as it exercises in performing similar services for itself.

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

     (c) Transitional Nature of Services; Changes. The parties acknowledge the
transitional nature of the Services and that the Providing Company may make
changes from time to time in the manner of performing the Services if the
Providing Company is making similar

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changes in performing similar services for members of its own Group and if the
Providing Company furnishes to the Receiving Company substantially the same
notice the Providing Company shall provide members of its own Group respecting
such changes.

     (d) Responsibility for Errors; Delays. The Providing Company's sole
responsibility to the Receiving Company:

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

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

     (e) Good Faith Cooperation; Consents. The parties will use good faith
efforts to cooperate with each other in all matters relating to the provision
and receipt of Services. Such cooperation shall include exchanging information,
providing electronic access to systems used in connection with Services to the
extent the systems in use are designed and configured to permit such access,
performing true-ups and adjustments and obtaining all consents, licenses,
sublicenses or approvals necessary to permit each party to perform its
obligations hereunder. The costs of obtaining such consents, licenses,
sublicenses or approvals shall be allocated in accordance with Section 2.3. The
parties will maintain documentation supporting the information contained in the
Exhibits and cooperate with each other in making such information available as
needed in the event of a tax audit, whether in the United States or any other
country.

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

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     2.5 Certain Limitations.

     (a) Service Boundaries and Scope. Except as provided in an Exhibit for a
specific Service, (i) the Providing Company shall be required to provide the
Services only at the locations such Services are being provided by the Providing
Company for the members of the Genco Group immediately prior to the Genco
Distribution Date; and (ii) the Services will be available only for purposes of
conducting the business of Genco and its Subsidiaries substantially in the
manner it was conducted prior to the Genco Distribution Date.

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

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

     (d) No Sale, Transfer, Assignment. No Receiving Company may sell, transfer,
assign or otherwise use the Services provided hereunder, in whole or in part,
for the benefit of any Person other than a member of the Genco Group.

     2.6 Confidentiality.

     (a) Information Subject to Other Obligations. The Providing Company and the
Receiving Company agree that all Information regarding the Services, including,
but not limited to, price, costs, methods of operation, and software, and all
Information provided by any Receiving Company in connection with the Services,
shall be maintained in confidence and shall be subject to Sections 7.2 and 7.10
of the Genco Separation Agreement.

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

     (c) Internal Use; Title, Copies, Return. Subject to the applicable
provisions of the Genco Separation Agreement governing ownership, use and
licensing of Intellectual Property (as defined therein), the Receiving Company
agrees that:

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

                                       10

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

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

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

     2.7 Term; Early Termination.

     (a) Term. The term of this Agreement shall commence on the date hereof and
shall remain in effect through ____ or until the earlier of such time as (i) all
Services are terminated as provided in this Section or (ii) CenterPoint ceases
to own a majority of the voting power represented by the outstanding Genco
common stock. This Agreement may be extended by the parties in writing either in
whole or with respect to one or more of the Services, provided, however, that
such extension shall only apply to the Service for which the Agreement was
extended. Except as otherwise provided on an Exhibit for a particular Service,
the obligation to provide Corporate Center Services shall terminate on ____. The
parties may agree on an earlier expiration date respecting a specific Service by
specifying that date on the Exhibit for that Service. Services shall be provided
up to and including the date set forth in the applicable Exhibit, subject to
earlier termination as provided herein.

     (b) Termination by Genco of Specific Service Categories. Genco may
terminate this Agreement either with respect to all, or with respect to any one
or more, of the Services provided hereunder at any time and from time to time,
for any reason or no reason, by giving written notice to the Providing Party as
follows:

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

          (ii) for Information Technology Services, a terminated category of
     Services must include one of the thirteen major service categories
     specified in Exhibit 2.1(a)(ii), in its entirety, and a notice of
     termination must be given at least 90 days in advance of the effective date
     of the termination.

          (iii) for Shared Services, a terminated category of Services must
     include a complete service function specified in Exhibit 2.7(b)(iii) and
     advance notice of termination for that function must be given no later than
     the date specified in Exhibit 2.7(b)(iii).

                                       11

<PAGE>
     (c) Termination of Less than all Services. In the event of any termination
with respect to one or more, but less than all, Services, this Agreement shall
continue in full force and effect with respect to any Services not terminated
hereby.

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

     2.8 Disclaimer of Warranties, Limitation of Liability and Indemnification.

     (a) Disclaimer of Warranties. EACH PROVIDING COMPANY AND ITS SUBSIDIARIES
DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH
RESPECT TO THE SERVICES. EACH PROVIDING COMPANY AND ITS SUBSIDIARIES MAKE NO
REPRESENTATIONS OR WARRANTIES AS TO THE QUALITY, SUITABILITY OR ADEQUACY OF THE
SERVICES FOR ANY PURPOSE OR USE.

     (b) Limitation of Liability; Indemnification of Receiving Company. Each
Providing Company and its Subsidiaries shall have no Liability to any Receiving
Company with respect to its furnishing any of the Services hereunder except for
Liabilities arising out of or resulting from the gross negligence or willful
misconduct occurring after the Genco Distribution Date of the Providing Company
or any of its Subsidiaries. Each Providing Company will indemnify, defend and
hold harmless each Receiving Company in respect of all such Liabilities arising
out of or resulting from such gross negligence or willful misconduct. Such
indemnification obligation shall be a Liability of the Providing Company for
purposes of the Genco Separation Agreement, and the provisions of Article III of
the Genco Separation Agreement with respect to indemnification shall govern with
respect thereto. In no event shall a Providing Company or any of its
Subsidiaries have any Liability under this Agreement or otherwise arising out of
or resulting from the performance of, or the failure to perform, Services for
loss of anticipated profits by reason of any business interruption, facility
shutdown or non-operation, loss of data or otherwise or for any incidental,
indirect, special or consequential damages, whether or not caused by or
resulting from negligence, including gross negligence, or breach of obligations
hereunder and whether or not the Providing Company or any of its Subsidiaries
was informed of the possibility of the existence of such damages.

     (c) Limitation of Liability; Indemnification of Providing Company. Each
Receiving Company shall indemnify and hold harmless each Providing Company in
respect of all Liabilities arising out of or resulting from the Providing
Company's furnishing or failing to furnish the Services provided for in this
Agreement, other than Liabilities arising out of or resulting from the gross
negligence or willful misconduct of the Providing Company. The provisions of
this indemnity shall apply only to losses that relate directly to the provision
of Services. Such indemnification obligation shall be a Liability of the
Receiving Company for purposes of the Genco Separation Agreement and the
provisions of Article III of the Genco

                                       12

<PAGE>
Separation Agreement with respect to indemnification shall govern with respect
thereto. In no event shall a Receiving Company or any of its Subsidiaries have
any Liability under this Agreement or otherwise arising out of or resulting from
the performance of, or the failure to perform, Services for loss of anticipated
profits by reason of any business interruption, facility shutdown or
non-operation, loss of data or otherwise or for any incidental, indirect,
special or consequential damages, whether or not caused by or resulting from
negligence, including gross negligence, or breach of obligations hereunder and
whether or not the Providing Company or any of its Subsidiaries was informed of
the possibility of the existence of such damages.

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

     2.9 Representatives. The parties shall each appoint one or more
Representatives to facilitate communications and performance under this
Agreement. The maximum number of Representatives for each party shall be three,
one for each of the three principal categories specified in Section 2.1(a). Each
party may treat an act of a Representative of another party as being authorized
by such other party without inquiring behind such act or ascertaining whether
such Representative had authority to so act. Each party shall have the right at
any time and from time to time to replace any of its Representatives by giving
notice in writing to the other party setting forth the name of (i) each
Representative to be replaced and (ii) the replacement, and certifying that the
replacement Representative is authorized to act for the party giving the notice
in all matters relating to this Agreement (or matters relating to one or more
categories specified in Section 2.1(a)). Each Representative is hereby
authorized by the party he or she represents to approve the establishment of new
or modifications to existing Exhibits for Initial Services before or after the
Genco Distribution Date and the addition of new Exhibits for Additional Services
after the Genco Distribution Date.

     2.10 Employee Matters. Eligible employees of Genco will continue to
participate in CenterPoint's benefit plans and programs after the Genco
Distribution Date, in accordance with the terms and conditions of such plans and
programs as they may be amended or terminated by CenterPoint at any time, for so
long as CenterPoint continues to own 80% or more of the shares of Genco common
stock.

                                  ARTICLE III
                                  MISCELLANEOUS

     3.1 Taxes. (a) General. Each Receiving Company shall bear all taxes, duties
                    -------
and other similar charges (and any related interest and penalties), imposed as a
result of its receipt of Services under this Agreement, including any tax which
a Receiving Company is required to withhold or deduct from payments to a
Providing Company, except any net income

                                       13

<PAGE>

tax imposed upon the Providing Company by the country of its incorporation or
any governmental entity within its country of incorporation.

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

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

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

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

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

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

                                       14

<PAGE>

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

     3.8 Successors and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Except as contemplated by Section 2.2, no party shall assign
this Agreement or any rights herein without the prior written consent of the
other party, which may be withheld for any or no reason.

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

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

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

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

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

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

                                       15

<PAGE>

Any single or partial exercise of any particular right by a party shall exhaust
the same or constitute a waiver of any other right.

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

                                       16

<PAGE>

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

                                           CENTERPOINT ENERGY, INC.

                                           By:
                                              ----------------------------------
                                             [Name]
                                             [Title]

                                           TEXAS GENCO HOLDINGS, INC.

                                           By:
                                              ----------------------------------
                                              [Name]
                                              [Title]

                                       17<PAGE>

                                                                    EXHIBIT 10.5

                            TAX ALLOCATION AGREEMENT

                                  BY AND AMONG

                            CENTERPOINT ENERGY, INC.

                          AND ITS AFFILIATED COMPANIES

                                       AND

                           TEXAS GENCO HOLDINGS, INC.

                          AND ITS AFFILIATED COMPANIES

<PAGE>

                            TAX ALLOCATION AGREEMENT

     THIS TAX ALLOCATION AGREEMENT (this "Agreement"), dated _______, 2002, by
and among CenterPoint Energy, Inc., a Texas corporation ("CP"), each CP
Affiliated Company, Texas Genco Holdings, Inc., a Texas corporation ("Texas
Genco"), and each Texas Genco Affiliated Company is entered into in connection
with the Distribution (as defined below).

                                    RECITALS

     WHEREAS, CP is the common parent of an affiliated group of corporations
within the meaning of Section 1504(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), which currently files a consolidated federal income tax
return, and which, together with other affiliated corporations, is party to the
Tax Sharing Agreement (as defined below);

     WHEREAS, as set forth in the Master Separation Agreement, dated December
31, 2000, and subject to the terms and conditions thereof, Reliant Energy,
Incorporated, the predecessor to CP, transferred all of its Texas electric
generating assets to a limited partnership subsidiary of Texas Genco, and the
limited partnership subsidiary of Texas Genco assumed all of the liabilities
associated with such electric generating assets; and

     WHEREAS, in accordance with the Texas statute that mandates the
deregulation of the Texas electric business and in order to establish the
"stranded costs" attributable to the electric power generation facilities owned
by Texas Genco and pursuant to that certain Separation Agreement between
CenterPoint Energy, Inc. and Texas Genco Holdings, Inc., dated __________, 2002,
CP will distribute approximately 20% of its shares of Texas Genco common stock,
on a pro rata basis, to the holders of the common stock of CP (the
"Distribution");

     NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

SECTION 1. DEFINITIONS

     1.1 In General. As used in this Agreement, the following capitalized terms
shall have the following meanings:

          "Affiliated Company" means, for income tax purposes, any entity in
     which a common parent holds 80% or more of the voting power and value of
     such corporation.

          "Audit" includes any audit, assessment of Taxes, other examination by
     any Tax Authority, proceeding, or appeal of such a proceeding relating to
     Taxes, whether administrative or judicial, including proceedings relating
     to competent authority determinations.

          "Code" means the Internal Revenue Code of 1986, as amended.

                                       1

<PAGE>

          "Consolidated Group" means a group of one or more corporations
     connected through stock ownership with a common parent in which the common
     parent owns at least 80% of the total voting power and value of such
     corporation and that files a Consolidated Return.

          "Consolidated Return" means any Tax Return with respect to Federal
     Income Taxes filed on a consolidated basis.

          "Consolidated Return Regulations" shall mean the Treasury Regulations
     promulgated under Chapter 6 of Subtitle A of the Code, including, as
     applicable, any predecessors or successors thereto.

          "Consolidated State Tax" means any Tax incurred by a Legal Entity that
     is not a Federal Income Tax and that is filed on a combined, unitary, or
     consolidated basis.

          "Consolidated State Tax Return" means a Tax Return filed with respect
     to a Consolidated State Tax liability.

          "CP" has the meaning set forth in the Recitals to this Agreement.

          "CP Consolidated State Tax" means a Consolidated State Tax for a
     particular Tax period for which CP or a member of the CP Group has the
     legal obligation to file a Tax Return with respect to such Consolidated
     State Tax.

          "CP Consolidated State Tax Return" means a Tax Return filed with
     respect to a CP Consolidated State Tax.

          "CP Group" means CP, any CP Affiliated Company or other entity of
     which CP is the common parent corporation or other entity which may be, or
     may become a member of such group from time to time.

          "CP Consolidated Group" means with respect to a particular Tax period
     a Consolidated Group in which CP is the common parent for all or a portion
     of such Tax period.

          "DIT" shall mean any "deferred intercompany transaction" or
     "intercompany transaction" within the meaning of the Treasury Regulations
     (or predecessors thereto).

          "Distribution" has the meaning set forth in the Recitals to this
     Agreement.

          "Distribution Date" means the date on which the Distribution is
     effective.

          "Federal Income Tax" means any Tax imposed under Subtitle A of the
     Code (including the Taxes imposed by Sections 11, 55, and 1201(a) of the
     Code), and any interest, additions to Tax or penalties applicable or
     related thereto, and any other income-based U.S. federal Tax which is
     hereinafter imposed upon corporations.

          "Filing Party" has the meaning set forth in Section 2.3 of this
     Agreement.

                                       2

<PAGE>

          "Final Determination" means with respect to any issue (i) a decision,
     judgment, decree or other order by any court of competent jurisdiction,
     which decision, judgment, decree or other order has become final and not
     subject to further appeal, (ii) a closing agreement (whether or not entered
     into under Section 7121 of the Code) or any other binding settlement
     agreement (whether or not with the Service) entered into in connection with
     or in contemplation of an administrative or judicial proceeding, or (iii)
     the completion of the highest level of administrative proceedings if a
     judicial contest is not or is no longer available.

          "Income Taxes" means (1) any tax based upon, measured by, or
     calculated with respect to (A) net income or profits (including any capital
     gains tax, minimum tax and any tax on items of Tax preference, but not
     including sales, use, real or personal property, gross or net receipts,
     transfer or similar taxes) or (B) multiple bases if one or more of the
     bases upon which such tax may be based, measured by, or calculated with
     respect to, is described in clause (A) above, or (2) any U.S., state or
     local franchise tax.

          "Indemnifying Party" means a person who has an obligation to indemnify
     another person under Section 5.2. "Indemnitee" means a person who is owed
     an indemnification obligation by another person under Section 5.2.

          "Joint Return" shall mean any Tax Return that includes at least two
     Legal Entities, of which one Legal Entity is a member of the Texas Genco
     Group and the other Legal Entity is a member of the CP Group.

          "Legal Entity" shall mean a corporation, partnership, limited
     liability company or other legal entity under the corporation, partnership,
     limited liability company or other organizational laws of a state or other
     jurisdiction.

          "Non-Filing Party" has the meaning set forth in Section 2.3 of this
     Agreement.

          "Redetermination" shall mean any redetermination as the result of an
     Audit by the Service (or the relevant state, local or foreign governmental
     authority), a claim for refund, an amended Tax Return or otherwise and that
     is resolved by a Final Determination.

          "Separate Tax" means any Tax incurred by a Legal Entity that is not a
     Federal Income Tax and that is filed on a separate company basis.

          "Separate Return" means any Tax Return filed with respect to a
     Separate Tax liability.

          "Service" means the Internal Revenue Service.

          "Tax" includes any charges, fees, levies, imposts, duties, or other
     assessments of a similar nature, including income, alternative or add-on
     minimum, gross receipts, profits, lease, service, service use, wage, wage
     withholding, employment, workers compensation, business occupation,
     occupation, premiums, environmental, estimated, excise, employment, sales,
     use, transfer, license, payroll, franchise, severance, stamp, occupation,
     windfall profits, withholding,

                                       3

<PAGE>

     social security, unemployment, disability, ad valorem, estimated, highway
     use, commercial rent, capital stock, paid up capital, recording,
     registration, property, real property gains, value added, business license,
     custom duties, or other tax or governmental fee of any kind whatsoever,
     imposed or required to be withheld by any Tax Authority including any
     interest, additions to tax, or penalties applicable or related thereto.

          "Tax Authority" means any governmental authority or any subdivision,
     agency, commission or authority thereof or any quasi-governmental or
     private body having jurisdiction over the assessment, determination,
     collection or imposition of any Tax (including the Service).

          "Tax Benefit" means a reduction in the Tax liability of a taxpayer (or
     of the affiliated group of which it is a member) for any taxable period.
     Except as otherwise provided in this Agreement, a Tax Benefit shall be
     deemed to have been realized or received from a Tax Item in a taxable
     period only if and to the extent that the Tax liability of the taxpayer (or
     of the affiliated group of which it is a member) for such period, after
     taking into account the effect of the Tax Item on the Tax liability of such
     taxpayer in the current period and all prior periods, is less than it would
     have been if such Tax liability were determined without regard to such Tax
     Item.

          "Tax Detriment" means an increase in the Tax liability of a taxpayer
     (or of the affiliated group of which it is a member) for any taxable
     period. Except as otherwise provided in this Agreement, a Tax Detriment
     shall be deemed to have been realized or received from a Tax Item in a
     taxable period only if and to the extent that the Tax liability of the
     taxpayer (or of the affiliated group of which it is a member) for such
     period, after taking into account the effect of the Tax Item on the Tax
     liability of such taxpayer in the current period and all prior periods, is
     more than it would have been if such Tax liability were determined without
     regard to such Tax Item.

          "Tax Item" means any item of income, gain, loss, deduction or credit,
     or other attribute that may have the effect of increasing or decreasing any
     Tax.

          "Tax Sharing Agreement" means the Tax Sharing Agreement, dated August
     6, 1997, entered into by and among Houston Industries, Incorporated
     (predecessor to CP), NorAm Energy Corp., and Houston Industries Energy,
     Inc.

          "Tax Return" means any return, report, certificate, form or similar
     statement or document (including, any related or supporting information or
     schedule attached thereto and any information return, amended Tax return,
     claim for refund or declaration of estimated Tax) required to be supplied
     to, or filed with, a Tax Authority in connection with the determination,
     assessment or collection of any Tax or the administration of any laws,
     regulations or administrative requirements relating to any Tax.

          "Texas Genco" has the meaning set forth in the Recitals to this
     Agreement.

          "Texas Genco Group" means Texas Genco and any Texas Genco Affiliated
     Company of which Texas Genco would be the common parent corporation if
     Texas Genco were not a member of the CP Group.

                                       4

<PAGE>

          "Treasury Regulations" means the final, temporary and proposed income
     Tax regulations promulgated under the Code, as such regulations may be
     amended from time to time (including corresponding provisions of succeeding
     regulations).

     1.2 Construction Principles. As used in this Agreement, the singular shall
be deemed to include the plural and vice versa, and the captions and section
headings are inserted for convenience of reference only and are not intended to
have any significance for the interpretation of, or construction of, the
provisions of this Agreement. It is intended that this Agreement shall comply
with the Public Utility Holding Company Act of 1935, Rule 45(c), to the extent
relevant, and all ambiguities shall be interpreted and resolved accordingly.

SECTION 2. PREPARATION AND FILING OF TAX RETURNS.

     2.1 In General. CP shall timely file or cause to be filed all Tax Returns
that are filed on a consolidated, combined or unitary basis and shall include
Texas Genco and the Texas Genco Affiliates as members of the CP Group with
respect to the Tax Items of Texas Genco and the Texas Genco Affiliates. If Texas
Genco is required to file a Separate Return, CP shall timely file or cause to be
filed all such Separate Returns.

     2.2 Information and Cooperation.

     (a) CP and Texas Genco shall provide each other all documents and
information, and make available employees and officers of CP and Texas Genco, as
reasonably requested by the other party, on a mutually convenient basis during
normal business hours, to aid the other party in preparing any Tax Return
described in Section 2.1 of this Agreement or to contest any Audit of any such
Tax Return.

     (b) In the case of any Tax Return described in Section 2.1 of this
Agreement, CP will provide Texas Genco with a copy of that portion of each such
Tax Return to the extent it relates to Texas Genco or any Texas Genco Affiliated
Company, together with all related tax accounting work papers, not later than
five (5) days after the receipt of a written request therefor.

     2.3 Manner of Filing Tax Returns. Except as otherwise provided in this
Section 2.3 of this Agreement, the party that is required to file a return under
Section 2.1 of this Agreement (the "Filing Party") shall have the exclusive
right to determine (1) the manner in which such Tax Return shall be prepared and
filed, including the elections, methods of accounting, positions, conventions
and principles of taxation to be used and the manner in which any Tax Item shall
be reported, (2) whether any extensions may be requested, (3) the elections that
will be made in such Tax Return, (4) whether any amended Tax Returns shall be
filed, (5) whether any claims for refund shall be made, (6) whether any refunds
shall be paid by way of refund or credited against any liability for the related
Tax, and (7) whether to retain outside specialists to prepare such Tax Return,
whom to retain for such purpose and the scope of any such retainer. (The party
who is not the Filing Party is referred to herein as the "Non-Filing Party".)

     2.4 Agent. Texas Genco hereby irrevocably designates, and agrees to cause
each Texas Genco Affiliated Company to so designate, CP as its sole and
exclusive agent and attorney-in-fact to take such action (including execution of
documents) as CP, in its sole

                                       5

<PAGE>

discretion, may deem appropriate in any and all matters (including Audits)
relating to any Consolidated Return and any other Tax Return described in
Section 2.1 of this Agreement.

SECTION 3. TAX SHARING AND PAYMENTS.

     3.1 In General.

     (a) Sharing Agreement. Except to the extent specifically modified or
supplemented herein, the Tax Sharing Agreement shall continue in full force and
effect. The provisions of the Tax Sharing Agreement shall fix the rights and
obligations of the parties as to the matters covered thereby.

     (b) Federal Income Tax Payments. With respect to CP Consolidated Group
federal income Taxes, no later than five (5) days prior to the due date
(including extensions) of any consolidated federal income Tax Return of the CP
Consolidated Group:

          (i) Texas Genco shall pay to CP no later than five (5) days prior to
     the due date (including extensions) of such Tax Return, the excess, if any,
     of (A) the sum of (I) the aggregate amount of any Tax that would not have
     been incurred by the CP Consolidated Group but for the inclusion of any
     Legal Entity that is a member of the Texas Genco Group in the CP
     Consolidated Group and (II) the aggregate amount of any Tax refund, credit
     or other Tax Benefit that would have been realized or received with respect
     to such Tax Return (or any other Tax Return that has been or could have
     been filed) by the CP Consolidated Group but for the inclusion of any Legal
     Entity that is a member of the Texas Genco Group in the CP Consolidated
     Group over (B) the aggregate amount previously paid by Texas Genco pursuant
     to this clause (i); and

          (ii) CP shall pay to Texas Genco no later than five (5) days prior to
     the due date (including extensions of such Tax Return) the excess, if any,
     of (A) the sum of (I) the aggregate amount of any Tax that would have been
     incurred by the CP Consolidated Group but for the inclusion of any Legal
     Entity that is a member of the Texas Genco Group in the CP Consolidated
     Group and (II) the aggregate amount of any Tax refund, credit or other Tax
     Benefit realized or received with respect to such Tax Return that would not
     have been realized or received by the CP Consolidated Group but for the
     inclusion of any Legal Entity that is a member of the Texas Genco Group in
     the CP Consolidated Group over (B) the aggregate amount previously paid by
     CP pursuant to this clause (ii).

     (c) Consolidated, Combined, Unitary or Joint Return State Tax Payments.
With respect to consolidated, combined, unitary or other Joint Return Taxes,
other than consolidated federal income Taxes, no later than five (5) days prior
to the due date (including extensions) of any Joint Return of the CP
Consolidated Group:

          (i) Texas Genco shall pay to CP the excess, if any, of (A) the sum of
     (I) the aggregate amount of any Tax that would not have been incurred by
     the CP Consolidated Group but for the inclusion of any Legal Entity that is
     a member of

                                       6

<PAGE>

     the Texas Genco Group in the CP Consolidated Group and (II) the aggregate
     amount of any Tax refund, credit or other Tax Benefit that would have been
     realized or received with respect to such Tax Return (or any other Tax
     Return that has been or could have been filed) by the CP Consolidated Group
     but for the inclusion of any Legal Entity that is a member of the Texas
     Genco Group in the CP Consolidated Group over (B) the aggregate amount
     previously paid by Texas Genco pursuant to this clause (i); and

          (ii) CP shall pay Texas Genco the excess, if any, of (A) the sum of
     (I) the aggregate amount of any Tax that would have been incurred by the CP
     Consolidated Group but for the inclusion of any Legal Entity that is a
     member of the Texas Genco Group in the CP Consolidated Group and (II) the
     aggregate amount of any Tax refund, credit or other Tax Benefit realized or
     received with respect to such Tax Return that would not have been realized
     or received by the CP Consolidated Group but for the inclusion of any Legal
     Entity that is a member of the Texas Genco Group in the CP Consolidated
     Group over (B) the aggregate amount previously paid by CP pursuant to this
     clause (ii).

     (d) DITS. The Consolidated Return Regulations and the consolidated federal
income Tax Returns filed by the CP Consolidated Group pursuant to this Agreement
or the Tax Sharing Agreement, respectively, shall determine the timing of the
recognition of Tax Items with respect to DITS and the determination of whether
the CP Consolidated Group or the Texas Genco Group (and which member thereof)
shall bear the Tax Benefit or burden of such Tax Items, and each group shall be
responsible for the Tax Items recognized by its respective members with respect
to any DITS.

     (e) Estimated Federal Tax Payments.

          (i) In the case of any Federal Income Taxes for the CP Consolidated
     Group, Texas Genco (on behalf of itself and each Affiliated Company of
     Texas Genco) shall provide to CP no later than 8 days prior to the due date
     for each payment of an installment of estimated Federal Income Taxes (as
     determined under Section 6655 of the Code or successor provision then in
     effect) of the CP Consolidated Group ("Estimated Federal Installment
     Payment") such information pertaining to Texas Genco or an Affiliated
     Company of Texas Genco as is necessary for CP to compute the amount of such
     Estimated Federal Installment Payment.

          (ii) On or before the due date of such Estimated Federal Installment
     Payment, CP shall inform Texas Genco of either (A) the amount ("Texas Genco
     Estimated Federal Installment Payment") that Texas Genco (on behalf of
     itself and each Affiliated Company of Texas Genco) must pay CP with respect
     to such Estimated Federal Installment Payment, or (B) the amount ("Texas
     Genco Estimated Federal Installment Refund") CP must pay Texas Genco with
     respect to such Estimated Federal Installment Payment. CP shall compute the
     amount of each Texas Genco Estimated Federal Installment Payment or the
     Texas Genco Estimated Federal Installment Refund, as the case may be, so as
     to equal the

                                       7

<PAGE>

     portion of the Estimated Federal Installment Payment that is allocable to
     Texas Genco and the Affiliated Companies of Texas Genco taking into account
     previous Texas Genco Estimated Federal Installment Payments and Texas Genco
     Estimated Federal Installment Refunds that have been made for the same
     period. CP shall calculate the portion of each Estimated Federal
     Installment Payment of the Texas Genco Group that is allocable to Texas
     Genco and the Affiliated Companies of Texas Genco by (C) computing the sum
     of the estimated Federal Income Tax payments that Texas Genco and each
     Affiliated Company of Texas Genco would have been required to pay if each
     of Texas Genco and each Affiliated Company of Texas Genco had filed a
     Federal Income Tax Return on a separate company basis for such estimated
     Federal Income Tax period and (D) taking into account adjustments, if any,
     that are applicable on a Consolidated Return basis to the CP Consolidated
     Group Consolidated Return for such period. Texas Genco shall pay CP the
     Texas Genco Estimated Federal Installment Payment within 24 hours after the
     due date of the Estimated Federal Installment Payment to which it relates,
     and CP shall pay Texas Genco the Texas Genco Estimated Federal Installment
     Refund within 24 hours after the due date of the Estimated Federal
     Installment Payment to which it relates.

          (iii) If (A) the portion of the actual Federal Income Tax Liability of
     the CP Consolidated Group that is allocable, as determined by CP in
     accordance with the Tax Sharing Agreement and consistent with the past
     practices utilized by the CP Tax Department in completing previous CP
     Consolidated Group Consolidated Returns, to Texas Genco and the Affiliated
     Companies of Texas Genco exceeds (B)(I) the sum of the Texas Genco
     Estimated Federal Installment Payments for such period less (II) the sum of
     the Texas Genco Estimated Federal Installment Refunds for such period, then
     CP shall inform Texas Genco of the amount of such excess on or before the
     due date of the CP Consolidated Group Consolidated Return for such period.
     Texas Genco (on behalf of itself and each Affiliated Company of Texas
     Genco) shall pay the amount of such excess to CP within 24 hours after the
     due date of the CP Consolidated Group Consolidated Return.

          (iv) If (A) (I) the sum of the Texas Genco Estimated Federal
     Installment Payments for a period less (II) the sum of the Texas Genco
     Estimated Federal Installment Refunds for such period exceeds (B) the
     portion of the actual Federal Income Tax Liability of the CP Consolidated
     Group for such period that is allocable, as determined by CP in accordance
     with the Tax Sharing Agreement and consistent with past practices utilized
     by the CP Tax Department in implementing previous CP Consolidated Group
     Returns, to Texas Genco and the Affiliated Companies of Texas Genco, then
     CP shall pay the amount of such excess to Texas Genco within 24 hours after
     the due date of the CP Consolidated Group Consolidated Return for such
     period.

          (v) CP shall calculate the portion of the actual Federal Income Tax
     Liability of the CP Consolidated Group that is allocable to Texas Genco and
     the Affiliated Companies of Texas Genco for Sections 3.1(e)(iii) and (iv)
     consistent with the principles set forth in the penultimate sentence of
     Section 3.1(e)(ii).

                                       8

<PAGE>

     (f) Estimated Payments of CP Consolidated State Taxes and Texas Genco
Separate State Taxes.

          (i) In the case of any CP Consolidated State Tax for any period that
     includes a member of the Texas Genco Group or in the case of any Separate
     Tax of the Texas Genco Group, Texas Genco (on behalf of itself and each
     Affiliated Company of Texas Genco) shall provide to CP no later than 8 days
     prior to the due date for each payment of an installment of CP Consolidated
     State Tax ("Estimated Consolidated State Installment Payment") or Separate
     Tax of Texas Genco ("Estimated Separate State Installment Payment") such
     information pertaining to Texas Genco or an Affiliated Company of Texas
     Genco as is necessary for CP to compute the amount of such Estimated
     Consolidated State Installment Payment or such Estimated Separate State
     Installment Payment.

          (ii) On or before the due date of such Estimated Consolidated State
     Installment Payment, CP shall inform Texas Genco of either (A) the amount
     ("Texas Genco Estimated Consolidated State Installment Payment") that Texas
     Genco (on behalf of itself and each Affiliated Company of Texas Genco) must
     pay CP with respect to such Estimated Consolidated State Installment
     Payment, or (B) the amount ("Texas Genco Consolidated Estimated State
     Installment Refund") CP must pay Texas Genco with respect to such Estimated
     Consolidated State Installment Payment. CP shall compute the amount of each
     Texas Genco Estimated Consolidated State Installment Payment or Texas Genco
     Estimated Consolidated State Installment Refund, as the case may be, so as
     to equal the portion of the Estimated Consolidated State Installment
     Payment that is allocable to Texas Genco and the Affiliated Companies of
     Texas Genco taking into account previous Texas Genco Estimated Consolidated
     State Installment Payments and Texas Genco Estimated Consolidated State
     Installment Refunds that have been made for the same period. CP shall
     calculate the portion of each Estimated Consolidated State Installment
     Payment that is allocable to Texas Genco and the Affiliated Companies of
     Texas Genco by (C) computing the sum of the estimated CP Consolidated State
     Tax payments that Texas Genco and each Affiliated Company of Texas Genco
     would have been required to pay if each of Texas Genco and each Affiliated
     Company of Texas Genco had filed a CP Consolidated State Tax Return on a
     separate company basis for such estimated CP Consolidated State Tax period
     and (D) taking into account adjustments, if any, that are applicable on a
     Consolidated State Tax basis to the CP Consolidated State Tax Return for
     such period. Texas Genco shall pay CP the Texas Genco Estimated
     Consolidated State Installment Payment within 24 hours after the due date
     of the Estimated Consolidated State Installment Payment to which it
     relates, and CP shall pay Texas Genco the Texas Genco Estimated
     Consolidated State Installment Refund within 24 hours after the due date of
     the Estimated Consolidated State Installment Payment to which it relates to
     the extent that CP has cash available from tax installment payments from
     other members of the CP Consolidated Group and shall pay Texas Genco the
     balance, if any, of the Texas Genco Estimated Consolidated State
     Installment Refund within 5 business days after the date that CP receives
     the refund from the taxing authority.

                                       9

<PAGE>

          (iii) On or before the due date of each Estimated Separate State
     Installment Payment, CP shall inform Texas Genco of either (A) the amount
     ("Texas Genco Estimated Separate State Installment Payment") that Texas
     Genco (on behalf of itself and each Affiliated Company of Texas Genco) must
     pay CP with respect to such Estimated Separate State Installment Payment,
     or (B) the amount ("Texas Genco Estimated Separate State Installment
     Refund") CP must pay Texas Genco with respect to such Estimated Separate
     State Installment Payment. CP shall compute the amount of each Texas Genco
     Estimated Separate State Installment Payment or Texas Genco Estimated
     Separate State Installment Refund, as the case may be, so as to equal the
     Estimated Separate State Installment Payment of Texas Genco and the
     Affiliated Companies of Texas Genco taking into account previous Texas
     Genco Estimated Separate State Installment Payments and Texas Genco
     Estimated Separate State Installment Refunds that have been made for the
     same period. Texas Genco shall pay CP the Texas Genco Estimated Separate
     State Installment Payment within 24 hours after the due date of the
     Estimated Separate State Installment Payment to which it relates, and CP
     shall pay Texas Genco the Texas Genco Estimated Separate State Installment
     Refund within 5 business days after the date that CP receives the refund
     from the taxing authority.

          (iv) If (A) the portion of the actual CP Consolidated State Tax
     Liability for a period that is allocable, as determined by CP in accordance
     with the Tax Sharing Agreement and determined as if each of Texas Genco and
     each Affiliated Company of Texas Genco had filed a CP Consolidated State
     Tax Return on a separate company basis for such estimated CP Consolidated
     State Tax period, to Texas Genco and the Affiliated Companies of Texas
     Genco exceeds (B)(I) the sum of the Texas Genco Estimated Consolidated
     State Installment Payments for such period less (II) the sum of the Texas
     Genco Estimated Consolidated State Installment Refunds for such period,
     then Texas Genco (on behalf of itself and each Affiliated Company of Texas
     Genco) shall pay the amount of such excess to CP within 24 hours after the
     due date of the CP Consolidated State Tax Return for such period.

          (v) If (A) (I) the sum of the Texas Genco Estimated Consolidated State
     Installment Payments for a period less (II) the sum of the Texas Genco
     Estimated Consolidated State Installment Refunds for such period exceeds
     (B) the portion of the actual CP Consolidated State Tax Liability for such
     period that is allocable, as determined by CP in accordance with the Tax
     Sharing Agreement and if each of Texas Genco and each Affiliated Company of
     Texas Genco had filed a CP Consolidated State Tax Return on a separate
     company basis for such estimated CP Consolidated State Tax period, to Texas
     Genco and the Affiliated Companies of Texas Genco, then CP shall pay the
     amount of such excess to Texas Genco within 24 hours after the due date of
     the CP Consolidated State Tax Return for such period to the extent that CP
     has cash available from tax installment payments from other members of the
     CP Consolidated Group and shall pay Texas Genco the balance, if any, of the
     Texas Genco Estimated

                                       10

<PAGE>

     Consolidated State Installment Refund within 5 business days after the date
     that CP receives the refund from the taxing authority.

          (vi) If (A) the sum of the Separate Tax of Texas Genco for a period
     exceeds (B)(I) the sum of the Texas Genco Estimated Separate State
     Installment Payments for such period less (II) the sum of the Texas Genco
     Estimated Separate State Installment Refunds for such period, then Texas
     Genco (on behalf of itself and each Affiliated Company of Texas Genco)
     shall pay the amount of such excess to CP within 24 hours after the due
     date of the CP Consolidated State Tax Return for such period.

          (vii) If (A) (I) the sum of the Texas Genco Estimated Separate State
     Installment Payments for a period less (II) the sum of the Texas Genco
     Estimated Separate State Installment Refunds for such period exceeds (B)
     the sum of the Separate Tax of Texas Genco for such period, then CP shall
     pay the amount of such excess to Texas Genco within 5 business days after
     the date that CP receives the refund from the taxing authority.

     (g) State Allocation Rules. For purposes of CP's determination under
Section 3.1(c) and Section 3.1(f) of the portion of the actual CP Consolidated
State Tax liability that is allocable to Texas Genco and the Affiliated
Companies of Texas Genco, CP shall allocate the amount by which the net
aggregate CP Consolidated State Tax liability for a particular period is
increased or decreased because a Legal Entity included in the CP Consolidated
State Tax Return created a nexus in a jurisdiction resulting in the imposition
of a CP Consolidated State Tax by such jurisdiction that would not otherwise had
been imposed but for such nexus either (A) completely to Texas Genco and the
Affiliated Companies of Texas Genco if such Legal Entity is a member of the
Texas Genco Group or (B) completely to the members of the CP Group if the Legal
Entity is not a member of the Texas Genco Group.

     3.2 Payments. CP shall pay (or cause to be paid) to the Service all Federal
Income Taxes, if any, of the CP Consolidated Group that are attributable to
Texas Genco and shall pay (or cause to be paid) to the appropriate Tax
Authorities all Consolidated State Tax, if any, and all Separate Taxes, if any,
that relate to the Texas Genco Group.

SECTION 4. ALLOCATION OF CERTAIN TAX ITEMS.

     4.1 Net Operating Losses. Net operating loss carryovers, current losses and
other Tax attributes available to the CP Consolidated Group may be used by any
member of the CP Consolidated Group without compensation to other members of the
Consolidated Group generating such attributes.

     4.2 Adjustments.

     (a) In the event of any Redetermination of any Joint Return for any taxable
period, the amounts required to be paid pursuant to Section 3 or 4 of this
Agreement shall be recomputed for such taxable period to take into account such
Redetermination, and payments pursuant to Section 3 or 4 of this Agreement
hereof shall be appropriately adjusted. Each party shall pay each other party an
amount equal to the difference between the payment or payments

                                       11

<PAGE>

previously made between the parties in respect of such redetermined Tax Return
and the amount that would have been paid pursuant to this Agreement in respect
of such redetermined Tax Return if such redetermined Tax Return had been filed
on the basis of the Redetermination, plus interest at the statutory rate and
applicable penalties.

     (b) Any refund of Taxes received will be allocated in a manner consistent
with the existing Tax Sharing Agreement in effect for such period and Section
3.1 of this Agreement.

SECTION 5. INDEMNIFICATION AND CONTEST PROVISIONS.

     5.1 General Indemnification.

     (a) CP and each CP Affiliated Company shall jointly and severally indemnify
Texas Genco, each Texas Genco Affiliated Company, and their respective
directors, officers and employees, and hold them harmless from and against any
and all Taxes for which CP or any CP Affiliated Company is liable under this
Agreement and any loss, cost, damage or expense, including reasonable attorneys'
fees and costs, that is attributable to, or results from the failure of CP, any
CP Affiliated Company, or any director, officer or employee to make any payment
required to be made under this Agreement.

     (b) Texas Genco and each Texas Genco Affiliated Company shall jointly and
severally indemnify CP, each CP Affiliated Company, and their respective
directors, officers and employees, and hold them harmless from and against any
and all Taxes for which Texas Genco or any Texas Genco Affiliated Company is
liable under this Agreement and any loss, cost, damage or expense, including
reasonable attorneys' fees and costs, that is attributable to, or results from
the failure of Texas Genco, any Texas Genco Affiliated Company, or any director,
officer or employee to make any payment required to be made under this
Agreement.

     5.2 Payments.

     (a) In General. Except as otherwise provided under this Agreement, to the
extent that the Indemnifying Party has an indemnification or payment obligation
to the Indemnitee pursuant to this Agreement, the Indemnitee shall provide the
Indemnifying Party with its calculation of the amount of such indemnification
payment. Such calculation shall provide sufficient detail to permit the
Indemnifying Party to reasonably understand the calculations. All
indemnification payments shall be made to the Indemnitee or to the appropriate
Tax Authority as specified by the Indemnitee within the time prescribed for
payment in this Agreement, or if no period is prescribed, within thirty (30)
days after delivery by the Indemnitee to the Indemnifying Party of written
notice of a payment or if such liability is contested pursuant to Section 6.3 of
this Agreement, within thirty (30) days of the incurrence of such an amount
based on a Final Determination, together with a computation of the amounts due.

     (b) Electronic Payments. Any payment required under this Agreement shall be
made by electronic funds transfer of immediately available funds.

                                       12

<PAGE>

     5.3 Prompt Performance. All actions required to be taken by any party under
this Agreement shall be performed within the time prescribed for performance in
this Agreement, or if no period is prescribed, such actions shall be performed
promptly.

     5.4 Interest. Payments pursuant to this Agreement that are not made within
the period prescribed in this Section 5.4 shall bear interest for the period
from and including the date immediately following the last date of the period
through and including the date of payment at a per annum rate equal to the prime
rate as published in The Wall Street Journal on the date of determination, plus
two percent (2%). Such interest will be payable at the same time as the payment
to which it relates and shall be calculated on the basis of a year of 365 days
and the actual number of days for which due.

     5.5 Tax Records. The parties to this Agreement hereby agree to retain and
provide on proper demand by any Taxing Authority (subject to any applicable
privileges) the books, records, documentation and other information relating to
any Tax Return until the later of (a) the expiration of the applicable statute
of limitations (giving effect to any extension, waiver or mitigation thereof)
and (b) in the event any claim is made under this Agreement for which such
information is relevant, until a Final Determination with respect to such claim.

SECTION 6. AUDITS AND CONTEST RIGHTS.

     6.1 In General.

     (a) The members of the Texas Genco Group shall cooperate and provide
reasonable access to books, records and other information needed in connection
with Audits, administrative proceedings, litigation and other similar matters
related to periods in which such member of the Texas Genco Group was a member of
the CP Consolidated Group.

     (b) Except as otherwise provided in this Agreement, the respective Filing
Party shall have the right to control, contest, and represent the interests of
CP, any CP Affiliated Company, Texas Genco or any Texas Genco Affiliated Company
in any Audit relating to any Tax Return that the Filing Party is responsible for
filing under Section 2.1 of this Agreement and to resolve, settle or agree to
any deficiency, claim or adjustment proposed, asserted or assessed in connection
with or as a result of any such Audit. The Filing Party's rights shall extend to
any matter pertaining to the management and control of an Audit, including
execution of waivers, choice of forum, scheduling of conferences and the
resolution of any Tax Item.

     6.2 Notice. If, after the date of this Agreement, CP (or any CP Affiliated
Company) or Texas Genco (or any Texas Genco Affiliated Company) receives written
notice of, or relating to, an Audit from a Tax Authority that asserts, proposes
or recommends a deficiency, claim or adjustment that, if sustained, could result
in Taxes for which the other party is responsible under this Agreement, then the
party receiving such notice shall provide a copy of such notice to such other
party within ten (10) days of receipt thereof.

     6.3 Contests.

     (a) If any Tax Authority asserts, proposes or recommends a deficiency,
claim or adjustment that, if sustained, could result in Taxes for which the
Non-Filing Party is

                                       13

<PAGE>

responsible under this Agreement, then upon request by the Non-Filing Party, the
Filing Party shall contest, or continue to contest, any deficiency, claim or
adjustment and the Filing Party shall keep the Non-Filing Party informed in a
timely manner reasonably in advance of all actions taken or proposed to be taken
by the Filing Party in connection with such deficiency, claim or adjustment.

     (b) In the case of an Audit with respect to any Tax Item, the Filing Party
shall:

          (1) in the case of any material correspondence or filing submitted to
     the Tax Authority or any judicial authority that relates to the merits of
     such deficiency, claim or adjustment (i) reasonably in advance of such
     submission, but subject to applicable time constraints imposed by such Tax
     Authority or judicial authority, provide the Non-Filing Party with a draft
     copy of the portion of such correspondence or filing that relates to such
     deficiency, claim or adjustment, (ii) incorporate, subject to applicable
     time constraints imposed by such Tax Authority or judicial authority, the
     Non-Filing Party's comments and changes on such draft copy of such
     correspondence or filing, and (iii) provide the Non-Filing Party with a
     final copy of the portion of such correspondence or filing that relates to
     such deficiency, claim or adjustment;

          (2) provide the Non-Filing Party with notice reasonably in advance of,
     and the Non-Filing Party shall have the right to attend, any meetings with
     the Tax Authority (including meetings with examiners) or hearings or
     proceedings before any judicial authority to the extent they relate to such
     deficiency, claim or adjustment; and

          (3) at the Filing Party's reasonable request (or upon the Filing
     Party's consent to a request by the Non-Filing Party, which consent shall
     not be unreasonably withheld), the Non-Filing Party shall assume
     responsibility for (i) contesting and presenting the merits with respect to
     any deficiency, claim or adjustment that, if sustained, would result in
     Taxes for which the Non-Filing Party is responsible under this Agreement,
     or (ii) resolving, settling or agreeing to any such deficiency, claim or
     adjustment. Any such request (or consent) by the Filing Party shall be
     subject to the Non-Filing Party's continued compliance with the conditions
     of Section 6.4 of this Agreement and to such other conditions as the Filing
     Party and Non-Filing Party reasonably agree.

     6.4 Limitations.

     (a) In General. The Filing Party shall have no obligation to contest, or to
continue to contest, any deficiency, claim or adjustment in accordance with
Section 6.3, and the Non-Filing Party shall have no right to control or
participate under Section 6.3 of this Agreement unless:

          (1) within thirty (30) days of a reasonable request by the Filing
     Party, the Non-Filing Party shall deliver to the Filing Party a written
     opinion of a nationally recognized tax attorney, to the effect that the
     Non-Filing Party's

                                       14

<PAGE>

     position with respect to such deficiency, claim or adjustment is supported
     by a reasonable basis (within the meaning of Treasury Regulations Section
     1.6662-3(b)(3));

          (2) the Non-Filing Party shall have agreed to be bound by a Final
     Determination of such deficiency, claim or adjustment;

          (3) the Non-Filing Party shall have agreed to pay, and shall be
     currently paying, all reasonable out of pocket costs and expenses incurred
     by the Filing Party to contest such deficiency, claim or assessment
     including reasonable outside attorneys', accountants' and investigatory
     fees and disbursements;

          (4) the Non-Filing Party shall have advanced to the Filing Party, on
     an interest-free basis (and with no additional net after-tax cost to the
     Filing Party), the amount of Tax in controversy (but not in excess of the
     lesser of (A) the amount of Tax for which the Non-Filing Party could be
     liable under this Agreement or (B) the amounts actually expended by the
     Filing Party for this item) to the extent necessary for the contest to
     proceed in the forum selected by the Filing Party;

          (5) the Non-Filing Party shall have provided to the Filing Party all
     documents and information, and shall have made available employees and
     officers of the Non-Filing Party, as may be necessary, useful or reasonably
     required by the Filing Party in contesting such deficiency, claim or
     adjustment; and

          (6) the contest of such deficiency, claim or adjustment shall involve
     no material danger of the sale, forfeiture or loss of, or the creation of
     any lien on, any asset of the Filing Party (except if the Non-Filing Party
     shall have adequately bonded such lien or otherwise made provision to
     protect the interests of the Filing Party in a manner reasonably
     satisfactory to the Filing Party).

     (b) Settlement. Notwithstanding Section 6.4(a), the Filing Party may
resolve, settle or agree to any deficiency, claim or adjustment proposed,
asserted or assessed in connection with any Audit of any Tax Return that it is
responsible for filing under Section 2.1 of this Agreement if the Filing Party
has provided the Non-Filing Party with a reasonable opportunity to review a copy
of that portion of the settlement or compromise proposal which relates to the
claim for which the Filing Party is seeking indemnification hereunder; provided,
that if (a) the Filing Party fails to provide the Non-Filing Party such a
reasonable opportunity to review such portion of such proposal, or (b) after
such reasonable opportunity to review such proposal the Non-Filing Party in
writing reasonably withholds its consent to all or part of such settlement or
compromise proposal, then, unless the Filing Party was not required to continue
the applicable contest under the terms of Section 6.4(a), the Non-Filing Party
shall not be obligated to indemnify the Filing Party hereunder to the extent of
the amount attributable to the loss to which such settlement or compromise
relates as to which the Non-Filing Party has reasonably withheld its consent, or
with respect to any other loss for which a successful contest is foreclosed
because of such settlement or compromise as to which the Non-Filing Party has
reasonably

                                       15

<PAGE>

withheld its consent. If the Filing Party effects a settlement or compromise of
such contest, notwithstanding that the Non-Filing Party has reasonably withheld
its consent thereto, the Filing Party shall repay to the Non-Filing Party such
amounts that the Non-Filing Party advanced pursuant to clause (a)(4) of this
Section 6.4 hereof as relate to such claim, to the extent that the Non-Filing
Party has reasonably withheld its consent to the settlement or compromise
thereof (together with interest at the prime rate as published in the Wall
Street Journal on any such amount paid by the Non-Filing Party from the date
paid by Lessee to the date repaid by the Filing Party).

     (c) Waiver. Notwithstanding any other provision of this Section 6.4, the
Filing Party may resolve, settle, or agree to any deficiency, claim or
adjustment for any taxable period if the Filing Party waives it right to
indemnity with respect to such Tax Item. In such event, the Filing Party shall
promptly reimburse the Non-Filing Party for all amounts previously advanced by
the Non-Filing Party to the Filing Party in connection with such deficiency,
claim or adjustment under Section 6.4(a)(4) of this Agreement. In addition, the
Filing Party shall reimburse the Non-Filing Party for any Tax Detriment that
directly results from the settlement of such deficiency, claim or adjustment. No
waiver by the Filing Party under this Section 6.4(c) with respect to any
deficiency, claim or adjustment relating to any single Tax Item, position, issue
or transaction or relating to any single Tax for any one taxable period shall
operate as a waiver with respect to any other deficiency, claim or adjustment.

     6.5 Failure to Notify, Etc. The failure of the Filing Party promptly to
notify the Non-Filing Party of any matter relating to a particular Tax for a
taxable period or to take any action specified in Section 6.3 of this Agreement
shall not relieve the Non-Filing Party of any liability and/or obligation which
it may have to the Filing Party under this Agreement with respect to such Tax
for such taxable period except to the extent that the Non-Filing Party's rights
hereunder are materially prejudiced by such failure and in no event shall such
failure relieve the Non-Filing Party of any other liability and/or obligation
which it may have to the Filing Party.

     6.6 Remedies. Except as otherwise provided in this Agreement, the parties
hereby agree that the sole and exclusive remedy for a breach by the Filing Party
of the Filing Party's obligations to the Non-Filing Party with respect to a
deficiency, claim or adjustment relating to the redetermination of a Tax Item of
the Non-Filing Party for a taxable period shall first be a reduction in the
amount that would otherwise be payable by the Non-Filing Party for such taxable
period and then an increase in amount that would otherwise be payable by the
Filing Party for such taxable period, in either case because of the breach. The
parties further agree that no claim against the Filing Party and no defense to
the Non-Filing Party's liabilities to the Filing Party under this Agreement
shall arise from the resolution by the Filing Party of any deficiency, claim or
adjustment relating to the redetermination of any Tax Item of the Filing Party.

SECTION 7. MISCELLANEOUS.

     7.1 Effectiveness. This Agreement shall become effective upon execution by
the parties hereto.

     7.2 Notices. Any notice, request, instruction or other document to be given
or delivered under this Agreement by any party to another party shall be in
writing and shall be

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<PAGE>

deemed to have been duly given or delivered when (a) delivered in person, (b)
deposited in the United States mail, postage prepaid and sent certified mail,
return receipt requested or (c) delivered to Federal Express or similar service
for overnight delivery to the address of the party set forth below:

          If to CP or any CP Affiliated Company, to _______________, with a copy
     to _____________:

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

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

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

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

          If to Texas Genco or any Texas Genco Affiliated Company, to
     _____________, with a copy to ______________:

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

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

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

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

Any party may, by written notice to the other parties, change the address or the
party to which any notice, request, instruction or other document is to be
delivered.

     7.3 Changes in Law.

     (a) Any reference to a provision of the Code or a law of another
jurisdiction shall include a reference to any applicable successor provision or
law.

     (b) If, due to any change in applicable law or regulations or their
interpretation by any court of law or other governing body having jurisdiction
subsequent to the date of this Agreement, performance of any provision of this
Agreement or any transaction contemplated thereby shall become impracticable or
impossible, the parties hereto shall use their commercially reasonable efforts
to find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such provision.

     7.4 Confidentiality. For a period of three years, commencing on the date of
this Agreement, each party shall hold and cause its directors, officers,
employees, advisors and consultants to hold in strict confidence, unless
compelled to disclose by judicial or administrative process or, in the opinion
of its counsel, by other requirements of law, all information (other than any
such information relating solely to the business or affairs of such party)
concerning the other parties hereto furnished it by such other party or its
representatives pursuant to this Agreement

                                       17

<PAGE>

(except to the extent that such information can be shown to have been
(a) in the public domain through no fault of such party or (b) later lawfully
acquired from other sources not under a duty of confidentiality by the party to
which it was furnished), and each party shall not release or disclose such
information to any other person, except its directors, officers, employees,
auditors, attorneys, financial advisors, bankers and other consultants who shall
be advised of and agree to be bound by the provisions of this Section 7.4. Each
party shall be deemed to have satisfied its obligation to hold confidential
information concerning or supplied by the other party if it exercises the same
care as it takes to preserve confidentiality for its own similar information.

     7.5 Successors. This Agreement shall be binding on and inure to the benefit
and detriment of any successor, by merger, acquisition of assets or otherwise,
to any of the parties hereto, to the same extent as if such successor had been
an original party.

     7.6 Affiliated Companies. CP shall cause to be performed, and hereby
guarantees the performance of, all actions, agreements and obligations set forth
herein to be performed by CP or any CP Affiliated Company. Texas Genco shall
cause to be performed, and hereby guarantees the performance of, all actions,
agreements and obligations set forth herein to be performed by any Texas Genco
Affiliated Company.

     7.7 Authorization, Etc. Each of the parties hereto hereby represents and
warrants that it has the power and authority to execute, deliver and perform
this Agreement, that this Agreement has been duly authorized by all necessary
corporate action on the part of such party, that this Agreement constitutes a
legal, valid and binding obligation of each such party and that the execution,
delivery and performance of this Agreement by such party does not contravene or
conflict with any provision of law or of its charter or bylaws or any agreement,
instrument or order binding on such party.

     7.8 Entire Agreement. This Agreement contains the entire agreement among
the parties hereto with respect to the subject matter hereof.

     7.9 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas as to
all matters regardless of the law that might otherwise govern under the
principles of conflicts of law applicable thereto.

     7.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.

     7.11 Severability. If any term, provision, covenant, or restriction of this
Agreement is held by a court of competent jurisdiction (or an arbitrator or
arbitration panel) to be invalid, void, or unenforceable, the remainder of the
terms, provisions, covenants, and restrictions set forth herein shall remain in
full force and effect, and shall in no way be affected, impaired, or
invalidated. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions,
covenants, and restrictions without including any of such which may be hereafter
declared invalid, void, or unenforceable. In the event that any such term,
provision, covenant or restriction is held to be invalid, void or

                                       18

<PAGE>

unenforceable, the parties hereto shall use their best efforts to find and
employ an alternate means to achieve the same or substantially the same result
as that contemplated by such terms, provisions, covenant, or restriction.

     7.12 No Third Party Beneficiaries. This Agreement is solely for the benefit
of CP, the CP Affiliated Companies, Texas Genco and the Texas Genco Affiliated
Companies. This Agreement should not be deemed to confer upon third parties any
remedy, claim, liability, reimbursement, cause of action or other rights in
excess of those existing without this Agreement.

     7.13 Waivers, Etc. No failure or delay on the part of the parties in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such right or power, preclude
any other or further exercise thereof or the exercise of any other right or
power. No modification or waiver of any provision of this Agreement nor consent
to any departure by the parties therefrom shall in any event be effective unless
the same shall be in writing.

     7.14 Setoff. All payments to be made by any party under this Agreement may
be netted against payments due to such party under this Agreement, but otherwise
shall be made without setoff, counterclaim or withholding, all of which are
hereby expressly waived.

                                       19

<PAGE>

     IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by a duly authorized officer as of the date first above written.

                                CENTERPOINT ENERGY, INC.
                                On behalf of Itself and Its Affiliated Companies

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

                                TEXAS GENCO HOLDINGS, INC.
                                On behalf of Itself and Its Affiliated Companies

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

                                       20

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